(H-1)Back to the Drawing Board

President Trump ordered a review and overhaul of the H-1B visa system on Tuesday that is supposed to redirect the program away from lower-paying service jobs toward high-end tech jobs. Bloomberg reports:

“Right now, H-1B visas are awarded in a totally random lottery and that’s wrong,” said Trump, who traveled to a tool factory in Kenosha, Wisconsin, to sign the order. “Instead, they should be given to the most skilled and highest paid” and should “never, ever be used to replace Americans.” […]

Employers seeking H-1B visas for 2018 submitted 199,000 applications this year, far exceeding the 85,000 available visas, which are currently distributed by lottery, according to figures released Monday by the U.S. Citizenship and Immigration Services. But the number of applications for the lottery, conducted earlier this month, declined from 236,000 last year, possibly reflecting concern about new restrictions.

The changes are not yet specified, but the reforms are aimed at curtailing outsourcing related to H-1B visas. As the Bloomberg report continues:

In the U.S., outsourcers often bring staffers into the country on work visas, train them in the tech departments of leading corporations and then rotate them back to India where pay and living costs are lower.

Outsourcing companies now get far more visas than traditional technology companies, according to data collected through Freedom of Information Act requests by Ron Hira, an associate professor at Howard University who has done extensive research on the H-1B program. Tata Consultancy received 5,650 H-1Bs in 2014 while Amazon, the largest recipient in the latter group, got 877.

About 6 percent of the visas currently go to the Labor Department’s top skill level, while eight in 10 workers on the visa are paid less than the median wage for their fields, the White House said in a fact sheet distributed to reporters.

The shift in policy is expected to benefit Silicon Valley, where companies are looking to use the visa to fill positions that are relatively higher-paid (and higher-skill) than the kind of jobs that Tata Consultancy and others use it to fill. Leading Silicon Valley tech firms have lobbied heavily and often in high-profile ways for increased visa allotments in recent years. Their efforts took on an increasingly left-leaning tone in the run-up to 2016; you have to wonder if someone smart in the Trump Administration knows this new move could be read as an overture to the Zuckerbergs of the world.

In any event, the start of H-1B reform is a welcome move. We’ve been following the problems with the H-1B visa for some time at TAI. Outsourcing is certainly one of them. Advances in technology and globalization have wrought significant disruption on lower- and mid-level white-collar workers. Though these workers and their plight haven’t received the same sort of high-profile media coverage as their blue-collar counterparts, they an important source of support for Trump and their problems are real. The Administration has done a clever thing here.

But if this is all good, it is still only a start. An even bigger problem than outsourcing remains: the H-1B program incentivizes companies simultaneously to take advantage of foreign workers and to favor them over American workers. That’s because anyone brought here on an H-1B must leave the country if they are fired. This makes for more compliant workers, who on margin will take lower wages—two potential advantages, in management’s eyes, over American employees.

And there’s a third “advantage”: H-1B employees cannot leave their parent company to start start-ups. This may prove more significant in Silicon Valley than anywhere else. We’re all for strategic thinking to maintain an optimal inflow of talent to the tech world, which is one of the major drivers of America’s economy. But the H-1B as currently constituted, even after these reforms, isn’t smart—it’s a hand-out to management at the expense of laid-off American workers, exploited foreign ones, and a country deprived of the full economic dynamism of immigrants.

Long-term, the solution is legal immigration reform with a greater skills component, probably in the form of a points system. One traditional concern with a points system is that skilled immigration would become racism by another name, favoring educated, i.e. European, countries. But the shape of the H-1B debate itself points up ways in which facts on the ground are undercutting that premise. Increasingly, educated immigrants come from what was once the third-world—particularly, but not only, the Indian subcontinent and East Asia. Combined with points allocations for nuclear family reunification from the end of the Second Great Wave from Mexico and Latin America, this provides (potentially) the basis for a truly global, diverse, yet more skills-based immigration reform.

For now, though, these concerns lie in the future; a somewhat-improved but still-troubled H-1B is what we’ve got. This was a good step. It would be a better one if it were a first step.