President Trump signed an executive order in April that temporarily halted immigration amid the coronavirus pandemic.
The president indicated that this move was to ensure that unemployed Americans would “be first in line” for jobs as they become available. His administration is expected to put a further hold on issuing new visas — the H-1B for highly-skilled foreigners and the H-2B for seasonal employment.
At the same time, new research from the National Foundation for American Policy (NFAP) found that H-1B visa holders don’t have a negative impact on U.S. workers. In fact, the presence of these immigrants in the U.S. is actually “associated with lower unemployment rates and faster earnings growth among college graduates, including recent college graduates.”
US President Donald Trump speaks in the East Room of the White House in Washington, DC on April 30, 2020. (Photo by MANDEL NGAN/AFP via Getty Images)
The study was based on data from 2005 to 2018 and looked at the impact of the number of approved H-1B petitions on unemployment rates and earnings growth rates in the respective occupations.
“If highly productive workers no longer can work in the United States, the U.S. economy as a whole is worse off,” the paper stated.“With the country facing a long and difficult struggle to emerge from the economic downturn, this is not the time to impose additional restrictions that would reduce the number of skilled, innovative workers in the United States.”
More approved H-1B petitions are not associated with higher unemployment. (Chart: NFAP)
Visa holders ‘increase innovation, productivity, and profits’
So why is that immigration is such a boon to the American economy and workforce?
H-1B workers account for at most 2% of highly educated U.S. workers, according to the study.
And by having an H-1B program, employers sometimes expand or at least maintain the number of jobs open to American workers. Furthermore, although some indicate that foreigners take jobs away from Americans because they are cheaper to pay, “the bulk of the evidence indicates that H-1B visa holders earn more than comparable American workers, on average, even before considering the substantial additional costs involved in using the H-1B visa category.”
By eliminating, or at least minimizing, H-1B visa programs, if there aren’t enough American workers to fill the empty spots, employers might move jobs in a position overseas, which would ultimately reduce job opportunities for American workers.
H-1B workers account for at most 2% of highly educated U.S. workers. (Photo: Getty Images)
“Despite the H-1B program’s small scale, the visa category is important to the U.S. economy and to employers that use it to fill gaps in their workforce,” the paper said.
H-1B visa holders help to increase innovation, productivity, and profits at their employers, according to NFAP, and boosts total productivity and innovation in the country.
The study found that a one percentage point increase in the number of H-1B workers reduces the unemployment rates by approximately 0.2 percentage points and boosts the earnings growth rate in the occupation by between 0.1 to 0.26 percentage points.
Previous research has also supported the notion that immigration creates more innovation. Immigrant-owned tech firms in the U.S. are more innovative than U.S.-born entrepreneur firms. Examples of this include Google (GOOGL), co-founded by former Soviet Union resident Sergey Brin, and Tesla (TSLA), founded and run by CEO Elon Musk, a South African native.
Commuters are seen walking to the United States wearing face masks as a Customs and Border Protection agent looks on at San Ysidro crossing seen on April 23, 2020, on the US-Mexico border. (Photo by GUILLERMO ARIAS/AFP via Getty Images)
Back when Trump first announced his executive order and said that it was necessary to protect American jobs, NFAP Executive Director Stuart Anderson described that premise as “faulty.”
“It is simply incorrect to assume that adding new entrants to the labor force means other people lose their jobs,” Anderson told Yahoo Finance. “Otherwise it would be considered bad news for other workers whenever high school and college students graduate and enter the workforce.”
‘The results here should give pause’
Visa denials and immigration restrictions have historically done more harm than good for the U.S. economy.
In places with more H-1B visa denials during the Great Recession, according to the NFAP paper, employment and wage growth was slower.
Michael Clemens, an economist at the Center for Global Development and the Institute of Labor Economics, indicated there were similar effects during the Great Depression.
USA permanent resident card (Green Card) with Employment Authorization card next to passports and fingerprints
“This is what the leading economic research has found,” Clemens previously told Yahoo Finance, citing a research paper from the National Bureau of Economic Research (NBER). “Back in the Great Depression, the United States banned and deported most immigrants from Mexico… this act made native unemployment worse in the Depression. This is because immigrants are the backbone of many industries that massively employ Americans. A few Americans took jobs opened up by the past barriers. But more Americans lost their jobs when the businesses that depended on immigrants folded.”
The NFAP paper concluded that the findings “should give pause to policymakers considering imposing additional restrictions on the H-1B program. There is little reason to think doing so will help American workers.”
Adriana is an associate editor for Yahoo Finance. Follow her on Twitter @adrianambells.
