The Much-Maligned H-1B Program: Why America Still Needs High-Skilled Immigrants

Vowing to protect the jobs of American high-tech workers, President Trump signed an executive order this week requiring the government to take a critical look at the H-1B visa program to ensure it will “never be used to replace Americans.” If the president wants to create opportunity for American workers, he should seek to reform and expand the program.

Established in 1990, the H-1B visa program allows U.S. industry to hire college-educated immigrants to fill specialized jobs, typically in information technology (IT). Thousands of U.S. companies hire H-1B workers each year because they simply cannot find enough U.S.-born workers with technical training in the so-called STEM fields of science, technology, engineering and math.

The number of American students graduating each year with degrees in those subjects falls short of the growing demand of U.S. industry. In America today, there is plenty of work to go around in the IT sector.

For U.S. workers trained in the STEM fields, wages are competitive, typically $100,000 or more, and the unemployment rate is low. Employers already have an incentive to hire American workers first since there are significant fees — $10,000 or more — to hire an H-1B worker.

Competition among employers, in combination with the law, ensures that foreign workers are not systematically underpaid. In fact, studies show that salaries paid for immigrant IT workers match those paid to natives for similar work. 

The ability of American companies to tap the pool of foreign-born IT workers creates opportunities for Americans through increased investment and innovation.

In a recent study on the economics of immigration, the National Academy of Sciences (NAS) concluded: “Immigrants are more innovative than natives; more specifically, high-skilled immigrants raise patenting per capita, which is likely to boost productivity and per capita economic growth.”

Highly skilled immigrants are also more likely than natives to found companies, creating additional employment for Americans. A 2016 study by the National Foundation for American Policy found that: “Immigrants have started more than half (44 of 87) of America’s startup companies valued at $1 billion or more and are key members of management or product development teams in over 70 percent (62 of 87) of these companies.”

If allowed to stay, high-skilled immigrants are a boon to taxpayers. The NAS study determined that an immigrant with a bachelor’s degree who arrives in the United States at age 25 will, over his or her lifetime, pay $514,000 more in taxes than they collect in government benefits, including retirement. The NAS study found that their descendants are also net contributors to funding government at all levels.

If the U.S. government makes it more difficult for U.S. companies to hire high-skilled immigrants, those companies will have a greater incentive to move their productive activities offshore where they can more easily hire the workers they need.

Other developed nations, such as Canada, Australia and Singapore, are opening their doors to global talent. If the United States becomes less friendly to foreign-born tech workers, they will simply go elsewhere to start new companies and design new products.

The H-1B program could be tweaked to make it even better. The current cap of 85,000 visas a year is fixed well below the need of U.S. industry, with demand for the visas far exceeding supply every year.

Concerns about abuses focus on a few Indian-owned IT service companies, but they account for a small minority of the visas issued each year, and the outsourcing services they provide help make U.S.-based companies more competitive.

Like any program, the H-1B visa should be open to reform and improvement, but it continues to fill a vital role in ensuring that U.S. companies can hire the human capital they need to remain globally competitive.