Broad STEM Grad Green Card Exemptions Would Distort Labor Market
Broad-based exemptions would result in foreign STEM grads who substitute rather than complement American workers
May 25, 2012
There are a number of proposals to staple a green card to a foreign student's diploma. Some proposals have narrowly targeted only those foreign students who earn a Ph.D., while others have proposed a much more expansive benefit to include any advanced degree (master of science, master of arts, and J.D.) and include non-STEM students such as MBAs. It's important to note that a green card is very valuable economically to the individual receiving it, and such proposals will have a significant impact on the workforce and higher education.
The key issue is designing the criteria to select which type of graduate gets a green card and who doesn't. Those criteria will significantly shape the impacts on our workforce and unemployment rate.
A selective set of criteria, such as limiting it to Ph.D.'s-only, is likely to have a small impact on the broader economy because the absolute number of Ph.D.'s is very small and universities don't find producing Ph.D.'s a lucrative business. It is unlikely that universities will find it profitable enough to create large-scale Ph.D. programs specifically tailored to paying foreign students. And foreign students will find the barrier to entry, earning a Ph.D., a fairly long and difficult and expensive proposition. Further, most foreign students graduating with a Ph.D. already have a variety of immigration channels to stay permanently. Michael Finn from Oak Ridge Labs has found that the stay rates for foreign student Ph.D.'s has remained at a very high level. So, one should ask whether the problem is real or imagined. In sum, untapped demand by foreign students is likely small and universities are unlikely to expand a fairly unattractive market. Of course, some labor markets, such as faculty positions in universities, and post-doctoral researchers, may be affected more significantly.
More expansive criteria, such as including master's degrees, as is the case in many proposals, is likely to induce a large influx of new foreign students and create major new markets for universities. Institutions would create and expand degree programs that are specifically tailored to foreign students interested in staying permanently. Master's programs are very short in duration, as short as 12 months, and fairly inexpensive to run. Further, many foreign students will see this as a brief and inexpensive path toward a green card. Some universities will see this as an opportunity of selling landed status rather than as education.
Some have argued that one way to avoid diploma mills is to limit the list of approved universities to very selective criteria. This is unlikely to be effective because it misunderstands both the business models of universities and the political-economy in which they sit. Universities left out will find ways to get politicians to include them.
All of the STEM green card proposals would create a clear signal to future markets that obtaining a green card is a matter of getting such a degree. Given the current labor markets, high unemployment levels for STEM workers, a broad-based exemption would distort the normal functioning of the U.S. labor and education markets.
To avoid such an outcome, the policies should use a selective criteria and adopt an effective and efficient labor market test to ensure there's a real need for those specific workers. When those foreign students and workers have truly complementary skills, and there's a need for them in the American labor market, then they help both the country and American students and workers. Having a broad-based exemption, as is proposed in nearly all of these bills, would induce the markets to supply foreign students and workers who substitute for, rather than complement, American STEM students and workers.