Foreign IT professionals in U.S. get paid more than American professionals

Published 14 May 2010

Foreign IT professionals — holders of H-1B visas — working in the United States do not push down the pay of U.S.-born IT professionals; the reason: foreign-born professionals get paid more, not less, than their American counterparts; the damage too-low caps on H1-B professional visas cause American-born IT professionals comes from the fact that U.S. companies prefer to relocate offshore where they can hire the foreigners they want without paying the H-1B induced premium

Foreign IT professionals working in the United States on H-1B visas do not cause a reduction in pay for Americans, according to a new study — because they actually get paid more than U.S. citizens with similar qualifications, not less.

According to a survey of “more than 50,000 IT professionals in the United States,” analyzed by Sunil Mithas and Henry Lucas of the University of Maryland, H-1B workers “earn a salary premium” compared to Americans with similar “human capital attributes” — for example, qualifications and experience. The study covered the period 2000-5.

Lewis Page writes that the two business professors say that the cap on numbers of H-1B visas causes “supply shocks” in the U.S. IT employment market, with lower, fully utilized caps pushing up the premium paid by employers for foreign workers.

They argue for larger numbers of visas to be issued, saying that too-low caps motivate companies to relocate offshore where they can hire the foreigners they want without paying the H-1B induced premium.

The two professors contend that perceived damage to Americans’ career and earnings prospects from the numbers of foreigners allowed so far cannot be real. They say that their research “provides indirect evidence that visa and immigration policies so far have not had any adverse impact on the wages of American IT professionals due to any relatively lower compensation of foreign IT professionals.”

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-Read more in Sunil Mithas and Henry C. Lucas Jr., “Are Foreign IT Workers Cheaper? U.S. Visa Policies and Compensation of Information Technology Professionals,” Management Science 56, no. 5 (May 2010): 745-65 (DOI: 10.1287/mnsc.1100.1149) (sub. req.)