According to the WSJ, 2014 will be a great year for the American job market. Total jobs is projected to pass it’s pre-recession peak, while adding almost 200,000 jobs per month. (WSJ: Signs Point to Healthier Job Market in 2014). Nevertheless, even the aforementioned, optimistic WSJ article concedes that there is still considerable room for improvement, particularly given the distribution of new jobs. In January of 2014, the Bureau of Labor Statistics released projections for job growth until 2022. Unfortunately, with respect to salary levels, the jobs projected to experience the most growth pay very low wages. Specifically, of the top five jobs projected to grow, 3 of them barely exceed the federal poverty level for a three-person family (annual income of $19,090), and 1 of them is below this poverty threshold (see graph below for details from MetroTrends Blog). This data seems to suggest that job recovery in the United States is extremely one sided; low-wage employment is making a recovery while high-wage employment is not. In this way, while the unemployment rate is falling, the Untied States definitely still has an employment problem
Interestingly, according to an article in Forbes titled “The Cities Creating the Most High-Paid Jobs, And Why They’re Good for Low-Wage Workers Too,” points out that if we focus on growing high-wage jobs, the low-wage job growth will follow (Forbes: The Cities Creating the Most High Paid Jobs…). This article points out that high-wage jobs, typically those requiring a large degree of specialization and existing in export-oriented industries (like technology, which siphons money into silicon valley from outside the region), have a very large “multiplier effect.” Because they draw in so much money, high-wage jobs created a demand for services that pay low wages, like grocery services, food prep, and health aids. Thus it seems logical that policymakers should focus on increasing high-wage employment, as the multiplier effect will help local economies maximize growth.
But how do we increase the amount of high-wage jobs? One potential solution is to refocus immigration policy. Specifically, the United States immigration department, by issuing more H1-B visas, can increase the level of high-wage employment (note: an H1-B visa is a visa granted to non-immigrants who temporarily come to the United States to work in specialized occupations like biotechnology, medicine, business, or engineering). Indeed, data supports that issuing H1-B visas has an extremely positive impact on domestic employment. In 2008, Bill Gates stated that “Microsoft has found that for every H-1B hire we make, we add on average four additional employees to support them in various capacities” (Immigration Policy Center).
It is logical to suspect that issuing fewer H-1B visas would force American corporations to rely on domestic labor for the “specialty labor” that foreigners provide. But this does not seem to be the case. A survey by the National Foundation for American Policy found that 65% of firms respond to low limits on H-1B visas by moving operations oversees where these firms can freely access the specialty labor they need (Immigration Policy Center). Furthermore, H-1B visas allow non-immigrants to “temporarily” work in the United States. In this way, they allow firms to create high-wage employment opportunities domestically by hiring foreign experts to get the ball rolling.
Certainly, adjusting immigration policy is just one way to increase the amount of high-skilled labor in the United States, and I would certainly enjoy hearing additional ideas. The key takeaway, however, is that increasing the amount of high-skilled labor is a far more effective way of fueling economic recovery than growing low-wage employment. By fueling high-wage job growth and taking advantage of the multiplier effect, US policymakers can accelerate this country’s economic recovery.