H-1B Visas Are Not Going Away

The Trump Executive Order on H-1B visas has the tech industry feeling nervous. Many companies in the U.S. rely on their tech jobs being filled by foreign workers. Trump’s “Hire American” is a nice slogan probably intended to make unemployed American workers feel better about their future. But it’s just that, a feel-good message that’s not actually rooted in reality when it comes to current and future demand for foreign tech workers.

I predict the H-1B visa program won’t go away or be reduced in any significant way. Here’s why:

  • There are many (and when I say many, I mean a ton) more tech jobs in America than qualified people to fill them. Some tech positions remain open for months or years before being filled. Worse yet, companies often just shut these positions down without filling them at all, and are forced to make do without them. What’s the effect on profits and productivity when that happens?
  • Baby Boomers are retiring in droves, with some estimates at 10,000 a day. A lot of Boomers in the tech industry are in positions of management or high-level technical roles. To fill the void, younger workers will be promoted into those vacated seats, which will create a void at lower level positions. Who’s going fill all those newly-vacated seats? We already don’t have enough qualified people to fill the roles today (see point #1 above).

What’s that you say…we should hire American tech workers over foreign ones? Well yes, in theory I agree. However, America isn’t graduating enough engineering students. Whereas India is graduating 100,000 a year (there are many estimates on the number of engineers in India – all are greater than the numbers being produced in the U.S.)

So until American moms and dads start forcing their colleged-aged children to major or minor in computer science, MIS or computer engineering, there will continue to be a parity problem between tech talent produced in India versus America.  Also K-12 schools and state boards of education should do their part in requiring computer science as a graduation requirement in High School and start making STEM sound exciting to children and teens.

If Trump really wants to help American workers, his slogan should be “American Parents: force your kids to get an engineering degree or get an engineering degree yourself”. But that’s too long to be a good slogan. Plus, it doesn’t sound sexy and puts the burden on Americans to do something for themselves rather than relying on the government to do something for them.

Foreign tech workers also tend to be better educated than American tech workers. Before anyone freaks out on that statement, hear me out. Foreign tech workers generally come to America for their Master’s degree with the hopes of employment in America following their graduation. And since they have a Master’s degree, which equates to two additional years of school, that foreign graduate is more qualified than a typical American with a four-year degree and also more mature than a typical 22-year old college grad.

Regarding educating Americans, beware of snake oil salesmen. Specifically, for-profit colleges. In my opinion, for-profit colleges are hurting Americans. They are overpriced (and expensive!) and under-valued from an employers’ perspective. What’s the statistic on the average earnings of graduates from for-profit versus traditional colleges?  And what’s the graduation rate of for-profit colleges compared to traditional? This is a bit off-topic, but I can’t talk about education and not give my opinion on this subject.

So for the aforementioned reasons the H-1B program can’t go away. In fact, the number of visas released in the annual lottery should probably be increased to help fill the talent gap in the U.S.  BUT, if the government wants to focus on making changes there are indeed problems with the current H-1B program that should be addressed.

  • The administrative process for both the individual and the sponsoring company is too burdensome. The process is so complicated that many companies that sponsor foreign workers hire outside immigration law firms to help process the paperwork. Who wins in this scenario? The lawyers, of course. Further, managers within the hiring company are forced to be aware and stay abreast of immigration processes and paperwork. Any manager who’s ever hired a foreign worker probably understands terms like EAD, OPT, CPT, Green Card, spouse visa, etc. etc. So instead of focusing on the business at-hand (tech stuff), managers are focusing on visa renewal statuses. Death by administrivia, basically.
  • The cost for visa processing is too high. Administrative fees for H-1B visas are paid for by the sponsoring company. The costs vary by year, but in the first year alone the costs for government filing fees and legal fees is over $10,000. It goes down from there each year, but it’s not cheap. Who wins in this case? The government. Hey, someone’s got to help pay for USCIS salaries. Bottom line, the government doesn’t make it easy on companies who sponsor foreign workers, either through administrative burden or fees.
  • Prevailing wage rates by state should be lowered. In light of the Trump Executive Order, there’s been much talk in recent days about foreign workers undercutting Americans by taking jobs at lower salaries. This is not legal. All states have “Prevailing Wage” laws for H-1B workers that require companies to pay foreign workers at a commensurate rate with American workers. These laws are specifically designed to prevent undercutting by foreign workers. However, the rates in some states are actually too high, which hurts companies by forcing them to pay foreign workers at a higher wage than their American counterparts. If the current administration wants to help businesses, the prevailing wage rates should be lowered in states where they’re too high.

Let’s also talk about unintended negative effects of the Executive Order on H-1B visas, specifically on American colleges and universities. While I don’t believe the visa program for tech workers will go away or change substantially, I do believe the mere threat of it could hurt American higher education institutions. This is because foreign students may be less inclined to enroll in U.S. schools for fear of not being able to find employment upon graduation. And if that happens, universities will have no choice but to increase tuition rates on U.S.-based students in order to cover fixed costs of running their institutions. Or, will have to layoff college educators and adjuncts.

The “Hire American” slogan is a feel-good message and I support it. But until America produces enough qualified technical graduates, it needs foreign tech workers to fuel innovation and productivity. If our legislators want to do something they should listen to businesses who rely on foreign tech talent to help guide legislative changes, encourage Americans to get educated in tech fields from accredited colleges and simplify the administrative process for visa processing.

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