The H1-B Visa: Help Wanted

If we can’t turn enough Americans into STEM workers, can we turn STEM workers into Americans?

H-1B visa application

Five Figures to Consider

3 million unfilled STEM jobs in 2016
199,000 H-1B visa applications were received in first five days of fiscal 2018
85,000 is the maximum number of new H1-B visas issued annually
$60,000 is the salary threshold at which U.S. employers are no longer required to offer foreign H-1B visa recipients parity pay with American workers
20% of U.S. start-up companies valued over $1 billion were founded by someone who first came to the U.S. as an international student

The U.S. isn’t turning out American STEM workers fast enough to keep up with our expanding digital economy. As of 2016 there were three million unfilled STEM jobs in the U.S. Nor are companies able to fill all those vacancies with foreign workers. Why? Because the H1-B visa program, which is supposed to enable U.S. companies to hire highly-skilled foreign workers, is short-changing both U.S. companies and U.S. workers. A random lottery system awards visas for entry-level tech jobs that Americans could fill, while leaving tech companies pining for the foreign specialty talent  they cannot hire.

Consider that 79% of full-time computer science graduate students at U.S. universities are international students. Without a guarantee they can use their made-in-the-U.S.A. education in the U.S.A., they may take their skills elsewhere. This is at a time of historically low unemployment, particularly in the high-tech sector where the unemployment rate was recently 1.7% for computer and mathematical occupations and 1.6% for architecture and engineering. It’s no surprise then that demand for H-1B visas far oustrips supply. In the first five days of the current fiscal year, the U.S. government received 199,000 H1-B visa applications from employers. The annual cap is 85,000.

So what does the government do when H-1B visa demand outstrips supply? It holds a lottery, which gives the same priority to entry-level programmers and analysts as it does to specialized PhD scientists and engineers. The result? The wages of American workers are undercut, and American companies don’t get the specialized talent they need. That’s because giant outsourcing companies including Infosys and Tata Consulting hire foreign, entry-level STEM workers to do the jobs Americans are already doing but pay them less. This is possible because wage protections for U.S. workers disappear for positions with annual salaries above $60,000 or for positions requiring a graduate degree. This puts wage pressure on entry-level American STEM workers and even puts some, often older workers, out of work. Current law has enabled companies such as Disney, Con Edison and others working with outsourcing firms to fire American workers and replace them with cheaper, temporary foreign workers  — but not before the American workers were directed to train their replacements. Of H-1B applications issued in 2015, 41% were for Level 1 wage jobs  — such as entry level computer programmer, financial analyst  and software engineer — occupations that in 2018 can no longer be considered “specialty occupations” and in which, despite legal requirements, many H-1B workers are not paid “prevailing wages.” In 2016, only 45% of H-1B visa holders had earned advanced degrees. The job market is so tight, though, that most U.S. STEM workers are still doing okay. The average starting salary for U.S. software engineers is $86,000. However a recent study showed that in the absence of immigration, wages for U.S. computer scientists would be 2.6% to 5.1% higher. Attracted in part by the high wages, 48% of U.S. college students are majoring in STEM or business fields.

Republicans and Democrats recognize the need for reform of the H-1B program. In a 2017 policy memo the current Administration promised to increase scrutiny in the application process, particularly among Level I wage requests. Requests for evidence to support applications rose 45% in 2017. More substantial legislative changes may come from three bills currently before Congress — the Immigration Innovation Act (Sen. Orrin Hatch, R-UT and Sen. Jeff Flake, R-AZ), the Protect and Grow American Jobs Act (Rep. Darrell Issa, R-CA) and the High-Skilled Integrity and Fairness Act, (Rep. Zoe Lofgren, D-CA). All would boost salary thresholds, ensure American workers are prioritized and reform the lottery system by raising or eliminating the visa cap and instead award visas based on qualifications and industry needs or by auction. Other changes might include indexing the salary threshold to inflation, eliminating the master’s degree exemption and allowing foreign students at U.S academic institutions to apply for green cards while they are in school.

Data shows that high-skilled immigration lifts our economy, and that skilled-workers here will locate abroad if the barrier to U.S. entry is too high. According to research by the Heritage Foundation, each highly skilled H-1B employee at a high-tech company supports the jobs of four Americans, and 65% of high-tech companies have expanded their hiring outside of the U.S. because of a shortage of qualified STEM workers. Consider also that  51% of America’s start-up companies valued over $1 billion (so-called “unicorns”) had an immigrant founder (often arriving on an H-1B visa), and that 20% of America’s start-up companies valued over $1 billion were founded by someone who first came to the U.S. as an international student.

FIVE FIGURE THINKING
Let’s bring the H-1B visa program into the digital age by increasing the number of visas available, raising or eliminating the salary exemption threshold and reforming the lottery system. In doing so, we will protect American workers and unleash a powerful economic engine.

Sources

Brookings Institute, Economic Policy Institute, Glassdoor, National Foundation for American Policy, New American Economy Research Fund, Pew Research,  Population Studies Center, The Heritage Foundation, U.S. Citizenship and Immigration Services, U.S. Department of Labor