Tech companies this week railed against President Trump’s immigration ban on seven mostly Muslim countries. Taking to blogs, social media, and even protesting in person, tech leaders claimed the immigration bans not only defy the very foundation of the United States, but from a practical point of view, the bans reduce the tech talent pool.
Now, tech companies face another attack from Washington on their businesses: changes to the H-1B visa process.
The H-1B visa system began in 1991. It currently permits a maximum of 85,000 visas to be granted annually for a period of three years, with three-year renewals possible. The minimum H-1B salary of $60,000 is unchanged since 1991.
A group of Goldman Sachs analysts prepared a report “The H-1B Visa Debate: A Global FAQ for Investors” where they write, “We estimate that 900,000 to 1 million H-1B visa holders currently reside in the U.S. While H-1B visa holders comprise only 0.6-0.7 percent of total U.S. jobs, we estimate they comprise about 12-13 percent of tech related jobs.”
The H-1B visa program paves the way for the majority of highly-skilled workers from other countries to work in the U.S. The visas are doled out through a lottery system, and there are usually about three times as many applicants as there are visas. Many foreign workers eventually apply for green cards to work permanently in the U.S.
But there have been a lot of complaints that the H-1B visa program allows tech companies to hire cheaper foreign workers rather than pay higher wages for U.S. engineers.
Now, bi-partisan leaders in Congress have introduced new legislation that could change the popular visa program. Sen. Chuck Grassley (R-Iowa) and Sen. Dick Durbin (D-Illinois) introduced legislation in January that they say would modify wage requirements for visa holders and require that students educated in the United States receive preference for an H-1B visa.
And Representatives Darrell Issa (R-Calif.) and Scott Peters (D-Calif.) introduced legislation that would raise the salary requirement for the H-1B positions to $100,000 per year.
Finally, Rep. Zoe Lofgren (D-Calif.) introduced legislation that would raise the salary requirement to about $130,000 per year.
The Goldman Sachs analysts say that changes to the system would result in higher wages for U.S. tech workers, with higher labor costs for tech companies.
Changes in the Wind
“Even though H-1B visas are intended to fill labor shortages for skilled labor, there have been reported incidents (and subsequent investigations) of companies such as Disney and Southern California Edison that have allegedly laid off hundreds of employees and replaced them with foreign workers brought to the U.S. by outsourcing firms,” says the Goldman Sachs report.
Indeed, abuses by IT outsourcing companies may cost other tech companies big time.
Research from Computerworld (and cited in the Goldman report) found that in 2014, the top users of H-1B visas were all consulting and outsourcing companies, including Tata Consultancy (7,149 visas), Cognizant (5,228 visas), Infosys (4,022 visas), and Wipro (3,246 visas).