Demand for H-1B Immigrant Workers in U.S. Metropolitan Areas: Remarks by Neil Ruiz

Editor’s Note: During an event to release a report on U.S. demand for skilled immigrant labor, Neil G. Ruiz delivered a presentation highlighting major findings.

Good morning.  Thank you Bruce for that introduction and thank you very much to all of you for participating in this event.

I first want to take this opportunity to recognize my two other co-authors, Jill Wilson and Shyamali Choudhury, who have laboriously worked with me over the past year on this project.  The three of us our grateful to others in the Metropolitan Policy program who also contributed to this project. 

The research we are releasing today analyzes a decade of data on H-1B worker applications—over 2 million employer requests for high-skilled foreign visas.  We used this data, to paint the first-ever picture of demand for these skilled workers at the local and regional levels across the country.

As Bruce noted in his remarks, the Great Recession and slow recovery have only heightened the demand for skilled workers to help American firms compete globally.

A skilled workforce provides the foundation upon which metropolitan areas can transition to the next economy—one that is fueled by innovation, powered by low carbon, driven by exports and greater internationalization, and rich with opportunity.   

The question is, where and how should America’s metro economies find those skills?

In this presentation, I will make three main points.

First, the H-1B program connects U.S. employers to high-skilled workers.

Second, metropolitan areas drive demand for H-1B workers.  They are the places where employers utilize skills, and these skills needs, vary from place to place.

And third, the U.S. must match the supply of skilled workers to metropolitan demand. It’s time for a smarter approach.

(1) The H-1B Program connects U.S. employers to high-skilled workers

So let’s begin with the first point, that the H-1B program connects U.S. employers to high-skilled workers.

More and more, the high skilled workers that U.S.-based employers seek can be found not just at home but also in foreign markets. This is particularly true for STEM workers who have science, technology, engineering, and mathematics training.

Take engineering.  According to the National Science Foundation, Asia is producing 56 percent of the world’s engineering bachelor’s degrees, followed by 17 percent in Europe, and just 4 percent in the U.S.

How, then, should other parts of the world contribute to the deepening search for skills among U.S.-based employers and their wider regional economies?

This leads naturally to a discussion of the H-1B visa program. The program, as we know it today, is the product of two key pieces of legislation: The Immigration Act of 1990 and the American Competitiveness Act of 1998.  The program has a two-pronged approach for increasing the supply of skilled workers to U.S. firms:

First, employers apply for H-1B visas for high-skilled workers for specialty occupations.

These occupations are defined as requiring theoretical and practical application of a body of highly specialized knowledge and the attainment of a bachelor’s degree or higher in the field of specialty. The one occupational exception to the H-1B bachelor’s requirement is, not surprisingly, fashion models, who make up less than 1 percent of all H-1B requests.

There are two types of organizations requesting H-1B workers.

Private firms account for the vast majority—90 percent—of all H-1B requests. Research, non-profit, and government organizations make up the remaining 10 percent of all requests.

But overall demand is spread widely. In 2011, a total of 70,000 companies and organizations requested H-1B workers.  More than half of them requested only one H-1B worker. 

Demand from private firms is subject to an annual cap set by Congress for newly issued H-1B visas. Currently, that cap is set at 85,000 visas, 20,000 of which are reserved for foreigners holding graduate degrees from American universities.

Visas are granted to employers on a first-come, first-served basis.  Applications are accepted beginning on the first business day of April and are closed as soon as the cap is reached. 

Private firms requesting H-1B workers come from a wide variety of industries.

They include:

  • Information technology producers such as Microsoft, Intel, and WiPro.
  • Management consulting firms such as IBM, Deloitte Consulting and Accenture.
  • Globally competitive manufacturers like Caterpillar, Qualcomm, and Cummins Incorporated.
  • And financial services giants such as Ernst & Young, Goldman Sachs, and JP Morgan Chase

The 100 employers with the most H-1B requests account for 20 percent of all applications. And more than a quarter of these employers are Fortune 500 companies. 

Universities, non-profits, and government research institutions form the second category of employer requesting H-1B workers. Unlike private firms, these organizations are not subject to the annual visa cap under the H-1B program.  Many rank among America’s largest and most prestigious research universities, such as the University of Michigan, University of Texas at Austin, Harvard, MIT, and the University of California system.  Many of their requests are for STEM workers, professors, and medical doctors conducting research or residencies at university hospitals.

