H1Bs: Job Killers?

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During the most recent presidential election, Donald Trump attempted to win over working-class Americans by pledging to put “America first.”  The slogan ultimately became the foundation of his campaign, attracting a large demographic of voters that held negative perceptions of immigrants and their participation in the U.S. job market.  Now as president, Trump continues to promote this platform.  The H-1B visa, defined as as a temporary visa category that allows employers to petition for employment of foreigners in a “specialty field”, has been the focus of this issue. [1]  For example, in April of 2017, Trump signed an executive order that will place the H-1B visa under scrutiny, along with many similar work programs that enable foreigners to live in the U.S. (this includes exchange visas for certain teachers and professors in designated programs, as well as media visas for foreign journalists). [2]

The policy, titled “Buy American, Hire American,” is intended to boost employment rates for American citizens and reduce the effect of job outsourcing – the tendency to hire foreigners instead of Americans due to lower labor costs. [3]  While the issue may not receive nearly as much attention as some of other developments across the nation, such as rising tensions with North Korea or the nationalist protests in Virginia, the H-1B visa situation is a controversial topic because it has a direct effect on the lives of millions of people currently residing in the U.S. – implications exist for both the American citizen and the foreigners in pursuit of the American dream.  This is because the visas are an important element of the U.S. job market.

This seems to be where the political vendetta lies with this issue – the polarizing nature of outsourcing, which can be further simplified to domestic labor vs. foreign labor.  However, with that said, this vendetta here cannot only be limited to domestic vs. foreign labor.  For example, the tension also represents a dichotomy between U.S. employment and free market capitalism.  In this sense, this vendetta is fueled by the opportunity cost of choosing one alternative over another.  

Currently, the legislation regarding the H-1B visa can be summarized as follows:

• Congress has limited the annual national amount for H-1B visas to 65,000 with an additional 20,000 reserved for Master’s or Doctorate degrees from a higher U.S. institution of learning.  If the cap is reached in the first five days, the process for distributing the visas is based on a lottery system.
• President Trump has acknowledged that the lottery system is flawed and intends on revamping the system so that it is based on merit.  If Trump’s proposals passes, it will then become more difficult for foreigners to obtain an H-1B visa, as the minimum wage requirement of $60,000 will be more than doubled. [4]

However, one cannot be certain what Trump’s proposals will look like in practice or what the longterm effects will be.  There are both positives and negatives associated with Trump’s proposals.  On one hand, many individuals support Trump’s push for H-1B visa reform because they believe that the current system favors the employment of immigrants for lower pay, while displacing qualified Americans.  Additionally, in past years global outsourcing firms have dominated the system.  

• In 2014, more than 10,000 companies applied for an available 85,000 visas – a limit set by Congress – on behalf of prospective foreign employees. [5]  
• However, out of the 85,000 visas, more than 30,000 of these visas were issued for less than 20 companies, meaning many smaller American companies were excluded from the system.[6]  
• While any individual foreigner is limited to one H-1B visa application, the discrepancy in these numbers comes from the employer’s side.   The large global outsourcing companies, which favor low-cost laborers, are able to submit an unlimited number of applicants for their employees, reducing the opportunity for more skilled laborers who expect higher wages.

On the other hand, a counterargument can be made against Trump’s proposals.  From an economist’s perspective, outsourcing can be a valuable tool to boost the overall global economy.  Many analysts believe that foreign workers on H-1B visas do not replace American workers.  This is because these immigrants are typically highly specialized in a particular field of study, including science, technology, engineering and mathematics (STEM). [7]  As a result, the product of outsourcing can be seen as a way to expand the economy by creating new opportunities and jobs through STEM innovation.  One statistic in particular stands out: “from the creation of the H-1B program in 1990 to 2010, H-1B-driven increases in STEM workers were associated with a significant increase in wages for college-educated, U.S.-born workers in 219 U.S. cities.” [8]  Furthermore, employment rates are particularly low in the STEM-related fields, often less than half the national employment rate. [9]  To put it bluntly, individuals with a STEM occupation are not really in need of work.

