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H-1B visas: A hot-button issue
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March 20, 2009

The 2009 Stimulus Plan restricts companies receiving Troubled Asset Relief Program (TARP) money in their hiring of H-1B workers -- immigrant employees with a six-year pass to work in the United States.

That law, and a new study on H-1B workers by the Harvard Business School, are rekindling an ongoing debate about immigration.

H-1B visas are used by "alien(s) who will be employed temporarily in a specialty occupation. . .," according to the U.S. Department of Citizenship and Immigration Services' website.

The authors of the Harvard study used patent records to compare the performance of Indian and Chinese scientists and engineers with their American counterparts.

"We find that increased admissions are not a zero-sum game in the short run," said Professor William R. Kerr of Harvard Business School. "US innovation increases with higher admissions levels primarily through the direct contributions of more immigrant inventors, with very limited crowding-in or crowding-out effects for American workers."

Crowding-out refers to the idea that increased hiring of foreign workers will limit the prospects of American workers. Kerr's study focuses on the short-term. He said that in the long view, studies disagree about whether American workers are crowded out by H-1B workers.

Researchers like Jennifer Hunt of McGill University find that immigrants are a strong boost to invention by American workers, Kerr said, while George Borjas of Harvard consistently finds evidence of displacement effects.

Outside the academic realm, some American private businesses believe restricting H-1B opportunities is harmful.

"There aren't enough qualified people out there," said Jeff Putz, owner of an Ohio web business that runs, a media site. "Without people from overseas, we'd be in a tight spot."

Putz runs his business using contract labor, and hopes for an improved U.S. education system: "My bigger takeaway is that it seems like we have a breakdown in this country of a system that leads to the creation of quality people for a lot of these positions."

A larger private company, New Jersey-based US Tech Solutions, was listed on a BusinessWeek ranking of the top 200 H-1B employers. US Tech, which offers web and software services, didn't receive TARP-money, but some of its clients did. CEO Manoj Agarwal said his clients, many of whom are in the financial services industry, are worried.

"I believe it applies to any type of third party company doing work for them too, potentially," Agarwal said. "I think they're trying to play it safe because there's a little bit of ambiguity."

Agarwal said he isn't immediately concerned about restrictions on hiring foreign workers in the current recessionary labor market. But in the longer term, changes to H-1B law could make hiring for some positions like traveling employees more difficult.

"It's not a problem right now because of the talent available," Agarwal said. "But if things change, it could be tough for everybody."

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