Denying visa extensions to H-1B holders has negative impact on US economy

Study by Partnership for a New American Economy.

By Deepak Chitnis

WASHINGTON, DC: A new study indicates that denying visa extensions for high-skilled workers who are at the cusp of having to either leave or stay in the US has an overall negative impact on the domestic economy.

The report, released last week by an immigration reform advocacy group known as the Partnership for a New American Economy (PNAE), claims that keeping foreign workers in the US is good for domestic workers, as well.

Entitled “Closing Economic Windows: How H-1B Visa Denials Cost U.S.-Born Tech Workers Jobs and Wages During the Great Recession,” the report combats the widely held belief that America’s legal immigration system currently favors foreign-born workers at the expense of its own citizens.

PNAE examined visa application data from various major cities across the US from 2007-2008, specifically picking that period because it was just before the global financial meltdown that led to the recession in late 2008.

“[The report] shows how existing H-1B visa lottery caps disproportionately hurt American-born tech workers by slowing job and wage growth in more than 200 metropolitan areas across the United States,” PNAE claims.

“H-1B visa denials in 2007 and 2008 caused these areas to miss out on creating as many as 231,224 tech jobs for American-born workers in the years that followed and cost U.S.-born, college-educated workers in computer-related fields as much as $3 billion in aggregate annual earnings,” says the report.

Their report essentially says that if the US had been more open to letting temporary high-skilled workers stay in the US longer, if not permanently, the country’s recovery from the recession could have been significantly expedited. Not only would it have led to more job creation, but it would have helped the industry itself grow much faster, adding three times as many jobs as what actually ended up being created.

“The number of jobs for U.S.-born workers in computer-related industries would have grown at least 55 percent faster between 2005-2006 and 2009-2010, if not for the applications eliminated in the recent H-1B visa lotteries, says the report. “Computer firms could have added as many as three times more jobs for U.S.-born workers than they actually did during that period without all the unsuccessful H-1B visa applications.”

One of the key complaints of those against hiking the H-1B cap is that it would lead to an increase in cheap labor, and would further decrease the already-low average wage for the IT industry. The report says that this is, in fact, untrue, and that “the [extension] denials resulting from [the recession] greatly slowed wage growth” for the tech-related industries.

Lastly, the report indicates that US-born workers without bachelor’s degrees were significantly impacted by the lack of visa extensions, because “less-educated tech workers often play valuable roles supporting the work of high-skilled engineers, programmers, and others.”

“By 2009-2010, U.S. metropolitan areas lacked as many as 188,582 computer-related jobs for U.S.-born workers without a college degree as a direct result of the large number of applications that were eliminated in the 2007 and 2008 H-1B visa lotteries. The number of positions missing from the economy for U.S.-born, college-educated tech workers, in contrast, was between 24,280 and 42,642,” says the report.

PNAE is comprised of more than 500 Republican, Democratic, and Independent politicians and business leaders, who are “united in making the economic case for streamlining, modernizing, and rationalizing our immigration system.” Its key members include former Microsoft CEO Steve Ballmer, former New York City Mayor Michael Bloomberg, Newscorp CEO and Chairman Rupert Murdoch, San Antonio Mayor Julian Castro, and Disney President Bob Iger.