Op-ed: How America's outdated immigration laws hurt the economy

Decades of inaction on immigration reform mean that certain areas of the workforce will have severe labor shortages that could be helped by an influx of foreign workers. Other sectors are taking advantage of an outdated visa system. 

What have three decades of failure to pass comprehensive immigration reform wrought?

An election campaign filled with histrionics and divisive imagery. One where immigrants coming to the US in large numbers are viewed as a “critical threat” by too many voters.

Lost in this panic over immigration has been the issue of temporary visa allocation. The problem has received too little campaign media coverage, even though the current structure dates from the era of snap bracelets and AOL chat rooms. Temporary visa policies wreak economic havoc on both foreign-born and native-born Americans because they are not aligned with current and future workforce needs. 

Ours is a system that keeps nurses and home health aides from abroad out, even as their presence could improve care and reduce costs in America’s most vulnerable communities. At the same time, the large number of temporary IT workers with access to visas far outpaces the economy's current need for them.

A labor mismatch

The Conference Board’s uniquely forward-looking Labor Shortage Index demonstrates that America’s businesses are more likely to have future difficulty finding health workers than information technology (IT) ones. This tool assesses future labor shortage risk by occupation based on three factors: (i) the gap between future demand and supply; (ii) the education and skills required; and (iii) how flexible the occupation is to different work arrangements. The last factor best explains why tech sector occupations have lower future shortage risks than health ones. Computer programmers can work offshore or from home; nurses cannot.

The share of immigrants working in an occupation is another important measure of flexibility. As fewer native-born workers enter the labor force, higher levels of immigration will be needed to fill the gaps—particularly in certain occupations where the “home-grown pipeline” is not full.

My recent report on the role of immigrants in the US labor market is designed to help employers determine whether foreign-born workers might significantly alleviate labor shortages in their industries and locations in the future. I find that IT occupations like web developers have high levels of immigrant participation but low future shortage risk.  In contrast, doctors, home health aides, and registered nurses all have both high levels of immigrant participation and high future shortage risks. To find more needed health workers, employers can and should look abroad, to the extent that US visa policy allows.

During the dot-com boom, American tech firms faced a dearth of computer programmers and software developers. But now our needs have changed. A generation of college students majored in computer science knowing that job opportunities were waiting.

Large numbers of temporary IT workers made sense in the late 1990s and early 2000s when the program was temporarily expanded. However, these “emergency” conditions have long since passed. Workers who obtain H-1B visas must be sponsored by their employers, limiting their ability to find better jobs.

The application process also advantages large firms over smaller ones, further reducing competition for these workers. Even where employer demand is rising rapidly, among data scientists for example, the best talent should be free to join firms that can use it most productively. Scrapping temporary visas for IT workers, while allowing more to come as permanent workers, would make the US tech sector more dynamic.

Where there's need

Meanwhile, our health care system though cries out for more foreign-born registered nurses and home health aides. The Baby Boomers are rapidly filling the retiree ranks and will need to be cared for. Unfortunately, while IT workers access temporary H-1B visas in droves, registered nurses and home health aides, the linchpins of our health care system, are shut out.

Reforming the temporary visa rules would assure that an adequate and nimble supply of such workers would be present at all times and in all locations. The supply of native workers in these health service occupations actually rises during periods of economic stress like the Great Recession and falls as economic conditions improve.  Consumers do not stop getting sick during recessions. Former nurses and home health aides may briefly return to these professions as more attractive job opportunities dry up and to replace lost earnings from other household members.  High turnover is a particular problem for health providers located in poor and rural areas where working conditions are most challenging.

Unfortunately, past efforts to admit foreign health care workers to meet such shortages have been both half-hearted and unsuccessful. H-1C visas for health workers, which were instituted in 1997, were successfully used by only 14 hospitals before the program was abandoned in 2009.

After the election, Congress and a new president should create a new category of temporary visas for health workers. This would help drive higher quality and more affordable care to poor and rural Americans. These new immigrants will provide noble service to their adopted country, ensuring that all Americans receive the quality of care they deserve. 

Brian Schaitkin is a Senior Economist at The Conference Board and the author of Importing a Solution: Can Immigration Help Mitigate Looming Labor Shortages? Follow him on Twitter: @BSchaitkinTCB