Should High-Skill Labor Immigration Be Limited?

This editorial in the Wall Street Journal arguing for increased immigration of high-skill labor, along with the commentary by Krugman on the need to limit low-skill immigration that follows, illegal immigration in particular, completes an immigration daily double. While discussing the impact of immigration on domestic low-skill workers, Krugman highlights research by Borjas and Katz showing that immigration of low-skill labor lowers wages for workers in those markets. Following up on Krugman's statement that "a review of serious ... research reveals some uncomfortable facts about ... immigration... If people like me are going to respond effectively to anti-immigrant demagogues, we have to acknowledge those facts," a recent paper by Borjas, "Immigration In High-Skill Labor Markets: The Impact of Foreign Students on The Earnings of Doctorates," shows that high-skill immigration has lowered wages as well. Thus, the argument made below that wages are not undercut because "it's illegal to pay these high-skill immigrants less than the prevailing wage" misses how the prevailing wage is affected by immigration:

The Other Immigrants, Review and Outlook, Wall Street Journal: Lost in the heated debate about the future of millions of illegal laborers in the U.S. is that our system for admitting foreign-born professionals is also in tatters. While globalization has increased the competition for international talent, U.S. businesses are frustrated by processing delays, long backlogs and especially the failure of Congress to increase the annual limits on visas for skilled immigrants. The Senate Judiciary Committee is scheduled to resume its mark-up of Arlen Specter's immigration bill today. And the good news is that it contains long-overdue provisions for hiring more of the foreign professionals who help keep our economy competitive.

Under Mr. Specter's proposal, the annual cap on H-1B guest worker visas for immigrants in specialty fields like science and engineering would rise to 115,000 from 65,000. Moreover, the new cap would not be fixed but would fluctuate automatically in response to demand for these visas. ...

Another important reform addresses foreign students who want to work here after graduating from U.S. colleges and universities. It doesn't make a lot of sense in today's global marketplace to educate the best and brightest and then send them away ... to start businesses and develop new technologies for U.S. competitors. But that's exactly what current U.S. policy encourages by limiting the employment prospects of foreign students who would rather stay here.

Mr. Specter would let more foreign students become permanent residents by obtaining an advanced degree in math, engineering, technology or the physical sciences and then finding work in their field. .... The reality today is that the U.S. ... and our economy will suffer if bad policy limits industry's access to intellectual capital.

Anti-immigration groups and protectionists want to dismiss these market forces, arguing that U.S. employers seek foreign nationals only because they'll work for less money. But it's illegal to pay these high-skill immigrants less than the prevailing wage. ...

According to a new study by the National Foundation for American Policy, our broken system for admitting foreign professionals also contributes to outsourcing. Since 1996 the 65,000 annual cap on H-1B visas has been reached in most years, sometimes only weeks into the new year. This leaves employers with the choice of waiting until the next fiscal year to hire workers in the U.S. or hiring people outside the country.

"Many companies concede," says the report, "that the uncertainty created by Congress' inability to provide a reliable mechanism to hire skilled professionals has encouraged placing more human resources outside the United States to avoid being subject to legislative winds." ...

[T]he U.S. labor market has ... long been a magnet for highly skilled and educated foreigners, many of whom attend school in America at some time in their lives. In a world where these brains have more options than ever in Asia and Europe, we drive them away at our economic peril.