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Banning Foreign Workers Will Not Help Domestic Employment in the US

Georgia Strong | United States Fellow

As businesses across the United States (US) have shut down, full-time employment opportunities have become increasingly limited. This hardship has been reflected in the unemployment rate, which peaked at 14.7 per cent unemployment in April, before decreasing to 10.2 per cent for the month of July.

In response to this high unemployment rate, US President Donald Trump and Senior Advisor Stephen Miller suspended the ability of foreign workers to enter the United States. President Trump claimed that "by pausing immigration, we'll help put unemployed Americans first in line for jobs as America reopens". The logic sounds like it should work; a reduction in the supply of foreign workers should assist domestic workers in finding employment opportunities. Specifically, some 900,000 foreign workers will no longer be able to enter the US under a range of employment visas.

However, a lack of foreign workers will see the US economy struggle to maintain existing levels of competitiveness, productivity and innovation. This is because visa programs such as the H-1B, which is now banned under the executive order, are specifically designed to attract and employ highly skilled workers in the US economy. At any time, as many as 62 per cent of these workers are employed in IT-related fields. They bring knowledge and expertise from their home country, and they use it to add value to the US market through innovation, patents and entrepreneurship. This industry is unique in that it has maintained stable employment rates throughout the pandemic. Technology companies are often forced to hire foreign workers as the domestic labour market lacks the skills and qualifications for the job. As such, Trump's shut down of the H-1B visa program does not improve the employment opportunities of Americans, but hinders innovation and development within the IT field.

Other industries known to take advantage of foreign work visas include engineering and technology, with 30 per cent of all such workers born abroad. By facilitating a more educated, advanced workforce within the engineering and science industries, foreign worker programs have increased total factor productivity by 50 per cent in the US economy. Without these workers, the US economy should not expect to maintain current levels of productivity, competitiveness or innovation. As such, an executive order limiting foreign work visas may not increase domestic employment, but reduce the recovery and growth capacity of the US economy.

Without immigration, the US economy is also likely to encounter low labour market growth. Under pre-COVID-19 trends, immigrants and their US-born children were expected to account for 88 per cent of population growth. Without this labour, the US will need to fill an additional 10 million jobs by 2024.

To combat President Trump's executive order several high profile companies, including Apple, Facebook and 50 other organisations, have launched legal action. They believe that foreign work visa limitations will hinder "the ability of U.S. businesses to attract the world's best talent, drive innovation, and further American economic prosperity". A second legal challenge has also been levied by the Justice Action Center and Innovation Law Lab on behalf of several families, employers and organisations. It cites the treaty obligations of the US to L-1 visa holders under the General Agreement on Trade in Services (GATS) as evidence that the administration cannot void all employment and family migration visa services.

However, a successful challenge may not reverse the damage President Trump has had on the image of the US as an immigrant friendly nation. Earlier this year, he tried to end the Obama administration's Deferred Action for Childhood Arrivals (DACA) program and ban foreign students from the US if they were taking fully online classes. By curating an environment of uncertainty for foreign workers and students, those looking to move abroad are unlikely to view the US as an attractive destination for employment and study opportunities. US institutions and industries currently at the forefront of cutting edge research and development may be overlooked by talented students and workers for fear of facing undue deportation or visa complications. Without qualified workers, the US economy will struggle to innovate and compete against more diversified international markets. At the end of the day, Trump's America-first migration policy may do more damage to the economy than it assists employment.

Georgia Strong is the United States Fellow for Young Australians in International Affairs.


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