H-1B Visas Do Not Create Jobs or Improve Conditions for U.S. Workers

The common wisdom on Capitol Hill, carefully nurtured by corporate lobbyists and campaign cash, is that America needs more high-tech guestworkers, requiring a big increase in the number of H-1B guestworker visas made available each year. A number of senators, including Amy Klobuchar and Orrin Hatch, have introduced legislation to double or triple the number of non-immigrant tech workers who can be imported each year, despite evidence from the U.S. Government Accountability Office, independent researchers, and various media reports that the H-1B is used to lower wages and displace U.S. workers.

The senators endlessly proclaim that H-1B employees are good for our economy, that businesses can’t find enough talent here, that the H-1Bs are innovative, the “best and the brightest,” and that importing them leads to more job creation. In support, they cite a paper by Agnes Scott College researcher Madeline Zavodny, which found that hiring H-1Bs creates jobs for Americans: specifically, that “adding 100 H-1B workers results in an additional 183 jobs among U.S. natives.”

The problem is that it isn’t true. Zavodny’s research couldn’t discern whether the H-1Bs were hired because the economy was growing and jobs were being created—for natives and guestworkers alike—or whether the H-1Bs were responsible for the job growth. (The weakness of her results is demonstrated by another, completely implausible finding she reports, that H-2B unskilled guestworkers are associated with two-and-a-half times greater job creation than the college-educated H-1Bs: 464 jobs for every 100 H-2B guestworkers. The notion that hiring low-wage-earning landscapers and groundskeepers, hotel maids and dishwashers—most of whom have little or no college education—spurs spectacular job growth is ludicrous on its face.)

Much more careful, groundbreaking research on the effects of H-1Bs has recently been completed by economists at Notre Dame, the University of California, Berkeley, and the Office of Tax Analysis at the U.S. Department of Treasury. Their findings should put an end to the notion that H-1Bs are in any way good for U.S. workers. The research solves the problem of causality by employing a natural experiment. Two types of businesses were studied, those that applied for and received visas through the H-1B random “lottery” (because more employers want H-1Bs than are annually available, the government has to allocate them via lottery), and those that applied but failed in the lottery. If the H-1B visa raised wages, led to job creation, or spurred innovation, the companies that were awarded the visas should do better on each of those counts. In fact, they did not. On the contrary, over the eight years following the hiring of an H-1B worker, U.S. workers were displaced, wages were lowered, and there was no positive effect on innovation.

As the authors write: “We demonstrate that H-1Bs given to a firm on average do not raise the firm’s patenting and/or other employment, contrary to firms’ frequent claims. Overall our results are more consistent with the second [i.e., the critics’] narrative, in which H-1Bs replace other workers to some extent, are paid less than alternative workers, and increase the firm’s profits (despite little, if any, effect on firm patenting).”

Far from adding 1.83 jobs for each additional H-1B, the researchers “robustly find that new H-1Bs cause no significant increase in firm employment. New H-1Bs substantially and statistically significantly crowd out median employment of other workers.”

If Sen. Klobuchar and Sen. Hatch were being honest, they would stop repeating the debunked conclusion that H-1B visas are on the whole good for anything other than lowering wages for U.S. workers while raising the profits of the firms that obtain them. They would abandon their legislation to expand the H-1B visa program and put their efforts into crafting better H-1B rules that protect U.S. workers, or better yet, providing U.S. workers with better opportunities to make use of and be properly rewarded for the education and skills they have worked hard to obtain.

  • Avraam J. Dectis

    “U.S. workers were displaced, wages were lowered, and there was no positive effect on innovation.”

    I think most people who have been in the IT field since before the H1B visa would agree with the above assertions.

    It is simple supply and demand. If you vastly increase the supply of workers in a particular skill, wages will go down as the talent competes for the available positions and some talent will have to settle for much less or be unemployed.

    It is shameful that we would do that to an American citizen and shameful that any politician who claims to be a Democrat would support such a position.

  • Dave Batz

    Supply and Demand? Yes, I have been in the construction industry for many years, usually a fair paid occupation, but with what I see now, an influx of low-paid, low skilled, immigrant workers (Not H-1B), with questionable work quality standards, is what has increased competition for the contracts and pricing to the point that I can’t compete with. If I wish to hire laborers with the skill-sets required to complete a contract with the quality standards I can guarantee, I must pay a higher rate and if able offer some protections for my workers. Basically, I must now work alone with maybe 1 “Helper” which means the job takes longer to complete which is another competitive factor when another “Contractor” can show up with multiple workers.
    We have an “Over-Supply” of those willing to work “Hard for Less” while our governmental administration chooses to ignore the “Amendments of our Constitution” (“Broken Immigration System”?) and increases competition for jobs across the nation. “94M Out of the Workforce”? Economically, this is unsustainable for all citizens of our nation.

  • Kat

    While contracting in nuclear power construction, I watched a major construction company fill all the design engineering positions then pull everyone into a meeting and lowered all wages. Their excuse was the client refused to pay those level of wages. Which is ludicrous as the client does not determine hourly wage as they pay a lump sum per position to cover rate, overtime, and other expenses. I had never seen a company, especially a large, well known one, do this before but, it was obvious the original wage was to entice experienced workers only. Just one of the underhanded ways companies screw even degreed workers.

    • Mark

      I saw this at an electric utility back in the early 2000s. A dozen new grads were hired on at great packages, but because the market had recently collapsed, they were hauled into a meeting and told that they wouldn’t receive their promised pay packages. Those who put up any sort of resistance were subjected to abusive work assignments and ultimately quit and/or were fired for non-performance.

      • Kat

        Sounds like the East Coast Bechtel Corporation. LOL!!! A lot of heavy construction companies use that tool to get good employees than drop their wages. Which is why I contracted. Too many H1b workers as well. Thanks to Right to Work and H1b nonsense. Like America doesn’t have enough talent.

  • FdoCenteno

    Yes, some of us have already known this, so THANKS for the empirical evidence. Now, pls forward same to editorial pages around the country so that they can stop endorsing H-1B visas at the expense of U.S. workers.

  • Mark

    Things have been so bad for the past decade or longer that even top grads from US STEM schools, citizens, face an uphill battle finding employment. Job offers being few and far between. Interviews being torture tests and not professional at all. Salaries have lagged severely for the STEM workers who have managed to be employed during the H-1B onslaught, but Americans in the tech sector are becoming few and far between. Treating our best and brightest this way is a national disgrace.

  • Zen-mar

    Working at Infosys, and seeing the contracts, and constant replacement of forced out US workers with H-1B workers is atrocious. In my previous role in a US based company’s IT department I was level 5, working on Servers and project planning, and information security initiatives. Infosys reduced 26 of the 35 employees they “onboarded” to Level 1 and 2 with no chance of advancement, so that they could fill the higher level jobs with H-1B folks, and forced us to train them in the meantime. They were not skilled people. For the most part, they were college graduates that went through 1-6 weeks of Infosys orientation before being shipped over. It’s pathetic that we as Americans, whose skills far out paced the H-1B immigrants, had to settle for reduced responsibility, and as such, now are unable to get interviews with other US companies to move back up the chain, due to Infosys’ reputation. I graduated with a Bachelors in MIS and now working on my Masters, with sceptical hope of getting out of Infosys into a US firm, making a living wage again.