H-1B Visa Shortfall Starves the Economy

Demand for labor has risen steadily since 2004, but the program is still capped at 85,000 a year

By Jason L. Riley. Excerpts:

"The annual cap on H-1B visas for skilled foreign workers was established in 1990 and set at 65,000. In response to increased demand for high-tech workers, the limit was raised to 115,000 in 1998 and to 195,000 from 2001 to 2003. In 2004, it was lowered to 85,000. The U.S. economy has since doubled in size, yet we continue to cap work visas for foreign professionals at the same level we did almost 20 years ago and at a time when unemployment rates have dipped to post-World War II lows. This is madness.

The Journal reported last week that some companies are trying to game the H-1B visa lottery by submitting the same applicant’s name multiple times. That isn’t illegal under U.S. Citizenship and Immigration Services rules, but if officials discover that there’s no real job for the applicant, the visa can be denied. “If companies that win a visa then quickly contract an employee out to third parties, or lay off an employee on the visa so he or she can switch companies, that could potentially amount to fraud,” the story explained.

If Biden administration officials want to crack down on this behavior, bully for them. But don’t expect the shenanigans to stop so long as demand for H-1B visas far outstrips supply, as has been the case for almost two decades. Last year some 478,000 people competed for 85,000 visas, the most ever at the time. That record was shattered this year, when there were 781,000 applications. Even putting aside duplicate entries, the number of applicants who submitted only one entry to the visa lottery grew to 350,000 this year from 307,000 last year. According to calculations by Stuart Anderson of the National Foundation for American Policy, the percentage of eligible lottery applications that are approved has declined steadily, from more than 46% in fiscal 2021 to less than 15% in fiscal 2024.

Some who oppose increasing the level of high-skill immigration claim that such companies as Amazon and Microsoft are simply looking for cheap labor. In fact, foreign nationals with college degrees can be more expensive to employ. In a 2021 analysis of immigrant pay, economist Omid Bagheri found that “in computer and mathematical sciences, temporary work visa holders on average make about 14% more than their U.S.-born counterparts.” At U.S. universities, foreign nationals account for more than 70% of the full-time graduate students in electrical engineering and computer and information services. Employers look to foreign workers not to save money but to fill positions that relatively few U.S. natives are qualified to fill.

Like other sectors, tech companies have hiked pay to address the labor shortage, but there are limits to this approach. At some point, a business’s rising labor costs will affect its profits and ability to maintain market share, and those higher costs get passed on to consumers in the form of higher prices for goods and services. We want these companies to stay competitive, and we want the millions of jobs they create to remain in America. But if you think those are foregone conclusions, remember that the U.S. once led the world in auto manufacturing and steel production and no longer does. This is no time to be locking foreign nationals out of domestic labor markets that are starving for workers."