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Immigration Blog

What’s Happening with H-1B Visas?

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Press outlets are abuzz with stories signaling that H-1B visa numbers are down and, therefore, no longer held in favor by employers. Is that the case?

The key article, which has led to other press articles, was a May 6 Wall Street Journal piece entitled “Long-Prized Tech Visas for U.S. Entry Lose Cachet.” The story began, “A visa program designed to supply skilled foreign workers to companies in the U.S. has slowed sharply, attracting about 50% fewer petitions so far this year than last year, and 80% fewer than in 2009.” The article cites three possible factors: a mediocre U.S. economic recovery, increased opportunities for workers to stay or return to their home countries and higher visa fees against primarily Indian companies.

Because of the great demand for H-1B visas, in recent years, U.S. Citizenship and Immigration Services (USCIS) has accepted H-1B applications for the next fiscal year on April 1, 6 months before new workers would be allowed to start work. That means current petitions filed by employers are for new H-1B visa holders to start work on October 1, 2011, which is the start of fiscal year 2012. (Fiscal year 2012 runs from October 1, 2011 to September 30, 2012.)

The argument that a major slowdown in hiring H-1Bs is taking place rests on the observation that in April 2010 over 16,000 petitions were filed and in April 2009 employers filed 45,000, according to USCIS. Moreover, back in 2008, employers filed enough petitions early on that the quota was reached in the first week filing petitions was permitted. Therefore, when compared to those earlier years, current numbers are down.

A Short History of the H-1B Quota

Congress did not “create” an H-1B visa program in 1990. Individuals had long been permitted to come into the United States on H-1 temporary visas to work in high skill jobs. Prior to 1990, going back to the 1950s, H-1s generally could not enter the United States if they intended to stay permanently.

Congress changed the law in 1990 to allow (explicitly) “dual intent,” which allowed H-1B visa holders to intend to become permanent residents (green card recipients), while also placing an annual limit of 65,000. Much of the debate over H-1Bs has centered on this annual cap.

By 1997, the 65,000 annual limit established by Congress in 1990 proved to be insufficient. Since 1997, employers have exhausted the supply of H-1B visas every year except during FY 2001 to FY 2003, when the ceiling was increased. In the past 9 years employers used up all the visas before or during the fiscal year. In 1998 and 2000 Congress passed short-term H-1B numerical increases that eventually expired.

In late 2004 Congress approved an exemption of 20,000 from the cap for recipients of an advanced degree from a U.S. university. In earlier legislation, Congress had approved an exemption from the numerical limit for those hired by universities and non-profit or government research institutes. With time Congress has revised the law it has come with greater regulation and, beginning in 1998, higher fees for hiring H-1B professionals.

image1

Market Forces: Why the H-1B Quota is Still Likely to be Fully Utilized

 
If history is a guide, then it is likely the H-1B quota for FY 2012 will be exhausted before the end of the fiscal year. If we examine previous years it is easy to see how labor market conditions have determined the number of H-1B visas used in a year. As noted earlier, for FY 2002 and 2003, Congress temporarily increased the H-1B limit to 195,000. But as Table 1 shows, during those years employers used fewer than 80,000 visas that counted against the cap. That meant about 230,000 H-1B visas went unused in those two years.

In other words, companies did not decide to hire more individuals on H-1B visas during those years simply because the visas were available. And the same is happening today. Employers are analyzing how many people are needed in the United States to accomplish their objectives. In general, smart employers only hire as many people as necessary, since laying off people is costly, inefficient and bad for morale.

What does this mean for H-1B visas? It means that we are still early in the hiring cycle for the 2012 fiscal year, which does not start until October 1, several months from now. Two factors are necessary to keep in mind in projecting H-1B use. First, an H-1B is generally the only practical way to hire a skilled foreign national, including an international student, to work long-term in the United States. Second, the annual quota on H-1B – 65,000 plus the 20,000 exemption for those receiving a masters or higher from a U.S. university – remains low as a proportion of the U.S. labor force, less than one-tenth of one percent.

The fluctuations in H-1B use help demonstrate that employers hire individuals on H-1B visas when it is considered important for the business, not to replace Americans.

