How New Immigration Policy Can Save America’s Economy

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

Job Growth

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.

4 thoughts on “How New Immigration Policy Can Save America’s Economy

  1. umbrown@umich.edu'umbrown

    I agree with your point on immigration policy, but would point to an alternative solution: increase the number of qualified U.S citizens for these jobs. I am pretty sure that there are qualified, educated American citizens capable of performing these jobs without having to necessarily change our immigration policy, and if there aren’t, the U.S government could perhaps more heavily subsidize getting an education in a field that would prepare someone to take on such a job.

    1. schmitzc Post author

      I am rather intrigued by your proposal for the government to “subsidize getting an education in a field that would prepare someone to take on such a job.” I think it is a very good idea, but I think it would be tough to implement. For example, I think it would be hard for a politician to win favor if he supported subsidizing computer science majors but not women’s studies majors. If you could somehow do this, though, I think it is a great idea!

  2. pranavrk

    Interesting article. You did talk about the multiplier effect which could help create jobs, but there might also be a possibility of diminishing returns for H-1B visas. I know that Pittsburgh recently created an investment for visa scheme to attract wealthier overseas entrepreneurs to put down $500,000 or so for a particular startup and in return they’d get their Visa but what they noticed is that there weren’t as much follow up investments. Of course this applies to wealthy businessmen primarily from Asia. If we were talking about bringing in high-skilled workers for tasks, diminishing returns could take the form of there might not be enough good hires that create many jobs after a certain point.

  3. cchegash

    I do agree that it would be nice for these jobs to be able to be filled by able Americans; however, I don’t think that these companies would go through the hassles of sponsoring visas, if it wasn’t worth the risk. Also, ironically, this “immigration policy”, trying to bring extremely talented foreigners into the U.S., is somewhat the opposite of the traditional keeping-low-skilled-workers out immigration policy. It might be better to not refer to it as immigration policy at all in order to avoid confusion.

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