Earlier this month, two researchers at the University of California, San Diego (UCSD) issued a research paper suggesting that increasing a company’s proportion of H-1B visa-holders translates into measurable gains in innovation.
Specifically, boosting the ranks of H-1B workers by 10 percent equates with a two percent gain in product reallocation rates, or the speed at which new products replace old ones, according to Gaurav Khanna and Munseob Lee, both assistant professors of economics at UCSD’s School of Global Policy and Strategy.
“There’s been a lot of work by economists on the impacts of the H-1B program mostly focused on the wages and employment of native born workers, but little is known about how immigration affects production at the firm level,” Lee wrote in a press release posted on UCSD’s website. “We find that hiring more immigrant workers is associated with firms introducing new products on the market.”
Product reallocation is an interesting metric to use, because it can represent a company’s incremental progress toward new products and services; other H-1B studies have focused on immigrant workers’ impact on a company’s patent portfolio, which doesn’t always offer insight into corporate productivity.
Whether or not H-1Bs translate into boosted productivity, the federal government’s efforts to restrict the visa seem to be succeeding. H-1B denials and Requests for Evidence (RFEs) rose in the fourth quarter of fiscal year 2017, according to the National Foundation for American Policy (PDF): Rates of outright denials rose from 15.9 percent in the third quarter to 22.4 percent in the fourth, while there were nearly as many RFEs in the fourth quarter as the first three quarters of that year combined.
“The significant increase in denials and Requests for Evidence in the 4thquarter of 2017, which started July 1, 2017, came shortly after Donald Trump issued his restrictive ‘Buy American and Hire American’ executive order on April 18, 2017,” the National Foundation for American Policy added in its report. “The data indicate the new administration needed time to get in place its new political appointees—considered by observers to be a who’s who of opponents of all forms of immigration—and to exert their will on USCIS career adjudicators, who were not considered favorably inclined in the first place toward businesses or high-skilled foreign nationals.”
The Foundation claims that, based on its conversations with companies and attorneys, this elevated rate of denials and RFEs has continued into 2018.
Updated guidance for U.S. Citizenship and Immigration Services (USCIS) will allow the federal government to reject visa applications and petitions without asking for any RFE or Notice of Intent to Deny (NOID). “This policy is intended to discourage frivolous or substantially incomplete filings used as ‘placeholder’ filings and encourage applicants, petitioners, and requestors to be diligent in collecting and submitting required evidence,” the agency wrote in a statement when it announced the changes, which are slated to take effect on September 11.
Critics of the H-1B visa suggest that companies exploit the system in order to import lower-paid workers. While data from USCIS suggests that H-1B holders at the nation’s top tech firms (such as Apple and Google) make six figures per year, and often work extremely specialized jobs, H-1B holders at consultancy firms (which represented eight of the top ten companies petitioning for the visa) are often paid less.
And there is widespread acknowledgment that some entities abuse the system. “Big household-name American companies are just as culpable as the outsourcing companies of abusing the program,” Norman Matloff, a professor at the University of California, Davis,told The New York Times last year. Therein lies the cost: layoffs, potential salary discrepancies, and nasty lawsuits.
So while the research by UCSD suggests that H-1B visa use can have a positive effect on company productivity, it’s clear that the system underlying it is in the midst of some changes with big potential repercussions. How it will all work out is anyone’s guess.