 

Table 1

        H-1B VISAS ISSUED AGAINST THE CAP BY YEAR 

Fiscal Year

Annual Limit*

H-1B Visas Unused

1992

65,000

16,400

1993

65,000

3,400

1994

65,000

4,700

1995

65,000

10,800

1996

65,000

9,900

1997

65,000

0

1998

65,000

0

1999

115,000

0

2000

115,000

0

2001

195,000

31,400

2002

195,000

115,900

2003

195,000

117.000

2004

65,000

0

2005

65,000

0

2006

65,000

0

2007

65,000

0

2008

65,000

0

2009

65,000

0

2010

65,000

0

2011

65,000

0
Immigration Blog

Are Indians Using All the H-1B Visas?

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If one follows the press, one would assume Indian companies or Indian nationals use all the H-1B visas. Yet the issue is much more complicated than that. In fact, a focus on about a handful of top-using companies has distorted the overall picture of these visas used for highly skilled foreign nationals across the U.S. economy.

To understand the issue, it’s necessary to divide the use of H-1B visas into two separate categories: 1) H-1Bs petitioned for by India-based companies and 2) H-1Bs received by Indian foreign nationals. While there is an overlap between the two groups, these are not the same thing.

H-1B Visas Used by Indian Companies

A January 2011 headline from the technology blog of the Capitol Hill newspaper The Hill read: “GAO: Disproportionate share of H-1B Visas going to India-based staffing firms.” The article noted, “Almost half of all H-1B visa holders are from India.” The perception that Indian companies use most of the H-1Bs is often utilized by critics to undermine support for H-1B visas more generally.

One of the ironies of the criticism of Indian companies and H-1B visas is that the use of H-1Bs by such companies has declined quite a bit in recent years. As a March 2010 report from the National Foundation for American Policy (NFAP), where I am executive director, explained, “USCIS data show in FY 2009, less than 6 percent of new H-1B petitions went to Indian technology companies. Indentifying 25 India-based firms one finds Indian companies utilized fewer than 5,000 (4,809) new H-1B visas in FY 2009. Moreover, tracking these same companies over time, shows that the number of new H-1B visas utilized by Indian technology firms fell by 70 percent between FY 2006 and FY 2009.” (See Figure 1 below.) Based on the release of a list of the top 10 companies for new H-1Bs in FY 2010, it appears the Indian company use of H-1Bs was greater in 2010 than in 2009.

The NFAP report also explained that it is simplistic to assume that visas utilized by an Indian technology company (or any other company) means a loss of jobs in the United States: “When Indian technology companies or other non-Indian IT service providers perform work in the United States it is because U.S. companies believe such work makes their businesses more profitable . . . To the extent Indian (and non-Indian) companies performing information technology service work allow U.S. businesses to focus on core functions, run more efficiently, and enhance shareholder wealth, U.S. companies can hire more people in the long run by becoming more profitable.” This is not the popular perception but just because a viewpoint isn’t popular doesn’t mean it’s not true.

Moreover, when an individual enters the U.S. workforce, he or she earns a salary and spends that money. That spending helps support other jobs in the economy. In addition, when new workers help increase productivity they also help enhance the standard of living in an economy.

                                     Figure 1

H-1B Visas for Indians

A separate issue involves H-1B visas received by Indian nationals. The data from U.S. Citizenship and Immigration Services (USCIS) show Indians are a key source of H-1Bs. This reflects the size of the Indian population, the education level of Indian workers and students, and interest in working in the United States. Many of these individuals have graduated from U.S. universities and are hired off U.S. campuses.

(Source: U.S. Citizenship and Immigration Services, National Foundation for American Policy)

In most years, Indians have not been a majority of the new hires on H-1Bs. (See Table 1.) Examining data from USCIS for “initial employment” one can see Indians represented about 45 percent of H-1Bs in 2000 and 2001, dropped to under 30 percent with the economic downturn in 2002 and 2003, then rose to over 50 percent from 2006 to 2008. In 2009, the Indian percentage dropped to 39 percent. (“Initial employment is the term to denote an H-1B used by a new H-1B visa holder, rather than someone renewing status or switching to a new employer.)

