Commentary

Foreign-Born Engineers and Scientists Don’t Undercut Wages: They Earn More

October 25, 1996

Contrary to the conventional wisdom, new research demonstrates that foreign-born scientists and engineers in Silicon Valley and elsewhere do not increase unemployment for natives and actually earn more than their American-born counterparts. That undermines the key premise of restrictive legislation by Senator Alan Simpson, who has asserted that immigrant professionals work for one-third less pay just so they can get a green card.

The research findings I uncovered for a recent study on employment-base immigration do not mean the foreign-born are taking high-paying jobs from Americans or doing well at the expense of the native-born. The number of jobs available in the U.S. economy is not a fixed number, nor is the amount of compensation paid to workers static and fixed. Both grow based on several factors, including labor force growth, technology, education, entrepreneurship and research and development.

No correlation exists between a high percentage of foreign-born PhDs working in a field and a high unemployment rate within that field. Engineering and computer science have the highest concentration of foreign-born in any PhD field, yet have unemployment rates of only 1.7 percent and 1.0 percent.

Geosciences and the social sciences have a low percentage of foreign-born PhDs, and the unemployment rates in those fields are 2.2 percent and 2.8 percent respectively.

Even more significant is what analyzing unpublished data obtained from the National Academy of Sciences and National Science Foundation reveals. The data show that foreign-born engineers and scientists earn higher salaries than their native-born counterparts who completed their Ph.D.s and master’s degrees in the same year. This is clear evidence that the foreign-born are not bidding down wage rates by being willing to work for less than the native-born, since, on balance, the foreign-born are paid more.

According to the data, the annual median earnings of foreign-born engineers and scientists are $1,100 more than those of the native-born one to five years after completing their master’s degrees, $2,000 more 11 to 15 years after, and $4,000 more 16 to 20 years after.

At the Ph.D. level, the data are even stronger (see table). Foreign-born Ph.D. scientists and engineers one to six years out of school earn $44,000 compared to $40,000 earned by the native-born. The gap between the two groups increases until reaching a $10,000 foreign-born advantage for those 16 to 20 years after having received a Ph.D.

The data measures people who completed their degrees in the same year, which is crucial, since, all things being equal, an individual 15 years in the field will earn more than someone relatively new. Other things held constant, one would expect to find that immigrants are paid less than the native-born because of the obvious advantage of the native-born in language and culture.

Wages are a function of productivity. We can only conclude then from the data that the foreign-born who work in America are exceptionally productive.

1993 Median Salaries of U.S. Recipients of Ph.D.s in
Science and Engineering: Foreign-Born vs. Native-Born

Years Since Earning Degree

Foreign-Born

Native-Born

1-5 years since degree $44,400 $40,000
6-10 years $55,400 $49,200
11-15 years $64,000 $56,000
16-20 years $70,000 $60,000
21 years or more $70,200 $68,000

Source: Unpublished National Science Foundation tabulation of the 1993 Survey of Doctoral Recipients and the 1993 National Survey of College Graduates. Foreign-Born includes naturalized U.S. citizens, permanent residents and workers on temporary visas (including H-1B visas).

Research and development would fly offshore if immigration restrictions prevented high tech companies from hiring the people who contribute to America’s next generation of products and innovations. In fact, 28 percent of Ph.D.s involved in research and development in the U.S. are immigrants. How would the United States be stronger if instead these highly educated people went to work for our competitors overseas?

Can we find stories of people being exploited because they are immigrants? Undoubtedly, but there is no evidence this iswidespread in the science and engineering fields. Pay scales at companies do not differentiate by national origin or immigration status; they are established through examining an individual’s merit, experience and education.

The issue of whether foreign-born engineers are paid less than American-born engineers is best summed up by Ehud Yuhjtman, an Israeli-born engineer at Santa Clara-based Chip Express, who often interviews prospective hires. “You cannot pay foreign-born engineers less. These are smart people, if you try to fool with them, then they will go someplace else.”

Stuart Anderson is a director of trade and immigration studies at the Cato Institute.