Lack of Immigration Reform Hurts Economic Competitiveness

Current limits for high-skills jobs put U.S. at a disadvantage

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With Washington often appearing hopelessly gridlocked, there’s one issue critical to the nation’s economic health that both parties seem to agree on: the need to fix the nation’s broken immigration system. In particular, the US needs to take advantage of the global high-skilled labor supply to meet demand as our global competitors step up their game to attract the best and brightest talent.

There’s agreement among government officials and industry leaders that America should be the world’s number one destination for highly-skilled workers. The H-1B visa program was created to connect those individuals with U.S. employers who can’t find domestic workers with the right skill sets. Without the H-1B program, many companies would be unable to find workers with the science, technology, engineering and mathematics skills (STEM) they need to innovate and grow.

The federal government only makes 65,000 of these highly coveted visas available each year. Applications become available on April 1st, and like a hot concert ticket are gone within days. According to the US Citizenship and Immigration Services, they received 124,000 H-1B petitions during the last filing period, including those filed for a special advanced degree exemption. Clearly, demand for these workers is staggering and continues to grow every year. The U.S. Senate and House both rightly recognize that the current arbitrary visa cap must be raised.
But there are critical differences between the House and Senate when it comes to highly-skilled worker visas that are not well-known.

Last summer, the House Judiciary Committee passed the “Skills Visa Act,” which would increase the number of H-1B visas and make the visa selection process fairer. Most importantly, the bill drops the discriminatory “outplacement” language present in the Senate bill that would bar IT services firms from sending specialists to work on-site at client facilities if more than 15% of the IT firm’s U.S. workforce consists of visa workers.

This is an arbitrary, protectionist (most of the IT services firms meeting the criteria are based in India) labor-backed amendment that has nothing to do with safeguarding American jobs. The temporary visa allocations will simply shift to other, larger corporations that manage to skate under the 15% cap due to their legacy U.S. labor force. In fact, so-called “H-1B dependent” firms targeted by the Senate bill would be forced to pay higher wages to their existing visa workers than they would have to pay to U.S.-born workers. Do the unions truly believe that it makes sense for the government to require businesses to pay foreign workers more than Americans?

What’s more, these “H-1B dependent” companies would be hit with new restrictions on the number of visa workers and filing fees that are in some cases nearly quintuple what other companies would pay. If these onerous provisions were to become law, U.S. jobs would most likely be outsourced or eliminated all together. And this is to say nothing of the impact on U.S. businesses that have established long-standing relationships with their IT services providers, particularly in the financial sector, if they are forced to disrupt these relationships by government fiat.

In general, those who claim increasing the number of skilled foreign workers costs American jobs are simply wrong on the facts. Economist Giovanni Peri of the University of California, Davis wrote in a report published by the Federal Reserve Bank of San Francisco: “Data show that, on net, immigrants expand the U.S. economy’s productive capacity, stimulate investment, and promote specialization that in the long run boosts productivity…there is no evidence that these effects take place at the expense of jobs for workers born in the United States.”

In a study published last year, Peri and his fellow researchers found that foreign scientists and engineers with H-1B visas contributed to 10%-20% of the annual productivity growth in the US from 1990 to 2010.This immigrant-driven growth boosted GDP per capita by 4%, and increased the size of the economy by $615 billion in 2010. Peri and his colleagues also reported that H-1B holders had no negative impact on U.S.- born workers with similar skills and actually increased the compensation and overall employment of American-born scientists and engineers. Clearly, allowing more talented and entrepreneurial individuals into the country will lead to more jobs for all Americans, greater productivity growth and increased economic benefits.


Article printed from InvestorPlace Media, http://investorplace.com/2014/02/lack-immigration-reform-hurts-economic-competitiveness/.

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