As many are now aware, an executive order revamping the H1-B program was signed this week by President Trump. This directs government departments to introduce reforms that will ensure H1-B visas are given to the “most skilled or highest paid” applicants and is intended to prevent companies from replacing or undercutting American workers.
The order also calls for the strict enforcement of laws governing the entry of overseas labor to the United States, in order to create higher wages and employment rates for U.S. workers, and for new rules to be proposed that will further protect U.S. workers by preventing immigration fraud or abuse.
How will this impact U.S. companies? It’ll depend. Those that do abuse the system by applying for more H1-B visas than they actually need will be less able to do so, while those who don’t — which is the majority of companies that apply for these visas — will face even greater challenges in sourcing highly skilled talent. This change would also favor established U.S. technology companies that tend to pay high wages and put at a disadvantage outsourcing companies that hire immigrants to do more basic work at lower wages. Unfortunately, it would also impact start-up companies that don’t have the cash to pay new hires high wages, but do provide stock options.
H1-B Designed to Address Talent Shortage
The H1-B, a work permit created in 1990 in response to the talent shortage, allows non-U.S. citizens to work in the United States for up to six years. It’s geared to specialized workers who hold, at a minimum, a bachelor’s degree or the equivalent.
Under the H1-B program, 65,000 visas per year may be granted to non-U.S. workers and 20,000 more to foreigners with master’s degrees or doctorates from U.S. colleges and universities.
Currently, the demand for H1-Bs far exceeds the supply. This is evidenced by the fact that when the annual H1-B visa petition process begins in early April each year, the 85,000 cap is quickly reached (within five business days every year since 2014). As a result, a lottery must be held to determine which employers’ petitions will be processed.
While advocates of the new executive order claim that many companies use H1-Bs to replace U.S. workers with cheaper foreign labor, others disagree. The program, they maintain, provides much-needed talent due to the well-documented shortage of U.S. workers in specific occupations, particularly those within the tech industry and/or STEM occupations. In fact, notes The American Immigration Council, H-1B workers actually boost the U.S. economy by complementing U.S. workers. They not only fill employment gaps in many STEM occupations, but also expand employment opportunities for all. (For an interesting snapshot of where the H1-B has the biggest impact with regard to job and wage distribution, check out this post from Fortune.)
Beyond this, say others, restricting access to skilled talent will make hiring far more expensive than it is now, as these workers are already in such high demand. This, in turn, may lead to the loss of more U.S. jobs, as well as potential tax revenue.
If you would like more information on this, and how it may apply to your company and employees, or to sign up for our immigration alerts, please email MSI Immigration at email@example.com.
Carolina Rojas, president – MSI Global Immigration