H-1B visas and the engineering workforce shortage, per Chair of Intel

Craig Barrett, Chair of Intel, recently wrote a commentary for the Financial Times (payment required) and afterwards responded to reader questions.
Begun in 1998, the H-1B program has annual caps which in 2003 was 195,000. In 2004 the cap was cut to 65,000. As of 2004, close to 1,000,000 H-1B visa holders were believed to be working in the United States, up from about 360,000 in 1998. This means an annual addition of about 150,000 workers a year into the American workforce.
Compare this stream to the supply of engineers coming from American higher education (many of whom are foreigners)? In 2004, there were about 70,000 bachelor, 40,000 master, and 6,000 doctoral degrees were awarded by American colleges and universities. This is from the American Society of Engineering Education
H1B Visa (Professional in a Specialty Occupation) allows a U.S. employer to fill a position requiring the minimum of a baccalaureate in the particular field with a qualified worker from abroad. The foreign worker must possess that U.S. degree or an acceptable foreign alternative. In some cases, a combination of studies and relevant experience may substitute for the degree if it is determined by a credentials expert to qualify the foreign professional. The large majority of H1B visa holders are believed to be engineers.
Per Barrett:

A full half of China’s college graduates earn degrees in engineering, compared with only 5 per cent in the US. Even South Korea, with one-sixth the population of the US, graduates about the same number of engineers as American universities do. Part of this is due to the poor quality of our primary and secondary education, where US students typically fare poorly compared with their international counterparts in maths and science…

Today, immigration policy is managed through arbitrary and inadequate quotas that severely constrict the hiring of talented foreign nationals and their ability to get permanent residence. The two quotas are the arbitrary caps on the H-1B visa and the visa quotas that that limit the number of highly skilled people who can obtain permanent residence in any given year.

The H-1B visa has a mandatory cap of 65,000, which has been met seven times since 1997. In 2005, advanced degree graduates from US universities were granted an additional 20,000 H-1B visas and that quota has been met. We are currently in a situation where both H-1B caps being exhausted until 10/1/06 when another quota will be available.

The employment-based system provides green cards to individuals sponsored by their employers to work in the United States. The annual cap of 140,000 was implemented in 1990 to address similar backlogs in the 1980s. Today, demand is greater than supply and coupled with long processing delays by the Citizenship and Immigration Service individuals wait up to seven years to obtain a Green Card.

These arbitrary caps undercut business’s ability to hire and retain the number of highly educated people in the fields where we need to maintain our leading position. Instead of arbitrary caps, a market-based approach that responds to demand is needed. Only then will the US be competitive and have the ability to hire the best and the brightest, a large proportion of whom we have educated in our universities. The market-based approach can require employers to pay foreign nationals the market wage (”prevailing wage”), and indeed that is already a requirement in the H-1B and Green Card processes.