On February 6, the U.S. Senate voted to put stricter limits on banks and other recipients of taxpayer money through the Troubled Assets Relief Program, or TARP, that want to hire high-skilled workers from overseas under the H-1B visa program. The Senate approved the measure – introduced by Senators Charles Grassley (R-Iowa) and Bernie Sanders (Independent-Vermont) – by voice vote as an amendment to President Obama’s economic stimulus package.
The H-1B provisions are not as strict as originally envisioned by Sen. Grassley, who wanted to keep firms receiving TARP funds from hiring H-1B workers altogether. Instead, the amendment ensures that TARP recipients follow the same rules as so-called H-1B dependent employers (whose workers brought in with that visa comprise 15% or more of the employer’s total workforce), meaning that firms using TARP funds face additional hurdles when trying to hire foreign workers.
The rationale, according to Grassley and his supporters, is that H-1B workers are used to displace similarly qualified American workers. But why would a company want to fire an American just to hire a foreigner whose qualifications are no better or worse than those of the domestic worker? I mean, I know our accents are charming and all, but surely that’s not enough…
No, allegedly H-1B hires are used to displace Americans because foreigners coming to work in the U.S. under the visa program are cheaper than domestic workers. In reality, however, there is a provision in the regulations governing the visa process that states that H-1B workers have to be paid “at least the prevailing market rate.” Also, the assumption that H-1B holders are willing to work for less money than domestic employees lumps together the highly qualified H-1B crowd with uneducated, or poorly educated, seasonal workers who come to America because they see taking jobs as farm workers here as the only way to escape the high levels of unemployment, poverty, political instability and general hopelessness and desperation in their home countries.
That’s not a good predicament – and, thankfully, not the situation H-1B workers usually find themselves in. Most H-1B workers have options. For example, I have a friend who is a British citizen but graduated from a top three business school here in the US. After earning his MBA, he took a job with an East Coast investment firm under the H-1B program. But do you think he would have accepted the job offer if he thought he would be paid less than his American colleagues? No, the guy would have simply returned to London and worked in the financial industry there (this was a few years ago, so there was still such a thing as a functioning financial industry).
The point is: The majority of H-1B holders (57% in 2006, to be exact) have Master’s or even PhD degrees – often in math or the sciences – and are therefore pretty sought after. It simply doesn’t make sense for people like that to work in America at below-market rates.
But why hire a foreigner if you can hire an American with the same level of education and experience for the same amount of money? That’s a good question – and all I can say is that whoever is better qualified should get the job. Often, who ends up being seen as “better qualified” is a question of minute differences between the candidates, with language skills or the knowledge of local markets giving the foreigner an edge in some cases.
Startups, in particular, depend on highly specialized talent. Many of them are looking for that rare individual who can either lead a team or develop a new solution – and they should not be restricted to one country in their search. If the best person for the job happens to have been born abroad – well, then the startup should still be able to hire them.
That is why ACT, in response to a recent public request for comment by the new administration, recommended that 10,000 H-1B visas be set aside for small businesses, with a limit of five visas per firm.
We also think that H-1B visas for small businesses should be made available twice a year, not just once. SMEs simply cannot afford to participate in a lottery system that requires them to make a hiring decision 18 months before that person starts work. For startups it would therefore be especially advantageous if the H-1B process were more flexible, giving them two chances per year to apply for visas, not just one. Making available a batch of 5,000 H-1B visas to SMEs every six months would ensure that startups, which depend on small teams of highly qualified people, do not face a potentially devastating one-year wait to hire the specialized talent they require.
H-1B opponents such as Senator Grassley and notorious anti-H1B torchbearer Ron Hira seem to forget that the temporary work visas are not just requested by big companies, who, according to Hira’s and Grassley’s logic, want to get vast amounts of low-level back office work done by underpaid foreigners.
They also conveniently overlook the fact that a) there are legal provisions to ensure that H-1B workers don’t get hired because they work for less money than Americans and b) even if US employers were allowed to pay lower salaries to foreigners than to domestic workers, most H-1B workers (especially those with graduate degrees in math, science, or engineering) are too in demand to accept an underpaid position as a “second-class employee” in an American company. Testifying in Congress in 2007, Microsoft Chairman Bill Gates pointed out that U.S. competitors are eager to hire the kind of highly-educated professional that would qualify for an H-1B visa in the U.S.
Oh, and by the way, highly-qualified foreigners do not just take jobs here in the US – they also create new jobs for Americans: According to a Duke University study published in 2007, foreign-born entrepreneurs were behind one in four American technology startup companies from 1995 to 2005 and generated 450,000 domestic jobs in 2005. In the same year, immigrant entrepreneurs’ companies generated $52 billion dollars in sales. Among the U.S. technology companies founded by foreigners are Google, Intel, Sun, and eBay.
Does America really want to risk showing the next Sergey Brin the door? I bet not even Senator Grassley and Dr. Hira can respond “yes” to that without feeling a little disingenuous.