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Economics
Alabama’s Extreme Immigration Law Could Cost State Billions, Report Finds
02 days ago
Implementing Alabama’s extreme immigration law (HB 56) would be incredibly expensive. That is the bottom line of a new report by University of Alabama economist Samuel Addy entitled A Cost-Benefit Analysis of the New Alabama Immigration Law. According to the report, the law could cost Alabama up to $11 billion in GDP and nearly $265 million in state income and sales tax. The loss includes 1) implementation, enforcement, and litigation expenditures; 2) increased costs and inconveniences for citizens and legal residents and businesses; 3) reduced economic development opportunities because it creates a poor business climate; and 4) the economic impact of reduced aggregate demand due to some unauthorized immigrants leaving and therefore not earning and spending income in the state.
Addy creates an estimate of the costs of HB 56 by using a model that assumes that unauthorized workers vacate jobs in agriculture, construction, accommodation, and food service and that between 40,000 and 80,000 workers earning between $15,000 and $35,000 leave the state. Different estimates are provided for losses of 40,000; 60,000; and 80,000 workers. He concludes that the law would result in:
- A reduction of 70,000 to 140,000 jobs;
- A reduction of $2.3-$10.8 billion in Alabama’s Gross Domestic Product (GDP) or 1.3-6.2 percent of the stat’s 2010 GDP;
- A reduction of between $56.7 and $264.5 million in state income and sales tax collections;
- A reduction of $20 to $93.1 million in local sales tax collections.
Although HB56’s proponents often claim the bill will bring potential benefits to the state, Addy does not find significant state savings from decreased benefits for unauthorized immigrants. He concludes that unauthorized immigrants pay taxes and are not a drain on the economy. Furthermore, he does not see increased public safety as a likely outcome because unauthorized immigrants are not responsible for disproportionately high crime rates.
Addy also responds to arguments that the new immigration law is responsible for decreased unemployment in the state. Contrary to what proponents of the law are claiming, it does not appear that legal residents and citizens are filling jobs previously held by unauthorized immigrants. Also, in the four sectors that most often employ unauthorized workers (agriculture, construction, lodging and eating establishments), unemployment is not falling.
The report concludes that the costs of the new law are large and certain, while any potential benefits are unclear. “From an economist’s perspective, the question Alabama and its legislature have to ponder is this: Are the benefits of the new immigration law worth the costs.” Based on the work of Addy and others, the answer has to be a resounding “no.”
Photo by Willamor Media.
New Report Highlights Contributions of Immigrant Entrepreneurs to U.S. Economy
01 week ago
BY MARCIA HOHN, IMMIGRANT LEARNING CENTER
At last night’s State of the Union Address, two immigrant entrepreneurs were among the President’s guests—Japan-born Dr. Hiroyuki Fujita, founder, president and chief executive officer of Quality Electrodynamics (QED) in Cleveland, Ohio and Brazil-born Mike Krieger, co-founder of Instagram, a fast growing social mobile startup. Dr. Fijuita and Mike Krieger were rightfully recognized for their entrepreneurial drive and hard-earned success (both businesses are now worth millions of dollars), but they are just two examples of immigrants who came to this country and started businesses. There are many more unsung immigrant entrepreneurs whose U.S. businesses continue to create jobs for Americans and strengthen the U.S. economy.
Many are aware of the giants among immigrant entrepreneurs such as Sergey Brin of Google or Jerry Yang of Yahoo. But there is little recognition of the role important immigrant businesses play in neighborhood revitalization, growth businesses, and transnational businesses. A new report, Immigrant Entrepreneurs: Creating Jobs and Strengthening the Economy, released today by the Immigrant Learning Center, U.S. Chamber of Commerce and Immigration Policy Center highlights the vital role immigrant entrepreneurs play across the U.S. economy.
