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If Trump restricts skilled immigrants, the U.S. could lose jobs to other countries

- March 22, 2017
Google CEO Sundar Pichai speaks during a news conference on Google’s collaboration with small-scale local businesses in New Delhi on Jan. 4, 2017. U.S. tech companies fear the Trump administration will target a visa program they cherish for bringing in engineers and other specialized workers from other countries.  (AP Photo/Tsering Topgyal)

President Trump’s recent executive order on immigration, which restricts immigration from six Muslim-majority countries, has dominated headlines. But much less publicized is that he is reportedly considering an overhaul of the H-1B visa program, which provides visas to highly skilled foreign workers.

We do not know what exactly this overhaul might entail, but companies that rely on these visas are nervous. Social science research shows that restricting visas for highly skilled foreign workers could prompt high-tech firms in the United States to shift operations overseas in search of skilled labor. Restrictions might also affect hospitals, universities and other service industries.

What is the H-1B program?

The H-1B program, authorized by the 1965 Immigration and Nationality Act, permits high-skilled foreigners to take jobs in “specialty occupations” including biotechnology, engineering and physical sciences. Visas last for three years, with the possibility of extending to six years. The program is capped at 65,000 visas per year, with a cap exemption for universities, nonprofit research organizations, and government research organizations — and an additional 20,000 visas available for applicants with advanced degrees. U.S. firms including Google, IBM and Microsoft are frequent users of the program, with Infosys topping the list of H-1B employers in 2017.

What does the Trump administration want to do?

The Trump administration announced last week that it was temporarily suspending “premium processing” of H-1B visas, which means that U.S. employers may have to wait several months before the H-1B foreign workers they want to hire can enter the country. A leaked draft executive order states that visa programs should be designed to protect the “civil rights of American workers.” Sen. Charles E.  Grassley (R-Iowa) and Senate Minority Whip Richard J. Durbin (D-Ill) introduced legislation earlier this year that would prioritize visas for foreign students educated in the United States, and “crack down on outsourcing companies that import large numbers” of H-1B visa holders.

Who would be most affected by changes to the H-1B program?

Skilled foreign workers in the United States are particularly prevalent in health care, higher education and high-tech industries. This is one reason that the American Medical Association has expressed concern to the Trump administration, noting that visa restrictions affect the flow of physicians and other health-care workers. Such restrictions would affect rural and low-income areas the most, as these are most likely to be served by international medical graduates.

Universities also depend on foreigners to fill their faculty ranks, especially in the science, technology, engineering, and mathematics (STEM) fields. Despite a greater push for STEM training in U.S. high schools and colleges, the number of U.S. citizens and permanent residents earning graduate degrees in science and engineering has been flat in recent years. This is why employers who depend on STEM workers often apply to hire skilled foreigners.

Silicon Valley, a region with obvious needs for foreign talent, would also be affected if visas become more difficult to obtain. In 2013, the Immigration and Citizenship Office of Canada posted billboards along the San Francisco highways (“H-1B Problems? Pivot to Canada!”) to lure foreign high-tech workers with the promise of easier residency requirements.

How would U.S. companies likely respond?

U.S. companies that hire H1-B workers have immediate demands for engineers and technical workers. A forthcoming study finds that U.S. companies often have responded to labor shortages and immigration restrictions not by lobbying the U.S. government to improve worker training or liberalize policies, but by simply relocating their production and employment overseas. Indeed, in our contemporary era of globalization, companies face far fewer legal and practical barriers to international movement than workers.

When companies make the decision to relocate abroad, they offer many benefits to foreign economies, such as higher wages than what local employers typically pay. Companies that make the move overseas tend to be more efficient than other firms in their industry.

How would the United States itself be affected?

American companies may profit from expanding overseas to benefit from foreign labor. However, offshoring also means that there is less employment, less investment and a lower tax liability here at home. There is also the loss of revenue from immigrants, who pay income and Social Security taxes. Immigrants also help to connect U.S. investors with opportunities in migrants’ home countries — such as by identifying promising high-tech start-ups — thereby bolstering the U.S. financial and venture capital industries.

Much is still in flux with the H1-B program. If Trump does issue an executive order, it could also end up subject to litigation. Congress could pass legislation too, and it would be less likely to be challenged on legal grounds.

H-1B restrictions could also have a direct electoral impact. Firms’ shifting operations and employment overseas is unpopular with voters. There is also the question of how Americans will respond — especially in rural areas that voted overwhelmingly for Trump — if there is a shortage of health-care workers, teachers and other professionals.

Layna Mosley is professor of political science at the University of North Carolina at Chapel Hill and the author of “Labor Rights and Multinational Production” (Cambridge University Press, 2011). She’s also at https://twitter.com/thwillow

David A. Singer is associate professor of political science at Massachusetts Institute of Technology and the author of “Regulating Capital: Setting Standards for the International Financial System” (Cornell University Press, 2010).