Monday, October 7, 2019

Let's Reduce Dependence on H-1B Foreign Workers

Studies show that almost 2 million H-1B visas have been distributed between 2000 and 2018. Here are some basic facts about the H-1B visa program:

a. The program was created by the Immigration Act of 1990
b. It allows employers to hire foreigners to work on a temporary basis, for up to 6 years, with two 3-year back-to-back stints
c. It allows foreigners to work in jobs that require highly specialized knowledge and a bachelor’s degree or higher.
d. Visas are awarded to employers on a first-come, first-served basis, with applications accepted each year beginning in April
e. If the number of applications exceeds the annual cap set by Congress (currently at 85,000) during the first five business days of April, visas are awarded through a lottery system
g. Though it's a temporary non-immigrant visa, many workers have been allowed to adjust to permanent status with green cards (adjustment data are unavailable).  

How to Steadily Reduce Dependence on H-1B Skilled Foreign Workers – A 5-Point Solution

   1. Provide Corporations Significant Tax Benefits to Hire Local STEM Graduates – Instead of incentivizing the US corporations to hire more of H-1B workers, the federal government should allow them significant tax incentives to hire the local STEM (Science, Technology, Engineering and Math) graduates at the prevailing rate. This special tax incentive should last, say, up to five years (or the longevity of the employee, whichever comes first), thus vastly negating the incentive to hire foreign workers at a reduced rate. Of course, in order to neutralize the arbitrage (lower hiring rate vs. additional tax advantage), it must remain effective for the proposed tax incentive period (could be more or less). This tax incentive will also encourage the future STEM students, foreseeing a fast leveling playing field. Without this assurance, it would be difficult to entice local students to venture into the STEM field. Today, the qualified American workers are training their far-less qualified foreign counterparts to take their jobs. Hopefully, the tax incentive would force corporations to hire local STEMs while a renewed interest among future students would reinvigorate the field, the sum of which would reduce the dependence on H-1Bs.      

2. Introduce Higher Educational Qualifications for H-1B Applicants –
According to the 2018 Congressional mandate, 65,000 H-1B applicants need only bachelor's degrees while another 20,000 require master's or higher. Unfortunately, a bachelor's degree in SE Asia (which accounts for 80%+ applicants) is not equivalent to an US bachelor's. In order to effectively meet the US standard, Congress should consider transposing the degree requirements, meaning 65,000 applicants with master's+ and 20,000 with bachelor's. It makes no sense to displace a truly qualified American degree-holder with a much lesser qualified foreign degree-holder. That is why the replacement wages tend to be much lesser for foreign workers. Since H-1B is meant for the highly skilled foreign workers, Congress should gradually move to an all-master's+ requirement, at least leveling the playing field.

3. Until Higher Educational Requirements are Established, Congress must Insist on Degree Evaluation by ETS (and Other Entities) – While Congress debates on upping the ante on degree requirements, they must require that the foreign degrees are properly vetted and evaluated, a priori, by well-known education evaluation organizations like Educational Testing Service (ETS), thus forcing the sponsoring organizations to prove that their selected candidates, at least, satisfy the basic educational requirements. This simple yet independent step will surgically (identify and) disqualify many applicants from the export-oriented private schools as they will not meet the US degree requirements. Ideally, Congress must additionally require all applicants to pass a US-administered standardized test (good for 3 years), along the lines of Foreign Medical Graduates Exam (FMGE). Conversely, these requirements will work to the advantage of the truly qualified candidates as they will pre-qualify themselves (by getting their degrees evaluated and passing the exam in advance). Needless to say, the rouge employers will not be able to abuse the truly qualified workers either (by forcing them to work outside of the US labor laws, etc.).

4. Let the Sponsoring Companies Recruit Foreign Students Graduating from the Major US Universities First – Foreign students graduating from the major US Colleges and Universities are more valuable candidates for these unfilled jobs than their all-foreign counterparts. There are other advantages to this hiring approach too:
(a) No need for the equivalency assessment;
(b) Since the vast majority of them undergo internship or practical training in the US, they are already used to the requirements of the American workplace and work ethics;
(c) Graduates from the major US schools are at least as good as the best and brightest from foreign nations;
(d) They will command the prevailing wages, negating the aforesaid arbitrage that many sponsors have been trading on;
(e) Rouge sponsors will be discouraged;
(f) Will foster the enrollment of foreign student population, benefiting the US Schools;
(g) Better English proficiency (both verbal and written) and so forth.

5. Let the Annual H-1B Quotas Steadily Decline as we Promote STEM Education – 
If we switch to a merit-based immigration, H-1B will be a thing of the past. Whether that comes to pass or not, the rapid and aggressive promotion of STEM education here will help lower the quotas steadily. Hopefully, the current 85,000 level would decline by 10,000 annually, leading to a total phase-out in 8-9 years. In fact, if we are able to promote STEM education in keeping with the needs of the labor force, this phase-out could take place even sooner. Of course, the promotion (of the positives) of STEM education must start early in high school so the students are always in the know of the unrestricted domain of opportunity the STEM universe offers. 

The advantages of lessening the dependence on H-1B are numerous:
a) Producing thousands more of home-grown engineers, scientists and technologists (by far, the best on earth!) every year;
b) No need for a debate everyday whether the spouses of the H-1Bs must be given work permits or not;
c) Our politicians won't be able to convince us of the need to admit 85,000 (yes, per year!) foreign engineers and scientists at the expense of our own;
d) The Housing boom and the list can go on and on. 

- Sid Som, MBA, MIM
President, Homequant, Inc.

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