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Issue Date: April 2011, Posted On: 4/20/2011


Study suggests H-1B fixes

Competitive Enterprise Institute has solution for H-1B dilemma 


By Martin Desmarais
FAST FACTS
 
Seven fixes to the H-1B visa program:
  • The numerical cap on foreign born workers for private firms should be lifted
  • The length of employment for an H-1B worker should be unlimited
  • The fees for filing for an H-1B visa should be drastically reduced
  • The H-1B work visa should be awarded on an individual basis and not limited to company sponsorship
  • H-1B visa workers should be free to change jobs without jumping through bureaucratic hoops
  • The definition of specialty occupation and a highly skilled worker should be expanded
  • H-1B workers who decide to apply for permanent residence should be able to do so without disruption  to their employment by allowing them to stay in the country and remain employed during the application process
With the H-1B visa cap hit in January for 2011, and the new application process for 2012 just kicking off, criticism of the H-1B visa system is a hot topic and many are calling the regulations flawed ones that stifle innovation and hurt growth. The Competitive Enterprise Institute has gone beyond just pointing out the flaws, though, and is offering some fixes.

The nonprofit, public-interest group, which is headquartered in Washington, D.C., has release a new immigration study by policy analyst Alex Nowrasteh that argues the strict regulations on H-1B visas should be removed.

The H-1B visa is currently a three-year, employer-sponsored visa for highly skilled foreign workers, which can be renewed one time. The annual cap is 85,000 and the fee for the visa was increased by Congress last year from $320 to $2,000.

Nowrasteh, who focuses on immigration policy and is currently pursuing a master's degree in economic history from the London School of Economics, writes in "H-1B Visas: A Case for Open Immigration of Highly Skilled Foreign Workers," that there are many reasons to remove the restrictions on highly skilled workers entering the United States, including their contributions to science and technology, high rates of education, low rates of crime, net contribution in tax revenue and positive effect on the wages and productivity of American workers.

While Nowrasteh's study delves into the numbers illustrating H-1B trends and benefits, he is also quick to defend against what he calls "populist arguments" that a more open immigration policy hurts the economy and takes away jobs. He asserts that, in fact, the opposite is true — a more open immigration policy creates economic prosperity and jobs.

"These populist notions seem to be a constant of human opinion. They generally hold across time and places, which makes it very difficult to change. I think that persistently explaining economics in a fun and engaging way is the best way to dispel populist and anti-capitalist arguments," Nowrasteh commented to the IndUS Business Journal about his study. "Economists are generally terrible at this, but that's where I try and come in. Fortunately though, Americans understand that capitalism is good and that immigration in the past was great for their ancestors.  Just explaining the arguments without boring people is the key.  

According to Nowrasteh, opponents of a more open immigration policy miss several main points.

"First, voluntary exchange is usually mutually beneficial and rewards everyone involved.  Second, there are not a fixed number of jobs or resources in an economy. Those expand and contrast based on the opportunities, policies, and factors of productions available. Immigrants actually expand the opportunities available to natives," he said. 

"Third, people are the ultimate resource. As the late economist Julian Simon pointed out, people find all types of innovative solutions to the problems that confront our world and usually produce a lot more than they consume — if they didn't produce more than they consumed, we would be poorer today than cavemen were a hundred thousand years ago. In the long run, an increasing population leads to increasing prosperity in every situation. The more people we have, the better — whether that increase comes from immigration or natural increase."

Nowrasteh is also quick to speak out against politicians and immigration restrictionists who suggest that perhaps the best move it to eliminate H-1B visas all together. According to him, if the United States were to close its borders to foreign skilled immigrants and workers, the impact would be immediately bad for all parties concerned.

"First of all, the firms that hire foreign skilled workers are those that are expanding, especially in the technology sector. They spend thousands of dollars in U.S. government fees per visa so they can hire the skilled labor they need when they need it," said Nowrasteh. "Eliminating highly skilled immigration would hurt vibrant, expanding, and dynamic firms when they are trying to expand — it wouldn't be a wise policy for the U.S., especially as we are climbing out of the recent economic downturn.  

