U.S. Employment Visas: Exploring Economic Impact, Challenges, and Opportunities for Reform

The United States’ economy has been devastated by the COVID-19 pandemic. Millions of Americans have lost their jobs, over 100,000 businesses have permanently closed, and the country is facing an economic hit of almost eight trillion dollars over the next ten years. Immigrants, in particular, are among the communities who have been hit the hardest by the pandemic’s historic economic catastrophe. This disparate impact is intrinsically linked with policies comprising the U.S. immigration system that are in dire need of bold reform.

Such reform won’t be easy. Immigration in the United States has always been a policy issue that causes friction. Today is no different: immigration remains one of the most fiercely debated issues in the country. Although more than three-quarters of the U.S. population believe that immigration is good for the United States, the issue has also caused a lot of division. The national immigration debate has been mostly focused on unauthorized immigration, beneficiaries of Deferred Action for Childhood Arrivals (DACA), border security and detention procedures, and refugee and asylum policies. All are very crucial subjects that must be addressed, and, most importantly, resolved, in a way that protects the human rights of immigrants and recognizes their immense contributions to U.S. communities.

However, our immigration system is much more complicated than the well-known, aforementioned policies. It includes family-based immigration, employment visas, programs for refugees and asylees, the diversity visa program, humanitarian relief programs, and the naturalization process. These policies, as a part of the system, are generally guided by the following principles: family reunification, bringing in foreign-born workers who are valuable to the U.S. economy, sheltering refugees, and promoting diversity. Thus, in order to truly have comprehensive immigration reform, we have to examine, research, discuss, and include all areas of the immigration system.

This report concentrates on just one of these areas: the employment visa programs. It discusses how the programs contribute to the overall goal of bringing in the skills, talents, and economic contributions of foreign-born workers, and how to best protect and treat those who come and join our communities. In particular, the report attempts to address both the economic impact of employment visa programs as well as their shortcomings and missed opportunities. We have a variety of employment visa programs that are designed to stimulate economic growth, create jobs for U.S. workers, and strengthen communities nationwide. However, in order to realize the full potential of these programs, they need to be reformed and strengthened. Given the economic toll brought by the COVID-19 pandemic, we cannot afford to waste any talent.

By collecting, sorting through, and organizing data and analyses produced by think tanks, advocacy groups, and government institutions that span the political spectrum, this report seeks to accomplish three main objectives. First, it examines the economic impact of some of the largest employment visa programs in the United States. To do that, the report looks at how each visa program affects job and employment rates, wages, generated income, and provided services, where such information is available. Second, the report will highlight the shortcomings of the selected programs, particularly as they pertain to their protection of foreign-born workers. Finally, the report will use findings to recommend certain necessary actions that will improve these visa programs and help expand an appreciation of their impact.

Research Overview

The United States has created several employment visa programs in order to strengthen the economy, fill gaps in the workforce, and create more job opportunities for all Americans. However, little is known by the average American about many of these programs and their economic benefits, or shortcomings. By examining data and analyses available from the federal government, think tanks, immigration law firms, and advocacy organizations, this report aims to shed light on the economic impact of four of these employment visa categories: H-1B, H-2B, H-2A, and EB-5.

All of these programs except EB-5 are nonimmigrant visa categories. A nonimmigrant is a foreign-born individual who is admitted to the United States for a specific purpose and for a limited amount of time. Some examples of nonimmigrants include, but are not limited to, foreign-born workers, international students, tourists, and diplomatic officials.

Aside from their popularity, these programs were selected for this report out of the many employment visas because they are often debated among policymakers and advocates, and there is comparatively more research done on them—although useful data are still lacking.

When we understand both the benefits, as well as the shortcomings, of these programs, we can make better decisions about how to strengthen them and take full advantage of what they have to offer to our communities.

This report uses data and analyses from a variety of sources, published studies, and reports in order to draw conclusions about the visas’ economic impacts. The report uses those sources to compare the economic impact of each of the selected employment visa programs against the following set of criteria: job creation, wages, generated income for the United States, and needed services, where such data is available. The report also examines some of the most common issues with these programs such as fraud, wage theft, and abuses of labor rights. When we understand both the benefits, as well as the shortcomings, of these programs, we can make better decisions about how to strengthen them and take full advantage of what they have to offer to our communities.

