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Why was the White House proclamation made? Will the Trump administration’s move affect the IT services industry adversely?

June 28, 2020 12:02 am | Updated 11:06 am IST

The story so far: On June 22, the White House made a proclamation halting the processing and issuance of non-immigrant work visas of several types, with the stated aim of this sweeping policy being to stop foreign workers snagging American jobs, especially at a time of deep economic distress brought on by the COVID-19 pandemic. The order by the Donald Trump administration includes the H-1B visa for skilled workers, a large proportion of which goes to Indian nationals, dependents of the H-1B who are seeking the H4 visa, the H-2B visa issued to seasonal workers in the landscaping and hospitality industries, the L-1 visa for intra-company transfers and their dependents on the L-2 visa, and the J-1 visa for students on work-study summer programmes and related occupations. The important questions on this latest policy shift by Mr. Trump on immigration relate to whether it will muddy the waters of the U.S.-India relationship by adversely impacting Indian IT services exported to the U.S., and whether it has the potential to shore up the flagging U.S. economy and open up more jobs for U.S. persons, or whether it will fail in that goal and yet yield dividends in terms of campaign strategy for the U.S. presidential election on November 3, 2020.

Why is the Trump administration tightening the screws on its immigration policy?

It had earlier instituted a ban on visitors from certain Muslim-majority countries and periodically engaged in rhetoric on building a wall to stop undocumented workers from entering the U.S. from across its southern border. On April 21, the White House announced a 60-day halt in legal migration — effectively a ban on “green card” issuance. The gaping hole in this policy was the fact that the number of jobs purportedly saved from immigrants for U.S. persons was relatively small compared to the number of jobs going to foreign nationals who enter the U.S. on non-immigrant visas. Unemployment claims filed since the novel coronavirus pandemic hit the U.S. economy in March have crossed 40 million. Analysts argued that out of the million or so green cards that the U.S. issues annually, approximately only 358,000 would likely be impacted by the pause in immigration processing.

Editorial | Downing the shutters: On H1-B visa halt

It appears that the Trump administration has been seized of this fallacy in its immigration policy in this regard, and the proclamation of June 22 is likely to have been a remedial measure to bring non-immigrant work visas under the purview of the ban. The reasoning offered by the White House is that the ongoing COVID-19 pandemic has “significantly disrupted Americans’ livelihoods”, to the extent that the overall unemployment rate in the country nearly quadrupled between February and May 2020 to a little over 13%.

To what extent is the motive behind the visa ban political?

Despite the stated reasoning for the work visa ban, which is to protect U.S. persons from loss of livelihoods to foreign nationals, it is still unclear that tangible economic benefits of this sort can be achieved at this juncture. The reason is that the latest restrictions do not apply to visa-holders who are already within the U.S., or those who are outside the country and have already been issued valid visas. Given that the ban will remain in force until the end of the 2020 calendar year, this implies that U.S. firms or others with U.S. operations who rely on skilled foreign nationals working in the U.S. will be unable to make new hires as long as the ban stands. How many firms are likely to do any hiring at this economically depressed time? How many will do so before the end of the calendar year? If we assume, as we safely can, that the answer is “negligibly few”, then it is hard to see the Trump White House’s policy as anything other than a campaign tactic.

Also read | Big Silicon Valley firms slam Trump’s new visa rules

What further policies do we expect on the visa ban?

If indeed these moves have been made keeping in mind the imperatives of the 2020 Republican presidential campaign, then that would be signalled by Mr. Trump seeking, in the months ahead, to build political capital in the name of the “America First” mantra — a foregone conclusion given his outspokenness on the subject to date.

The proclamation supplies hints on the likely tenor of this policy plank of Mr. Trump’s administration. It noted that between February and April of 2020, “more than 20 million U.S. workers lost their jobs in key industries where employers are currently requesting H-1B and L workers to fill positions”, noting that similar or higher numbers could be found in the other visa categories included in the proclamation.

Yet, in the first instance, it is not his Democratic rival in the election, former Vice-President Joe Biden, who will play spoiler to Mr. Trump’s visa ban plans. It is the backlash from America Inc., the employers of likely millions of non-immigrant foreign workers, from Wall Street to Silicon Valley, that could bring his dreams crashing to the ground, and fast.

Google CEO Sundar Pichai wasted little time in responding to Mr. Trump’s latest visa proclamation tweeting, “Immigration has contributed immensely to America’s economic success, making it a global leader in tech, and also Google the company it is today. Disappointed by today’s proclamation — we’ll continue to stand with immigrants and work to expand opportunity for all.”

Elon Musk, SpaceX founder and Tesla CEO, and Apple CEO Tim Cook, posted similar messages on social media.

As more captains of industry chime in, the momentum of lobbying behind closed doors, and lawsuits filed by civil liberties groups, to either get the ban revoked or to strengthen Mr. Biden’s hand will likely build up fast. Corporate America, already hit by the economic downturn since the pandemic struck, can hardly afford to accept even more losses as the President undermines the base of their work force.

Will Indian corporations be hit?

The prospects of Indian IT majors building up their order books as they limp back through an economic recovery in India are, in the interim, likely to be seriously undermined by this move. What is more, this may come at a crucial inflection point for the Indian economy, even as restrictions on the movement of people and goods slowly lift after India passes its peak viral case numbers, thus leading to a knock on effect from IT to other sectors.

India’s IT services exports to the U.S., which depend significantly on the H-1B visa, have been an important constituent element of bilateral economic trade. U.S. imports of services from India were an estimated $29.6 billion in 2018, 4.9% more than in 2017, and 134% greater than 2008 levels, according to the U.S. Trade Representative. The major services exports from India to the U.S. are in the telecommunications, computer and information services, research and development, and travel sectors.

Until now, the U.S. issued 85,000 H-1B visas annually, of which 20,000 went to graduate students and 65,000 to private sector applicants, and Indian nationals would garner approximately 70% of these. Now the Migration Policy Institute has been cited predicting that up to 219,000 workers would be blocked as a result of Mr. Trump’s proclamation.

What is the Indian government saying?

Its response has so far been muted, limited to highlighting the importance of highly-skilled Indian professionals to imparting a competitive edge to the U.S. economy.

Nevertheless, that the high-skilled non-immigrant visa ban is a double-edged sword is amply demonstrated by the fact that the unemployment rate in the “Professional and Business Services” super-sector, which includes IT services, unemployment actually dropped between April and May 2020, and there remained almost 950,000 job openings in this sector nationwide despite the sharp hike in overall unemployment filings.

If there is one assumption of the Trump administration’s immigration policies that is most likely to fail, it is that there are sufficient numbers of U.S. persons with the requisite skill set to perform the jobs that Mr. Trump is “protecting” for them.


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