July 22, 2016 2:29PM

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.

For example, if Facebook, Amazon, Microsoft, Apple, or Google misses out on a higher-skilled worker for 60 days, the economic damage would be a sixth of the person’s annual salary, and since their typical H-1B worker’s annual salary is more than $100,000, that’s more than $16,600 in losses that such a mandate would automatically impose per hire. In recent years, Microsoft has submitted about 4,000 H-1B applications each year. That would be $66 million in guaranteed losses every year for a single company.

This lost productivity translates into fewer innovations and higher prices for American consumers. That’s why the Senate Judiciary Committee’s report on the 1990 bill emphasized that “the H(i)(b) 'specialty occupations' are subject to a modified attestation without a recruitment requirement, or challenge except after the attestation is in effect and the alien has entered the country” (emphasis in original).

This concern about delays for high skilled immigrants was widespread. Sen. Arlen Specter noted at the time, “Those waiting [for a green card] have to wait a full year to come in. The United States is deprived of their talents for a full year.” Sen. Slade Gorton joined him, bemoaning “time delays in transferring highly skilled or professional personnel to U.S. businesses.”

Sen. Jesse Helms added that “it is frankly embarrassing to hear foreign business leaders tell of the uncertainty and frustration they encounter when applying for permission to transfer key managers to our country.” On these grounds, Sen. Specter’s amendment to increase employment-based green cards passed overwhelmingly.

While it is true that those green cards required a labor market test, the bill authors included a provision specifically intended to allow companies who needed workers immediately to use the H-1B while they worked through this process. The provision, known as dual intent, allows H-1B workers, unlike all other temporary workers, to adjust their status to permanent residency while already working in the United States.

The H-1B authors constructed a system where it was difficult to obtain a green card, but specifically wanted to prevent businesses from losing money while they met its requirements, so they designed the H-1B as a temporary “bridge” to a green card for a limited number of workers. Today 95 percent of all skilled immigrants use this bridge to adjust from temporary status to permanent residency.

In 1998, Congress revisited the idea of a recruitment requirement in the American Competitiveness and Workforce Improvement Act, and rejected it for all companies that were not “H-1B dependent,” meaning that they had a low proportion of H-1Bs. In explaining his opposition to a blanket recruitment requirement, the author of the bill, Senator Spencer Abraham, excoriated the proposal:

We have...a recruitment process in place for permanent workers. It takes 2 years before the various hoops and regulations can be met. I am not saying that is wrong, but I am saying it is unworkable in the context of temporary workers….We cannot wait 2 years to bring in additional workers to cure the year 2000 problem [for example] because we will already be in the year 2000. In a similar sense, we simply cannot take the existing program and undermine it with these complicated bureaucratic Department of Labor regulations…

An increase in the cap would be meaningless and totally nullified if these kinds of labor provisions are included. They go too far. They would undermine the whole program… This is not a situation where we are dealing in a zero sum game. People coming in under the H-1B program are not taking jobs away from Americans.... they are creating more opportunities. That is the evidence we had before us in the committee.

That is indeed what the evidence continues to show in the vast majority of cases. But whatever the right policy, the idea that a recruitment rule would make the law “consistent with Congress’s original intent” is utterly false. Congress specifically intended to allow companies to use the H-1B to quickly respond to labor market needs. There are actions, consistent with this intent, that would help American workers compete, but a recruitment rule simply is not one of them.