American industry's explosive demand for highly skilled workers is being stifled by the federal quota on H-1B visas for foreign-born highly skilled workers. The quota is hampering output, especially in high-technology sectors, and forcing companies to consider moving production offshore.

The number of H-1B visas was unlimited before 1990, when it was capped at 65,000 a year. In 1998 the annual cap was raised to 115,000 for 1999 and 2000, but industry is expected to fill the quota several months before the end of the fiscal year. The shortage shows no sign of abating. Demand for core information technology workers in the United States is expected to grow by 150,000 a year for the next eight years, a rate of growth that cannot be met by the domestic labor supply alone.

Fears that H-1B workers cause unemployment and depress wages are unfounded. H-1B workers create jobs for Americans by enabling the creation of new products and spurring innovation. High-tech industry executives estimate that a new H-1B engineer will typically create demand for an additional 3-5 American workers.

Reports of systematic underpayment and fraud in the program are false. From 1991 through September 1999, only 134 violations were found by the U.S. Department of Labor, and only 7, or fewer than 1 per year, were found to be intentional. The lack of widespread violations confirms that the vast majority of H-1B workers is being paid the legally required prevailing wage or more, undercutting charges that they are driving down wages for native workers. Wages are rising fastest and unemployment rates are lowest in industries in which H-1B workers are most prevalent.

Congress should return to U.S. employers the ability to fill gaps in their workforce with qualified foreign national professionals rapidly, subject to minimal regulation, and unhampered by artificially low numerical quotas.