Why Trump's plan to put restrictions on H-1B visa may not help US workers

Research suggests that, if anything, being in a field with more H-1B visa-holders makes it more likely that US-born young college graduates work in a job closely related to their college major

The H-1B visa-holders, a majority of them Indian IT professionals, do not adversely affect Americans, according to new research, which also suggests that the presence of foreign workforce having such visas boost employment among other workers in an occupation.

The H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise. Companies depend on it to hire tens of thousands of employees each year from countries like India and China.

On April 1, the US Citizenship and Immigration Services (USCIS) said that the US received nearly 275,000 unique registration requests for the Congressional mandated 85,000 H-1B visas for foreign technology professionals, of which more than 67 per cent are from India.

The National Foundation for American Policy said that the findings of its new research should give pause to policymakers considering imposing additional restrictions on the H-1B programme.

The Trump administration has been planning new restrictions on the H-1B visas premised on the argument that foreign-born scientists and engineers harm the job prospects of US college graduates.

There is little reason to think doing so will help American workers, the think-tank said in its latest research.

The H-1B visa holders do not adversely affect US workers, according to new research. On the contrary, the evidence points to the presence of H-1B visa holders being associated with lower unemployment rates and faster earnings growth among college graduates, including recent college graduates, the report said.

Further, the results suggest that, if anything, being in a field with more H-1B visa-holders makes it more likely that US-born young college graduates work in a job closely related to their college major, it said.

The study uses data from 2005 to 2018 to examine how the number of approved petitions to hire the H-1B visa-holders as a share of college graduates within each of 22 occupations affects the unemployment rate and earnings growth rate in those occupations.

An increase in the share of workers with an H-1B visa within an occupation, on average, reduces the unemployment rate in that occupation, the report said.

The results indicate that a 1 percentage point increase in the share of workers with an H-1B visa in an occupation reduces the unemployment rate by about 0.2 percentage points.

The findings suggest the presence of H-1B visa holders boosts employment among other workers in an occupation. The results provide no evidence that the H-1B programme has an adverse impact on labour market opportunities for US workers, it added.

The report also said that a larger share of the H-1B visa-holders, therefore, may push up wages and wage growth for US workers. While critics often allege that H-1B visas reduce wages or suppress wage growth, this finding of the opposite is consistent with research showing that the H-1B visa-holders earn at least as much as similar US workers, if not more.

The results further indicate that the H-1B visa-holders do not adversely affect US-born college graduates during the early years of their careers. Having more approved total or initial H-1B petitions, on average, reduces the unemployment rate within a major-occupation for recent graduates.

It provides no evidence that recent college graduates have worse labour market outcomes if there are more H-1B visa-holders in jobs closely related to their college major, the report said.

Noting that the results of the research indicate that the H-1B visa holders do not adversely affect US workers, the report said that the H-1B programme is small relative to the size of the college-graduate workforce, likely accounting for at most two per cent of highly educated US workers.

The H-1B visa-holders are concentrated in computer-related occupations but account for only a small share of workers in information technology (IT) jobs. Despite the H-1B programme's small scale, the visa category is important to the US economy and to employers that use it to fill gaps in their workforce.

The presence of the H-1B visa-holders increases innovation, productivity and profits at H-1B employers and boosts total productivity and innovation in the United States.

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