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Everybody Needs STEM Talent

Evidence of the  shortage of Science, Technology, Engineering, and Mathematics (STEM) talent in the United States is plentiful. However, in an effort to stop immigration of high-skilled STEM workers, left wing advocates argue that there is no shortage. A new twist to their argument is to claim that STEM graduates do not always go into STEM fields and therefore are not in short supply. This reasoning falls apart rapidly. First, the U.S. Census Bureau definition of STEM graduates and workers, which is used to make this argument, includes psychology and social science majors, which are not what most people think of when considering STEM occupations. But second, it ignores the glaringly obvious point that in today’s technology-driven economy, all sectors and industries-not just those classified as STEM fields-have a growing need for STEM talent.

To further this flawed argument, the Economic Policy Institute (EPI) has recently launched a new website ostensibly designed to increase transparency into the H-1b and other visa programs, but in function serves to argue that the jobs that are being filled by guest-workers are jobs that American’s would otherwise fill. Unfortunately, the reasoning behind their anti-H-1b position is predicated on the belief a) that there is no skill shortage among American workers, b) that jobs filled by H-1b immigrants are low skilled, and c) that H-1b visa holders are low-wage substitutes for U.S. labor.

Providing support for these prevarications is where the new website comes in, providing statistics with little to no context and leaving readers to cherry-pick misleading data.

A recent article by Matthew Yglesias at Vox titled “New data reveals it’s not just high-tech companies using H-1B guest workers” fell for the bait. The lede refers to H-1b workers in Rhode Island, where CVS employs 314 H-1b workers, the largest H-1b hirer of in the state.  While I do credit the article for remaining fairly neutral and citing both sides of the ongoing debate, the tone is clear: ‘Why on earth are work visas meant to attract high-skilled labor going to a corner drugstore?’

But there are very good reasons why CVS needs high-skilled workers in Rhode Island. CVS has its global headquarters in Woonsocket, Rhode Island, and naturally has a need for workers with diverse skills, especially as CVS has begun to look internationally, acquiring a Brazilian chain of pharmacies last year. Indeed, the majority of the CVS’s H-1b visas are for pharmacists to help manage the nationwide network of pharmacies. CVS also has extensive need for programmers, data specialists, and operations managers. It is a prime example of a company that is indeed not thought of as a technology company demanding large quantities of STEM talent.

CVS is not alone. In today’s advanced world, the ubiquitous need for STEM skills transcends industries, with retailers, financial institutions, manufacturers, builders, educational institutions, and a host of other industries all clamoring for the same scarce resource. Banking giant JP Morgan employs more programmers than Google, plus over 16,000 engineers and 3,000 PhDs, according to CEO Jamie Dimon.

So why does CVS and other companies need to hire foreign talent? The simple truth that EPI does not want to concede is that we simply do not have enough skilled workers here at home. Engineers and computer scientists in the U.S. are at essentially full employment, with companies complaining of not being able to find enough workers. Scarcity has driven up the price for data scientists, computer specialists, and engineers, with the average wage rate growing 2.6 times faster than the average American worker. Moreover, there is essentially no structural unemployment among these high skilled workers. In fact, over 200,000 STEM job openings are currently unfilled, 42 percent of which require advanced STEM knowledge. And, contrary to the myth that STEM graduates don’t use their skills, 81 percent of STEM graduates have jobs related to their majors.

So what would happen if CVS and the rest of private American business were shut off from the supply of talent provided by H-1Bs? EPI theorizes that the tech labor shortage will create higher American wages for high-skilled jobs, incentivizing more students to pursue an education in these fields. There are two problems with this.  First, it takes time. Any adjustment that relies on student incentives would take years to see any sort of results. With the state of the American education system, it is unclear just how many more students we can steer into STEM fields, even with greater wage incentives.  Second, there is little evidence that students choose or do not choose to major in STEM degrees because the wages might be 10 percent higher or lower. As ITIF has shown, STEM is not like truck-driving or retail sales jobs where wage levels determine supply.

In short, long before wage incentives get more students to pursue STEM, CVS and others whose businesses rely on access to skilled workers will be forced to shift more work outside the nation. CVS has already moved one division to Ireland. EPI should stop and consider the repercussions to Rhode Island’s economy if it loses jobs at its largest employer before blindly advocating for restricted immigration.

Of course, proposed reforms to H-1b should be carefully considered to ensure that the program accomplishes its objective of bringing in STEM talent and not simply allowing companies to undercut domestic workers. However, all indications point to this use of H-1bs to be the rare exception, rather than the rule. While strengthening the program through smart reforms is valid, vilifying all H-1b filers and cutting employers off from foreign talent is not.

A firm relocating and investing in the United States, or smart people choosing the United States as a desired work location is a huge national boon that we should be taking full advantage of. Instead, immigration barriers have constructed a ‘brain block’ that fails to capitalize on the appeal of the U.S. to foreigners. Engineering students graduating from U.S. universities are being denied opportunities to stay and work. These students would not ‘steal’ jobs from American citizens, but instead enable opportunities here at home.

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