Economics

Trump's H-1B Visa Zero-Sum Thinking Will Make American Workers Poorer

Is Donald Trump ever right about anything?

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H1BVisaDoor
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During the Republican presidential candidates debate in Miami the billionaire bully was asked about "pausing" the H-1B visa worker program. According to the U.S. Department of Labor, the H-1B program "applies to employers seeking to hire nonimmigrant aliens as workers in specialty occupations or as fashion models of distinguished merit and ability. A specialty occupation is one that requires the application of a body of highly specialized knowledge and the attainment of at least a bachelor's degree or its equivalent. The intent of the H-1B provisions is to help employers who cannot otherwise obtain needed business skills and abilities from the U.S. workforce by authorizing the temporary employment of qualified individuals who are not otherwise authorized to work in the United States."

In his inimitable word-salad manner of expostulating, Trump replied:

First of all, I think and I know the H1B very well. And it's something that I frankly use and I shouldn't be allowed to use it. We shouldn't have it. Very, very bad for workers. And second of all, I think it's very important to say, well, I'm a businessman and I have to do what I have to do.

When it's sitting there waiting for you, but it's very bad. It's very bad for business in terms of -- and it's very bad for our workers and it's unfair for our workers. And we should end it. Very importantly, the Disney workers endorsed me, as you probably read.

And I got a full endorsement because they are the ones that said, and they had a news conference, and they said, he's the only one that's going to be able to fix it. Because it is a mess. I think for a period of a year to two years we have to look back and we have to see, just to answer the second part of your question, where we are, where we stand, what's going on.

We have to sort of take a strong, good, hard look and come up with plans that work. And we're rushing into things, and we're just -- we're leading with the chin.

We're leading with people that don't know what they are doing in terms of our leadership. I'd say a minimum of one year, maybe two years.

His reference to Disney stems from the lawsuit in which 250 workers claim that the entertainment company replaced them illegally by hiring H-1B visa holders. The courts will decide if the company violated the law in this instance.

But the larger question is, how does the H-1B program affect the employment and wages of American citizens? Actually the program raises native worker wages and has no significant effects on native employment according to three economists in their 2014 National Bureau of Economic Research working paper. There was one downside - the inflow of H-1B workers into a city tends to raise the cost of housing. From the study:

We find that a one percentage point increase in the foreign STEM share of a city's total employment increased wages of native college educated labor by about 7-8 percentage points and the wages of non-college educated natives by 3-4 percentage points. We find non-significant effects on the employment of those two groups. These results indicate that growth in STEM workers spurred technological growth by increasing productivity, especially that of college educated workers. They also experienced increasing housing rents, which eroded part of their wage gain.

Additionally, a 2016 survey of 900 tech innovaters by the Information Technology and Innovation Foundation found that …

…immigrants comprise a large and vital component of U.S. innovation: 35.5 percent of U.S. innovators were born outside the United States. Another 10 percent of innovators have at least one parent born abroad. Over 17 percent of innovators are not even U.S. citizens, yet are nonetheless making in valuable contributions to U.S. innovation. Immigrants born in Europe or Asia are over five times more likely to have created an innovation in America than the average native-born U.S. citizen.

Trump's call to shut down the H-1B visa program is just the sort of zero-sum thinking that really will ensure slower job growth and make Americans poorer.