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Stricter Rules for Skilled-Worker Visas Are a Mistake

Interviewee: Jagdish N. Bhagwati, Senior Fellow for International Economics
Interviewer: Toni Johnson, Staff Writer, CFR.org
November 12, 2009

Much of the debate over U.S. immigration policy has focused on illegal immigration, but visas for skilled workers also are under attack, from Congress and from nativist and union lobbies. Recent congressional efforts to create stricter rules for skilled-worker visas are "particularly inappropriate," says Jagdish N. Bhagwati, CFR's senior fellow for International Economics and a professor at Columbia University, who also recently coedited the book Skilled Immigration Today: Prospects, Problems and Policies. The current attitude, fueled in part by the recession, is based on a fallacy, says Bhagwati, because it fails to account for the quality of skilled-worker visa holders. He points out that many of these hires are from world-class technological and management institutions in India, Seoul, and China, which the United States has often helped to set up.

"Intel, Microsoft--they are looking for the best people they can get," Bhagwati says, and "the Americans who do not get the jobs in competition with the foreign hires tend to be graduates who are at the bottom of the class." Any openness policy is going to be a tough sell for lawmakers right now, but he argues that openness benefits the country economically.

Much of the debate at the end of the Bush administration was focused on illegal immigration from Mexico, though it also included the issue of expanding visas for skilled workers, such as the H-1B Visa. With a new Congress and a financial crisis, however, the politics has shifted to restricting these quotas, not increasing them. Why do you feel the United States needs to hire skilled foreign workers and why aren't there enough workers in the United States to do these jobs?

The recent immigration [bill], which failed, focused for the most part on illegal immigration. U.S. legislation typically addresses refugees, legal immigrants, and illegal immigrants separately, so the issue of hiring skilled foreign workers belongs to legislation addressed to legal immigration. But it got included in the current reform legislation addressing illegal immigration, to increase lobbying support for a failing bill. The calculation was that, by adding this issue, the proponents of the bill would galvanize the support of influential firms such as Intel and Microsoft, which use a lot of the foreign skilled workers. But this strategy didn't work.

In some areas of negotiations like trade, the more issues you open up, the more tradeoffs are possible and you can make progress by making concessions in one area and "collecting" in another. This does not work with immigration, however. Within each area of immigration, there are lobbies on both sides. Thus, adding skilled immigration to the illegal immigration bill drew in the support of Intel, Microsoft etc.; but it also drew in opposition from the lobbies representing the native engineers who opposed the use of skilled foreigners who would "take jobs away from them." They said: We're not getting employed, why should we have more [visas]? So, in fact, instead of winning the war for the bill, you simply added another battle ground! I firmly believe that the native opposition to skilled foreigners coming into the United States is harmful to us.

"The number of jobs is not static; it is not a given pool from which thirsty natives and the foreign hires drink and deprive one another of water if they drink a mouthful."

One thing to remember is that labor is not homogenous. Many of those coming in temporarily under H-1B visas, and other long-term "stay-ons" from our universities under other visa categories are gifted and well-trained graduates of high promise. The former often come from world-class institutes of technology and management in India, and comparable institutions in Seoul and in China. These institutions were often set up by top [U.S.] institutions such as California Institute of Technology and Massachusettes Institute of Technology decades ago.

Intel, Microsoft-they are looking for the best people they can hire. These hires in turn lead to a high share of patents that the United States registers. They also often set up their own firms which expand hires for all. By contrast, the Americans who do not get the jobs in competition with the foreign hires tend to be graduates who are at the bottom of the class: An engineer is not an engineer is not an engineer, if I might paraphrase the Gertrude Stein remark, and we need to make distinctions based on quality. The number of jobs is not static; it is not a given pool from which thirsty natives and the foreign hires drink and deprive one another of water if they drink a mouthful. The skilled foreign workers often expand the size of the pool and what seems like a "me or you" situation turns into a "more of you and more of us" situation.

I should emphasize that I am not just for skilled immigration, because that would be too elitist. Just take hugely successful people who have enriched the United States immeasurably, like Colin Powell for example: He is a son of middle class, not highly skilled, immigrants from Jamaica. If we had applied the test that only skilled immigrants should be allowed to come in, that would freeze out all the unskilled and his parents probably never would have been here. These kids from relatively poor families are actually going to be hungrier for success. And there is a huge amount of sociological information available now, which shows that the second generation really takes off.

You are talking about the broader side of immigration, not only the H-1B?

