Trump’s Halt on H-1B Visas Hits Indian IT Companies Hard
Trump’s decree on visas for foreign workers
On Monday, US President Donald Trump issued an Executive Order to halt, till December 31 this year, the issuance of work visas, including the H-1B visas for high-skilled workers, to prevent immigrant workers from coming to the US.
According to The Wall Street Journal the order is expected to affect 525,000 persons, including 170,000 Green-Card holders. However the order will not affect workers already in the US with valid visas.
Justifying his step, Trump said: “American workers compete against foreign nationals for jobs in every sector of our economy, including against millions of aliens who enter the United States to perform temporary work. Temporary workers are often accompanied by their spouses and children, many of whom also compete against American workers.
Under ordinary circumstances, properly administered temporary worker programs can provide benefits to the economy. But under the extraordinary circumstances of the economic contraction resulting from the COVID-19 outbreak, certain non-immigrant visa programs authorizing such employment pose an unusual threat to the employment of American workers.”
“For example, between February and April of 2020, more than 17 million United States jobs were lost in industries in which employers are seeking to fill worker positions tied to H-2B non-immigrant visas. During this same period, more than 20 million United States workers lost their jobs in key industries where employers are currently requesting H-1B and L workers to fill positions.”
“The entry of additional workers through the H-1B, H-2B, J, and L non-immigrant visa programs, therefore, presents a significant threat to employment opportunities for Americans affected by the extraordinary economic disruptions caused by the COVID-19 outbreak.”
“Excess labor supply is particularly harmful to workers at the margin between employment and unemployment — those who are typically ‘last in’ during an economic expansion and ‘first out’ during an economic contraction. In recent years, these workers have been disproportionately represented by historically disadvantaged groups, including African Americans and other minorities, those without a college degree, and Americans with disabilities.”
“In the administration of our Nation’s immigration system, we must remain mindful of the impact of foreign workers on the United States labor market, particularly in the current extraordinary environment of high domestic unemployment and depressed demand for labor.”
Among others, there was an electoral factor working in Trump’ mind, which partly explains the timing of the order. Trump is seeking a second term in the November elections, and in the run up to it, he has to cover up his incompetence in dealing with the coronavirus pandemic, which till June 25, had infected 2.59 million and killed 120,171 in the US.
Over 20 million Americans had been thrown out of jobs because of lockdown and closures of economic enterprises. Trump also has to take into account the fact that African Americans and other racial minorities have been the worst affected by the pandemic.
The African Americans have also been badly alienated because of the brutal public murder of Black man George Floyd by a White police officer. It had touched off unprecedented rioting across the US. That the Presidential election was the trigger for the Executive Order is clear also from the fact that it is to be in place only till December 31.
But, irrespective of the electoral factor, the unemployment situation is alarming. According to a PEW Research Center analysis, the COVID-19 outbreak and the economic downturn it engendered, swelled the ranks of unemployed Americans by more than 14 million, from 6.2 million in February to 20.5 million in May 2020.
As a result, the U.S. unemployment rate shot up from 3.8% in February to 13.0% in May. The Blacks are the worst hit now, as before. The Black unemployment rate is currently 16.7%, compared with the White unemployment rate of 14.2%.
In 2019, the share of the U.S. civilian labor force that was foreign born was 17.4%. Adding to this problem are the undocumented foreign workers, numbering about 11 million.
The H-1B is closely associated with Indian IT companies. The US has a cap of 85,000 on H-1B visas for each year. Of this, 65,000 H-1B visas are issued to highly skilled workers, while the rest 20,000 can be additionally allotted to highly skilled workers who have a higher education or a Master’s degree from a US university.
Indian IT companies are amongst the biggest beneficiaries of the H-1B visa regime. According to Indian Express, as on April 1, 2020, the US Citizenship and Immigration Services (USCIS) had received about 250,000 H-1B work visa applications. Indians had applied for as many as 184, 000 or 67%. As per Trump’s order, H-1B visas will no longer be decided by the currently prevalent lottery system but by a tougher process.
Many American experts complain that the H-1B visa facility is misused. According to US reports, Ron Hira, Assistant Professor of Public Policy at New York’s Rochester Institute of Technology, had said that a large portion of the “specialty” workers hired under H-1B visas are not “special” at all. In 2008, the Department of Labor (DOL) certified more than 5,000 applications for H-1B positions which pay less than US$ 15 an hour.
In 2008, Sen. Charles Grassley, R-Iowa, found evidence of forged documents, fake degrees and other improprieties in one out of every five petitions for H-1B visas. In one instance, the H-1B position described by the employer as "business development analyst" turned out to be for a washing machine repair and maintenance man.
US reports say that many of the companies most reliant on H-1Bs are India-based outsourcers. Till recently, Indian-owned companies had collectively accounted for 12% of all new H-1B hires. Several large Indian-owned companies, including Infosys Technologies Ltd. and Wipro Ltd., hired thousands for their US operations, unlike US-based companies.
In 2007, Sen. Richard Durbin, D-Ill., charged that the "primary mission" of Indian outsourcing companies "is to gain the expertise necessary to take on critical tasks performed by companies in the United States and perform them in India at a fraction of the cost."
However, it is undeniable that foreign workers significantly contribute to the growth of the US economy. Three-fourths of the H-1B visas each year go to people working in the technology industry. Many tech giants cite the vital contribution immigrants make to their companies and the US as a whole.
The US media is full of reports of dismay in leading tech companies about Trump’s order. "Now is not the time to cut our nation off from the world's talent or create uncertainty and anxiety," Brad Smith, Microsoft chief counsel, tweeted. "Preventing high skilled professionals from entering the country and contributing to America's economic recovery puts America's global competitiveness at risk," an Amazon spokesman said.
Google CEO Sundar Pichai, himself an Indian immigrant, says that immigration helped build the company and the US. "Immigration has contributed immensely to America's economic success, making it a global leader in tech, and also Google the company it is today," Pichai said in a tweet.
According to Duke University professor Vivek Wadhwa, among US tech and engineering companies launched from 1995 to 2005, in more than 25% there is at least one foreign-born founder. In 2005 alone, these immigrant-founded companies produced US$ 52 billion in sales and employed nearly half a million workers. In 2006, more than 24% of international patent applications filed from the US had named foreigners as inventors or co-inventors.