H-1B visa immigration program erodes wages, curbs hiring: study

The H-1B visa immigration program has undermined wages and eroded job growth — yet bolstered corporate profits — according to a new report by a closely watched research group of economists.

The study by the widely respected National Bureau of Economic Research looked at the impact of foreigners who entered the “high-skill workforce” during the 1990s.

The main takeaways from the study: Immigration has caused wages to be lower and hiring to be reduced for U.S. tech workers than would otherwise have been the case.

Without immigration, wages would have been as much as 5 percent higher for tech workers, and up to 11 percent more tech jobs would have been created, according to the study, which was conducted by two academics from the University of Michigan economics department and an academic from UC San Diego.

One possible caveat regarding the study, however, is that it analyzed a period from 1994 through 2001. That time frame also coincided with the dot-com era boom, a time when demand for technology workers surged.

“In the absence of immigration, wages for U.S. computer scientists would have been 2.6 percent to 5.1 percent higher and employment in computer science for U.S. workers would have been 6.1 percent to 10.8 percent higher in 2001,” wrote University of Michigan professors John Bound and Nicolas Morales and UC San Diego professor Gaurav Khanna.

Yet while tech workers in the United States felt those effects, consumers and technology titans harvested a bumper crop of rewards, the researchers stated in their study, which was completed in February 2017.

“Immigration lowered prices and raised the output of I.T. goods by between 1.9 percent and 2.5 percent, thus benefiting consumers,” the NBER study determined. “Finally, firms in the I.T. sector also earned substantially higher profits due to immigration.”

The researchers also noted that the rising profits tends to put tech executives and digital leaders in the camp that urges more skilled immigration

“High-skill immigrant labor raises I.T. sector profits,” the professors wrote. “It is then no surprise that Bill Gates and other I.T. executives lobby in favor of increasing quotas for high-skill immigrants.”

 

Photo: Visa applications. (Courtesy U.S. Citizenship and Immigration Service)

 

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  • noh1bvisas

    Not to mention the number of American lives destroyed when they lost their job, home and means to support their families when they were replaced by cheap, foreign labor.

  • pgm554

    End H!B.

  • maraba4

    This is not the first study; the EPI study is one of the best. But for long, the rich tech CEOS have happily ignored all calls because the public was unaware (fake “STEM crisis” myth) and the ecnomy was fairly good. Nobody believes the fake news from rich tech CEOs anymore: H1Bs create more jobs, it brings the best and brightest – blah blah. The system has been abused and needs retouch regardless of what Silcon valley and their friends in media tell

    • Soobey Doo

      Started with Bill Gates (Microsoft), Scott McNealy (Sun), Larry Ellison (Oracle), Mark Zuckerburg (Facebook) and the likes. Line the CEO and investor pockets at the detriment of the US worker and taxpayers.

  • Aaid

    The overall message of this article is correct. Of course a non-stop supply of cheap, captive labor from India has lowered wages for American tech workers.

    But it understates the extent to which wages have been compressed. I am an American programmer so I know of what I speak. My salary at my current company as an full-time employee is the same now as my 2001 salary as an FTE at my previous employer. No raise since 2001 and my skills are up to date. And I am one of the lucky ones. Many Americans have simply lost their livelihood to H-1b. It’s great that there is finally some awareness about this problem.

    American programmers are the sort who have played by the rules all their lives. They foolishly expected America to play by the same rules. They generally don’t take to the streets and protest. That meekness has played perfectly into the whole H-1b scam.

    The only parties who win with H-1b are billionaire CEOS, the Indian body shops who specialize in replacing entire IT departments with H-1bs, India’s economy, the Indians themselves who say they are IT professionals, and last but certainly not least, American politicians who allow this to happen for reasons of their own.

    The losers are American workers and the American economy. It would be best to simply cancel the H-1b visa and make it retroactive to cancel the current status of current H-1b visa holders.

  • Independent

    I too am a programmer. If the H1-B had indexed salaries instead of leaving the floor at $60K programmers the minimum salary would be around $100K. I have worked with dozens of Indian programmers with around 10 years experience making $70K. Unfortunately, most senior management doesn’t realize the quality of the Indian labor force is inferior to Americans as well. And I have several Indian friends that have admitted as much. Trump said he was going to not have an H1-B Visa auction in late January and he even released the EO, but Apple, Google and Microsoft threatened to move offices to Vancouver, so the EO hasn’t been executed. Trump did put a temporary end to fast tracking H1-B candidates, which may help. Just raise the minimum to $120K. That will accomplish the same thing as the EO

  • Soobey Doo

    There is no reason to have the H1B Visa Program. I saw so many American engineers lose their jobs to cheaper foreign engineering labor. And the companies made them train the people taking their jobs or they would lose their severance. This started in 2001 and has continued to this day. It’s not just H1B visas – there’s the L1 Intra-Company Transfer Visa, K and V Fiancee Visas. Several of these visa holders come over – and their spouses can get jobs and have their kids receive US funded education. So not only does the US worker lose their job, their family suffers, the community foots the bill to support the visa holder’s family benefits. I have a friend that works for a UC CA campus and her job is to help foreign US visa holder’s spouses find work here. Taking another US job. Our tax dollars at work!

  • Regular Joe

    There is one thing that I have not heard much discussion about. I have been witnessing the H1B program decimate people’s jobs for 20 years. In addition to the well documented issues, here is another concern.
    – Many of the folks that come here on an H1B live incredibly frugally. Like 4 people in a two bedroom apartment, never eating out just a couple of outfits. They live like this so that they can save up money. So, every single spare penny that they have gets sent overseas. That is a lot of money leaving our country. I’d be curious to know the capital outflow that takes place with H1B’s.

    I don’t blame the people that come here on an H1B visa. In their shoes, I’d do the same thing as would anyone else on here. I blame the system that allows this to happen. I have seen too many people get laid off and replaced by an H1B.

  • Burt Way

    The 250 IT workers replaced by H1Bs at Disney WERE educated and WERE competent. They had to educate their H1B replacements who on arrival were incompetent do do the job. The Americans (of all races,etc) had completed their STEM education, worked hard, did not fall in the trap of drug use, and raised their families. As a reward they were replaced. It was the H1Bs who were uneducated and incompetent. I will bet some of those 250 fired were Asians of Indian descent who were US citizens doing good, honest work. Very lik ely some corporate executives are getting kickbacks from the consultancies providing H1Bs to replace workers who are already doing the job. It is not real competition when corporate executives accept some workers with substandard backgrounds or unaccredited academics for this reason. I saw this happen in my own major corporation when unqualified contractors were hired. The complicit executive was caught and fired, but too late for the project he brought down.

 
 
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