As Congress considers a makeover of the country’s immigration policies, they’ll discuss an expansion of the H-1B temporary visa program for high-skilled foreign nationals. The H-1B program is popular among employers, including several in Illinois, who have long asserted that U.S. colleges and universities are not producing enough graduates in the science and technology fields.

But a new study from the Economic Policy Institute, a Washington-based non-profit which receives about 30 percent of its funding from labor unions, finds that there are more domestic graduates in those fields than the market can accommodate. The study looks over time at domestic graduates in the fields of Science, Technology, Engineering and Mathematics (or STEM), as well as temporary guest worker inflows on the H-1B, L-1, and Optional Practical Training visas, where large shares of visa holders work in IT jobs.

“There are, as we found before, a large supply of STEM graduates,” said Hal Salzman, a professor at Rutgers University and one of the authors of the report. “We just can’t see in the numbers a failure of U.S. colleges and universities to produce sufficient supply,” he said. Salzman co-authored the paper with professors Daniel Kuehn of American University and B. Lindsay Lowell of Georgetown University.

H-1B workers account for thousands of jobs in Greater Chicago, which historically has been one of the top five hubs in the nation for workers on that visa. In federal fiscal year 2011 more than 11,000 skilled workers came to Chicago on H-1B visas, with India-based IT consulting company Infosys employing nearly one in ten of them as computer programmers. Suburban Hoffman Estates and Schaumburg also accounted for an additional 4,300 H-1B workers. Average wages for H-1B workers in these cities ranged between $63,000 and $69,000.

The study finds that the domestic supply of students in STEM fields responded to industry demand as expected during the 1990s and into the early 2000s, but that a shift occurred in 2004 when companies began shifting their search for talent overseas.

“If you look at what happened in the lead up to the dot-com bubble to the peak, you can see that wages rose steeply, unemployment was fairly low, right up until the 2001 peak, and the result was that the number of students pursuing computer science overall doubled,” said Salzman, “it seems that students are very responsive to market signals.”

The authors find, however, that after the recovery from the dot-com recession, employment in the IT sector began picking up, but wage growth did not resume. They attribute this to an increasing reliance on foreign workers for those jobs. “The guest worker supply, understandably, coming from low-wage countries, is very plentiful, (and) will continue almost despite whatever wage levels are here because they’re still better than what (they) would be in their home country,” said Salzman.

One result of the divergence between demand and wages for IT workers, said Salzman, is that many American STEM graduates are opting to work in other fields. The study finds that one-third of computer science graduates and nearly half of engineering students fail to go into jobs related to their degrees because they couldn’t find jobs, or because they felt they had better career prospects in other fields.

“It’s basic Econ 101,” said Salzman. “If you bring in a lot and flood the market, it depresses wages (and) lowers job quality. And we’ve certainly seen that in interviews we’ve done over the years, where people think what used to be good jobs, particularly in IT, are no longer high-quality jobs. They think they’re unstable, wages have not gone up and they counsel their kids to go elsewhere.”

The STEM report comes as Congress picks over a proposed new immigration overhaul. The legislation by the so-called Gang of Eight would dramatically expand employers’ access to skilled, temporary foreign workers, while also imposing additional controls. The H-1B visa program, currently capped at 85,000 visas annually for highly-educated foreign nationals, would over time grow to 180,000 visas. It would also prohibit large companies from staffing more than half of their workforce with H-1B visa holders, and would require companies to pay higher wages to those workers.

Very few legislators in Washington question the assumption that U.S. companies have been unable to locate qualified, STEM-educated American workers. Two separate bills proposed in the Senate in recent months have both looked at increasing the H-1B cap. Large companies such as Microsoft have been particularly vocal about the need to change immigration policies to allow for more temporary, skilled workers.

“I don’t think the argument here is that foreign workers aren’t good or they aren’t productive,” said Lowell. “I think the argument is yeah, I think we want foreign workers we want employers to have access to, but the question really is, in what amount, and is more better?”

Lowell and the other study authors said the devil will be in the details of any changes to immigration policies. They point out that while the immigration bill does propose higher wages for H-1B workers, it would still allow these workers to be paid 20 percent less than the average wage for those industries.

Odette Yousef is WBEZ’s North Side Bureau reporter. Follow her at @oyousef and @WBEZoutloud.