When President Trump announced his “Buy American, Hire American” executive order in mid-April, he promised that new rules, investigations and restrictions would help the United States attract top talent. The purpose of the executive order is to discourage U.S. companies from hiring high-skilled foreign nationals. Despite the Trump administration’s spin, these unilateral actions will serve to hurt high-skilled immigration to the U.S. — and international students in particular. No one should be surprised that the Trump administration is making life more difficult for skilled foreign-born professionals and their potential U.S. employers, after his hastily executed Muslim travel ban left many skilled immigrants in limbo. The way to attract top talent to America is not through more rules and potential prosecutions, but through higher visa numbers and less regulation.
Trump’s executive order specifically targets H-1B visas, a temporary program for high-skilled foreign nationals with at least a bachelor’s degree, though almost 60 percent today have a master’s degree or higher. While the number of H-1B visas are small, they are important to the U.S. economy and to a diverse group of companies — approximately 26,000 different U.S. employers hired at least one high-skilled foreign national on a new H-1B petition in 2015. Since it can take many years to sponsor an employee for permanent residence (due to bureaucratic rules, a low annual limit, and a per country limit), an H-1B visa remains often the only practical way for international students or other highly skilled individuals to work long-term in the United States.
In 1990, Congress set an annual limit of 65,000 H-1B visas, which represents a small proportion of the U.S. labor force. The supply of H-1B visas has been exhausted every year since 2004, encouraging companies that are shut out to instead place more jobs and investment overseas. This limit is reached primarily because it was set back in the ‘90s, before technological innovations like mobile applications and smartphones fueled today’s demand for high-skilled labor, and because the number of U.S. graduates with high tech skills is low relative to today’s demand. At U.S. universities, international students account for nearly 80 percent of the full-time graduate students in electrical engineering, and over 70 percent in computer science.
While simply raising the annual cap of H-1Bs would solve the problem of an overburdened H-1B program, critics argue that the solution is to restrict which companies can receive the visas. But, simple math tells us that would not solve the problem. Trump advisers and allies in Congress have wrongly claimed Indian-based companies use up most of the visas. But during just the first week of April 2017, U.S. Citizenship and Immigration Services received 199,000 applications for the next fiscal year, while the top seven Indian-based companies typically have only about 14,600 new H-1B petitions approved in a year, or a negligible 0.009 percent of the U.S. labor force. That means the visas still would have run out just as quickly this year even if those companies had received no visas.
The core substantive proposal in the Trump executive order would change the system for issuing H-1B visas toward “the most-skilled or highest-paid.” While this may sound reasonable, in practice, it would mean instead of the current method of distributing new H-1B petitions by lottery when too many applications are received each year, petitions instead would go only to those with the highest salaries, favoring older H-1B visa holders over recent, foreign-born graduates from U.S. universities.
To make the case for new restrictions, the Trump administration has argued that H-1B visa holders are paid low salaries. This is not true. A Trump official told reporters in a background briefing that “about 80 percent of H-1B workers are paid less than the median wage in their fields.” This “80%” statistic is highly misleading, since that figure relies on a problematic Department of Labor database that double or triple counts anyone who works in more than one geographic location (primarily younger workers sent to multiple offices). After comparing the median reported salaries of U.S. workers and H-1B professionals in the same fields and age groups, the Government Accountability Office found H-1B professionals generally earn the same or more than their U.S. counterparts.
Another reason to question the Trump administration figure: the median salary in 2015 for H-1B computer-related recipients after working for about three years (known as “continuing employment”) was actually approximately $7,000 higher than the median salary in the industry.
The Trump administration’s proposal would shut out many international students from H-1B visas, since new entrants to the labor market cannot demand the highest salaries. The goal of Trump and other critics is to price many international students and other potential H-1B visa holders out of the job market so they will leave the country and not return. The critics mistakenly believe this will free up more jobs for U.S. workers, even though technology companies are struggling to find qualified candidates for high-skilled jobs — nationwide, there are more than 500,000 open computing jobs. If U.S. law had earlier prevented international students from being able to work in the United States after graduation, then about 20 percent of the startup companies in America today valued at $1 billion or more never would have been started.
America remains the number one destination for people around the world with talent and ambition. But not if we don’t let them in.