Eliminating work permits for H-4 visa holders would result in an annual loss of $1.9 billion in federal tax revenue and $530 million in state and local tax revenue, according to a recent study.

Researchers Ike Brannon, a senior fellow at the Jack Kemp Foundation, and M. Kevin McGee, Professor Emeritus at the University of Wisconsin-Oshkosh, analyzed the economic impact of the Trump administration’s move to end employment authorization for H-4 visa holders.

U.S. Citizenship and Immigration Services (USCIS) began the official process for rescinding the H-4 Employment Authorization Document (EAD) program in February. Dependent spouses of H-1B specialty occupation visa holders are eligible for H-4 visas. And among H-4 visa holders, some are eligible for employment authorization. Many H-4 visa holders are well-educated, highly skilled professionals—and mostly women. Although USCIS continues to issue work permits to H-4 visa holders, we recommend exploring alternatives now.

The researchers collected data from H-4 holders through a questionnaire distributed by the American Immigration Lawyers Association and Save H-4 EAD, an advocacy group. They received more than 4,700 responses from H-4 visa holders.

Based on the survey data, the researchers conclude that rescinding the H-4 EAD program fails any cost-benefit analysis. Ending the program would have “significant negative impacts” on tax revenue, production, U.S. workers, and new business formation. Moreover, it would impose “significant costs” to both H-4 households and to employers of both H-4 and H-1B visa holders. And finally, ending the H-4 EAD program would present “no discernable benefits” to American workers.

 

Significant Costs

Brannon and McGee estimate about 75% of the 91,000 H-4 workers with work authorization are currently employed, earning an average annual salary of $80,000.

In addition to the loss of nearly $2.5 billion in annual federal, state, and local tax revenue paid by H-4 households if the H-4 EAD program ended, the researchers estimate a minimum of $5.5 billion—and as much as $7.5 billion—in lost output for H-4 employers.

According to the survey, 28% of employed H-4 respondents reported that the ability to work has been important in their family’s decision to remain in the U.S. Therefore, ending H-4 EAD will also have a negative impact on the employers of H-1B visa holders.

Brannon and McGee estimate employers could lose up to 25,000 H-1B employees and the $2 billion in U.S. production that they contribute to the economy. Overall, rescinding the rule could reduce annual U.S. GDP by $7.5 billion.

 

No Economic Benefit for U.S. Citizens

Brannon and McGee conclude that ending the H-4 EAD program would bring no employment or income gains to U.S.-born workers.

Eliminating the ability to work for 68,000 H-4 visa holders would result in the employment of 5,500 to 8,200 U.S. citizens. These gains to U.S. workers would be offset by the jobs lost when self-employed H-4 workers are forced to close their businesses. The researchers estimate that H-4 visa holders employ 6,800 U.S. citizens. Of the H-4 visa holders surveyed, 2% operate their own business with employees.

In addition, the researchers conclude that the loss of H-4 workers would reduce overall employment and wages for American workers. The researchers say “skilled foreign-born workers have an unambiguously positive effect on unskilled U.S.-born workers.” An increase in the supply of skilled foreign workers increases the amount of capital in the economy—and along with that—the demand for unskilled workers. That results in higher wages and employment levels for unskilled workers.

 

H-4 Demographics

Of the 4,708 survey responses the researches received, 90% were from women. Of the 83% H-4 visa holders who currently have work permits, 75% are currently employed and nearly 7% are self-employed.

Brannon and McGee found H-4 visa holders have similar educational backgrounds as their H-1B spouses. Nearly 60% had a master’s or higher degree.

The Alcorn Immigration Law team has successfully helped H-4 visa holders with employment authorization and their employers find alternative options. Reach out to us if we can help you.