Increasing H-1B cap reduces wages?

The National Science Foundation (NSF) has published a document entitled, "Science and Engineering Indicators 2008."

One very interesting NSF point for FY 2006 was for H-1B visa holders in Computer-related and Writers occupations. In both occupations, Bachelor’s degreed H-1B workers earned an average of $400.00 more per year than those with a Master’s degree.

2006 Computer-related occupations H-1B Average Salaries:
Bachelor’s Degree = $56,000.00
Master’s Degree = $55,600.00

2006 Writers occupation H-1B Average Salaries:
Bachelor’s Degree = $37,900.00
Master’s Degree = $37,500.00

http://www.nsf.gov/statistics/seind08/c3/tt03-29.htm

The NSF document also states:

"In 2006, 44% of those receiving new H-1B visas in computer-related occupations had master's degrees, and a little more than 1% had doctoral degrees."

"In 2006, 51% of new H-1B recipients were in computer-related occupations, including 48% in the United States Citizenship and Immigration Services occupational category of "occupations in systems analysis and programming," which includes many S&E occupations, such as computer scientist, and technician occupations, such as programmer. "

"Over two-thirds of the slightly more than 110,000 recipients of H-1B visas in 2006 are in S&T [Science & Technology] occupations."

"Total 2006 new H-1B visas approved: 113,593."

Checking these NSF statements, the computer-related H-1Bs would total 57,932 in computer-related occupations. Forty-four percent, those with Master’s degrees, equals 25,490 H-1Bs. Subtracting 1% for Doctoral degrees, the remainder would be 55%, or 31,862 computer-related H-1Bs with bachelor's degrees.

The number of H-1Bs granted to computer-related Bachelor’s and Master’s holders were significant samples and comparative in number 31,862 to 25,490 respectively.
What happened in FY 2006, that drove salaries down for Master's degree holders in Computer-related & Writers occupations?

Of interest is the fact that FY 2006 was the first year of the 20,000 visa, U.S. postgraduate degree exemption to the H-1B program.

". 20,000 cap exemption for U.S. masters and higher. Up to 20,000 aliens with masters or higher-level degrees from U.S. institutions of higher education will be exempt from the H-1B cap each year. Petitions for such individuals that are filed after the 20,000 exemptions are granted will be counted against the cap. Note: this does not impact the general exemption from the cap for individuals employed by institutions of higher education; that exemption remains. Effective date: March 8, 2005. [Sec. 425]. [Note: No further details of how this will be implemented have been announced.]" http://www.oiss.yale.edu/visa/h1refact.htm

Recapping, the 20,000 visa H-1B exemption for postgraduates of American institutions of higher learning became effective less than 30 days prior to the H-1B FY2006 application date of 4/1/2005.

Subsequently, in the largest group of subscribers to the H-1B program, the value of a Master's degree appears to have become less valuable than a Bachelor's degree in computer-related occupations. (Sorry, the NSF did not supply additional data for Writing occupations.)

Source:
National Science Foundation: "Science and Engineering Indicators 2008"
Chapter 2. Section: Higher Education in Science and Engineering
http://www.nsf.gov/statistics/seind08/c2/c2s4.htm

Chapter 3. Section: Global S&E Labor Force and the United States
http://www.nsf.gov/statistics/seind08/c3/c3s4.htm

H1B Petitions Traditionally Exceed Caps

"Characteristics of Specialty Occupation Workers
(H-1B):Fiscal Year 2005"

In 2005, 117,536 H1B initial employment petitions were filed, of those petitions, 116,927 were approved for initial employment; the H1B approval rate for 2005 was 99.48%.

In 2004, 163,549 H1B initial employment petitions were filed, with 130,497 H1B initial approvals, but the approval rate was a more realistic 79.79%

===========================================

Initial H1B Petitions_Initial H1B Approvals__Approval rating
2002 __ 109,576 _____ 103,584 _________ 94.53%
2003 __ 108,526 _____ 105,314 _________ 97.04%
2004 __ 163,549 _____ 130,497 _________ 79.79%
2005 __ 117,536 _____ 116,927 _________ 99.48%
===========================================
Total __ 499,187 _____ 456,322 __________ 91.41%_

Top 20 - 2005 Initial and Continuing H1B Approvals:

Computer Systems Design & Related Services 32%
Other industries 17%
Colleges, Universities, & Professional Schools 10%
Industry unknown 7%
Architectural, Engineering, & Related Services 4%
Management, Scientific, & Technical Consulting Services 4%
Scientific Research and Development Services 3%
Elementary and Secondary Schools 2%
Accounting, Tax Preparation, Bookkeeping, & Payroll Services 2%
General Medical and Surgical Hospitals 2%
Securities & Commodity Contracts Intermediation & Brokerage 2%
Semiconductor & Other Electronic Component Manufacturing 2%
Telecommunications 1%
Offices of Physicians 1%
Computer and Peripheral Equipment Manufacturing 1%
Other Financial Investment Activities 1%
Pharmaceutical and Medicine Manufacturing 1%
Other Professional, Scientific, & Technical Services 1%
Health and Personal Care Stores 1%
Professional, Scientific, and Technical Services 1%

The H1B numbers 2002 through 2005:
Initial Approvals 2002 – 2005 = 499,187
2005 Median Salary = $55,000
Economic Salary Impact = $25,097,710,000.00
Average number of H1B initial petitions = 124,796.75
Average number of H1B initial approvals = 114,081
Average H1B approval rate = 91.41%

Continuing Employment Approvals 2002 – 2005 = 513,104
2005 Median Salary = $55,000
Economic Salary Impact = $28,220,720,000.00
Average number of H1B continuing petitions = 131426.75
Average number of H1B continuing approvals = 128276
Average H1B continuing employment approval rate = 91.41%

(Yes, that total is, $53 billion annually for only four years of economic immigration.)

One might also note that 116,927 H1B initial approvals in 2005 exceeded the stated cap.

"For example, approved petitions for initial employment are exempt from the cap if the sponsors are institutions of higher education or nonprofit organizations affiliated with institutions of higher education; the sponsors are nonprofit research organizations or governmental research organizations; or a beneficiary has a U.S. advanced degree."

Only fifty-four percent of H1B employment approvals held a Masters degree or higher in 2005. Of the total 117,536 initial employment petitions for 2005 "Highly Skilled Worker" visas, only 63469.44 had completed a postgraduate degree according to the 54% statistic.

One way to address the Highly Skilled Worker visa shortage is to raise the educational requirements to "Highly Skilled" (AKA postgraduate educational levels.) Additionally, petition approvals should be graded on the basis of the employment offer; long-term, full salaried employment offers are the best indicators of a genuine need for guestworker expertise.

If the minimum educational requirement for an H1B visa had been postgraduate degree in 2005, every qualified applicant would have received a visa. The recent addition of 20,000 postgraduate exemptions would not have been tapped.