The cost of political posturing

Representational image.   | Photo Credit: Getty Images/iStockphoto

U.S. President Donald Trump has done it again, and this time only a few weeks before a Presidential election — the 45th Commander-in-Chief has put another turn in the screws of his country’s immigration system by announcing a hike in the salaries for those arriving in the U.S. on H-1B or skilled-worker visas.

This is expected to cut visa applications by around 33%, according to experts, and it comes as only the latest White House rule following executive actions that earlier banned the issuance of new skilled worker visas and new green cards. The question that these policy changes beg is, how much of the motivation for them is pure economic rationale versus political value for the incumbent’s final stages of election campaigning?

Also read | U.S. imposes new curbs on H-1B visas

It would not be unreasonable to expect that the visa issuance ban, combined with the mandatory salary floor soon to be instituted, will seriously hit U.S. imports of services from India, estimated to be at $29.6 billion in 2018, 4.9% more than in 2017, and 134% more than 2008 levels. The skilled visa issuance picture has been a positive one to date: the U.S. Citizenship and Immigration Services has been issuing 85,000 H-1B visas annually, of which 20,000 are given to graduate students and 65,000 to private sector applicants, approximately 70% of which are granted to Indian nationals.

The Migration Policy Institute has predicted that Mr. Trump’s June 22, 2020 ban on new H-1B visa issuance could impact up to 219,000 workers, who would effectively be blocked from taking up any potential jobs on offer in the U.S. going forward. But how likely are firms, including the Silicon Valley tech giants, to embark on recruitment drives at this economically depressed time in the wake of the COVID-19 pandemic? Although unemployment in the U.S. peaked in the summer and has fallen for the fifth consecutive month since then, the latest figures suggest that both the unemployment rate and the number of unemployed people remain substantially higher than the pre-pandemic values in February 2020.

Even so, it is important to distinguish between the ban on new visa issuance and the Labour Department rule that would insist on higher salaries being paid to all H-1B visa workers in the U.S. Under the latter rule, assuming it stands the test of time and inevitable litigation, companies would be required to pay entry-level staff in the 45th percentile of their industry’s salary instead of the 17th percentile; for high-skilled workers, the rise would be from the 67th to the 95th percentile.

Also read | New H-1B rules to restrict U.S. access to skilled talent: Nasscom

Staunch criticism

Speaking of litigation, it is telling that days before the Trump administration’s announcement of the proposed salary hike that makes H-1B hiring significantly more expensive to potential employers, a federal judge in the Northern District of California blocked the enforcement of the new visa ban, ruling that the President “exceeded his authority” under the U.S. Constitution. Driving that legal challenge to the White House proclamation was a swathe of U.S. manufacturing and industry associations, including the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Retail Federation, TechNet, a technology industry group, and Intrax Inc., which sponsors cultural exchanges.

In a similar vein, Google CEO Sundar Pichai hit out at the ban, saying, “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.” Tesla CEO Elon Musk and Apple CEO Tim Cook echoed similar sentiments.

Also read | U.S. judge blocks Trump’s H-1B visa ban

This goes to the heart of the issue, the question of why Mr. Trump is willing to risk damage to corporate America’s bottom lines, all to garner some campaign ammunition for his familiar plank of nativist populism. The answer is a simple one: people vote, while companies do not. What might happen after the election is an entirely different story.

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Printable version | Jun 17, 2021 1:53:43 PM |

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