April 28, 2007

High-Skill Immigration Trends Across U.S. States

Source: Global Insights
Despite much national attention on low-skill immigrants, high-skill immigration has significant consequences for the U.S. economy.

Immigration has received a lot of attention recently, grabbing headlines and keeping legislators busy at both the state and federal levels. While much of this focus has been on immigrants from Mexico, the Caribbean, or other NAFTA partners who come to the United States for low-skill, low-wage jobs, there is another aspect of immigration that has significant consequences for the U.S. economy: H1B visas.

These visas allow temporary immigration into the United States contingent on an existing job offer. A domestic firm acts as sponsor for the applicant, who must possess skills in a specialty occupation, theoretical and practical application of a body of specialized knowledge, and at least a bachelors degree or its equivalent. The annual U.S. quota for H1B visas is 65,000, with an additional quota of 20,000 for those who have earned their masters degree in the United States. It is notable that the large majority of these positions are in the services sector (most often science or technical occupations) and require a higher level of education and work experience. More prevalent occupation types sought in visa applications are IT related, such as software engineers, programmers, and system analysts, or business related, such as accountants and specialists in finance, marketing, and business development.
Research on H1B visas is still in its early phases. However, one of the data sets available is the Labor Condition Application (LCA), which is used by employers as supporting evidence for the petition for an H1B visa. Regional patterns in the LCA data show some interesting trends. For the fiscal year 2006 (October 2005 to September 2006), there were 644,779 applications filed online (90% of total applications). In the map below, these applications are broken down by state and then weighted by total employment (to control for size) to show which states are most active in seeking out foreign labor for technical service positions.

State Ratios of H1B Applications to Employment

There is a clear trend of coastal states taking greater advantage of the H1B program compared with inland states. This can be attributed to these areas having more densely developed science and IT-related sectors, more internationally diverse demographics, and more interaction with foreign-based firms. Moreover, the East Coast metropolitan areas have a near monopoly on applications for employment. The anomalies in this group are Arizona, Illinois, and Michigan—noncoastal states that also show great demand for international workers. This may be explained by the fact that both Illinois and Michigan have close proximity to Toronto's large labor pool, and that Arizona is adjacent to Mexico. For these states, knowledge of and easy access to skilled labor across the border, coupled with existing business relationships to customers and suppliers, increases local demand for H1B visas.

Most states with a ratio less than 1.50 are in the interior of the country. There are a few outliers, those that are coastal but have a low frequency of applications relative to employment: Oregon, Louisiana, Mississippi, South Carolina, and Maine. Three of these are in the Southeast region of the United States; Louisiana and Mississippi may still be suffering the aftereffects of Hurricane Katrina.

With U.S. policy focused on immigration and protectionism, this is sure to be a closely watched issue. It has certainly piqued the interest of the private sector—applications for 2008 reached their cap limit on the first day (April 2) that the U.S. Citizenship and Immigration Services began allowing submissions.

by Stephen Houdlette

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