Immigration / Labor Force / Politics

The Inefficiencies of Employer-Sponsored Visa Caps

Screen Shot 2018-05-16 at 9.36.41 PMby Finn D. Reynolds

On April 6th, U.S. Citizenship and Immigration Services (USCIS) announced it had reached the 65,000 H-1B visa cap for 2019, as well as the 20,000 cap for advanced degree petitioners. This comes just five days after USCIS started accepting H-1B petitions, and marks the sixth consecutive year that it reached the cap within the first week of the filing period.

Year Date Cap Reached
2013 April 8 Cap Reached for FY 2014
2014 April 7 Cap Reached for FY 2015
2015 April 7 Cap Reached for FY 2016
2016 April 7 Cap Reached for FY 2017
2017 April 7 Cap Reached for FY 2018
2018 April 6 Cap Reached for FY 2019

The H-1B visa is an employer-sponsored visa for high-skilled foreign workers to live and work in the United States for three to six years.  H-1B recipients hold at least a bachelor’s degree, and are employed mainly in the information technology and STEM-related industries for companies like IBM, Google, and Microsoft.

When the program was created in 1990, the annual cap was set at 65,000 as it is today.  In FY 1997, the cap was reached for the first time, a trend that continued the following year.  To meet the employment demands of a booming-technology sector, the cap was temporarily raised for FY 1999 and 2000 to 115,000 and 107,500, respectively.  However, in spite of market demand for H-1B workers, Congress arbitrarily decreased the cap back down to 65,000 just a few years after the initial increase.

Earlier this year, Senator Orrin Hatch proposed the Immigration Innovation Act (I-Squared), which would allow the annual cap of H-1B visas to change each fiscal year based on market demand.  Under the legislation, the cap could expand to as high as 195,000 H-1B visas per year depending on certain market indicators.

Critics of the H-1B visa program claim that it allows companies to import cheap foreign labor while pushing American workers to the sidelines.  However, research from the American Enterprise Institute found that foreign workers who have advanced degrees and work in STEM-related fields­–both common traits of H-1B visa holders–actually create additional jobs for Americans overtime.

Furthermore, American businesses are required by law to pay H-1B workers comparable salaries to native workers doing the same job.  To obtain an H-1B visa, businesses also must go through a costly filing process.  Therefore, there is no economic incentive for a business to hire an H-1B worker over an American worker with the same qualifications.  In other words, the market demand for high-skilled foreign workers is authentic, and not simply a corrupt practice used by companies to “import cheap foreign labor.”

The H-1B isn’t the only employer-sponsored visa that has faced cap problems in recent years.  The H-2B–an employer-sponsored visa for foreign workers coming to the United States to work as low skilled laborers on a seasonal basis­–is also facing challenges.  The H-2B is specifically for low-skilled laborers working in the hospitality, construction, and landscaping industries.

Over the past year, the Trump Administration has signaled that it is considering cutting the H-2B program as a part of its Buy American Hire American initiative.  Moreover, in the near term, the Department of Homeland Security (DHS) under this administration has failed thus far to adequately manage the H-2B cap–an inaction that is hurting seasonal businesses.

In both 2016 and 2017, USCIS reported it had received more H-2B petitions than visas available under the cap of annual 66,000 per fiscal year.  This caused the agency to turn to a lottery to determine a large portion of the petitions, leaving many businesses in a situation where they’re unable to hire the labor they need to operate at full capacity.

Similar to the H-1B visa, employers have to jump through a number of costly hoops to obtain H-2B visas.  The purpose of the H-2B visas is so that seasonal businesses that aren’t able to find enough Americans to fill positions have access to foreign workers so that they’re able to meet labor needs and operate at full capacity; and, subsequently, continue to grow the business, contribute to the economy, and create more jobs.

A study conducted by the U.S. Chamber of Commerce found that increased demand by employers for H-2B workers reflects a trend of upward mobility for Americans, who in times of strong economic growth no longer need or desire to work in relatively low-paying seasonal jobs.  Furthermore, allowing small- and medium-sized businesses access to the labor they need through the H-2B program provides opportunity for them to produce at a higher capacity and grow.

With the unemployment rate at 3.9% and 6.6 million available job openings going into the summer months–the busy season for the hospitality and landscaping industries–many small businesses are struggling to find seasonal labor to fulfill critical jobs.

Meanwhile, Congress authorized DHS Secretary Kirstjen Nielsen to issue up to 69,000 additional H-2B visas for the summer if needed.  Secretary Nielsen has yet to authorize any additional H-2B visas however, leaving hundreds of small business owners uncertain of whether or not they will have the necessary amount of labor to operate this season.

In 2017, legislation introduced by Senator Ron Johnson called the State Sponsored Visa Pilot Program Act sought to reform and expedite the process for H-2B petitioners.  The legislation would give states the authority to distribute employer-sponsored visas for temporary workers.  This could allow states to distribute these visas with a greater emphasis on market demand.  For example, if the hospitality industry in Maine expected an influx of tourists, the state government could more efficiently and fairly distribute H-2B visas to businesses who couldn’t fulfill labor needs with local workers.

This system would mirror the more market-based and decentralized immigration systems of Australia and Canada.  In a study conducted by Dan Griswold of the Mercatus Center, he found that the U.S. has about the same levels of family-based and refugee-based immigration as Canada and Australia each year, but much less employment-based immigration.

In order to meet current and future demands, policymakers should consider implementing market-based immigration reform for temporary nonimmigrant visas like the H-1B, H-2B, and other employer-sponsored visa programs.  In our prospering economy, American entrepreneurs have the opportunity to expand their businesses, and such growth shouldn’t be hindered by arbitrary and inefficient caps of employer-sponsored visas.

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