Context

• The global competition for skilled talent is reshaping economies and innovation landscapes
• The United States, historically a hub for technological advancements, has long benefited from skilled immigrants who not only fill jobs but create them.
• However, restrictive immigration policies, particularly concerning H-1B visas, threaten to undermine this advantage.

A Closer Examination of the Flawed Logic of H-1B Visa Restrictions

• A Misguided Notion
  • At the heart of the H-1B visa debate lies a pervasive yet misguided notion: that restricting skilled immigration will create more opportunities for native workers.
  • On the surface, this argument appears intuitive, but a deeper dive into the data reveals a far more complex and counterproductive reality.
  • Policies that limit skilled immigration fail to account for the interconnected nature of global labour markets.
  • Also, these restrictions impact the dynamics of innovation-driven economies, and the tangible contributions of foreign talent to economic growth and job creation in the United States.
• Displacing Jobs, Not Protecting Them
  • When H-1B visas are restricted, American companies rarely respond by hiring more U.S. workers; instead, they shift their focus to hiring abroad.
  • This trend is not speculative; it is supported by substantial evidence.
  • A study by Britta Glennon found that when faced with stricter visa policies, U.S. firms accelerate foreign hiring, often relocating entire teams and operations to countries with more accessible talent pools, such as India and China.
  • For every 10 H-1B visa applications denied, U.S. multinational companies hire an average of eight foreign workers in offshore locations.
  • These are not simply replacement hires; they represent the relocation of innovation ecosystems, jobs, teams, and expertise, all moving overseas.
• Myths About Wage Suppression
  • Another argument against the H-1B program is that it suppresses wages for native workers.
  • Critics often claim that companies hire foreign workers to save on labour costs, but research debunks this myth.
  • According to the American Immigration Council, the median wage for H-1B workers in 2021 was more than double that of the general U.S. workforce.
  • Furthermore, between 2003 and 2021, wages for H-1B workers rose by 52%, compared to a 39% increase for all U.S. workers.
  • Giovanni Peri’s research demonstrates that hiring foreign STEM workers increases native wages, particularly in technical fields where innovation leads to higher productivity.
  • These gains, which range from 30% to 50% of aggregate productivity growth, underscore the positive economic impact of skilled immigration.

Economic and Technological Benefits of Skilled Immigration

• Employment Generation
  • The contributions of skilled immigrants extend beyond employment figures.
  • Research has consistently shown that H-1B visa holders stimulate job creation.
  • Each H-1B worker, on average, generates 1.83 additional jobs for native-born American workers over a seven-year period.
  • Additionally, immigrant-founded companies in the U.S. tend to attract higher investments and create more jobs than those founded by native-born entrepreneurs.
  • According to the National Foundation for American Policy, more than half of America’s billion-dollar startups were founded by immigrants.
• Innovation Driven Benefits
  • The innovation-driven benefits of skilled immigration are undeniable.
  • A 10% increase in foreign STEM workers correlates with a 0.5% to 0.6% rise in native wages and a 0.3% to 0.7% increase in patents per capita.
  • Research by Jennifer Hunt reveals that a 1% rise in immigrant college graduates leads to a remarkable 9% to 18% surge in patents per capita.
  • Given that up to 71% of tech workers in Silicon Valley are foreign-born, restrictive policies risk eroding America’s technological leadership and global competitiveness.

Broader Implications of H-1B Visa Restrictions

• Innovation at Risk
  • One of the most concerning consequences of H-1B restrictions is the impact on innovation.
  • Skilled immigrants are disproportionately responsible for patents, technological breakthroughs, and high-growth startups.
  • Studies reveal that a 10% increase in foreign STEM workers leads to a 0.3% to 0.7% increase in patents per capita and a corresponding rise in native wages.
  • Immigrants, many of whom arrive in the U.S. through programs like the H-1B, account for a significant share of technological advancements, particularly in tech hubs like Silicon Valley.
• Stalling Broader Economic Growth
  • The U.S. labour market operates differently in knowledge-driven sectors, where talent scarcity is a pressing issue.
  • In such industries, skilled workers, especially in STEM fields, are not interchangeable with less specialised labour.
  • Rather than protecting domestic jobs, these caps restrict American companies from scaling their operations, which hinders job creation for native workers.
  • Research shows that H-1B visa holders are job multipliers: each one generates 1.83 additional jobs for native-born Americans over a seven-year period.
  • By limiting access to skilled immigration, policymakers are not only curtailing the potential of individual companies but also stalling broader economic growth.

‘Brain Circulation’ and the Indian Experience

• India plays a crucial role in the global skilled migration landscape, receiving approximately 70% of H-1B visas issued annually.
• What was once perceived as a brain drain is now recognised as ‘brain circulation’; a phenomenon where skilled Indian professionals gain experience abroad and later contribute to India’s growing innovation ecosystem.
• This cycle benefits both the U.S. and India, developing cross-border knowledge exchange, investment, and technological advancements.
• While the H-1B debate in the U.S. continues, India must position itself not just as a talent exporter but as a hub of innovation and entrepreneurship.

India’s Role in the Global Innovation Network

• Developing Innovation Clusters: India needs globally competitive innovation hubs with tax incentives, research grants, and high-quality infrastructure to attract and retain talent.
• Setting Global Standards: Rather than playing catch-up, India must pioneer new technological paradigms, as seen with successful initiatives like IndiaStack and UPI.
• Creating a Risk-Taking Culture: A vibrant startup ecosystem requires policies that encourage experimentation, such as a dedicated startup visa program to attract international entrepreneurs.
• Balancing: Short-term reforms (such as streamlined overseas citizenship processes and pension portability agreements) with long-term strategies (such as automated talent mobility systems and shared patent applications) will be crucial in integrating India into global innovation networks.

Conclusion

• Skilled immigration is not a zero-sum game, it is a driving force behind economic growth, job creation, and technological advancement.
• The U.S. must recognise that restricting skilled immigration undermines its own economic and technological leadership, while India must leverage its global talent network to fuel domestic innovation.
• In an era of intense global competition for talent and innovation, policies must shift from protectionism to strategic collaboration, ensuring that knowledge economies continue to thrive.