President Trump insists he wants to attract high-skilled legal immigrants, even while pushing for a wall on the southern border — but his administration is moving to deprive thousands of highly trained immigrants of the right to work.
The argument for throwing these well-educated newcomers — holders of H-4 visas — out of the workforce is it would open jobs for unemployed and underemployed U.S. citizens.
It’s a lousy rationale. Our research shows this proposal would not create a single net job, and it would also cost the U.S. economy — and taxpayers — billions of dollars a year in lost revenue and reduced economic growth. It will also likely force immigrants — actively encouraged, up to now, to move here — to uproot themselves.
Congress created the H-1B visa program in 1990 to attract more high-skilled immigrants into the country. Companies were having trouble filling jobs in technical occupations like systems engineers and software developers, occupations that then (and now) had low unemployment rates. Turning to foreign-born workers is an effective way to plug this hole. Trained, experienced foreign workers are also much more likely to start new businesses, creating new jobs in the process.
Since a good proportion of H-1B workers happen to be married, Congress created an H-4 visa for their spouses. At its inception, the law prohibited H-4 visa holders from working, but the work exclusion came to be a problem. Most spouses of H-1B visa holders also tend to have substantial technical skills as well, and find coming to the United States without being able to pursue a career a considerable sacrifice. Their inability to work was making it more difficult to attract H-1B visa holders.
To remedy this, in 2015, the Obama administration issued a rule that permitted H-4 holders to obtain employment, and nearly 70,000 H-4 visa holders now have a job. However, the Trump administration’s proposed rule would force them to stop working.
To understand the economic impact of a work ban, we asked two different immigration groups to help us survey H-4 visa holders. We received almost 5,000 responses — an incredibly large proportion of the roughly 130,000 people who currently have the visa.
Almost five out of six of our respondents had already obtained employment authorization documents (EADs), and three-fourths of these currently hold jobs. Unsurprisingly, most work in occupations tied to technology or engineering in some way. Almost half are employed in IT-math-stats occupations, which have chronic worker shortages. These occupations’ 2018 unemployment rate of only 2.13 percent indicates the only unemployed workers in these areas are the ones in the process of changing jobs.
Another 20 percent of H-4 workers are employed in legal, engineering, management or health care practitioner occupations, with an even lower average 2018 unemployment rate of only 1.67 percent. Fewer than 4 percent of these workers are employed in occupations with 2018 unemployment rates above the national average last year of 3.9 percent: manufacturing, sales, personal care, transportation, construction, building maintenance, food preparation or farming.
The fact so many H-4 workers are in such hard-to-fill occupations means the average income for this cohort is quite high — about $80,000 in our sample, fully 30 percent above the median income for U.S. workers. It also means that if these workers lost their ability to work, the jobs they currently hold would mostly go unfilled. We estimate only 7 to 10 percent of the jobs vacated would be filled by U.S. workers.
In addition, about 2 percent of H-4 workers have started their own businesses, which on average employ five workers each. Since their employees’ jobs would also be lost if the H-4 employers could not work, these jobs that would be lost by U.S. workers would almost exactly offset any employment gains from filling empty H-4 jobs.
Interviews we did after our survey revealed a significant number of families with an H-4 visa have made life-altering decisions predicated upon the ability of the visa holder to join their H-1B visa-holding spouse in obtaining work authorization, such as purchasing a house, beginning a business or having a child.
Numerous respondents also told us coming to the United States without being able to work was frustrating and stressful, and it was difficult to contemplate a return to that status.
Ari Banerjee and his wife came to the United States to attend graduate school and decided to remain when she received a job offer that came with an H-1B visa. After receiving his work permit, Ari started a digital marketing firm that now employs nine workers. If he loses his work authorization he would close his company or move it to another country.
Priya Chandrasekaran married her H-1B spouse — a software engineer for Microsoft — in 2010 and came to the United States soon after to be with him. Although Priya had a Bachelors in business management, graduate training and six years of work experience in India, she was initially unable to pursue her career because of the H-4 work ban in place at the time. When that changed Priya jumped at the opportunity to work, and since going to work in 2015 she has become a CPA and had a second child, and their family purchased their first home.
The uncertainty about her work status led Priya to delay plans to pursue an MBA because the couple cannot afford the tuition without her income — even their mortgage may be a stretch. If the administration terminates the H-4 EAD program the family will explore moving to a country where Priya can work as well.
Many H-4 spouses used the word “depressed” to describe their frustration at the prospect of being unable to work while living in the United States.
Besides being harmful to their families, rescinding the work authorization for the H-4 visa would impose costs both on our economy and tax coffers. Executive Order 12866 requires any new rule issued by an administration — or the rescission of an existing rule — must be able to pass a cost-benefit analysis. The data show this does not come close to passing.
We estimate the lost earnings for this group alone would be about $5.5 billion a year. What’s more, fully one-fourth of our respondents said their family would consider leaving the United States if the work authorizations were rescinded. That would cut economic output by another $2 billion. The reduction in employment that would ensue would cost the government about $2-$3 billion in lost tax revenue annually. Crucially, as we’ve already shown, we find no evidence this action will create jobs for U.S. citizens.
The president is right when he states we should do more to attract skilled immigrants to the country. The United States has a shortage of workers with degrees or training in STEM fields and attracting such workers from abroad would fill jobs that would otherwise go wanting.
However, ending the ability of H-4 visa holders to work goes against the president’s ostensible goal of increasing skilled foreign workers in our economy. It would reduce economic growth and tax revenue while doing absolutely nothing to create new jobs.
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