As expected Congress is up to its eyeballs in spending bills, from the $3.5 trillion social spending bill to more modest ones that fund various departments and agencies. Notwithstanding these legislative train wrecks, some interesting developments occurred on the immigration front this week.
Biden Administration Defends Trump’s H-1B Wage Rule
In January 2021, former President Trump’s Department of Homeland Security (DHS) issued a final rule that would have rid us of the random H-1B visa lottery. The lottery would have been replaced by a system that prioritizes applications by the highest wage offered. Sadly, the Biden administration pushed back the rule’s implementation to the end of the year.
If perpetually pushing back the rule change isn’t bad enough, there’s more to bemoan. A group of immigration attorneys in cahoots with cheap labor aficionados like the U.S. Chamber of Commerce, National Retail Federation, University of Southern California, and others, filed suit claiming that converting to a selection process that prioritizes highest wages is inconsistent with the rules governing the Immigration and Nationality Act (INA). Push it back, these clowns want to strike it down altogether! This is why U.S. Tech Workers filed an amicus brief in support of DHS in this lawsuit.
However, in a surprise move, Biden’s Department of Justice (DOJ) defended Trump’s H-1B visa rule in the U.S. District Court, Northern District of California, stating that it is indeed a valid rule:
“Although the INA prescribes that H-1B visas be issued ‘in the order in which petitions are filed,’ 8 U.S.C. 1184(g)(3), the INA is silent with respect to how to order such simultaneous submissions.
If a ‘statute is silent or ambiguous with respect to the specific issue,’ the Court should defer to the agency’s interpretation so long as it is ‘based on a permissible construction of the statute.’
In deciding how to order simultaneous or nearly simultaneous submissions, DHS turned to an important purpose of the H-1B visa program and reasonably determined that a wage-level-based selection process will implement that purpose of the statute and that nothing in the statute requires random selection.”
Well, knock me over with a feather and kudos to Biden’s DOJ for stepping in and defending the Trump era rule change.
In previous newsletters I’ve described how this and two other rule changes would have reformed the H-1B visa program to such an extent as to render it harmless to America’s productive classes.
This is one of the many needed reforms that would ensure the H-1B visa program is specifically used for foreign workers who offer a set of highly specialized skills, that are not readily available in the U.S. If a foreign worker is indeed “high-skilled” and there is indeed a scarcity for that skill, then it follows that an employer would happily pay extra for that skill set. Unfortunately, the current system just doesn’t take skills into account. If policymakers claim the H-1B visa program brings in the “best and brightest”, the current random lottery system has as much a chance of achieving that as growing palm trees in Siberia.
If the goal is to find top-tier talent, a free market demands an employer pay top dollar for it. On the other hand, if the goal is to displace Americans whose companies deem them expensive, then don’t change a thing.
Moreover, there’s bipartisan support for this rule change. Even Representative Zoe Lofgren (D-CA), the darling of Silicon Valley tech moguls, favors it and in a recent hearing stated “I had bills in prior Congresses to eliminate level 1 (lowest skill level/pay tier) and when the cap is reached, allocate based on wages.”
Massive Layoffs at Rackspace, US Jobs Off-shored
Contrary to what many U.S. companies like to claim, there isn’t a “skilled labor shortage.” These companies also like to claim that any hindrance to obtaining cheap workers via the H-1B visa program, will lead to jobs being offshored. This is malarkey and the recent news about Rackspace proves it.
Rackspace, a cloud computing company based in San Antonio, Texas, announced it will be cutting 10% of its workforce. In about the time it’ll take to conduct an abbreviated “knowledge transfer,” 700 workers in its San Antonio office will receive a pink slip and be kicked to the curb.
The reason for the cuts? Rackspace wants to shift 85% of those positions to “off-shore centers” where labor costs are significantly cheaper.
This comes with the knowledge that Rackspace is a user of and keeps a lot of H-1B visa workers on its rolls. Truth be told, Rackspace has all the talent it needs, here but that didn’t stop them from off-shoring U.S. jobs to low-rent countries like India. Economists like Britta Glennon argue that if policymakers make it challenging for employers to hire H-1B visa workers, jobs will be off-shored. Perhaps Britta can explain to us what just happened at Rackspace!
Not surprisingly, the private equity firm that bought Rackspace in 2016 and took it private, is behind the layoffs. Cheaper, better, faster – that’s the motto! However, Rackspace will suffer the fate of other such companies that have traded short-term profits for innovation, and sent jobs overseas. The geniuses behind the Boeing 737-Max software development come to mind.
In closing, if you enjoyed reading this week’s newsletter be sure to pass it on to your friends, colleagues and family, and this week we are providing an incentive for you to do so. Anyone who can demonstrate they forwarded it to at least twenty people and at least five of them subscribed, will receive both a U.S. Tech Workers coffee mug and a U.S. Tech Workers polo shirt. I’m looking forward to announcing the winners in two weeks and your colleagues will be green with envy when they see you sporting the coolest swag in the Technosphere!