One of Donald Trump’s first priorities in office has been to restrict the entry of foreigners into the U.S. But while he’s so far focused on refugees and individuals from majority-Muslim countries, the tech industry is girding itself for changes that will take direct aim at how they do business.
In a draft executive order obtained by Bloomberg News, Trump calls for new restrictions on the H-1B work visa program, used to bring thousands of high-skilled foreign workers into the U.S. every year, mainly for jobs in the information technology industry. Additionally, four separate bills have been introduced in Congress this year addressing H-1B visa policy.
“Right now, people in the IT world are probably both hopeful and scared,” said Neil Ruiz, executive director of the Center for Law, Economics, and Finance at George Washington University, and a specialist in work visa policy. “They know change is coming. But whether that change will be bad for business is unknown.”
Some tech companies stand to be uniquely impacted by reforms to the work-visa program. Microsoft has been the second largest filer of H-1B visa applications among domestic tech companies since 2012, the most recent year with data readily available from the U.S. Department of Labor. Leaving out IBM’s India-based outsourcing arm, the company is number one.
Microsoft received over 4,000 H-1B visas in fiscal year 2016. Among the top 10 applicants for H-1B visas, Microsoft pays the highest average salary to immigrants.
Google ranks 11th among applicants for the visas, Amazon 16th, and Apple 18th.
But the lion’s share of H-1B visas go to consulting and IT outsourcing firms based in India, as well as their U.S. subsidiaries. This is because the number of H-1B visas is limited to 85,000 a year, which are awarded through a lottery system. Outsourcing firms dedicate more resources to flooding the system with applications and, therefore, scoop most of them up.
The three companies with the most H-1B applications since 2012 — Infosys, Tata Consultancy, and WiPro — all fit this category. They pay lower average salaries than tech companies and largely bring in workers who only have bachelor’s degrees. This cuts to what some claim is a central flaw of the current system: that outsourcing firms are taking jobs away from domestic tech workers, and driving down salaries.
“There’s a lot of debate about that issue, and it’s still unresolved,” said Ruiz. “There’s such a high need for technical workers, and sometimes these firms will play a role in filling the gap in areas where the U.S. isn’t graduating enough students, like science and math. But some argue the system is depressing wages and not incentivizing Americans to go into the talent pool in some areas.”
According to a working paper published this month by researchers at the University of Michigan and University of California in San Diego, H-1B visas have exerted downward pressure on both the wages and employment rates of U.S. computer scientists.
Ed Lazowska, the Bill & Melinda Gates Chair in Computer Science & Engineering at the University of Washington, regularly speaks with local tech executives regarding staffing issues. He said the use of these visas by outsourcing companies shouldn’t be mixed up with how “home-grown leading-edge information technology companies” use them.
“Studies show that the majority of (tech) companies — most, particularly including our neighbor Microsoft, use H-1B visas extremely responsibly: modest numbers of exceptional individuals, filling jobs for which qualified Americans are not available, receiving market-rate compensation, with a relatively high conversion rate to permanent residency status,” said Lazowska.
According to Ruiz, this is because tech companies like Microsoft utilize the program differently than outsourcing firms or companies like Accenture, which use visa holders to staff the IT consulting arm of their businesses. As opposed to hiring workers temporarily, he said Microsoft often uses it as a stopgap to keep top talent in the country while they wait for their green card.
Lazowska agreed there is room for improvement in the H-1B program, which has become a political football. U.S. Attorney General Jeff Sessions has called H-1B visas a “tremendous threat” to American workers. Steve Bannon, Trump’s key strategist, has highlighted a story from the New York Times regarding Disney IT workers that were replaced by cheaper foreign labor under the H-1B program.
The bills now in Congress that are related to the program, introduced by members of both parties, attempt to address these issues.
- A bill introduced by Representative Zoe Lofgren, a Democrat who represents Silicon Valley, would give first priority for visas to the companies willing to pay workers the most, and would “curtail abuse of the program which has allowed replacement of American workers by outsourcing companies,” according to a release from her office. It would also reserve 20 percent of these visas for startup companies, defined as having 50 employees or less.
- A wide-ranging bipartisan bill by Sens. Chuck Grassley and Dick Durbin would eliminate the lottery-based allocation system, and would prioritize foreign students educated in the U.S., advanced degree holders, firms that pay the highest wages, and workers with certain valuable skill sets.
- A bill by California Republican Rep. Darrell Issa would raise the minimum salary requirement for H-1B positions to $100,000, up from the current floor of $60,000. Companies that want to pay visa holders less would have to prove they couldn’t hire U.S. workers for the same job.
- A bill by Utah Republican Rep. Jason Chaffetz would do away with per-country cap for employment-based immigrants, creating a “first come, first serve” system and reducing the backlog of applicants from countries such as India.
Grassley and Durbin are more dedicated than most legislators on the issue, having introduced bills to reform H-1B visa policy since 2007. According to Grassley spokesperson Beth Levine, their bills have never seen much movement on Capitol Hill. It is unknown whether this year will be an exception, she said, and they are in the dark about the White House’s plans.
They’re not alone in seeing Trump’s plans as an important unknown. His draft executive order on work visas is vague, and subject to either change or never be implemented. But it is essentially protectionist, forcing companies to attempt to hire more U.S. workers for tech positions.
“Visa programs for foreign workers … should be administered in a manner that protects the civil rights of American workers and current lawful residents, and that prioritizes the protection of American workers — our forgotten working people — and the jobs they hold,” reads the draft order.
However the program is reformed, many consider it long overdue. Ruiz points out that the last time the H-1B system was changed was over a decade ago, when technologies such as smartphones and the Internet were not nearly as pervasive for businesses and consumers.
“Technology changes so fast, and we’re stuck with an old immigration system that doesn’t work,” said Ruiz. “Now, in a weird way, there’s hope. Trump is going to do something on immigration, and with two Republican houses in Congress, there will be some reform. The question is what that looks like under this new veil of ‘America First.’”