H-1B: A good system gone bad
- 28 March, 2017 00:56
No one knows what the Trump administration will do about the H-1B visa program. Certainly it is in need of reform. Just as certainly, though, it needs to be retained. Visa holders admitted to the U.S. under an H-1B visa program with the right controls very much represent the type of immigration the U.S. should be encouraging.
In 1990, when Congress expanded the 1965 Immigration and Nationality Act, it created the H-1B visa program. Its intention was to allow U.S. employers to hire foreign professionals when qualified Americans couldn’t be found. Visa holders must have a bachelor’s degree along with specialized knowledge and experience in information technology, chemistry, engineering, math, medicine or other occupations requiring specialized skills.
Difficulties with the H-1B visa are reminiscent of earlier immigration/isolationism issues. One man’s story highlights the challenges of immigration legislation. Qian Xuesen, born in Hangzhou, China, received a scholarship to MIT in 1935. After receiving his Ph.D. from Caltech, he joined the faculty there. During WWII, he was a key member of the Allies’ missile team working to counter Germany’s V-2 rocket and was also a member of the Manhattan Project. In 1949 he became the first director of Caltech’s jet propulsion laboratory.
On June 6, 1950, his security clearance was revoked as part of the Red Scare — even though he had left China 13 years before the Communists came to power. Placed under virtual house arrest, he decided to return to China but was not allowed to leave the U.S until 1955. Back in his native land, he became known as the father of the Chinese missile program and was a major contributor to China’s first successful test of a nuclear bomb on Oct. 16, 1964.
Although the H-1B visa had not yet been created, the Qian situation highlights some of the problems that plague the U.S. visa and immigration process. Even though he made significant contributions to the U.S. war effort, Qian was never able to become a naturalized U.S. citizen. Worse, as a result of the indignities he suffered, the U.S. lost one of the world’s brightest scientific minds to one of our most competitive rivals. Former Navy Secretary Dan Kimball, who tried to keep Qian in the U.S., stated, “It was the stupidest thing this country ever did. He was no more a Communist than I was, and we forced him to go.”
Although the H-1B system was designed with good intentions and does help some companies acquire hard-to-find skills, the system is widely abused. Recently, The New York Times ran an article titled “Large Companies Game H-1B Visa Program, Costing the U.S. Jobs.” In 2011, the Government Accounting Office published a report called “H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program.” Today’s H-1B problems include the following:
- U.S. workers are often replaced by lower-paid H-1B workers. A New York Times headline summarized this problem: “Pink Slips at Disney. But First, Training Foreign Replacements.” (On the national level, the story about Disney’s IT workers was broken by Computerworld’s Patrick Thibodeau.) Companies with large numbers of H-1B workers must assert that they will not replace U.S. workers. However, that requirement does not apply if the H-1B workers are paid more than $60,000 per year. Since IT is a relatively well-paid profession, it is rather straightforward to replace most IT staff with lower-paid H-1B holders.
- Outsourcing firms dominate the H-1B visas awarded. The program was intended to allow firms to hire small numbers of people with specialized skills. Created in an era before widespread outsourcing, the program did not envision wholesale replacement of entire functions or departments. Unfortunately, in 2014, almost one-third of the H-1B visas were awarded to 13 outsourcing firms. Worse, seven India-based outsourcing firms received nearly 20% of the visas. This is ludicrous!
- The program assists companies headquartered outside the U.S. The program was intended to help U.S. firms, not those based in other countries. Unfortunately, the regulation allows any company with a U.S. tax ID to apply for an H-1B visa. This permits firms headquartered in other countries to create U.S. subsidiaries to submit the H-1B paperwork. While this is perfectly legal, it does skirt the law’s purpose.
- Few small firms are able to get H-1B visas. The New York Times identified multiple small firms unable to acquire H-1B visas. Mark Merklebach’s firm offers a good case study. The firm, Green Earth Operations, was unable to acquire visas for Mandarin-speaking engineers and landscapers to work in Seattle. These individuals would have worked on a variety of green projects in China, including rehabilitating lakes and rivers, creating wetlands, better managing urban flooding, and improving water quality. When the firm was unable to get the visas, the jobs were moved to Taiwan.
Job losses like these damage the U.S. economy. In addition to paying U.S. taxes, the Mandarin speakers, would have made it possible for non-Mandarin speaking, American engineers to assist with projects in China.
- Many H-1B employees are treated unfairly. Many are forced to work significantly more than 40 hours per week without overtime. Those who complain are threatened with dismissal. Both employee and employer know that without a job, the H-1B visa holder has to leave the country. Worse, if the employee is attempting to get a green card, that employee will have to restart the entire process after finding a new job. Searching for “H-1B visa holders treated unfairly” shows blogs discussing various types of abuse. Even more telling, the search reveals a number of lawyers advising persons holding H-1B visas to “know your rights.”
- Some H-1B visa holders lack advertised credentials and associated skills. Searching for “H-1B visa fraud” produces thousands of results. Some people have been fined or jailed for creating fake college degrees or inflating experience.
Immigrants make a significant contribution to our economy. Over 10% of the 2016 Forbes 400 were born outside of the U.S. In describing the 2016 Forbes 400, the magazine noted, “The very act of immigrating is entrepreneurial, a self-selecting risk taken in an effort to better one’s circumstances.” And many do. As a boy, my father-in-law spent several years in a postwar European refugee camp before coming to the U.S., where he attended college and became a well-respected physician.
In the short term, the government should do some simple things to improve the program. It should increase the price of acquiring an H-1B visa from approximately $3,000 to $50,000, thereby making salary arbitrage more difficult. It should eliminate the $60,000 salary limit for asserting that no American lost a job to a H-1B visa holder. H-1B visas should only be granted to firms headquartered in the U.S. and not to foreign subsidiaries holding a U.S. tax ID. The number of H-1B visas granted to any firm should be limited. Finally, H-1B visa holders who lose their jobs without cause should be given additional time to find another job before being forced to leave the country.
As an American IT professional, I want to see H-1B visa abuse stopped. The H-1B is only one of many problematic visas, but it clearly illustrates problems with current immigration legislation. I hope that Congress will reform immigration law in ways that better support IT professionals, IT organizations and IT companies. Write to your congressperson before you are also replaced by an H-1B visa holder!
Bart Perkins is managing partner at Louisville, Ky.-based Leverage Partners Inc., which helps organizations invest well in IT. Contact him at BartPerkins@LeveragePartners.com.