In today’s labor market, foreign workers fill a critical need — particularly in the Science, Technology, Engineering, and Math (STEM) fields. The H-1B Visa program has provided the main route for these skilled foreign workers to pursue opportunities with U.S. companies, enabling them to take domestic jobs that might otherwise remain unfilled. (Click here to learn more about the way the H-1B visa program works.)
Despite its importance for companies in STEM fields, the H-1B visa program has been the target of substantial political criticism from those who seek to pit native-born workers against their foreign-born colleagues. But, in fact, workers do not compete against each other for a fixed number of jobs. The United States has created a dynamic and powerful economy, and immigrants of all types and skills, from every corner of the globe, have worked with native-born workers to build it. Skilled immigrants’ contributions to the U.S. economy help create new jobs and new opportunities for economic expansion. Indeed, H-1B workers positively impact our economy and employment opportunities of native-born workers.
As we are now entering a new presidential campaign cycle and political rhetoric is heating up on a broad range of topics, including immigration, it’s a good time to address some of the common myths and misunderstandings surrounding the H-1B program.
How do H-1B visas impact wages?
Despite suggestions to the contrary, the overwhelming evidence shows that H-1B visas do not drive down wages of native-born workers, with some studies showing a positive impact on wages overall.
- From 1990 (the start of the H-1B program) to 2010, H-1B-driven increases in STEM workers were associated with a significant increase in wages for college-educated, U.S.-born workers in 219 U.S. cities. H-1B-driven increases in STEM workers in a city were associated with increases in wages of 7 to 8 percentage points paid to both STEM and non-STEM college educated natives, while non-college educated workers saw an increase of 3 to 4 percentage points.
From 2009 to 2011, wage growth for U.S.-born workers with at least a bachelor’s degree was nominal, but wage growth for workers in occupations with large numbers of H-1B petitions was substantially higher. For example, in the Computer Systems Design and Related Services category, there has been a 5.5 percent wage growth since 1990 and 7.0 percent wage growth since 2009. In comparison, wage growth across all industries has been 0.8 percent since 1990 and 1.6 percent since 2009.
- On average, H-1B workers earn higher wages than employed U.S.-born workers with bachelor’s degrees: $76,356 compared to $67,301, including in areas like computer and information technology, engineering, healthcare, and post-secondary education. When comparing workers of the same age cohort and occupation, H-1B workers earn higher wages than their native-born counterparts. Specifically, in 17 out of 20 age cohort and occupation groups, wages for H-1B workers are higher than non-H-1B workers.
- Factors such as gender, marital status, and ethnicity play a larger role than citizenship or immigration status for wages in the tech and finance industries—industries that use a large number of H-1B visas. A worker’s geographic region also accounts for significant differences in wages.
How do H-1B visas impact U.S. employment rates?
Research shows that H-1B workers complement U.S. workers, fill employment gaps in many STEM occupations, and expand job opportunities for all. The United States faces challenges in meeting the growing needs of an expanding knowledge-based innovation economy. Arguments that immigrants are freezing out native-born workers are rebutted by the best available empirical evidence.
- Unemployment rates are low for occupations that use large numbers of H-1B visas. For example, many STEM occupations have very low unemployment compared to the overall national unemployment rate. These low unemployment rates signal a demand for labor that exceeds the supply.
- Estimates indicate that an increase in H-1B visas could create an estimated 1.3 million new jobs and add around $158 billion to Gross Domestic Product in the U.S. by 2045.
- Conversely, research show that the United States has missed out on the opportunity to create new jobs by limiting the number of H-1B visas to 65,000 per year. For example, estimates show that, had the U.S. government not rejected 178,000 H-1B visa applications in computer related fields in the 2007 and 2008 visa lotteries, U.S. metropolitan areas could have created as many as 231,224 tech jobs for U.S.-born workers in the two years that followed.
Are the economic benefits of H-1B visas limited to Silicon Valley or the tech sector?
No. H-1B visas bolster innovation in the U.S. economy across America’s heartland far beyond the technology firms in Silicon Valley. Although much research explores H-1Bs from a national perspective, there is a “geography of demand” across the United States, meaning that demand for workers in particular geographic areas often outweighs the supply of qualified workers in those areas. Moreover, although the use of H-1B visas in the high-tech industry garners substantial public attention, high-skilled immigrants play other crucial roles in the U.S. economy.
- There were 106 metropolitan areas across the United States that had at least 250 requests for H-1B workers in 2010-2011.22 Demand for high-skilled workers in general is higher in metro areas where innovation industries agglomerate.
- For example, H-1B demand is high in places like Columbus, IN; Durham-Chapel Hill, NC; Trenton-Ewing, NJ; Bloomington-Normal, IL; Ann Arbor, MI; Peoria, IL; Boulder, CO; and Fayetteville-Springdale-Rogers, AR.
- Although the presence of research universities accounts for H-1B demand in some of these places, private industry accounts for the intensity of demand in other areas, including companies like HTC Global, Wal-Mart, Merrill Lynch, Educational Testing Service, Caterpillar Inc., Credit Suisse, JPMorgan Chase & Co., Bank of America, Wells Fargo Bank, and the Mayo Clinic.
• Nearly two-thirds of requests for H-1B workers are for STEM occupations. There also is high demand for workers in healthcare, business, finance, and the life sciences.