Hundreds of thousands of foreign workers will be kept from seeking jobs in the U.S. under an executive order issued by the Trump administration Monday, which blocks new work visas for at least the rest of the year for many high-skill jobs in STEM fields, seasonal hospitality work, students on summer work-study programs and au pairs.
The White House said barring immigrant workers will improve job prospects for Americans, with the pandemic decimating the economy. But immigration restrictions can affect the labor market in unintended ways.
The idea behind cutting off visas is that American companies will hire Americans, but it’s often not that simple. Foreign workers help the economy, said Giovanni Peri, an economist at the University of California, Davis.
“These workers are allowing these companies to grow, to improve their productivity, and they are connected with other jobs which Americans are doing,” he said.
In a study he found cities that have higher numbers of immigrants working in STEM fields on H-1B visas for specialty occupations also have more job and wage growth for American workers.
And when companies can’t hire workers from abroad, they often simply move the jobs instead, said Britta Glennon, an assistant professor of management at the University of Pennsylvania’s Wharton School.
“So those jobs aren’t necessarily going to Americans,” she said. “It just means those jobs are going to another country.”
She found restrictions on H-1B visas led firms to move more jobs to China, India and Canada during the early 2000s.
But allowing companies to hire more immigrants doesn’t necessarily slow the exporting of jobs overseas, said Ron Hira, a professor of political science at Howard University and author of “Outsourcing America.”
“The net effect of H-1Bs is to speed up offshoring,” he said. In an analysis for the Economic Policy Institute, he found that half of the 30 companies that receive the most H-1B visas are staffing firms that send jobs abroad.
“So they have the U.S. workers train the H-1B workers, who then return home,” he said. “And so their ultimate aim is to try to shift the work offshore as much as possible.”
He advocates reforms to the immigration system to limit such abuses while still allowing companies to recruit the high-skilled talent they need.
But Wharton’s Glennon said the limits put in place by the Trump administration could change the course of business for years or even decades to come.
“If it becomes too difficult to hire people in your U.S. office, you may shift more than just those immigrant jobs abroad,” she said. Once companies start moving jobs, the innovation that fuels growth often goes along with them.
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