In 1998, Congress temporarily increased the quota on H1-B visas granted to foreign laborers. But this measure, which will soon expire, brought little relief to the technology companies it was supposed to help. As legislators revisit this critical issue, they should recognize that the best solution to today’s skilled labor shortage is to eliminate H1-B quotas entirely.

According to the Information Technology Industry Association, the high-tech sector will create 1.6 million jobs this year, but 843,000 of these will remain vacant because skilled workers are in short supply. This shortage, says the Computing Technology Industry Association, annually costs technology firms roughly $4.5 billion in lost productivity. Because the H1-B cap stymies attempts to avert these losses, companies may soon be forced to move some operations overseas.

H1-B visas are reserved for skilled, educated foreigners hired to perform jobs that cannot be filled with Americans. While the 1998 bill bumped the annual H1-B quota from 65,000 to 115,000, even this increase was woefully insufficient. In 1999, the entire allotment was used up by June, five months before the fiscal year’s end. This year, the visas were gone in March. With the quota set to tumble back to 65,000 in 2002, Congress is fighting over another increase.

Several legislators plan to introduce proposals that would temporarily push the cap over 200,000. Other measures such as Congressman Lamar Smith’s Technology Worker Temporary Relief Act go farther; this bill would allow an unlimited number of H1-B workers to enter the United States for three years. Such proposals enrage union representatives, who say that any visa increase harms domestic workers.

Labor leaders make two arguments. First, they assert that the private sector is to blame for its own labor woes because U.S. workers could fill the gaps if the industry funded more retraining programs. Second, unions claim that domestic firms use H1-Bs to keep labor costs low, replacing experienced employees with foreigners willing to accept below-market wages. These protectionist arguments are outdated and false.

Companies don’t apply for H1-Bs on a whim or to save a few bucks. The procedures are complicated and costly, typically requiring specialized lawyers. After proving they made a good-faith effort to hire an American, companies must file an array of forms in a process that often lasts several months. Once H1-B workers are hired, the law requires they be paid the prevailing wage. The notion that U.S. workers are floundering without corporate-sponsored retraining programs is also absurd.

Americans are neither ignorant nor helpless. Anyone not living in a vacuum understands that, in today’s economy, technology companies are eager to pay top dollar to workers with relevant skills. U.S. laborers are responding to this demand by retraining themselves, a fact evidenced by skyrocketing enrollments at community colleges and technical schools. It is time for government planners to place H1-B policy in the hands of market economics.

If the cap were demolished, the high-tech sector would finally be released from arbitrary quotas set by bureaucrats. Technology firms, free to efficiently meet their labor needs, would be given the best chance to continue the growth that has brought such stunning prosperity to the domestic economy. And even more important than being pragmatically sensible, this policy would be more consistent with the principles upon which America is built.

As legislators debate the H1-B issue, they should remember America’s proud immigrant tradition. In Silicon Valley, approximately 20% of local firms were founded by immigrants, who also run roughly one-quarter of the high-tech companies there. These leaders are reminders of a diverse American ancestry that, populated by immigrants, built our modern institutions, including the unions now trying to destroy the hope that led so many to our shores.

In a country where so much rhetoric concerns multi-culturalism, it is sadly ironic that we tolerate policies that leave hard-working foreigners stranded beyond our borders. By eliminating H1-B quotas, legislators can end this injustice and boost the economy. More important, they can preserve the American Dream.

*Justin Matlick is a Senior Fellow in Information Studies at the Pacific Research Institute. To learn more about PRI and the Center for Freedom and Technology, see www.pacificresearch.org.