Yes, exactly. In particular, to make just one important observation: We have been too hard on illegal immigration. The problem is that it creates schizophrenia in our minds and conflicts in our conscience. We are a nation of laws, so when immigrants are illegal, we tend to disown, even despise, them. But we are a nation of immigrants, so we like to welcome immigrants (though hard times cut into that, though less so than elsewhere). So, the nation gets polarized on illegal immigration. This is what makes it a hard nut to crack politically.

As for H-1Bs, the current recession has meant that, owing to a mix of low demand and more obstacles devised by U.S. legislators, the utilization of even a small H-1B quota has fallen off. But that is surely a temporary phenomenon. Once the recession is behind us, our ability to use many more H-1Bs will certainly revive and should be indulged by our legislators.

Senators Dick Durbin [D-IL] and Charles Grassley [R-IA] are pushing a bill that will crackdown on "abuse" of H-1B visas. Earlier this year, Grassley sent a letter to Microsoft, urging the company to fire H-1B visa holders before laying off Americans. What are the senators trying to accomplish and how would the bill affect the program?

It will be most unfortunate to go down that road, particularly once the recession is over. Our open society with relatively free immigration, continued freeing of trade, expanding role for multinationals, and equity investments-all of these in the post-war period have led to unprecedented prosperity. This is generally true worldwide. The big emerging powers like India and China also owe their huge jump in prosperity to increased embrace of openness, among other liberal reforms, especially since the early 1990s. Two decades of phenomenal growth there have seen nearly 500 million of their poor "pulled up" into gainful employment and out of extreme poverty.

So, we ought to stick to our relative openness on trade and on immigration despite and particularly during the current recession. If everybody starts, as Durbin and Grassley want us to do, hiring natives first and firing them last, Americans will lose jobs from Britain and France. Even India hires a lot of foreigners, like [U.S.] pilots. It is something that will lead to--what in the 1930s we used to call a "beggar thy neighbor" policy--where each beggars the other. If we were the only one doing it, we could say that our hire-America policies will keep our jobs to ourselves. But if others start doing that too-then we [all] are behind the curve.

This concern is similar to the arguments on globalization and protectionism. How do policymakers make the case for importing workers at a time of high domestic unemployment?

Indeed. Such beggar-thy-neighbor policies broke out after the notorious Smoot-Hawley Tariff of 1930. The creation of the General Agreements of Tariffs and Trade (GATT), now the World Trade Organization (WTO) since 1995, was precisely to avoid such a ruinous free-for-all. The GATT set up rules which had to be followed before protection could be used; this is one factor that has helped contain protectionism in the current crisis.

What about illegal immigration?

This is a vast subject with many facets, some of which I have already touched on. Let me just add one remark: namely, turning the illegal immigration into a Hispanic issue was a mistake. It helped the objectors to focus on Mexico. Also, it was increasingly inappropriate to think of illegal immigration inflows as being Hispanic when in fact, today, an estimated 50 percent of illegals come in legally but stay on illegally, and these are generally not Hispanic.

"[I]t was increasingly inappropriate to think of illegal immigration inflows as being Hispanic when in fact, today, an estimated 50 percent of illegals come in legally but stay on illegally, and these are generally not Hispanic."

If the issue had been framed as applicable to all illegal immigrants, the support from several other ethnicities among the illegal immigrants would have been deeper and broader. But Mexicans with whom I discussed this issue seemed to think that they would do better if they stressed the special relationship which Mexico has traditionally with the United States, owing to both history and geography.

So, the Mexican government wanted the illegal immigration reform and debate to focus on Mexico because they thought they would get better terms that way for Mexican immigration?

Yes. When President George W. Bush first offered amnesty, for example, it was for Mexicans alone. I found that shocking. Since the 1965 legal immigration reform, we have always tried to offer equal access to the United States to different ethnicities. An amnesty just for the Mexicans would take us backwards on that important principle of nondiscrimination.

How would you approach the issue of illegal immigration reform?

The last bill which failed polarized the country by offering amnesty--the supporters called it a "legalization process"--a stupid euphemism which deceived no one since it was an amnesty. That did not go down well partly because it raised the question of what economists call "horizontal equity" among the multitudes who were lined up for legal entry and the illegals who had just crashed in. I think that we have to cool it now: Amnesties are not politically feasible. Why not then settle for something that helps the illegals who will surely continue in our midst. There is no way you can get rid of them any more than you can get rid of illicit liquor when there is prohibition.

Data [shows] that nearly 30 percent of the illegals manage to get naturalized, and many now get effective protection in communities where their fellow-illegals congregate. [So] we have to recognize that unlike twenty years ago illegals are not quite the underclass they used to be. The better route to take therefore is to see how we can improve the rights of the illegals through measures such as granting driving licenses to them, giving them local voting rights in schools, etc.

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