Tag: H-1B

Why Congress Rejected an H-1B Recruitment Requirement

Several senators recently introduced a bill that would delay the hiring of H-1B high skilled foreign workers in order to give Americans extra time to apply, saying it would make the program “consistent with Congress’s original intent.” But the lack of this provision was no oversight. The authors of the H-1B law wanted the visa to be able to rapidly respond to U.S. labor market needs, not get bogged down in regulatory red tape.

The Immigration Act of 1990 created the H-1B visa. Previously, there was just one H-1 category for skilled professionals that was uncapped and had no labor restrictions. The 1990 act imposed a cap for the first time and required that H-1Bs be paid the “prevailing wage” for their occupation in the area of employment. The theory was that U.S. businesses would have no reason to prefer foreign workers if they had to pay them as much as they paid Americans.

Although the bill did have several restrictive measures, the absence of a recruitment mandate was intentionally left out for a very good reason. 

Just 3 years prior to the introduction of the 1990 Immigration Act, Congress created the H-2A visa for seasonal farm workers and mandated that H-2A employers make “positive recruitment efforts” of U.S. workers prior to hiring foreign workers. Regulators translated this to mean that a farmer needed to spend 60 days advertising and accepting referrals of U.S. employees from state employment offices.

If H-1B crafters wanted to impose a recruitment requirement, they knew how. Indeed, the lead cosponsor of the 1990 bill, Sen. Alan Simpson, was also the author of the H-2A language. “Congress also expressly determined,” wrote immigration attorney Angelo Paparelli just after the enacting regulations were announced in 1991, “that the H-1B ‘attestation-like’ procedures… should be a speedy streamlined process with no recruitment requirement.”

The senators who drafted the 1990 act had a very specific reason in mind when they declined to include such language. Unlike the H-2A, H-1B jobs are not limited to “seasonal” positions, meaning that any recruitment would typically have to take place while the job was open. This means that an H-1B recruitment requirement would have guaranteed that companies would be losing productivity throughout the period.

Costs and Benefits of Guest Worker Visa Quotas Determined by Formulas

On April 1st, the federal government will begin accepting petitions for hiring workers on the H-1B visa–a temporary visa for skilled workers.  H-1B visas for highly skilled workers are annually limited to 85,000 for private firms.  There is no numerical limit for H-1Bs employed at non-profit research institutions affiliated with universities.  The numerical cap for private firms was reached in fiscal years 2015 and 2016 within seven days after applications could be submitted.  During poor economic times, the visa cap can take months to fill, but it does do so without fail except for the years 2001 to 2003 when the cap was increased to 195,000 annually during a poor economy.[i] 

There are obvious economic benefits from adding more skilled workers so the numbers should be expanded greatly, preferably without government-created limits. Taking a page from the Senate’s 2013 immigration reform bill (S. 744), one way to expand the numbers and adjust them annually based on market conditions would be through a formula that takes into account labor market conditions.  The formula could be a big improvement to the current system but it also carries several risks. 

There are some rules of thumb the government should follow if it chooses to create such a formula.  It should be simple and based on publicly available economic data like the unemployment rate.  The formula should not include variables such as the opinions of various stakeholders or appointed officials.  For example, unions or technology firms should not be able to pull a number from their respective black boxes to influence the outcome: any decision should be purely based on publicly available economic data.  Finally, if guest worker visas are assigned to sector- or occupation-specific areas of the economy, the economic data applicable to that sector of occupation should be the only data relevant in calculating the number of visas issued. 

How I-Squared Would Affect Employment Based Green Cards

Senator Orrin Hatch (R-UT) introduced the I-Squared Act of 2015 to reform the high-skilled immigration system.  Most of this bill attempts to improve the H-1B visa for temporary highly skilled workers by making the workers more legally mobile and increasing the quotas for that visa.  The H-1B is a dual-intent guest worker visa program, meaning that workers on the H-1B can pursue a green card while working on a temporary visa. The H-1B is a pipeline to the employment-based (EB) green card.

Most commentators will focus on the important and positive proposed reforms to the H-1B visa.  In contrast, I will focus on the reforms to the employment-based (EB) green card program.  I-Squared would exempt several categories of workers and their family members from the numerical quota imposed on EB green cards.  Although I-Squared does not increase the numerical quota, effectively it more than doubles the quota through exemptions.  As I detail here, this is a very positive move for U.S. economic growth.  Below I detail many of the exemptions in I-Squared and then make some suggestions for further streamlining and liberalizing the system.

