H-1B Visa: Good Intentions Gone Astray

Has the H-1B process gone from adding hard to find skills that will strengthen the U.S. to one now mostly profiting foreign corporations?

The U.S. offers a smorgasbord of visas, 185 to be exact, and Donald Trump has an issue with one in particular - the H-1B. Since I am a U.S. born citizen, I don't know much about the visas our government offers, so hearing that we have 185 of them was a surprise. With that said, I have heard of the H-1B visa because I am in the Information Technology sector. I have also made a lot of friends with these visa holders and have worked on a number of technology projects where team members had H-1Bs, some of which have become permanent residents. So, when I heard that Trump had an issue with H-1Bs, stressing the Department of Justice will take action, I decided to take a closer look.

The Immigration Act of 1990 Contributed 31+ Billion Hours of Labor to the U.S. Economy.

I learned that the H-1 B visa was created via the Immigration Act of 1990. It was signed by George H. W. Bush with the intent to allow U.S. corporations to hire difficult to find skills from other countries. Macroeconomists might say the goal of the H-1B was to have these visa holders become citizens for the benefit of growing the U.S. economy as producers and consumers. After all, our capitalist system requires a continuous growth of population, especially of the primary producers and consumers (20 to 65 years olds), as there are only two paths to growth -  more people and/or more productivity. H-1B was a way to get the higher skilled people looking for the American dream.

The visa allows corporations to sponsor a foreigner’s stay in the U.S. for up to six years. Since its enactment, north of 2.5 million visas have been issued. Realistically, there is no way to calculate the amount of labor gained by these visas. However, one can extrapolate the number by multiplying the hours in a work year (2,080) by the six-year term by the number of visas issued. Thus, 2.5 million visa holders can contribute 31 plus billion hours of labor to the U.S. economy.

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There is much more to this visa than I expected. Although it is called a nonimmigrant visa, it is a definitive path for obtaining citizenship. On the 5th year, the person can apply for a green card. After 5 years of holding a green card, one can apply for citizenship. In addition, while the green card and citizenship applications are under review, the Department of State often grants 1 year extensions until a decision has been made on the application. So, essentially, this person can live and work in the U.S. for a minimum of 11 years. That’s 2.5 million visa holders, the equivalent to the population of Chicago, working in the U.S. for 11 years, roughly equating to over 55 billion labor hours!


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Although the number of visas issued each year are capped, U.S. universities and not for profits are exempt, which means the 55 billion ballpark is low – very low indeed. In 2015 alone, U.S. universities brought in over 17,000 “cap exempted” H-1Bs, so you can imagine how many have been issued to date.

It is important to keep in mind that these visas are being sponsored by corporations. What kind of corporations? The Department of State’s data shows that most H-1Bs are issued to technical service providers and consulting companies, like those of Infosys, Tata and Wipro for examples, not the manufacturing or distribution type corporations I was expecting to see. These offshore outsourcing companies typically pay the lowest salaries of any of the H-1B sponsoring companies.

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In addition, I was shocked to learn that 70% of the top 10 companies don't even have domiciles in the U.S. - 6 are from India and 1 from Ireland. If you look at the top 20 sponsors, all of which are tech firms, you will find that 11 of them are from another country, predominantly India. I find this to be astonishing.

Infosys, our 2nd top sponsor, having 47,123 H-1Bs issued over the past 10 years, holds domicile in Bengaluru, India. Their CEO, Vishal Sikka, recently stated that about 60% of the collective revenue from the  Indian H-1B sponsor companies are derived from the U.S. If you take Sikka's 60% of Infosys $10 billion in revenue for 2015, $6 billion in revenue came from the U.S. Some speculate this revenue is gained via H-1Bs, and this is only one sponsor company on the list.

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Politics
Mark Zuckerberg, founder of Facebook (another technology firm) and co-creator of FWD.us (pronounced Forward US), an immigration advocacy group, has partnered with Republican Senator Marco Rubio, recently slammed on his H-1B strategy, to lobby for the tripling of the H-1B cap to 250,000 a year. He is joined by the CEO of Yahoo and Chairman of Google, along with many others Silicon Valley leaders in this initiative.

On the flip side, Senator Bill Nelson, a Democrat, is trying to slash the cap to 15,000. But this is not a Democrat vs Republican beef. Democratic Congressman Bill Pascrell of New Jersey and Republican Congressman Dana Rohrabacher of California introduced a bill in 2015 to reform the H-1B visa and prohibit companies from hiring H-1Bs if they have more than 50 employees. Keep in mind that Pascrell and Rohrabcher are from states which have the highest concentration of Indian Americans.

A concern was recently raised by Senator Dick Durbin, another Democrat, in his floor statement on H-1B Visa Reform. He stated “companies… send the engineers to America to fill spots—and get money to do it—and then after the three to six years, they bring them back to work for the companies that are competing with American companies. They call it their outsourcing visa.”

Where does Trump stand on the cap? Time will tell. Is Trump in agreement with Zuckerman or Durbin? Although he has not voiced his opinion in totality as of yet, he has voiced concerns about the quality of the resources being imported. Trump has stated numerous times that we must import the “best and brightest” workers, giving special consideration to foreigners who have graduated from U.S. colleges.

In addition to quality factor, much scrutiny is being given to the lottery system that issues the visas, with changes intended to provide preference to U.S. university graduates and those with high skills requiring higher wages. Granting H-1Bs based on a fair market salary level will actually help Silicon Valley companies gain access to the system. In turn, raising salary requirements should open up more jobs in America, allowing our college graduates to train up. In Silicon Valley, these jobs are primarily new jobs, but as seen in the news some companies are using H1-Bs through large providers to replace existing employees, even asking the departing employees to train the new employee.  The salary requirement may help reduce this trend as well.

Good Intentions Gone Astray
Whether you are an H-1B visa holder,  a U.S. citizen or a U.S. permanent resident, I think you would agree that the H-1B visa classification has significantly drifted from it's intended purpose. The original vision of adding to the needed pool of talent and skills for new jobs, strengthening the U.S. economy and providing individuals the chance to fully realize their full potential, has drifted. Sometimes drifting towards where it is used to replace people in existing jobs, increasing profits in and outside the U.S. without necessarily strengthening the U.S. economy, and exploiting both the new and the old. We should ensure that any changes to the H-1B visa program helps it meet its better intentions rather than just moving a number (cap) up or down.


 

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