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Why Policy Makers Should Review the Facts Before Marching to the Drumbeat of the Xenophobes

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The H-1B visa has become the beachhead in the battle against the legal immigration of skilled workers. This is because it allows highly educated, skilled workers from abroad to take employment in the U.S. and eventually become citizens. Anti-immigrant groups believe that they can close the door to foreigners by restricting or abolishing the visa. So they have been trying to convince lawmakers that H-1Bs depress wages and take jobs away from American workers. To prove their point, they highlight examples of unscrupulous body shops that underpay their workers, and they cite questionable research published by other anti-immigrants. But a new peer-reviewed study, published in Management Science, a top academic journal, challenges these claims. This research finds that foreign-born I.T. professionals on temporary work visas actually earn more than their American counterparts; and that limits on H-1B visas cause the salaries of foreign workers—rather than of Americans—to increase. This, along with research completed by my colleagues at UC-Berkeley, Duke, and Harvard, confirms what most people in Silicon Valley already know: that foreign-born I.T. workers complement American professionals and make the pie bigger rather than take jobs away.

This new study was completed by University of Maryland professors Hank Lucas and Sunil Mithas, using data from a survey of 50,000 I.T. professionals that InformationWeek and Hewitt Associates conducted from 2000 to 2005.  After adjusting for educational qualifications, work experience, and other individual characteristics, the researchers found that I.T. professionals without U.S. citizenship earned 8.9% more than U.S. citizens. Tech workers on temporary visas were paid 6.8% more than those with U.S. citizenship; green-card holders took home 12.9% more than their American-born counterparts. In years when Congress increased the numbers of visas available, salaries of foreign workers fell. The salary premium for H-1B holders was 10.6% in 2000; 8.1% in 2001; 17.5% in 2004; and 4.7% in 2005. This corresponds to a visa cap of 115,000 in 2000; 195,000 in 2001; 65,000 in 2004; and 85,000 in 2005 When the number of visas rose, the corresponding salaries shrank.

To explain why firms pay more to foreign I.T. professionals, the researchers speculate that such foreign workers supply intangible human capital: knowledge of markets and cultures outside the U.S.; social relationships with colleagues at firms located in their home countries; access to networks in home countries and the ability to spot, circulate, and mix ideas and skills from different parts of the world. Foreign-born I.T. professionals are also usually willing to travel for extended periods. The researchers say that because the proportion of the sales and revenue that companies receive from abroad is increasing, they need to hire more I.T. professionals who are familiar with foreign culture; language; and business practice.

UC-Berkeley dean and professor AnnaLee Saxenian refers to the foreign-born professionals in Silicon Valley as the “new Argonauts”. She says that over the past three decades, the region’s immigrant professionals have helped open foreign markets; identified overseas sources of talent and innovation; and pioneered long-distance partnerships. Far from being zero-sum, this process continues to expand economic opportunities for both Silicon Valley and its collaborators. She says that foreign nationals are clearly a complement to the native workforce, their diverse perspectives and global networks being catalysts for local innovation.

The data Lucas and Mithas analyzed did not include all tech professionals: Information Week readers are typically I.T. workers in large and midsized American corporations. The researchers say that they compared their sample with that of other studies and believe that this is more representative of the tech industry than any other research. And unlike other studies, this compares apples with apples (previous research has looked only at aggregate data, not at individual education and skills). The Lucas/Mithas study clearly did not account for the shoddy body shops that break the law and underpay their workers.  But it is likely to be representative not only of the Information Week readership, but also of foreign-born I.T. workers in Silicon Valley. (Silicon Valley tech workers usually have the same advanced educational background and receive the same competitive salaries as their brethren in the I.T. world.) These are the skilled immigrants that American industry needs—to remain globally competitive.

The study also highlighted an issue that I have written about: these workers are earning less than they should. Because of a flawed immigration system, the U.S. has admitted large numbers of workers on temporary visas, but has never increased the number of permanent resident visas (also called green cards) to enable these workers to make America their home. Waiting times for green cards can be longer than a decade, and while workers wait in queue, they can’t easily change jobs. Employers often take advantage of the situation. Indeed, Lucas and Mithas found that H-1B visa holders earned 6.1% less than equivalent green-card holders.

There is a far more serious problem brewing: we’re not letting the foreign-born workers start companies and boost the economy, so they are leaving. Consider that 52% of Silicon Valley companies started in 1995–2005 were founded by immigrants. There are now hundreds of thousands of highly educated and skilled workers who also could be starting companies that are stuck in “immigration limbo”. Many are getting frustrated and returning to their home countries. Others languish in the same jobs they had when they stated their green-card–application process; just as they can’t change companies, they can’t receive a promotion, so if they started as a computer programmer, they can’t become an architect or manager.

Policy makers are used to the constant drumbeat of the xenophobes. To educate policy makers on the facts and to make them aware of the green-card backlog, a group called Immigration Voice is organizing Advocacy Day on June 7 and 8 in Washington, D.C. This group represents the foreign-born I.T. workers sampled in the Lucas/Mithas study and more than 250,000 doctors, PhDs, research scientists, scholars, engineers, and professors also stuck in the green-card backlog.  Hundreds of Immigration Voice members will be travelling to the nation’s capital to tell their stories. They have set up more than 400 meetings with members of Congress and the Senate. Let’s hope they get through and introduce a little logic into the immigration debate.

Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa

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