The H1-B visa program, which grants temporary visas for educated, foreign workers in “specialized occupations” to enter the U.S., has long been a political lightening rod. Proponents claim that the program is absolutely required as a means of gaining access to technical skills that are in short supply in the U.S. Opponents, by contrast, contend that it takes jobs away from U.S. citizens and allows corporations to replace high-wage U.S. workers with lower-paid foreigners.

Although vendors have continually pressed for the government to lift the 65,000 visa annual quota for such visas, the political winds—especially during the recession—have been blowing in exactly the opposite direction. Congress, for example, placed restrictions on bailout recipients’ hiring of foreign workers and Senators Grassley and Durbin have introduced legislation that would make it more difficult for all firms to bring workers in under this program. And this does not even begin to consider the dozens of more subtle, less institutionalized “barriers” to the program that Vivek Wahdwa discusses so passionately in his many studies and articles.

Encouraging Signs

Although I do see some opportunities for abuse, I believe that the program, on balance, is not only positive for the U.S., it is essential. We simply are not graduating sufficient numbers of STEM (Science, Technology, Engineering, and Mathematics) professionals from our universities. Moreover, as I have discussed in previous blogs, a rapidly growing percentage of these undergraduate students—and the majority of STEM graduate students—are citizens of other countries (especially India and China).

Our universities need foreign students to fill their classrooms and pay for the professors and facilities that keep our programs ahead of those of other countries. U.S. businesses, meanwhile, need these skills if they are to remain competitive. And, 24% of all U.S. technology start-ups launched between 1980 and 1998 included at least one non-U.S. citizen as a founder, we apparently also need them to help create the new companies that produce such a large percentage of this country’s new jobs.

Given the importance I attribute to encouraging talented foreigners to study and work in the U.S., it may seem odd that I applauded a Thursday 30^th Wall Street Journal article that showed that the number of visas issued this year will fall well short of the 65,000 quota for the first time in six years. This is quite a reversal from the typical pattern in which the entire annual quota for visas is snapped up on the first day they become available.

Why did I find this article encouraging? Because it provided at least some evidence that the market is self-correcting. It suggests that vendors, as they repeatedly insist, do bring in foreign workers to address skills gaps within the U.S. market, rather than as a means of substituting lower-paid developing company workers for U.S. workers. My hope is that such results may dampen some of the political pressure that surrounds this program.

The Sad Reality

But alas, such a reprieve is unlikely. First, as we all know, the current 9.8% unemployment rate will inevitably rise before it even begins to decline, and this decline promises to be painfully slow. Political pressure on the program is, therefore, likely to continue.

Just as importantly, another Wall Street Journal article from the same day suggested that the decline is indeed an anomaly—that it was largely attributable to the plummeting growth of Indian outsourcing contracts and that it will reverse as soon as these contracts begin to revive. After all, the vast majority of these visas are taken not by American companies looking for additional workers, but by Indian service providers that bring consultants into this country to assist on projects being performed primarily in India. In the article, N. Chandrasekaran, CEO of Tata Consulting Services, explained that while the company was actively expanding its offshore (i.e., non-Indian) workforce, most of this growth would be in other developing countries. In fact, Tata generally finds it easier, less expensive and more convenient to bring workers from India to address U.S. projects, than it is to hire U.S. employees.

There is, however, another even deeper reason why the demand for foreign technical workers will continue to grow. It is looking increasingly unlikely that the supply of highly trained U.S. STEM graduates will grow anytime soon. Although tentative initial evidence cited in a recent New York Times article suggests that U.S. college enrollment continues to increase, this gain is almost entirely attributable to growth in community college, rather than in four-year university or graduate school enrollment. Moreover, as discussed in my previous blogs, smaller percentages of U.S. university students are electing to study technical subjects.

And if we are really looking for discouraging news, we need look no further than another New York Times article that demonstrates one popular way in which the country is currently addressing the academic deficiencies of our public schools. According to the article, in fear of being penalized for not meeting No Child Left Behind performance requirements, 15 states have found a creative way of staying in compliance—they simply lowered the scores required to demonstrate proficiency.

Given the current state of affairs, the chances of increasing or eliminating the 65,000 per year cap on visas are probably below zero. The best we can probably hope for is a reprieve in populist and political pressures to limit the H-1B program. But, as much as I would like to hope for such a reprieve, I am afraid we will have longer to wait. The demand for talented scientists, technologists and mathematicians will continue to grow as the domestic supply of such people declines. And with unemployment rates expected to continue at high levels for the next several years, political and populist pressures against foreigners are likely to continue to grow.