incoming domestic workers or to foreign workers—is that they may well influence the wages that must be paid to others in the firm.)

However, if the H-1B worker were not available, the employer would have to seek a domestic worker. Under tight labor market conditions, the employer might well have to offer a domestic worker wages or hours or conditions of employment that are better than those for others in the company. If so, the effect of the H1-B program is not necessarily to depress wages and working conditions but rather to keep them from rising as rapidly as they would if the program did not exist.

Unfortunately, the magnitude of such an effect is hard to estimate with confidence. In a study of the economic impact of immigrants, the National Research Council used an empirically based elasticity of demand for labor of about 0.3, suggesting that a 10 percent increase in the size of the labor force would result in the wage of competing workers being reduced by about 3 percent below what it would have been in the absence of that labor pool increase.³⁶ However, this estimate is based primarily on studies that have focused on all foreign-born individuals and not only “highly skilled” foreign workers, such as those with H-1B visas. As such, the committee has not found sufficient evidence on the magnitude of wage and employment effects to make a judgment about the effects of the program on domestic IT workers.

This discussion also highlights the fact that the committee has not found an analytical basis on which to determine the optimal number of H-1B visas. Without such a basis, decisions to reduce or increase the cap on H-1B visas are fundamentally political, and outcomes in such a process depend primarily on political balances of power. That said, the committee notes that an increased number of H-1B visas will likely result in future additional pressure on the already beleaguered permanent immigration program unless Congress also adjusts the various numerical limits on permanent residents.

Table 5.2 summarizes the various pros and cons of changing the level of H-1B visas.

U.S. firms can use foreign IT workers in two ways: they can be brought to the United States (in which case other nations can compete for their services), or they can be used in their home nations.

Front Matter (R1-R28)

Executive Summary (1-20)

The IT Sector: Context and Character (21-43)

Understanding the IT Workforce (44-91)

Characterizing the Workforce Problem (92-132)

Older IT Workers and Possible Age-Related Discrimination (133-151)

Foreign Workers in the IT Workforce (152-187)

Making More Effective Use of the Existing IT Workforce (188-219)

Longer-Term Strategies for Increasing the Supply of Qualified Labor: Training and Education (220-272)

Sunthesis, Principles, and Recommendations (273-314)

Appendix A: Biotechnology (315-330)

Appendix B: Estimating the Size of the IT Workforce (331-343)

Appendix C: Study Committee Biographies (344-350)

Appendix D: Briefers to the Committee (351-356)

Index (357-370)