Lift the Congressional Quota on High‐​Skilled Workers

This article appeared on Cato.org on March 27, 1998.
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America's information technology companies are starved forhigh-skilled workers. The shortage was created by an arbitraryquota on immigrants set before the World Wide Web and 486 PCs evenexisted. In 1990 Congress capped the annual number of H-1B visasset aside for high-skilled immigrant workers at 65,000. This year,because of booming demand for workers in America's high-technologysector, the quota is expected to be filled by June, making analready tight labor market even tighter. Failure to lift the capsoon will disrupt production and dull the competitive edge ofAmerica's most dynamic companies.

There's plenty of evidence of a shortage. A study by VirginiaPolytechnic Institute estimates that more than 340,000 informationtechnology jobs are currently unfilled. Wages in a number ofhigh-skilled occupations such as systems analysts and softwareprogrammers have been rising at double-digit rates, a sure signalthat demand is outstripping supply. The unemployment rate amongelectrical engineers nationwide today is 0.4 percent.

The problem will only get worse. The U.S. Department of Laborpredicts 130,000 new information technology jobs each year for thenext decade. Yet American colleges are producing only 25,000graduates in computer science a year, 40 percent fewer than in the1980s, and only 20,000 electrical engineering graduates, one-thirdfewer than a decade ago. Although many high-tech jobs do notrequire such degrees, the decline in computer and engineeringdegrees can only aggravate whatever shortage exists.

A lack of qualified workers is forcing U.S. companies topostpone new research projects. Two-thirds of informationtechnology companies surveyed recently said the shortage ofhigh-skilled workers is a barrier to their future growth. CyprusSemiconductor of California counts 16 projects on hold because of ashortage of engineers. With product cycles of one year or less,every postponed project means lost sales, lost profits and fewerjobs 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 jobdone, whatever the workers' national origin.

Immigrants already play a vital role in America'shigh-technology economy. While immigrants are less than 10 percentof the U.S. population, they comprise 30 percent of research anddevelopment scientists and engineers with Ph.D.s. More thanone-third of the engineers in Silicon Valley are foreign born.

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

The anti-immigrant lobby has attacked a bill by Sen. SpencerAbraham (R-Mich.) that would raise the H-1B cap to 90,000, callingit a "sweatshop" bill for high-technology workers. The charge isjust plain silly. High-technology jobs are among the most rewardingin the country. Salaries in Silicon Valley average $42,000 a year,among the highest in the country. The only sweating those workersdo is during lunch hour in the company gym.

High-skilled immigrants do not undercut the wages or jobopportunities of native American workers. Indeed, according to datafrom the National Academy of Sciences and the National ScienceFoundation, foreign-born engineers and scientists typically earnslightly more than their native-born counterparts with the sameacademic credentials and experience. Immigrants also bringspecialized language skills to industries such as software, where agrowing percentage of sales for U.S. companies are innon-English-speaking markets. By enhancing the innovation, growthand competitiveness of American high-tech companies, immigrantscreate job opportunities for natives--along with better and moreaffordable products for consumers.

So why don't American companies train natives to fill the openpositions? America's high-tech industry already spends more than$200 billion a year on formal and informal job training. Companiesthat need workers today can't wait indefinitely for the publicschool monopoly to improving its teaching of math and science.

Companies pay a $10,000 to $15,000 premium to cover therelocation and visa application costs of a skilled immigrant underthe H-1B program, with no savings in labor costs. If U.S. companiescould meet their personnel needs by hiring only natives, theyprobably would. But there are simply not enough qualified nativeworkers to meet demand. In the end, the only proof of a workershortage that matters is the fact that companies want to hireworkers but are being prevented from doing so by a governmentrestriction.

The absurdly low H-1B cap is nothing more than a form ofcentralized industrial policy. It represents an attempt by Congressto micromanage the nation's most dynamic and innovative industry bydictating the composition of its most important resource, humancapital. Congress should lift the H-1B cap so that America'shigh-technology companies can continue to create wealth for all ofus in a competitive and open market.