The Economic Impact of Employment Visa Programs

H-1B

The H-1B visa category is one of the most popular, and sought after, employment visa programs for foreign-born nationals. Created in 1990, the H-1B visa was designed to assist American employers who are unable to find the skills they need to fill certain jobs from within the U.S. workforce. The H-1B visa is for foreign-born workers who possess a particular set of skills, based on “exceptional merit and ability,” to provide services to U.S. employers in “specialty occupations.” According to the U.S. Citizenship and Immigration Services (USCIS), a special occupation is a job that requires, and cannot be performed without, a minimum of a Bachelor’s degree, or its equivalent. The H-1B visa most frequently has been awarded to foreign-born individuals in the fields of science, technology, engineering, and mathematics (STEM), such as software developers, engineers, mathematicians, and scientists.

There are 65,000 H-1B visas available every year, with additional 20,000 visas that are set aside for foreign-born individuals with a U.S. Master’s degree or higher. Because of the high demand for H-1B visas, which for years has surpassed the set cap, USCIS has created a lottery system through which these petitions are selected. Today, the demand for H-1B visas is higher than ever. USCIS started accepting H-1B petitions on April 1, 2019 for Fiscal Year 2020. Within just eleven days, USCIS announced the H-1B petition had surpassed the annual cap for that year.

It is also worth noting that before filing H-1B petitions, U.S.employers must file a Labor Condition Application (LCA), approved by the Department of Labor, to ensure that the employment of a foreign-born individual will not negatively impact the working conditions and wages of American citizen workers. Employers must also notify their U.S.employees about their intention to hire an H-1B worker.

The Economic Impact of the H-1B Visa

As one of the most popular employment visa programs in the United States, the H-1B visa has been one of the most studied, and debated, employment visa categories when it comes to its impact on the nation’s economy. Although the program has been generally associated with a positive impact on the U.S. economy, it has also drawn criticism over its strict limitations, maltreatment of its holders, fraud, and other issues, which this report will highlight later on.

The positive effect of H-1B visas on U.S. job growth is clear. According to a study by the National Foundation for American Policy (NFAP), for every H-1B worker in a given tech company, five jobs were created for U.S.-born workers in the same companies. Another study highlights that expanding the H-1B visa program is predicted to create 1.3 million jobs by 2045.

Furthermore, H1-B visas have actually been linked to positive wage growth for both native and foreign-born workers. According to a study by Giovanni Peri, Kevin Shih, and Chad Sparber in the Journal of Labor Economics, a 1-percent increase in H-1B STEM workers leads to a wage growth of 7 to 8 percentage points for native-born, college educated workers, and a 3 to 4 percentage points for non-college educated workers. The Brookings Institution has found that between 2009 and 2011, wage growth for native workers with at least a bachelor’s degree was flat in average positions. However, during the same period, occupations with strong H-1B workers witnessed a wage growth of 1.3 percent each year among both. native-born and foreign-born workers.

At a time when the United States is one of the hardest-hit countries globally by the COVID-19 pandemic, the need for highly skilled health-care workers is more important now than ever. Additionally, the United States is projected to face a major STEM crisis by 2025 due to the lack of domestic talent in STEM fields. These are gaps that H-1B workers can fill. According to the Brookings Institution, between 2010 and 2011, 106 metropolitan areas across the United States requested 250 H-1B workers. Of those, nearly two-thirds are for STEM occupations. Additionally, the Mercatus Center has found that H-1B workers help drive innovation and generate a greater number of patentable technologies.

Some research has indicated that H-1B workers have a sizable impact on the U.S. annual GDP and federal tax income revenue. In fact, one study by the Hoover Institution estimates that increasing the limit of H-1B visas to a minimum of 110,000 would add $456 billion to the U.S. annual GDP and $113 billion in federal tax revenue. Furthermore, such an increase to the H-1B visa annual limit could create hundreds of thousands of jobs for U.S. born workers. But between 2007 and 2008, the United States rejected 178,000 H-1B visa applications. As a result, the United States missed the opportunity to create nearly a quarter of a million tech jobs for native-born workers. The H-1B visa restrictions have also led U.S. corporations to create jobs in their international affiliates instead of at home, especially in China, India, and Canada. These are jobs that could be created right here in the United States, generating additional employment opportunities for native-born citizens.

