High-end immigrants and the shortage of skilled labor

Abstract

The 1990 Immigration Act (IMMACT) responded to claims of an impending shortage of skilled labor in the United States (Johnston & Packer 1987) and to growing concerns that the skill levels of immigrant workers were falling farther and farther behind those of natives (Borjas 1990, 1994). IMMACT raised the annual number of employment-based permanent resident visas from 54,000 to 140,000 and created a new temporaryworker category (H-1B) to permit US employers to recruit skilled workers from abroad for professional 'specialty occupations'. The latter include, for example, computer programmers, engineers, medical professionals, and accountants.1 H-1B workers must have at least a bachelor's degree or its equivalent, and they may remain in the United States for up to six years. In 1990 Congress decided to cap the number of newly admitted H-1B workers at 65,000 per year. This ceiling proved sufficient for most of the 1990s, but the growing demand for H-1B workers created a visa shortage in fiscal year (FY) 1997 and again in 1998 (Martin 1999).2 The FY 98 ceiling was reached in May, and the Immigration and Naturalization Service reported that the cumulative backlog had reached at least 30,000 by the end of the fiscal year (National Conference of State Legislatures, 1998). Congress eased the annual quota on H-1B visas in October 1998 when it passed the American Competitiveness and Workforce Improvement Act. This act increased the number of temporary visas for highly skilled foreign workers to 1 15,000 in FY 99 and FY 00 and to 107,500 in FY 01 before returning to 65,000 in FY 02 and beyond.3 However, more than 90,000 H-1B petitions subject to the new cap had been approved by the end of March 1999, and by June 1999 the larger supply was exhausted once again (Colon 1999; Newhouse News Service 1999). The H-1B visa limit for FY00 was reached in March 2000, six months before the end of the fiscal year (Alvarez 2000). Just before the end of fiscal year 2000 the U.S. Congress acted once again to liberalize restrictions on the number of H-1B visa holders. Both the Senate and the House of Representatives on October 3 passed the American Competitiveness in the 21st Century Act of 2000. This new bill raises the ceiling