Table 1

H-1B Petitions for Indian Nationals Approved for Initial Employment: FY 2000-2009

Year Percentage used by Indians Number used by Indians
2000 44.5 percent 60,757
2001 45.2 percent 90,668
2002 20.4 percent 21,066
2003 27.8 percent 29,269
2004 46.0 percent 60,062
2005 49.0 percent 57,349
2006 54.4 percent 59,612
2007 55.4 percent 66,504
2008 56.5 percent 61,739
2009 39.4 percent 33,961
43.9 percent (average) 54,098 (average)

                                                                (Source: U.S. Citizenship and Immigration Services)


Table 2 provides a look at Indian nationals compared to those from other countries in being hired on new H-1B visas. Table 2 shows in FY 2009, Indians utilized 39.4 percent of the petitions approved for “initial employment,” while the next largest recipients were individuals from China (10.4 percent), Canada (5.3 percent), Philippines (4.3 percent), South Korea (2.5 percent) and United Kingdom (2.3 percent).

Table 2

H-1B Petitions Approved for Initial Employment by Country of Birth in FY 2009


Country of Birth Percentage of H-1Bs Approved for Initial Employment
India
 39.4 percent
China 10.4 percent
Canada 5.3 percent
Philippines 4.3 percent
South Korea 2.5 percent
United Kingdom 2.3 percent
Japan 2.0 percent
Mexico 1.9 percent

 (Source: U.S. Citizenship and Immigration Services)


Conclusion

Although the annual H-1B cap is 65,000, there is also an additional 20,000 slots permitted for individuals who receive a masters degree or higher from a U.S. university. H-1B visa holders hired by U.S. universities or non-profit research institutes are exempt from the numerical limits. Overall, we normally see a little more than 100,000 H-1Bs approved in a year for “initial employment.” That annual flow of new H-1B visa holders comes to about 0.06 percent of the U.S. labor force. It should be obvious that while such professionals are important to many employers and the United States as a whole, given this small percentage it is difficult to argue they are creating widespread joblessness or other “evils” that are sometimes attributed to them.

Immigration Blog

Are H-1B Visa Holders Really Only Hired for Cheap Labor? Let’s Look at the Law, Common Sense and Some Data

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The argument made by critics of H-1B professionals is straightforward – the only reason companies hire them is because they will work more cheaply. In fact, the argument is central to criticism of H-1Bs and will likely never be conceded by critics, since all assertions about skilled foreign nationals rest on the premise that they work more cheaply.

One can recognize the value of permitting skilled foreign nationals to work in the United States without assuming the entry of every individual results in a storybook ending. America is an immense country with large and small employers and when tens of thousands of new people enter the U.S. labor market for the first time each year it is possible some of these individuals will be taken advantage of or will not recognize their true market value. This may be more likely to occur at some small IT services companies, which have been cited in the press.

However, the law, common sense and available data indicate that, on the whole, H-1B visa holders are paid appropriately based on their age and work experience – even if this does not take place in all circumstances.

Under section 212(n)(1) of the Immigration and Nationality Act, employers must pay H-1B visa holders the higher of the prevailing wage or actual wage paid to “all other individuals with similar experience and qualifications for the specific employment in question.”

To knowingly violate this law risks heavy fines, debarment from using the immigration system for hiring skilled individuals and much bad publicity for the company. That is why one rarely hears of any company with a recognizable name found to have willfully underpaid an individual on an H-1B visa.

Think about what would be necessary for a large or even medium-sized company to (unlawfully) maintain two wage scales – one for foreign nationals, one for U.S. workers. The records would be available and accessible to government auditors on demand – and such audits are frequent these days from U.S. Citizenship and Immigration Services. Moreover, a mid-level employee in the human resources department, perhaps several of them, would have to work with a company’s general counsel office and likely an outside law firm in a conspiracy to underpay foreign nationals. All of this would risk the reputation of the company and the livelihood of the employees involved. And since employers generally pay up to $5,000 to $6,000 in legal and government fees to hire H-1B visa holders, to make this conspiracy worthwhile the amount of underpayment would have to be significant.

After all this is done, can the H-1B professional thwart this conspiracy by simply leaving the employer to work elsewhere? Yes. Do H-1B visa holders change jobs? Yes, it happens quite often, particularly when the economy is good. Immigration attorney and former INS general counsel Bo Cooper recently noted in Congressional testimony that his law firm often processes cases for clients for an H-1B professional to move from one employer to another.

