Why We Need to Reform H1-B Visas
This January Congress’s House Judiciary Committee began reviewing a bill that would require employers to pay foreign, high-skilled temporary workers at least $100,000 a year, a nearly 67% increase from the current H1-B minimum wage of $60,000 a year. Formally known as the “Protect and Grow American Jobs Act,” the bill is intended to index the new minimum wage to inflation and encourage American firms to hire more American workers. Even though President Trump repeatedly alleged that companies are exploiting H1-B Visas to hire cheap entry-level foreign workers, his allegations are not new. Politicians have been echoing President Trump’s claims for years, and there is much merit behind their allegations.
Due to the H1-B Visa’s low minimum wage requirement it is easier for companies to overlook American workers for foreign workers, who may be more tolerant of lower pay. This argument is supported by the H1-B’s usage of a lottery system, which does not guarantee the best foreign workers will always be chosen. To explain the H1-B lottery system in detail, United States Citizenship and Immigration Services (USCIS) sets a quota for 65,000 Regular and 20,000 Masters H1-B Visa holders. The number of H1-B applications USCIS receives usually exceeds the quota; for example in 2017, USCIS received nearly 236,000 applications. If there are more than 20,000 applications specifically for the Masters quota, they run a computer generated algorithm to randomly select 20,000 applicants. The remaining Masters applicants are put into the pool for the regular H1-B Visa pool. A computer algorithm then screens the remaining applications to fill the 65,000 regular H1-B Visa quota. Worryingly, nobody besides the USCIS knows the methodology behind the algorithm or how effective this algorithm is in choosing the best applicants. This means outstanding applicants will get crowded out by greater numbers of less qualified applicants. There are IT companies like Infosys and Cognizant which send in thousands of applications for several hundredpeople, so their probability of being chosen increases.
It is important to note the distinction between hiring foreign workers with high tech skills and hiring foreign workers as guest workers, who will most likely be less skilled and fill in for more mundane jobs. One of the most common arguments for H1-B Visas is America’s supposed lack of STEM workers. This argument does not appear to be true, as the Economic Policy Institute’s studies show Programmers, Computers, and IT workers’ salaries have stayed stagnant since the start of the 21st century. Even though their unemployment numbers have sharply declined, it means we’re generating enough qualified students for jobs, importing enough foreign workers, or a combination of both. Even though the fall in tech workers’ unemployment rates is attributable to the latter option, the inflow of guest workers makes up for half of all IT hires each year and nearly 66 percent of new, under-30 IT workers are foreign. Looking back at the H1-B Visa’s minimum wage of $60,000, it is no surprise IT Jobs’ salaries have been stagnant for nearly a decade.
In essence, the H1-B Visa’s problems are an expected byproduct of market forces. When more guest workers take domestic workers’ jobs, the domestic workers will find jobs in other fields. Certainly, more and more jobs utilize math, science and technology, but domestic workers are increasingly left out of jobs that fully maximize their STEM education. The Brookings Institute affirmed these conclusions in 2013, as it discovered nearly 25 percent of H1-B Visa jobs only required an associate’s degree. This means current US workers could train for these jobs at little cost and time. Furthermore, nearly 80 to 85 percent of all back-office programming jobs are filled by H1-B guest workers. These jobs often are not innovative, with most H1-B Visa employers producing little to no patents. One of the largest arguments for H1-B Visas is hiring the best foreign talent to drive American innovation. First of all, if US companies want to hire the best foreign talent they must also be willing to pay higher salaries, as skilled IT workers are in high demand internationally. The current H1-B Visa minimum wage discourages American companies from paying foreign workers more. Furthermore, if we do not reform our H1-B Visas, we will fail to accommodate America’s best STEM workers and graduates. Instead they will flock to well paying non-STEM jobs that still utilize STEM skills, such as Data Analytics or even manufacturing jobs.
In essence, America produces plenty of STEM workers to fill employers’ needs. Especially with universities’ recent push to train more STEM graduates and our economy’s transition to a technology, data-driven market, more and more STEM majors will be looking for jobs. If we keep hiring foreign workers under the H1-B Visa, America’s technological innovations will decrease and America’s STEM talent will find work elsewhere, whether it be in other job fields or in other countries like Germany, which actively promote the need for foreign and domestic scientists and IT specialists. H1-B Visas also promote employers’ unrealistic expectations and unnecessary strategic posturing, harming both the employer and potential hirees. As of now, nearly 11.4 million STEM degree holders work in non-STEM jobs, even though nearly all STEM vacancies - approximately 277,000 annually - could be filled by 350,000 STEM Bachelor's, Master's, and PhD graduates US universities produce every year. As less employers are willing to invest time training their employees and are increasingly willing to utilize cheaper foreign workers over American talent, H1-B Visas will cause a long-term decline in America’s technological dominance.
- Daniel Hyun