SAN FRANCISCO — Companies that want to fill positions with non-U.S. workers on H-1B visas will end up having to pay them more — and they’re likely need to be better educated in general — under a new executive order signed by President Trump on Tuesday that could make the business model of tech outsourcing firms less viable.
The executive order is very light on details but one crucial phrase could signal its intent. Government agencies are to suggest reforms that ensure H-1B visas go to the “most-skilled or highest-paid.”
“Right now, H-1B visas are awarded in a totally random lottery, and that’s wrong,” Trump said at the signing ceremony at Snap-On Tools in Kenosha, Wis.
How that might be implemented is not addressed in the order. Options might include moving from the current lottery model to something more like an auction, said experts.
For example, it could mean “if a company is offering $140,000 for one position and another is offering $70,000, the $140,000 is going to be selected,” said Ted Ruthizer, a partner and expert in immigration law at the New York firm of Kramer Levin.
In the educational realm, it might mean putting Ph.D. holders above those with Masters of Science, who would be above those with simply Bachelors degrees.
The largest impact would likely be on outsourcing companies such as Tata and Infosys, which have built lucrative businesses by bringing computer professionals, often from India, into the United States on H-1B visas — the specialized work visas favored by the tech industry.
“The real abusers of H-1B are Indian offshoring companies. They obtain a large number of H-1B visas, they bring people in for relatively short periods of time, they pay them below market rate, and their job is to send work back to India,” said Edward Lazowska, the Bill & Melinda Gates Chair in Computer Science & Engineering at the University of Washington in Seattle.
Infosys frames its work very differently.
“It is our endeavor to help clients leverage the best U.S. talent together with the best global talent, to drive economic growth in the U.S., ensure the U.S. continues to be at the forefront of innovation, and bring skills and education in the new technologies that will transform our world,” said spokeswoman Chiku Somaiya.
Currently, 35% to 40% of H-1B visas go to these types of professional staffing companies, said Todd Schulte, president of FWD.us, a science and tech-focused organization that lobbies for immigration reform.
His group has advocated for immigration reform that would, among other things, raise the salary floor for these visas above $60,000, the figure at which they can skirt restrictions on displacing Americans. The floor was set by Congress in 1991 but because it was not indexed to inflation, it now represents the very lowest end of the wage scale for skilled tech workers.
“If a company can bring people in on an H-1B visa and they’re paying them $150,000 a year, that’s very different than the sort of work they’re coming in to do at $60,000,” Schulte said.
Studies consistently show that bringing in highly-skilled and well-paid professionals is an economic multiplier that doesn’t displace American workers but instead helps create more jobs, he said.
“If you bring in more highly-skilled immigrants, wages go up for native-born Americans,” Schulte said.
The Executive Order on its own doesn’t actually do anything beyond telling the Secretary of State, the Attorney General, the Secretary of Labor and the Secretary of Homeland Security to suggest reforms.
Once those reforms are agreed upon, Congress would then have to write and pass legislation enacting them, said Stephen Yale-Loehr, a law professor and expert on immigration at Cornell University.
Thus any substantial change to the current program is likely several years away, he said.
While it’s possible that the outsourcing companies might simply raise their prices to accommodate the higher salaries they would need to pay, it’s more likely that they would simply move their operations outside of the United States, he warned.
“The administration has to be careful because if they go too far they could be hurting the U.S. economy by accelerating the existing problem of off-shoring work and talent to other countries,” he said.
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