With The H-1B Visa Cap Filled In Record Time, Reform Is In The Air

With The H-1B Visa Cap Filled In Record Time, Reform Is In The Air

If changes to the controversial foreign worker program happen, they'll likely occur this year and be tied to increases in the visa cap.

By Marianne Kolbasuk McGee
April 7, 2007 12:00 AM (From the April 9, 2007 issue)

For both critics and supporters of the H-1B visa, two days last week revealed everything you need to know about the foreign worker program, one of the most controversial topics in business technology.

In the first two days that the U.S. government accepted applications for H-1B work visas, 133,000 envelopes poured in with applications seeking 65,000 openings. The crush was enough that U.S. Citizenship and Immigration Services cut off new applications, certain the envelopes it had–many with multiple applications–would fill the slots. It's the fastest the application period has ever closed. Last year, the cap was met May 26, the year before that in August.

H-1B visa supporters see the overflow as reason to raise the cap so businesses can get the talent they need from abroad. Critics see the queue as a mockery of what the H-1B is supposed to be. Instead of a ticket for the supertalented to work in the United States, the visas are being hoovered up, often by offshore outsourcing companies that want to train workers on U.S. business and technology practices so they'll be better workers when they head home.

In 2004, in the trough of a U.S. recession, Congress lowered the visa cap to 65,000 after three years at 195,000. In 2005, it added 20,000 visas for foreign nationals who graduated with advanced degrees from U.S. universities. The tech industry–which takes the majority of the visas–has been pushing to raise the ceiling to at least 115,000. However, the policy debate in Washington this year could move beyond the cap number to more serious reform, starting with a bill introduced last week by Sens. Chuck Grassley, R-Iowa, and Dick Durbin, D-Ill. (More on that later.)

Differences are emerging within the pro-H-1B camp. Major U.S.-based software vendors, most of which look to bring foreign workers here indefinitely, are subtly trying to distinguish their needs from companies that want an ever-rotating staff of short-term foreign workers.

Still, tech employers continue to speak with one voice about the need to increase the number of H-1B visas. Last month, Microsoft chairman Bill Gates testified before a Senate committee on the need to let more people from abroad work here, accurately predicting that the H-1B allotment would quickly be filled. “The question we must ask is, how do we create an immigration system that supports the innovation that drives American growth, economic opportunity, and prosperity?” Gates said. His recommendations centered on attracting the best students from abroad to study here and stay when they finish, and to expedite work privileges and permanent-resident status for highly skilled workers.

How is the market for IT jobs in the U.S.? Merely OK. The IT unemployment rate based on an average of the past four quarters is 2.3%, according to Bureau of Labor Statistics data released last week. To compare that, unemployment across all management and professional jobs, IT and non-IT, was 2.2%.

Some segments have boomed: In IT management, jobs are up 31% since the tech employment nadir of 2003, and unemployment is 1.9%. Jobs in the largest IT category, software engineers, are up 17% from 2003 and unemployment is 1.7%. But the second largest category, computer scientists and system analysts, has been flat since 2003, with 2.6% unemployment today. Support specialists see 3.2% unemployment, network and system admins 3.6%. Overall, IT jobs are up just 1% since 2001 and 5% since 2003.


So what happens to those 133,000 envelopes full of applications? USCIS officials enter the data from the paper petitions, then randomly select them like a lottery. Officials can reject petitions, but that rarely happens.

Once an H-1B visa is granted, the recipient can seek renewal after three years, letting that person work in the United States for up to six years. Workers can change compa-nies, though the new employer must be up for some bureaucratic legwork.

Beyond the 65,000 general H-1B visas and the 20,000 more for foreign grads with advanced degrees from U.S. universities, there are exemptions for working at universities and other nonprofits. No one's entirely sure how many people are in the country on H-1B visas at a given time, but as many as 120,000 new H-1B visa holders join the U.S. workforce each year through the allotment and exemptions, estimates Rob Hira, a professor at Rochester Institute of Technology who's on leave at the Economic Policy Institute and is critical of H-1B practices.

