Effects of H-1B Visa Program on Employment and Wage in the United States

Custom Student Mr. Teacher ENG 1001-04 23 September 2016

Effects of H-1B Visa Program on Employment and Wage in the United States

The United States is the most powerful country in the world. Its dominant culture, military, and economy make it the most influential nation across the globe. The power of the US doesn’t only come from its native citizens but also from the foreigners who come to its shores every day to work and live there. These people play a very significant role in driving the US economy. A number of national programs have been developed in order to influence the influx of these people into the US. One of those programs is called the H-1B visa program.

The program, which allows foreigners to work in the US, has critical effects on various sectors of American society, but especially the economy. Based on the data that have been so far collected, it is clear that the H-1B visa program, in terms of employment in the technology sector, is important in maintaining the status of the country as a leader in science and technology. However, the H-1B visa program may also have negative effects on the wage of native citizens because they would have to compete with the low wages of foreign workers.

Many companies in the US needed temporary workers, so the H1 category of non-immigrants was created under the Immigration and Nationality Act of 1952. Unlike immigrants, non-immigrants only stay in the US temporarily to accomplish a specific purpose, for instance, education or work. The current H1-B visa program of the United States was created through the Immigration Act of 1990 and the amendment of the 1952 act. The result of the amendment was a program that allows an employer to temporarily hire a foreigner to work in the US provided that he’s under the category of non-immigrants.

Also, the worker must have a specialty occupation or be a fashion model with exceptional ability and merit. The law describes a “specialty occupation” as something that requires theoretical and practical application of a specialized body of knowledge. The worker must also have a bachelor’s degree or the equivalent in specialties such as business, biotechnology, education, health care, medicine, and sciences. The H1-B program currently limits the number of foreign nonimmigrant workers in the US to 65,000 per year (Bartik et al. 134).

H-1B’s cap has not always remained the same, however. Congress increased it to 115,000 in 1998 for fiscal years 1999 and 2000. Then in 2000, Congress increased it even further to 195,000 for the 2001 fiscal year. It was maintained during 2002 and 2003, and was slashed to 65,000 again from 2004 onward. Not all foreign workers are affected by the cap, however. The H-1B Visa Reform Act of 2004 states that foreign workers employed by institutions of government research organizations, institutions of higher education and NGOs are exempt from the cap.

Also, a separate cap of 20,000 exists on petitions that are filed on behalf of foreigners with master’s or higher degrees earned in the US (Bartik et al. 135). Recently, lobbyists composed of universities and members of the technology industry are pushing for a huge increase in the annual cap of H-1B visas. They argue that H-1B visas otherwise known as “guest worker visas” serve a crucial role in driving the economy, especially in the high technology sector. According to them, there is a systemic shortage of American engineers and scientists in the country.

There is a very high demand domestically for these highly skilled workers and the small supply cannot fill that gap. The only way to solve this problem therefore is through the import of foreign workers through the H-1B visa program (Hira et al. 150). These lobbyists argue that they will be forced to resort to outsourcing jobs to foreign engineers and scientists in their home countries if the H-1B cap is not increased. They also claim that the visa program actually serves as a tool for the country to gather the best and the brightest highly skilled workers in the world.

This is supposedly a result that is to be expected if the cap on the H-1B visa program is increased (Hira et al. 150). There are many evidences for the advantages brought about by hiring foreign workers in the technology sector. For example, a 2008 study by the National Research Council looked at the effects of hiring H-1B workers by large US companies Texas Instruments, Qualcomm, Motorola/Freescale, Intel, and IBM. Of the five companies, IBM employed the most number of H-1B workers, granting almost 4,000 in five years. Most applications in the company stated a range of earnings of about $82,072.

This was considerably bigger than the other four companies’ average minimum earnings. The researchers thought that the applications were for jobs that were not chip-related since IBM had become a software company from a hardware company (National Research Council and National Academy of Engineering 152). It is clear from the example above that foreign workers in the technology sector do indeed get attracted to the United States through H-1B visas. IBM was hiring more foreign workers than anybody else in the group, and these people were earning higher.

However, there are still many “experts” that love to criticize the H-1B visa program. John McCain and Edward Kennedy defended the H-1B visa program in 2006. The two senators supported the immigration bill that passed the Senate and insisted that their bill required employers to search for workers in the US first. However, their bill actually didn’t have any of these provisions (Hira et al. 152). Indeed, it’s a common misconception that the current law instructs US companies to look for workers in the US first. Many government officials also have this incorrect belief.

Senator Norman Coleman, for example, says that he supports the issuance of H-1B visas as long as a number of conditions are met. One, the employer must show that there is not enough US workers qualified for the position; two, that the employer has not laid off a US worker 90 days before or after hiring a foreign worker; three, the employer must demonstrate that they tried to hire US workers before foreign workers; and finally, that the recruitment of H-1B workers will not have adverse effects on the waves, working conditions, and job opportunities of US workers.

Even then Senator Barack Obama thinks that the H-1B policy aims to exhaust all means of recruiting US workers before foreign workers. He believed that hiring H1-B workers should be a last recourse for American employers (Hira et al. 152). The truth is however, that the provisions mentioned by the two people above actually don’t exist for the majority of employers who use the H-1B visa program. Even Obama’s wish that employers should hire foreign workers as a last option is not practiced in the real world (Hira et al. 152).

Also, according to market indicators, there is not enough evidence of a systemic shortage of resident engineers and scientists in the US, one of the main arguments of lobbyists for the increase in H-1B cap. Also, earnings and wage growth have been moderate and more or less the same as other professions. The unemployment rate, while it sharply increased during the dot-com bubble, has now fallen. Researchers have also supported the idea that there is little evidence of shortage in high technology jobs. Private surveys and public data are also conflicting when it comes to determining shortages.

Trade surveys show there are indeed shortages, but public data indicate the opposite (Bartik et al. 137). Determining shortages in scientists and engineers is a real problem because any increase in the number of H-1B visas issued by employers alone is not indicative of a systemic shortage. Other factors contribute to perceived shortages, for example, the growing significance of foreign students in American institutions. These are foreign students who remain in the United States after they graduate to convert their student visa to a working visa.

Other equally important factors include: economic growth, cyclical demand in IT industries, especially during the 1990s, and even backlogs in the application process for permanent visa. Employers today are constantly hiring H-1B workers, but that is clearly not enough reason to increase the cap on H-1B visas. Aside from the effects it will have on the wages and earnings of American workers, the increased cap will create some problems in the permanent residency part of immigration because there are already backlogs there (Bartik et al. 137). The influx of H-1B workers into the United States has been going on vigorously since the 1990s.

During that time, about 30 million people were able to stay in America through nonimmigrant admissions. The fastest growing nonimmigrant admissions fall under categories where a foreigner first applies as a temporary foreign worker or student. He then tries to find a US sponsor to able to obtain the immigrant visa. Between 1992 and 1998, the number of foreign students admitted into the country with F1 visas rose from 53% to 565,00. The number of trainers and temporary workers also increased from 128% to 372,000 during that period of time (OECD 35).


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  • University/College: University of Arkansas System

  • Type of paper: Thesis/Dissertation Chapter

  • Date: 23 September 2016

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