Keeping Out Foreign Workers Is Crushing America's Growth

[Confederate Kahanist]

http://www.investors.com/NewsAndAnalysis/Article/563375/201102161754/Keeping-Out-Foreign-Workers-Is-Crushing-Americas-Growth.aspx

By ALEX NOWRASTEH Posted 02/16/2011 05:54 PM ET

It's only February, but the U.S. government has already shut the door on applications for H-1B work visas for 2011.

On Jan. 27, U.S. Citizenship and Immigration Services announced that it had "received a sufficient number of H-1B petitions to reach the statutory cap for fiscal year 2011." This needs to change if America is to remain competitive.

The H-1B visa is a three year, employer-sponsored work visa, renewable one time, for highly skilled foreign workers with an annual cap of 85,000. To make matters worse, last year Congress passed a law to raise the H1-B fee from $320 to $2,000.

H-1B regulations kill innovation and stifle growth. The cap and time limit should be eliminated and fee drastically reduced.

Our economy grows by the efforts of the nation's entrepreneurs and workers — but only if they have enough freedom. Immigration restrictions on highly skilled workers restrict that freedom in the most fundamental sense. Punishing highly educated and skilled workers with regulations and a low cap also hurts Americans.

First, foreign highly skilled workers do not "take" American jobs. The economy doesn't have a set number of jobs. Rather, jobs are created and destroyed based on production possibilities and economic innovation. Foreign workers are also consumers and investors, increasing employment opportunities for Americans.

Second, foreign skilled workers do not lower wages. There is some evidence that large numbers of low-skilled immigrants lower wages for some low-skilled workers, but there is scant evidence of a similar effect for highly skilled American workers. In fact, highly skilled foreign workers generally complement, rather than compete with, American workers.

Firms hire H-1B workers as they expand, so the cap on H-1Bs severely limits companies' ability to expand and hire more workers. America's companies are just beginning to recover from the recent economic downturn. The government should make expansion and innovation easier, not harder.

H-1B regulations and fees also discourage foreign investment in the United States. They cost outsourcing companies Tata Consultancy Services and Infosys $250 million annually, according to the Financial Times. As a result, the companies, both based in India, recently announced that they are seeking to invest in European and emerging markets that don't saddle them with such burdens.

H1-B restrictions also divert American firms to expanding abroad rather than at home in order to hire the workers they need. For example, Microsoft recently opened a campus in Canada because the U.S. government would not allow it to hire enough highly skilled foreigners. If the future of American technological development is going to take place in America, companies need to be able to import the talent they need to succeed.

Moreover, highly skilled foreign workers have created many of the firms that make America a technology leader. Highly skilled foreign born workers and immigrants were instrumental in the founding of Intel, Sanmina-SCI, Sun Microsystems, eBay, Yahoo and Google. Those firms have produced billions of dollars in value and employed thousands of Americans in well-paid positions.

Twenty-five percent of all venture-backed U.S. public firms started between 1990 and 2005 had at least one immigrant founder. By 2008, one-third of all Silicon Valley companies were founded or co-founded by Indian or Chinese nationals who were able to work legally in the U.S. under H-1B visas or green cards.

H-1Bs are not perfect, but there are numerous ways to improve them. The numerical cap and time limit should be removed, or at least greatly expanded. The fee should be cut to cover administrative costs only. Unused visas from recession years should be allowed to be "recycled." Finally, the requirement of company sponsorship should be either loosened or replaced with employee self-sponsorship.

On April 1, the H-1B application process for next year will begin all over again — and thousands of intelligent, hard-working and educated foreign workers will be shut out of our economy yet again. Many of America's entrepreneurs of tomorrow are living in other countries today. We should let them apply their talent to build their businesses here.

In today's world, where human capital and talent are the most precious commodities, cutting ourselves off from foreign highly skilled workers will only make us poorer. Today's U.S. work visa system might keep out Albert Einstein. It is in serious need of liberalization.

• Nowrasteh is a policy analyst at the Competitive Enterprise Institute.