New American Economy‘s new report, “Closing Economic Windows: How H-1B Visa Denials Cost U.S.-Born Tech Workers Jobs and Wages During the Great Recession,” shows how existing H-1B visa lottery caps disproportionately hurt American-born tech workers by slowing job and wage growth in more than 200 metropolitan areas across the United States. H-1B visa denials in 2007 and 2008 caused these areas to miss out on creating as many as 231,224 tech jobs for American-born workers in the years that followed and cost U.S.-born, college-educated workers in computer-related fields as much as $3 billion in aggregate annual earnings.

Key report findings include:

• The high number of H-1B visa applications that were eliminated in the 2007-2008 visa lotteries represented a major lost opportunity for U.S.-born workers and the American economy overall. The failure of 178,000 H-1B visa applications in computer related fields to make it through the 2007 and 2008 H-1B visa lotteries caused U.S metropolitan areas to miss out on creating as many as 231,224 often highly-sought after tech jobs for U.S.-born workers in the two years that followed. The total number of U.S.-born workers with computer-related jobs would have exceeded 2 million by 2010 with that additional employment.

• The U.S. tech industry would have grown substantially faster in the years immediately after the recession if not for the large number of visas that didn’t make it through the 2007 and 2008 H-1B visa lotteries. The number of jobs for U.S.-born workers in computer-related industries would have grown at least 55 percent faster between 2005-2006 and 2009-2010, if not for the applications eliminated in the recent H-1B visa lotteries. Computer firms could have added as many as three times more jobs for U.S.-born workers than they actually did during that period without all the unsuccessful H-1B visa applications.

• U.S.-born workers without bachelor’s degrees were disproportionately hurt by the H-1B visa lotteries in 2007-2008. Because less-educated tech workers often play valuable roles supporting the work of high-skilled engineers, programmers, and others, they were particularly impacted by recent H-1B trends. By 2009-2010, U.S. metropolitan areas lacked as many as 188,582 computer-related jobs for U.S.-born workers without a college degree as a direct result of the large number of applications that were eliminated in the 2007 and 2008 H-1B visa lotteries. The number of positions missing from the economy for U.S.-born, college-educated tech workers, in contrast, was between 24,280 and 42,642.

• The H-1B visa lotteries in 2007 and 2008—and the denials resulting from them—greatly slowed wage growth for workers in computer-related industries. In 2009, the 1.1 million U.S.-born, college-educated workers in computer-related fields missed out on as much as $3 billion in aggregate annual earnings as a direct result of the large number of applications that were unsuccessful in the H-1B visa lotteries in the 2007-2008 period. From 2005-2006 to 2009-2010, wages for college-educated, U.S.-born workers with computer-related jobs grew by 1.7 percent. Without the earlier visa lotteries, their wages could have grown by as much as 4.9 percent during that period.

• For some cities, the H-1B visa lotteries in 2007 and 2008 had a particularly large impact.  In New York City and Northeast New Jersey, the large number of H-1B visas that didn’t make it through the lottery for workers in computer-related fields caused the local economy to miss out on creating as many as 28,005 jobs for native-born workers in those industries by 2009-2010. The Washington, DC metropolitan area, including parts of Virginia and Maryland, lost the opportunity to create as many as 30,222 computer-related jobs for U.S.-born workers during that period; Chicago and Dallas Forth Worth passed up the opportunity to create as many as 27,329 such positions together.

This report was prepared for New American Economy by Giovanni Peri, University of California, Davis and the National Bureau of Economic Research; Kevin Shih, University of California, Davis; and Chad Sparber, Colgate University.

Download the full report (PDF).