On June 22, the Trump administration announced expansive new bans on worker visas—in addition to an extension of restrictions on new green cards–under the premise of protecting American jobs and spurring economic recovery in the United States. But the announcement—which is only one in the Trump administration’s ongoing efforts to block legal immigration, beginning with the “Buy American Hire American” executive order in 2017—is likely to have precisely the opposite effect: sending jobs, innovation, investment, and economic growth abroad instead.
1. These actions will motivate companies to move jobs out of the U.S.
Prominent American companies like Duolingo and Boston Consulting Group (BCG) have already announced that, rather than rescinding offers to those affected by the new visa rules, they will simply move those jobs to Canada or elsewhere. And they are not outliers, nor is this without precedent. In a recent paper, I show that U.S. multinational companies have already offshored tens of thousands of jobs and opened new foreign affiliates in response to H-1B visa restrictions much less severe than those being implemented now. The countries that benefited the most at the time—and are likely to benefit once again now—were China, India, and Canada. I find that U.S. multinational companies particularly increased employment in those three locations in response to the growing constraints of the H-1B visa cap, even as U.S.-based employment at the same firms remained flat. That response is likely to be amplified under the much more restrictive regime being put into place now, particularly as remote work becomes more common. In other words, rather than going to Americans, those jobs are likely to go to another country.
2. Entrepreneurial immigrants will start businesses outside of the U.S.
Nearly half of all Fortune 500 companies were founded by immigrants or their children. A quarter of all new firms are created by immigrants.
By Britta Glennon for BROOKINGS
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