The new scrutiny on H1B Visas granting skilled foreign workers employment in the U.S. could be good and bad for small businesses. It sort of depends what kind of business you run.
Small American tech businesses didn’t see the seismic shift downward they’d hoped for in the number of H1B visas allocated this year. They were hoping to see fewer visas issued in hopes they could snap up the work that usually goes to foreign workers.
Small American IT firms have been complaining for years about cheap foreign labor driving down both the wages and employment for American IT workers.
Pundits too now insist these visas are used primarily by tech giants to avoid paying domestic tech contractors and employees more. Some, however, vehemently dispute this claim, arguing H1B visa recipients are paid very well indeed and are only brought in when domestic talent is insufficient.
New H1B Visa Guidelines
Despite hopes the Trump administration would do more, when the new guidelines were unveiled and applications for this year’s H1B visas opened this week, the quota of 85,000 was unchanged.
However, there is a glimmer of hope since the path for foreign workers to take positions requiring a college degree did get a little harder to navigate, thanks to the U.S. Citizenship and Immigration Services.
The agency says it will temporarily suspend fast-track ‘premium’ processing of applications. However, that only puts a small dent in what’s causing the issues for some small American businesses in the first place.
Premium processing involves a USCIS commitment to respond to an application within 15 days for an extra fee. It’s a method used for clearing a backlog of applications.
Here’s How Small Business is Getting Gamed
The trouble is not all small businesses benefit from the decrease in availability of foreign tech workers.
Smaller established businesses and start-ups that could use foreign workers in specialty occupations feel they have been getting squeezed by the bigger players they accuse of manipulating the system.
Here’s their complaint. Federal officials only allow one application per foreign worker. Bigger companies can file what are sometimes thousands of applications since they have the resources to eat up bigger numbers of the overall quota. When the number of applications exceeds the quota, a computer run lottery takes over.
Other Issues
To make matters worse for smaller businesses, global recruitment firms have moved in and taken the lion’s share of visas set aside for foreign workers with special skills and college educations. These companies gobble up the available applications as soon as a window opens leaving smaller businesses shut out.
Also, though any small business that needs a specialist with a college degree can apply for one of these visas, a large number are take up by the IT sector. Small businesses in other sectors like engineering and some physicians use the applications as well but find it hard to compete.
Future Regulation also a Mixed Bag
USCIS changes and the fact there are several bipartisan bills in the House and Senate aimed at giving priority to American workers could mean the possibility for bigger shifts on the horizon — and not all of them good for small businesses.
The House Judiciary Committee reviewed a bill in January that would force employers to give some high-skilled foreign temporary workers under the “exempt” category of the H1B visa program a raise. The minimum they could get paid would go from $60,000 to $100,000 dollars and be tied to inflation.
The bill is looking to amend the Immigration and Nationalization Act and change the definition of “exempt H–1B nonimmigrant”.
Most recently, the U.S. Department of Homeland Security reported steps to prevent these visas from being used “fraudulently.” The changes will center on site visits by U.S. Citizenship and Immigration Services agents and will focus on areas in which:
- an employer’s basic business information can’t be validated.
- there is a high ratio of H1B employees compared to American workers.
- petitions are being made for H1B workers who work offsite.
Another USCIS memo suggests the agency will make it harder for entry level computer programmer positions to be designated as “specialty occupations.”
All this could be good news if you’re an IT or computer programming contractor hoping all this regulation will convince huge tech firms to hire your company instead of bringing on cheaper foreign competitors.
If, however, you’re a small startup in need of affordable labor, it means more government scrutiny and a more uneven playing field when competing with larger firms.
President Trump Photo via Shutterstock
There is really only one solution for the H-1B visa problem – eliminate it. Despite what the big companies whine about, there is no shortage of IT workers. There is, however, a large disparity in what the H-1B employees are paid and what an equivalent, legal resident would expect. The large employers are using the H-1B holders to cut costs, both in direct labor and in overhead. Legal residents are not interested in working at a Silicon Valley for $50k, living in a shack somewhere, to write code.
What should be done in place of the H-1B program is start training legal residents interested in working the IT field, but not doing so already. If the large companies are truly the benevolent, socially conscious employers they represent themselves to be, they would be all over this. It certainly would only require a fraction of the obscene profits they currently rake in.
You should talk with a few small companies who are considering hiring a H-1B employee, if you can find any. I am a small business owner and I wouldn’t be at all interested in doing this. I don’t have the time to train, supervise, and monitor these employees. I have worked in large companies who did employ H-1B people, and they wore out copy machines making reproductions of everything they could get their hands on. And guess what, they are now making the same products in their home company.
Rob Starr
You make an old sensible argument Lyn. Some European governments have even started subsidizing the education of their own citizens looking to fill voids in their economies.
Tucker C
I used to love reading these articles few years ago, but now, reading the articles and especially reading the viewers comments, like the one by “Lyn” above, makes me think that I am in a thick cloud of mediocrity.
@Rob Starr: Is it no longer possible to do a fair critique of anything?
Look at Lyn’s comment above. Silicon valley, 50K, living in shack, what is this? Is this a caricature of dated small business owners?
Plain and simple, I want to find a great cloud computing guy. I do have a contract employee as of now, Michael from Alma here which is close to SF. Michael has been in IT for about 28 years, speaks very well, can connect, drinks beer I like and is a blast to hang out with. I like the guy.
Problem is that Cloud Computing is a rapidly advancing field and each change is so disruptive, Michael, even I cannot keep up. Plus I have other things to do than coding or helping Michael.
If I hire H1 VISA holder here, he/she too will be, unfortunately, layed-off once technology changes. I have nothing against Michael or the H1 folks. I need a great cloud developer to survive.
If we train American kids, they will take these jobs eventually, but today ? Today the show must go on.
Plus it is an incredible lie propagated by pure politics that a foreigner earns less by definition of being a foreigner. I HAVE to pay a minimum specific amount to my H1 employees by law, I do not have a leeway to reduce that. So yes, silicon valley but more like 150K salary, almost same as Michaels.