Pause on H-1B Visa Program Could Benefit U.S. Workers

July 24, 2020
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Author: Glenn Hunter

More jobs for U.S. workers could be available, especially in the Science, Technology, Engineering and Math (STEM) fields, following the Trump Administration’s move to suspend temporary visas for foreign workers through the end of the year. Among several types of visas targeted by the Administration’s executive order, which “may be continued as necessary” after December 31, 2020, are H-1B visas used mainly by workers in the technology industry.

The temporary halt to allowing H-1B visa workers into the U.S. may force tech companies to look to U.S. talent to fill these roles.

The H-1B visa program was established in 1990 to help American companies that had labor shortages in highly skilled or specialized areas like research and computer programming. The program has a current annual cap of 65,000 visas for applicants with bachelor’s degrees, plus another 20,000 for employees who hold advanced degrees from American universities. As a result of record-high unemployment caused by the coronavirus pandemic, the visa program was halted last month because it risks “displacing and disadvantaging” American workers during the recovery, the administration says. One official told Reuters the visa suspensions would open up 525,000 jobs to U.S. workers.

In 2019, the Department of Homeland Security’s U.S. Citizenship and Immigration Services said the U.S. workforce included a total of more than 388,000 H-1B visa holders, the majority of whom had been granted extensions of their visas to remain in the country. About 72.0% of the total figure came from India, while the second-largest group, or 13.0%, were from China.

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According to a LaborIQ by ThinkWhy analysis of data from the Department of Labor’s Office of Foreign Labor Certification, 55.8% of H-1B applications from January to March this year came from the Professional, Scientific and Technical Services sector, which includes the likes of computer design, computer programming and computer services. More than 10.0% of the applications came from the Manufacturing sector, while the Finance and Insurance industry accounted for 8.4%. Other industries with smaller numbers of applications included Retail Trade, Educational Services and Health Care and Social Assistance.

The top five states for H-1B certifications in FY 2020 to date were California, Texas, New York, Washington state and New Jersey, in that order. Companies including Qualcomm Technologies, Infosys Limited, Cognizant Technology Solutions, Amazon.com Services, Tata Consultancy Services and Google were among the top employers hiring H-1B visa holders. By occupation, Software Developers specializing in Apps accounted for 29.5% of the certifications, the government data shows, followed by Computer Systems Engineers/Architects, with 11.4%; Software Developers, System Software at 8.5%; and Computer Systems Analysts with 7.2%.

An Opportunity for American Workers

H-1B critics, who call it a “cheap labor program,” say that there are plenty of U.S. workers who can fill the positions held by these visa holders, but that most of them currently work in other industries. The big Indian IT companies, which provide outsourcing services to American firms and employ thousands of H-1B workers, are sensitive to such charges. Vishal Sikka, CEO of Infosys Limited, told the Press Trust of India, “We [have] articulated that we have to become much more local and locally oriented in our strategy in the market and globally. So ultimately, regardless of the visa policies or so forth, the right thing to do for innovation is to have a lot of rich local talent.”

Companies that employ H-1B workers have spoken out against the temporary suspension, insisting that visa holders are important for filling gaps in key STEM occupations and keeping U.S. business competitive. “Now is not the time to cut our nation off from the world’s talent or create uncertainty and anxiety,” Microsoft president Brad Smith said on Twitter. Added Amazon in a statement, “Preventing high skilled professionals from entering the country and contributing to America’s economic recovery puts Americans’ global competitiveness at risk.”

The program’s suspension gives U.S. workers the chance to fill positions that otherwise would be taken by H-1B visa holders. And, the main industries targeted by the program are hiring. In June, for example, the Professional and Technical Services sector, which includes Computer Systems Design and Scientific Research and Development services, added 62,300 jobs, according to the Bureau of Labor Statistics. Manufacturing gained 356,000 jobs in June, and the Finance and Insurance sector added 9,300.

Upskilling or reskilling that might be required to qualify for specialized positions could pay off in a number of ways for workers seeking new opportunities. According to the Federal Reserve Bank of Atlanta’s Wage Growth Tracker for June 2020, for example, median annual wage growth for those who switch jobs is 4.3%, compared to wage growth of 3.2% for those who stay in the same job.

ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations and businesses across the U.S.