H-2B

Created in 1986, the H-2B visa is a nonimmigrant employment program that is designed to help U.S. employers hire temporary foreign-born individuals in nonagricultural occupations when they cannot find native-born Americans to fill these positions. The majority of H-2B visa holders—nearly 40 percent—work in landscaping. Other common industries include forestry, parks and recreation, hospitality, seafood and meat processing, construction, and restaurants.

Since amending the Immigration and Nationality Act in 1990, Congress set an annual cap of 66,000 H-2B visas that are granted on an annual basis. Of those, 33,000 H-2B visas are issued from October to March, and the rest are issued from April to September. In addition to the annual cap, the H-2B visa category can only be used by individuals from a list of countries designated by the Department of Homeland Security (DHS). Currently, there are eighty-one countries that are eligible to participate in the H-2B visa program.

In order to qualify for H-2B classification, there are three main pieces of evidence U.S. employers must provide before requesting a foreign-born worker for a position. First, the employer must prove that there are not enough American workers who are qualified, available, or willing to fill an open position. Second, as is the case for the H-1B visa, the employers must guarantee that hiring a foreign worker will not negatively impact the wages, or well-being, of U.S.workers. Finally, the employer must provide evidence that the prospective foreign worker will only be needed temporarily for a one-time occurrence, seasonal need, peak-load need, or intermittent need.

It is important to note that even though H-2B workers have a lot to contribute to the U.S. economy, the program has been heavily criticized by immigration advocacy groups and policy makers. Their concerns stem from the reality that H-2B workers are often underpaid, lack protections, and face unsafe working conditions. We will go into details about these challenges in the next section of this report.

The Economic Impact of the H-2B Visa

The H-2B visa program’s main goal is to help U.S. employers fill shortages in the labor market that otherwise cannot be occupied by native-born workers. However, the impact of H-2B workers extends beyond just shortages—it can be associated with increased wages for U.S. workers and increased economic growth.

The H-2B visa program allows U.S. businesses to fill critical temporary jobs that native-born Americans are not interested in—often because of these jobs’ unideal working conditions. In a survey carried out by the U.S. Department of Commerce under the Obama Administration and ImmigrationWorks USA, U.S. employers indicated that due to the fact that many of these jobs are temporary, physically demanding, and often in remote locations, they are less appealing for American workers. One study projects that by 2024, the United States will have 3.6 million job vacancies that American workers are not interested in taking. Even at three of President Trump’s properties, only one out of 144 positions was occupied by a native-born worker, whereas the rest were filled by H-2B visa holders.

H-2B visas have far-reaching positive effects in terms of business growth and job creation. One study has found that hiring H-2B workers allows businesses to not only continue their work, but also expand on the volume of their services—which can result in the growth of these companies. That growth can in turn allow U.S. businesses to create more long-term, full-time positions for native-born workers, often in more skilled managerial, sales, and clerical roles. Additionally, similar to the impact of the H-1B program, hiring H-2B workers has been found to generate more jobs for native-born U.S. workers. A study by New American Economy indicates that for every 100 H-2B workers hired, almost 500 jobs are created for native-born Americans.

Some data shows that there is a correlation between H-2B visa holders and overall employment rates in the United States, as well. An analysis looked at state-by-state H-2B admissions between 2006 and 2009 and compared the data with each state’s employment and unemployment rates. This comparison showed that as employment rates go up, the demand for H-2B workers increases.

H-2A

Designed to specifically hire foreign-born workers in agricultural positions, the H-2A category is one of the largest, the fastest growing, and most controversial temporary visa programs in the United States. While the U.S. has relied on foreign-born workers in agricultural positions since the civil war, the official H-2A program was established in 1986. Unlike the H-1B and the H-2B visas, the H-2A has no cap. This has allowed the program to more than double over the past decade. In 2006, the U.S. issued just over 37,000 H-2A visas—compared to almost 135,000 in 2016 .

