California Seeks Immigration Reform to Spur Economic Growth

Leaders in business and government say that caps on visas are chasing away workers who are essential to the economic development of California—and the nation.

California is facing a significant shortage of skilled professionals, a problem that many believe will limit the state’s economic growth in the coming decades. Researchers and leaders in the public and private sectors say the demand for knowledge-based employees already exceeds the supply, and that this gap will only widen over time.

The state’s workforce has long had an increasingly high percentage of skilled employees in the areas of math, science, and engineering. California ranks 12th in the nation in the percentage of adults who are college graduates, according to the Public Policy Institute of California (PPIC), a private, nonprofit research organization. Its businesses have also relied heavily on foreign-born professionals. With these workers, Silicon Valley companies have become global leaders, and California has built a thriving knowledge-based economy that helps to fuel the nation’s overall economic growth.

But a shortage of highly skilled workers poses a problem for the state, as it does for other parts of the nation. According to PPIC’s report, “California 2025: Taking on the Future,” 33% of California’s working-age adults will have a college degree in 2020, but 39% of jobs in the state will need college graduates.


Population (2006): 36,457,549

Largest Cities (2006): Los Angeles, 3,849,378; San Diego, 1,256,951; San Jose, 929,936; San Francisco, 744,041; Long Beach, 472,494

Targeted Industries: Health care, medical technologies, high technology, logistics, financial services, advanced manufacturing,
nanotechnology, aerospace,
environmental energy, and agricultural technology

Key Incentives: Pollution Control Financing, Small Business Loan Guarantee, Local Agency Military Base Recovery Area, Net Operating Loss Carryover

Projections show that by 2025, some 4.5 million new jobs will be created in California. On the whole, two out of every five jobs in the state will require a college graduate, up from less than one third in 2005. It is unlikely that college-educated workers from other states will be able to fill this need, according to the PPIC report, because the number of these workers moving to California would need to increase 75% in 20 years, from 4.78 million in 2005 to 8.33 million in 2025.

For both government and business leaders, the answer to these problems lies not just in improving the education pipeline, but in federal immigration reform, which they say must be changed to allow more foreign-born, skilled workers to live in the United States. California Governor Arnold Schwarzenegger and other state officials were disappointed last year when Congress rejected an immigration reform package that would have increased the annual cap on temporary, or H-1B visas, while also reforming the green card application process. The bill was defeated in June following a heated political debate over what to do with the estimated 12 million illegal immigrants in the country.

Gov. Schwarzenegger says the government must increase the limits on H-1B visas, which are capped at 65,000 per year, in order to better match the nation’s workforce needs. He cites U.S. Department of Labor projections that between 2004 and 2014 nearly one million new jobs will be created in math and computer sciences, the fastest-growing professional sectors of the California economy.

U.S. companies often recruit highly skilled workers through the H-1B visa program, which is available to individuals whose services are sought by an employer in a specialty occupation. The worker must have a bachelor’s degree and the employer must attest to the Department of Labor that the person will receive a salary commensurate with the prevailing wage of U.S. workers in the same category. In many cases, the visas, which are generally good for six years, go to foreign-born individuals with degrees from U.S. universities.

But the H-1B visa cap of 65,000 stops many would-be workers from coming to, or remaining in, America. For fiscal year 2007, the annual quota was exhausted in less than two months. Last April, more than 133,000 H-1B visa applications were submitted on the first day of availability, resulting in a lottery system to determine who would receive them. There has also been a sustained backlog of employment-based green cards that allow individuals to remain in the U.S. permanently. As a result, many professionals wait more than five years to receive a green card. The length of the process prompts many of these workers to give up and return to their native countries.

Meanwhile, the U.S. as a whole is dealing with a shrinking labor pool, according to the U.S. Chamber of Commerce. This is due in part to the declining fertility rate among women in the United States, which is expected to drop to 1.91 children per woman, and the anticipated retirements of 77 million baby boomers by 2010.

Many companies in California (and Silicon Valley in particular) have become active in the push to allow more foreign-born workers to remain. Google, Intel, Microsoft, Oracle, Hewlett-Packard, and Sun Microsystems are among the businesses in California that have joined the lobbying group Compete America, advocating for immigration reform. The group notes that foreign nations are making efforts to attract international employees with a program that stands in stark contrast to the “broken” U.S. system. The European Union recently introduced a “Blue Card” temporary work visa for highly educated professionals, and will target foreign-born graduates of leading U.S. universities and offer a streamlined application process.

Google, which has immigrants from countries like Canada, Iran, and Switzerland leading the company’s business operations, global marketing, global business development, and data infrastructure operations, has urged Congress to pass immigration reform. Laszlo Bock, vice president of people operations at Google, testified before the House Judiciary Subcommittee on Immigration last year about the practical impact that the U.S. immigration system has on the firm, which is headquartered in Mountain View, CA. Bock testified that, due to limits on the number of H-1B visas, Google is regularly unable to pursue highly qualified candidates. Over the last year, the cap on H-1B visas prevented more than 70 Google candidates from being hired, according to Bock.

In December, the Bay Area Council, a business-sponsored, public policy advocacy organization, wrote to House Speaker Nancy Pelosi that the failure to revamp immigration laws is inhibiting key Bay Area industries including agriculture, high technology, and healthcare from recruiting and retaining essential workers needed to advance the region’s economic growth. The council states that if its nine-county region is to continue to be a global leader in innovation, immediate reform to the H-1B program is needed.

According to the PPIC, California must “redouble its efforts” to open its colleges and universities to more residents and raise the graduation rates. This, along with the possible passage of immigration reform, is the state’s best chance of easing the gulf b
etween workers and jobs in the future.

“Inevitably, if education levels in the state don’t catch up, the economy will adjust in one way or another,” says Deborah Reed, PPIC’s director of research and co-author of the institute’s report, “California 2025.” “The workforce of 2025 will be skilled, but not be as skilled, and the economy not as productive or high-income, as current projections imply.”