Post by Joyce Zhang. Colgate Class of 2023.
Immigrations of high-skilled workers will be greatly affected by the introduction of stricter eligibility requirements for the H-1B program in October 2020. DHS issued the Strengthening the H-1B Nonimmigrant Visa Classification Program Interim Final Rule revising the definition of “Specialty Occupation” and DOL issued the Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States Interim Final Rule that incorporate the computation of prevailing wage levels in the granting of H-1B.
Effects on Productivity
The United States is likely to experience a negative effect on innovation and productivity because companies will have less foreign employees. A study found that foreign-born graduate students in science and engineering departments at U.S. universities greatly contribute to innovation and research production by working in the industry or academia after graduation (Mobarak). Equipped with skill sets they obtained from at least a bachelor-level education, high-skilled immigrants are able to contribute to increased productivity of the United States if they are offered an opportunity to do so.
The National Foundation for American Policy found that denial rates for the popular high-skilled H-1B visas tripled under Trump policies, compared to the end of the Obama administration at 29% (Kight). With these additional requirements of applying to H-1B, the number of passed H-1B petitions is projected to further decline. Therefore, less immigrants will contribute to the productivity of the U.S.
On the other hand, these new rules are favorable by origin countries. Tightening US immigration policies indicate increasing return migration. Immigrants will return home having gained human capital in the U.S. and can therefore positively contribute to the origin country’s labor markets.
Effects on Wage of Foreign Workers and Native Workers
One purpose of the new rule, as stated by DOL, is to ensure migrant workers in H-1B status are compensated fairly. However, the rules would actually result in a misleading upward shift in the calculation of average wages of skilled workers. H-1B workers whose current wage is above the threshold will be unaffected. Those who have a job but with a wage below the threshold either need their company to raise their wage or leave the country. If the latter happens, they are therefore not included in future calculation of wages. Since they have worked in the U.S, the resulting wage calculation has an upward bias.
Another purpose of this rule is to give the spot that is originally taken by international workers to natives. However, as Chad Sparber, an economics professor at Colgate University, illustrates from an economist perspective, immigration is not a zero-sum game in that “an immigrant comes in and an American loses.”
Immigrants create employment opportunities for natives. High-skilled immigrants contribute to technological adaptation and create new jobs for native workers. By raising demand, immigrants cause firms and production to expand, resulting in new hiring (Constant).
Even if we accept the claim that immigrants cause the decline of natives’ wages, natives still benefit from the overall economic growth due to immigrants’ contributions to productivity. Besides, high skilled immigrants bring the destination country a positive fiscal effect. They earn high wages so they contribute a great amount of taxes, but because they are not citizens, they are not eligible for a lot of social welfare programs. Government can distribute immigrants’ taxes to natives through social welfare programs.
Effects on Migration Flow
As demonstrated in Chapter 3 of the textbook, tighter immigration policy can decrease the number of immigrants to a country. Immigrants consider the wage and employment possibility of the destination countries when considering whether to immigrate or not. The new rules are likely to increase the possibility of unemployment, therefore decrease the outlook of immigraiton.
From April, the Trump administration has announced a series of anti-immigration policies targeted at international students and workers. But these policies are sued by either universities, companies, or civic groups and repelled or limited by the court. Nevertheless, these policies serve as a strong Trump rhetoric and an indication of anti-immigration sentiment in the United States. Potential discrimmination causes additional psychological costs that discourage immigration. The unwelcoming atmosphere might discourage immigrants from choosing the United States as their destination country to study or work.
The government should encourage immigration in sectors with excess demand of labor to allow migration stocks to contribute to the economy. High-skilled foreign workers are majorly economic immigrants who are more interested in economic opportunities than naturalization. Even if the decline of natives’ wage is caused by immigration, it can be compensated by immigrants’ contribution to the economy in the form of productivity and taxes through government redistribution programs.
U.S. Department of Labor. 2020. “U.S. Department of Labor Issues Interim Final Rule to Protect Wages of American Workers”. U.S. Department of Labor, October 6, 2020: https://www.dol.gov/newsroom/releases/eta/eta20201006
Kight, Stef. 2020. “The plunge in highly skilled work visas”. Axios, September 13, 2020: https://www.axios.com/immigrant-work-visas-h1b-coronavirus-a9dc6aeb-60cc-46be-ae3d-aa198f8c54ba.html
Mobarak, Ahmed. 2017. “Does Immigration Create Jobs?”. Yale Insights, March 30, 2017:https://insights.som.yale.edu/insights/does-immigration-create-jobs
Constant, Amelie. “Migrants rarely take native workers’ jobs, and they boost employment effects in the long term”. IZA World of Labor: https://wol.iza.org/uploads/articles/10/pdfs/do-migrants-take-the-jobs-of-native-workers.pdf
Costa, Daniel, Ron Hira. 2020. “H-1B visas and prevailing wage levels”. Economic Policy Institute, May 4 2020: https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/