Last Saturday a preliminary draft order titled “Protecting American Jobs and Workers by Strengthening the Integrity of Foreign Worker Visa Programs” surfaced that targets H-1B “genius” visas. The order signals a second wave of the new administration’s immigration agenda—with potentially catastrophic effects to our economy. I’ve written and spoken extensively on the H-1B topic recently and, based on hundreds of responses, it’s become clear that there is an overabundance of emotion and a drought of hard facts circulating on this critical issue.
Many Americans believe that H-1B visas are being used as a cost-cutting measure to hire cheap foreign labor; in reality, most H-1B workers hold elite jobs and earn on average 20% more than their US citizen counterparts for similar roles. Many Americans believe that H-1B visas fuel the outsourcing of jobs; in reality, these visas bring the foreign talent into the US—many of whom go on to found startups and a shocking number of Fortune 500 businesses. And most critically, many Americans believe that there exists a ready supply of high-skilled workers in the US that could easily jump into elite tech jobs with accelerated on-the-job training. The reality is that for every one unemployed tech worker in the US, there are five open tech jobs. America has hundreds of thousands of technologically brilliant citizens, but the facts show that we don’t have nearly enough to meet demand.
Without expanding the H-1B visa program or some other positive reform to recruit foreign talent, the US risks technological stagnation. And with the draft executive order currently on the table, we risk much more than that. The most innovative edge of our US tech sector is built on the combination of brilliant homegrown talent and the infusion of equally brilliant global talent. Take either away, as is threatened by this draft order, and you have a recipe for disaster. The research that follows will show that the facts outweigh our emotions on this subject on every point of contention.
H-1B Visa Jobs Do Not Save Money for US Employers
The most popular bromide I’ve heard resurface this week is that a primary use for H-1B visas is to help corporations cut costs. I have seen stories in the news of a few bad players trying to game the system, but in my 30 years in technology leadership, I’ve never personally seen an H-1B visa used to save money. When we look past a minority of dishonest players (who have been caught, by the way) and look at the whole system, the raw numbers show that H-1B workers earn 20% more on average than native citizens in the same roles. H-1B visas are not a cost-cutting tool. The below summary from the Brookings Institution tells the full story.
Source: Brookings Institution – H-1B Visas and the STEM Shortage: A Research Brief
H-1B Visas Do Not Contribute to Outsourcing
It may be that many people simply conflate the concepts of outsourcing and high-skilled visa workers, but it’s important that everyone understand the distinction. There are currently more than half a million high-skilled IT and computer science jobs sitting unfilled in the US today. It seems unfathomable to many, but these are jobs that are so technical that there aren’t enough trained workers in the US to fill them all. The H-1B program was created to help bring highly trained foreign workers to the US to fill those roles. It’s important to know that if a worker is not coming to reside in the US, an H-1B visa would not be needed. It’s not a tool for outsourcing.
Source: US Bureau of Labor Statistics (BLS) and labor analytics firm Burning Glass Technologies (a non-partisan research firm)
Outsourcing, on the other hand, happens when a company creates a job to be filled outside of the US or ships an existing job overseas. Outsourcing for cost savings is not the issue being addressed by this week’s draft executive order. The issue in front of us is H-1Bs for importing elite technical workers, and they have the exact opposite effect of outsourcing—bringing skilled workers to the US who then pay the same Federal, State, Social Security and Medicare taxes as their US counterparts.
Last year the US only issued 85,000 H-1B visas out of 236,000 requests. 20,000 of those went to foreign recipients of master’s degrees from US universities and the remaining 65,000 were decided by a highly unpredictable lottery. The simple math suggests that more high-skilled visa holders in the US mean an overall reduced need for hiring talent offshore. That means that if you’re against outsourcing, you should be for H-1B visas.
H-1B Visas Do Not Take Away Jobs or Lower Salaries for Americans
First, let me start by clarifying that I know that there are anecdotal cases of bad players. Just like news of plane crashes or bear attacks, you’ve seen these stories because they are sensational and clearly done in bad faith to American tech workers. But just like plane crashes and bear attacks, data shows that they are exceedingly rare and are the exception, not the rule. The statistics tell a much more complete story.
