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H-1B visa cuts would damage US and Indian economies

The economies of both the US and India could suffer if any curtailment of the H-1B visa scheme is introduced, a study from the Centre for Global Development has argued.

The report argues that H-1B visa restrictions could damage the US and India's economy.Restrictions on the H-1B visa program will hinder productivity and innovation for both the US and India's economies, the report argues. Photo: pixabay/Laurel Russwurm.

In 2016, 180,000 H-1B visas were issued, with 126,700 going to Indians

According to the paper, for more than two decades the H-1B visa has been the catalyst behind booms in the technology industries both in India and the US.

Looking at the industries from 1994-2010, the paper notes that in the US and India, the welfare gains from H-1B migration amounted to $14.7bn.

However, as the Trump administration considers cutting the number of H-1B visas allowed (currently capped at 65,000), the report argues any restrictions on the program will hinder productivity and innovation for both economies.

“Clamping down on the program essentially will hurt both the economies”

“Clamping down on the program essentially will hurt both the economies on average, it’ll hurt tech exports, tech production and in general it will hurt productivity growth in other major sectors in the US,” remarked Gaurav Khanna, the report’s co-author.

Indians are the largest recipients of the H-1B visas used to employ foreign skilled migrant workers. In 2016, 180,000 H-1B visas were issued, with 126,700 going to Indians.

The career opportunities the scheme presents to Indians, especially the allotment of an additional 20,000 H-1B’s for master’s graduates introduced in 2004, has been a driving force behind the increase in Indians studying STEM degrees in the US, the report argues.

“It is an incentive for students to come and get a master’s degree in the US because there is no cap on the number of international students coming to the US, there is only a cap on the number of work visas,” commented Khanna.

“Having a master’s degree makes the chance higher because of the separate category.”

The paper includes findings from a National Survey of College Graduates which noted that in 2003, 55% of foreigners working in computer science fields arrived in the US on a temporary working (H-1B) or a student type visa (F-1, J-1).

Higher salaries and brighter career paths incentivised Indians to migrate to the US. In the early days of the tech boom, wages in the US were often nine times higher than those in India, said Khanna. Even today they’re often four to five times higher.

India’s tech sector also benefitted from the H1-B scheme as the number of computer science students in India incentivised by the H-1B visa didn’t win the lottery but stayed and set up companies increased, as did the number of H-1B returnees with experience and contacts from years of working in Silicon Valley.

“These two groups in India really have built the tech industry,” said Khanna.

The education sector in India also benefitted from the flow of talent, the report argues. In response to the need for skilled workers both at home and abroad, Indian technology schools introduced more computer science-oriented degrees. The number of first degrees conferred in science and engineering rose from about 176,000 in 1990 to 455,000 in 2000, it observes.

“Given that such a large proportion obtain their bachelor’s degrees in other countries, the education sector abroad plays a major role in the US tech boom as well,” the report notes.

“The education sector abroad plays a major role in the US tech boom as well”

As the number of tertiary-level students in India rise, so too do the number of Indian undergraduates studying in the US. In 2016 alone, Indian undergraduates increased 17%.

“That’s the new phenomena, the rise in Indian undergraduates studying STEM fields in the US since 2010,” Khanna said, adding that the rise in undergraduates required new modeling beyond the scope of the current study.

And the demand for skilled migration continues to benefit both countries, he explained.

“It’s a massive motivator to acquire these skills, go to Silicon Valley, earn higher wages, work with the best and the brightest, make connections and set myself on a life path that gives me a good career,” he said.

“It’ll be a bad thing if there are more restrictions added to the H-1B program.”

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2 Responses to H-1B visa cuts would damage US and Indian economies

  1. I have noticed that everyone benefiting from the H-1B claims ending it will harm both countries. I agree that ending it will hurt India but the history of economics suggest that ending the H-1B would enhance the US economy. The ONLY benefit of the H-1B to the US is lower cost labor for corporations. That means lower wages for Americans. The US economy would benefit from more than 100,000 jobs each year as well as increased wages for those who already have jobs. The best estimate of that overall wage increase is 5 percent. That would be a huge Keynesian boost to the US economy. A collateral benefit would be less H-1B wages sent out of the country and more spent here. All this benefit comes for only a small cost in corporate profits already at an all time high. A huge return to the people who put Trump in office.

  2. Last year I worked with a group of H-1B workers from India. They didn’t do any coding. They got an additional two months of training and even then all they did was use the built-in interfaces to look for missing records and resend files. I on the other hand had to go right to work. My only training was a week of reading code for the 40 databases that I was in charge of.
    And these are the people who are doing the jobs that they can’t find any Americans to do?
    I found out why they hire them. It is because they work then 12 to 14 hours a day for seven days a week. They get no holidays, sick days or vacation days. I was in their group so I attended their meeting. Their superior was like an old fashioned overseer. He had meeting twice a day where he constantly pushed them to get out more and more work. And although we weren’t salary, the time cards system was set up to where you couldn’t change the number of hours that you worked from the 40 hours that were hard coded in.

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