Thursday, July 24, 2014

This study showed that high-skilled immigrants create jobs for Americans

2 US-born workers at a tech startup founded by an immigrant in Ohio. Benjamin Lowy/Getty

The tech industry has become one of the biggest interests lobbying for immigration reform, for a straightforward reason: they say they can't find enough qualified workers here in the US. If the government issued more high-skilled visas, they say, they could hire immigrants to fill their vacancies — and the greater capacity would allow them to hire more US-born workers, and pay them more, as well. Some economists and others question whether that's true, or whether companies simply prefer to hire immigrant workers (over whom they have more control) rather than native-born ones.

So when tech companies hire high-skilled immigrants, do US-born workers prosper or suffer? Or to invert the question: under the current system, in which some companies get to hire high-skilled immigrants and some companies don't, where do US-born workers do better?

In 2007 and 2008 (and then again last year and this year), so many companies and immigrants wanted high-skilled visas that the government selected random applications that had been sent by the first day visas were available until it had given out all 65,000 of the visas it had. That was bad news for the tens of thousands of immigrants who put in applications but weren't able to make it through the lottery. But it provided an easy way to test this question: a randomized experiment, in which the cities with better luck in the H-1B lottery could be compared to the cities with worse luck.

That's what a new study from the Partnership for a New American Economy, a group that advocates for increased immigration from an economic perspective, examined. What they found: when companies have worse luck in getting high-skilled visas, it's bad news for the tech sector in their city — and especially for US-born computer workers who don't have college degrees.

What they measured

The study looks at how different cities fared in the visa lotteries in 2007 and 2008 — right before the financial crisis and most recent recession. In particular, it calculates how many H-1B applications for jobs in that city got rejected in the lottery over those two years — and how much it would have affected the size of the city's tech sector if there had been enough visas to let those immigrants come.

Chicago, for example, had an average of 7,410 visa applications that didn't get through the lottery in 2007 and 2008. But because there were already 89,503 people working in computer-related jobs in Chicago before that, the "shock" (negative impact) of not getting those visas was only 8.3% — still high, but not that high. Detroit, on the other hand, had about 5,386 visas rejected those years — for a tech sector that only had 40,000 people beforehand. So Detroit missed out on the chance to expand its computer workforce by 13.3%, just by not getting those visas approved.

After determining which cities had gotten relatively lucky in the visa lottery (by getting more visas approved, or having a larger tech sector already that made rejections less significant) and which cities had been unlucky, the study's authors looked at employment trends in the computer industry before 2007-2008, and then again during the recession.

The tech sector in the 236 cities covered in the study actually didn't do terribly during the recession: it created almost 110,000 jobs from 2005-06 to 2009-10. But the point wasn't to look at whether companies hired more people in 2010 than they had in 2006. The point was to figure out whether cities that had bad luck in the visa lottery looked different in terms of their post-recession employment from cities that had less bad luck.

What they found

The study found that cities with bad luck in the 2007 and 2008 visa lotteries really did take a hit to their computer sectors — and the US-born workers in them. They generated slightly fewer jobs for native tech workers with college degrees than cities that had better luck, but many fewer jobs for tech workers without college degrees. For every 1 percent in "shock" from H-1B rejections, the number of jobs available for US-born tech workers without college degrees grew 7 percent slower during the recession. (For US-born workers with college degrees, it was 1.3 percent slower.)

In total, the study finds, had everyone who applied for an H-1B visa in time gotten one in 2007 and 2008, the tech industry could have added at least 60,000 more jobs by 2010 than it did for US-born tech workers — and as many as 231,000. So a single tweak in immigration policy could have caused tech sector growth to triple in the teeth of the recession.

Who was most affected

The study, and most research into how high-skilled immigration affects US-born workers, points out that not everyone who works in the computer industry has a college degree. (By the same token, not everyone with a STEM degree goes into tech. That isn't relevant to this particular study, but it generally makes it difficult to figure out whether or not there are already "enough" tech workers in the US without increasing immigrant workers.) And the effects of bad luck in the H-1B visa lottery were very different for native-born tech workers with degrees, and those without them.

Bad luck in the H-1B lottery, according to the study, meant that companies created far fewer jobs for computer workers without college degrees: the support staff who would have complemented the new immigrant workers. Every 1 percent of "shock" from H-1B rejections meant that the number of jobs in a city for US-born tech workers without degrees grew by 7 percent less than it would have.  But US-born workers with college degrees didn't do nearly as badly: their job growth only fell 1.3 percent.

Where US-born workers with degrees did suffer from the bad luck of their cities was in wages. Every 1 percent in "shock" hurt wages for tech workers with degrees by .26 to .79 percent. In practice, the average US-born, degree-holding tech worker would have made $861 to $2,672 in a world where high-skilled visas were available to everyone who applied.

So the results of the "experiment" the government accidentally created with its visa lottery, according to PNAE, are this: trying and failing to get high-skilled immigrants to your city means fewer jobs for US-born tech workers without college degrees, and lower wages for US-born tech workers with them. Whether or not the tech industry is trying to pit immigrant workers against native-born ones, this study indicates that hiring more of the former really would allow them to hire more of the latter.

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