The H-1B Opportunity (Slate-Moneybox)
In a recent Slate-Moneybox article, Senior Fellow Michael Clemens looks at one Indian firm to highlight the increase in productivity as a result of H-1 B visas.
Each year the United States hands out a modest quantity of H-1 B visas for firms to import skilled technology workers. During the pre-crisis years, we would regularly hit the H-1 B cap very quickly and end up needing to allocate the slots via lottery. Then during the economic downturn, demand to import workers declined substantially. But now the rush is back. This week the filing process began, and the expectation is that we'll run out within five days and be back to the lottery.
This is inefficient from the standpoint of the overall American economy, but one virtue of the system is that it allows us to quantify exactly how inefficient it is. Michael Clemens looked pre-crisis at one particular Indian firm that was involved in the IT outsourcing trade. Since visas were handed out by lottery, he's able to match employees of the IT outsourcing firm who lost the lottery to employees of the IT outsourcing firm who won. He finds that lottery winners' salaries increased by $55,000 to $58,000 per year. In other words, for reasons that aren't entirely clear, skilled IT workers experience a productivity miracle when they're allowed to come to the United States.
