Immigration Politics are Holding Up the Technology Sector

This piece originally appeared in the National Journal here, and is reproduced with permission from the author. It is written specifically in the context of United States politics.

Politicians are simply playing at immigration reform. As these representatives and senators take their turn at political games, introducing pieces of legislation designed to go nowhere, the federal immigration bureaucracy once again highlights how much the current opaque immigration system damages the U.S. economy, now in its third year of anemic growth.

Rep. Lamar Smith, R-Texas, recently introduced a bill to eliminate the diversity visa program, which awards 55,000 green cards by lottery, and instead redirects all of those green cards to skilled advanced foreign graduates from U.S. universities. His bill came up for a vote last week, failing in the House.

As a counter, Sen. Chuck Schumer, D-N.Y., and Rep. Zoe Lofgren, D-Calif., who represents part of Silicon Valley, introduced their own legislation to increase the number of green cards for highly skilled graduates without destroying the diversity visa program. It’s a version of Smith’s bill meant to appeal to Democrats who support the diversity visa, but it will turn off Republicans who are newly opposed to it.

Both bills, introduced with provisions unacceptable to the other party, make for political theater but leave the fundamental problem of immigration reform unresolved.

On Oct. 1, new highly skilled migrant workers on H-1B visas can start working in the United States. H-1B visas are a small subset of visas that let U.S. firms temporarily hire skilled foreigners. Along with skilled foreigners on green cards, H-1Bs make a big difference in innovative growth industries, even though only 85,000 a year are hired annually. About half of all H-1Bs work in the computer industry, with most of the rest in engineering, science, mathematics, and technology. 

Over the last decade, the number of jobs in these sectors has grown three times faster than in the rest of the economy. Foreigners seem particularly driven to these high-growth industries. About 35 percent of engineers, 27 percent of computer scientists and mathematicians, and 25 percent of physical scientists were born in foreign countries. 

To be clear, Americans are driven to these industries, too. U.S. firms try to hire H-1Bs and skilled immigrants when they are expanding. Smaller technology firms that employ H-1Bs hire five to seven other employees for each H-1B worker brought in. H-1B workers expand production, meaning that firms have to hire other Americans as well to work alongside H-1Bs. That is one reason why more technology workers do not drive down American wages. 

Every year, firms in Silicon Valley and elsewhere clamber for more H-1B visas than are issued. This year, after just two months of accepting H-1B visas, the government had to stop because the quota had been reached. Last decade, when the economy was growing at a rapid clip, the yearly quota would fill up in a single day. 

Presidents George W. Bush and Obama have done a lot to hobble the H-1B. Under Bush’s TARP, financial firms getting bailed out were not allowed to hire H-1B workers. 

And it’s not like hiring H-1B workers is easy or cheap. Firms already spend about $6,000 in legal and government fees per H-1B and as much as twice that for employment-sponsored green cards. Obama didn’t think those fees were high enough, so he doubled them for firms heavily dependent on H-1B workers, mostly Indian firms, to fund increased border-security efforts. 

Dynamic Silicon Valley firms and the technology industry are highly dependent on skilled workers. As they grow, so does their demand for skilled workers. To continue to expand in this overall moribund economy and remain a bright light of economic success, they need to be freed of obtuse immigration restrictive, quotas, and rules that hobble their expansion.

The bills introduced by Schumer, Lofgren, and Smith would release a bit of the pressure. But when desperately needed reform is stalled over the diversity visa, which has nothing to do with skilled immigration and is blamed for many sins it has never committed, it is clear just how unserious Washington is about solving the immigration mess it created.

[Open Border editorial note: Readers might like to check our pages on high versus low skill as well as our page on the startup visa, which contain related material]

Leave a Reply