To qualify for H-2A classification, a U.S. employer must provide a job that is temporary or seasonal, and evidence that there aren’t enough qualified, American workers to fill these vacancies. Additionally, as is the case for the H-1B and H-2B visa programs, the employer must also prove that the H-2A worker will not negatively impact the wages or working conditions of American workers in similar positions.

The H-2A program has been criticized by immigration rights activists and elected officials due to lack of labor rights protections, wage theft, and discriminatory policies against visa holders. This report will dive into some of the challenges facing the H-2A program in the following section.

The Economic Impact of H-2A

There are approximately 2.5 million farm workers across the United States, and roughly 250,000 of them 10 percent—are H-2A visa holders. With the agricultural industry continuously reporting shortages in labor, immigrant farm workers have been crucial in filling these positions. Beyond simply filling existing jobs, the H-2A visa program has been positively linked to job creation as well: one 2013 report estimated that increasing the number of H-2A visas could lead to the creation of 17,000 jobs in 2014, and more than 51,000 jobs in 2017.

There is very limited data regarding the direct economic contributions of H-2A workers, whether through tax revenue or additions to the U.S. annual GDP. Where data does exist, it tends to be limited to a specific state. One Center for American Progress study found that in 2012, each H-2A worker added an additional $42,000 to North Carolina’s annual GDP. According to a report by the Washington Farm Labor Association, H-2A workers generated close to $620 million for Washington state’s fruit industry in 2015. The same report indicates that the H-2A program contributes more than $9 million to the state’s transportation, housing, and administrative costs.

Some data suggests that an expansion of the H-2A program could be beneficial to the U.S. economy overall. For example, one report indicates that expanding the program to include year-round jobs, as envisioned in Senate Bill 1887, would increase U.S. exports of fruits and vegetables by 3.4 percent and 5.4 percent respectively.

EB-5

Created by Congress in 1990, and enacted as a pilot program in 1992, the EB-5 visa is unique in comparison to the other programs in this report: it is the only employment-based visa program that allows foreign-born individuals to obtain a permanent residency, also known as a “green card,” in the United States. Every other visa program included in this report is not only time-limited, but does not create a pathway to stay.

The EB-5 visa is available to foreign investors, and was designed to support economic growth through job creation and capital investment. There are three main USCIS requirements for a foreign investor to obtain an EB-5 visa: investment in commercial enterprises, job creation, and a minimum level of investment.

USCIS requires all EB-5 investors to invest in a commercial enterprise, which it defines as “any for-profit activity formed for the ongoing conduct of lawful business.” These activities could include a sole proprietorship, partnership, joint venture, business trust, and more. In addition to investing directly into businesses, EB-5 investors may also invest in “regional centers.” A regional center is a public or private unit built to promote economic growth, job creation, and regional productivity.

For job creation, USCIS requires that all EB-5 investors must create a minimum of ten full-time positions for U.S. workers. Lastly, to obtain an EB-5 visa, the investor must invest a standard minimum of nearly 2 million dollars ($1,800,000) in a commercial enterprise. For those who invest in areas with unemployment rates that are 150 percent of the national average, also known as Targeted Employment Areas (TEAs), the required minimum investment is $900,000. These numbers were updated in late 2019 from $1 million and $500,000, respectively; USCIS has made clear the minimum amounts will continue to be adjusted in the future to match the inflation rate in the country.

There are 10,000 EB-5 visas available every year, with 3,000 reserved for those who want to invest in TEAs. Once an investor is approved for EB-5, they can apply for temporary conditional residence, which lasts for two years. After that, and only if the investors meet all the requirements set by USCIS, they can apply for permanent residency.

The EB-5 program has drawn a substantial amount of criticism since it was implemented because it is seen as a visa program that only favors the rich and wealthy.