Hira's research concluded that for fiscal year 2006 seven of the 10 biggest applicants for H-1B visas were India-based IT companies, led by Infosys and Wipro. Wipro declined to discuss the issue, and Infosys didn't return calls for comment. Other companies with major offshore outsourcing businesses that have applied for H-1B visas, including Tata Consultancy Services, Satyam, and U.S.-based Cognizant and Accenture, also declined to comment or didn't return calls.

There were several unsuccessful bipartisan efforts last year to raise the cap as part of comprehensive immigration reform, including one passed by the Senate modeled on a Kennedy-McCain proposal. Another was the standalone “SKIL” bill focused on streamlining green card processes and raising the H-1B cap.

This session, there has been one comprehensive immigration reform bill, by Reps. Jeff Flake, R-Ariz., and Luis Gutierrez, D-Ill., that proposes raising the visa cap to 115,000, with a total not to exceed 180,000 annually.


But it's the Durbin-Grassley bill that would break new ground. It's aimed at H-1B and L-1, which isn't capped and is designed for managers of multinationals. The Durbin-Grassley bill would bar companies from outsourcing H-1B or L-1 employees to other companies; it would require all employers with H-1B workers to pledge that they made a “good faith” effort to fill those jobs with American workers, something now required only of companies with 15% or more of their employees on H-1B; and it would require them to advertise jobs on a Labor Department Web site for 30 days and post summaries of all H-1B applications. It would also give the Labor Department more authority to investigate abuses.

“It's a great bill to fix the problems,” Hira says. Addressing such abuses would lower demand and make it less likely that the cap would have to be raised, he contends. Others want broader reform kept separate from the cap discussion, having seen past efforts wither while caps increase. “This time around I think we need to reform the H-1B program first,” says John Miano, founder of the Programmers Guild, an IT professional organization opposed to H-1Bs.

Reform is unlikely to go forward unless it's tied to a cap increase, and Grassley isn't opposed to raising the cap, a spokeswoman says. A Senate debate on the immigration issue is expected in two months, she says.

This looks like a make-or-break moment for H-1B reform. If it doesn't happen this year, it's not going to happen in 2008, when politicians will be focusing on the presidential election and their own re-elections. “If we get action, it'll be before '08,” says Robert Hoffman, Oracle's VP of government and public affairs and co-chair of Compete America, whose 30 or so members push the tech industry's immigration agenda.

Hoffman says the H-1B program gets a bad rap partly because it's a “catch-all”–it covers people that companies bring to the U.S. for short-term stints and people that companies are trying to get on a permanent-resident track. More than 90% of Oracle's visa workers are trying to stay in the United States and are on the path to permanent residency, Hoffman says.

It may be controversial that companies import employees under H-1B visas just to train them and then return them to other countries, but it's a perfectly legal use if they pay prevailing wages–the visa is temporary. It's also a practice their U.S. business customers quietly support, as they want their offshore teams to be well trained.

If the goal is to make it easier for foreign talent to permanently stay in the U.S., some see green card reforms as a smarter approach than more H-1B visas. Hoffman notes the green card process has long waits and quotas that end up frustrating many people, driving them to leave the United States. The sidelined SKIL bill proposed streamlined green card processes and a new visa class, F-4, to let foreign students with degrees from U.S. schools get jobs in this country with a path to permanent residency. “We can absorb the highly skilled worker best with green cards,” Hira says.

The risk with Washington's approach is that it mashes issues like H-1B visa reforms with a larger, comprehensive immigration reform bill, so “high-skill versus low-skill” issues become conflated, says Robert Atkinson, president of the Information Technology and Innovation Foundation. Atkinson says the most-needed reform is for the Labor Department to enforce rules to pay visa holders prevailing wages.

When it comes to wages, Kim Berry, president of the Programmers Guild, offers up his own idea as a deterrent to H-1B abuse. If wage is a measure of skill and scarcity, “why doesn't [USCIS] grant the visas to the highest-paying candidates, rather than use a lottery?” he suggests.

Not likely. But for all those looking to reform or ramp up the H-1B program, this is the year to try.