Loss of high-skilled immigrants hurts job growth and wages for U.S. workers

Deepthi Valli is weighing choices she’d rather not have to make: Return to India or enroll in graduate school. It doesn’t appear she can keep working at Cerner Corp.

Valli, 26, is one of thousands of highly skilled foreign-born employees whose U.S. employers can’t get the work visas needed to keep them employed. Federal limits on the work permits, called H-1B visas, are too low to meet employers’ requests.

Valli, who has been working at Cerner under a training visa, wants to stay in Kansas City. Her husband is pursuing a Ph.D. at the University of Missouri-Kansas City. But to stay employed, she needs an H-1B.

That’s not just Valli’s problem. And it’s not just Cerner’s problem. According to a report released Wednesday, her inability to keep working in the U.S. sends a negative ripple throughout the job market, depressing job growth and wages for American-born workers.

The report from the Partnership for a New American Economy catches a political hot potato. Efforts to increase the number of H-1B visas have been considered in Congress but opposed by trade unions, professional organizations and members of both major political parties. They argue that immigrant labor, especially in the high-skill science and technology jobs, works at lower pay and takes work away from American-born workers.

Not so, says the Partnership report. It says that federal law limiting H-1B visas to 65,000 a year hurts job creation for Americans whose jobs would be tied to H-1B positions. Also, employers who sponsor H-1B visas must submit documentation that they pay prevailing wages.

Researchers analyzed extensive job and economic data from 2007-2008 to conclude: “Denying H-1B visas didn’t help the economies of America’s cities or their U.S.-born workers.… Instead, it cost their tech sectors hundreds of thousands of jobs and billions in missed wages.”

The report said H-1B visa denials in 2007 and 2008 meant that as many as 230,000 spinoff tech jobs for American-born workers weren’t created in U.S. metro areas. That cost U.S.-born, college-educated workers in computer-related fields as much as $3 billion in aggregate annual earnings, it said.

The report said Kansas City, among more than 200 metropolitan areas studied, ranked in the top 25 for potential jobs lost because area employers didn’t hire high-tech immigrants whose employment would have been catalysts for other jobs.

The economic damage for the area included an average of 658 H-1B visas denied per year in 2007 and 2008. That meant an estimated 1,932 jobs for American-born workers — jobs that would have been tied to the H-1B positions — weren’t created.

H-1B work permits are granted for three years with a renewal option to six years and a possible pathway to “green card” permanent residency status. Employers request them to sponsor immigrants’ employment. Foreign-born workers cannot apply for themselves.

Because there are more applications than available visas, U.S. employers must go through a lottery to get them. This year, as in past years, applications swamped the system within hours of the April 1 filing date for applications.

The Partnership, an organization founded by businessman and former New York mayor Michael Bloomberg, focused on work visas connected to science, technology, engineering and math jobs.

Researchers at the National Bureau of Economic Research, the University of California-DavisColgate University and the Partnership for a New American Economy collaborated on the report. Their analysis used data from the U.S. Citizenship and Immigration Services, the U.S. Department of Labor and the American Community Survey.

“Anybody who knows about the information technology industry knows that this is a problem,” said Mira Mdivani, a corporate immigration attorney in the Kansas City area. “It makes no business or economic sense for folks who care about America to send good-paying jobs or hard-working talent overseas.”

Mdivani said foreign-born people, educated in American universities and internships, are having to return to their home countries, so “we are training the talent to be our competition.”

If Valli, for example, has to move back to India, she could use what she’s learned at Cerner for a different employer. At this point, though, because her husband is here, she’s probably going to decide to enroll in graduate school on a student visa — and gain even more skills.

Kauffman Foundation-funded National Foundation for American Policyreport last year reached similar conclusions to the Partnership report — that Congress should expand the H-1B limit to keep American companies competitive.

That report countered the so-called Gang of 8 Senate immigration bill that would have discouraged, and in some cases prohibited, use of H-1B visas. The Kauffman-tied report concluded that restrictions on H-1B visas “are mistaken, overstated or based on incorrect information.”

Frank Lenk, economist at the Mid-America Regional Council in Kansas City, said the metro area suffers a shortage of information technology workers.

“We have had four IT job openings for every unemployed IT worker,” Lenk said. “The shortage might not be as severe if the cap were relaxed.”

He said some industry analysts put the “job multiplier” at five — for every new high-tech job, five others are created, and some launch entire new industries.


About NAE

New American Economy is a bipartisan research and advocacy organization fighting for smart federal, state, and local immigration policies that help grow our economy and create jobs for all Americans. More…