New Research Says H-1B Visas Created A $431 Million Net Gain For U.S. Workers

Aug 08, 2017

A new paper from the Center for Global Development finds that from the early 1990s to 2010, the H-1B visa program resulted in net gains for the United States and India.

By the mid-2000s, more than half of the H-1B visas were going to Indian applicants, though there's evidence that interest in U.S.-based jobs may now be falling among Indian workers under the Trump Administration.

The study estimates that U.S. workers across all sectors on average were better off by about $431 million in 2010 when you take into account the increased productivity and innovation within the tech sector due to foreign workers. That amounts to $1,345 per each additional H-1B worker, according to Gaurav Khanna, CGD senior fellow and assistant professor of economics at the public policy school at the University of California-San Diego.

“A lot of these gains are because of the fact that the tech sector is also where a lot of the innovation happens in the economy,” Khanna, who co-authored the paper with Nicolas Morales, told Fortune. “What that does is raise the productivity of other parts of the economy as well.”

Better products, like software, lead to higher outputs from workers.

“For example, bankers on Wall Street may not realize that their software is better because the U.S. can attract global talent and produce better IT products,” he said.

Khanna also points out that the biggest contributor to productivity growth in the U.S. in the last 15 years is in information technology — a sector that’s now inextricably linked with India and the H-1B visa program.

The study finds the visa program resulted in a net gain in both the U.S. and India by 2010. Their combined incomes increased by 0.36% during that time period, though the growth in the IT sector specifically saw a greater increase in India.

Part of this is due to the fact that the opportunity to work at American tech companies incentivized Indian students to pursue degrees in computer science. But caps on H-1B visa approvals meant not all of them could travel to the states for a job, creating an increase in computer science majors in the Indian labor market. This happened on a large enough scale to have a positive impact on national productivity, according to the study. And H-1B visa holders who returned to India after the temporary work period also helped to grow the Indian tech sector very rapidly.

The research doesn’t conclude that the H-1B visa program is the best setup for all workers, though.

U.S.-born computer science employees are hurt by the influx of foreign workers in the field, but for the American computer scientists who make up 1.7% of the workforce, wages were depressed by just 1.5% in 2010, according to Khanna.

He argues that the benefits of bringing foreign talent to work in the U.S. are far-reaching, despite the displacement of some American workers. The research found that as more foreign workers are hired, many Americans working as computer scientists may move into managerial roles or other tech-adjacent positions.

Though data from the US Citizenship and Immigration Services does show that Indian workers are often underpaid at companies that rely on the H-1B visa workers, Khanna emphasized the value of immigrant workers to the tech sector and to U.S. innovation as a whole.

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