Advocates for the EB-5 visa argue that the program brings billions of dollars to cities nationwide, and creates thousands of jobs for many U.S. citizens. At the same time, the program has drawn a substantial amount of criticism since it was implemented because it is seen as a visa program that only favors the rich and wealthy; it is seen as a visa that allows some foreigners to buy their permanent residency (aka green card); and it could put foreign investors at risk of fraud.

The Economic Impact of the EB-5 Visa

The EB-5 visa program has been linked to significant job creation across the United States. According to a 2017 report by the Department of Commerce, 11,000 immigrant investors in the United States provided nearly $6 billion in capital investment in 562 EB-5 projects nationwide in FY 2012-2013. The report estimates that these projects have created nearly 175,000 jobs in the United States. Also according to the report, 70 percent of these jobs were created in New York, California, Florida, and the District of Columbia. Despite these positive job creation numbers, it’s worth noting that the numbers included in this report are based on estimates and extrapolations about the number of jobs created and dollars invested. For example, the report indicates that between Fiscal Years 2012 and 2013, there were 202 stand-alone EB-5 projects in a TEA. The report estimates, based on the former minimum requirement of $500,000 investment in a TEA, that these EB-5 investors provided an estimated capital investment of $101 million and created more than two thousand jobs. According to a study by Invest in the USA (IIUSA), EB-5 investors helped create more than 355,000 jobs for U.S.workers in Fiscal Years 2014 and 2015, accounting for six percent of the private sector growth in that period.

Because of the investments they are required to make are so significant, EB-5 investors end up generating hundreds of millions of dollars in tax revenue. For example, according to a report by IIUSA, in 2014, EB-5 investors generated over four billion in tax revenue. Furthermore EB-5 investors also contribute tremendously to the U.S. annual GDP. In 2014 and 2015, EB-5 investors contributed more than $33 billion to the GDP.

The Challenges of the U.S. Employment Visa Programs

While it is important to understand the economic contributions of the U.S. employment visas, it is also important to understand the various issues and flaws with these programs to better understand how we can reform them to reach their full potential—and to ensure we are supporting, protecting, and adequately compensating both American and foreign born workers.

H-1B

Despite its economic contributions, the H-1B visa program involves several issues that have made it highly contested among policymakers and advocates. As with many of these visa programs, one of the biggest challenges with the H-1B visa has to do with how well it actually supports and protects the workers who qualify. Specifically, the underpayment of H-1B holders is a major concern. According to an Economic Policy Institute report, 60 percent of all H-1B workers are assigned wage levels below the local median wage.

Additionally, the H-1B visa creates substantial limitations for its holders, given the complexity of our immigration system. For example, an H-1B visa holder may not change jobs while they’re in the processing of applying for permanent residency, even though that might be the appropriate step for them. This situation creates an imbalance of power in which the worker is not free to leave a job, which increases the risk that an H-1B worker could be exploited, or faces abuses of their rights by an employer—but cannot leave or seek employment elsewhere because they might lose their immigration status.

H-2B

When it comes to the H-2B visa category, issues including recruiter fraud, lack of labor rights worker protections, and wage theft have been plaguing the program for years. As with the H-1B program, H-2Bs can simply leave workers too open to exploitation by employers, given the workers’ total dependence on the employers for both their wages and their immigration status. Currently, there are no requirements for public disclosure, which makes it very easy for both real and fake job recruiters to make up promises about jobs, and even positions that don’t even exist. This major problem leaves H-2B workers extremely vulnerable and could potentially put them in life-threatening situations. Furthermore, some employers will not reimburse H-2B workers for costs like visa applications and transportation, which the employer should be responsible for. This results in many H-2B workers making less than the required minimum wage.

Oftentimes… [H-2B visa holders’]passports are confiscated in order to force them to pay recruiters monthly fees. If the H-2B workers don’t pay the recruiter fees, they are then threatened with deportation.

In addition, there is clear and troubling evidence of H-2B visa holders becoming victims of human trafficking. H-2B workers often fall victim to U.S. employers who end up charging them tens of thousands of dollars in exchange for fake promises of permanent residency for themselves and their families. The H-2B workers end up living in overcrowded and unsanitary housing, and working in exploitative conditions. Oftentimes, their passports are confiscated in order to force them to pay recruiters monthly fees. If the H-2B workers don’t pay the recruiter fees, they are then threatened with deportation.

