H-1B Work Visas and the U.S. Presidential Election (PWC)
Although the US unemployment rate dipped to 4.9% in February for the first time since 2008, the issue of immigrants stealing jobs is always a hot topic during an election season. The H-1B temporary visa, meant for specialized workers with college degrees, poses a unique conundrum. American companies apply on behalf of potential employees and in recent years the demand for H-1B visas has often outstripped the number available. Many critics of the current system, including the late Steve Jobs, have said that the U.S. is unable to reach its potential in the tech industry because of the limited number of foreign qualified professionals it accepts each year.
Last week was the United States Citizenship and Immigration Services' (USCIS) start date (April 1) for accepting applications. For the fourth year in a row, the H-1B visa cap was reached within a week. A record-breaking 236,000 foreigners applied, 3000 up from last year.This was despite the recent hike in H-1B application fees meant to discourage large companies from hiring foreign workers. While the processing of an H-1B visa costs most employers $4,550, starting this year an extra charge of $4000 has been imposed on companies with more than 50 employees of which half are on H-1B visas. Currently a total of 85,000 H-1B visas are granted every year, with 20,000 of those being reserved for those with advanced degrees from U.S. institutions. The limit does not include those looking to renew their visas.
According to the latest annual report released by the Labour Department the top 3 occupations of H1B visa recipients for 2014 were Computer Systems Analysts, Computer Programmers and Software Developers (Applications). The top employers included Cognizant Technology Solutions Corporation (CTSH), PricewaterhouseCoopers (PWC), Deloitte Consulting LLP, Wipro Limited (WIT), Tata Consultancy Services Limited (TCS.NS) and Infosys Limited (INFY). Every year a few companies flood the system with applications and receive a large chunk of approvals since the process is conducted on a first-come-first-serve basis. This has led to some criticism regarding the odds stacked against smaller start-ups looking to acquire visas. In 2014, Cognizant was granted almost 56,000 H-1B visas for its employees. Also, according to a New York Times report, H1B workers earned on average less than similarly qualified American employees.
So the question remains, is the U.S. producing enough college graduates with the skills in demand ? Or are companies taking advantage of the system to hire foreign workers for lower pay ?
The current presidential candidates all have slightly different takes:
Hillary Clinton (D)
The Clinton campaign website says nothing of the H-1B Visa Program and she rarely if ever brings it up during her speeches. Investopedia reached out to her campaign press team but has received no response. In early March of this year, the Sanders campaign shared a video of her addressing a crowd of Indian students. During her speech she said that outsourcing was a part of the economic relationship the US shares with India, and that while Obama's statements may have made Indians nervous, "Well, you know it’s an election campaign, and there is an obligation in any election campaign."
Important to note is that donors to the Clinton Foundation include Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL), Infosys, Tata Consultancy Services, PricewaterhouseCoopers and Qualcomm Inc. (QCOM), all of whom employ people on the H-1B visa. The Silicon Valley Community Foundation also donated to the Clinton Foundation. According to figures collected by the Center for Responsive Politics, members of the electronics manufacturing and equipment industry have donated $2,302,322 to the Clinton presidential campaign.
Bernie Sanders (D-Vermont)
Sanders was one of ten senators in 2015 to sign a letter addressed to the US Department of Justice, the Department of Homeland Security and the Labor Department asking for an investigation into the use of H-1B to replace American workers. He also criticized the expansion of guest worker programs in 2013 and continues to do so today but his arguments often focus on the vulnerability of foreign workers entering on the H-2B and H-2A programs.
According to his immigration platform, his beliefs are that if there is a true labor shortage, workers should be getting paid higher salaries. He wants to increase wages for H-1B workers and change the current rule that binds an employee to the employer that sponsors their visa.
Ted Cruz (R-Texas)
In 2013, during the comprehensive immigration reform bill debate in the Senate, Cruz said he wanted to raise the number of H-1B Visas distributed by 500% but he has done a 180 on the issue.
Now he would like to make it much more difficult for companies to hire foreign workers. He co-sponsored a bill called “American Jobs First Act of 2015” that seeks to amend the current H-1B visa program. The bill states that employers must pay H-1B workers a minimum wage of $110,000, a figure to be adjusted for inflation, cannot charge foreign workers a penalty fee for ceasing employment before the agreed date or replace an American worker with a foreign worker. In an interview with CNN, he said he changed his mind because companies started “bringing in people who are not high-skilled, bringing in medium- and low-skilled [information technology] workers and then firing American workers and, adding insult to injury, forcing the American workers to train their foreign replacements.” His bill also seeks to remove the Optional Practical Training program that allows graduates from American universities to work in the country for 12 months on a student visa.
Donald Trump (R)
During a Presidential election in the first week of March, Fox News' Megyn Kelly asked Trump about his stance on “highly skilled workers” and he responded that the country needs to “keep the brain power in this country” and allow graduates from American universities to stay.
However, in a statement released soon after he addressed the question again and clarified, “Megyn Kelly asked about highly-skilled immigration.The H-1B program is neither high-skilled nor immigration: these are temporary foreign workers, imported from abroad, for the explicit purpose of substituting for American workers at lower pay.I will end forever the use of the H-1B as a cheap labor program, and institute an absolute requirement to hire American workers first for every visa and immigration program. No exceptions.”
Also notable is that India, a country from where the majority of H-1B contractors arrive, is on Trump’s list of countries the United States is being “ripped off” by when it comes to jobs.
John Kasich (R)
The Ohio Governor has been quite mum on the issue of H-1B; but the free trade advocate has been accused of supporting trade agreements that cost Ohio manufacturing jobs and pushed people into the service industry. In the past he has voted for NAFTA and in favor of giving China "Most Favored Nation" status. In March, Trump railed against Kasich for supporting the Trans Pacific Partnership during a rally in Ohio.
But jobs haven't just been leaving Ohio, they have also been going to foreign workers moving to the US. According to a 2014 report, Ohio was ranked 13th on the list of states with the highest number of permanent labor certifications issued by the Department of Labor. These certifications allow employers to hire a foreign worker to work permanently in the United States i.e. grant the employee a green card.
Investopedia reached out to his campaign for his stance and are awaiting comment.
The Bottom Line
For candidates who haven't made the H-1B visa a talking point during this election season, it can only be assumed that the status quo is acceptable to them. But in government, decisions aren't made in a bubble. The companies that hire the most H-1B workers have a say in policy through lobbying as well as campaign contributions. According to the Center for Responsive Politics, the top five lobbying groups on the subject of "immigration" for 2015 were Microsoft, Qualcomm, Cognizant, Intel Corp. (INTL) and Apple Inc. (AAPL).
What the debate is missing now is Marco Rubio, who co-sponsored the Immigration Innovation Act (I-squared bill) of 2015 that would increase the H-1B visa cap. Possibly one of the most important bills to be introduced in the Senate regarding H1B, its progress should produce some interesting reactions.