Study finds H-1B Cap had a significant negative impact on U.S. technology industry

The Partnership for a New American Economy recently published a study showing the detrimental consequences of the H-1B Cap on the U.S. technology industry.  The study examined how the 2007 and 2008 H-1B lotteries that resulted due to more than the allotted 85,000 petition being filed within the first 90 days of the application period, affected the number of jobs and the total wages for U.S. born workers both with and without college degrees in the technology industry.  The study relied upon data gathered from USCIS, the Department of Labor, and the American Community Survey to build a statistical model examining the H-1B Cap effects on the technology industries in 236 metropolitan areas.

According to the model, between 60,000 and 231,200 jobs could have been created by 2009 – 2010 if all the H-1B petitions had been accepted in 2007 and 2008.  Most of the jobs, as many as 188,500 jobs, would have gone to U.S. workers without a college degree who support the work of H-1B visa recipients.  Only between 24,280 and 42,640 jobs would have been created for U.S. born workers with a college degree.

In direct connection to the loss of potential new jobs, U.S. technology workers lost billions in annual wages.  The study found that in 2009 alone, U.S. born college-educated technology workers lost out on $3.0 billion in annual wages.  In 2010, wages lost totaled $2.96 billion.  Furthermore, the rejection of H-1B petitions in 2007 and 2008 due to the Cap slowed wage growth for U.S. born college-educated workers by over 3 per cent between 2005 and 2010.

The Washington, D.C. metropolitan area was one of the worst affected areas by the 2007 and 2008 H-1B Cap. The area lost as many as 30,200 jobs by 2010, 22,920 of which would have gone to U.S. born workers without a college degree. This translates to between $170 and $520 million lost in wages for U.S. technology workers in the Washington, D.C. area.

What happened to those H-1B positions whose petitions were rejected because of the Cap? Most of the positions were eliminated or left unfilled as employers were unable to find qualified U.S. born workers to fill them. In total, the potential 231,200 jobs combined with the 178,000 rejected H-1B petitions, left the U.S. economy with over 400,000 potential jobs lost. Although outside the scope of the study, it is noted that technology industry jobs on average support five additional jobs in other areas of the economy meaning the total number of jobs lost by 2010 because of the 2007 and 2008 H-1B Cap may be significantly higher than predicted by the model.

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