Staffing Companies Targeted In New H-1B Bill

California Rep. Darrell Issa has ramped up his effort to present legislation which will unfairly target H-1B employers, especially U.S.-based tech companies that support other U.S. companies by providing highly skilled H-1B workers. On November 15th, the House Judiciary Committee approved his Protect and Grow Jobs Act (H.R. 170). According to the press release, the Act, “makes changes to the program to prevent H-1B dependent employers from bringing in foreign workers to replace American workers at low salaries that undermined the wages of American workers.”

Rep. Issa utilizes a story line that in 2015 Southern California Edison was accused of laying off 500 employees and replacing them with cheaper H-1B recipients – replacements which the former employees had to train. While this activity may have occurred, the larger issue is that many U.S. employers need the ability to hire foreign born employees to stay at the top of their field – especially in the arenas of technology, medicine, finance, and higher education.

Bolstered by this theme of H-1B abuse, Rep. Issa and California Rep. Zoe Lofgren have devised a series of intrusive government regulations for U.S. companies. Instead of calling out a company that may have acted inappropriately, Reps. Issa and Lofren’s goal is to make it difficult for U.S. employers to hire the workers they need. They label U.S. companies as H-1B dependent if only 20% of their workforce uses the H-1B visa. In addition, the Protect and Grow Jobs Act would:

• Eliminate the exemption for H-1B beneficiaries with advanced degrees. This means even if the employee has a master’s degree or PhD they will be harder to hire.

• Increase the $60,000 minimum salary to $90,000. This raises the minimum wage of foreign workers but also eliminates employees just graduating from U.S. universities from participating, as that the wage is so much higher than an entry level position.

• Require certain H-1B employers to attest that they will not displace U.S. workers for the life of the position. This component makes U.S. employers make statements to the government that they cannot know.

• Require a report showing employers made an assertive effort to recruit U.S. employers. This requirement may cost employers excessive advertising costs and time especially when they already know who they want to hire.

• Require H-1B dependent employers to pay each worker the average wage for that position in their geographic area. Average wage may be higher than prevailing wage. This component also makes no sense. It means a new worker would have to be paid the wage of someone in the same type of job who has worked there for years.

• Allow the Department of Labor to conduct randomized investigations on H-1B dependent employers annually. There would be a new $495 fee to cover the costs of the investigations. This component invites police style investigations into the workplace of U.S. companies that are not even under suspicion of any wrongdoing just because they hire a small percentage of their workforce from other nations.

According to his website, The Protect and Grow Jobs Act would, “close a loophole in the nation’s high-skilled immigration system being used by these companies to bring in cheaper foreign labor from abroad.” Moreover, the Congressman claims that these changes help keep American jobs. The website argues that raising the pay requirements “to a level more in-line with the average American Salary,” would prevent companies from abusing H-1Bs and “ensure these positions remain available for companies who truly need them.”

The problem with representatives slashing the H-1B cap is that they utilize arbitrary figures based on a scare tactic instead of looking at statistics of the benefits of high skilled immigrant workers. When making changes to the H-1B cap or the required wage, it’s important to remember that H-1B visas create jobs for Americans. H-1Bs granted between 2010 and 2013 are expected to create more than 700,000 jobs for US born workers by 2020.

Moreover, H-1B workers are not taking American jobs. They are filling temporary or hard-to–fill positions for which few available American workers are skilled. For example, the overall unemployment rate in California is 6.1% while the UT unemployment rate in the state is 3.5%. This compares with a national average of 4.1% for the month of October.

A study by the McKinsey Global Institute presented data that every $1.00 spent on foreign staffing generates $1.12 to $1.14 for the U.S. economy. Staffing companies also allow businesses to control capital cost, increase efficiency reduce labor costs, start new projects quickly, focus on core business values and reduce risks.

Rep. Issa’s bill unfairly targets staffing companies which provide talent for other U.S. companies helping lower the cost of hiring high-skilled workers for hard-to-fill positions. They absorb the cost of recruitment, training and immigration legal fees. This supports U.S. companies’ ability to remain innovative. Restricting outsourcing firm’s ability to recruit talent chills the U.S. economy and keeps U.S. firms from having access to the high-skilled talent they need.