Various sources have reported on the intense lobbying efforts by industry representatives of the high-tech sector, who seek to influence the outcome of the Senate’s proposed comprehensive immigration reform legislation. The initial version of the Senate bill already grants the industry two of its key demands: an increased number of H-1B visas for university-educated temporary foreign workers (almost tripling the quota), most of whom work in the IT sector, as well as an unlimited amount of permanent resident visas (green cards) for recent foreign graduates of U.S. universities in STEM fields (and a fast track to receive them). So what is the industry hoping to achieve now? The industry is lobbying to remove the few improvements to the H-1B program that Senator Durbin (D-IL) managed to persuade the other seven members of the Gang of Eight to include in the bill. This week, a number of proposed amendments could make that happen.
Here are the simple, common sense rules and innovations included in the Senate bill that relate to the H-1B program:
1. A new H-1B job database.
Employers will now be required to advertise job openings on a national database maintained by the Department of Labor. This ensures that when jobs become available, U.S. workers will know about them and have a chance to apply. A common misconception about the H-1B program is that all firms are required to recruit local workers before applying for an H-1B worker—but that’s not the case. Only a subset of employers, those that are “H-1B dependent” (i.e., if more than 15 percent of their workforce holds an H-1B) are required to first engage in “good faith” recruiting. (That’s already the law, and the Senate bill doesn’t change it.) The database will be a simple and easy way to infuse the H-1B program with a much-needed dose of transparency and to allow American workers the opportunity to apply to these openings.
2. Employers will have to offer jobs to any U.S. worker who applies and is equally or better qualified than the H-1B worker they seek to hire.
This provision in the law has the potential to be an important step forward in terms of protecting the interests of U.S. workers in high-tech fields. However, it is still unclear how this will work in practice. For example, will there be an administrative remedy through DOL? Will U.S. workers be able to file individual or class action lawsuits? Whatever the result, this provision should be enforced in a way that doesn’t dictate who an employer should hire, but that protects U.S. workers from obvious discrimination if an employer chooses to prefer an H-1B worker over a qualified American. The threat of a lawsuit from a U.S. worker claiming to suffer discrimination could act as a strong deterrent to employers that might consider acting illegally.
3. The “50/50” rule.
Some of the biggest beneficiaries of the H-1B visa are companies with an offshore outsourcing business model that transfer high-tech jobs overseas. A number of those companies have a workforce made up primarily of temporary foreign workers holding H-1B and L-1 visas (the L-1 visa (pdf) is another temporary visa mainly used for computer and IT occupations). Past bipartisan legislative proposals have attempted to curb offshore outsourcing by prohibiting firms from receiving additional work visas if more than 50 percent of their workforce is comprised of guestworkers with H-1B and/or L-1 visas—this is known as the 50/50 rule. The Senate immigration bill would phase in the 50/50 rule over three years, and has the potential to curb H-1B visa abuse amongst certain firms.
Any reasonable person has to concede that globalization and offshoring are irreversible trends, but U.S. government policy should not facilitate and expedite the overseas transfer of decent paying high-tech jobs. In a surprising turn, even the CEO of the largest tech company in the world, Microsoft’s Brad Smith, seemed to admit this when he endorsed the 50/50 rule—explicitly stating “I do support that”—in response to a question from Senator Durbin in a recent Senate hearing. Smith further acknowledged “there’s no large country in the world that allows people to employ over half of their people from outside the local population.”
Are these requirements onerous?
Not if the industry is already doing everything it can to recruit and hire U.S. workers before using the H-1B program. So why do some of its representatives oppose posting jobs online and offering jobs to qualified U.S. workers first? Or go so far as to call these provisions a “poison pill?” If H-1B employers already recruit U.S. workers—and if U.S. workers are as scarce as the industry claims—then what’s so difficult about being prepared to prove it?
Many U.S. workers claim they have been shut out of jobs reserved for H-1Bs, and the media has reported on examples of U.S. workers being replaced by H-1B workers. As a result—and since H-1B employers are asking the government for a special and significant privilege, i.e., an intervention into the American labor market (what Milton Friedman called a “government subsidy”)—it’s reasonable to require some basic assurances that the program isn’t being used to bypass or replace U.S. workers.
Furthermore, only the small number of H-1B dependent firms must comply with any meaningful obligations in the program. Under current law they must recruit U.S. workers in good faith, and under the Senate bill, not underpay H-1B workers compared to U.S. workers in the same occupation and locality, and not rely on temporary foreign workers for more than 50 percent of their workforce. However, thanks to a successful lobbying effort by Facebook, a massive loophole was included in the Senate bill that allows dependent firms and those above the 50-50 threshold to be exempted from all of these rules if they apply for labor certifications and green cards for 90 percent of their H-1B and L-1 visa holders.
On balance, the Senate immigration bill represents a major victory for the high-tech industry. Thus, Senators in the Judiciary Committee are under no obligation to deregulate the H-1B program even further, as some on the committee are proposing. High-tech firms will now benefit from a drastically increased number of temporary and permanent visas and prevailing wage rules that still allow most H-1B employers to continue paying foreign workers wages that are far below market rates, and they won’t face any new significant burdens in terms of having to recruit U.S. workers before they’ll be granted an H-1B visa.