The Donald Trump administration's "Buy American, Hire American" strategy has resulted in tweaks to the H-1B visa regime, making it difficult for firms based in the United States to hire foreign workers for highly specialised jobs. In a policy memorandum released on February 22, the US Citizenship & Immigration Services (USCIS) outlined the amendments to the Immigration and Nationality Act, section 101(a)(15)(H) - the law which covers H-1B visas - requiring donor firms to clearly specify the duration, nature, and site of work.
The new law will restrict the duration of the work permit to three years, but will also make extensions much harder to obtain. Greater scrutiny of the application is aimed at ensuring that large companies do not farm out skilled labour. Additionally, if a foreign worker who is in the United States on an H-1B visa quits or is fired prior to the lapse of her work permit, she will be given a window of 60 days to find other employment, after which there is a risk of deportation if a Green Card application is not being processed.
The USCIS argues that the H-1B visa is being exploited by corporations to hire high-skilled, low-cost labour, and that the new clauses will only protect the rights of beneficiaries who are being paid less than the requisite wage for their labour in the U.S. market.
Here is all you need to know about the H-1B visa, according to data sourced from the U.S. Citizenship and Immigration Services.
H-1B approvals halve under Trump presidency
After the inauguration of Donald Trump last January, the number of H-1B visa approvals have gone down by 43.38%, from 3,48,162 in 2016, to 1,97,129 in 2017. The rate of approval in 2017 was 58.65%. The USCIS received 3,36,137 applications in 2017. The approval rate in the last year of Barack Obama’s tenure was 87.18%. The federal immigration and citizenship agency cleared 3,48,162 applications of the 3,99,349 it received in 2016. The number of foreign workers holding H-1B has fallen back to the levels seen post the recession of 2008, when corporations tightened their belts. The number of approvals is at its lowest since 2010.
Two-thirds of all H-1B applicants since 2007 are Indian
According to data collated by the USCIS, of the 34,01,117 applications for H-1B visas filed since 2007, 21,83,112 were for Indian beneficiaries. This amounts to 64.18% of the total applications filed by sponsor companies. China ranks a distant second with 2,96,313 applications in the past decade, only 13.57% of the Indian tally for the same period. Other countries which have a relatively large number of H-1B visa petitions are Philippines and South Korea, with 85,918 and 77,359 applications between 2007 and 2017 respectively.
Foreign workers make a beeline for the Golden State
In 2016-17, most H-1B visa applications listed California as the destination State of high-skilled foreign workers. California, which is home to Silicon Valley, the world’s biggest technology hub, attracted 1,19,744 LCAs. This is almost double the 68,460 applicants for Texas, and 58,660 for New York. Labor Condition Application(LCA) is the number of H-1B petitions submitted by employers. This figure includes new applications, renewals, and the transfer of the work permit in case the beneficiary has switched jobs.
However, the average annual salary for foreign workers based out of California was $100,542, lower than that of less industrialised States such as Wyoming, Maine and North Dakota. H-1B beneficiaries based out of West Virginia had the highest remuneration, earning $114,471 per annum.
STEM professionals corner most H-1B visas
Although not a standalone discipline, the term STEM, which is the acronym for ‘Science, Technology, Engineering, and Mathematics’ has gained currency in the past few years. Due to the shortage of ultra-skilled professionals in emerging technologies, this umbrella term for scientific disciplines has the highest requirement of foreign workers, as is evidenced by the trend of H-1B visa application according to occupation category. A total of 2,81,017 applications were filed for ‘computer-related’ occupations in 2016-17. Other vocations, such as administration and education received 22,786 and 19,253 applications respectively.
No country for old men
Individuals aged between 25 and 34 accounted for the most number of H-1B visa applications from 2012-2017, USCIS data reveals. In 2017, sponsor companies filed 2,26,195 visa petitions on behalf of foreign workers from this age group. For the same year, the number of beneficiaries from the 35-44 group, and those below 25, were 84,193, and 17,665 respectively.
Mid-career and senior professionals seem not favoured by global corporations, possibly owing to their hefty wage demands, and also the nature of emerging technologies like artificial intelligence and big data, which came into existence in the recent past. Only 7,046 H-1B visa applications were made for individuals in the 45 to 54 age group, while those over 65 found only 122 takers, in 2017.
Majority of H-1B beneficiaries are paid more than U.S. average
While the total compensation under the H-1B visa regime peaked in 2016, the income groups into which beneficiaries fall under, have remained more-or-less constant. Foreign workers earning between $50,000 and $74,999 annually have constituted the biggest income group from 2012 to 2017.
However, in 2017, there has been a substantial increase in the number of individuals falling under the $75,000 to $99,999 salary slab. In 2017, 1,05,827 H-1B visa applicants fell under the $50,000-$74,999 slab, while the $75,000-$99,999 slab covered 99,326 beneficiaries.
It must be noted that according to the Bureau of Labor Statistics (BLS), the median wage for workers in the United States in 2017 was $44,564 per year. 5,945 foreign workers in the U.S. pocketed salaries in excess of $2,00,000 (Rs.1.29 crore) in 2017.
Amendment of H-1B rules could hit Indian IT firms the hardest
Cognizant Technology Solutions, the New Jersey headquartered IT services major, was the single largest sponsor company for foreign workers under the H-1B, with 21,459 approvals from the USCIS in 2016-17. Cognizant has a significant presence in India. The next two spots were bagged by Infosys and Tata Consultancy Services (TCS). Wipro, HCL, and Tech Mahindra are also present in the top ten. A change in the visa policy could affect India’s services sector which is reliant on the outsourcing of technology solutions, and whose business model involves coupling the development of technology in India with client-side design of the product.
Are Indian companies exporting cheap labour?
Donald Trump’s claims that more stringent legislation is needed to protect the American workforce from lower paid foreign professionals might have worked for him in his domestic constituency, but there is no conclusive data to repudiate his stance.
Among Indian companies, TCS offered the lowest compensation to employees who were in the U.S. on H-1B visas, in 2016-17. However, the H-1B beneficiaries sponsored by TCS had an average annual salary of $71,819, which is significantly more than the $44,564 per year earned by the average American. According to the Bureau of Labor Statistics (BLS), “people working in professional, management, and related occupations earned an average of $64,220 annually, while those working in service occupations earned an average of $28,028 annually.”
Salaries paid by American companies to foreign workers who are in the U.S. on H-1B visas, is significantly greater than what is paid by Indian companies. On an average, Apple and Google offered average salary packages of $1,38,563 and $1,31,882 respectively in 2016-17. While it is true that Indian IT firms tend to have tighter purse strings relative to their American peers, Trump’s claim that foreigners are taking over American jobs for lower pay is contestable since all Indian companies pay over and above the average annual American’s salary. HCL and Infosys paid workers on H-1B visas $83,980 and $84,344 respectively.
Another notable trend is that American firms tend to hire more foreign workers with greater levels of academic achievement. 71.2% and 67.17% of Intel and Amazon employees respectively had Master’s degrees. There is a direct correlation between the salary offered to H-1B beneficiaries and their level of education. With the exception of Deloitte, all firms which paid foreign workers in excess of $1,00,000 on an average, had more than half of its H-1B workforce possessing Master’s degrees. Only 19.6% and 21.5% of employees sponsored by TCS and Infosys had Master’s degrees. The change in H-1B rules will make it tougher for firms to hire foreign workers, given that the law now places much store by hiring from overseas only to fill jobs which require ‘great skill and specialisation’ without providing an adequate definition for the same.
