Recruiting Blog

More Foreign Workers: Better For U.S. Wages?

A recent study done by three academic economists claims that more hiring of foreign workers by U.S. employers will also raise the wage scales of U.S. born workers. University of California, Davis researchers Giovanni Peri, Kevin Shih and Colgate researcher Chad Sparber collaborated to examine wage data and immigration in 219 metropolitan areas from 1990 to 2010. They found that cities with the largest influx of foreign-born workers in R&D, engineering, science, mathematics, IT and technical fields (also called the STEM professions) translated into the fastest increase in wages for U.S. born, college-educated professionals.

Importing wage growth

All three studied how wages for native workers shifted along with immigration. They found that a one-percentage-point increase in the share of workers in STEM fields increased both: a) the wages for college-educated native born U.S. workers by 7-8 percentage points and b) the wages for non-college-educated native born U.S. workers by 3-4 percentage points.

However, all three researchers have provided earlier work demonstrating the benefits of immigration. This further research cements their position that immigrants can boost the productivity of the overall economy because as professor Peri says, “then the pie grows and there are more jobs for other people as well.” Furthermore, Dr. Peri claims that this research bolsters the case for raising or even removing the caps on H-1B visas (the program that regulates how many high-skilled foreign workers employers can bring into this country). The current annual cap on H-1B visas is 65,000 for first-time applicants and 20,000 for workers with advanced degrees.

As an engineering recruiter who regularly places STEM professionals, I am not sure that I agree with this research. Immigrants may not be needed to fill many STEM jobs and those wage gains stated in their research could be even greater without the presence of H-1B workers. My executive recruitment staff regularly encounters advanced degreed engineers, scientists, R&D, IT and technical candidates. In fact, many STEM degreed candidates do not even land STEM related jobs! Furthermore, this research attempts to isolate the cause and effect of a shift in the supply of immigrants instead of the increased demand by employers. Instead, they should have calculated how the number of skilled workers has changed over time in each area they covered.

In my regular roundtable discussions with other engineering recruiters, scientific recruiters, IT recruiters, R&D recruiters and technical recruiters, many share my same thoughts. It is true that for some hard-to-fill positions, H-1B is necessary. However, we need to train our own internal workers to better serve American employers. This would be a boon for internal management recruiters as well as external executive recruiting firms.

Please share your valuable views with us…

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