Again, none of this is to deny that some individuals may be shortchanged. It’s more to explore the extent to which one can say that H-1B visa holders in general are underpaid and only hired to save money.

What the Research Shows

In a January 2011 report, the Government Accountability Office (GAO) found H-1B visa holders generally earned the same as U.S. professionals when compared in the same fields and age groups. For example, in the category Systems Analysis, Programming, and Other Computer-Related Occupations, the median salary for an H-1B professional was higher ($60,000 vs. $58,000) than for a U.S. professional in the age group 20-29 and the same ($70,000) in ages 30-39. (See Table 1 below.)

Table 1

Median Reported Salaries of H-1B and U.S. Workers: Systems Analysis, Programming, and Other Computer-Related Occupations

Age Group H-1B U.S. Workers
20-29 $60,000 $58,000
30-39 $70,000 $70,000

Source: H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program, Government Accountability Office, GAO-11-26, January 2011, Table 1.; Salaries are 2008.

In the age group 20-39 for Electrical/Electronics Engineering Occupations, the median salary for an engineer in H-1B status was higher than for a U.S. engineer – $80,000 vs. $75,000. (See Table 2.) For some reason, U.S. workers in the age 40-50 range earn more in this field than their H-1B counterparts, but since relatively few H-1B visa holders enter the U.S. after the age of 40 (less than 10 percent) and only a portion of those enter this field it is difficult to know whether the data are significant in any way.

Table 2

Median Reported Salaries of H-1B and U.S. Workers: Electrical/Electronics Engineering Occupations


Age Group H-1B U.S. Workers
20-39 $80,000 $75,000

Source: H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program, Government Accountability Office, GAO-11-26, January 2011, Table 1.; Salaries are 2008.

Table 3 shows in the age group 20-39, H-1B professionals earned $47,237 compared to $35,000 for U.S. professionals for jobs in college and universities.

Table 3

Median Reported Salaries of H-1B and U.S. Workers: Occupations in College and University Education

Age Group H-1B U.S. Workers
20-39 $47,237 $35,000

Source: H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program, Government Accountability Office, GAO-11-26, January 2011, Table 1.; Salaries are 2008.

What Do These Results Mean?

The data show one needs to compare individuals with similar ages and fields when comparing salaries. Since U.S. professionals tend to be older than H-1B visa holders, U.S. professionals will tend to earn higher salaries. But that doesn’t mean H-1B professionals are only hired because they earn less. Recent U.S.-native-born college graduates earn less money than more experienced native-born professionals in the same field. Does that mean recent native-born college graduates are paid less than more experienced individuals because of wrongdoing by American employers? Of course not. Salaries in America are based on a variety of factors. Individuals with greater experience should be expected to earn higher salaries.

Conclusion

There are reforms that would make the situation better both for workers and legitimate employers. First, strengthen the rules for whistleblowers and make such rules more widely known. Second, increase portability for individuals with pending green card applications so it is easier for a professional to leave a current job if necessary. Third, increase the employment-based green card quota and/or exempt from the quota individuals who received a masters degree or higher from a U.S. university, which would move many people into permanent resident status much more quickly. The green card backlog makes it even more important that Congress refrain from enacting crippling restrictions on H-1B visas, since otherwise it would be difficult for skilled foreign nationals to work in the United States.

The debate over H-1B visas is rarely civil. But hopefully more people will agree that individuals born outside the United States have much more to offer America than, as critics assert, a willingness to work for less money.

India-US Relations Blog

The Ties that Bind

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Three years after the conclusion of the path-breaking civilian nuclear agreement, the U.S.-India relationship suffers from the lack of a new energizing project. In its first year or so, the Obama administration did not display much interest in continuing its predecessor’s high-profile engagement with New Delhi, turning its attention instead to expanding ties with Beijing. To be sure, the United States more recently has moved to re-engage India, as evidenced by the warm sentiment flowing from President Obama’s state visit last November. The problem is that Mr. Obama’s rhetoric during the trip made it sound like the visit was more connected to his export-promotion initiative than to any grand foreign policy objective.