The report focuses on small businesses such as neighborhood storefronts—grocery stores, restaurants, gift shops and real estate firms—which make up the fabric of many neighborhoods. Immigrants are often attracted by low rents available in neighborhoods that have been blighted by economic decline. The arrival of their businesses revives commerce in these areas and provides needed goods and services for residents. As one immigrant storefront owner in Boston said:
Of course my business makes the neighborhood better. It makes this neighborhood more beautiful. The community ignored this neighborhood before. People did not want to move here because it was desolate and unsafe. Now, people want to come here.
The report also mentions growth businesses which, like many small businesses, often hatch from a living room or kitchen. The result of ambition, hard work and vision, these immigrant growth businesses have a strong presence in food and food distribution, transportation, leisure and hospitality as well as building services. One Boston-based entrepreneur, Jill Cheng, had a vision to bring Asia to the world. She began with a small collection of books in Chinese and Japanese, but with the explosion of business with China, her company (Cheng & Tsui Publishers) is now a multi-million dollar business.
Technology and science companies continue to be founded by immigrants at unprecedented numbers—leaping to 46% in venture-backed companies—as documented in a very recent study by the National Foundation for America Policy. These companies are keeping America on the cutting edge of innovation in technology and improving human health—as well as keeping America internationally competitive. Not only do these immigrant founders bring talent and skill but are also likely to have qualities such as a willingness to take risks, a deep appreciation for the opportunities that America gives them and perseverance. Sonny Vu from Vietnam and Sridhar Iyengar, 2nd generation from India, are convinced it was their immigrant backgrounds that made it possible for them to take an idea born in a cramped Boston apartment to a $20 million American company called AgaMatrix that manufactures mobile health monitoring devices.
Immigrant-run transnational businesses are also keeping the U.S. globally competitive. These are businesses that have a “foot in both worlds” and have a variety of business relationships here in the U.S. and their homelands that provide import-export, transfer of goods and remittances across countries or special goods for specific communities groups here and abroad. Transnational businesses also help America companies understand how to do business in other countries, build bridges of communication and bring diversity to the goods and services available in America.
Countless economists and business experts have highlighted the economic contributions of immigrant entrepreneurs to the U.S. economy. Now, it’s Congresses turn. National immigration policies must reflect the economic and social contributions of immigrant businesses and—equally important—that immigrant entrepreneurs come from all backgrounds.
New Report Says Legalization Would Result in $1.4 billion in Revenues for Houston, Texas
02 weeks ago
A new report issued this month by the Greater Houston Partnership (GHP), a business advocacy organization, confirms that legalization of unauthorized workers would result in those workers earning higher wages and paying more taxes. Potential Tax Revenues from Unauthorized Workers in Houston’s Economy uses data from the Pew Hispanic Center to estimate the number of unauthorized immigrant workers, by industry, in the Houston area. Then, assuming that legalized workers would earn the prevailing wage in their industry, GHP estimates their projected incomes to which it applies the standard tax rate.
GHP estimates that, if all unauthorized workers in the Houston region were legalized and they and their employers paid Social Security, Medicare, unemployment insurance, and federal income taxes, additional tax revenues would exceed $1.4 billion. The report also demonstrates that even with less than 100% legalization, there are still significant potential revenues. For example, if only 25% acquire legal status, an additional $356.1 million in tax revenues would be generated.
This study examines an important question about what legalizing the currently undocumented would do. However, it does have a few problems stemming from some of the assumptions made about the undocumented population.
The report assumes unauthorized workers and their employers are not currently paying any taxes and that only legalization would require them to pay taxes. However, we know that many undocumented workers and their employers already pay Social Security, Medicare, unemployment, and federal income taxes. Once legalized, many would likely get better jobs with higher wages, not the prevailing wage, meaning they would pay even more in taxes than the report estimates.
The report should also include sales and property taxes which are already paid by unauthorized immigrants right now. The gains from these taxes would also likely increase because legalized workers making higher incomes would spend more on consumption and pay more tax.
Despite those concerns, the new GHP report adds to the literature that legalization is an economic plus for our communities.
