The U.S. technology sector is facing an unprecedented crisis that could have significant negative implications for the tech sector itself, the wider U.S. economy, and long-term consumer welfare. At the end of 2020, it was estimated there was a shortfall of 1 million tech professionals. This labor shortage is nothing new, with the Bureau of Labor Statistics warning back in 2013 there would only be 400,000 computer sciences graduates qualified to fill 1.4 million computer science-related jobs.
To ensure the tech sector can continue to provide its monumental contribution to the U.S. economy and remain a global leader in tech innovation, the industry needs to find a way to ensure it can recruit talent both domestically and abroad. The best way to ensure the tech sector can continue to recruit enough workers to fill vacant positions is for the federal government to reform immigration policies that prevent international students from working after they graduate.
Each year, the U.S. welcomes over 1 million international students. Of these 1 million international students, the Congressional Research Service estimates almost 500,000 were enrolled in a STEM (Science, Technology, Engineering, Math) discipline. Of those foreign STEM students, the majority study for graduate degrees. The significant number of international students enrolled in STEM topics, particularly at the graduate level, presents the United States with an obvious labor pool of qualified and willing applicants to fill the significant number of vacant positions in the tech sector.
Current immigration statutes provide foreign graduates few options if they wish to remain in the United States after graduating, forcing them to either return home or move to a different country, such as Canada, with more liberal immigration laws. After finishing up a degree program, STEM graduates can obtain a two-year employment authorization that allows them to work in a field directly related to their studies. However, once the two years are over, those workers must either leave the country or find a sponsor for an H1-B visa or employment-based green card, both of which impose significant burdens on the sponsoring company.
U.S. immigration law has created a situation whereby American universities cultivate tech talent, only for the federal government to turn them away. This relationship weakens the American economy, limits long-term economic prosperity for Americans, and benefits rival economies that can attract talent forced to leave the U.S. These foreign graduates have also allowed cities like Toronto and Vancouver to become tech hubs at the expense of Silicon Valley.
The H1-B visa does not offer a viable alternative since Congress limits the number to 65,000 each year, with only 20,000 reserved for advanced degree holders. While tech firms receive the majority of H1-B visas, the quota is simply too low to fill the number of vacancies in tech sector.
The Congressional Budget Office (CBO) has also recognized the importance of immigration to supporting innovation. In a recent study that explored policy solutions to declining entrepreneurship since the 1980s, the CBO explicitly called for reform to the H1-B visa and employment-based green-card program to make it easier for highly skilled workers to immigrate to the United States.
The shortage of qualified workers also presents significant and unnecessary challenges to the broader U.S. economy and its long-term prosperity. The lack of skilled workers who can work in the tech sector will cost the U.S. economy an estimated $454 billion in lost economic output by 2028. A shortage of tech workers also presents a significant threat to other industries, considering the tech sector has an employment multiplier of 3.59, where one tech job ultimately produces a total of 4 jobs nationwide. This multiplier effect means the shortage of tech workers significantly slows job growth in the wider economy.
Foreign labor has also driven tech innovation, providing American consumers with more advanced technology at a lower price. Stanford University recently found that while immigrants only make up 16 percent of inventors, they have been responsible for “30 percent of aggregate U.S. innovation since 1976.” Over the past few decades, foreign tech workers have provided American consumers access to a range of technologies from autonomous cars, search engines, and video streaming services.
As the tech sector grows and becomes an even more important component of the twenty-first century U.S. economy, the industry’s labor needs will only continue to grow. It should be clear that federal immigration law is a principal cause of this shortage. One solution Congress should pursue to resolve the tech industry’s labor shortage is to reform immigration laws to allow more international STEM students to remain in the country after graduating.
Immigration reform would not only resolve the labor shortage the tech sector faces, but it would also ensure the tech industry can drive future prosperity, innovation, and American competitiveness in the global economy.
