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.