The National Institutes of Health also requests large numbers of H-1B workers in the health sciences. 

While H-1B workers come from all over the world, Asia dominates as a source region. About two-thirds of visa recipients come from India and China, with India representing a majority of all visa recipients.  Other countries represented include Canada, the United Kingdom, South Korea, and the Philippines.

In terms of skills requested, slightly less than two-thirds of all H-1B applications are for STEM occupations.  Computer occupations and engineers are the most highly demanded fields.  Top Non-STEM occupations include healthcare practitioners and financial specialists.

The second, less well-known prong of the H-1B program uses revenues from visa fees to support U.S. workforce development efforts that aim to reduce the need for high-skilled foreign workers over time.

Between 2001 and 2011, the H-1B program generated about $1 billion in visa fees. Two government agencies have responsibility for distributing that funding: the Department of Labor’s Employment and Training Administration, and the National Science Foundation.

The majority of dollars fund short-term training, about 2 years in length. These grants are distributed by the ETA on a competitive basis to local workforce training centers or public private partnerships.  NSF has distributed another $357 million to support post-secondary scholarships for students to earn STEM degrees, and to K-12 systems to help inspire children to pursue STEM fields.

(2) Metros drive demand for H-1B workers

This brings me to my second point, which is that metropolitan areas drive demand for H-1B workers. 

In 2010 and 2011, 106 metropolitan areas across the country averaged at least 250 H-1B requests annually.  We call these “high demand H-1B metros.” 

They house 67 percent of the national workforce, but concentrate an astounding 91 percent of all H-1B visa requests. 

The 10 metro areas with the highest number of H-1B requests are among the country’s largest regional economies.  They range from the nation’s largest metro requester, New York, to Los Angeles, San Francisco, San Jose, Washington, Chicago, Boston, Dallas, Houston, and Seattle. 

These 10 metros alone account for 53 percent of all H-1B requests. 

Another group of metro areas exhibit a high demand for H-1Bs relative to their existing workforce.  They have, what we call, high “H-1B intensity.”

The top 10 metros for H-1B intensity range from larger metros like San Jose, New York and Seattle, to smaller metros like Columbus, Indiana, and Durham, North Carolina.

A closer examination of the H-1B visa program in four metro areas portrays how demand for these workers tracks the distinct economic profiles of these places.

The San Jose metro area, home to Silicon Valley, is most likely the first place that comes to mind when discussing demand for skilled workers and the H-1B visa program. 

It ranks among the top 10 in total requests for H-1B workers, and number 1 for H-1B demand intensity.

The technology industry dominates demand for H-1B workers.  The top employers requesting H-1B workers include Apple, eBay, Yahoo, and Intel. 

Demand for H-1B workers in the New York metro is not a high-tech story, but rather reflects its specialization in high-end finance. 

New York had nearly 53,000 H-1B worker requests on average between 2010 and 2011, highest in the country. The top employers requesting H-1B workers are in finance, including Goldman Sachs and JPMorgan Chase.

About half of H-1B requests in the region are for STEM occupations, ranging from financial specialists, business operation specialists, and computer occupations.

But demand for H-1B immigrant workers also lies well outside just the largest metropolitan areas.

With a population of just over 75,000, Columbus, Indiana is the smallest of the high demand H-1B metros.  But it ranks second in its demand intensity.

The metro is characterized largely by its manufacturing sector, which accounts for one-third of all employment in the metro area.

The majority of H-1B requests in the area are from one major employer: Cummins Incorporated.  Cummins is an advanced manufacturer specializing in clean technologies for automotive engines. The firm has experienced exponential growth over the past several years—even during the recession—and its requests for H-1B workers, especially in engineering, have followed that path.

Finally, Rochester, Minnesota, exemplifies a number of other small metro areas dominated by research and medicine that exhibit high H-1B demand.

The Mayo Clinic is both the largest employer in the metro area and highest requestor of H-1B workers. 71 percent of all Rochester’s H-1B applications come from institutions not subject to the annual visa cap, the highest share of any U.S. metro.

