Indian workers get less wage premium in US than English-speaking immigrants: Study | World News - Hindustan Times
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Indian workers get less wage premium in US than English-speaking immigrants: Study

By | Edited by Kunal Gaurav, Hindustan Times, New Delhi
Apr 02, 2021 12:01 AM IST

According to the study, American companies hire foreign students due to skills shortage and not because they are a source of cheap labour.

American companies hire foreign students due to skills shortage and not because they are a source of cheap labour, according to a new working paper by the Center for Growth and Opportunity, a university-based academic research centre in Utah. The previous administration had introduced a series of changes in visa policy, including a temporary ban on employment-based nonimmigrant visas, intended to prevent US employers from hiring low-cost foreign workers and push the so-called protectionist policy.

H-1B visa, B-1 and B-2 visas, and F-1 visa are some prominent non-immigrant visas.(AFP Representational picture)
H-1B visa, B-1 and B-2 visas, and F-1 visa are some prominent non-immigrant visas.(AFP Representational picture)

During the last days of the Trump administration, the then secretary of labour Eugene Scalia had said that the administration was taking those steps to strengthen “wage protections, address abuses in visa programs, and protect American workers from being undercut by cheaper foreign labour.”

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US President Joe Biden on Thursday let the ban on foreign workers visa, including H-1B, lapse amid ongoing policy debates over the use of work visas by American companies to hire foreign professionals. H-1B visa, B-1 and B-2 visas, and F-1 visa are some prominent non-immigrant visas.

H1-B visa allows US employers to temporarily hire foreign workers in speciality occupations that require theoretical or technical expertise. Indian IT professionals looking for onshore opportunities heavily depend on H-1B.

Omid Bagheri, assistant professor of Economics at the Kent State University at Salem (Oregon) and author of the study, examined the wage gap between college graduate immigrants working in the US on a work visa and their native counterparts. Bagheri suggested that the demand for skilled workers exceeds the supply of skilled workers in the United States and companies pay “significant premiums to hire foreign workers.”

The study estimated that on average, skilled immigrants with temporary work visas have a wage premium of 29.5% compared to similar natives. However, the wage premium, according to the study, is less for individuals originally from countries like India and Iran and more for English-speaking immigrants. The findings also showed a significant decline in the wage premium from 2010 to 2017.

"The immigrants’ wage premium that we found in this study might suggest that the demand for these workers outweighs the supply," the author noted.

According to the report, easing immigration rules for foreign workers may be very helpful to the US economy and even prevent companies from moving jobs overseas. It further suggested that the US needs to encourage native-born workers to pursue training and education that meets the needs of its labour market.

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