Restricting immigration doesn't always go as intended : The Indicator from Planet Money Limiting high-skilled immigration to the U.S. may not save jobs for Americans; it might even cost jobs.
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An Immigration Backfire?

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An Immigration Backfire?

An Immigration Backfire?

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UNIDENTIFIED PERSON, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

STACEY VANEK SMITH, HOST:

Hey, everyone. Cardiff and Stacey here. This is THE INDICATOR FROM PLANET MONEY. On June 22, President Trump issued an executive order to restrict certain types of immigrants and temporary foreign workers from coming to the U.S. Now, this order applied to future immigrants, not to people who are already here or those who had already been approved to move here.

CARDIFF GARCIA, HOST:

And the rationale given by the president was that with so many Americans out of work right now, he did not want more people from other countries competing with Americans for the available jobs. And the executive order was consistent with the president's broader agenda of limiting immigration to the U.S.

VANEK SMITH: Maggie Peters is an associate professor of political science at UCLA, and she says there was one thing about the executive order that she found really surprising. Unlike the Trump administration's earlier changes to immigration, which had largely focused on restricting so-called low-skilled immigration, this new executive order also targeted visas for highly skilled workers.

GARCIA: And specifically, as Maggie explains, the order suspended new H1B visas. Those are the visas that often go to foreign workers in the U.S. tech sector. The government had previously begun scrutinizing H1B applications more than it had before, and that had made it more complicated to apply for them. But this order temporarily suspends granting H1Bs altogether, with just a few exceptions.

MAGGIE PETERS: But when you think about the H1B workers who are coming into the tech sector, that's not exactly the population that we think about who've lost their jobs right now. If we think about any group, the tech sector has pretty quickly moved to being able to work remotely.

VANEK SMITH: Today on the show, the economics of immigration. During a pandemic that has devastated the U.S. economy, will restricting high-skilled immigration actually lead businesses to hire more American workers, or could it potentially backfire?

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

GARCIA: Maggie Peters is the author of "Trading Barriers: Immigration And The Remaking Of Globalization." She says that throughout long stretches of U.S. history, going all the way back to the 1800s, American businesses cared a lot about attracting more immigrants to the U.S. That's because businesses needed the workers.

PETERS: We had a huge manufacturing sector. We were becoming the leading manufacturing power in the world. Agriculture still needed a lot of labor, so we still had a lot of people coming to work on farms or start their own farms.

VANEK SMITH: The economy is obviously very different now. If businesses that want to find more workers are restricted from hiring immigrants, they have a number of options for how to get certain jobs done.

GARCIA: And one option, yes, could be to hire more American workers instead. That is the option that the Trump administration hopes businesses will go for when it restricts immigration. And in some cases, that could happen. But very often, hiring American workers could require paying higher wages than the businesses would've paid to an immigrant, or a business could be pursuing immigrant workers for their specific skill sets, which might be harder to find in the U.S. And so in those cases, businesses could choose other options, which they do have, especially because the economy is so much more technologically advanced than it used to be.

VANEK SMITH: And the option that has become increasingly appealing to businesses in the tech sector is just to go ahead and hire the immigrant workers that they wanted to hire in the first place but to let those workers do their jobs in a different country outside of the U.S. And this has become a lot easier recently because the online tools that make remote work possible have gotten so much better, and so many more people are using them.

GARCIA: And having this option is one of the reasons that Maggie argues restricting high-skilled immigration will not necessarily lead to more jobs for Americans. In fact, she says, for some businesses, it could even lead to fewer jobs in the U.S.

PETERS: And so if you moved your company to Toronto or moved some of your production to Toronto, you could hire those immigrant workers. And then you would probably lose jobs here because you're not just thinking about the couple of tech workers. You're also thinking about all the support staff and all the people who are in the restaurants in the office park and all of the janitors and all of that other staff that because people are no longer in that building in Silicon Valley, they're now in Toronto. You just don't have the same jobs.

GARCIA: Of course, at the moment, there are so many people out of work in office parks and in restaurants anyways that we might not see the effects just yet. But those effects could become more obvious, more pronounced later on when the economy returns to normal. And from an economic standpoint, Maggie argues, immigrants are not just workers. They are also consumers who buy things like new houses and cars and furniture and groceries and all of the other things that go with moving to a new place. And so if those immigrants are moving to another country, it could mean less demand in the long run for the products sold in the U.S. That could also lead to fewer jobs for American workers who make and sell those products.

VANEK SMITH: And in the last few years, we have a lot of examples of businesses in the U.S. that are hiring a lot of the same immigrants they wanted to hire - they are just hiring them to work north of the border in Canada. Canada runs a program to accept highly skilled immigrants called Express Entry. Between 2017 and 2019, the number of people who had been living in the U.S. and then were accepted through Express Entry into Canada increased by 75%.

GARCIA: And all of that increase was from people who were not U.S. citizens. In other words, highly skilled immigrants in the U.S. were moving to Canada to work there instead.

VANEK SMITH: And other research looked at what happens when the U.S. makes it harder for foreign workers to get an H1B visa. That is the visa that allows highly skilled foreign nationals to work in the U.S. temporarily. And what happened is that big multinational companies typically ended up hiring more workers at their foreign affiliate offices, especially in Canada, China and India.

PETERS: And that is one thing that we've seen the Canadian government do - trying to benefit from. So the Canadian government was running ads in Silicon Valley, basically touting that they have relatively easy visas.

GARCIA: And as the data suggest, some U.S. businesses have already been taking advantage of this option to hire workers and have them work from another country because it's just easier that way than fighting through the new immigration restrictions.

VANEK SMITH: In fact, Maggie says there's a chance the pandemic could actually intensify these trends because a lot of companies are now experimenting with their employees working remotely anyway.

PETERS: And so as we get used to more people not working together in office but working online, it becomes even easier to have people in other countries work for you. And so companies might increasingly see this as a potential - that why even bother with an immigration system that costs a lot of money and is tedious where they think, it's just easier to either hire everybody virtually, have an office in Singapore, have an office in Canada and all those sorts of issues.

GARCIA: And so that is just one more way that the pandemic we're in may well end up changing a fundamental part of the economy in lasting ways. And of course, we won't know for sure until the pandemic is over and the normal times return.

VANEK SMITH: Knock on wood.

GARCIA: As normal as those times were before the pandemic.

VANEK SMITH: (Laughter).

GARCIA: Special thanks for this episode to former producer Camille Petersen, who contributed a lot of reporting for it. Thanks also to Zachary Arnold of Georgetown's Center for Security and Emerging Technology for the numbers on the Express Entry program. We also cited the work of economist Britta Glennon on the effects of H1B visa restrictions. We'll post links to all these works on our show notes at npr.org/money.

This episode was produced by Brittany Cronin. THE INDICATOR's editor is Paddy Hirsch, and THE INDICATOR is a production of NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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