STEM Guest Workers and the U.S. Economy
- November 6th, 2022
- in Capstone Commentary
By: Sara Robideaux
The STEM disciplines are widespread and valuable fields to which many of the guest workers of America contribute. The H-1B visa focuses on specialty occupations, generally requiring a degree. Although there are various specialties, STEM occupations are currently the majority, with about 90% of total H-1B visas. The H-1B visa requires the employer to hold the visa while the employee (or guest worker) is the beneficiary. Beneficiaries are allowed to participate in this visa under one of these conditions; they hold a bachelor’s degree or a state license in the specialized field, or they have training or experience that is considered equivalent to a degree. With over half a million foreign workers in the United States, guest worker programs have proven to be a policy that we should consider carefully.
Applying economic supply and demand theory, one would expect that an increase in workers supplied, in this case by non-US citizens, would result in decreased wages for all workers. Along with the higher supply in the labor market, an increase in guest workers could potentially lower wages more than an increase in American workers. In response to the executive order suspending guest worker programs in 2020, the University of North Carolina completed a study based on the previous extension of the Optional Practical Training (OPT) program for non-native STEM graduates. This program allows non-native workers to stay in the US for 36 months in 163 STEM occupations, which they often follow with an H-1B visa or path to citizenship. After considering years of data following the implementation of these programs, their findings were clear. “The STEM OPT extension has “positive and significant” effects on the average wage for workers in IT occupations (OPT gives domestic workers the equivalent of a 3.4% raise).”
There are a few possible reasons for this effect. First, as expected, talented workers encourage innovation and improved business practices in their organization. They also tend to stimulate global expansion through markets, along with competitiveness. For firms, guest workers are a tremendously valuable asset. Employers obtain a pool of highly skilled workers they may otherwise lack. As with any politicized issue, there are a plethora of studies, and many have conflicting conclusions. The World of Labor found that “a study using the lotteries of H-1B visas shows that firms facing shortages of guest workers had reduced employment, sales, and profits. Firms unable to hire guest workers due to visa rationing also had reduced market value, R&D investments, and capital expenditures relative to firms that did not face visa rationing.” When firms succeed, America succeeds. Utilizing highly skilled labor gives US firms a competitive advantage in the market and often benefits the economy as a whole. Guest workers take advantage of their diverse and unique backgrounds to contribute to research and production in American organizations rather than their native ones. Furthermore, looking specifically at STEM fields, there was no evidence of a decrease in the wages of American workers. In fact, the opposite transpired.
On the other hand, there has been widespread criticism of guest work’s effect on US employment in the STEM field. Rutgers Professor Hal Salzman testified to congress regarding guest worker programs, claiming that there are twice as many STEM students graduating from US universities than jobs available. He concluded that employers are targeting guest workers to decrease wages. The 1990 Immigration Act required employers to pay H-1B visa holders the same amount as American workers with the same skills. But, even with this law in place, companies still seem to find a way to pay lower wages; as of 2019, 60% of H-1B guest workers are making less than the median wage in their field.
Ethically, and harder to measure, is the concern of power that guest worker programs give employers. Generally, if a worker is terminated from their organization, they must return to their home country, putting them at an acute disadvantage compared to the employer. An extensive paper from the Committee on Education and Labor regarding guest workers drew a few conclusions. Guest workers must work during illness or injury, and their wages are often withheld or delayed. Employers also unfairly deduct workers’ wages for room and board, even though the company should cover those. In addition, the Committee on Education and Labor found that “housing that is provided to guest workers is often severely substandard with no electricity, hot water, doors or windows.”
Therefore, changes are necessary concerning worker treatment and employer power. The main issue is a lack of reporting. As beneficiaries are aware of the importance of the relationship with the visa holder, they often avoid reporting problems for fear of deportation or retaliation. The Center for Public Integrity elaborates that “outspoken workers risk blacklisting from future jobs, which, like retaliation, is illegal. But getting involved in a lengthy investigation can also be daunting for guest workers.”
