An arbitrary cap on high-skilled immigration is hurting job creation in the United States, according to a new study from the libertarian Niskanen Center.
Immigration critics typically argue that businesses use H-1B visas to replace American workers with cheaper immigrants. This study, written by immigration policy analyst David Bier, challenges that argument. "The data show that over the last decade, as businesses have requested more H-1Bs, they also expanded jobs for Americans," Bier writes. "For every one percent increase in unemployment for workers with computer and tech expertise, who represent two-thirds of all H-1Bs, it takes an additional three months to reach the visa cap. In other words, companies use H-1Bs to grow, not to downsize."
Bier estimates that one immigrant worker in engineering or computer-related industries is related to an increase of almost two new jobs in those industries. He also shows that wages in major H-1B fields are rising even though there has been a 50 percent increase in the number of immigrant workers.
Bier says Congress should make more H-1B visas available, raise limits on the number of green cards and let H-1B workers stay in the green card line if they switch jobs. To limit abuse of H-1B workers, he says Congress should also let high-skilled immigrants switch employers if offered. "This would empower [immigrants] to protect themselves while also making them less attractive to an employer who would seek to use the H-1B to undercut the wages of an American worker," Bier writes.
The study only shows a correlation between high-skilled immigration and job creation. But this correlation is important. If businesses were using high-skilled immigrants to undercut the wages paid to native-born workers, as immigration critics claim, one would expect to see the number of H-1B visa requests rise when the economy is bad and companies are shedding jobs. Then, when the economy is growing and jobs are being created, one would expect companies to hire fewer immigrants.
Indeed, there are examples of some firms abusing the H-1B visa program, laying off employees, and replacing them with lower-paid immigrants. However, data since 2003 show these examples are exceptions, not the rule. As Bier shows, when the economy slowed during the Great Recession, unemployment in computer occupations rose and it took longer for companies to reach the cap on H-1B visas. When these industries were expanding, unemployment fell as requests for H-1B visas rose. The same holds true for engineering and architectural jobs, the second most common H-1B occupation. This relationship is measured going back to 2003 because the H-1B visa cap was cut by two-thirds to 65,000 visas that year.
Bier says this shows companies hire high-skilled immigrants to increase production, not to save money on labor costs. He goes on to show that more high-skilled immigrants working in engineering, architecture, computer, and mathematical jobs have not harmed wages in those fields. Instead, real median hourly wages have risen by almost 5 percent since 2003, whereas other occupations have seen wages fall by almost 2 percent. The wage increases in those fields may not have been caused by immigrants, but it shows that these immigrants have not damaged wages relative to other fields.
"The benefits of H-1B workers are indisputable," Bier concludes. "H-1Bs are associated with greater economic growth, innovation, employment and wages for Americans."