Main image of article Economist: H-1Bs Are Important to the Economy
One phrase that's almost always injected into discussions of H1-Bs is "supply and demand." But how is that measured when it comes to tech workers? For some insight, I spoke with Ashok Bardhan, a senior economist at the University of California at Berkeley and author of Globalization and a High Tech Economy: California, the U.S. and Beyond. Ashok BardhanWhat impact do H-1B workers have on the American economy? Because of the fact that H-1B visas are by and large issued to professionals in well-paid occupations with fast-rising demand — and thus low unemployment rates — the impact of this increased supply on wages is moderate. Having said that, there is some adverse impact on older American workers, since most H-1B applicants are young. How big a chunk of the tech workforce are H-1Bs? This is a difficult question to answer. In many years, the approvals are rarely more than a couple of percentage points of those employed in a given occupation. But in some years the number has reached double digits, and over time the share can be considerable. In some of the computer software area’s specialty occupations it can probably constitute a majority. The Special Report: Are H-1Bs particularly important to the economy? The need is expressed by firms, mostly large corporations, who have to justify it in terms of a shortage of expertise and undertake to pay prevailing wages, so as not to undercut resident workers’ pay. In the absence of H-1B workers, it’s true that wages of residents may rise faster. But in an expanding sector that has many spillover effects, the long-term growth prospects of both the high-tech sector and the economy at large would be negatively affected in a serious manner [without the guest workers]. How many STEM graduates do you think American colleges will produce over the next 10 years? Probably between 2.5 million to 2.75 million, depending on how much expansion takes place in enrollments made available over the next decade, as well as the desire of young high school grads in pursuing these careers. The BLS estimates 1.8 million computer-related jobs to be created between 2010 and 2020. If you expect there to be 2 million or 2.5 million new STEM graduates entering the market, won’t there be excess supply for those 1.8 million jobs? The thing to keep in mind is that not all STEM grads work in computer-related jobs. You’ll see that many go into "Life, Physical" science occupations, many into what is classified as "architecture and engineering occupations,” and others into education, healthcare, business, etc. Technology companies say the H-1B cap prevents them from filling their job openings, so they may have to send the work offshore.   Companies that say that are being somewhat disingenuous. Cap or no cap, they’d still move offshore. The motivations for onshore foreign hiring versus offshoring involve many calculations, including unit labor costs, the need for physical presence, market access, internal firm coordination issues, consumer feedback, and the like. It’s not so cut-and-dried.