White House DACA Deal Will Chill U.S. Economy

This past Sunday (October 08, 2017), the White House released a list of priorities it is willing to exchange for reinstating DACA, the Obama-era executive order that provided work permits to approximately 800,000 people who were brought into the U.S. undocumented as children.

On the list is increasing border security through tightening the criteria of asylum protections, hiring 10,000 immigration agents, building a border wall, and toughening sanctions on sanctuary cities. In addition, the deal calls for the institution of the E-verify program to prevent undocumented persons from working in the U.S.

However, the deal also touches legal immigration visa processing by increasing the number of ways a visa applicant can be rejected and significantly limiting the number of foreign nationals who can obtain visas. Proponents call it merit-based immigration, which sounds like a good idea, but the White house officials state it will significantly decrease the number of visas issued. The plan would significantly transform the employment-based immigration system that corporations use to hire highly skilled foreign talent.

Limiting employment based immigration would be detrimental to the technology, medical, and higher education sectors, which is a major driver of the U.S. economy.  This kind of immigration policy actually restricts economic growth in America.

There is a well-documented shortage of STEM educated talent in the United States. For example, by the end of the decade there will be 120,000 new jobs requiring a bachelor’s degree in computer science. However, the U.S. higher education system only produces 51,000 computer science graduates annually. To fill these positions, technical companies turn to immigrant workers to fill critical positions. This allows them to keep important parts of their business on U.S. soil.

The H-1B visa program is already capped at 65,000 visas per year and that has proved grossly insufficient to fill all the positions available. The Trump Administration DACA deal has suggested even further cuts in this program, which may force companies to consider moving abroad simply to stay in business.

Curbing high-skilled immigration costs jobs and reduces wages

Data show that those areas with more H-1B visa denials experience less job creation and wage growth for American-born workers in the years that follow. These same cities also lost as much as $3 billion in aggregate annual earnings in the two years that followed.

In 2007 and 2008 alone, it is estimated that up to 230,000 potential positions in the high-tech sector were lost to U.S.-born workers because of H-1B visa denials due to H-1B cap. The total number of U.S.-born workers in computer related jobs would have exceed 2 million in 2010 with that additional employment. H-1B visa denials from 2007-2008 cost 30,222 computer related positions for U.S.-born workers in the DMV area and 27,329 such positions in Chicago and Dallas.  These local statistics give a glimpse of the sweeping national economic implications of slashing employment based immigration overall as has been proposed by the Trump Administration.

H-1B visa denials affect wages for U.S.-born workers

H-1B visa denials in 2007 and 2008 slowed the wage growth of U.S.-born computer workers by as much as 3.2 percent by 2010. This means the average college educated computer worker would have earned between $861 and $2,672 more per year in 2009-2010.

While it is commonly portrayed that high-skilled immigrants displace U.S.-born workers in the computer and other technology fields, the fact is that the presence of high skilled immigrants creates more jobs with higher wages for native-born workers.

Reducing H-1B and other work visas significantly below the current rates will slow the growth of numerous economic sectors, causing lost jobs for Americans. Translated into dollars and cents, these numbers show the truth economic impact of immigration policy schemes like the one the Trump Administration has proffered in their DACA deal. It is dangerous policy to mix legal immigration concerns with policies for undocumented persons and border security. The two are separate issues deserving of separate policies.

To keep America innovative and keep tech companies on our shores supporting economy the U.S. needs an expansion of the current employment-based immigration system instead of additional restrictions.