“How applicants and employers may be impacted by the Trump administration’s possible changes to the H1-B visa process.”
By Jeremy Ron Teboul
Winter has certainly come to an end in Washington D.C. but has left employers and job seekers around the United States and the world quite chilly. On April 3rd, through its Citizenship and Immigration Service agency (USCIS), the White House announced new changes to the H1-B visa program, which allows companies to employ skilled foreign workers in the United States. The Department of Homeland Security, issued a memo, announcing that “more scrutiny” will be put in place to eradicate immigration frauds involving the sponsorship of H1-B visas. This is particularly relevant, as most H-1B visas’ operations are put in place by companies during the beginning of April and usually come into effect 6 months after this date. H1-B visas can account for 85,000 of jobs in the United States for foreigners, 82% of them coming from India and China, according to data from the United States Department of State. In this article, we analyze what the new scrutiny put in place by the Trump Administration means for all actors involved in this process. What is the economic cost of H1-B visa? Why is the Trump Administration scrutinizing H-1B sourcing? And how do these changes affect companies and applicants?
H1-B visas cost money for applicants, companies and the federal government:
Immigrant and nonimmigrant visas from 2011 to 2015
(retrieved from the U.S. Department of State)
Immigration is essential to companies in the United States. As far as experienced hires are concerned, companies are looking for specific skills which can sometimes apply to foreigners. Every year, more than 10 million visas are awarded by the United States’ Department of State to foreigners. There are about 185 different types of visas awarded every year for different purposes, most of them, allowing its holders to work in the United States, legally. However, we distinguish two types of visas: Immigrant visas, which allow permanent immigration to the United States and nonimmigrant visas, including H1-B visas, which are of interests here. The table above shows a 45% increase in the number of visas awarded to foreigners from 2011 to 2015, a percentage which illustrates the Obama administration’s stance on immigration. For current U.S. President Donald Trump–who has promised to be cautious on matters such as immigration, jobs, and China–government scrutiny in the H1-B visa process was obviously to be expected.
Now we wonder what H-1B visas actually cost to companies, applicants and to the United States’ federal government:
-In theory, H1-B visas involve different costs that are spread out between the applicant and the company who nominates the qualified applicant for this visa. The cost of creating such visa is split between these two agents and usually ends up being fully covered by the company–except if legal services apply for the applicant. The Los Angeles Times reports that “there were 17 H-1B visa requests for every 1,000 jobs in Silicon Valley.”
-In practice, the cost for the U.S. federal government, which simply involves processing fees and operational fees, sums up to much less than what the company has to pay. However, the Trump administration insisted on the economic opportunity cost of hiring foreign workers, as opposed to American. This explains why the Trump Administration, wants to adopt more scrutiny into the process. The USCIS has not yet disclosed information regarding the number of visas it will award for future financial years and if restrictions would apply for specific countries’ applicants. Despite not being very harmful to applicants just yet, the H-1B visa scrutiny certainly foreshadows more drastic measures are to come, possibly defining strict quotas as far as Indian and Chinese immigrants are concerned.
What does it mean to be ‘tough’ on H-1B frauds?
In this section, we come to ask what ‘H-1B frauds’ are and why the federal government is becoming ‘tough’ on them. Our first analysis aims to explain ‘who actually frauds who?’
Previous comments from the Trump administration with regards to immigration tend to hint that H-1B visa applicants could be to blame in this process. However, what we find is a wholly different story: When the Trump administration refers to H-1B visa frauds, they are not referring to either fraudulent applicants or applicants which do not abide by American laws but rather to fraudulent American companies–particularly those in the technology sector–who apply for more H-1B visas than they actually need, in order to have a higher chance of hiring as many foreign workers as possible. This is considered fraud as H-1B visas only apply for specifically skilled applicants and not for cheaper labor. Tech companies are trying to outsource work as much as possible and a way to do that is to import highly skilled and ‘cheaper’ workers using the H-1B process. President Donald Trump has insisted that this corporate behavior is fraudulent as it favors foreign workers as opposed to American workers for reasons other than aptitudes.
The Future of H1-B visas
On the one hand, while it first seems that foreigners are the only ones targeted by H-1B visa changes, it appears that the Trump administration actually intended to threaten outsourcing companies, who tend to abuse of this system. On the other hand, there is a clear movement for protection of U.S. workers by the government: a CNN Tech article reports that “the Department of Justice recommended that people call a hotline if they see discrimination of U.S. workers on the basis of their nationality.” It further states that “the USCIS asked that tips about visa abuse be sent to a newly established email address.” Not only is the Trump administration scrutinizing the process of administering such visas but it also announces on-going scrutiny for all companies hiring H-1B workers in the form of site visits. CNN adds that a Department of Homeland Security spokesperson declared that “site visits are not meant to target non-immigrant employees for any kind of criminal or administrative action but rather to identify employers who are abusing the system.”
Looking at the timing of such statements, we were not surprised to hear about President Trump’s ‘buy American, hire American’ executive order on April 18th, which targets H1B visas. This executive order, as its name suggests, emphasizes the scrutiny evoked above, coming from the new administration in the H1B visa process. Apart from reiterating the role of the executive branch in making sure tech companies prioritize U.S. workers in their hiring process, the order does not – yet – affect foreign H1B workers directly. On the other hand, silicon valley giants like Apple or Google, who chose not to comment on the order, clearly got the message.
Since Trump has promised “million of jobs” back for U.S. citizens, we conclude that it is not the end of the H-1B war between corporate leaders and U.S. President Donald Trump.
Sources:
Photo from Pixabay.
O’Brien, S.A. (April 3rd 2017) Trump administration moves to combat H-1B visa fraud with increased site visits. CNN. Retrieved from http://money.cnn.com/2017/04/03/technology/h1b-visa-fraud/
USCIS. H and L Filing Fees for Form I-129, Petition for a Nonimmigrant Worker. (n.d.). Retrieved from https://www.uscis.gov/forms/h-and-l-filing-fees-form-i-129-petition-nonimmigrant-worker
Travel State. Statistics and annual reports of the visa office. Retrieved from https://travel.state.gov/content/visas/en/law-and-policy/statistics/annual-reports/report-of-the-visa-office-2015.html
Lien, T. Changes to H-1B visa policy could have a chilling effect on the tech industry. (n.d.). Retrieved from http://www.latimes.com/business/technology/la-fi-tn-silicon-valley-h1b-changes-20170404-story.html
https://www.usatoday.com/story/tech/news/2017/04/04/new-h-1b-visa-measures-employment/99992732/
Business Standard
Breitbart
http://www.breitbart.com/texas/2017/04/05/trump-admin-creates-reporting-tool-h-1b-abuse/
Financial Express
http://www.financialexpress.com/india-news/us-president-donald-trump-cracks-down-on-h1b-visa-programme-5-things-indian-techies-must-know/614274/
Recode
https://www.recode.net/2017/4/13/15281170/china-india-tech-h1b-visas
The Economics Review 