By Krisztina Pusok, American Consumer Institute
With the economy still reeling from the COVID-19 pandemic, there are growing calls to ease competition in the labor market by restricting immigration. But these policies overlook the fact that highly educated foreign graduates from U.S. universities act as a stopgap for a shortage of American STEM graduates. Before taking aim at H-1B visa workers, Capitol Hill needs to do more to increase the number of STEM graduates in America. Without that support, domestic tech companies and their consumers will suffer.
The H-1B visa program is a three decades-old initiative to allow a limited number of highly educated foreigners to work temporarily in the United States. While most applicants require a bachelor’s degree and a job offer from an employer, recent changes to the program have increased the likelihood that workers with at least a master’s degree from an American university will be chosen from the pool.
The program is particularly popular for high-skilled graduates with science, tech, engineering and math (STEM) degrees. For example, in 2019 66.1% of H-1B workers were employed in computer-related jobs. Moreover, these foreign-born experts have been the key to countless tech success stories. According to researchers affiliated with the NBER, start-up companies that hire H-1B workers receive more venture capital funding and file more patents. This ongoing innovation in Silicon Valley provides a wealth of benefits to American consumers, businesses, and the broader economy.
Despite the benefits that foreign born experts provide to US companies, critics say that H-1B workers dilute the labor force and make it harder for Americans to get jobs—particularly during the COVID-19 downturn. But the problem with limiting the number of H-1B visa workers is that the American education system is currently unable to produce enough STEM graduates to fill current labor demand.
America’s STEM education problem is often linked to the fact that many students begin a STEM degree, but most won’t graduate with one. While American universities collectively produce among the highest number of graduates each year, the share of STEM graduates pales in comparison to countries like China and India.
To address the problem, the Trump administration has dedicated more than half a billion dollars in recent years towards enhancing domestic STEM education. While forward-looking federal policies represent an important step, educating future experts takes time and does not produce graduates overnight. In the interim, H-1B workers offer a temporary solution until new graduates enter the labor market.
The ongoing short-fall of STEM graduates is acutely evident during the COVID-19 crisis. Despite the fact that tens of millions of Americans have filed for unemployment in recent months, a recent analysis suggests that the tech industry has bucked the trend. Between January and April of this year, the unemployment rate among tech professionals (which the BLS categorize as “computer occupations”) fell from 3.0% to 2.8%. For reference, workers in all other occupations saw unemployment rise from 4.1% to 15% during the same period.
However, demand for STEM graduates during the COVID-19 period is not a flash in the pan. The BLS predicts that demand for STEM employees will continue to rise in coming years, and at a faster rate than demand for other workers. With a greater need for tech workers, and insufficient domestic STEM graduates, America’s leading tech companies face a dire future in an internationally competitive industry.
While current federal initiatives represent a good start to supporting STEM education, the expertise that quality education produces is not created overnight. Even within the COVID-19-blighted economy, employment in the tech industry appears to be strong. Until American universities can increase the number of STEM graduates, the H-1B program serves as a useful stopgap—particularly by employing workers with postgraduate degrees from American universities.
Rather than taking aim at foreign experts who are in the country temporarily, lawmakers on Capitol Hill should double down on supporting American STEM education for a long-term solution.
Krisztina Pusok is the Director of Policy at the American Consumer Institute, a nonprofit educational and research organization. Oliver McPherson-Smith also writes for the Institute. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.