Surprise! There’s hope for meaningful H-1B reform

U.S. companies favor issuing more visas to foreign workers, but President Trump has vowed to put American workers first. Can a compromise be found in Congress?

Surprise! There’s hope for meaningful H-1B reform

If you thought the backlash on immigration was powerful, wait until you see the reaction to H-1B reform.

The H-1B visa was originally designed to give companies—especially tech companies—a way to hire highly skilled foreign workers. Each year, 65,000 H-1Bs are issued, and U.S. companies strongly favor raising that cap. According to a Harris Poll, 75 percent of employers surveyed late last year said increasing the cap for H-1Bs is very or extremely important for the United States. Fifty-five percent of those companies said they plan to hire foreign workers in 2017. 

“The continued ability of employers to acquire and develop global talent is vital and plays a crucial role in helping our country remain competitive in today’s economy,” said Dick Burke, president and CEO of immigration law firm Envoy.

Some argue the H-1B cap needs to be raised because there is a shortage of American workers qualified to fill STEM jobs. GoDaddy CEO Blake Irving this month issued a strongly worded warning against “clamping down on H-1B ‘genius’ visas” when there is “so much technical illiteracy in the U.S.” In his blog, Irving quotes theoretical physicist Michio Kaku, who said, “If you remove the H-1B visa, you collapse the [U.S.] economy. There are no Americans to take these jobs. These visas aren’t taking away jobs, they are creating industries.” 

The myth of a STEM crisis

However, there is strong pushback against this notion of a shortage. The Bureau for Labor Statistics says the United States graduates well over 100,000 STEM students annually. And wages for U.S. workers in computer and math fields have largely stagnated since 2000, as STEM workers struggle to find employment and many companies, including IBM and Symantec, lay off thousands of STEM workers.

“If there was really a STEM labor market crisis, you’d be seeing very different behaviors from companies,” says Ronil Hira, an associate professor of public policy at Howard University who has testified before Congress on this issue. “You wouldn’t see companies cutting their retirement contributions, or hiring new workers and giving them worse benefits packages. Instead, you would see signing bonuses, you’d see wage increases. You would see these companies really training their incumbent workers. None of those things are observable,” Hira says. “In fact, they’re operating in the opposite way.”

American workers first

President Trump recently waded into the melee. While details remain sketchy, a leaked draft executive order vows to overhaul the program. The proposal reads in part:

Our country’s immigration policies should be designed and implemented to serve, first and foremost, the U.S. national interest. Visa programs for foreign workers … should be administered in a manner that protects the civil rights of American workers and current lawful residents, and that prioritizes the protection of American workers—our forgotten working people—and the jobs they hold.

Many will applaud that goal. Critics of H-1B visas, like the IEEE, argue the program has evolved into “a pipeline for a few big companies to hire cheap labor.” Tech giants like Amazon, Apple, Google, Intel, and Microsoft are among the top 20 H-1B employers, but Indian outsourcing firms Tata, Infosys, Wipro, and Cognizant receive the vast majority of H-1B visas issued. The U.S. Customs and Immigration Service says Indian nationals accounted for 70.9 percent of all H1-B visa beneficiaries in 2015.

Hira points out that the median wage for H-1B workers at outsourcing firms was less than $70,000, while Apple, Google, and Microsoft paid their H-1B employees more than $100,000. That suggests those companies are genuinely going after highly skilled employees, while outsourcers are recruiting less expensive talent, he said.

“However, while Indian companies take the brunt of the blame for bringing in foreign tech workers, the majority of all Fortune 500 companies use these outsourcing firms on work projects and are direct beneficiaries of the H-1B visa system,” points out Forbes. Companies like Disney, FedEx, and Southern California Edison contract with these outsourcers, and all too often, their American workers end up training  H-1B visa-holding replacements who work for below-market wages.

One InfoWorld reader, who wished to remain anonymous to protect his job, referred to the “H-1B carnage” among American IT workers in the Midwest. “Everyone thinks I am crazy for staying in technology,” he wrote. “Tons of American IT worker parents, displaced by cheaper foreign visa workers, advise their kids to avoid programming and technology as a career. They are happy to see the changes from the new POTUS.”

A call to action

Congress has circled around the issue of H-1B visas for years, but last month a number of bills were introduced that seek to address its various problems. The IEEE supports four concrete strategies to improve the program:

1. Raise wages. U.S. companies hire H-1B workers for a simple reason: They’re cheaper than American workers. Hira says raising the H-1B wage floor is the reform most needed to fight wage depression and keep the job market competitive. A bill introduced by Rep. Darrell Issa (R-Calif.) requires H-1B visa holders to be paid at least $100,000.

2. Abolish the lottery. Under the current lottery system, employers like Tata, Wipro, Infosys, and Cognizant apply for thousands of visas, knowing a large portion will be approved. Rep. Zoe Lofgren (D-Calif.) has introduced a bill that seeks to award visas based on highest offered salary. But Hira warns that a wage-based system needs to take job categories and locations into account, otherwise it would skew toward high-cost areas like Silicon Valley and New York, and toward high-wage occupations at the expense of others.

A bill introduced by Senator Chuck Grassley (R-Iowa)—which Hira calls the “best reform bill” in Congress right now—not only redefines H-1B wages, it prioritizes foreign students who have earned an advanced degree in the United States and have preferred skills.

3. Stop replacing U.S. workers. The Grassley bill requires employers who seek H-1Bs to make a good faith effort to recruit American workers—which companies are not currently required to do. The effectiveness of this reform will depend on how the rules are enforced. Employers seeking green cards must currently meet this requirement, which “sometimes prompts sponsoring employers to post ’fake’ job ads with very specific requirements that all but assure that the foreign worker is the person who is ultimately hired,” says Computerworld’s Patrick Thibodeau.

Issa’s bill makes it more complicated to hire H-1B workers, but critics have called the bill worthless; to really make an impact, the bill should make it illegal for companies to replace American workers with H-1Bs, Hira says.

4. Make immigration easier. This could prove a harder change to implement, given current anti-immigrant sentiments. But Lofgren’s bill, as well as one introduced by Rep. Jason Chaffetz (R-Utah), seeks to ease the long backlog of green card applicants who are in the United States on an H-1B. While facing the often lengthy waits for permanent residency, these visa holders cannot switch jobs. “People on these visas cannot create companies and create more jobs,” says Vivek Wadhwa, distinguished fellow and professor at Carnegie Mellon University Engineering at Silicon Valley. One approach could be to fast-track green cards for those creating jobs.

In a far-reaching policy letter dated Nov. 14, 2016, a lobbying group with Twitter, Netflix, Facebook, and Google as members, urged President-elect Donald Trump to increase the number of H-1Bs and expand and improve the STEM green card system. As Thibodeau says, “The tech firms may well support some [of the proposed] changes that favor them, and ... throw the Indian IT firms under the bus on this issue.”

Update: Orrin Hatch (R-Utah), considered the Senate’s leading proponent for increasing the H-1B visa cap, is updating his 2015 I-Squared bill—legislation that was so awful, said the IEEE, that it would “help destroy” the U.S. tech workforce.

Copyright © 2017 IDG Communications, Inc.