US President Donald Trump’s executive order suspending new work visas and H-1B and L-1 visas have resulted in a plunge in the market valuation of the top Fortune 500 firms.

A recent research jointly done by Brookings Institution, Harvard Business School, Wharton School and National Bureau of Economic Research (NBER), points to this dent on valuations, based on the daily stock market returns across 471 firms which are part of the S&P 500 Index, as well as on the H-1B visas issued between 2015-19. It covered companies such as Adobe to US Steel.

This initiative was undertaken in the backdrop of the June 22 order that suspended new work visas, barring foreign workers and their dependents from entering the US and preventing American companies from hiring skilled immigrants using H-1B or L-1 visas. It also comes at a time when immigration is one of the key issues in the upcoming presidential elections in November.

According to market capitalisation figures of the 471 companies surveyed, the total value of the companies at the end of June 19, 2020 — the business day before the visa policy announcement was made — was about $22.68 trillion. This has come down to $100 billion, according to the study. “We also find that this result remains consistent even when we expand the estimation to longer windows,” said the study’s authors, Dany Bahar, Prithwiraj Choudhury and Britta Glennon.

The results from the study pointed out that sectors across the board were affected due to the order. However, the negative estimates are especially large for the financial, information technology and real estate (FIRE) sector, followed by the mining, utilities and construction (MUC) sector.

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Glennon, in an earlier research paper by the National Bureau of Economic Research, had called out Trump on his flawed logic. “India stands to benefit the most, as all the S&P 500 companies shop for talent by moving the work to India,” she said.

“If US multinationals use this option in response to restrictive H-1B policies — as their public statements suggest — then such restrictive migration policies are unlikely to have the desired effects of increasing employment and earnings of high-skilled natives, but rather have the effect of offshoring high-skilled jobs to other countries,” Glennon’s paper noted.

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The thought of visa suspension, itself, is not new but assumes significance considering the depressed global economic scenario as a result of the Covid-19 pandemic and the subsequent impact it is having on livelihoods.Tech giants such as Microsoft, Amazon, Apple as well as financial giants such as Golaman Sachs, Wells Fargo all rely on H1-B visas.

Business leaders have also raised concerns over these measures, saying that the shortage of workers with specialised skills has negatively affected the competitiveness and innovation of high-tech firms and can have a ripple effect on the US economy if long-standing restrictions are placed on high-skilled immigration. Recently, a US Federal Court in Northern California blocked the implementation of H-1B visa ban by Trump stating that the President “overstepped his constitutional authority” with the June order.

According to the US Citizenship and Immigration Services (USCIS), there were as many as 419,637 foreign nationals working in the US on H-1B visas as on October 5.

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