"Second, more U.S. firms will begin to produce and build overseas. If U.S. firms can't get the labor they need in the U.S., they will move overseas. Microsoft has already moved some operations abroad for that reason. Either labor will come to U.S. firms or U.S. firms will move to where the skilled labor is. It's as simple as that," he added. "I don't oppose offshoring or firms diversifying overseas — that's part of the free market process that delivers better goods and service at lower prices to more people than ever before — but there is no need to encourage such behavior by restricting the types and quantities of highly skilled foreigners that U.S. firms can hire. We should let business and workers, cooperating together, decide where they should set up production facilities. If American immigration laws were a lot looser, especially for skilled immigrants, you would see substantially more manufacturing, production, and research occur in the U.S. today."  

In his study, Nowrasteh suggests seven solutions for the H-1B visa program:
  • The numerical cap on foreign born workers for private firms should be lifted
  • The length of employment for an H-1B worker should be unlimited
  • The fees for filing for an H-1B visa should be drastically reduced
  • The H-1B work visa should be awarded on an individual basis and not limited to company sponsorship
  • H-1B visa workers should be free to change jobs without jumping through bureaucratic hoops
  • The definition of specialty occupation and a highly skilled worker should be expanded
  • H-1B workers who decide to apply for permanent residence should be able to do so without disruption  to their employment by allowing them to stay in the country and remain employed during the application process
Nowrasteh says that these suggestions are the ideal fixes to the program and he would love to see them all, but in following up on his study he offers some possible ways to put this process in motion.

"I think the most realistic first step would be to •recycle' unused H-1B visas from the early 2000s and the 1990s. After that I think the easiest hurdle to clear would be to increase the exemption for foreign students who earned a masters degree in an American university from 20,000 or exempt certain occupations entirely from the quota," he said. "The next least difficult hurdle would probably be increasing the length of the work visa. But attacking the quota itself is going to be very difficult.

"If all the reforms I suggested were implemented, we would see many more highly skilled and trained foreigners move to the United States, either as workers for American firms or entrepreneurs. This combination would drastically increase the profitability of American firms, spur massive new capital investments in technology industries, and create enormous numbers of jobs for ordinary Americans of all skill levels," he added. "Every immigrant needs a place to live, food to eat, a place to get their hair cut, secretaries, American engineers, American bosses, American accountants, bank managers, and American consultants at every level of production. It's a win-win scenario for everyone involved."

However, when it comes to removing the H-1B visa cap altogether, Nowrasteh isn't holding his breath.

"In the near future removing the H-1B visa cap would be difficult. But the U.S. made radical policy shifts on immigration in the past, so I think it can do so again," he said. "In 1917 there were only a handful of restrictions on immigration, all bad, but not very damaging. But by 1921 the quota system was in full force and excluded almost all immigrants by 1930. Such a rapid change could occur again in the right direction if enough people saw the benefits of immigration."

According to Nowrasteh's study, India by far rules the H-1B world. He cites a 2009 study that indicates Indians held over 50 percent of the issued H-1Bs, with China a distant second at approximately 9 percent.

These numbers might suggest the possibility of the United States singling out India and creating separate H-1B regulations for a country that so clearly contributes to the United States through the program.

But Nowrasteh is not so sure this would be a good idea.

"Liberalizing immigration rules on a per country basis is an interesting idea that has been floated from time to time. After all, there's practically free immigration amongst EU countries and America allocates more visas to Chile and Singapore as a result of international treaties. I think it would be a beneficial policy, but one that's short term in its benefits," he said. "Thirty years ago very few people would have said that India will be sending thousands of highly skilled workers to the U.S. But in the meantime India built a vast and excellent technical education system and liberalized its own economy to create opportunities. My worry with liberalizing immigration for certain countries and keeping it strict for others, is that the U.S. will miss out on all the other "Indias" of the future that haven't started producing highly skilled workers yet, but will.  

"If India was going to be the main source for highly skilled workers forever, then I would support it. But forever is a very long time," he added. "Immigration policy is about the future, laying the paths for future growth and development. I think the U.S. should just focus on liberalizing highly skilled immigration for everybody regardless of where they are from, so that the market and individuals can decide for themselves when the time is right."








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