Hopefully, this report will encourage more people to look at what immigration brings to an economy as opposed to the usual discussion over how much unauthorized immigrants cost—discussions which often cite dubious sources. Conveniently absent from many of those discussions is the fact that these immigrants are workers, taxpayers, and consumers who benefit the economy in significant ways. More importantly, in contrast to spending billions of dollars on mass deportation, legalization would lead to higher tax revenues and higher consumption which boosts the economy.
Photo by arielp.
Immigrants, Latinos and Asians Contribute More to Your State Than You Think
03 weeks ago
Immigration has never been a numbers game. When people think of immigration in America, they likely call to mind fear-fueled myths perpetuated by immigration restrictionists, like “immigrants are stealing American jobs” or “immigrants are a drain on our system.” Sadly, numbers and facts have rarely been part of the discussion, especially as state legislatures continue to take immigration law into their own hands. Today, however, the Immigration Policy Center published 50 state fact sheets updated to show just how much immigrants, Latinos and Asians contribute to our country as consumers, taxpayers, workers, entrepreneurs and voters—facts state legislators would do well to consider before passing legislation that drives immigrants, undocumented and documented, from their state.
Legislators in Alabama passed one of the most extreme anti-immigrant laws (HB 56) last year in response to the state’s “immigration problem.” According to the Pew Hispanic Center, Alabama’s undocumented population was 2.5% of total population (or 120,000 people) in 2010—lower than in 22 other states. While Alabama’s undocumented may be smaller than other states, however, their economic contributions are not. Alabama’s undocumented contributed more than $130 million in state and local taxes in 2010.
As Alabama continues to drive undocumented immigrants and their contributions from the state, they also run the risk of alienating documented immigrants, Latinos and Asians in the process. Alabama’s Latino and Asian populations’ combined purchasing power was nearly $6 billion in 2010. Alabama faces a $979 million budget gap in FY2012.
In California, whose undocumented population paid $2.7 billion in state and local taxes in 2010, some recently attempted (and failed) to overturn the California DREAM Act—two laws which allow undocumented students to enroll in California’s public colleges and universities and apply for state-based funding. Studies show that by 2025, California will not have enough college graduates to keep up with economic demand. The California DREAM Act may play a critical role in boosting the number of college grads.
Another part of Georgia’s extreme immigrant law (HB 87) went into effect this month, requiring people to show certain forms of identification before they can get among other things, professional business licenses. While this may seem pretty standard, business leaders in the state are worried that this will slow commerce, cause serious processing delays, and hurt an already struggling economy. At last count, Latino and Asian businesses in Georgia had sales and receipts of $20.6 billion and employed nearly 110,000 people.
State legislatures, the majority of which convene this month, are likely to continue to consider restrictive immigration legislation this year, but it’s critical that they consider exactly how much these punitive laws will cost their state. States are far from fully recovered from the economic recession and many still face large budget shortfalls into FY2013, according to Center for Budget and Policy Priorities.
Facts don’t lie. Immigrants, Latinos and Asians have and will continue to account for large and growing shares of state economies and populations. Can state legislators really afford to alienate such a critical part of its labor force, tax base, and business community?
New Report Finds that Immigration Creates U.S. Jobs
01 month ago
Immigration creates jobs for native-born Americans. That is the fundamental finding of a new study from the American Enterprise Institute and the Partnership For A New American Economy, entitled Immigration and American Jobs. The study—authored by Madeline Zavodny, a professor of economics at Agnes Scott College—reinforces the findings of numerous other studies which have demonstrated that there is no correlation between immigration and unemployment. Specifically, Zavodny analyzes Census data with the aim of answering one pivotal question: “In states with more immigrants, are US natives more or less likely to have a job?” Zavodny focuses on two groups in particular: immigrants with advanced degrees, and immigrants of any skill level who are in the country on temporary visas.
