New immigration rules could prevent our next Elon Musk

Silicon Valley’s highest echelon is filled with examples of successful people who have eschewed degrees in favor of entrepreneurship. It’s also filled with immigrants.

No one illustrates this better than Tesla and SpaceX CEO Elon Musk, who was born in South Africa. Musk did attain two bachelor’s degrees in the 1990s, one in economics and one in physics, but much of his relevant education came from his own experience. Musk taught himself both computer programming and rocketry. He dropped out of a Stanford PhD to found his first company.

Musk was able to continue working in the United States — where he would eventually become a citizen and household name, founding several billion dollar tech companies — thanks to a high-skill immigration visa called an H-1B. These days, Musk would have had a much harder time.

According to new data from US Citizenship and Immigration Services, some 52 percent of those who applied for next year’s 85,000 H-1B slots have a US master’s degree, more than double the rate it was in 2015. That’s been ticking up as immigrants and their US employers try to anticipate the Trump administration’s increasingly strict immigration policies that prioritize immigrants with graduate degrees.

Accordingly, master’s degree candidates are being selected at a higher rate. Some 63 percent of fiscal year 2020’s new H-1B recipients have master’s degrees, up from 56 percent the year before.

“Our efforts to improve the H-1B program are working and increasing the number of US advanced degree holders who are selected for the limited number of visas subject to the annual H-1B cap,” USCIS spokeswoman Jessica Collins told Recode. “Due to the new H-1B cap selection process, preliminary data shows that the number of petitions for US advanced degree holders selected toward the annual numerical allocations increased by more than 11 percent over last year.”

The idea behind the new regulation is that raising the education level will prevent immigrants — and the tech companies looking to employ those immigrants — from replacing American jobs with workers willing to fill them for less money, something that’s already prohibited in the H-1B rules.

However, the data shows there’s not much difference in pay between H-1B holders and US citizens. H-1B holders are usually paid the same or higher, if you account for age and occupation, according to the Government Accountability Office. A more recent study by salary information site Glassdoor backs up those findings.

Furthermore, the H-1B process is in itself expensive and time-consuming, so it’s not likely a money-saving mechanism. When an employer has a highly specialized job candidate, it files an H-1B application on that employee’s behalf. The application includes the employee’s exact duties and wages, which cannot be less than the prevailing wages for that job in that area. The process requires thousands of dollars in fees, can take up to six months, and is ultimately decided by computer-generated random selection.

The companies that have H-1B high approval ratings are some of the biggest, most innovative tech companies in the US. Amazon, Google, and Facebook last year received 99 percent of the H-1B visas they requested. These are companies that can afford to pay for the best talent, no matter where it’s from.

But US companies of all sizes are having a hard time finding enough tech talent to fill open positions, according to data from New American Economy, a bipartisan business research coalition. The organization has also found that an inadequate supply of H-1B workers in the American labor market has resulted in fewer jobs and lower wages for citizens and immigrants alike.

Notably, the number of high-skill immigrants allowed into the US annually hasn’t been updated since 2004, before internet companies dominated the US economy. Trump’s Buy American and Hire American is meant to “promote the proper functioning of the H-1B visa program,” but it has so far only made the process more complicated.

“By favoring individuals with master’s degrees, you risk favoring some industries over others,” said Sarah Pierce, a policy analyst at the Washington, DC-based think tank Migration Policy Institute.

The tech industry is particularly susceptible.

“Tech companies spend a lot of time looking at skill sets which may or may not be tied to a degree,” immigration attorney Dagmar Butte told Recode. “Usually they are experiential as opposed to being part of an advanced degree.”

According to a survey of 700 software engineers on Hired, a tech job platform, more than a third learned to code either on their own or through bootcamps. The rest took some sort of relevant college computer course, though it’s unlikely many of those resulted in grad degrees.

“For technical roles like software engineering, on-the-job experience and a lifetime commitment to learning are often the most important things,” Hired CEO Mehul Patel told Recode. “While having a background in computer science can be incredibly valuable, I think most employers would agree that technical talent will learn more during two years on the job than two years earning their master’s.”