H1B Restrictions Increase “Offshoring”

Immigration law has never been more challenging than under the current administration. One area that has gone largely unexplored has been the unintended consequences of how multinational companies tend to react to harsh U.S. immigration policies that target high-skilled workers. Dr. Britta Glennon, Assistant Professor at the Wharton School of Business at the University of Pennsylvania, has undertaken research that has shed light on this issue. The findings indicate that H1B restrictions are not protecting U.S. workers, but are actually resulting in increased offshoring, creating more jobs abroad and resulting in patents being filed from abroad instead of in the United States.

Background: Attacks on the H1B Program Contradict Research and Studies

It seems that each week, the U.S. government announces a new policy or process meant to stifle U.S. immigration. President Trump has targeted the H1B program and alleged that H1B workers play a significant factor in unemployment rates for U.S. workers. This is despite ample evidence to the contrary.

H1B Restrictions Results in Offshoring, Not Additional Jobs for U.S. Workers

The primary finding of Glennon’s groundbreaking study is that multinational companies are responding to restrictions in the U.S. on the H1B nonimmigrant visa category by offshoring – that is, these companies are opening additional offices abroad, and hiring more high-skilled workers at their foreign offices.

Countries Benefiting Most with Offshoring are India, China, and Canada

Isolationists and critics of the H1B program have long asserted that restrictions on the H1B category will result in U.S. firms hiring more U.S. workers, and increase salaries for those U.S. workers. In reality, however, the study finds no evidence to support this assertion. To the contrary, foreign nations are reaping the benefits of U.S. efforts to keep these high-skilled workers out. Ironically, the countries benefiting most from U.S. restrictions on the H1B category are the countries that send the most H1B workers to the United States – India, China, and Canada.

Restrictions on H1Bs Sends Innovation Offshore

In addition to increasing offshoring of high-skilled workers, efforts to curb the use of H1B workers is also leading to innovation that would have occurred in the United States now being offshored. Based on a review of patent data, the study found that high-skilled workers prevented from working – and innovating – in the U.S. are instead innovating abroad. In Glennon’s own words, “[…] the innovative spillovers that they generate will go to another country instead.”

Conclusion

While Glennon’s study examined a novel area of the inter-connectivity between U.S. immigration policy and employment and innovation within the United States, the findings are hardly surprising. As a nation of immigrants, it defies logic for the U.S. to use flimsy reasons of blaming foreign nationals for problems that the U.S. faces. Instead, the U.S. should work on creating a more streamlined immigration system to ensure the U.S. continues to attract high-skilled talent from around the world, to maintain its global leadership position in technology and innovation.

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