Spring, sadly, is the time of year we are reminded there is a yawning gap in the U.S. labor market—545,000 technology jobs remain unfilled because we have a shortage of workers who are qualified for high-skilled positions in the so-called “STEM” fields of science, technology, engineering, and mathematics. This gap stymies growth in advanced technology industries and hurts American competitiveness.
The federal government has a special visa program that is intended to help fill the STEM gap by allowing foreign-born workers with in-demand skills to temporarily work in the United States. The trouble with these permits, known as H-1B visas, is there aren’t nearly enough of them. The imbalance in the supply and demand for H-1Bs was on full display earlier last month when the U.S. Citizenship and Immigration Services received more than 233,000 applications in less than a week for just 85,000 available permits, forcing administrators to use a lottery system.
This drama plays out every year, like the turning of the seasons. Yet a small band of liberal economists has become increasingly vocal in its insistence that the STEM shortage is an industry fabrication and that H-1B workers are simply cheap substitutes for able Americans. Against all evidence, they claim that H-1B workers are paid substantially less than native-born workers, that wages in IT and engineering industries are low and flat, and that native-born STEM workers, especially recent graduates, cannot find jobs in their fields.
These arguments are easily debunked. The truth is that H-1B workers earn comparable or higher wages than native-born workers in similar occupations. Moreover, inflation-adjusted wages in IT fields are 80 percent higher than the average national wage, and have risen much faster than wages for the rest of the economy. Moreover, degrees in computer science and engineering yield the highest return on investment of any major, and graduates find jobs related to their fields at higher rates and earn substantially more than their peers. The supply of students studying STEM subjects is constrained by lack of capacity and quality in the education system, not by insufficient wage incentives.
Most importantly, the evidence shows that guest workers don’t take jobs from native-born workers—they create them. When companies expand, they hire an average of about four non-STEM personnel for every three STEM workers they bring onboard. Additionally, each technology worker who moves into a city and spends wages locally can generate 4.3 additional jobs while driving wage increases for native-born workers through a robust spending multiplier effect. Additionally, as measured by businesses founded and patents filed, immigrants demonstrate higher rates of innovation and entrepreneurial activity than do native-born workers, which drives the economy forward and creates new and higher-paying opportunities for others.
The deleterious impact of the STEM shortage and low H-1B visa cap is particularly bad for Silicon Valley. The region files more than 10 percent of the nation’s H-1B visa petitions. In this year’s lottery to allot scarce visas, more than 15,000 visa petitions filed by companies in the Silicon Valley are likely to be rejected. This will cause the region to forfeit an opportunity for significant growth in advanced industries.
Silicon Valley’s advanced, traded industries power innovation and growth throughout the U.S. economy. But denying companies access to the skilled workers they need is like asking them to work with one hand tied behind their backs. Instead, the United States should raise the cap on H-1B visas and broaden overall high-skill innovation so that our economic engine can be fueled by the brightest minds from all over the world.