Technology and life sciences are cornerstones of the Triangle economy but as much as they have supported local job growth these sectors lost out on adding more than 2,500 jobs due to the denial of visas to foreign-born workers.
That finding comes from a report by the Partnership for a New American Economy, a bipartisan group supporting immigration reform. The calculation of jobs lost includes not only foreign workers who were not hired but also native-born workers who companies could not hire because the visa caps kept their businesses from expanding.
The report, “Closing Economic Windows: How H-1B Visa Denials Cost U.S.-Born Tech Workers Jobs and Wages During the Great Recession,” was released earlier this month. Its analysis of the 2007 and 2008 H-1B visa lotteries concludes that visa denials led to less job creation and wage growth in 2009 and 2010. Raleigh-Durham was one of the top 15 U.S. markets affected.
“Denying H-1B visas didn’t help the economies of America’s cities or their U.S.-born workers,” the report says. “Instead, it cost their tech sectors hundreds of thousands of jobs and billions in missed wages.”
The Partnership for a New American Economy was founded in 2010 by then New York City Mayor Michael Bloomberg and News Corp. CEO Rupert Murdoch. The group, whose members include more than 500 mayors and business leaders, supports the prevention of illegal immigration and a streamlining of legal immigration policies. North Carolina members of the Partnership include SAS CEO Jim Goodnight, Lord Corp. CEO Richard McNeel and Chapel Hill Mayor Mark Kleinschmidt.
H-1B visa program
H-1B visas allow companies to temporarily employ foreign workers in jobs calling for specialty knowledge or skills, such technology and biotechnology. Since its creation in 1990, the program has been capped; first at 65,000, then raised to 115,000 in 1999 and then to 195,000 from 2001 to 2003. In 2004, the cap dropped back to 65,000 with an additional 20,000 visas reserved for workers with advanced degrees from U.S. colleges or universities. The Partnership report says the cap has crimped business growth in the last decade. Since 2004, the cap has been met before the end of the fiscal year; in some years, the cap was met in less than a month. Because there are many more applications than available visas, the United States Citizenship and Immigration Services allocates those visas by lottery.
While some policymakers believe that hiring foreign-born workers displaces U.S.-born tech workers, the report says the visa caps have the effect of pushing high tech jobs out of the country. The report cites Microsoft as an example. The software giant recently chose to expand its R&D in Canada, where visa availability makes it easier to recruit. Instead of adding 400 jobs in the United States, Microsoft is hiring for those positions in Vancouver, British Columbia.
U.S. companies are hungry for workers with science, technology, engineering and mathematics backgrounds – the STEM skills, said Dan Wallace, strategic advisor at the Partnership. Some of those potential job candidates are already here; they are foreign-born students studying at U.S. universities. But despite having STEM degrees, visa caps limits their ability to land jobs here.
“Many of them have to leave after they graduate, which doesn’t make much sense,” Wallace said.
Immigrants help grow the U.S. economy by complementing, rather than competing with the country’s native-born workforce, said Alex Nowrasteh, immigration policy analyst with the libertarian Cato Institute. That’s because immigrants tend to fall in one of two camps: either less skilled or more highly skilled than the existing U.S. workforce. Most of the U.S. workforce falls in the middle. Nowrasteh supports immigration reform that allows more legal immigrants. He says U.S. immigration policy is one of the most heavily-regulated pieces of the U.S. economy, which hurts U.S. competitiveness.
“If you support free markets, there is no reason to oppose policy that opens more legal immigration to the U.S.,” Nowrasteh said.
An immigrant entrepreneur’s experience
Giles Shih, chairman and CEO of Durham agricultural biotech firm BioResource International (BRI), is an immigrant entrepreneur. Shih came to the United States from Taiwan when he was 2 and he says that the ties that he and other immigrants have to the countries of their birth are important in an increasingly global economy. BRI does much of its business in Asia and Shih says his cultural connections there help his company add business from that part of the world.
Half of BRI’s workforce of 20 come from countries other than the United States. Shih said that BRI has sponsored about five H-1B visas for current and former employees. So far, none of BRI’s H-1B visa applications have been denied. But Shih said one employee, an Indian national who has an advanced degree from N.C. State University, had to go through the lottery process last year. That worker came up with a favorable number in the lottery.
“If he had not received a favorable number, he would have had to wait another year to try again, with no assurance of being able to obtain the H-1B visa,” Shih said. “Without the H-1B visa, he would have been required to leave the country after his ‘optional practical training’ period ran out and we would have lost the investment of time and money we had made in him while he was employed by BRI.”
Impact on the Triangle
In 2007 and 2008, 1,112 H-1B visas were denied in the Raleigh-Durham area. Those visa denials also affected U.S.-born workers. Restrictions on a company’s ability to add the high-tech workers it needs crimp a company’s ability to add workers at all levels of the organization, the report says. Visa denials in Raleigh-Durham led to as many as 735 jobs lost for U.S.-born, college-educated workers and as many as 1,822 jobs lost for workers who do not have a college degree, the report calculated. Those lost jobs represented $47 million in missed wages.
The Partnership compiled its report by studying publicly available Labor Condition Applications, the documents companies file outlining the job and wage information for the post they want fill with a foreign-born worker. That data was merged with city-level labor market data in order to examine the causal relationship between the flow of skilled foreign labor and labor market outcomes.
The Washington, D.C. metro area was most heavily-impacted by H-1B visa denials, missing out on as many as 30,222 jobs and $519.4 million in wages followed by New York City-Northeastern New Jersey with as many as 28,055 jobs lost and $470.5 million in missed wages.
BRI’s Shih said that even though his company has been successful with its H-1B visa applications, denials still have an indirect affect. Many qualified foreign-born STEM applicants are highly sought by companies in their home countries or other countries.
“This reduces the pool of qualified candidates of graduates in the STEM fields that BRI actively recruits from,” Shih said.