In 2014, the Brookings Institution published a detailed study which found that, contrary to the popular myth, high-tech jobs requiring STEM degrees all had consistently rising salaries for the period they studied. If imported talent were driving down salaries, the data would be trending the other way. It’s not.
Even more importantly though, the study found that there were five job openings for every one unemployed computer worker. That means that if every unemployed tech worker was qualified to fill one open role, 4/5th of the open tech jobs would sit unfilled without the help of the H-1B visa program. It’s one thing to be protective of the American worker (I think we all should be) but it’s altogether another to leave 4/5th of all open tech jobs unfilled simply to ward off high-skilled international talent.
Source: Brookings Institution – Job Vacancies and STEM Skills
This week I’ve heard some argue that if we gut the visa system, we can simply retrain US workers to fill the open roles. Unfortunately, that is incredibly unrealistic. The skills needed for elite science and tech roles take dozens of years in study and training. America is a country full of brilliant people, but on the job training or typical job retraining programs couldn’t scratch the surface of the technical skills an individual would need to develop. Even the most advanced American worker can’t develop master’s degree level expertise in such a short time. Ideal candidates for these roles start their focus on math and science in their early education and dedicate years of study to reach elite status. It’s disappointing to face the grimness of our circumstances, but these are just not the kind of careers where on-the-job training will fix the talent gap.
High-skilled Immigrants Are Critical for the Health of the US Economy
The Partnership for a New American Economy concluded in a 43-page report that more than 40 percent of Fortune 500 companies were founded by immigrants or their children, and these companies created $4.8 trillion in annual revenue and employed 18.9 million people globally. That data is backed up by a 2016 study from the National Foundation for American Policy, a non-partisan think tank based in Arlington, Va., that found recent immigrants started more than half of today’s wave of US-based startups valued at $1 billion or more.
Once one understands that the H-1B visa program as a whole doesn’t take away jobs from Americans, doesn’t encourage outsourcing, fuels American innovation and leads to new immigrant citizens who push our economy forward, it’s easy to spot the serious dangers in restricting H-1B visas as outlined in the draft executive order that surfaced this week. STEM advocate and Physicist Michio Kaku described the danger succinctly in a heated debate arguing, “if you remove the H-1B visa, you collapse the economy. There are no Americans to take these jobs. These visas aren’t taking away jobs, they are creating industries.” Dr. Kaku’s fears strike the core fallacy in this draft policy—it’s designed to protect American workers that, on close inspection, don’t actually exist in our economy today.
The Path Forward
The immigration reforms I’d like to see would focus on helping the US attract the best and brightest minds from anywhere on the planet—and then find successful ways to help them stay and thrive in the US for generations. I’d couple that with educational reform in STEM from K-12 so future generations of Americans can engage more successfully in the technology job market at elite levels.
I want to see more Americans compete for the most elite technical jobs, and the first step begins with significantly better STEM education from K-12. Our kids entering high school currently rank 35th in the world in math and they don’t fare much better in science. That doesn’t mean that we don’t have any brilliant US tech workers—we have tons. But our shoddy STEM education means we have way too few young people pursuing STEM careers and many who do find themselves struggling to compete at the most elite levels. It’s not fun to have to admit it, but with so much technical illiteracy in the US, the H-1B visa program has become America’s secret weapon warding off economic catastrophe.
Though STEM education is the clear long-term solution, the US is not going to see a vastly greater pipeline of domestic technical talent coming from our universities anytime soon. It will take us years, if not decades, to educate a new wave of students from elementary thru their advanced degrees. Until that next generation enters the elite technical workforce in mass, the most technical jobs (all 545,000 of them) will simply sit open if H-1B visas shrink or disappear. The cost to the US will be paid in lost technological progress, lost relevance in the global marketplace and an overall weaker America. I believe we can turn the tide of STEM education, but it’s going to take years and we need to be thoughtful about what happens in the meantime. Let’s join forces, set aside our emotions to face the clear facts, and find a better path forward together.