Trump's Crackdown On Worker Visas Could Bring More Pain To Top Tech Markets
Foreigners are less interested in renting U.S. apartments in key technology-heavy markets, underscoring the impact of the Trump administration's restrictive immigration policies that have caused the numbers of foreign workers to slow to a multi-decade low.
The share of searches for apartments in the San Francisco and Silicon Valley market from outside the U.S. fell by half between January 2019 and this month, according to an analysis of Apartment List search traffic, from 8% to 4%.
Apartment List found similar declines in Seattle, Boston, New York and Washington, D.C.
“In high-priced gateway markets, international migration, especially among highly skilled, new-knowledge workers, is a critical factor in the rental market,” Apartment List Chief Economist Igor Popov said in an interview. "I think this is an underappreciated factor in what’s causing some softening of rents in some of the most expensive markets. The slowdown of the inbound flow of renters is significant.”
Immigrants such as Google’s Sergey Brin, Intel’s Andy Grove and Tesla’s Elon Musk helped make Silicon Valley a leading center for technological innovation. They remain essential to the tech sector. More than 60% of all workers employed in the computer, mathematical, engineering and architectural fields were born overseas, according to a 2018 analysis of census data from the think tank Silicon Valley Institute for Regional Studies.
The slowdown in immigrant renters with high-paying jobs could soon worsen.
Recently issued rules by the U.S. Department of Labor and the Department of Homeland Security will make it “significantly harder” for tech companies to bring in workers from overseas with H-1B visas, the Los Angeles Times reports.
The U.S. Chambers of Commerce, the National Association of Manufacturers and the Bay Area Council have filed suit challenging the Trump administration’s actions from taking effect.
“These rules are extraordinary: If left unchecked, they would sever the employment relationship of hundreds of thousands of existing employees in the United States, and they would virtually foreclose the hiring of new individuals via the H-1B program," the lawsuit states, according to The Hill.
A federal judge has temporarily blocked the rule from being enacted.
“These workers fill an important need in our economy and provide immense benefits not only to the companies they work for but the communities where they live," Sean Randolph, senior director of the Bay Area Economic Institute, said in a press release.
Although San Francisco rents have slumped nearly 18% since the coronavirus pandemic started in March, residents pay an average of $2,592 a month for a two-bedroom apartment, according to Apartment List. That’s more than $800 higher than what New Yorkers pay for similar accommodations and $664 more than Boston renters shell out every month.
Apartment List data doesn't specify whether the searchers are foreign workers seeking to enter the U.S. are international students, though the company likely captures both demographics, Popov said.
The Massachusetts Institute of Technology and Harvard University, in Boston and neighboring Cambridge, ranked third and fourth on Forbes' ranking of the top colleges for international students. New York-based Columbia University rated fifth. Stanford University, which is based in Palo Alto, California, ranked ninth.
According to the nonprofit NAFSA, international students generated about $41B in economic impact during the 2018-2019 academic year.
Massachusetts landlord Sue McMahon rents a West Springfield apartment property to many Indian immigrants, some of whom have left the U.S. because their visas weren't renewed after their assignments were completed.
One resident was stuck in the U.S. after his visa expired, and India wouldn’t allow him to return home because of the coronavirus pandemic. McMahon said the tenant was stuck in the U.S. for three months, unable to work, and paid his rent with his savings.
“I have noticed that I haven’t seen as many referrals,” McMahon, who manages 162 units in West Springfield and Agawam, Massachusetts, wrote in an email. “[Foreign renters] are a great help with filling vacancies! I appreciate their help, too, because it is free advertising!”
Net immigration to the U.S. fell to 595,348 between 2018 and 2019, down from a peak of over 1 million between 2015 and 2016, according to the U.S. Census Bureau. The U.S. government’s ineffective response to the pandemic likely caused immigration to fall further in 2020.
“That throws a wrench into everything,” Russell Hancock, the CEO of trade group Joint Venture Silicon Valley, said in an interview. “The coronavirus has made the United States a less hospitable place [for] foreign workers because we aren’t doing a good job in fighting the virus or containing the virus. That makes [those] from overseas less interested in coming here, especially from Asian nations who are used to wearing masks.”
President Donald Trump has made cracking down on the migration of foreigners into the U.S. a focal point of his presidency and his campaign against his Democratic challenger, former Vice President Joe Biden.
If the Trump administration's rules are put into place, they would heighten the requirements businesses must meet to hire H-1B workers and require companies to increase what they pay the immigrant employees, The Hill reports. The moves are seen by critics as attempts to discourage legal immigration.
"History shows us that opportunistic politicians will weaponize coronavirus to scapegoat immigrants and further curtail immigration," Ali Noorani, executive director of the National Immigration Forum, said in a statement. "America should fight the impulse to close its borders — and to keep them closed. For a full recovery from the social and economic impacts of the coronavirus, America should be open to the world rather than become more isolated."