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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

Indian Students to the U.S. Have Nearly Doubled in 10 Years

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A surprising development in recent years is the dramatic growth in Indians coming to the United States to study. In a phenomenon that has largely gone unreported, the number of Indians studying at American colleges and universities has nearly doubled since the year 2000.

Figure 1 below shows the almost steady rise in Indian enrollment in the United States, based on figures compiled by the Institute of International Education. One can see that in the 2000/2001 academic year the number of Indian students enrolled was below 60,000, while by 2009/2010, the total exceeded 100,000.

figure1

To gain a better perspective on the numbers, one can see below in Table 1 the large percentage increase in the enrollment of Indian students in the U.S. since 2000. Between the 2000/2001 and 2009/2010 academic years the number of Indian students enrolled at American colleges and universities increased by 92 percent. That is an extraordinary figure by any measurement.

Table 1
Indian Students Enrolled at U.S. Colleges and Universities

Academic Year Number of Indian Students Enrolled
2000/2001 54,664
2001/2002 66,836
2002/2003 74,603
2003/2004 79,736
2004/2005 80,466
2005/2006 76,503
2006/2007 83,833
2007/2008 94,563
2008/2009 103,620
2009/2010 104,897

Yet the percentage increase in the enrollment of Indian students in the U.S. is even larger if one goes back to 1995. In the 1995-1996 academic year, only 31,743 Indians were enrolled to study in America. That means Indian enrollment at U.S. colleges and universities rose by over 200 percent between 1995 and 2009.

 

figure2

Increases in Graduate or Undergraduate Students From India?

Students pursuing graduate degrees are a primary source of the increase in Indian enrollment in the last decade. In the 2000/2001 academic year, 12,259 Indian undergraduates studied in the U.S. compared to 15,192 in 2009/2010. However, in 2000/2001, the number of Indian graduate students totaled 39,797, but rose to 68,290 by 2009-2010.

Yet those number do not tell the whole story. As Table 2 shows below, Optional Practical Training (OPT) makes up over 18 percent of Indian enrollment in the United States. OPT permits temporary employment for training that is “directly related to the student’s major area of study,” according to Immigration Customs and Enforcement.

Table 2

Indian Students in U.S. by Academic Level: 2009/2010

Academic Level Number Percentage of Total
Undergraduate 15,192 14.5 percent
Graduate 68,290 65.1 percent
Non-Degree 1,758 1.7 percent
OPT 19,657 18.7 percent
TOTAL 104,897

The Implications of These Numbers

The rise in Indian students coming to America reflects positive trends in both countries. First, since most students generally must pay a substantial portion of their education out of family or individual assets, the rise in U.S. enrollment reflects increased wealth in India. Second, the enrollment increase also indicates the rise in technology companies in both India and the United States and the importance of education in technical fields. Third, this is a good news story for American universities, showing their ability to attract outstanding students from all over the world.

A final, important implication of these numbers is that international education makes the globe smaller and a better place to live. Indians who stay in the United States after graduation have the opportunity to build a career that may involve interaction with people or companies in India. Students who complete their studies in America and return to India have acquired greater knowledge of an important market for both customers and commercial partners. And American students gain the opportunity of getting to know individuals and cultures from halfway around the world without even having to leave a college campus.

(Figures and Tables Source: Institute of International Education)

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.

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.