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U.S. Immigration Reform

May 2007
U.S. Immigration Reform

Is loosening up of numerical limits desirable?

No, the visa caps benefit the Indian economy


Immigration reform is a wretched topic, and reasonable people may differ on it. Apart from some bad economics, obsolete provisions in the existing statutes lead to much heartache and separation of families. To simplify matters, I shall look at this strictly from the point of view of the Indian economy, while admitting that there are many other, and entirely valid, perspectives as well.

This April, the annual H-1B scramble ended up in an even more bizarre result than usual. The authorities were so overwhelmed with 150,000 applications on the very first day that they now have to run a lottery to pick the winners. This implies an unmet demand for technical people in the United States, as the majority of H-1B visas go to Indian software people.

While protectionists argue that wages for native engineers are being depressed by immigrants, the technology industry—including Bill Gates—counters that science and engineering not being socially sexy occupations for native Americans, the supply is too low.

The Indian IT services industry has made a fortune out of wage arbitrage, using employees in India who are paid a quarter as much as an equivalent U.S. employee. This is economically rational, because the purchasing-power multiple is about four, that is, an Indian employee gets four times as much purchasing power for the same dollar.

The rationale for the H-1B cap is to help U.S. employees. But the contrarian result is the migration of jobs to India. Per the law of unintended consequences, the H-1B cap is not preserving the wages of U.S. employees; rather, the jobs are being permanently moved to India!

Which is precisely what the Indian economy needs. As the result of higher-skill jobs moving offshore, the "yield," if you will, is also going up. An article in the International Herald Tribune on April 3 ("India outsourcing moves to the front office") provides some startling numbers: pharmaceutical drug researchers in India being billed at $1 million a year, business analysts at $500,000, aerospace engineers at $100,000, etc.

This could lead to a perfect storm. Indian immigrants, attracted anyway by the prospect of dramatic growth and increased job satisfaction back home, may return to India. Others will be discouraged from coming to America in the first place because of the hassle of waiting periods and the sheer torture of getting green cards. Besides, domestic demand for well-paid technology jobs is going up in India. And there is, after all, no place like home. Taiwanese returned home in droves a few years ago, and Indians may, too.

In sum, immigration controls are great for Indian corporates, if not necessarily for individual Indians who wish to immigrate to the United States. n

Rajeev Srinivasan wrote this opinion from Hyderabad, India.

Yes, more legal immigration is good for the U.S.


To see how legal immigration is working for the U.S. economy I can just look out my window. For the past year, trucks and construction workers have rolled into the lot behind my home in Las Vegas, converting a wasteland of tumbleweed and rock to a new assisted living center; the second one in three years in this area. The other center is two miles away, across from the new casino resort built last year. In it, like thousands of others in this city, many employees are legal immigrants. The casino hotel is part of development project where new offices and shops will open in coming years. In the opposite direction, a desi doctor conducts ground-breaking cancer research in a new institute. And so it goes. Back at home, the sing-song horn of a taqueria-on-wheels announces lunch time for the construction workers, bringing the hammering to a halt.

No doubt in some regions construction and housing are down, but the United States continues to build; wages and job growth are up; the economy is growing. In the Silicon Valley, venture capital funding, innovation, new technologies, advertising—all are on an upswing. Despite the good news, however, it could be better. Some experts say the economy is being held back due to a lack of skilled workers.

Recent surveys indicate that, across the board, finding the right people is more difficult, particularly in scientific and technical fields. Consequently, employers may woo skilled workers away from competitors or opt to hire those with not quite the desired qualifications. The net result is reduced productivity, stifled innovation and restrained economic growth. All this at a time when the United States can least afford it, what with India shining and China rising.

The contribution immigrants have made to the U.S. economy is undeniable. According to a Duke University study, immigrants founded 25 percent of the engineering and technology companies created in the last 10 years. Those wrangling over immigration reform and focused on illegal immigrants are missing the point. It's about the bottom line: more skilled and qualified workers are needed to meet industry demand. Noting this, other nations like Canada and Australia are attracting migrants by easing immigration norms.

Meanwhile, a pool of ready, willing, and able skilled workers waits overseas. In April, the 65,000 cap set by Congress for H-1B visas, temporary U.S. visas granted to skilled workers, was met in a few hours. Sci-tech companies are livid as they lobby for an increase to the cap or no visa cap at all.

So, who will receive those 65,000 H-1B visas? The United States thinks a lottery to select skilled workers is the solution. Is the U.S. economy worth the gamble? Odds are, it isn't. n

Reeta Sinha wrote this opinion from Las Vegas, Nev.

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