Once you let the economic-nationalist genie out of the bottle, it’s difficult to stop it from enveloping the entire economy. Since January, the Trump administration has pursued an aggressive tariff agenda, taken a 10% stake in Intel, and insisted that the U.S. government can tell Nippon Steel how U.S. Steel should run its operations. It was only a matter of time before the administration applied the same logic of economic intervention for ostensibly patriotic purposes to America’s labor market.
This is what lies behind the administration’s decision to raise the application fee for new H-1B visas to $100,000 for every new applicant. The program, created by the 1990 Immigration Act, allows companies to bring high-skilled professionals into America to fill significant gaps in “specialty occupations” in the U.S. economy.
Consider the arguments in President Trump’s Sept. 19 proclamation. American companies (especially tech businesses), it claims, have abused the H-1B visa program to “replace, rather than supplement, American workers with lower-paid, lower-skilled labor” and exploited H-1B regulations “to artificially suppress wages.” The sheer number of foreign workers on H-1B visas, the proclamation insists, has made it harder for “college graduates trying to find IT jobs, allowing employers to hire foreign workers at a significant discount to American workers.”
The theme underlying these claims is that the H-1B program—like trade liberalization and economic openness to the world generally—is hurting American workers. Consequently, the argument goes, the legal importation of foreign high-skilled workers into America via H-1B visas should be harder and more expensive.
Missing from this picture is appreciation of how H-1B visas benefit the U.S. economy, particularly the American-born workforce.
In the first place, there is considerable evidence that the young skilled immigrant workers typically granted H-1B visas increase overall U.S. employment. One 2015 study of the employment structure of U.S. firms found “rising overall employment of skilled workers with increased skilled immigrant employment by the firm,” with the native employment expansion occurring primarily among younger workers. A more recent analysis, by the National Foundation for American Policy, likewise concluded that “H-1B visa holders do not adversely affect U.S. workers.” Instead, they contribute to “lower unemployment rates and faster earnings growth among college graduates, including recent college graduates.”
Adding an H-1B visa holder to the U.S. workforce isn’t a zero-sum game. Foreign workers with highly valued and often rare skills inject human capital and expertise into the U.S. workforce. This increases firms’ innovativeness and productivity.
A foreign high-skilled worker may have rare skills different from those of an American high-skilled worker. But when the two employees are put together in an American business, the resulting collaboration translates into more creativity and output for the firm. In other words, H-1B workers complement and magnify the productivity of native-born Americans rather than nullify it. That means more jobs for Americans.
It’s true that the entry of foreign skilled workers on H-1B visas into a particular field can produce an exodus of American skilled workers, such as IT specialists, from that field into another. But that doesn’t necessarily translate into an overall loss of jobs. Redistributions of skilled workers from one sector to another occur all the time because of entrepreneurial, technological and structural changes in the U.S. economy.
This evidence indicates that if the Trump administration successfully reduces the number of H-1B workers, we can expect negative effects on overall U.S. employment. If American companies find the new H-1B costs too much to bear, it doesn’t follow that they will automatically hire U.S. workers. More likely, many large American businesses will do something guaranteed to infuriate economic nationalists—move the jobs offshore. If the talent can’t come to America, many U.S. firms will go to the talent.
This has been happening for several decades. Existing H-1B visa caps have led many American businesses to set up research-and-development offices abroad in cities with high concentrations of STEM workers. The effect is to increase employment abroad and for patents to be registered and new technologies to be created beyond U.S. shores.
In a saner policy environment, these factors would encourage American policymakers interested in stoking American employment and growth to expand the availability of H-1B visas and allow more foreign-born high-skilled workers into the U.S. The same considerations suggest that Washington should make it easier for such workers to do, at some point, what I did seven years after entering the country on an H-1B visa: become an American citizen and personally invested in this great country and its dynamic economy.
Unfortunately, in the upside-down world of economic nationalism in which we now live, different outcomes are more likely to be the case. The biggest losers, sadly enough, will be American workers—the very people whose interests economic nationalists claim to be protecting.
Mr. Gregg is president of the American Institute for Economic Research and author of “The Next American Economy.”
