Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
The U.S. government began accepting applications for H-1B high-skilled work visas this week. As the requests pour in, U.S. business leaders are already telling Congress that the program is woefully inadequate to meet their demand for skilled workers. Cristobal Conde, immigrant entrepreneur and former CEO of Sungard Data, is one of those leaders. “If I were to try to come to America today, the likelihood is I would be turned away,” he said this week. “I hope Congress will come to its senses and roll out the red carpet.”
Congress has created a system that is unresponsive to market demand for these workers. H-1B visas and employer-sponsored green cards are the primary means by which U.S. companies compete for foreign skilled labor. Like the rest of the economy, this process is too regulated and restricted.
To start with, these programs require high-skilled laborers to be sponsored by an employer before they can come into the country to work. Worse, H-1B visas expire after just three years and are only renewable once. This comes as a huge tax to potential employers who must then begin the job search all over again. Speaking of taxes, the Obama administration raised the H-1B fee by more than 600 percent, from $320 to $2,000, only adding to the costly program.
Worst of all is the arbitrary cap. Only 85,000 H-1B visas are awarded each year to private companies. Before the recession and the fee hike, in most years all the available visas would be gone in a matter of days. The additional fees, regulations and lousy economy slowed down that process; last year, employers tapped out the program after several months. This year, the cap will prove even more inadequate, as the economy recovers. Such bureaucratic restrictions stifle growth. In particular, the technology sector, which depends on foreign-talent for expansion and has a very low unemployment rate, will see its growth constrained by the arbitrary limit.
Foreign highly skilled workers do not “take” American jobs. The economy doesn’t have a set number of jobs. Rather, jobs are created and destroyed based on production possibilities and economic innovation. Firms hire H-1B workers as they expand, so the cap on H-1Bs severely limits companies’ ability to expand and hire more workers. As American companies begin to recover from the recent economic downturn, the government should make expansion and innovation easier, not harder.
Limits on H-1Bs mean long term limits on job creation. Like Cristobal Conde, immigrants are disproportionately entrepreneurial, which means they are job creators, not takers. More than 40 percent of America’s Fortune 500 companies were founded by immigrants or their children, according to the Partnership for a New American Economy. In Silicon Valley, about one-third of all companies were founded or co-founded by Indian or Chinese nationals who were once able to work legally in the U.S. under H-1B visas or green cards.
Foreign skilled workers also do not lower wages. Highly skilled foreign workers generally complement, rather than compete with, American workers. What H-1B restrictions actually do is force American firms to expand abroad in order to hire the workers they need. For example, Microsoft recently opened a campus in Canada because the U.S. government would not allow it to hire enough highly skilled foreigners.
Firms would rather innovate in the U.S. because of our laws, capitalist institutions, and large investments in research and development. But if firms cannot import the talent they demand, they will go elsewhere to get their work done. Research and expansion suffer as a whole and all of us are made worse off.
It’s time Congress took Conde’s advice and “rolled out the red carpet.” H-1B quota and time limits should be removed, and the fee should be cut to cover administrative costs only. The requirement of company sponsorship should be either loosened or replaced with employee self-sponsorship. Unlike many other programs on Congress’s agenda, rolling out the proverbial red carpet will cost the government nothing -- and will create the jobs and innovations that will make tomorrow’s economy prosper.