Visa as the master card
By Dr. Mukesh Aghi, President of the U.S.-India Business Council
In the United States, immigration continues to be a deeply polarising issue that places high-skilled workers on H-1B visas at the centre of an inconvenient narrative. Their fate is often linked with that of the 11 million undocumented workers in the country and security concerns over terrorism and refugees. It is a debate that is swallowed up by election politics, sound bites, and anti-trade arguments that ignore the facts which support the free flow of labour and play upon people’s fears of losing jobs to “outsourcing”.
The free movement of high-skilled workers plagues the U.S.-India bilateral relationship unlike any other issue, and it can be fixed with pragmatic reforms. But some facts need to be aired first so as to erase the myths that have become popular on the campaign trail.
Busting H-1B myths
H-1Bs visas are for high-skilled workers. The problem is that the demand for these workers far surpasses the annual allotment of 85,000 H-1Bs, 20,000 of which are slotted for master’s graduates. In fact, the U.S. needs 120,000 new computer engineers annually but American universities only produce one-third of that number. Hence, the need for the H-1B programme, which allows the U.S. to fill the Science, Technology, Engineering, Mathematics (STEM) gap. Simply put, bringing in tech workers from abroad creates jobs in the U.S. According to a study by Professor Madeline Zavodny of Agnes Scott College, Georgia, U.S., hiring 100 H-1B workers resulted in an additional 183 jobs for native U.S. workers.
Similarly, estimates show that by rejecting 178,000 H-1B visa applications in computer-related fields in 2007-08, the U.S. missed out on creating as many as 231,224 tech jobs for U.S.-born workers in the two years that followed. These are the good-paying jobs that politicians love to talk about.
But this isn’t just a jobs conversation. A National Association of Software and Services Companies (NASSCOM) study released in September 2015 noted that Indian IT companies contributed $22.5 billion in taxes to the U.S. Treasury between 2011 and 2013. Plus, they supported over 411,000 jobs in the U.S., including 300,000 jobs for U.S. citizens and permanent residents during that time. More important, those jobs make U.S. companies more efficient so that they can compete globally.
All of which raises the question of why there’s a political issue in the first place. There is a myth that high-skilled workers on H-1Bs earn less than and — as a result — displace their native-born counterparts. In fact, high-skilled IT workers on temporary visas earn competitive salaries and cost their employers as much or more than their American counterparts. According to a May 2013 Brookings Institution publication authored by Jonathan Rothwell and Neil G. Ruiz, “H-1B [visa] workers are paid more than U.S. native-born workers with a bachelor’s degree generally.”
Yet members of the U.S. Congress who used to champion H-1Bs by proposing to quintuple the annual allotment have flipped positions to appeal to the political winds. The IT services industry has been tainted by isolated media accounts of U.S.-born workers training in their foreign replacements. But the reality is that U.S. companies must remain technologically competitive. And that’s precisely what they hire U.S. and Indian IT companies to do.
Targeting Indian companies
Nevertheless, as a result of political dynamics, the U.S. Congress doubled H-1B visa fees in December, punishing Indian companies to the tune of $400 million over a decade and prompting India to file a case at the World Trade Organisation over a discriminatory fee increase that largely targets Indian companies. It is politically convenient to charge these companies when the U.S. Congress needs to pay for something. After all, those companies have little influence in Washington. Prime Minister Narendra Modi raised the issue with U.S. President Barack Obama when the fee hike was signed into law as part of December’s Omnibus Appropriations Act.
The law’s so-called 50:50 fees are clearly discriminatory and should be eliminated. The law provides that increased fees would apply to companies with (a) more than 50 U.S.-based employees and (b) more than 50 per cent of its U.S.-based workforce on H-1B or L-1 visas. If the U.S. Congress does not strike down this discriminatory trade barrier that disrupts the market, then it should level the playing field by reducing the amount assessed per petition, spreading the cost to every organisation that uses the H-1B and L-1 visa programmes instead of targeting Indian firms through the 50:50 trigger.
But that’s not the only reform that should be made. Industry should push the U.S. Congress to rally around more visas for small businesses. Critics claim that smaller companies and start-ups don’t have the resources that larger IT firms have to procure their share of H-1Bs.
To address these concerns, which have been raised by members of the U.S. Congress, we propose maintaining the current number of 65,000 H-1Bs for larger companies, adding an additional 50,000 visas for small and medium enterprises exclusively, and taking on an extra 30,000 visas for master’s graduates. The U.S. could make these changes solely to improve its strategic relationship with India, which serves as a bastion of stability in an otherwise difficult region. But that’s not why the U.S. Congress should act. It should act because innovation — and the hundreds of thousands of jobs associated with new companies — rests on a global, mobile workforce.
This opinion piece first appeared in the Hindu.