With 2.6 H-1B requests per 1,000 workers, the large majority of the region’s H-1B applications are for Life Scientists and Health Practitioners.

Metros—both large and small—are at the forefront of demand in the H-1B visa program.  These four metro areas show that H-1B visas are not only being demanded by Silicon Valley, but also metro areas that are centers of American finance, manufacturing, and medicine.

(3) The U.S. must match the supply of skilled workers to metro demand

This brings me to my third and final point, the US must match the supply of skilled workers to metro demand.

Our research highlights 2 key priorities for matching highly skilled workers to the needs of metropolitan economies:

First, we must increase responsiveness to fluctuations in H-1B demand.

Currently, the H-1B visa cap is not responsive to fluctuations in demand for H-1B workers in U.S. metropolitan areas. 

Demand far outstripped the cap in the late 1990s, and by the time Congress finally lifted the cap in 2001, the dot com bubble already burst. Congress failed to react to changing economic needs in the mid-2000s, and let the cap expire as demand grew.

Since then, the annual visa cap for private employers has been reached, every year.

This is not surprising, because the cap is set nationally by Congress without any deliberate method for receiving input from regional businesses that have a high demand for H-1B workers, or from labor market analysts who understand the distribution of skills among existing U.S. workers.

In response to this challenge, and in line with other groups like the Migration Policy Institute, we recommend that Congress create a Standing Commission on Labor and Immigration. We recommend that this Commission include a dedicated, non-partisan H-1B Panel to consider and respond to metropolitan demand for highly skilled labor.

This panel should make annual recommendations to congress and the president on H-1B visa levels and priorities, informed by analysis and expertise around the demand and supply of skilled workers at home and abroad.  The panel dedicated to the H-1B program should include recognized experts in the fields of business, economics, immigration, and representatives from federal agencies and a business research organization.

The data presented in this report provide one example of the information this panel could use to inform its recommendations.

In addition, input from metros, including their local employers and business groups, workforce development groups, and educational institutions would provide complementary qualitative information regarding regional skills needs.

The second priority, is to more deliberately target education and workforce development resources, to meet longer-run metro needs for highly skilled labor.

As I said before, $628 million dollars of the H-1B visa fees have been distributed for technical skills training grants at the local level.

Ideally, many of these skills employers seek from abroad would already exist in the metropolitan workforce. Unfortunately, visa fees are not currently targeted to address the longer-run skills needs implied by the geography of H-1B demand.

Collectively, the 106 high-demand H-1B metros received only $3.09 per capita in skills training funds from 2001 to 2011.  Other metros with far fewer H-1B requests, by contrast, received $15.26 per capita for technical skills training.

Indeed, the four metro areas featured earlier have a high demand for H-1B workers but received a very small portion of these funds, if any at all.

The bottom line is, H-1B supported workforce training does not match H-1B workforce demand at the regional scale.

We recommend that the program instead target worker training to metropolitan areas with a high demand for H-1B workers, in the specific occupations for which employers are seeking skilled foreign labor.

Metro leaders can then collaborate with local stakeholders to create smarter programs to help train their existing workers for jobs available today and in the future.

This is already happening in metro areas like Wichita, Kansas. The Kansas Engineering Excellence Project (KEEP) is a skills training program funded by the ETA.  We will hear more about this later this morning from its executive director.  It supports workers in completing advanced degrees in high-demand fields in aviation and aerospace—occupations that might normally be filled by H-1B workers. Private employers work with Wichita State University and the program to train students for jobs that will be in demand in the near future.

Other metropolitan leaders can take advantage of the data that we released today to more smartly target their workforce training to their skills needs.  Metro organizations can use our metropolitan profiles to inform their applications for ETA grant funds, by identifying the specific skills and employers behind H-1B demand in their regions. 

All these data are available at the following website, noted on the screen and on the handouts: www.brookings.edu/metro/h1b

In conclusion, to move forward in the national debate about global economic competitiveness, policymakers must understand local demand for foreign skills in the United States.  Until now, the discussion around high-skilled immigrants and the H-1B visa program has been highly polarized, conducted solely at the national level, and lacking geographic information about employer demand. 

Our metro economies are driving the nation’s demand for global skills, they need a seat at the table to maximize the value of the H-1B program for our businesses, our workers, and our economy. Thank you.