Decoding the H1B Dilemma

While much of the debate surrounding immigration has centered on the southern border, a separate debate of potentially equal consequence is shaping up in America’s tech industry. Already controversial before the 2016 election, the H1B visa program garnered new attention when the then Presidential-candidate Donald Trump called for the program to be reformed, describing it as a job killer. This post will go into detail on what the H1B visa program is, why it has become so controversial, and its potential future.

The Background

The first H1B visas were established in the 1950s to allow companies to hire foreign workers whose skillsets are in short supply/unavailable in the US. In 1990, it was amended to place educational and numeric restrictions on would-be visa recipients, requiring a minimum of a bachelor’s degree and setting a cap of 65,000 visas available nationwide. H1B visas are non-immigrant visas, allowing their recipients to stay and work in the US for 3 years (with the potential for up to one 3 year extension). The visas are given out via lottery based on the petitions submitted to the government (the current 85,000 cap is generally reached within less than a week of the application window opening).

H1B visas are applicable only so long as their holders are employed in the US; the loss of one’s job means that the visa will be revoked if new work is not found within a seven month grace period. Employers of H1B visa holders are also required to offer annual salaries of no less than $60,000. While the visas apply to a potentially broad variety of professions, the vast majority each year are given for technology related positions.

The Issues

The controversy surrounding the visas stems from the perception that they are costing Americans jobs in the tech industry while depressing wages for those currently in the industry. A handful of anecdotal but well publicized stories of companies of workers being forced to train their H1B replacements drew headlines and fury from many across the political spectrum.

This fury, however, is in many cases misguided.

The recognizable tech giants (Google, Facebook, Microsoft, etc.) actually hire relatively few H1B workers and generally pay them at rates well in line with industry averages (Google H1B workers average over $120,000 per year). The main source of the problems generally associated with H1B visas instead stem from an industry relatively unknown to the general public: outsourcing companies.

Outsourcing companies are not often discussed on the news, but it’s actually fairly easy to understand the services that they provide. Say that you’re a large bank looking to open a new office and will need someone to manage the office’s IT systems. Instead of your company having to go out hire and train IT staff, you can pay an outsourcing company to use some of its trained workers to fill the jobs instead.

Outsourcing as a broader industry is nothing new (it’s been popular with cleaning services for decades). The snag came when several large IT outsourcers realized that they could find IT workers willing to work for drastically less money if they brought them from abroad using the H1B program. These companies are generally using their H1B workers to do lower-mid level IT work on the cheap (comparatively) and suck up large percentages of the H1B visa pool. These workers then can be hired by US firms far more cheaply than their native counterparts, leading to the widely publicized issues mentioned above.

Looking Forward

Given president Trump’s protectionist rhetoric, there is considerable speculation as to the future of the H1B visa program. Despite the abuse cases, the H1B program is still considered critical by many tech companies who hold considerable political clout in Washington. Several suggestions on H1B reforms have been floated in recent months, with most focusing on the idea of increasing the minimum salary requirements to hamper the ability of companies to use H1Bs as cheap alternatives. A recent bill working its way through the US House of Representatives would increase the minimum annual salary of H1B workers from $60,000 to $100,000. Rumors suggest that this bill may have the support of the president, however many unknowns remain. Regardless, it’s a near certainty that this issue will continue to garner attention in the months and years ahead.

H1B Visa public policy technology

Greetings all. Here at ZL I work in Business Development to find new and relevant ways to deliver our information governance solutions and expertise to organizations and businesses. Outside of work my interests center around languages, politics, philosophy and traveling.