Exempting Dependents

The most important exemption in I-Squared for EB green cards is for the spouses and children of workers.  Under current statutory interpretation, the family members of these workers count against the quota. Fifty-five percent of those who received the EB green card were the spouses and children of workers in 2013.  Allowing those spots to instead be filled with workers would more than double their number going forward.      

2013 Employment Based Green Cards: Families and Workers

Source: 2013 Yearbook on Immigration Statistics, Table 7.

Is There a STEM Worker “Shortage”?

The Center for Immigration Studies (CIS) released a new report claiming that there is no STEM worker “shortage”* after looking at the small wage gains in STEM occupations since 2000.  CIS has a history of using poor methodology and data in their reports (see here, here, here, and here), but assuming that they did everything correctly this time, their results don’t tell us much for two reasons.

First, they don’t compare wage changes for STEM occupations with all other occupations.

Total real (2012 dollars) median annual wage growth for each of the three big STEM occupations was higher than for the median for all occupations from 2001 to 2012.  Real wages for computer occupations grew by 2.05 percent, real wages for architecture and engineering occupations grew by 5.77 percent, and real wages for science occupations grew by 3.55 percent.  Those gains look low until you realize that real wages for all occupations actually decreased by 0.94 percent.  Compared to all occupations, wages for STEM occupations grew while attracting large numbers of immigrants.

Source: Occupational Employment Statistics, Bureau of Labor Statistics. http://www.bls.gov/oes/tables.htm.

Second, the CIS study ignores the dynamic economic effect of halting STEM immigration or what stopping STEM immigration years ago would have done to the economy.  The dynamic (general equilibrium) effects of kicking out STEM immigrants or halting their flow would be to shrink the economy and diminish wage, employment, productivity, and economic growth.

*CIS and others use the word “shortage” incorrectly.

What Both Sides Miss in the Immigration Debate

That’s the title of my latest Forbes column, which begins:

As chances for immigration reform fade ahead of this year’s congressional elections, the main sticking point seems to be the “pathway to citizenship” for those who are in the country illegally.

Reform opponents don’t want to reward those who break our laws, while activists on the other side refuse to consider a deal that doesn’t naturalize this entire population. Fixing our broken immigration system thus seems to turn on the question of what to do with the estimated 11-12 million illegal aliens living in our midst. (I’m reminded of John Candy’s final movie, Canadian Bacon, where a propaganda bit ominously decries: “Canadians: They walk among us.”)

But both sides are wrong to focus on citizenship and should instead target permanent resident status—otherwise known as green cards.

Read the whole thing, which includes a bit about the naturalization process that I’m now experiencing.

America Does Not Have a ‘Genius Glut’

On Friday, Ross Eisenbrey of the Economic Policy Institute wrote an op-ed in the New York Times titled “America’s Genius Glut,” in which he argued that highly-skilled immigrants make highly skilled Americans poorer. 

A common way for highly-skilled immigrants to enter the United States is on the H-1B temporary worker visa. 58 percent of workers who received their H-1B in 2011 had either a masters, professional, or doctorate degree. The unemployment rate for all workers in America with a college degree or greater in January 2013 is 3.7 percent, lower than the 4 percent average unemployment rate for that educational cohort in 2012. That unemployment rate is also the lowest of all the educational cohorts recorded. 

Just over half of all H-1B workers are employed in the computer industry. There is a 3.9 percent unemployment rate for computer and mathematical occupations in January 2013, and an unemployment rate of 3.8 percent for all professional and related occupations. For selected computer-related occupations from the Bureau of Labor Statistics’ “Quarterly Census of Employment and Wages,” real wage growth from 2001 to 2011 has been fairly steady:   


 11 percent of H-1B visas go to engineers and architects but wage growth in those occupations has been fairly steady too:


Mr. Eisenbrey concludes that those rising incomes would rise faster if there were fewer highly-skilled immigrants. 

The unemployment rates for engineers and computer professionals are low but not as low as they used to be. There are a whole host of factors explaining that, but highly-skilled immigration is not likely to be one.