For its part, New Delhi is a constrained strategic partner, one that is not well-equipped – ideologically or institutionally – to take on bold bilateral projects. While Prime Minister Manmohan Singh finally did manage to push the nuclear agreement through a balky Parliament, his victory was in important measure pyrrhic, in the end revealing just how small the consensus (see the analysis here and here) is among Indian political elites for undertaking ambitious bilateral initiatives.

Credit: thesouthasian.comThe paucity of visible leadership in both capitals is problematic. It is true that both governments are collaborating as never before at the bureaucratic level. But the U.S.-India partnership has yet to find sure footing and still lacks sufficient institutionalization to advance the new era in bilateral relations. Robert Blackwill has warned that “neither the U.S. nor the Indian bureaucracies at present are yet prepared instinctively to facilitate a deeper and more intimate degree of cooperation between the two countries….It is going to take leadership and direction from the top to change old habits and attitudes.” Ronen Sen has made a similar point: “We have not reached the point where the relationship can be placed on auto-pilot. It still needs to be nurtured.”  And the Hindustan Times noted last year that the Washington-New Delhi connection is still not yet “a machine that will move on its own steam.”

The burden of advancing bilateral affairs, at least in the next few years, will have to be borne by the key societal bonds that helped build the relationship in the first place.  Headlines about the nuclear cooperation accord and expanding military ties notwithstanding, it is important to bear in mind that the foundation for the partnership was actually forged outside the realm of government policy and far beyond the confines of Washington and New Delhi. Unlike most of the relationships maintained by the United States with other leading countries, the one with India is distinguished by the signal role played by societal ties and privatesector initiatives. As Shivshankar Menon, now Prime Minister Singh’s national security advisor, remarked last year, “[I]f anything, the creativity of [American and Indian] entrepreneurs, engineers and scientists has sometimes exceeded that of our political structures.” And Nicholas Burns, who did yeoman’s work in hammering out the details of the nuclear accord, emphasizes that societal bonds are “the greatest strength in the relationship” and that “the big breakthrough in U.S.-India relations was achieved originally by the private sector.”

Consider, for example, the dynamics at work a little more than a decade ago. In response to the 1998 nuclear tests, Washington imposed an array of economic sanctions on India and expelled visiting Indian scientists from U.S. government laboratories. Yet at the same time, concerns about the “Y2K” programming problem led companies in Silicon Valley and in India to set the foundation for today’s strong technology partnership. And as I wrote earlier, the Indian-American community, relatively small but highly influential, has lead the way in building new ties between its native and adoptive countries.

credit: charlierose.comThe significant role played by these societal bonds has caused Fareed Zakaria to compare U.S.-India ties to the special relationships the United States has with Great Britain and Israel. Shashi Tharoor has likewise remarked that “in 20 years I expect the Indo-U.S. relationship to resemble the Israel-U.S. relationship, and for many of the same reasons.”

Although they are often overlooked by national policymakers, societal bonds give fuller texture and equipoise to the bilateral partnership than could be hoped to be achieved at the intergovernmental level alone.  And at a time when bureaucratic mechanisms are not firing on all cylinders, strengthening these ties will be one key in securing the growth of broad-based, resilient relations over the long term since they work to limit the risk that political and diplomatic frictions could escalate and disrupt the overall U.S.-India partnership.

This is particularly important as the structural dynamics of the bilateral relationship will prove challenging to manage in the future.  The basic framework of U.S. security and economic relations with a number of key countries in Europe and Asia was laid down in another era of world politics, when the national power of these states was in decline.  The resulting alliances were, and in many ways still remain, unequal partnerships.  In contrast, India’s power trajectory is upward.

Moreover, foreign policy elites in New Delhi continue to insist on the prerogative of strategic autonomy and, hence, are unlikely to accommodate Washington’s priorities as readily as other U.S. allies.  With continuing divergences over foreign policy objectives, frictions will inevitably develop on a range of issues – from global trade negotiations, climate change and nonproliferation policy, to differential approaches on Afghanistan and Pakistan, as well as India’s bid for a higher profile in world affairs. As Nick Burns cautions “the United States must adjust to a friendship with India that will feature a wider margin of disagreement than [Washington is] accustomed to.”

