A new study of foreign-born and U.S.-born graduates of U.S. institutions shows that the foreign-born alums out-earn U.S.-born ones by about 10 percent.
This is the case largely because the foreign-born ones have more graduate degrees than the native-born ones, and are more likely to have majors in the STEM fields of science, technology, engineering, or math; people born in India and China do not come to American campuses to study languages and literature, nor are they likely to work in our public sector.
The study is “The Skills and Economic Outcomes of Immigrant and U.S.-Born College Graduates”, by Jeanne Batalova and Michael Fix of the Migration Policy Institute in Washington, D.C.
That a group of the foreign-born is paid more than a group of native-born peers comes as a bit of a surprise and reflects in part, as far as I am concerned, the long-term impact of the nominally temporary H-1B program on the wage levels of all concerned, as well as our immigration system generally.
The two populations do not consist of immigrants and citizens; it covers, on one hand, foreign-born persons including those who have become citizens, who are green card holders, or who are working in the U.S. on temporary visas; the other group consists of U.S.-born persons; both groups have at least one U.S. college degree. All involved are between the ages of 25 and 65.
The difference in income is measured by monthly totals; it is $6,500 for the native-born grads (including a lot of school teachers) and $7,140 for the foreign-born grads (who are often in the high-tech industries). The two authors drew their findings from a big database with which I am not familiar (but which my colleague Jason Richwine has written about): a survey of adults in this country called the Program for the International Assessment of Adult Competencies (PIAAC) for the years 2012, 2014, and 2017. That the wage data came from those years explains the rather modest monthly totals.
The PIAAC database includes information on the skill levels of those surveyed, and they produce the interesting information that while the foreign-born get more money, they are less skilled than their native-born peers. This is what the study shows:
- Literacy: foreign-born 22 percentage points lower than the native-born;
- Numeracy: foreign-born 11 points lower than the native-born; and
- Digital skills: foreign-born 19 points lower than native-born.
In the last instance, 54 percent of the native-born grads performed at high levels, while only 35 percent of the foreign-born ones did.
That an average computer programmer is less skilled than say, a school teacher, but apparently is better paid, means that the sector of the economy where one works is more meaningful than individual competence. This is an interesting, if depressing, reflection of the values of our society.
That the foreign-born grads of U.S. colleges do better financially than native-born grads of the same set of schools also reflects the conscious and unconscious biases of our immigration and education systems. A series of little tilts at different points along the way leads to the outcome that the foreign ones get 10 percent higher salaries than the native-born ones. For example:
- I assume that is harder for an average Indian student from a family with average financing to get into an American university than it is for an average native-born student; this suggests that the arriving student may be more competent or more hard- driving, than the average American one.
- The sorting process within American universities may be such that it is rougher on foreign students than domestic ones, thus creating a higher quality of alien graduate.
- The post-graduate foreign worker system, the Optional Practical Training (OPT) program, offers federally subsidized jobs to aliens, but not citizens, and within OPT it offers three-year slots for those in the STEM fields, but only one-year slots for non-STEM grads.
- The OPT employment experience can be repeated for each subsequent degree; no such deal is available to American grads; OPT allows U.S. employers to pay these workers more than U.S.-born ones because they do not have to pay the usual payroll taxes that fund the Social Security, Medicare, and federal unemployment insurance systems.
- The next stage in the process for many of the aliens is the H-1B program; high-tech employers are more likely to use this program than low-tech ones.
- The H-1B program gives two shots at the lottery for those with advanced degrees, but only one for aliens with a bachelor’s degree.
- Once in the H-1B program, there is another sorting process; employers have a choice after years of employment to seek green cards for some of their workers and not for others; presumably the more talented of them are chosen, with the lesser ones more likely to return to their home countries.
- There is no comparable screening-out process for citizen workers.
All of these little tilts accumulate and give the foreign-born grads of U.S. colleges and universities slightly higher wages than American ones, despite somewhat lower competency scores, a test apparently given in English.
The MPI report does not touch on these factors; it offers two other equally valid reasons for the outcome: that the alien college grads are more likely to have advanced degrees and that they are more likely to have STEM degrees than their opposite numbers.
One of my take-aways from this is that, among college grads, at least, we have a strong statement from a reputable source, MPI, that foreign-born grads of American universities as a group do not suffer from adverse economic treatment.