The Case for Setting H-1Bs Free

When President Trump suspended the issuance of new H-1B work visas for high-skilled foreigners, he explained it as a way to bolster job prospects for unemployed Americans. But if companies can’t bring talent to the U.S., they respond by shifting resources and research abroad, according to a study released this week by the National Bureau of Economic Research.

Britta Glennon, a professor at the University of Pennsylvania, examined data on 2,263 U.S. multinational companies. When the cap on H-1B visas dropped precipitously in 2004, multinational firms that were more reliant on the program expanded overseas, she found. The effect was more pronounced among businesses that “were R&D-intensive.”

American multinationals, Ms. Glennon writes, “appear to have increased the share—not just the levels—of their total employment and patenting to three main countries: Canada, India, and China.” For context, U.S. multinationals, the study says, account for 80% of American R&D and about a quarter of private employment.

One anecdotal example is the 2007 announcement of a new Microsoft development center in Vancouver, Canada. The company specifically said that this expansion would be near its home base, while letting it “recruit and retain highly skilled people affected by immigration issues in the U.S.”