2013 Hinckley Journal - Hinckley Institute of Politics - University of ...

The Hinckley Journal of Politics 2013
there is some truth to that statement, the situation is a lot more complex
and the evidence implies that the problems are more likely caused by bad
policies rather than by immigrants. First of all, the idea that companies
abuse the H-1B system to pay high-skilled immigrants less in wages is wide
of the mark. The law requires companies to pay H-1B
workers similar wages as to all others in the same
positions. A 2007 National Foundation for American
Policy (NFAP) study reports that though some businesses
do try to abuse the system, there have only
been 7-15 willful violations since 1992. The study
argues that it is unlikely for companies such Microsoft
or IBM (which generate billions of dollars per
year) to risk having legal issues by underpaying
H-1Bs to save a minuscule amount of money. It goes
on to state,“To systematically underpay H-1B visa holders would require,
in effect, keeping a separate set of books, one with the pay scales for Americans
and the other for foreign nationals in similar jobs within the same
company” (p. 7). Furthermore, the fact that almost all companies that hire
H-1Bs have native workers representing 85%-99% of their workforces
challenges the argument that high-skilled immigrants are being used as
cheap replacements for U.S. workers. Companies that wish to hire H-1Bs
actually have to pay about $2,500 in legal fees, a $1,500 training fee, a $1,000
premium processing fee (not required, but used to save time), a $500
antifraud fee, and a $100 visa fee. Despite these costs, companies still compete
for high-skilled immigrants. The obvious reason for this demand is talent;
however, it is true that high-skilled immigrants help companies lower their
costs (just not through wages).
In 2009 the Journal of Ethnic and Migration Studies published a study
by Renee Reichl Luthra, an immigration expert and researcher, seeking to
determine the exact effects of H-1B high-skilled immigrants on natives.
Specifically, Luthra (2009) focused on the notions of cheap labor and
exploitative practices associated with H-1Bs. The first part of the research
explored the idea of Labor Market Segmentation. This concept assumes the
existence of two types of jobs in labor markets. Primary positions are those
which companies invest more capital and training in and are also associated
with more job security, higher pay, and better benefits. Secondary jobs are
those which are less desirable, offer less pay, and less advancement. Nonetheless,
employers consistently need secondary positions filled regardless
of the state of the market. Having a shortage of native workers willing to
work in such positions creates great demand for immigrants who are
undeterred by the disadvantages. The researcher contends that this idea
applies in high-skilled sectors as well. Consider, for example, a technology
firm. This company would have core positions in which they invest significant
amounts of capital and training. These positions are very appealing
and offer excellent benefits, attracting more committed workers which
provide more security to the company (fewer turnovers). However, because
the technological market changes very quickly, the firm would also develop
peripheral positions which are constantly being filled by workers with the
most current skills. The transient nature of these positions justifies paying
these workers less in terms of benefits. In other words, the firm has created
an internal dual market. High-skilled immigrants with H-1B visas are an
ideal match for these peripheral positions. Employers need temporary
workers and H-1Bs can only work for a limited amount of time. Additionally,
they possess the best skills in the market and do not mind receiving
fewer benefits. The argument that high-skilled immigrants are cheap labor,
then, is true to the extent that companies save through benefits and by not
having to train or invest much in these skilled workers. If anti-immigrant
associations wished to change this situation, they would have to focus on
the rules of the H-1B visa instead of simply blaming immigrants. The second
“Over the past 15 years, high-skilled
immigrants had started 25% of all
U.S. public companies....The
market capitalization of these
exceeded $500 billion at that time.”
part of Luthra’s (2009) analysis shows that recently arrived H-1Bs are more
likely to be in peripheral jobs. The chances of being in such positions disappear
with H-1Bs who became permanent residents. Effectively, it is only
visa constraints that force high-skilled immigrants to accept contingent
jobs with fewer benefits. As Luthra (2009) explains,
“The combined results of these analyses point toward
visa reform. A greater likelihood of contingent work
is tied solely to the most-recently arrived immigrants
likely to be temporary visa holders” (p. 247).
The final purpose of visa reform should not only
be to ease the process of allowing high-skilled immigrants
to enter the country, but it should also help
the United States permanently retain their exceptional
talents. To do so, the dire green card situation
must be drastically improved. Anderson (2011) accurately describes the
problem by stating, “Today the most distinguishing characteristic of innovative
and adaptive immigrants is an ability to wait a long time” (p. 1).
Employment-based green cards are divided into five different categories.
The categories starting with the lower preference are EB-5 (issued to creators
of employment or investors), EB-4 (special workers), EB-3 (professional
and skilled workers), EB-2 (possess advanced degrees or exceptional abilities),
and lastly EB-1 (for outstanding professors, researchers or other
immigrants with extraordinary ability). The annual quota, which was set
in 1990, is a maximum of 140,000 visas. Since then, the gross domestic
product of the U.S. has nearly tripled and yet the quotas have remained
unchanged. Each country is also limited to a certain amount of visas each
year. This means that countries with large populations are severely affected.
Because of the massive backlogs that already exist for certain countries, it
is estimated that new Indian applicants can wait up to 70 years and new
Chinese applicants will have to wait about 20 years in the EB-3 category. In
the EB-2 category, wait times for these two countries approximate six to
eight years (Anderson, 2011). Such excessive waiting periods are clearly
disproportionately affecting countries with larger populations and simply
depriving the U.S. of talent.
High-skilled immigrants are more educated, possess superior skills, and
hold better positions than any other group of immigrants. They frequently
come to the United States as students seeking to complete their tertiary
education, or as skilled workers looking for quality jobs that cannot be
found in their native countries. Opponents of immigration, however, view
these foreigners as threats. They often argue that high-skilled immigrants’
willingness to work for less in harder conditions creates unfair competition
for U.S. workers of similar skill (Matloff, 2011; Eisenbrey, 2013; Beck, 1996).
There is much evidence that suggests otherwise.
Entrepreneurship, Innovation, and Job Creation
A 2006 study for the NFAP found that high-skilled immigrants had astonishing
entrepreneurial talents (Anderson & Platzer, 2006). The unique study
examined the birthplace of founders of all U.S. venture-backed publicly
traded companies. Additionally, it also surveyed more than 340 privately
owned venture-backed companies. The research showed that over the past
15 years, high-skilled immigrants had started 25% of all U.S. public companies.
It is important to note that many of these companies may have been
started with native partners or associates. The market capitalization of these
exceeded $500 billion at that time. Considering that all legal immigrants
(not just the highly-skilled) represented only 8.7% of the total U.S. population
that year, the proportion of successful immigrants is remarkable.
Furthermore, the analysis showed that 40% of all public companies started
by immigrants either alone or with native partners were in high-technology
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