Why We Need More H-1B Workers

Wednesday Mar 11th 2009 by Mike Elgan
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Instead of harming American competitiveness by blocking companies from hiring the world's most skilled workers, let's instead open the floodgates and let American companies hire whomever they please -- and issue the visas that will make that possible.

Since the recession started in December 2007, 4.4 million Americans have lost their jobs. Such record job losses are prompting some to call for a crackdown on the H-1B visa program. The H-1B is a temporary visa for foreign workers with special and valuable skills that are theoretically unavailable among American workers.

This whole financial mess is the direct result of irresponsible people doing stupid things for personal gain. These knee-jerk calls for the reduction in skilled foreign labor is just more of the same.

Here's an idea. Let's instead make major policy decisions based on evidence, reason and the public interest! If we did that, we'd raise or even remove the cap on skilled labor, not lower it. And we'd crack down on unskilled foreign labor instead.

Here Come the Pandering Politicians

You may have heard about the Grassley-Sanders amendment to President Obama's stimulus bill. The amendment places restrictions on the hiring of H-1B workers from companies receiving Troubled Assets Relief Program (TARP) money (mostly banks).

The companies must, for example, demonstrate that they tried to hire Americans before they hire H-1B visa holders, and they cannot lay off Americans 90 days before or after hiring H-1B workers.

As a result, financial companies are rescinding offers already made to some of the top graduates from US universities who happen to be non-US citizens. The American taxpayer is investing billions in these companies, who will need to innovate their way out of this mess without help from some of the best and brightest.

Those US-educated graduates will now take their educations back to China and India and help those countries with their recoveries instead of ours.

Way to go, pandering politicians!

Another charge is that the H-1B visa program enables companies to hire foreign workers at lower wages, thereby lowering pay for American workers who do the same jobs.

But this can take place only through fraud. The H-1B program requires that foreign workers earn salaries comparable to the going rate for US workers. A recent report determined that fraud exists in some 20 percent of H-1B applications. That's applications, not workers.

Still, better enforcement may be called for. But that's not a legitimate argument against the whole program.

The fact is that the more foreign skilled labor we allow, the better off our economy is. A study released this month by the Technology Policy Institute (TPI) found that caps on skilled labor lowers the nation's GDP, reduces federal income and generally harms the economy unnecessarily.

Every country would love to have America's problem: Some of the world's most educated and skilled people want to come here and work for American companies, which gives those companies an advantage in the global marketplace and creates American jobs.

Or they want to come to the US to work for foreign companies that are servicing US companies, thus lowering costs and making US firms more competitive.

The ignorant assumption behind restrictions on skilled labor is by sending a skilled worker abroad, we're benefiting American workers. But that's not what happens. The skilled workers take their skills and use them to help the very companies that American companies are competing against.

The 65,000-work cap forces American companies to set up major offices in foreign countries in order to hire the people they can't bring into the country. Or foreign companies simply hire those same highly skilled immigrants abroad.

Both these alternatives simply transfer jobs, economic activity and tax revenue from the United States to the country where skilled workers are being hired.

As the TPI study clearly demonstrates, the right move during the financial crisis is to lift all restrictions on hiring unskilled labor. Such a move could bring in $100 billion in new tax revenues over the next ten years.

Next Page: Skilled Foreign Workers Create Jobs

Skilled Foreign Workers Create Jobs

The way to create jobs is not to advantage foreign companies with the world's most highly skilled workers, but to allow private enterprise to build competitive, growing companies.

In a global economy, the way to do that is to let them hire the best people they can, regardless of whether they are American citizens or not.

Skilled workers create American jobs. Meanwhile, unskilled workers take them away.

If Google hires a brilliant Indian engineer on the H-1B visa program who invents a new service like Gmail or Google Maps, that contribution enables Google to hire hundreds of additional employees in marketing, business development, and other areas, as well as construction workers for the new offices, landscapers and operations people.

Restaurants in Silicon Valley get more customers, and can hire more workers. The coffee supplier to Google increases the daily order by 100 gallons. The government collects millions of extra dollars in tax revenues to help pay the national debt.

OK, that's an extreme example. The reality is that each H-1B visa worker creates anywhere from zero to hundreds of jobs. Google employs about 20,000 people, but only received 207 H-1B visas last year.

Meanwhile, if Google hires an unskilled foreign worker (a.k.a. illegal immigrant) to take out the trash, the only effect that has on the economy is to keep one American janitorial worker unemployed.

So while populist outrage is prompting pandering politicians to directly damage our economy by rejecting the world's best and brightest, where's the outrage that some 15% of the jobs that will be created by the stimulus bill will probably be taken by illegal immigrants?

While the total maximum allowable number of skilled workers is capped by the H-1B visa program at 65,000 workers for all companies in the entire nation, two studies have concluded that illegal immigrants could take 300,000 jobs created by the stimulus bill, whose main purpose is to put Americans to work.

Instead of harming American competitiveness by blocking companies from hiring the world's most skilled workers, let's instead open the floodgates and let American companies hire whomever they please -- and issue the visas that will make that possible.

Companies will hire Americans only if they're successful. Let's not use the stimulus plan to build roadblocks to that success.

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