Immigration Blog

Little Known Fact: Indians and Others on H-1B Visas Fund Scholarships and Job Training for Americans

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One of the more surprising aspects of America’s debate about high skill immigration is how little attention focuses on the fees paid by employers of H-1B visa holders. Indians generally make up roughly half of H-1B professionals, though it varies from year to year, so the fee issue should be of interest to the Indian American community, particularly since it can play a role in the broader immigration policy debate.

Back in 1998, when Congress debated an increase in the H-1B quota, a compromise was reached to raise the 65,000 annual limit for temporary visas for high skilled professionals. The policy debate over increasing the annual H-1B limit centered largely on whether America and U.S. employers were doing enough to train and educate Americans for high skill jobs in the technology field. Under the legislation passed in 1998, Congress raised the H-1B quota for three years, but also assessed a $500 fee on for-profit employers each time they hired (or renewed the status of) an H-1B professional, with the money going towards scholarships and job training.

In 2000, Congress again temporarily boosted the annual quota on H-1B visas and this time raised the training/scholarship fee to $1,000. After both the fee and H-1B quota increase ended in late 2004, Congress raised the H-1B training/scholarship fee to $1,500 ($750 for smaller companies) and provided 20,000 H-1B visas annually (in addition to the 65,000 quota) for individuals who received a masters degree or higher from a U.S. university. Congress also added a $500 anti-fraud fee on each H-1B and L-1 visa.

Lots of Money Raised, But Little Attention

The money raised from this training/scholarship fee has quietly grown over the years. In fact, its growth has been so quiet that nobody seems to have realized how much money has been spent by employers on these fees and where the money has gone.

A recent study from the National Foundation for American Policy concluded:

In addition to paying skilled foreign-born professionals the same wages as comparable American workers, government data show U.S. employers have been required to pay over $3 billion in mandatory government fees since 2000. The data call into question critics’ assertions H-1B visa holders are hired to save money. Data from U.S. Citizenship and Immigration Services obtained by the National Foundation for American Policy (NFAP) show from FY 2000 to FY 2011, employers have paid over $2.3 billion to the federal government in H-1B scholarship/training fees (generally $1,500 per individual), while a $500 anti-fraud tax/fee on each H-1B and L-1 visa has cost employers more than $700 million.

(A copy of the study from the National Foundation for American, where I serve as executive director, can be found here.)

Where Has the Money Gone?

There is no scandal here. No one claims the money has not gone to its intended purpose. But it is clear this topic has fallen through the cracks. Employers gain no political credit for paying the fee and neither the U.S. Department of Labor nor the National Science Foundation give much publicity to the training or scholarships that the fee funds. Nor do employers gain much credit for their individual efforts to train workers or support education.

According to the most recent annual budget document of the National Science Foundation, due to the H-1B fees assessed on each H-1B professional hired, “Approximately 58,000 students have received scholarships ranging from one to four years.” The scholarships can be as high as $10,000 and are used by U.S. undergraduate and graduate students pursuing math and science degrees.

Examining past budgets finds over 100,000 U.S. workers have received training via the H-1B fees paid by employers. In its annual budget document the Department of Labor describes its H-1B-funded job training initiatives as targeting “skills and competencies in demand by industries for which employers are using H-1B visas to hire foreign workers.”

Table 1

College Scholarships and Job Training Funded by Employers

Through H-1B Fees: FY 2000 to FY 2011

College Scholarships through National Science Foundation 58,000
Job Training through Department of Labor 100,000 +

Source: National Science Foundation, U.S. Department of Labor, National Foundation for American Policy.

Conclusion

Thirty percent of every H-1B fee goes to scholarships provided to U.S. students through the National Science Foundation. Fifty percent of the fee is allotted to training programs. That means every time an H-1B visa holder is hired (or his/her status is renewed), $450 goes to fund a scholarship for a U.S. student and $750 is sent to provide job training for a U.S. worker.

It is good that U.S. workers and students receive training and scholarships. Whether that money, particularly $3 billion worth, should come directly from employers when they hire H-1B professionals is less clear but it has been U.S. government policy for a decade. If these fees are to continue, then they should figure more prominently in the debate over skilled immigration. The fees call into question the assertions made that 1) employers hire H-1B visa holders to save money and 2) companies do not help educate and train students and workers. There is one point everyone should agree on – even in Washington, $3 billion is a lot of money.