The four principal conclusions of Zavodny’s study are unequivocal:
- Immigrants who hold advanced degrees create jobs for native-born workers. The biggest job boost comes from those immigrants with advanced degrees from U.S. universities who work in the science, technology, engineering, and mathematics (STEM) fields. According to Zavodny, “data comparing employment among the fifty states and the District of Columbia show that from 2000 to 2007, an additional 100 foreign-born workers in STEM fields with advanced degrees from US universities is associated with an additional 262 jobs among US natives.”
- Both highly skilled and less-skilled temporary workers create U.S. jobs. Zavodny finds “that states with greater numbers of temporary workers in the H-1B program for skilled workers and H-2B program for less-skilled nonagricultural workers had higher employment among US natives.” Specifically, the addition of 100 H-1B workers was associated with an additional 183 jobs for native-born workers, while the addition of 100 H-2B workers was associated with an additional 464 jobs for native-born workers.
- Immigrants don’t take jobs away from native-born workers. According to Zavodny, there is “no evidence that foreign-born workers, taken in the aggregate, hurt US employment. Even under the current immigration pattern—which is not designed to maximize job creation, has at least eight million unauthorized workers, and prioritizes family reunification—there is no statistically significant effect, either positive or negative, on the employment rate among US natives.”
- The taxes paid by highly educated immigrants more than cover the cost of the benefits they receive. Zavodny finds that “in 2009, the average foreign-born adult with an advanced degree paid over $22,500 in federal, state, and Federal Insurance Contributions Act (FICA, or Social Security and Medicare) taxes, while their families received benefits one-tenth that size through government transfer programs like cash welfare, unemployment benefits, and Medicaid.”
According to Zavodny, the findings of her study suggest three reforms to the U.S. immigration system which would benefit the U.S. economy and native-born workers. First, she calls for a reorientation of permanent and temporary immigration policies to favor immigrants with advanced degrees from U.S. universities in STEM fields. Second, she advocates an increase in the number of “green cards” (permanent visas) available to highly educated immigrant workers. And third, she recommends an increase in the number of temporary visas for both highly skilled and less-skilled immigrant workers. Zavodny notes that these reforms would create new jobs while requiring “neither new taxes nor new spending cuts.”
Zavodny concludes that “immigration policy can, and should, be a significant component of America’s economic recovery.” Yet the reality is that even the most basic of immigration reforms are deadlocked in the U.S. Congress. And, while the United States dawdles, “the rest of the world competes for talent.” According to Zavodny, “every major developed country is more focused than the United States on admitting immigrants to meet economic needs.” In other words, whether they realize it or not, opponents of immigration reform are needlessly undermining the U.S. economy.
Photo by thekevinchang.
Just in Time for the Holidays: Congress Moves 4 Million Children Closer to Poverty
01 month ago
Congress has been unable to pass any meaningful immigration legislation this year, but the House couldn’t miss a chance to stick it to immigrants by going after their U.S. citizen children in a recent tax bill. While Americans are debating whether taxes on millionaires should be raised, the House, at least, is planning to raise taxes on the most vulnerable of American citizens.
The tax package that is likely to pass the House and make its way to the Senate this week denies immigrant taxpayers who file their taxes using an Individual Taxpayer Identification Number (ITIN) the ability to claim the Additional Child Tax Credit for their U.S. citizen children. This provision will impact 2 million families and up to 4 million U.S. citizen children and take away a tax credit designed to keep children out of poverty.
Child tax credits can only be claimed by those paying into the system and were designed to alleviate some of the burden that tax payment imposes on low-income, working families. Taking away this credit from tax-paying families could drive more than two million families closer to poverty.
Unauthorized immigrants are required to pay their taxes, just like all Americans. Many fulfill their tax payment obligations using an ITIN, but they are not eligible for the vast majority of benefits their tax dollars pay into.
According to the Treasury Department’s Inspector General, in 2010, ITIN filers reported $60 billion dollars in wages, which according to an estimate by the National Immigration Law Center means they generated an estimated $9.2 billion in payroll taxes. This revenue, which benefits us all, is ten times the amount that would be saved by stripping the child tax credit away from the children of ITIN filers.
