President Trump signed a proclamation that imposes a $100,000 fee on H-1B visa applications, the immigration allocation set aside for highly skilled workers the U.S. economy needs. The new rules threaten the availability and deployment of human capital in the United States. This is misguided and will hurt U.S. growth and innovation, at a time when the global arms race for AI creates a vital need for the sharpest human talent and innovators.
We are professors who study and teach innovation-related topics at U.S. research universities. As immigrants to the United States from India and Panama respectively, we understand firsthand the sometimes painful discussions around H-1B immigration. Tensions around immigration routinely affect our academic institutions, our current students and former students now in industry. But there should be a lot of common ground on this polarizing topic.
STEM immigrants are creating substantial value in the United States. Immigrants play a significant role in entrepreneurial ventures in the United States and particularly startup innovation. Further, such immigrants are responsible for 23% of innovation output in the United States. This effect is in part based on policies that allow for foreign students to study and stay in the United States to work in startups.
H-1B immigration is like a natural selection process that benefits the U.S. immensely. Highly skilled immigrants in areas such as technology and medicine come hungry for hard work and full of ideas to better the world — to create new products, services and even markets as well as to cater to existing needs through more incremental improvement and optimization. Many of our best students are immigrants who are looking to stay in the United States and create work opportunities that would not be possible anywhere else in the world. In the United States, we recognize entrepreneurial success perhaps more than any other country. It is one of our greatest attributes as a society.
Nevertheless, we do have an immigration problem in the United States. The problem is that the distribution of benefits across the United States is highly skewed. Much of the wealth generated in terms of company creation and jobs has redounded to innovative clusters. But the idea to reduce the total number of H-1B immigrants by increasing the cost is exactly the wrong way to “solve” this problem — by dragging down the thriving parts of the economy rather than lifting up the rest.
To grow economic prosperity throughout the country, we need to offer more opportunities for more H-1B visa applicants. There are simply not enough trained U.S. nationals to take on the sort of labor required for the next wave of a tech-enabled industrial revolution.
Distributing the fruits of H-1B visa holders’ work more broadly requires a different approach than the U.S. has taken before. We should increase the total number of new H-1B visa recipients each year to 350,000 from around 85,000, with the additional visas apportioned across states so that locations like college towns — places like Lawrence, Kan., Gainesville, Fla., and Clemson, S.C., as well as cities such as Birmingham, Pittsburgh, Cincinnati, Salt Lake City and Boise receive sufficient numbers of H-1B workers. Visas could be allocated through a process akin to the resident-matching system for medical doctors, thereby sending workers to states where they would create greater value by filling economic and technological gaps. This infusion of labor would improve technological innovation in local economies and create local spillover effects in job creation and additional innovation.
Such immigration is necessary particularly now given a global push toward increased industrial policy, as China and others invest in AI and broader digital transformation. At a time when our national security is linked to technological innovation, it is shortsighted not to open ourselves to more immigration. If we do not, we will lose some of the best and brightest minds to Canada, Australia, the United Kingdom, Singapore and other countries.
Immigration is currently a volatile political issue in the U.S., as it has been at some other moments in the nation’s history. Although this is a country of immigrants, for people who feel insecure about pocketbook and cultural issues, continued immigration can feel threatening. As a percentage of people living in the United States, it has been more than 100 years since there were as many immigrants here as there are now. But as with past waves of immigration, productivity and transformation have followed.
This is particularly clear for H-1B visa holders, who create opportunities for people born in the U.S. and ensure the vitality of American innovation, security and democratic values. Increasing the costs of such visas would chill their use and reduce U.S. prosperity and innovation exactly at a time of great need.
Hemant Bhargava is a professor of business at UC Davis Graduate School of Management and director of the Center for Analytics and Technology in Society. D. Daniel Sokol is a professor of law and business at USC.
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