Far From Perfect and Hardly Any Good – The H-1B and L-1 Visa Reform Act


Founder’s Corner

Dear All

Anyone involved with policy is familiar with the aphorism, “don’t let perfect be the enemy of good.” Despite many opportunities over several years to significantly reform the H-1B visa program, Senators Chuck Grassley (R-Iowa) and Dick Durbin (D-Illinois) have fallen victim to the above.

Case in point is the “H-1B and L-1 Visa Reform Act” introduced as Senate Bill S.3720. The bill proposes lots of changes to existing immigration law and we’ll delve in to it to see just how far we are from perfect.

Impressively, S.3720 and the inclusion of the 50/50 rule provision will hit Indian IT outsourcing firms like Infosys, Tata, Cognizant, WiPro and others, hard.  It essentially says if an employer has 50 or more employees and half or more of those employees are H-1B workers, the employer can’t sponsor anymore H-1B visas.

Furthermore, the employer can’t create subsidiary companies to circumvent the 50/50 rule. Given these Indian IT outsourcing firms have workforces comprised primarily of H-1B visa workers, this will have an impact.

Another provision prevents the H-1B visa program from being used as an outsourcing or labor reselling program. This sounds great but wait for it, there’s a loophole.

Even though IT outsourcing firms like Cognizant won’t be able to “lease” their H-1B workers to a company like Disney, they can request a waiver if certain requirements are met. One of those requirements is if an H-1B worker is leased to a client (like a Disney), the petitioning employer (like a Cognizant) is required to have a supervisor onsite for those workers.

If it walks like a loophole and it quacks like a loophole – it’s a loophole! Whether it’s a loophole one can drive a Mac truck through or just a mini van, that remains to be seen.

Next up is a provision to modify the “prevailing wage”. Currently, the lowest prevailing wage is set to the 17th percentile. The new bill would raise that to the 34th percentile. While this may seem promising, the Economic Policy Institute, a progressive think tank, recently reported that almost half of the H-1B positions in 2019 were for wages in the 34th percentile.

Understand, the median wage level (50th percentile) for an occupation in a particular location is reflective of the minimum market wage rate an H-1B worker should be paid. Hence, S.3720 is still allowing H-1B workers to be paid well-below market wages.

Another S.3720 provision that falls short is the “Limitation on Extension of H-1B Petition.” It says the H-1B visa is good for up to three years and if the worker wishes to extend it, the employer must petition them for an employment-based Green Card.

The problem is S.3720 doesn’t eliminate the American Competitiveness Act of the twenty-first century (AC21). AC21 allows a person in the Green Card log jam, mainly people from India, to remain in the U.S. until their Green card status is adjudicated. Any serious H-1B reform bill would have gotten rid of AC21 because it’s a main driver of the Green Card log jam for Indian nationals. Not addressing this in the bill will only further exacerbate the backlog.

3720 aims to eliminate the current random H-1B lottery and replace it with a presumably better system. The bill sets forth the following prioritizations:

  1. International students with advanced degrees in STEM from U.S.  institutions
  2. Prevailing wage level 4 workers
  3. International students with advanced degrees in non-STEM from U.S.  institutions
  4. Prevailing wage level 3 workers
  5. International students with bachelor’s degree in STEM from U.S.  institutions
  6. International students with bachelor’s degree in non-STEM from U.S.  institutions
  7. Whomever the U.S. Department of Labor deems would fill labor shortages
  8. All others

As you can see, this new system mostly prioritizes Indian and Chinese international students who arrive in the U.S. in large numbers to study and earn graduate STEM degrees. With 65,000 H-1B visas available each year and with an international student population in the hundreds of thousands, someone paid at prevailing wage level 4, the highest wage level, has little or no chance of ever being selected in the H-1B lottery.

You’d think the highest paid H-1B worker would be prioritized first, but S.3720 prioritizes foreign students with STEM master’s degree or higher and paid the basic minimum prevailing wage, the 34th percentile, at the top. That said, where do you think Intel will find the workforce it needs for the plant it is building in Ohio? Anyone care to venture a guess? Just visit the Intel offices in Hillsboro, OR and Folsom, CA to see what I’m talking about.

There are more flawed provisions I could mention, but I think you get the gist. Bill S.3720 is far from perfect and hardly any good. It should have been overhauled prior to being reintroduced.

A key reform absent is the doing away with the dual-intent nature of the visa. From the outset, an employer must decide if they want temporary or permanent workers. The H-1B visa program allows employers in a sense hold foreign workers hostage. Dangling a Green Card ensures foreign workers remain compliant and under paid for years. It’s the twenty-first century version of indentured servitude.

In short, the bill reshuffles the deck in favor of Silicon Valley firms, offering them greater access to cheap labor and at even cheaper wages. Does the bill pressure U.S. employers to hire American STEM workers and graduates? Nope!

The H-1B visa program was designed to be a scam to displace Americans and this bill doesn’t do much to change that. If we want a better skilled-based immigration program, Congress should gut the current program and move towards building a merit-based one that complements American workers and doesn’t allow employers to dictate the immigration status of a foreign worker.

In President Biden’s State of the Union address, he had this to say about immigration:

“Revise our laws so businesses can have workers they need… it’s the economically smart thing to do. That’s why immigration reform is supported by everyone from labor unions to religious leaders, and by the US Chamber of Commerce!”

Given labor unions, religious leaders and the U.S. Chamber of Commerce have zero interest in seeing employment visa programs reformed, I’m thinking S.3720 is a way to revise our laws so that “businesses can have the workers (they claim) they need” and our legislators will create the appearance of sticking up for U.S. citizens and lawful permanent residents.

All this leaves me asking this question.  Can January 2023 come any sooner?

In Solidarity.


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