Posted by on May 21, 2020 7:13 am
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Categories: Competition & Regulation

 


By Oliver McPherson-Smith, American Consumer Institute

 

 

The COVID-19 pandemic has dealt a significant blow to America’s economy and countless Americans will be looking for jobs in the coming months. To ease competition in the labor force, four senators are pushing for a ban on certain temporary workers. But the plan would also block highly-educated workers from coming to America on H-1B visas. Rather than helping the nation’s economic recovery, banning foreign professionals, who are in short supply, will have the opposite effect.

 

 

The H-1B visa program regulates how highly-skilled foreigners can work in the United States for a fixed period of time. Workers need to be sponsored by an American company and must have at least a bachelor’s degree in a relevant field. In total, 65,000 H-1B visas are available each year through a lottery system, with an additional 20,000 reserved for would-be workers who have at least a master’s degree from a US institution. Changes to the lottery system last year now mean that applicants with advanced degrees are more likely to be chosen.

 

 

Despite the fact that these recent changes skew the program towards applicants with graduate degrees, critics say that a temporary ban should be implemented due to the COVID-19 economic downturn. The problem with this strategy is that foreign-born experts are a huge source of innovation, particularly in the tech industry. Cutting off the industry’s supply of the world’s best and brightest will put a damper on growth and development in the industry when it is needed the most.

 

 

The economic impact of H-1B visa holders has been routinely scrutinized by academics. For example, recent work by economists at the NBER finds that start-up firms with H-1B workers receive higher levels of venture capital funding, are more likely to have a successful IPO, and file for more patents. These successful firms also pay their H-1B workers above the prevailing wage, suggesting that these experts are not a source of cheap labor.

 

 

Far from dragging down the economy, highly educated foreign workers create innovation for American companies and further employment potential for Americans by growing domestic start-up companies. One prominent anecdotal example is South Africa-born Elon Musk, the eccentric CEO of Tesla and SpaceX, who was able to remain in America on an H-1B visa.

 

 

Slamming the breaks on the H-1B visa program will also have a negative impact on the country’s colleges and universities. For example, a 2015 study suggests that the mere possibility of an H-1B visa incentivizes foreign students to come to America. By closing the door to future temporary employment in the United States, the world’s best and brightest students are more likely to consider top schools in Europe or Australia.

 

 

Even if top foreign students still do come to America, freezing the H-1B program effectively makes American universities “innovation exporters.” Despite the fact that the American educational system will train promising international students, often on scholarships, the next generation of researchers and entrepreneurs will take their American training and innovate elsewhere.

 

 

It is no secret that the COVID-19 pandemic and its associated economic downturn will force more Americans to compete for fewer jobs. But banning foreign experts will only slow the country’s economic recovery. Rather than preventing the world’s best and brightest from coming to America, highly-educated foreign experts should continue to play a role in innovating and growing American businesses as part of the COVID-19 recovery.

 

 


Oliver McPherson-Smith writes for the American Consumer Institute, a non-profit educational and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.