May 01, 2013

I-Squared: Spoiling or Saving the U.S. Economy?

H1B Visa

The H-1B is a non-immigrant visa in the United States under the Immigration and Nationality Act, which allows employers to temporarily employ foreign workers in specialty occupations. The U.S. sets a limit of 85,000 H-1B visas every year, which prior to 2009 was a cap reached within the first week of accepting petitions. Over the past four years, however, employers have filed fewer petitions, resulting in it taking up to nine months to reach the limit. However, under the current law, tens of thousands of H-1B visas granted are not counted under the cap due to exemptions.  According to the Economic Policy Institute, 135,530 H-1B visas were issued in 2012, far exceeding the “cap” of 85,000.

In January of 2013, The Immigration Innovation Act (known as “I-Squared”) was introduced. This piece of legislation would increase the maximum limit to 300,000 H-1B visas for the private sector along with exemptions for graduates of U.S. universities holding advanced degrees. 

H1B Visa

Different Angles

There are various viewpoints on the issue of allowing an increasing number of foreign immigrants into the United States. 

An Employer’s Viewpoint:  A larger talent pool will provide greater choice when selecting workers, especially as it relates to recruiting high-skilled foreign workers at comparatively lower wages. Employers today are hiring fewer workers and are actively searching for workers with specialized experience, requiring no training or learning curve. Many foreign immigrants have vast experience in their home countries yet are willing to accept lower wages in order to break into the U.S. job market. At low wages employers can afford to keep a large number of H-1B workers on the bench, which is not feasible with domestic workers.

“There’s a huge demand for underpaid workers through this program…though federal law requires employers to pay H-1B workers at a prevailing wage, the law gives pay scale options depending on the profession. And the vast majority of the time they choose the lowest wage or the second-lowest wage, both of which are below the average wage” ~Daniel Costa, Immigration Policy Analyst at Economic Policy Institute

An Academic Institute’s Viewpoint:  Most foreign students studying in the United States elect a STEM (science, technology, engineering and math) field as their major. For example, foreign students encompass half the enrollment in engineering graduate programs. Since these students later become part of the working population, Americans again have to compete with foreign college graduates with advanced degrees in science and technology. However, this step might be essential. For example, analysts predict that in this decade the United States will have to fill 1.2 million jobs in computing professions that require a bachelor’s degree, and at the current pace American colleges will not matriculate even half the number of American graduates needed to fill these positions. 

H1B Visa

An Opponent to the Bill’s Viewpoint:  Opponents to the “I-Squared” bill believe that the influx of foreign workers will have a negative impact on the economy and job market. Because the H-1B visa is renewable for a total of six years, an increase in the cap could add more than 2 million new high-tech workers to an arguably unhealthy labor market. Additionally, current unemployment rates and wage growth do not suggest a labor shortage in STEM occupations, where the unemployment rate of college graduated workers in STEM occupations was 3% in 2012. Critics of the bill also argue that the proposed legislation does not address all the flaws of the current program, including artificially low wages, recruiting requirements and benefits to offshore outsourcing companies. Finally, opponents point to issues in the bill itself, including the authorization of employment for spouses and dependents of the H-1B visa holder.

“The American economy has become very dependent on foreign labor. Indeed, most of our workforce growth since 1990 has come from immigration, a trend that is expected to continue for at least the next 20 years. How these workers are employed, therefore, will have important implications for American economic health, as well as for national unity and social stability.” ~Ray Marshall, Former Secretary of Labor