February 28, 2020 11:03AM

Country Caps Cut the Average Wage Offer for New Employer‐​Sponsored Immigrants by $11,828 in 2019

The House of Representatives passed the Fairness for High Skilled Immigrants Act last year. The legislation would phase out the country‐​specific caps on employment‐​based green cards (i.e. legal permanent residence). The per‐​country limits prevent immigrants of any single birthplace from receiving more than 7 percent of the green cards issued in a year (unless they would otherwise go unused), no matter what share of the applicants they are

The per‐​country limits force Indians and Chinese—who make up a large majority of the immigrants employers sponsor for green cards—to wait for years, while nearly everyone else waits hardly at all. In 2019, the average green card recipient from India in the EB-2 and EB-3 green card categories—for employer‐​sponsored immigrants with either a bachelor’s or advanced degree—waited more than a decade. Chinese waited more than four years. Immigrants from every other country generally waited less than a year (on average) as a result of the caps. Going forward, these waits for Indians and Chinese will escalate to absurd lengths—several decades for newly backlogged immigrants in 2019.

This discrimination is wrong simply because it disadvantages one group based solely on their place of birth. But it is also economically senseless: Indian and Chinese immigrants tend to have much higher wage offers than immigrants from other countries in the EB-2 and EB-3 categories, so the government’s policy is targeting the most productive workers. In 2018, I demonstrated that the per‐​country limits depressed the average wage for new employer‐​sponsored immigrants by $11,592 for immigrants that year. In 2019, this disparity has grown.

Figure 1 relies on data on approved labor certifications submitted by employers in the EB2 and EB3 employer‐​sponsored immigrant classifications to the Department of Labor (DOL)[*]. The Department of Labor validates the information provided on the labor certification in order to deal with concerns that immigrants are taking jobs from U.S. workers. It shows that the wage offers for EB-2 and EB-3 immigrants from India and China were more than $30,000 more than workers from the rest of the world, despite much longer waits for those countries.

Figure 2 shows how much the country caps reduce the average wage offer for green card recipients. The first column shows the average wage offer for all immigrants—essentially what the wage would be without the country caps because the share of applicants would equal the share of green card recipients. The second column shows the wage offer for immigrants weighted by the number of green cards actually issued to each nationality in 2019. The weighted average wage with the per‐​country limits was $97,472, while the wage without it would be $109,301. The per‐​country limits depress the average wage for new employer‐​sponsored immigrants by $11,828.

Indians and Chinese have higher wage offers in virtually every state. Only in three states with very few wage offers are their (combined) average wage offer lower than the offers to other immigrants. This suggests that it is not the case the Indians and Chinese just choose higher‐​wage areas to reside. Table 1 lists the average wage offers by state for EB-2 and EB-3 Indians and Chinese and all other EB-2 and EB-3 immigrants.

The per‐​country limits strongly discriminate against higher‐​paid immigrants. On average, immigrants who are offered higher wages actually wait longer under the U.S. legal system than other immigrants. This shouldn’t be surprising because the average Chinese and Indian immigrants is also more highly educated than other immigrants (on average). Figure 3 shows the educational distribution of EB-2 and EB-3 immigrants with wage offers from employers.

U.S. employers need workers across the entire skill spectrum, and U.S. workers benefit from having low‐​skilled workers supporting their higher‐​paying activities. But a diversity of skill should emerge naturally from the operation of the free market, not because the government imposes rules that have the effect of discriminating against certain nationalities. Congress should repeal the country caps and allow workers to apply for jobs in the United States without regard to their birthplace. The market—not government bureaucrats—should determine who will benefit the United States the most economically.

This post updates my post on the same subject from 2018.

Notes

[*] Notes on methodology: Approved labor certifications include expired ones because they may still have been used to obtain a green card. The data needed mild cleaning as a result of a few entries where annual wages were listed as being paid on a more regular basis. The offered wage of immigrants was annualized and, if necessary, was determined by taking the midpoint in any salary or wage range provided by the employer.

EB2-EB3 employer‐​sponsored immigrants include all EB2-EB3 immigrants except for those who receive “national interest waivers,” but these immigrants do not need a sponsoring employer and so do not have any wage offer. No data exist on their wages after they receive green cards and find jobs in the United States, but NIWs are a much smaller population. There are good reasons for believing, based on the educational attainment of Indians and Chinese, that Indians and Chinese are overrepresented in this highly skilled (albeit smaller) group that may have higher wages. For this reason, this post may understate the final wages of new Indian and Chinese immigrants.