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During the late 1990s, the information technology (IT) field was one of the fastest-growing sectors in the economy in terms of employment. The estimated number of IT workers increased by 20 percent during the 1998-2001 period, compared with an overall increase in employment of less than 5 percent.1 A substantial fraction of these IT workers were foreign born, many of them working in the United States with temporary nonimmigrant visas issued under the H-1B program. The H-1B visa program has been the focus of considerable debate, with employers urging that the program be expanded and critics arguing that it hurts job opportunities for U.S. natives. This article provides background on the program and discusses its possible effects on information technology workers.
The H-1B program allows an employer to temporarily employ a foreign worker in the United States on a nonimmigrant basis in a specialty occupation. H-1B workers are professionals, and the visa generally requires at least a bachelor's degree or the equivalent in the specific specialty, such as computer programming or electrical engineering. The visa is issued for an initial period of up to three years and can be renewed once, making employment for up to six years possible. Up to 195,000 H-1B visas can currently be issued in a fiscal year.
Opinions on the program are mixed. Supporters argue that firms face a shortage of skilled workers, particularly in information technology fields, and the program allows companies to fill positions that would otherwise go vacant. Critics charge that employers use the program to hire foreign workers at lower wages than U.S. natives and that H-1B workers displace natives, particularly older workers in information technology jobs. Critics also assert that, without a supply of foreign workers, firms would have to increase salaries and training opportunities for U.S. workers. Absent the H-1B program, critics charge, firms would create more opportunities for U.S. workers, particularly minorities, who are underrepresented in IT fields.2
Despite the controversy over the H-1B program, economists have devoted little attention to examining its effects. The only comprehensive study to date, conducted by the National Research Council (2001), concludes that the magnitude of any effect the H-1B program has on wages is difficult to estimate with confidence. The report notes that the effect, if...