Is Immigration Still The Third Rail Of Politics?

By: Kathryn S. Wylde Issue: Education & Workforce Development Section: Jewel Of Collaboration

The Business Impact of H-1B Visas

Immigration The challenges facing the incoming Obama Administration – global economic turmoil, a war on two fronts, and a laundry list of campaign promises to fulfill, from universal healthcare to climate change – are formidable. Waiting in the wings behind some of the more obvious and immediate crises is the immigration debate, which in recent years may have even replaced Social Security reform as the “third rail” of politics.

For most business groups, the logic of addressing immigration is irrefutable. Rafts of academic studies show significant immigrant contributions to economic output. Just one example: a new report from the Small Business Administration shows that immigrants are nearly thirty percent more likely to start a business than are non-immigrants. Immigrants are helping to expand the ranks of the middle class, and in some localities even mitigating native-born population decline. One economist estimates that “roughly nine in ten working Americans gain from immigration.”

Yet both prejudices and objections remain. Social conservatives remain deeply opposed to any path to citizenship (often pilloried as “amnesty”) for the estimated 12 – 20 million undocumented foreigners living in the U.S. today, and favor stricter border enforcement before any plans are implemented to expand immigration. And there are concerns about the impact of immigrants on the wages of native-born workers at the low end of the wage scale, especially during a time of economic contraction.

The Business Impact High-Skilled Workers

In Washington DC, business lobbies concerned with immigration have focused largely on the need for agricultural guest workers at the low end of the market and on Silicon Valley software engineers at the high end. As the H-1B became the visa of choice for software engineers, it even became known as the “Microsoft problem” because Bill Gates has been so ardent a supporter of increasing the number of H-1B visas awarded each year. However, the immigration issue is important to many other American businesses. Access to professional-worker H-1B visas (or

L-1 visas for intra-company transfers) is cited as the most serious challenge for American companies across all sectors and is most troubling to small and mid-size businesses that are attempting to serve global markets from a U.S.-based operation. Currently, just 65,000 H-1B visas are allocated annually, and for the past few years all of these have been exhausted on the first day that applications are considered.

Winning the Global Race for Talent, a report released by the Partnership for New York City in March of 2008, documented that H-1B visas are used across the nation by diverse sectors, including financial services, professional services, healthcare and universities as well as IT. In terms of the number of H-1B visas granted, the New York Tri-State region had the highest concentration in the nation, with just over 21%. California used 18%, but Texas, Illinois, Florida and Virginia were all significant users of these visas as well.

Far from being strictly an issue of concern for big companies, the report found that only 11% of the H-1B visas granted in New York went to employees of Fortune 1000 companies. The remaining 89% were allocated among small and medium-sized businesses. Companies across the spectrum are looking to foreign-born workers to connect them to the global economy.

The Business Impact Agriculture, Construction & Hospitality

Issue 3 Is Immigration Still The Third Rail Of Politics pic002 Farm economies in many states from California and Texas to Oklahoma and Colorado are also highly dependent on immigrant workers. Estimates vary from 800,000 farm workers to over 1 million in any given year, but a recent study by the Department of Labor concluded that some 80% are migrant workers.

Statistics released by the Pew Hispanic Center in 2007 suggest that nearly 2.9 million of the 11.8 million workers in the construction industry are Hispanic and that 2.2 million were foreign-born.

A similar picture emerges in the hospitality and restaurant industry, with both the American Hotel & Lodging Association and the National Restaurant Association acting as strong proponents for reform.

Very few industries, and even fewer States, could manage without a significant immigrant presence within the economy. The political challenge that the U.S. needs to address, however, is the fear that immigrants will simply displace American workers, often at a lower wage. This obstacle can only be tackled by matching reform of immigration with simultaneous improvement to the domestic systems of education and workforce development.

