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– April 8, 2014

Like most immigration issues, the debate over H1B visas is politically contentious. While industry calls for more visas, labor argues that H1B workers are taking jobs Americans can fill. Efforts in Congress stalled in 2013, and there seems little chance for a consensus any time soon.

But industry leaders contend that real economic issues remain. So behind the debate over H1B visas lies a more pressing question: Where will this country find the talent it needs to remain competitive and drive economic growth?

In the absence of Congressional action on immigration policy, this AIER Issue Brief seeks to identify solutions that businesses themselves can employ to address their labor shortage problems. This brief examines the labor market of high-skilled workers and the distribution within it of American and H1B visa holders, and then it identifies a domestic source of high-skilled talent that has been hiding in plain sight.

Computer technology and finance lead the visa chase           

The H1B visa is intended to allow high-skilled workers to come to the U.S. for three years with a three-year extension. While there is currently an annual cap of 65,000 new worker visas that can be issued, each year companies’ requests often far exceed this cap within days after the application opens on April 1. (As of April 7, 2014, 172,500 H1B petitions were received by U.S. Citizenship and Immigration Services.) 

In 2013 businesses made 909,465 certified requests for H1B visas. Table 1 on the left shows that the top 10 demanded H1B occupations were in either computer technology or finance, representing 77 percent of the total, or 700,000. The rest were in fields that ranged from medical professionals and scientists to teachers and business administration analysts.

Computer technology jobs, including computer programmers and software developers, accounted for 647,653, or 71 percent of all visas requested. Accountants, auditors, and financial and management analysts accounted for 53,433, or about 6 percent of all visas requested.

Data from the U.S. Census allow an analysis of the American and foreign-born workforce in these top 10 jobs. However, the information on H1B visa holders is incomplete. So it was necessary to use a proxy measure. To estimate the number and characteristics of high-skilled H1B workers, the analysis looks at workers who are both foreign-born and non-U.S. citizens employed in the selected occupations. While the proxy may overstate slightly the number of H1B visa holders in these top 10 occupations, it presents an accurate depiction of their demographic characteristics.

The results, based on 2010-2012 data (the most current Census data available), are shown in Table 2, left. They show that the workforce of HIB visa-demanded jobs is almost evenly split between computer technology, with 2.9 million, and finance, with 2.7 million.

Despite their similar sizes, requests for H1B visas for computer technology jobs in 2012 were 12 times that of finance jobs. In fact, in one year, H1B visa requests from the computer technology industry equaled one-fifth of its entire high-skilled workforce.

Firms in the finance sector, in contrast, sought to fill a relatively small percentage of jobs, a mere 2 percent, with H1B visa holders. Their skilled workforce needs were being more adequately filled by U.S. workers. As shown in Table 3 on the left, the high-skilled finance jobs are roughly evenly split by gender, with 55 percent of jobs held by females. Computer technology jobs, on the other hand, are only 26 percent female.

Computer Technology’s Gender Gap

In both computer technology and finance, there is a high level of educational attainment. In finance, where there is no gender disparity in distribution, there are gender differences in education. In those occupations, as Chart 1 shows, 91 percent of H1B males working in finance have a college degree or higher. Among U.S. citizen males, 85 percent are highly educated. 84 percent of H1B females hold a college degree or higher, compared to 69 percent of U.S. citizen females.

In computer technology, there are less educational differences between men and women but a wide gender disparity. Though their absolute numbers in the field are smaller than that of males, as Chart 2 shows, American males and females have about the same levels of higher education. 68 percent of American males have their college degrees or higher, compared to 67 percent of American females. H1B males and females tend to have high levels of educational attainment, but also are closely matched: 94 percent of H1B females have a college degree or higher, compared to 93 percent of H1B males.

Comparing across sectors, U.S. citizen males in finance have higher shares of high educational attainment than their counterparts in computer technology. The proportion of U.S. citizen males in computer technology occupations with a college degree or higher is essentially equal to that of U.S. citizen females in finance with a college degree or higher.

The Path Not Taken

These data show that while the number of high-skilled workers in computer technology and finance occupations in the U.S. is the same, the demand to import H1B workers is far greater in the computer technology industry. They also show that finance occupations are evenly divided between females and males, while computer technology jobs are dominated by males. Finally they reveal that the computer technology industry has wide gender disparity despite almost equal levels of educational attainment among the U.S. citizen workforce.

Given the wide gender disparity, it is not surprising that the computer technology industry has such a huge demand for H1B labor. But given the almost equal level of educational attainment by U.S. women compared to U.S. men, these findings also highlight the opportunity for industries to intensify their efforts at increasing the number of women seeking computer technology jobs. If business competitiveness is put at risk by a lack of high-skilled computer technology workers, it behooves the industry to find ways to identify and eliminate the barriers to women participating in their high-skilled jobs.

Appendix: Methodology Note

To analyze the demographic makeup of the top 10 demanded H1B visa occupations, AIER used a three-year aggregate sample of public use micro-data from the 2010-2012 American Community Survey from the U.S. Census.

The three-year dataset is a 3-in-100 random sample of the population. It contains all households and persons from the 1 percent samples for the years 2010, 2011, and 2012, totaling 3 percent of the population. By aggregating years, these micro-data allow us to look at representative and generalizable trends across high-skilled occupations.

To make a comparison of American workers and H1B visa holders, it was necessary to develop a proxy measurement for nativity and citizenship status. The American Community Survey does not ask respondents about legal status, only about nativity and citizenship. AIER first constructed a new variable: Those who answered that they were born in the United States and U.S. citizens, born abroad of U.S. citizen-parents, or were born abroad and had become naturalized citizens were recoded as “U.S. Citizen.” Those who answered they were born outside the United States and were not U.S. citizens were recoded as “H1B.”

This proxy for H1B holders, while certainly not exact, did result in comparable total shares of H1B workers in these fields. However, it is important to note that some of these foreign-born workers could be on a student visa, a visitor’s visa, or could be unauthorized immigrants, rather than H1B visa holders.

Occupation was the second main variable analyzed. The top 10 H1B occupations for the most part were all coded directly the same in the U.S. census. The only difference was that the American Community Survey collapses “Software Developers, Applications” and “Software Developers, Systems Software” into one occupation code. Thus, all reports of the top 10 occupations in the brief are really the top nine occupations as coded by the U.S. census.

Next, AIER combined occupation codes into two categories: financial occupations (totaling accountants and auditors, management analysts, and financial analysts); and computer occupations (totaling all remaining occupations). The report uses the terms “high-skilled occupations” and “H1B occupations” interchangeably.

Following this recoding of these two main independent variables, AIER conducted descriptive analyses of the following independent variables: sex, age, and educational attainment (recoded into less than a high school degree, high school degree, some college, college degree, and more than college).