Question

Please consider the H1B visa question impliedly posed in this article. Recognizing that the human capital or resource pillar of your supply chain/cycle will impact all other pillars, please address one of the following questions.

Is the H1B visa a threat to domestic workers’ ability to find and keep employment, and does it impact business sustainability?

Does the H1B visa serve a purpose in the modern world of international markets of workers and purchasers?

Answer 1

Considering the vital roles of capital and labor in economic production, restrictions in recruiting skilled workers can hinder demand for capital. Employers hire skilled foreign workers to legally work in the U.S. on a temporary basis through the H-1B visa program. H1-B is a visa where the employers have to simply certify that they were unable to find local workers at the prevailing market wages, unlike other work visas which are highly cumbersome requiring an employer to formally advertise the job in print media to prove there are no applicants. This simpler approach of self-certification is prone to abuse by employers.

It is observed that an H1B holder has a relative advantage over a US Citizen while competing for the same job since an H1B holder has immigrated to work and earn money and as such can compromise on the salary while the US citizen has to look for his lifestyle and a better standard of living.

Large companies like Walt Disney Company and Southern California Edison have been accused of replacing domestic US workers with H-1B visa holders, even where qualified workers are found locally.

According to a research study, firms relying more heavily on H-1B workers experienced a sharper decline in their investment rates relative to firms relying less heavily on H-1B workers, which is consistent with the capital-skill complementarity hypothesis. It also suggests that repeated capping on the hiring of foreign skilled workers is not gradually mitigated by domestic workers

While it may seem that H1B visa system is a threat to domestic workers’ ability to find and keep employment, many studies have shown that rather than taking away jobs, skilled foreign workers (like H-1B holders) grow the U.S. economy. The National Bureau of Economic Research has published an article on this subject: Foreign STEM Workers and Native Wages and Employment in U.S. Cities. It suggests that individuals with STEM backgrounds are the primary drivers of technological innovation. And innovation is the foundation for new business enterprises and a central ingredient in job creation strategies.