Dive Brief:
- Firms that hire high-skilled workers from outside of the United States through an H-1B visa are more likely to have high product reallocation rates, according to a new study by University of California by San Diego Assistant Professors Gaurav Khanna and Munseob Lee. As the study shows, increases in product reallocation — which, in this study, is defined as "the entry of new products and the exit of outdated products" — are associated with high amounts of revenue growth.
- Khannah's and Lee's research extends from 2006 to 2016, a period that includes the Great Recession of 2008-2010. Businesses that had hired H-1B workers entered the recession with higher reallocation rates than their non-H-1B counterparts. The recession did not damage these businesses as much, and they also recovered their pre-recession reallocation rates by 2015.
- Khanna and Lee said they chose to analyze product reallocation over patents — a marker commonly used in previous research — as an indicator of innovation because it "captures incremental innovations" that sometimes go unpatented.
Dive Insight:
As the talent market continues to contract and the skills gap proceeds to widen, businesses may need to look outside the United States for highly-skilled workers. It's no simple choice, however, to file for those elusive H-1B visas, as growing demand for the visas pressure supply and changes to the H-1B program continue to be floated by the executive branch, including increased scrutiny of applications.
Procuring H-1B visas for foreign employees can create a huge set of complex tasks for employers. An employer must submit a Labor Condition Application form to attest that no qualified American workers were available for the position and that the foreign worker will receive appropriate payment.
Then the employer files a Petition for a Nonimmigrant Worker, along with the supporting documents and required fees. Those steps will only qualify an employer for the lottery. If the application is selected and approved, the entire process could wrack up thousands of dollars in expenses — and that's without attorney fees.
But if a firm needs talent, it should find and hire quality job seekers who can deliver. Foreign workers may bring a new set of ideas after receiving a different education than their U.S. counterparts, Khanna told HR Dive in an email.
Employers also get to choose the "best and brightest" employees from a much larger pool of applicants, especially when looking for workers in countries like India and China, Khanna said. If an employer understands the costs — both in money and in time — that bringing on high skilled foreign workers can entail, they may find that getting their hands on a few H-1B visas pays off in big ways, experts previously told HR Dive.
