On January 30, 2017, legislation by Congresswoman Zoe Lofgren was introduced in the US House of Representatives. If passed, this legislation would drastically change the H-1B landscape for the American technology sector.
The legislation promises to eliminate the “per country” cap for employment-based immigrant visas so that all workers are treated fairly and end discrimination in allocation of employment-based visas. That would mean employers can hire the most skilled workers without regard to national origin.
Lofgren says the bill will, “refocus the H-1B program to its original intent – to seek out and find the best and brightest from around the world, and to supplement the US workforce with talented, highly-paid, and highly-skilled workers who help create jobs here in America, not replace them.”
However, the terms of the bill may actually prove detrimental to the one of the U.S. economy’s strongest sectors.
An analysis of the bill reveals that it proposes to raise the minimum required wage for an H-1B visa to $130,000 for dependent employers. Anyone with more of 15% of their workforce composed of H-1B workers would be classified as a dependent employer. Unless dependent employers compensate their H-1B workers above the required wage level, they would be required to make attestations regarding recruitment and non-displacement of U.S. workers. No discretionary compensation would be counted towards the wages, and, quite critically, the master’s degree exemption would be eliminated for dependent employers.
The prevailing wage calculation system would also be changed from a 4-level formula to a 3-level formula (based on the mean of the bottom 2/3 of wages, the mean of all wages, and the mean of the top 2/3 of wages surveyed). H-1B allocations would be prioritized based on the percent of the prevailing wage the employer was paying.
Visas would be dispersed in the following order:
- Employers paying prevailing wage level 3 at 200% of prevailing wage, then 150% of prevailing wage (including cash bonuses and similar compensation);
- Employers paying level 2 at 200% of prevailing wage, then 150% of prevailing wage (including cash bonuses and similar compensation);
- Employers paying level 1 at 200% of prevailing wage, then 150% of prevailing wage (including cash bonuses and similar compensation);
- Any remaining petitions.
Another key component of the bill would reserve 20% of the annual allocation for small and start-up employers with less than 50 employees.
Risk for America’s Technology Sector
Technology has been one of the most successful sectors of the U.S. economy in recent decades. Last year, each of the nation’s top three H-1B tech employers, currently approved for a collective 31,000 H-1B petitions, paid their employers a mean wage of less than $70,000. If these employers were forced to pay $130,000 to each employee in order to expand their workforce in the way they do today, it would put a heavy financial burden on the tech sector.
As we previously reported, a study by Madeline Zavodny of Agnes Scott College found that, “immigrants with advanced degrees boost employment for US natives.”
In fact,for every 100 which went to foreign born workers with advanced US STEM degrees, 262 new jobs for domestic workers were created. And for every 100 immigrants who have advanced degrees in any field (regardless of whether the degree is US or a foreign equivalent) 44 jobs are created for US natives. Eliminating the master’s degree exemption would certainly eliminate thousands (probably near 5,000) jobs for American workers annually.
The Trump administration and our legislators need to be very careful with their regulations on our best companies and industries or we may literally lose them. Requiring a company no longer just to meet the prevailing wage but pay 150-200% above it is the type of overreaching concept that is bound to drive jobs and companies offshore. One recent piece of evidence is the stock market’s massive tumble in January 2017 when President Trump issued an executive order banning citizens from seven nations from entering the US. Rep.
Lofgren’s bill doesn’t solve the problem – it creates a worse one.
The H-1B program is not a threat to American workers. These positions are filled by persons trained in the STEM field – an area where Americans tend to be behind other nations in training. The facts show clearly that, once these positions are field, they actually create more jobs for Americans. Congress should carefully consider expanding rather than restricting the H-1B program if they’d like to boost the economy and create more jobs for Americans.