H-2A

The H-2A visa has also had challenges around worker protections. Similarly to the H-1B and H-2B visa programs, the fate of the H-2A visa holders’ immigration status is at the mercy of the employer. Because of that, H-2A workers are unlikely to disclose or report any problems that they might be facing at work in order to retain their employment and legal residence in the U.S.. Some of the most reported issues regarding worker exploitation in the H-2A program include wage theft, abuse during the recruitment process, and harsh retaliations by employers. As is the case with the H-2B program, some recruiters force H-2A workers to pay them recruitment fees in order to work in the United States without the employer’s knowledge. Additionally, H-2A workers may be paid way below the minimum wage, and are not reimbursed for taking mandatory trainings as well as transportation costs that should be paid for by the employer.

Furthermore, some H-2A workers face constant threats and abuse by their employers. The Economic Policy Institute recently reported that COVID19 has put H-2A workers at an even higher risk of facing abuses by their employers because they might be forced to work in environments where they could be highly exposed to the virus. If H-2A workers decide to assert their rights, they may be retaliated against by their employers who might threaten to fire them or even with deportations.

EB-5

Finally, the EB-5 program has also been under considerable scrutiny and bipartisan criticism since its inception. The program is inherently unfair, because it provides a path to permanent residency that is only available to the wealthy. EB-5 has been criticized for giving rich foreigners the opportunity to buy their green cards in the United States, instead of going through the immigration process like all other immigrants. Moreover, USCIS lacks the proper tools to track the economic benefits of the EB-5 visa. In 2013, the Department of Homeland Security reported that USCIS lacked the expertise needed to fully examine the economic benefits of EB-5 investors, especially when it comes to job creation. Furthermore, EB-5 investors may also fall victim to many fraudulent scams. This is mostly because EB-5 investors are not protected by certain safeguards as their investments are exempt from registration with the Securities and Exchange Commission. This exemption leaves foreign investors unprotected by certain safeguards such as disclosure requirements.

Recommended Actions

Thus far, this report has addressed both the importance of the selected employment visa programs, as well as some of their shortcomings. However, one of the main challenges that many policy makers, advocates, and researchers face pertains to the lack of available data about the U.S. employment visa programs. While many debate how to reform these programs, it is hard to make concrete, and forward-looking, decisions to strengthen these programs without adequate and up-to-date data.

After looking into each of the four selected programs, how they impact our economy, and what are some of main issues they face, this report recommends the following:

1. Improve protections for foreign-born workers in employment visa programs: Working closely with the Department of Labor, the Department of Homeland Security must double down on its efforts to ensure the protection of all foreign-born workers from abuse, scam, wage-theft, and human trafficking. To start, DHS and DOL should create a taskforce that is in-charge of enforcing all labor protection standards set by the Fair Labor Standard Act (FLSA), to ensure that foreign-born workers are paid equally and fairly. The taskforce would ensure adequate enforcement of these protections of foreign-born workers, through the DOL’s Wage and Hour Division’s enforcement of the FLSA to hire investigators across the country who will gather data on immigrant and nonimmigrant workers’ wages, hours, and how they are treated by their employers to ensure compliance with the law. Lastly, the taskforce should coordinate with the Occupational Safety and Health Administration (OSHA) to ensure that employers are meeting the employment safety standards for all foreign-born workers, including additional enforcement as necessary.
2. Create an annual evaluation of the economic impacts of employment visas: USCIS, in collaboration with the Department of Labor, should establish an in-depth annual report that explores the full cost-benefits of our employment visa programs and how they impact job creation, wages, and tax revenue.
3. Track data regarding the experience of foreign-born workers and their employer: More work needs to be done to collect qualitative data that tracks the experience of both U.S. employers and foreign-born workers in order to better understand how these programs impact our workforce.
4. Create more opportunities for dialogue across sectors and experience: In order to better understand foreign-born workers and how they benefit our communities, we need to facilitate conversations between foreign and domestic workers, as well as between employers and lawmakers and community leaders.