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Thoughts on Current Issues: The H-1B Visa Program

Tuesday, April 4, 2017

A dramatic reduction in H-1B visas could have a
negative impact on the U.S. high-tech and IT sectors.

The H-1B visa program allows U.S. companies to temporarily employ foreign workers who have an undergraduate degree or equivalent, if they work in a “specialty occupation” requiring “theoretical or practical application of a body of highly specialized knowledge.” In fiscal year 2014, about 125,000 new foreign workers in computer-related occupations, and over 300,000 overall, were deployed in the U.S. and this trend is expected to continue.1

As indicated in the accompanying box, the top five occupations in which firms submitted applications for H-1B visas were issued for work in computer-related occupations, with high-tech and information technology (IT) jobs being associated with about half of the program’s visas.

Suggestions to modify the H-1B visa program have been hotly debated in the Congress recently. H-1B critics claim that the program does not attract the "best and brightest" foreign workers and pays lower wages to the potential detriment of domestic workers.

While the Trump administration has not made concrete plans to change the H-1B visa program, it has laid out plans to tackle immigration reform this year.Immigration reform could have significant implications for the H-1B program. Given the program’s role in skill supply for pivotal sectors of the U.S. economy, careful consideration should be used in weighing economy wide repercussions from different redesign options.

Given the large number of H-1B visas in these occupations, curtailment of H-1B labor flows could have negative repercussions in some key sectors. For example, the Bureau of Labor Statistics (BLS) estimates that a bachelor’s degree is required for many computer specialist positions; for other computer related support jobs, lesser degrees may be enough.3 Assuming that, on average, four years of education or training are needed to develop native worker skills for high-skill computer related jobs, U.S. industries may not be able to find a ready IT labor force to meet their needs.

Source: Claim of 1.4 million computer science jobs with only 400,000 computer science graduates to fill them (http://econdataus.com/claim400k.htm)

Without H-1B visas, U.S. high-skill computer and IT sectors are likely to experience substantial skill shortages over the next few years. Specifically, our research indicates that without H-1B visa employees, computer occupations in the U.S. could face at least a 9.4% labor shortage in the next four years (see graph for an illustration of the overall potential gap).4

In short, lawmakers considering making adjustments to the H-1B program should review existing evidence on the requirements and time needed to develop high-skill native computer and IT workers. A reduction in H-1B visas could have negative effects on the U.S. high-tech and IT sectors. These sectors are engines of economic growth in the U.S. and thus any shocks could have economy-wide and persistent ripple effects.


1Characteristics of H-1B Specialty Occupation Workers – Fiscal Year 2014 Annual Report to Congress, U.S. Citizenship and Immigration Services.

2Four bills that address H-1B visas have been introduced in the House and Senate since January.

3BLS estimates that generally more support services will be needed as organizations upgrade their computer equipment and software (see e.g. https://www.bls.gov/ooh/computer-and-information-technology/computer-support-specialists.htm).

4Our measure for projecting a shortage in a given occupation—the job shortage index—is based on the ratio of job openings to unemployed individuals in that occupation. A high value suggests that employers’ need for qualified workers exceeds the supply, due to skill scarcity.