The Political Position Following The 2008 Election

Recently, the political tide of the immigration debate has shown signs of shifting. The pro-immigration group America’s Voice tracked races in both the House and Senate, and found that in 20 House races where candidates drew sharp distinctions on immigration, hard-line “enforcement only” advocates lost in eighteen. They found five Senate races in which anti-immigrant candidates lost.

The founder of the Immigration Reform Caucus (which opposes more open immigration policies), Rep. Tom Tancredo (R) of Colorado, is retiring, and nine of the House Republicans who were members of that Caucus lost their seats on November 4.

But even with a pro-immigrant Democrat in the White House, the path for a comprehensive immigration bill is uncertain.

Getting it Done

Efforts to pass comprehensive immigration reform in Congress failed in both 2006 and 2007, and any future attempt will doubtless represent a compromise option for the multiple interest groups with a stake in the outcome. Conservatives (including so-called “Blue Dog” Democrats) are likely to continue to oppose any amnesty, arguing that it rewards illegal aliens for ignoring U.S. immigration laws. On the other side of the debate, organized labor and many Hispanic groups have objections to a guest worker program on the basis that it could create an underclass. And conversations with members of Congress suggest that piecemeal fixes for special interest groups will fall foul of the Congressional Hispanic Caucus, which favors a comprehensive approach.

Finding a solution is becoming an imperative for businesses and business groups across the nation. The immigration debate has become directly linked with two other priorities, education and workforce development.

The immigration debate has become directly linked with two other priorities, education and workforce development. Comments one bank, “We are a company that invests significant amounts of money in education and training of current and future U.S. workers. However, these efforts are insufficient to meet our company’s immediate needs.” And a mid-sized design firm adds, “Current U.S. policy toward… foreign labor poses a significant obstacle to the expansion of our U.S. operations [given] the global mobility of the kind of talent we need, and the expected shortage of knowledge workers in the U.S. in the decades ahead.”

Connecting Businesses and Policymakers

Lawmakers have suggested that one of the reasons for the failure of the 2007 bill was that the business voice was missing from the debate. Despite powerful advocacy from Washington-based groups including the U.S. Chamber of Commerce and the Business Roundtable, Senators did not hear from their local constituents. The Lou Dobbs perspective, on the other hand, was very much in evidence, with calls flooding in opposing the bill.

In an effort to begin to bridge that divide, the Partnership for New York City co-hosted a meeting in July 2008 with the New York Immigration Coalition and invited members of the New York Congressional Delegation to attend, together with a group of CEOs. The exchange between business leaders and elected officials was frank and occasionally heated. But the takeaway was that business groups should look to find common ground with immigrant advocacy groups, form unusual coalitions and engage their elected representatives proactively, before this issue next comes to a vote.

Grassroots advocacy will be critical in order to move this issue forward. Interest is already percolating among business groups in Chicago, Houston and Los Angeles.

This may be an opportunity for a network of state and local business organizations to make a significant impact on federal policy,

This may be an opportunity for a network of state and local business organizations to make a significant impact on federal policy, especially with the appointment of Governor Janet Napolitano to head Homeland Security. The goal would be enacting a comprehensive reform program that provides a path to citizenship for unauthorized foreign residents who meet certain criteria and a significant increase in the availability of visas and green cards for students and workers, consistent with the unmet needs of the domestic labor market. It would also dovetail with expanded investment by the U.S. in education and workforce development programs that focus on unemployed and under-skilled populations within this country.

Immigrants are making a powerful and positive mark on our economy, from Chief Executives – like Robert Kelly of Bank of New York/Mellon, Cristobal Conde of Sungard, and Alain Belda of Alcoa – through skilled middle management to blue collar workers in our hotels, fields, and hospitals. It’s now time for businesses around the nation to acknowledge that contribution and work actively with U.S. policy-makers to fix our broken immigration system.

Kathryn S. Wylde is President & CEO of the Partnership for New York City, a non-profit organization of the City’s business leaders dedicated to maintaining New York City as a center of world commerce, finance and innovation. More information is available on the Partnership’s website at