Fixing the issue requires making new laws and enforcing them in ways other than employee reporting. First would be ensuring proper employee payment by monitoring employee pay stubs and company financial statements. In addition, a grace period for terminated employees, regardless of the reason, should be present. Whether it is due to employee reporting, company layoffs, or some other reason besides illegal activity, it is unnecessary to deport these workers without allowing them to apply and interview for new jobs while they are still in the country. Although they can contact employers from their home country, they face added issues like travel and communication, and the likelihood for them to find a new job in the United States would decrease significantly. Moreover, a period where they can pursue job fairs and networking opportunities is only fair.
Another option is giving guest workers increased freedom of association or union access. The First Amendment protects the right to join or leave organizations, such as unions, which partake in collective action. Guest workers are often ill-informed about these opportunities. According to the Migration Policy Institute, “immigrant workers are less likely to have union representation than native workers, 15 percent of whom have union affiliation through membership or coverage.” While unions have various criticisms, giving guest workers the option to gain access to collective bargaining would increase the likelihood of fair wages and treatment. With unionization comes the fear of retaliation from employers. While this is also an issue for American-born workers, it is difficult to mitigate for any worker, whether native or guest. Therefore, the grace period discussed earlier could at least give them a chance to find other employment options before being deported. Work environment seems to be a much larger issue for unskilled and agricultural guest workers, but it is still risky in STEM environments like labs or industrial plants. Other than reporting, environment standards, inspections, or anonymous surveys could be possible solutions. Overall, guest worker programs benefit both parties if they take proper precautions and the law is enforced. Expanding these aspects is extremely necessary to address the current failures.
 Jonathan Rothwell & Neil G. Ruiz, H-1B Visas and the STEM Shortage, BROOKINGS (May 10, 2013), https://www.brookings.edu/research/h-1b-visas-and-the-stem-shortage/.
 LEHIGH UNIV., Jing Gong: Are Foreign STEM Workers Hurting U.S. Job Market?, LEHIGH NEWS (Oct. 27, 2020), https://www2.lehigh.edu/news/jing-gong-are-foreign-stem-workers-hurting-us-job-market.
 Peter Norlander, Do guest worker programs give firms too much power?, IZA WORLD OF LAB., 3 (June 2021), https://wol.iza.org/uploads/articles/572/pdfs/do-guest-worker-programs-give-firms-too-much-power.pdf?v=1.
 Hal Salzman et al., Guestworkers in the High-Skill U.S. Labor Market, ECON. POL’Y INST. 20, 30 (Apr. 24, 2013), https://files.epi.org/2013/bp359-guestworkers-high-skill-labor-market-analysis.pdf.
 Immigration Act of 1990, S. 358, 101st Cong. (1990), https://www.congress.gov/bill/101st-congress/senate-bill/358.
 Daniel Costa & Ron Hira, H-1B visas and prevailing wage levels, ECON. POL’Y INST. 3 (May 4, 2020), https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/#:~:text=In%20fiscal%202019%2C%20a%20total,Level%202%20(34th%20percentile).
 Protecting U.S. and Guest Workers: Hearing on The Recruitment and Employment of Temporary Foreign Labor Before the Subcomm. On Workforce Prots. of the H. Comm. on Educ. and Lab., 110th Cong. (2007), https://www.govinfo.gov/content/pkg/CHRG-110hhrg35665/html/CHRG-110hhrg35665.htm.
 Susan Ferriss & Joe Yerardi, As guest workers increase, so do concerns about wage cheating, THE CTR. FOR PUB. INTEGRITY (Mar. 2, 2022), https://publicintegrity.org/inequality-poverty-opportunity/workers-rights/cheated-at-work/guest-workers-increase-wage-cheating/.
 Elizabeth Grieco, Immigration Union Members: Numbers and Trends, MIGRATION POL’Y INST. (May 2004), https://www.migrationpolicy.org/research/immigrant-union-members-numbers-and-trends.