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New Research Shows Who Will Be Hurt—And Helped—If America’s Tech Industry Can’t Hire World’s Best Talent

N. R. Narayana Murthy, Executive Chairman of Indian tech giant Infosys.

N. R. Narayana Murthy, Executive Chairman of Indian tech giant Infosys. // Aijaz Rahi/AP File Photo

President Donald Trump’s threats to overhaul the H1-B program, the largest visa program for allowing high-skilled immigrants to work in the U.S., has Silicon Valley shaking in its boots. But American computer scientists might want to root Trump on.

The H-1B visa, created for college graduates with knowledge in a highly specialized field, was first granted 1990. Its establishment coincided with the rise of the internet, which sent America’s need for skilled computer scientists skyrocketing. Today, the H-1B program is integral to the tech industry: About half of the more than 120,000 H1-B visas granted by the U.S. in 2014 went to those working in computer science.

The H-1B visa has also been a boon for the U.S. economy overall. One study estimated that between 10 percent and 25 percent of all productivity growth in the country between 1990 and 2010 came from foreign workers in science and technology, many of who are on H-1Bs.

But not everyone wins from the program. Recently published research by economists John Bound, Gaurav Khanna and Nicolas Morales of the University of Michigan found that although the H-1B program is a major contributor to U.S. economic growth, it’s quite bad for domestic computer scientists.

Based on data from 1994 to 2001, the researchers estimate that without the H-1B program, the wages of American computer scientists would have been 3 percent to 5 percent higher in 2001, and Americans’ employment in computer science would have been 6 percent to 11 percent higher. They also find that, in general, the H-1B program makes college graduates worse off, while helping non-college graduates by giving them access to cheaper technology.

The researchers chose to use the period from 1994 to 2001 because it was a time of stable growth in the U.S., during which there was also a large influx of H-1B workers. Though the computer-scientist labor market might be different today, the pain felt by its U.S. participants still likely holds.

The findings were a surprise to the researchers, who had not thought they would discover such a large loss for domestic computer scientists.

“The [H-1B] program led to a lot more innovation and growth in IT, which should raise wages for everyone in that sector,” Khanna told Quartz. “But competition from foreign computer scientists should also keep wages down. We weren’t sure which would be the bigger effect.” The competition effect easily won out.

The study is exemplary of the classic immigration trade off. Almost everybody in the U.S. gains from the H-1B program, and from immigration generally. It helps the economy grow, consumers are better off and company profits are higher. But the workers in direct competition with the immigrants in their industry are usually harmed, and are rarely if ever compensated for that loss.

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