The Business Case For Welcoming Foreign Professionals

Judy Olian is dean of Penn State's Smeal College of Business and a leading expert in strategic human resources management.

There has long been a tug-of-war between labor and business about the size of the welcome mat for foreign skilled workers in the United States.

This ongoing debate over H-1B visas temporarily extended to foreign workers is being conducted against a backdrop of strengthening anti-immigration and anti-globalization sentiments in the country. The economic and employment downturn has heightened sensitivity to anything with a passing relationship to job loss, but proponents of raising H-1B quotas argue that the real driver of job declines is global off-shoring and outsourcing, not employment of foreign talent.

Tech companies such as Motorola and defense contractors like Rockwell International are concerned about meeting product deliverables and keeping pace with foreign competitors in new product development. They are clamoring for increased access to experts—from the U.S. and abroad—with specialized technical and science skills.

On the opposing side, labor organizations view the H-1B visas temporarily extended to foreign workers for up to six years as license to steal jobs rightfully belonging to Americans. To prove the point, the U.S. arm of the Institute of Electrical and Electronic Engineers reports that unemployment for its engineers has risen from 4.2 percent in 2002 to a record 6.2 percent in 2003.

For companies searching for talent, the H1-B situation is heading in the wrong direction.

In 1998, after extensive employer lobbying, the annual H-1B visa quota increased from 65,000 to 110,000. In 2000, at the peak of the tech boom, it rose again when the administration allowed for a temporary four-year hike to 195,000 visas granted annually.

During the go-go years of the tech boom, U.S. employers used up every one of these H-1Bs. However, U.S. labor organizations claim that these visas sacrificed jobs that should have gone to American workers. Foreign professionals, they say—especially those from China and India—have an unfair advantage because they are willing to accept reduced compensation.

This year, the temporary H-1B quota returned to 65,000. By April, all H-1Bs were doled out, with employers already lining up to draw from next year’s quota. When the fiscal year began on October 1, 46,000 H-1B requests had already been filed, just 19,000 short of the entire annual allotment.

The reduction in the number of visas available has American corporations screaming about a competitive disadvantage in the global war for talent. Technical firms are especially upset about the lack of available professionals trained in math and the sciences.

Educational trends won’t help U.S. businesses solve their talent shortfalls. The number of U.S. engineering graduates has plummeted from almost 80,000 in the mid-80s, to less than 60,000 in 2000. That’s about one-third the engineers graduating annually in China. And among U.S. engineering graduates, the largest representation from abroad is among Chinese engineering students. These graduates are increasingly being lured back by the galloping economic growth of their home country.

On another front, China’s investment in industrial research and development has also jumped to third in the world, behind only the U.S. and Japan and growing faster than in any country.

As technological centers of excellence crop up all over the world, especially in India and China, American industry cannot afford to place limits on its rate of innovation or technological capabilities. Harsh restrictions on the temporary importation of foreign talent will impose such limits and are short sighted.

One of the by-products of a global economy is that workers—and not just goods or consumers—move across national lines in every direction. H-1B visas are a temporary labor pool solution that is consistent with the shift to global markets, where skilled workers pass each other at borders, in and out of local markets. These visas may also represent an opportunity for American labor if they enable companies to remain state-side rather than shutting down to move off-shore in search of the right talent. Clamping down on H-1B visas is pointing fingers in the wrong direction.

Back to Dean's Syndicated Column: 'About Business'

Back to Latest News

REPORTERS & EDITORS: For more information, please contact Wyatt DuBois in the Smeal College of Business Media Relations Office at 814-863-3798 or wed112@psu.edu.

Penn State's Smeal College of Business offers highly ranked undergraduate, MBA, executive MBA, Ph.D., and executive education opportunities to more than 5,500 students at all levels. Featuring academic departments of accounting, finance, marketing, insurance and real estate, management, and supply chain and information systems, the college is also home to major research centers such as the Center for Supply Chain Research, the Institute for the Study of Business Markets, the Center for Digital Transformation, the Farrell Center for Corporate Innovation and Entrepreneurship, the Center for Global Business Studies, and the Center for the Management of Technological and Organizational Change.

Click here for more news.