President Trump and the H1-B visa

President Trump and the H1-B visa

President Trump as is his wont has just unilaterally raised the annual fee for an H1B visa from $215 to $100,000. The president has claimed that the system was depriving American workers of jobs and was being abused and that abuse constituted a threat to national security (what doesn’t?). There is evidence that the visa program has been abused by some. “Since the creation of the program, the abuses of the program have been many, included vastly underpaying workers, laying off U.S. workers and replacing them with much lower-paid H-1B workers, forcing U.S. workers to train their H-1B replacements as a condition of receiving severance and unemployment insurance, and cheating the H-1B lottery to acquire additional visas.” See

https://www.epi.org/publication/new-evidence-widespread-wage-theft-in-the-h-1b-program/

The president was right in wanting to address the abuses in the system. The question is whether the increase in the annual fee is the right way to do it. One thing is certain, a fee of that size will mean that only the highest compensated foreign workers will now be brought into the country unless some type of fealty is paid to the president. Fealty – there’s that word again where it seems that kneeling before the president, kissing his ring and offering him gifts will get you an exemption. Apple anyone? Overlooked in most of the reporting is the following caveat:

“The restriction imposed pursuant to subsections (a) and (b) of this section shall not apply to any individual alien, all aliens working for a company, or all aliens working in an industry, if the Secretary of Homeland Security determines, in the Secretary’s discretion, that the hiring of such aliens to be employed as H-1B specialty occupation workers is in the national interest and does not pose a threat to the security or welfare of the United States.”

So it is possible to opt out of paying the $100,000 annual fee at the Secretary of Homeland Security’s discretion. Oh boy. I am sure that Kristi Noem is beyond reproach and cannot be bribed. Right? 

The president has made it clear that all those who currently hold an H1B visa are exempt from the new fee. That is obviously a relief to companies like Amazon that employs 14,667 such workers. Even with its deep pockets that would mean an additional $1.5 billion a year in visa costs. But going forward, unless exempted at the Secretary’s discretion, even Amazon would face increased costs to bring in new workers.

Seventy percent of the H1B visa holders are from India and has been a boon to that country and its citizens. About 12 percent of the visa holders are from China. Most are involved in skilled high tech jobs – jobs that Americans have deficient skills in. Needless to say there is much concern in India where the program has help raise countless families out of poverty.

There were 85,000 visas granted annually with another 20,000 for people with advanced degrees from American universities. Question to the president: Do Indians constitute a threat to national security?

The university programs will likely disappear given the $100,000 annual cost. This will surely impact university research and the hiring of professors and recruitment of graduate students. Most of the visa holders are in the STEM areas (science, technology, engineering and mathematics) where the majority of graduate degrees go to foreigners. The president says that now firms will have to hire Americans but of course if there are few Americans to hire, then that presents an interesting problem that will have significant impact on the economy. One thing is for certain, those skilled Americans should see a significant increase in their pay.

Trump supporters Vivek Ramaswamy and Elon Musk have defended the program while Steve Bannon has condemned it. Of course, Bannon does not operate a business dependent upon skilled workers. The largest industry for these visa holders are computer programing, professional, scientific and technical services and manufacturing. It is no surprise that tech giants are high uses of the program with Google (4,186), Meta (5,123), Microsoft (5,189) and Apple (4,202). The Indian multinational technology company, Tata Consultancy Services employs 5,586. I wonder what gifts will they have for the president.

Naturally, the new fee will face a court challenge. As one attorney put it “The only authority Congress has ever given the executive branch here is to charge fees to recover the cost of processing the application.”

The new fee is expected to cause the distribution of skilled workers to become more global as other countries that pay lower salaries will be able to attract those workers who would have otherwise gone to the US. One observer said that the biggest threat to Europe was the loss of talented innovators to the US but now Trump will have reversed that flow. The UK has responded by moving toward abolishing all visa fees for high level foreign talent and to “attract and retain high-skilled talent, particularly in science, research and technology.”

China has instituted a new K visa to attract skilled professionals in Science, Technology, Engineering, and Mathematics (STEM) from around the world. China will issue these visas without their being an employer sponsor. It is thought that many Indian professionals will now go to China rather than to the US.

Remember Harold Black’s First Law? “Any law worth being circumvented will be” means that one of the impact of the increased fee will be moving business operations off shore. Indeed there is an academic paper that shows that when H1-B immigration is restricted that US multinational shift work to other countries. Rutgers University economist Jennifer Hunt says “This misguided measure could shut down the H-1B program entirely and if that happens, it’ll have a very detrimental effect on the economy as a whole.” Hunt said H-1B workers don’t substitute for U.S. workers, but complement them instead, helping them do their jobs and making them more productive.

Another observer said that the impact on the medical profession would be “devastating” in that 30 percent of medical residents are foreigners. Also 8,200 of the visas were in general medicine and surgical hospitals. Again India is the largest single source of international medical graduates and make up about 22% of all international doctors. International doctors make up a quarter of US physicians.

As a side note, it is interesting that JD Vance’s wife is the daughter of Indian immigrants. Her father is a professor of Aerospace Engineering at San Diego State University. Her mother is a professor of Molecular Biology at UC San Diego, where she also serves as provost. It is not clear what their citizenship status is and whether they were on H1-B visas. Melania Trump came to the US on an H1-B visa. The cost was $1,500 and some doubt if she would have emigrated had the cost been $100,000. But an H1-B visa for a model? Is this what Trump means about the abuse of the system? But are the Drs. Chilukuri (Usha Vance’s parents) and Melania Trump a threat our national security?