On April 18, 2017, President Donald Trump signed an executive order called “Buy American, Hire American”, directing federal agencies to review the H-1B visa program with the aim to end alleged ‘fraud’ and ‘abuse’ and ensure only the “most-skilled and highest-paid applicants” were successfully processed.
[H-1B visas are issued to foreigners who have ‘theoretical’ and ‘technical’ expertise in specialized areas to work in local [read American] companies for temporary period.]As a follow up, the US Citizenship and Immigration Services [USCIS] which administers these visas, is already implementing measures which severely restrict or delay grant of such visas. These include inter alia stop ‘premium’ processing of applications, more rigorous interview/procedural requirements, denial of employment to spouses of those already working in US, dispensing with a leeway of 2 years available to students enrolled in US universities/colleges to look for jobs after they complete their education.
Furthermore, a virtual siege on H-1B visa holders is in the making. Recently, the Intellectual Property and the Internet Subcommittee of the House of Representatives voted to pass a law “Protect and Grow American Jobs Act [HR 170]” whose provisions tantamount to prohibiting their entry. The bill was passed by House Judiciary Committee [HJC] during a markup hearing. After approval by the full House, a similar version of the bill will be passed by the Senate before sending to Trump to be signed into law.
For H-1B dependent companies – defined as companies with more than 15% of employees on H-1B – the bill proposes to increase minimum salary from $60,000 to $90,000 and requires their employers ‘to give an undertaking that they will not displace a US worker during their entire employment and not just 90 days before and after filing of H-1B petition’. It also allows the department of labor to conduct at least 5 random investigations of H-1B dependent employers.
The USCIS issues 85,000 such visas every year — 65,000 hired from abroad and 20,000 from those enrolled in US universities/colleges. Considering that the numbers of applications made are much higher than the threshold, the agency uses an electronic lottery to pick the ones that will go through. This is a standard, time tested and transparent system. It has been in use for decades and no one ever found any fault or raised questions on its legitimacy and credibility. If, Indian companies manage to secure a good share of the quota even while going through the rigorous scrutiny, they cannot be faulted.
In a fundamental sense, H-1B is a trade and services issue. The demand for such visa arises primarily because a good slice of operations of US based companies are outsourced and a number of such contracts are bagged by foreign entities including Indian companies. The demand for professionals is business driven and there is no valid justification for imposing a ceiling on the number of H-1B visa. Yet, by putting a cap, the administration has throttled free flow of services and denied the benefit to American companies.
Now, the move to impose further restrictions – as contemplated under the law passed by the HJC – will lead to a scenario whereby it will become impossible to avail of H-1B visa facility in a cost effective manner. The hike in minimum salary by a steep 50% is bad enough. What makes it draconian is that for every professional brought from India [albeit under H-1B], the Indian company will have to retain US worker during the entire of his/her employment.
One shudders to fathom the financial implications of this scenario. Apart from the company having to give Indian professional US$ 90,000, it will also have to pay US worker a minimum US$ 90,000 and even higher if the latter was already drawing a higher salary. In other words, the effective cost of deploying H-1B worker would be a minimum of US$ 180,000 or three times the amount being spent currently.
Moreover, the company will be subject to bureaucratic red-tape [courtesy, investigations by the labor department] bringing in additional documentation, harassment and associated cost.
The average wage for H-1B visas for Indian IT companies is between $60,000 and $65,000. By contrast, the median Silicon Valley software engineer’s wage is over two-and-a-half times at $150,000. This may have prompted the law makers to conclude that the extant system is weighted toward lowest wage workers and there is dire need for replacing this by a dispensation that prioritizes higher-skilled, higher-paid [albeit American] workers.
The US government is committing a grievous error in equating “most-skilled” with “highest-paid” applicant. Simply because a professional is highest paid, it does not automatically follow that he is the most skilled. Conversely, if he is paid less, it cannot be inferred that he won’t the most skilled. Put differently, if a most skilled foreign national is available at a lower price [@ US$ 60,000-65,000 which is less than half the cost of a local], there is nothing unfair in it; instead, this should be welcome.
Yet, if viewing this purely as an immigration issue per se or an instrument to give more jobs [albeit in skilled category] to Americans, Trump/US legislature decides to impose a virtual ban on H-1B visa holders, this will be a losing proposition for all stakeholders. While, affecting Indian IT companies [by way of reduced export earnings], this will also undermine the growth and competitiveness of American companies.
The US should recognize that Indian IT companies are contributing billions of dollars to US GDP as also in tax collections besides supporting over 500,000 US jobs. A perception that H-1Bs granted to India-centric IT service companies cause any loss of American jobs is a myth. Their number is a tiny fraction of 20 million people who lose their jobs annually across the US economy – due to reasons not linked to hiring H-1B employees.
It is hoped that US government will not pass any law or take such measures that will come in the way of promoting mutually beneficial economic partnership between India and USA.