ITIN filers are doing the right thing by paying into the tax system with little hope of collecting any future benefits for themselves. If the Senate follows suit, the only ones hurt in the process will be the children.
Photo by miuenski.
New Report Shows Immigrant Women Entrepreneurs Create Jobs and Contribute to Economy
01 month ago
Economists readily acknowledge the economic contributions of immigrant entrepreneurs to the U.S. After all, we wouldn’t have one-quarter of all public companies in the U.S.—companies like Google, Yahoo!, and Intel which employed 220,000 people and generated more than $500 billion in one year—without them. But lost in that acknowledgement are the contributions of immigrant women entrepreneurs who last year made up 40% (or 980,575) of all immigrant business owners in the U.S. This week, a new report, Our American Immigrant Entrepreneurs: The Women, takes a closer look at these women and examines the obstacles and pathways to establishing successful businesses—businesses that have created American jobs and generated millions in taxable revenue.
According to the report, there was a significant rise in immigrant women entrepreneurship over the last 10 years. According to the Census, 575,750 foreign-born women who immigrated as adults claimed to be self-employed in their own business as of 2000. Ten years later, however, that number has increased to 980,575 or 40% of all immigrant business owners in the U.S.
But that success isn’t always easy to come by. Of the immigrant women interviewed, many faced gender bias and difficulties securing start-up capital. Many women also reported that banks were hesitant to provide start-up funds due to the small size of their businesses. Yet, through their own determination and help from friends, associations, networks, colleagues and families, these women were able to establish successful businesses.
Maria Sobrino, for example, came to the U.S. from Mexico and started her own dessert company, Lulu Desserts. She noticed the absence of a Mexican comfort food, gelatinas or flavored gelatins, and began experimenting with samples. Due to difficulties securing capital, Sobrino had to start small and constantly reinvest in her business. “Do you know how many people laughed at my idea of having gelatinas and selling them with a little jar three hundred cups a day that I was doing?” Sobrino asked. “Today we sell about fifty million cups a year of gelatin, and we distribute to supermarkets.” Lulu Desserts currently generates $9.2 million and employs a host of marketing, sales, and delivery personnel.
Sheela Murthy, an immigration attorney from India and graduate of Harvard Law School, agrees that a passion to succeed was essential in establishing her own law firm—a firm which today generates $4-5 million a year and employs 70 people. Rubina Chaudhary, also of India, had trouble securing capital for her engineering management firm at first. Now, however, as president of MARRS Services, Inc., she manages multimillion dollar public contracts, employs 50 full time staff, and consults with large public and private clients.
These are just some of the many stories of immigrant entrepreneur women who, despite gender and racial discrimination, started their own businesses. And they want nothing more than to create an easier path for other immigrant women to do the same. They recommend easier access to start-up capital and federal loans for women- and minority-owned business, reform of bureaucratic hurdles, access to clearer information on state and federal regulations, and a continued discussion on how to address the barriers women face in the workplace.
In fact, making it easier for all entrepreneurs—including immigrant women—to start businesses which create American jobs, stabilize communities, and generate millions in taxable revenue seems like something every American would be wise to support.
Alabama’s Immigration Law Digs Deeper Hole for State Economy
02 months ago
Although some Alabama lawmakers credit the state’s overall drop in unemployment to their new immigration law (HB 56), the reality is that many industries and sectors in the state are losing workers and jobs. This week, the Birmingham News reported that Alabama’s construction industry is losing jobs faster than nearly any other state—a loss experts say is due in part to HB 56’s draconian provisions. To make matters worse, Alabama’s crackdown on those who look or sound foreign (a Honda employee stopped this week and the arrest of a Mercedes executive last week) is causing many to fear Alabama’s anti-immigrant reputation will detract foreign investors from doing business in the state. In fact, according to the Tuscaloosa News, “the law is becoming the greatest threat to the state’s economy and job creation, overshadowing even the record-setting bankruptcy of Jefferson County.”
