In June, the US government suspended H-1B and other work visas for the rest of 2020. Hundreds of thousands of foreigners will no longer be able to attain work in the US as a result.
This halt will deal a one-two punch to employers of computer-related occupations, which includes jobs such as software developers and computer systems analysts. First, people in this field receive the overwhelming majority of H-1B visas. Out of the nearly 400,000 H-1B petitions approved in fiscal year 2019, about two-thirds were in that line of work. Most went to software developers.
Second, computer-related workers are the one group for which the labor market will soon become tight again. When that happens, new foreign workers may be sorely missed.
Why are computer-related occupations the most likely to regain their hot commodity status in the next year or two?
Before Covid-19, the unemployment rate for these workers was the lowest in recorded history. In the 10 years prior to the pandemic, the number of computer-related workers soared by 62%, while the number in all other fields grew by just 13%.
And since February, when the pandemic started impacting the US economy, the rise in the unemployment rate for computer and mathematical occupations was smaller than for other occupation groups (see charts 1 and 2). While the unemployment rate for all workers and for the management and professional group reached the highest rates in recorded history, the increase for computer and mathematical workers was more modest, though still significant.
In the next year or two, demand for tech workers is likely to be stronger than for most other workers. The fallout from Covid-19 is leading to a rapid acceleration in technological adoption by both businesses and consumers.
The accelerated shift to remote work is the most visible example of such changes. If before the pandemic, about 5 percent of all full-time employees in office jobs worked primarily from home, this rate could reach 20-30 percent even after the pandemic subsides. Another long-lasting impact is the acceleration in the shift to online consumption, especially in retail, restaurants, higher education, banking, and healthcare. These trends are likely to lead to an acceleration in digital transformation, resulting in a growing demand for tech workers.
The size of the effect on H-1B applicants and sponsoring companies will potentially be larger than the direct effect of the executive order itself if this spurs companies and potential H-1B applicants to de-risk themselves from the whims of the US immigration system.
Regardless of the impact of latest executive order, it may very well be that a major reform in the H-1B visa application and approval process is needed. A recent report by The Committee for Economic Development of The Conference Board (CED) describes the weaknesses of the current program and suggestions for reform.
In sum, if the suspension of H-1B visas ends in December 2020, the impact on the ability of US employers to recruit qualified workers, even qualified tech workers, is likely to be small. However, if the suspension continues beyond 2020, recruiting high-quality tech workers could become much more difficult.
While digital transformation and the shift to remote working are important factors in potentially creating a shortage of tech workers, they can also provide part of the solution to it. Computer-related workers had the highest work-from-home rates prior to the pandemic. With the rapid, and what seems like permanent rise in remote working, employers now have more flexibility in recruiting tech workers across the US and perhaps even internationally.
Beyond the short-term recruiting impact, reducing the number of foreign workers could have major implications on US innovation. A recent article concludes that immigrants are responsible for 30% of aggregate US innovation since 1976, partly due to their own innovation, but mostly due to the positive impact they are having on US natives’ innovation. Immigration grows the pie.
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