NEWS CONTACTS: Susan Mora (202) 822-9491 FOR IMMEDIATE RELEASE November 16, 2004

New Study Finds Profound Long-Term Changes in Workforce Contributing to U.S. High-Skill Labor Shortages

Washington, D.C. In a new report, scholars from the Hudson Institute have concluded that the United States is in the midst of a profound structural change in certain sectors of the high-skilled domestic labor force due to demographic changes and shifting fields of study by U.S. students.  They went on to suggest that there is strong secondary and anecdotal evidence of the positive role played by the H-1B visa program in countering this domestic trend.

The report: Can Foreign Talent Fill Gaps In the U.S. Labor Force? The Contributions of Recent Literature was commissioned by Compete America to provide an analysis of the numerous government and industry statistics as well as recent academic studies that touch on the impact of highly-educated foreign workers on the U.S. economy.

Despite incomplete publicly available data, the Hudson review of over 50 government and academic sources, including the U.S. Department of Homeland Security, the Organisation for Economic Cooperation and Development (OECD), and the National Education Association, concluded that the willingness and ability of the U.S. to attract highly trained foreign nationals will be an important tool for the foreseeable future in order to overcome both temporary and long-term shortages in specific high-skill occupations.

In detailing the structural changes impacting the U.S. high-skill labor market, Hudson pointed to National Science Foundation statistics showing that in 1975, the U.S. ranked third among countries in the proportion of 18-24 year old population earning science and engineering degrees, in 2004 it ranked 17^th.  Moreover, Hudson singled out the National Science Board’s concern that the trends of declining U.S. citizen enrollment in sciences and engineering coupled with the expected growth in jobs in these fields threaten the economic welfare and security” of the United States.

At the same time that the U.S. production of a highly-educated workforce is slowing down, American companies must compete against firms from countries that are rapidly increasing their own pools of highly-educated workers,” said Sandra Boyd, National Association of Manufacturers Human Resources Policy Vice President and Compete America Chair.  “The evidence clearly points to the need for increasing access to highly educated foreign nationals to perform specialized jobs here in the United States.

Based on its review of recent research and statistical reports, Hudson made the following observations:

Temporary foreign workers continue to fill gaps in demand for U.S. highly-educated labor. Many of these workers are graduates of U.S. universities with technical degrees, and are sought as permanent hires by U.S. companies.

Adjustments to permanent resident status by temporary foreign workers alleviate critical labor needs for science and engineering workers.

There is no clear evidence that highly-educated foreign workers displace native workers in comparable occupations.

Empirical evidence continues to be mixed or inconclusive about the wage effects of highly-educated foreign workers.

To its advantage, the U.S. does a better job than other developed countries at attracting talent; but this may not continue.

Empirical studies and anecdotal evidence point to spill-over benefits such as improved creativity and innovation gained from foreign talent.

In conclusion, the Hudson researchers stated:

This review of recent literature, points to two broad conclusions.  First, the widely-held proposition that the U.S. faces shortfalls in the supply of certain highly educated workers to meet rising demand continues to be confirmed.  The intensity of this “skills gap” varies by occupation (IT, science, engineering, health care, etc.) and industry and over the business cycle.  Second, the H1-B program continues to be quite flexible in addressing employer needs of a temporary nature (the original intent of the program) while enabling transition to permanent resident status when labor demand simply cannot be met by the indigenous workforce for the foreseeable future.  Recent policy suggestions indicate more flexibility needs to be built into the H1-B program.

In summary, despite incomplete publicly available data, there remains strong secondary and anecdotal evidence of the positive contributions of the H-1B visa program to the U.S. economy. The willingness and ability of the U.S. to attract highly trained foreign nationals will be an important tool for the foreseeable future in order to overcome temporary and even more structural shortages in specific high-skill occupations. For a copy of the report visit www.competeamerica.org.

Compete America (www.competeamerica.org) is a coalition of more than 200 corporations, universities, research institutions and trade associations concerned about legal, employment-based immigration and committed to ensuring that the United States has the highly educated workforce necessary to ensure continued innovation, job creation and leadership in a worldwide economy.

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