Clearly, the situation regarding the H-1B visas is a bit complex and will continue to be a popular discussion in the months to come given Trump’s insistence to push forward his “America first” platform.  Based on this empirical evidence, one must recognize that the claims against the current H-1B system are mostly misleading, as these employees do not necessarily remove American workers.  Therefore, the reforms associated with Trump’s “America first” platform may not be the ideal policy for overall economic growth. The restrictions imposed on the H-1B system will hinder the overall market economy because of a lack of diversity in the workspace.  Additionally, eliminating outsourcing will further hold back the U.S.’ involvement in the larger global economy.  For these reasons, Congress needs to protect a robust H-1B system from restrictive measures for the sake of a globally-competitive economy.  Although this is no surprise, Bill Gates is one of the proponents of this policy, even testifying before Congress to advocate for more H-1B visas to help compensate for “a deficit of Americans with computer science degrees.” [10]

Take Action

One viable action that the average American can do is to reach out to their congressional representative.  In order for President Trump’s policy proposal to come to fruition, he would need the approval of both houses.  To find out more about the H-1B visas process and the potential reforms  being debated in the White House, visit the U.S. Department of State (Consular Affairs) at: https://travel.state.gov/content/visas/en/employment/temporary.html.  

Additionally, listen to the stories of foreigners seeking employment in the U.S.  Many students who graduated from U.S. institutions are forced to relocate because they are unable to obtain an H-1B visa.  These students are just like you –  they are just in pursuit of a better life.  So what has become of the American dream?  To follow the H-1B debate through the experiences of real stories visit NPR’s website at: http://www.npr.org/2017/03/06/518743020/h-1b-visa-debate-are-foreign-tech-workers-hired-over-americans

References and endnotes:

1. US H-1B visa for specialty workers. (2016, October 16). Retrieved August 22, 2017, from http://www.workpermit.com/immigration/usa/us-h-1b-visa-specialty-workers.
2. Purnell, N. (2017, January 25). H-1B Visas: How Donald Trump Could Change America’s Skilled Worker Visa Rules. Retrieved August 22, 2017, from https://blogs.wsj.com/indiarealtime/2017/01/24/h-1b-visas-how-donald-trump-could-change-americas-skilled-worker-visa-rules/.
3. Amadeo, K. (n.d.). 7 Things You Should Know About Outsourcing. Retrieved August 22, 2017, from https://www.thebalance.com/how-outsourcing-jobs-affects-the-u-s-economy-3306279.
4. Clairmont, N. (2017, April 19). What Will Trump’s Executive Order Do to H-1B Visas? Retrieved August 22, 2017, from https://www.theatlantic.com/business/archive/2017/04/hib-hire-american-trump/523626/.
5. Park, H. (2015, November 06). How Outsourcing Companies Are Gaming the Visa System. Retrieved August 22, 2017, from https://www.nytimes.com/interactive/2015/11/06/us/outsourcing-companies-dominate-h1b-visas.html.
6. Park, H. (2015, November 06). How Outsourcing Companies Are Gaming the Visa System. Retrieved August 22, 2017, from https://www.nytimes.com/interactive/2015/11/06/us/outsourcing-companies-dominate-h1b-visas.html.
7. The H-1B Visa Program: A Primer on the Program and Its Impact on Jobs, Wages, and the Economy. (2017, April 10). Retrieved August 22, 2017, from https://www.americanimmigrationcouncil.org/research/h1b-visa-program-fact-sheet.
8. The H-1B Visa Program: A Primer on the Program and Its Impact on Jobs, Wages, and the Economy. (2017, April 10). Retrieved August 22, 2017, from https://www.americanimmigrationcouncil.org/research/h1b-visa-program-fact-sheet.
9. The H-1B Visa Program: A Primer on the Program and Its Impact on Jobs, Wages, and the Economy. (2017, April 10). Retrieved August 22, 2017, from https://www.americanimmigrationcouncil.org/research/h1b-visa-program-fact-sheet.
10. Torres, N. (2017, May 04). The H-1B Visa Debate, Explained. Retrieved August 22, 2017, from https://hbr.org/2017/05/the-h-1b-visa-debate-explained.

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