Lift the Congressional Quota on High‐​Skilled Workers

March 27, 1998 • Commentary
This article appeared on Cato​.org on March 27, 1998.

America’s information technology companies are starved for high‐​skilled workers. The shortage was created by an arbitrary quota on immigrants set before the World Wide Web and 486 PCs even existed. In 1990 Congress capped the annual number of H-1B visas set aside for high‐​skilled immigrant workers at 65,000. This year, because of booming demand for workers in America’s high‐​technology sector, the quota is expected to be filled by June, making an already tight labor market even tighter. Failure to lift the cap soon will disrupt production and dull the competitive edge of America’s most dynamic companies.

There’s plenty of evidence of a shortage. A study by Virginia Polytechnic Institute estimates that more than 340,000 information technology jobs are currently unfilled. Wages in a number of high‐​skilled occupations such as systems analysts and software programmers have been rising at double‐​digit rates, a sure signal that demand is outstripping supply. The unemployment rate among electrical engineers nationwide today is 0.4 percent.

The problem will only get worse. The U.S. Department of Labor predicts 130,000 new information technology jobs each year for the next decade. Yet American colleges are producing only 25,000 graduates in computer science a year, 40 percent fewer than in the 1980s, and only 20,000 electrical engineering graduates, one‐​third fewer than a decade ago. Although many high‐​tech jobs do not require such degrees, the decline in computer and engineering degrees can only aggravate whatever shortage exists.

A lack of qualified workers is forcing U.S. companies to postpone new research projects. Two‐​thirds of information technology companies surveyed recently said the shortage of high‐​skilled workers is a barrier to their future growth. Cyprus Semiconductor of California counts 16 projects on hold because of a shortage of engineers. With product cycles of one year or less, every postponed project means lost sales, lost profits and fewer jobs created to support research and development.

The answer is simple: Lift the cap on high‐​skilled immigrants. Allow U.S. companies to hire the workers they need to get the job done, whatever the workers’ national origin.

Immigrants already play a vital role in America’s high‐​technology economy. While immigrants are less than 10 percent of the U.S. population, they comprise 30 percent of research and development scientists and engineers with Ph.D.s. More than one‐​third of the engineers in Silicon Valley are foreign born.

Andrew Grove, the founder and CEO of Intel, the world’s largest semiconductor maker, immigrated to the United States from Hungary. James Goslin, a Canadian national, developed for Sun Microsystems the Java programming language, which is now used by 400,000 programmers worldwide. Why deprive ourselves of the present and future benefits of immigration when the past benefits are so obvious?

The anti‐​immigrant lobby has attacked a bill by Sen. Spencer Abraham (R‐​Mich.) that would raise the H-1B cap to 90,000, calling it a “sweatshop” bill for high‐​technology workers. The charge is just plain silly. High‐​technology jobs are among the most rewarding in the country. Salaries in Silicon Valley average $42,000 a year, among the highest in the country. The only sweating those workers do is during lunch hour in the company gym.

High‐​skilled immigrants do not undercut the wages or job opportunities of native American workers. Indeed, according to data from the National Academy of Sciences and the National Science Foundation, foreign‐​born engineers and scientists typically earn slightly more than their native‐​born counterparts with the same academic credentials and experience. Immigrants also bring specialized language skills to industries such as software, where a growing percentage of sales for U.S. companies are in non‐​English‐​speaking markets. By enhancing the innovation, growth and competitiveness of American high‐​tech companies, immigrants create job opportunities for natives–along with better and more affordable products for consumers.

So why don’t American companies train natives to fill the open positions? America’s high‐​tech industry already spends more than $200 billion a year on formal and informal job training. Companies that need workers today can’t wait indefinitely for the public school monopoly to improving its teaching of math and science.

Companies pay a $10,000 to $15,000 premium to cover the relocation and visa application costs of a skilled immigrant under the H-1B program, with no savings in labor costs. If U.S. companies could meet their personnel needs by hiring only natives, they probably would. But there are simply not enough qualified native workers to meet demand. In the end, the only proof of a worker shortage that matters is the fact that companies want to hire workers but are being prevented from doing so by a government restriction.

The absurdly low H-1B cap is nothing more than a form of centralized industrial policy. It represents an attempt by Congress to micromanage the nation’s most dynamic and innovative industry by dictating the composition of its most important resource, human capital. Congress should lift the H-1B cap so that America’s high‐​technology companies can continue to create wealth for all of us in a competitive and open market.

About the Author
Daniel Griswold
Former Director, Herbert A. Stiefel Center for Trade Policy Studies