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Why H-1B Visas Aren’t So Great for Silicon Valley Workers

Feb 15, 2017

Bringing in computer scientists from abroad has been good for the U.S. overall, raising wages nationwide and bringing down costs for computer products. But the practice hasn't necessarily been great for native-born workers in the country's IT sector.

Those are the mixed-bag conclusions of a study released recently by the National Bureau of Economic Research. The study ran two comparison models that looked at data from 1994 to 2001, the period during which the use of H-1B visas skyrocketed. H-1B visas allow companies to temporarily employ foreign workers in specialized occupations, which was a practice that was of particular use to tech companies as the digital boom began to take off. Some political leaders, including President Donald Trump, have criticized the visa program in its current form, saying that it displaces American workers and drives down compensation.

In 1990, 11% of U.S. computer scientists were immigrants. By 2001, more than 21% of workers in the sector were foreign-born.

The study found that immigration in the computer science sector led to an increase in wages across the broader economy of 0.04% to 0.28%. There was a more pronounced effect for non-college educated workers, whose paychecks saw a 0.43% to 0.52% bump.

The study also concluded that the inclusion of immigrant labor meant prices for computer products were 1.9% to 2.4% lower. The authors concluded that that decrease boosted the adoption of technology by the general public, by making it more affordable.

There is a caveat, though, that could give ammunition to opponents of the H-1B visa program. Without the added foreign labor, the study concluded that domestic employment in the computer science sector would have been between 6.1% and 10.8% higher in 2001. Put simply, for every 100 foreign computer scientists working in the U.S., between 33 and 61 domestic workers were displaced. The influx of foreign workers also held down wages, the authors concluded, with compensation being 2.6% to 5.1% lower than if foreign workers were not allowed.

Despite that impact, tech-sector jobs remain among the best-paid jobs in the country. Industry trade group CompTIA estimates that the average U.S tech worker earned $105,400 in 2016, more than twice the national average. The group estimates that the tech sector employed 6.7 million people in the U.S. in 2016, or about 6% of private-sector workers.

The lower wages in the sector were not necessarily a bad thing for the overall welfare of the nation, the report concluded. Lower wages allowed for higher company profits, which in turn led to an increase in the number of IT firms that entered the market, thus spurring competition and innovation.

The study also notes that high-skilled immigrants who enter the U.S. workforce sometimes indirectly open up new opportunities for U.S. workers. When one labor avenue is closed off to an extent, workers have incentive to look elsewhere for employment. Instead of working in computer science, for instance, a worker may choose to be an architect or manage a production team. The diversification would raise the productivity of workers overall, the authors concluded.

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