Do H1B visas prompt more American hires or fewer?

A free market think tank argues that H1B visas, which permit skilled workers to work in the US, stimulate the economy and create more jobs for Americans:

That group, called the National Foundation for American Policy, argues that for each H-1B visa requested by a corporation, its overall hires climbed by, on average, fivefold. In smaller companies, the group estimated seven new employees were hired for every H-1B application submitted. (Its data is based on regression equations derived from U.S. Department of Labor H-1B visa filings and year-by-year job totals for 76 technology companies in the S&P 500 between 2001 and 2005.)

And when companies were reducing their hiring numbers, their applications for H-1B visas also dropped off, which NFAP contends is a sign that companies don't seek out H-1B workers to save money on wages. If cheap labor were really the goal of H-1B participation, then the number of requests for those workers should have gone up during such "hard times," NFAP argues.

Those findings, coupled with a survey of 27 technology companies about their H-1B practices, prompted NFAP to conclude that foreign-born professionals are being hired to complement, not displace, American workers.

Furthermore, an "artificially low limit" that Congress imposes on H-1B visas actually hurts American workers by sending jobs overseas, NFAP contends. Sixty-five percent of the companies that participated in its survey said insufficient H-1Bs caused them to hire more people in subsidiaries outside the United States--or simply to outsource work to firms abroad.

Some opponents of such visas argue the following:

In response to concerns from American computer programmer groups like Programmers Guild, some senators have proposed imposing additional obligations on U.S. companies in an effort to ensure they give qualified American workers a first shot at job openings.

The report's timing hardly seems accidental. Less than a month from now, the application window for next year's visa crop will open, and if last year was any indication, it'll end almost as soon as it began. While it seems highly unlikely that Congress will make any changes before the likely rush on visas begins April 1, the tech industry will clearly be looking for new ways to promote its cause.

Programmer's Guild representative Kim Berry, who had access to the reports in advance, argued NFAP's claims fall short because they fail to consider the habits of the largest H-1B consumer: foreign consulting firms that snap up visas and recruit foreign workers, only to outsource them to offshore companies. No new American jobs are being created as a result of those activities, Berry suggested.

"It is biased, industry-funded propaganda intended to mislead Congress into increasing the flow of cheap foreign labor into the U.S. IT sector," Berry said of the report. (NFAP executive director Stuart Anderson, for his part, told CNET News.com that none of the industry groups or technology companies in the report provide financial or other support to his group, nor did they commission the study.)

These worldviews need not be exclusive. There's no reason you couldn't make it such that H1B visa recipients had to work in the physical territory of the United States. That particular restriction would seem reasonable.