US protectionism can’t STEM fall in local jobs Print
Wednesday, 03 January 2018 00:16
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More curbs on visas for Indians won't help as US has a shortage of STEM graduates, will also hurt US firms

 

The proposed Protect and Grow American Jobs Act, when passed into law—sometime later this year—will undoubtedly be a blow to Indian IT firms who earn the bulk of their revenues from the US, and they will have to find new ways to address the market if the Act gets passed in its current form. The number of H-1B visas that Indian firms use is already down by around half over the last two years, to around 10,000 of the total of 85,000 that the US government issues every year, and the new Act tightens the definition of visa-dependent companies and imposes tighter restrictions than those prevalent today. Under the new rules, what is proposed is a substantial hike in the minimum H-1B wage to around $100,000. More worrying, both the Indian IT firm and the US client will have to give an undertaking that no American worker will be displaced for a 5-6 year period—while it is theoretically correct to say that this will not happen since the US has a big shortage of Science, Technology, Engineering, Maths (STEM) workers, it is difficult to ensure no American loses his/her job at the level of an individual firm. Not surprisingly, the US Chamber of Commerce has said the Act “would hurt both workers and employers in a variety of economic sectors”.

Asking for written assurances on no job losses, the US chamber says “sets a dangerous precedent regarding the federal government’s power to interfere with the rights of companies to freely enter into contracts” and then goes on to describe the fact that employers are not getting enough time to adjust to the new requirements as being “highly disruptive”. A good report, in this context, is the chamber’s Immigration: Myths and Facts report brought out in 2016. It points out that, in general, immigration helps the US as it creates both new jobs and also complements the skills of the US work force. It correctly points out that employment is not a zero-sum game—that is, “if the 8.1 million undocumented immigrant workers now in the United States were removed from the country, there would not be 8.1 million job openings for unemployed America” as the skills the two bring to the table are quite different and immigrants and US-born workers are not competing for the same jobs.

On the specific case of H-1B workers, it points to a Brookings report that found that for “occupations with the most H-1B requests, recent wage growth has been much higher than the national average”—in San Jose, California, two-thirds of job vacancies remain unfilled after one month; that is, more H1-B visas do not depress US wages. Indeed, it adds that the American Enterprise Institute found that each approved H-1B worker helps create 1.83 jobs among native-born American workers. And, with the number of American STEM students growing at less than one percent per year, the report says that, by 2018, there will be more than 230,000 advanced degree STEM jobs that will not be filled even if every new American STEM graduate finds a job. Given this—the US chamber cites more studies making the same point of a STEM shortage that H1-Bs are filling—it is not clear what the Bill hopes to achieve since it will hurt US Inc but is not going to do much to further the interests of educated US workers.