iNDICA NEWS BUREAU-
On June 22, 2020, President Trump made history by issuing an executive order (EO) restricting the entry of individuals seeking to enter the country on a nonimmigrant work visa.
According to experts at The Brookings Institution, Harvard Business School, and The Wharton School of the University of Pennsylvania, this crackdown on foreign workers with H-1B and other visas wiped $100bn off the stock market value of the largest US companies.
In a study done by the National Bureau of Economic Research, authors Dany Bahar, Prithwiraj Choudhury, and Britta Glennon analyzed the market capitalization of 471 Fortune 500 companies before and after the President’s EO banning certain foreigners from entering the US, to track changes in those corporations’ cumulative average abnormal returns.
Nearly 200,000 foreign workers and their dependents, were apparently barred due to this EO. Meaning, the money that these immigrants brought into the US were barred as well.
There is overwhelming evidence documenting that skilled immigration improves firm outcomes such as profits, productivity, production expansion, innovation, and investment.
In less than 6 months of this passing, it has shown how deeply it is affecting the country rather than benefit it.
Thus, it is plausible that the Trump administration’s measures significantly restraining immigration will have lasting negative impacts on American firms, and with it, slow down the post-COVID-19 economic recovery.
In June, US Chamber of Commerce CEO Thomas Donohue said as much about the EO.
“Putting up a ‘not welcome’ sign for engineers, executives, IT experts, doctors, nurses and other workers won’t help our country, it will hold us back,” he said. “Restrictive changes to our nation’s immigration system will push investment and economic activity abroad, slow growth, and reduce job creation.”
If the EO—and other recent policies that curtail visas for skilled foreign workers—stays in place, there is robust evidence suggesting that in the next few years, these firms, instead of hiring US-born workers as the policies intended, will likely offshore many of their activities to other nations.
In other words, in the short run, the EO caused a loss of $100 billion in market valuation. In the long run, it could cause even more damage to the U.S. economy as firms react to these constraints by shifting employment and investment abroad.