H-1B visas are among the most favored visas by foreign nationals looking for specialty occupations in the US. The visa not only helps the foreign-born workers to land a job in the US but is also critical to fill the gap in the US labor market – especially in high-demand jobs such as STEM occupations.
A common perception among the US people is that hiring skilled workers from foreign nationalities is costing jobs to the American workers, and also, it is shrinking the American economy as the foreign worker are taking US money to their home country. But how true is that in the real world?
The up-to-date data and research show contrary to the perception, and further provides that H-1B workers create a positive impact in the US economic growth, creating more jobs to the native-born workers and hugely investing in the US economy.
The United States citizenship and immigration services (USICS) issues a certain amount of h1b visas every year. USCIS puts an annual cap of 65,000 foreign workers for h 1b visas and an additional 20,000 workers holding a US master’s degree or equivalent.
What is H-1B Program?
The H-1B visa program was launched in 1990 when President George H.W. Bush signed the Immigration act 1990. The aim of the H-1B program was to provide an opportunity to the US employers to hire skilled labor from foreign nations when the initial employment of US workers fell short.
Over the past decade, a debate has been going on whether the H-1B program is negatively impacting the US economy by depriving its citizens of local US jobs and lowering the employment rates?
However, despite that, USCIS promotes H-1B visas as it is necessary for US employers to fill the gap of shortage of skilled labor.
What is the impact of the H-1B program on the US economy?
The H-1B program has benefitted US employers, foreign-born workers, and the US economy. The fact that the program has economic benefits can be supported by the following observations:
Creation of New Jobs and Opportunities
The domestic workers in the US and the foreign-born workers together create a strong and dynamic US economy. The contributions of skilled H-1B workers to the US economy help create new job opportunities for economic expansion.
This has a positive effect on the native-born worker’s job search. They can find jobs more easily. Are the native-born workers being displaced by H-1B migrants?
The foreign workers may displace a few native workers; however, they create a substantial amount of new jobs, sufficient enough to justify few displacements.
For example – A study shows that the H-1B visas that were offered between 2010-2013 will create more than 7,00,000 jobs by 2020 for the US native-born workers.
Research again suggests that a 1% increase in the share of H-1B visa holders in occupation has to led to a 0.2% decrease in the unemployment rate.
Further, no adverse impact was evident on the opportunities for the US workers because of the H-1B program. Overall, if we talk about the impact on jobs of local American workers, it tends out to be positive.
Impact on Wages
Another misconception is that foreign-born workers drive down the wages of the US workers, while it is not true, and the studies suggest that H-1B workers have a positive effect on the wage growth of local American workers.
For example – According to research, the local median wage for H-1B workers rose from $69,455 in the financial year 2007 to $80,000 in the financial year 2016, while computer-related occupations and mathematical workers showed an increase from $73,979 to $75,036 during the same period.
Further, just a 1 percent increase in foreign-born workers in STEM occupations has led to an increase in wage growth of college-educated US natives by 7–8 percent. In contrast, the same 1 percent increase has impacted the wage growth equivalent to 3–4 percent for non-college-educated workers of the US.
The positive impact is quite visible as the percentage of wage growth in STEM occupations where H 1b petitions are substantially higher is more than the other occupations in the US where H 1b workers do not apply much.
Apart from this, the US employers pay more to the H-1B visa holders than the US local workers holding a bachelor’s degree. The data states that the average salary paid to US workers with bachelor’s degrees in 2010 was $67,301, while it was $76,356 for foreign-born workers even though the occupation and industry were the same.
This suggests that the employers appreciate the hard-to-find skills of the H-1B workers.
Tax paid by H-1B workers
The economic impact of h 1b workers can be seen by their contributions to the US in the form of taxes. An average h 1b worker earns between $1,00,000- $1,20,000 and can be expected to pay anywhere between 20%-40% of their gross income towards taxes.
Our data shows that more than $80 billion is contributed as taxes by all the h 1b holders in the US every year. Not only that, a cumulative of more than $25 billion is paid by h 1b visa holders annually towards social security and medicare in the US.
These stats show that a significant contribution is made by h 1b visa holders towards the US economy. All these contributions remain beneficial for the US natives and the US economy in general.
Fill the gap of Skilled Workers
The USCIS allows a total of 85,000 h 1b workers in the US every year. The US market is expanding whether it is in the IT sector, technology sector, or manufacturing sector. The demand for skilled labor and the supply by US domestic workers often creates labor shortages that are not suitable for the employers or the economy.
H-1B visa program helps in filling the gap of labor shortages and makes sure that there is no shortage of skilled labor in the US economy.
Investment by H-1B workers in the US
People of the US often criticize that the foreign workers earn in the US and take a big portion of their salaries to their home country. We were surprised to see the number of queries we had about whether H-1B visa holders can start their own businesses in the US.
Apparently, it is evident that H-1B workers are actually interested in investing their money in the US, which can contribute to the US economy at large. The fact states that 40 percent of Fortune 500 companies are founded by immigrants or their children.
For example – owners of some big tech giants that have a big influence in the world economy, such as google, e bay, or intel are immigrant entrepreneurs.
Furthermore, the economic research suggests that the H-1B visa holders spend on an average $2000 per month as their cost of living in the US. That is equivalent to a $24,000 contribution in the whole year by a single H-1B holder. Almost all of the earnings go to US local businesses that sell products or services to these H-1B visa holders, such as restaurants, grocery, rent, etc.
Impact on US workers and economy
The US workers gain when the foreign H 1b worker works in the US. The research states that because of the H-1B visa program, the US workers have gained an estimate of $431 million in 2010. Not only that, the H-1B workers’ skills have substantially benefitted the US tech sector.
Not limited to owners but people holding the big positions in big tech companies are immigrants. For example – Sundar Pichai, the current CEO of Google, is an Indian-born immigrant or Satya Nadella, another Indian who migrate to the US to study and is currently serving as the CEO of Microsoft.
These highly skilled H-1B migrants in the US have led to the production of knowledge, innovation, patent filing, and entrepreneurship in the US. This knowledge and innovation have diffused throughout the US.
For instance – Charles I. Jones, an economist, has come to the conclusion that an increase in the engineering and scientist workforce in the US has led to half of the US growth in terms of total factor productivity. And the fact that the H-1B visas are mostly offered to engineers and scientist complements the migrant role in the US economic growth.
New technology and innovation create new machines and ways of production that will increase nationwide productivity. The economic tendency will shift from being importers to exporters if the production allows the selling of products at worldwide competitive rates. Hence, the economy’s gross value increases, and the US nationals will have strong purchasing power.
It is not only the immigrants that have been benefitted from the US jobs, but they help in building and eventually growing the US economy, whether it is by the creation of new jobs and opportunities, their positive impact on wage growth, positive economic impact in the US or helping the US employers in employing hard-to-find skilled labor.
The US employers are ready to invest in foreign workers even though they have to incur additional labor costs because they understand the labor economics, and the outcome of investing in h 1b worker is often more than the initial investment.
Therefore, we believe that the migrants should be promoted, and the if decisions under trump’s administration to limit the H 1b visas can lead to adverse impacts on the US economy.
How can Herman Legal Group help?
Herman Legal Group has been working in American Immigration law and providing immigration services to a number of people. In the past, we were successful many times in getting an H 1b immigration status for our clients.
We offer wide-ranging services, from getting one-to-one consultation to applying for your H 1b visa. We also provide online consultation so that you can consult with our experienced immigration attorneys from any part of the world. Make sure to contact us and leave your immigration query.
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