Just over two years ago, as the world was confronting the COVID-19 pandemic, the United States hit a record unemployment rate of 14.7 percent. Since then, the U.S. labor market rebounded as everyday life has mostly returned to normal. But digging into the latest unemployment data reveals a thought-provoking trend that should have sweeping implications for U.S. immigration policy. In short, many high-tech, high-skilled industries rebounded from historic unemployment so quickly that they now face labor shortages.
According to the Bureau of Labor Statistics April report, the unemployment rates for workers in high-tech industries are far lower than the national average of 3.3 percent. Telecommunications industries reported only 7,000 unemployed individuals for an unemployment rate of 1.0 percent. The picture is even starker for high-tech manufacturing. Computer and electronic products manufacturers—including semiconductor manufacturers—reported only 6,000 unemployed for an unemployment rate of 0.7 percent. Such low unemployment rates compared to the national average indicate incessant demand for workers.
Perhaps unsurprisingly, high-tech industries have also been some of the fastest to rebound from record-breaking unemployment. Between April 2021 and April 2022, the national unemployment rate dropped 2.4 percent. Yet, over that same period, the unemployment rate for telecommunications industries dropped by 3.3 percent. Computer and electronics manufacturing nearly doubled the national trend, dropping over 4.5 percent.
Meanwhile, Congress is actively negotiating bipartisan legislation geared toward boosting U.S. global competitiveness in high-tech industries. Just last week, the Senate and House delegations held the first meeting of the conference committee on the United States Innovation and Competition Act (USICA). This broad sweeping legislation could include as much as $52 billion to spur domestic investment in semiconductor manufacturing, $45 billion for supply chain resiliency, and hundreds of millions for telecommunications workforce development.
Another important component of the package is heavy investments in science, technology, engineering, or mathematics (STEM) higher education, and research and development (R&D). With the United States falling behind in STEM education, it is crucial that Congress prioritize investments that boost graduation rates with an eye toward high-tech workforce development. Unfortunately, such long-term investments will do little to address the current workforce challenges faced by high-tech industries.
At least in the short term, the United States needs foreign workers to meet the growing demand for high-skilled labor. As the House Republican 2020 China Task Force Report noted, nearly 60 percent of PhD holders in STEM fields are foreign-born.
Semiconductor manufacturing in particular—the centerpiece of USICA—desperately requires high-skilled immigrant labor. One study from the Center for Security and Emerging Technology found that USICA investments would result in 19 percent employment growth for high-skilled engineering talent. The report further notes that filling this gap will require significant amounts of new “experienced, high-skilled foreign talent.” According to Jeremy Neufeld of the Institute for Progress and George Mason University:
In 2021, Morris Chang, the founder of TSMC, identified talent shortages as the major challenge to opening fabs in the United States instead of Taiwan, which has a deep pool of extremely qualified talent devoted to the chip sector. Chang reiterated the point in April, explaining that “Taiwan has certain competitive strengths in semiconductor manufacturing. Those strengths are … almost entirely people related—talent related” and that the “major limitation” to ramping up U.S. production is “a lack of manufacturing talent.” Federal spending can address some of the financial concerns for a company deciding whether to open a facility in East Asia or the United States, but only immigration policy has the potential to unlock the hard constraints on talent. Zero-sum competition for talent among TSMC, Intel and Samsung is already slowing existing plans for growing the U.S. industry. Such delays will only be exacerbated by new fabs unless the talent pool can be broadened.
The original, House-passed version of USICA included a provision that would help fill this gap. The provision would exempt individuals with PhDs in STEM fields and master’s degree holders in critical industries from the existing caps on green cards. This provision did not make it into the Senate-passed version of USICA. Now that the two chambers are engaged in conference negotiations over the final shape of USICA, lawmakers could champion this provision to ensure its inclusion. If this provision does not make it into the final package, then future efforts at immigration reform should include similar, low-hanging changes to immigration law.
There is near-universal agreement that the U.S. immigration system is broken. The House Republican China Task Force Report agrees that “[the] U.S. immigration system is a generous one that must be updated to meet the needs of the modern economy.” Regardless of one's feelings about federally subsidizing high-tech industries like semiconductor manufacturing, it is clear that any such investments would be severely hamstrung without corresponding increases in visas for foreign talent. If the U.S. is to maintain its global competitive edge, then Congress must address immigration.