Ever since the 2016 election campaign began, technology companies — many based in Silicon Valley — have been firmly opposed to the candidacy (and now presidency) of Donald Trump. Just about all of these enterprises strongly backed Democrat Hillary Clinton for president, with the billionaire founders of firms like Facebook, Google, Oracle and others donating millions to her campaign.
There’s a very clear reason why this was so, and it has nothing to do with political ideology. Instead it has to do with greed, their own personal greed. These billionaires don’t give a rats ass what president gets elected as long as they don’t restrict the one thing most important to them: money.
In most cases the largest cost to their businesses is labor. The engineering talent that powers their operations is very expensive, and any method by which they can reduce these costs is welcomed with open arms.
One way, in particular, this can be done is by hiring foreign-born workers, who in many cases will be significantly cheaper than American workers. Such workers are also less likely to complain and will probably work longer hours because they value their jobs more. These foreign-born workers are allowed into the United States under a visa classification known as H1-B, and the quota of H1-B visas has been a hotly debated issue in Congress and amongst presidential candidates for several years now.
On the campaign trail, Trump promised to “end forever the use of H1-B as a cheap labor program.” Later, he clarified his statement to say that he’s most concerned about firms using the visas to displace lower-earning American workers.
Currently, 85,000 H1-B visas are granted, with 20,000 specifically going to foreigners with Masters degrees. The demand among tech companies for these workers is so high — often for as much as three times the number of available visas — that the quota is usually completely exhausted within a few days of it opening every year. A lottery system evenly distributes the visas among tech companies such as Apple, IBM, Cisco, Amazon, Intel, Microsoft and others.
These companies say the H1-B visa workers are crucial because it’s difficult to find American college graduates with the equivalent level of engineering skills. CEOs from many of these companies say they want to bring the “best and the brightest” applicants from countries like India and Pakistan to work in the U.S.
But now, it appears that President Trump is poised to sign an executive order overhauling a number of visa quotas, including for the H1-B, B1, L-1 and L-2 programs. “Our country’s immigration policies should be designed and implemented to serve, first and foremost, the U.S. national interest,” a draft of the order reads.
“Visa programs for foreign workers… should be administered in a manner that protects the civil rights of American workers and current lawful residents and that prioritizes the protection of American workers — our forgotten working people — and the jobs they hold.” Trump’s order would require American tech firms to prioritize hiring American workers over possible foreign-born replacements.
The order also aims to provide more transparency for the program, mandating that the government publish reports with basic statistics spelling out which firms are using how many of each visa type within one month of each fiscal year end. Under the Obama administration, this kind of specific information was not available and even required journalists to file Freedom of Information Act (FOIA) requests to get the data in some cases.
Ron Hira, an associate professor at Washington, D.C.’s Howard University, says that “if firms are using the program for cheap labor, I think it will affect them, and they’ll have to pay workers more.” The Trump administration didn’t respond to requests for comment about the order.
But it’s unclear how much force the order would have since Congress is working on its own visa reform bills. One such bill, sponsored by Democratic Representative Zoe Lofgren of California, would also implement stricter requirements for the H1-B program.
“My legislation refocuses the H1-B program on its original intent — to seek out and find the best and brightest from around the world, and to supplement the U.S. workforce with talented, highly-paid, and highly-skilled workers,” Lofgren said.
Lofgren’s bill would change the current visa lottery system to one that’s based on salary, so visas would be awarded based on which companies were paying the most. “That would avoid this program undercutting the wages of American workers. It lets market forces work.”
But Lofgren’s bill would also eliminate limits on some permanent visas, whereas currently, most H1-B visas are granted for three years and can be extended for another three years. Lofgren believes this provision would help clear up the high demand for H1-B visas. It remains to be seen how the president would reconcile his order with Lofgren’s legislation.
Some Indian talent companies that supply engineers under the visa program have reacted to the impending order and Congressional bills. Firms such as Wipro, Infosys and Tata Consulting Services have argued that they’re helping U.S. corporations stay competitive by providing specialized staff for specific tasks. They also argue that the visa program helps keep jobs in the U.S., versus having them outsourced to offshore locations.
- Chandrashekhar, the president of IT trade group Nasscom, says “Inspections and investigations in the past have shown no cases of wrongdoing by Indian IT services companies, which have always been fully compliant with the law. The industry is open to any kind of checks in the system, but they should not cause any hindrance to the smooth operation of companies.”Raja Lahiri, a partner at Mumbai-based consultancy Grant Thornton, believes that the order and any related bills in Congress could add expenses for Indian talent firms. This could accelerate moves to new kinds of services like artificial intelligence and cloud computing, he believes. “The visa challenges are not going to go away easily. They will continue to be a challenge for Indian IT companies,” he stated.
Regards,
Ethan Warrick
Editor
Wealth Authority
