On Tuesday, SpaceX launched its last mission of 2024, its 134th Falcon flight of the year. SpaceX is a testimony to American innovation, employing 13,000 people, including engineers, finance professionals, and janitors. SpaceX is a new company that creates jobs. Elon Musk is the founder of SpaceX, and he also started Tesla, which employs 112,000 men and women.
The company was founded just 20 years ago. Now, Musk is launching a new artificial intelligence venture. He creates new businesses, which create well-paying jobs and are the oxygen of a strong economy. He is responsible for over 120,000 new jobs. Musk was born in South Africa and first came to the United States on a H-1B visa, reserved for highly skilled would-be immigrants to the U.S. Up to 85,000 such visas can be issued each year. The U.S. needs more of the best and brightest from all countries around the world.
In turn, U.S. policy should open the door wide to the well-educated and skilled and close tight the door to illegal immigrants. The H-1B program is good, and an open border is bad. As economist Greg Mankiw notes, the H-1B visa program increases demand for both high-paying jobs and lower-wage earners. People who come to the U.S. on H-1B visas strengthen the U.S. economy.
A very recent National Bureau of Economic Research paper explains that well-educated legal immigrants are entrepreneurial. This very small group of legal immigrants is responsible for between 30% and 45% of the total start-up creation effect in the U.S. We must have more of them. The U.S. also needs more of the best and brightest because the U.S. has a declining birth rate coupled with a rising dependency ratio. There are fewer active workers supporting an ever-larger retired population, and both the Social Security and Medicare trust funds are scheduled to run out of money in the next decade. More people working, especially highly productive workers, reduce the dependency ratio and delay the point when Social Security and Medicare benefits must be reduced.
Some Americans, including some prominent Republicans, oppose the H-1B program. They argue that the program squeezes out employment opportunities for native-born Americans. The naysayers also assert that the H-1B program reduces wages for American citizens. Both arguments are wrong, and the explanation is straightforward.
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The highly skilled immigrants create new businesses and more jobs. Demand for labor rises, and wages follow labor demand higher. They increase the productive capacity of the country and everyone benefits — a rising tide does lift all boats. Think of it this way: When an H-1B immigrant from India creates a new technology business, that business hires native-born American engineers and a janitor to keep the premises clean. More people have jobs, skilled and unskilled. There are positive spillover effects from each successful business created. The H-1B program is good and should be expanded because it makes the economy stronger and all of us benefit.
In other words, H-1B is a good policy of the kind we need.
James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes a daily note on the markets, politics, and society. He can be reached at [email protected]