Last Monday, U.S. Citizenship and Immigration Services began accepting applications for next year’s H1-B visas. However, this stopped by the end of the day, because they had received almost twice as many applications as there were openings. Experienced professionals around the world covet H1-B visas, which are tailored to temporarily allow foreigners sponsored by a company or university to work in the United States.
But with only 85,000 visas granted this year, the program is hardly generous to foreign workers and the American companies that need them. Many business leaders, such as Bill Gates (who recently spoke out against the visa cap), claim that the cap makes it difficult to find the foreign workers they need. Many companies resort to outsourcing to meet their labor demands.
History has shown the importance of well-educated immigrants. The massive influx of intellectuals and scientists escaping the clutches of Nazism during World War II was a crucial component of the postwar era’s rapid technological progress. Turning away experienced professionals is a surefire way to let other countries outpace us technologically.
Despite the importance of skilled immigrants to technical progress, many Americans are afraid they may find themselves with a lower income or even unemployed as a result of guest workers or immigrants. Yet new evidence has emerged showing that Americans no longer have to fear immigrants, whether they have advanced degrees or no degrees.
Last year, as the U.S. Congress struggled to find a solution to the “crisis” of immigration, and millions slipped across the Mexican border illegally, the median hourly wage grew by 4 percent, faster than the overall economy.
The national unemployment rate now stands at 4.4 percent, on par with the boom years of the late 1990’s and well below what most economists consider optimal unemployment. This is no coincidence.
Economist Giovanni Peri of the Public Policy Institute of California recently released a study challenging conventional wisdom on immigration. Peri analyzed U.S. census data from 1960 to 2004 in California, home to 30 percent of foreign-born Americans, and found no evidence that immigration threatened job opportunities for natives. In fact, between 1990 and 2004, immigration caused a 4 percent real median wage increase for California natives.
Immigrants act as complements, not substitutes, for American labor. Most immigrants have either an advanced degree or no high school diploma at all, two labor sectors where it is relatively difficult to find a native-born American. Only one-third of American workers without a high school education and 28 percent of those with doctoral degrees were actually born in the U.S. This contribution to the American workforce causes dynamic growth in American wages.
As millions of unskilled immigrants flow into the country, they do displace some American workers, but not into unemployment. An experienced American is more productive supervising or training a group of immigrant construction workers, for example, than doing the labor himself, and he is rewarded for the increased productivity with a higher wage.
Labor in America is scarce, so shifting native workers into more productive activities should be a welcome change. We must also remember that there is not a fixed supply of jobs in this country. The introduction of new labor willing to work at a low price (while Americans demand high wages to work in high-skilled jobs) increases opportunities for business expansion and leads to net job creation.
Most importantly, immigration keeps the American population young. The average age of immigrants is far lower than that of American natives, which will be extremely important as the baby-boomer generation begins to retire en masse. Although retirees receive incomes from pensions and savings, they are not productive, which means workers have to produce more than they consume to support the elderly.
Without an abundance of young workers, the economy simply will not be able to support an aging generation. The only hope to keep programs such as Social Security solvent is to introduce more young workers who pay wage taxes. Thus, in addition to fueling economic growth, immigrants are also crucial in solving a pressing social dilemma.
So if millions of low-skilled, undocumented immigrants have not caused a depression in American wages, how could a few thousand more workers with doctoral degrees?Of course, as they grasp at straws, proponents of the low H-1B visa cap cite homeland security in its defense, yet their logic is puzzling. Saying a cap on H1-B visas improves security is like claiming a half-filled plane of unscreened passengers is safer than a full one. If the U.S. government is concerned that these immigrants may pose a terrorist threat, it should conduct more extensive background checks or even monitor any suspicious activities once they are inside the country than place an arbitrary limit on their entry.
The limit on H1-B visas, like most immigration restrictions, hardly provides any security, physically or economically. It only serves to hamper our country’s strength and deprive others of a chance at the American dream.
The Daily TexanThe University of Texas