This week, the Associated General Contractors found that construction-related employment in Alabama fell from 85,900 in June (when the law passed) to 80,700 in October. Construction employment also fell in the Birmingham-Hoover metro area from 24,900 in June to 23,800 in October according to the group. Henry Hagood, head of Alabama Associated General Contractors chapter, said that although there are many reasons for the drop, “some of it has to do with the immigration law. Crews have left the state. That’s not the only reason for the numbers. Our market is down at the bottom. Every little thing, when you don’t have as much work, contributes to it.”
Samuel Addy, an economist at the University of Alabama, estimated that Alabama’s economy will shrink by $40 million if undocumented workers are driven from the state since U.S. workers are unlikely to fill those jobs.
“Only a small number of jobs vacated by illegal workers will be filled by legal residents,” Addy said, “so the state will suffer a net loss in productivity. It reduces demand … the economy will contract.”
And the law’s broad enforcement requirements aren’t helping the state’s reputation either. Following the ticketing of Honda employee this week and the arrest of Mercedes executive last week, experts worry that Alabama’s law will damage the state’s prospects for future investment. Mercedes—as well as Honda, Toyota, and Hyundai—currently have manufacturing plants in Alabama which create thousands of jobs and generate billions in economic benefits.
Leading business consultant Mark Sweeney—whose job is to scout locations for companies such as Boeing, Caterpillar, Mercedes and Michelin for future invest—however, said Alabama’s immigration law isn’t doing the state any favors.
“There’s nothing good about it. I can’t see any positives in terms of economic development … Alabama has worked so hard to reinvent itself as a destination for global manufacturing. It’s really been a remarkable transformation,” he said. “Unfortunately, this law really is counter to that effort.”
Although concerns such as labor costs, tax rates, and land availability often factor into companies investment decisions, “softer measures” like quality of life, business climate, schools and welcoming environments also play a roll, Sweeney said. “It all matters. It could come into play at the end, when they’re trying to make a final decision and it’s a very close call … The scary thing is, you may be losing prospects that you never even know about.”
Just this week, in fact, the Tuscaloosa News reported that a Chinese company is thinking twice about putting a $100 million plant in Thomasville, Alabama because “they feel they aren’t welcome because of the immigration law.”
While Alabama lawmakers have discussed “tweaking” the law to account for its effect on businesses, they are adamant about not repealing it. Further enforcement of HB 56, however, will only continue to paint the state as anti-immigrant and drive business elsewhere. Apparently, appearing tough on immigration is more important to Alabama legislators than the economic well-being of their state.
New Report Predicts Continuing Integration of Immigrants into U.S. Society
02 months ago
Anti-immigrant activists like to pretend that immigrants are destined to be poor and to never successfully integrate into U.S. society. However, a new report from the Center for American Progress (CAP) concludes that, in reality, “immigrants are integrating into American life, learning English, and becoming homeowners.” When socioeconomic advancement is tracked over time, it becomes clear that “far from a life in poverty, immigrants are exemplifying the American Dream.” The report, entitled Assimilation Tomorrow, was co-authored by renowned demographer Dowell Myers (a professor in the School of Policy, Planning, and Development at the University of Southern California) and by John Pitkin (president of Analysis and Forecasting, Inc., in Cambridge, Massachusetts). This report is the companion piece to another study which was released by CAP last year, entitled Assimilation Today.
Assimilation Tomorrow uses Census data as a basis for projecting where immigrants who came here during the 1990s are likely to find themselves socioeconomically by 2030. The report predicts that, in the coming decades, more and more of these immigrants will buy homes, become U.S. citizens, and earn higher incomes:
- Homeownership: Only 25.5 percent of immigrants who arrived in the United States during the 1990s were homeowners in 2000. By 2030, 71.9 percent of these immigrants are likely to own homes.
- U.S. citizenship: Only 13.2 percent of immigrants who arrived in the United States during the 1990s were U.S. citizens in 2000. By 2030, 70.6 percent of these immigrants are likely to be U.S. citizens.
