New Study Reaffirms the Job Creating Potential of H-1B Expansion

Regional Economic Models, Inc. (REMI), a nonpartisan private forecasting firm, released a report recently detailing the economic impacts of immigration reform.  The report focuses on the economic implications in all 50 states and the District of Columbia of three key reform components:  the Path to Legal Status; high-skilled (H1-B) visa expansion; and changes in other visa programs (H-2A, H-2B, and W-1). 

The study details the macroeconomic effects of the policy changes from the years 2014-2045, and concludes that immigration reform in these three areas would have a net positive effect at both the state and national level, and across a wide range of industries, through job creation, personal income growth, and an increase in gross domestic product (GDP).  At a time when the national unemployment and labor participation rates remain relatively stagnant, this reform suggests that immigration reform would put our country on much-needed long-term growth.

Clearly, ITI and our member companies strongly support expanding the H1-B visa program, which would allow companies to hire more foreign workers in specialty occupations, and keep skilled work in the United States.  This increase in visas would address the critical need for highly skilled workers, particularly those in the science, technology, engineering and math (STEM) fields.   The study assumed that, on top of the 65,000 H1-B visas available under current law, the annual number of visas increases to 75,000 in 2014, with an additional increase to 105,000 by 2019.  Based on these assumptions, the study concludes that new jobs would increase by 227,000 in 2014, and reach 1.3 million by 2045.  The study also finds that an increase in H-1B visas would increase national personal income overall by $13.7 billion in 2014 and up to $146 billion in 2045.

The REMI report reinforces a number of studies that have previously linked the expansion of H1-B visas to economic growth and job creation.  This is no surprise to anyone in the tech industry, as we see that tens of thousands of jobs in this sector remain unfilled due to a domestic STEM education system that can’t keep pace with the numbers and skills needed to occupy these positions. 

The increase in skilled immigrants through the expansion of the H1-B visa program allows these jobs to be filled, which boosts the overall domestic workforce as a result.  According to a study conducted by Engine Advocacy and the Bay Area Council Economic Institute, jobs in the tech sector have been more resilient to the economic downturn than other private sector industries, show promise for continued growth, and create by far more indirect jobs than any other industry.  For each job created in the high-tech sector, approximately 4.3 jobs are created in other local goods and services sector, the study finds, and demand for high-tech jobs will be considerably stronger than for other workers through at least 2020.

A more robust H1-B visa program also is expected to lead to increased consumption in the U.S. economy, creating more local consumption demand employment, and real estate investment, as the economic activity generated by these new workers will fuel a greater demand for housing.  With greater access to more high-skilled workers in the U.S., the resulting output expansion in the private sector would boost growth in overall trade, including exports.

There is no denying that our economy needs a shot in the arm that can provide stable and long-term economic growth.  Given REMI’s most recent immigration analysis, it’s clear that the expansion of the skilled-worker H1-B visa program will provide strong economic advantages to bolster our job creation, personal income, and GDP. 

With our current stagnant job growth, high-skilled immigrants have the ability to fill currently vacant positions and serve to fuel even more job creation through the multiplier effect already described.  By failing to act on this, Congress is denying our citizens and our economy the benefits associated with the positive immigration reforms being considered in Congress.  In order to satisfy our citizens and economy we must continue to push for the expansion of the high-skilled H1-B visa program as part of comprehensive immigration reform.

Public Policy Tags: Immigration