US federal limits on the work permits, called H-1B visas, are too low to meet employers' requests, leaving many migrants unable to remain in the US and companies short of workers.
According to a recent report, it's sending a negative ripple throughout the job market, depressing job growth and wages for American-born workers.
The Partnership for a New American Economy report catches a political hot potato. Efforts to increase the number of H-1B visas have been considered in Congress but opposed by trade unions, professional organisations and members of both major political parties. They argue that immigrant labour, especially in the high-skill science and technology jobs, works at lower pay and takes work away from American-born workers.
Not so, says the Partnership report. It says that federal law limiting H-1B visas to 65,000 a year hurts job creation for Americans whose jobs would be tied to H-1B positions. Also, employers who sponsor H-1B visas must submit documentation that they pay prevailing wages.
Researchers, who analysed extensive job and economic data from 2007-2008, conclude: "Denying H-1B visas didn't help the economies of America's cities or their US-born workers ... Instead, it cost their tech sectors hundreds of thousands of jobs and billions in missed wages."
The report said H-1B visa denials in 2007 and 2008 meant that as many as 230,000 spinoff tech jobs for American-born workers weren't created in US metro areas. That cost US-born, college-educated workers in computer-related fields as much as $US3 billion ($A3.25 billion) in aggregate annual earnings, it said.
H-1B work permits are granted for three years with a renewal option to six years and a possible pathway to "green card" permanent residency status. Employers request them to sponsor immigrants' employment. Foreign-born workers cannot apply for themselves.
Because there are more applications than available visas, US employers must go through a lottery to get them. This year, as in past years, applications swamped the system within hours of the April 1 filing date for applications.
The Partnership, an organisation founded by businessman and former New York Mayor Michael Bloomberg, focused on work visas connected to science, technology, engineering and math jobs.
Researchers at the National Bureau of Economic Research, the University of California-Davis, Colgate University and the Partnership for a New American Economy collaborated on the report. Their analysis used data from the US Citizenship and Immigration Services, the US Department of Labour and the American Community Survey.
"Anybody who knows about the information technology industry knows that this is a problem," said Mira Mdivani, a corporate immigration lawyer.
"It makes no business or economic sense for folks who care about America to send good-paying jobs or hard-working talent overseas."
Mdivani said foreign-born people, educated in American universities and internships, are having to return to their home countries, so "we are training the talent to be our competition".
A Kauffman Foundation-funded National Foundation for American Policy report last year reached similar conclusions to the Partnership report - that Congress should expand the H-1B limit to keep American companies competitive.
That report countered the so-called Gang of 8 Senate immigration bill that would have discouraged, and in some cases prohibited, use of H-1B visas. The Kauffman-tied report concluded that restrictions on H-1B visas "are mistaken, overstated or based on incorrect information".