- Income: Only 55.7 percent of immigrants who arrived in the United States during the 1990s earned incomes above the “low-income” level in 2000. By 2030, 70.3 percent of these immigrants are likely to earn incomes above the “low-income” level.
In other words, integration into U.S. society takes time, just as it always has. Newcomers don’t climb the socioeconomic ladder of an unfamiliar country overnight. That is why integration is most accurately tracked over the course of decades, not simply a few years. As the report notes, when immigrant integration is examined over an appropriate span of time, it becomes apparent that, “contrary to the critics, immigrants are integrating into American life, and doing so in impressive ways.”
The report concludes that all Americans have a stake in the successful integration of immigrants into the U.S. economy and U.S. society. As tens of millions of baby boomers retire over the next few decades, the demand for immigrant workers will grow. Immigrant taxpayers will play an increasingly important role in funding the revenue-starved Social Security and Medicare programs. And the housing market will become more and more dependent upon immigrant homebuyers. In short, the successful integration and upward mobility of immigrants will serve as a much-needed economic stimulus for the nation as a whole.
Photo by Andy Dean Photography.
Even Facebook Feels Brunt of Broken U.S. Immigration Policy
02 months ago
You know things are bad when a company as popular as Facebook has problems finding qualified talent. In a recent interview, Facebook’s chief operating officer, Sheryl Sandberg, remarked that our outdated immigration policy is a big reason Silicon Valley tech companies are fighting each other for highly skilled workers. Current immigration policy limits high-skilled worker visas (H-1B) to only 65,000 per year—a number that hardly meets demand. Even technology giant Microsoft recently testified before Congress that current immigration policies make finding talent a serious challenge. Until lawmakers revamp our outdated immigration system, technology companies like Facebook and Microsoft will continue to lose out on the foreign talent they need to stay ahead of the curve.
It doesn’t help that the U.S. sends home the best and the brightest foreign students, many of whom create their own companies that compete with the U.S. Instead, Sandberg argued, American universities should attach visas to every high tech diploma so they can stay here and create businesses that employ American workers.
Critics of immigration reform complain that U.S. companies shouldn’t be recruiting foreign-born workers when we have such a high unemployment rate, but economists consistently show that that highly skilled foreign born workers do not take jobs away from Americans. They create jobs for other Americans.
According to the National Foundation for American Policy, “for every H-1B position requested, U.S. technology companies increase their employment by 5 workers,” on average, the following year. For technology companies with fewer than 5,000 employees, “each H-1B position requested in labor condition applications was associated with an increase of employment of 7.5 workers.”
Highly skilled foreign-born workers also contribute to U.S. innovation and growth. According to the Harvard Business School, the H-1B visa program “has played an important role in U.S. innovation patterns” over the past 15 years. Data shows that the number of inventions, as measured by patents, has increased when H-1B caps are higher due to “the direct contributions of immigrant inventors.”
Without this talent, American companies are at a serious disadvantage. As a Microsoft executive said in a recent hearing:
Our continued ability to help fuel the American economy depends heavily on continued access to the best possible talent … We need to be able to attract—and have adequate access through the immigration system to—skilled workers from abroad.
Despite overwhelming evidence that highly skilled foreign-born workers create jobs for American workers, add to U.S. innovation and growth and keep American companies competitive in the global marketplace, little about our employment-based immigration system has changed in the last twenty years. The cap on employment-based visas was set by Congress without regard to real labor needs or the flexibility to conform to our evolving economic reality. Although Congress and the Administration acknowledge the need to attracted foreign-born talent, no major adjustments to the overall number of available visas have been made.
Until the U.S. makes significant strides towards reforming employment-based visa policies and our entire outdated immigration system, U.S. companies will continue to lose their competitive edge as highly skilled foreign-born workers migrate to more immigrant-friendly countries to start businesses—taking their talent and potential contributions to U.S. economic growth with them.
Photo by techxav.
