Donald Trump's new executive order could overhaul H-1B visa program: Here are some concerns

It looks like the Trump administration is on an executive order passing spree. After it emerged that US President Donald Trump passed an executive order halting the arrival of all refugees into the US for 120 days, another executive order has been accessed by Bloomberg. According to this new order drafted by Trump’s administration, there could be an overhauling of the work-visa program which technology companies depend on to get workers from abroad to work in the US.

According to the order accessed by Bloomberg, the draft proposal states that US immigration policies should be designed and implemented “…to serve, first and foremost, the US national interest. Visa programs for foreign workers … should be administered in a manner that protects the civil rights of American workers and current lawful residents, and that prioritizes the protection of American workers – our forgotten working people – and the jobs they hold.”

According to latest developments, the US House of Representatives, has already called for more than doubling the minimum salary of H-1B visa holders to $130,000 (approx Rs 89 lakhs)  making it difficult for firms to use the programme to replace American employees with foreign workers, including from India.

Numbers point that Indian companies are a job-generator in the US

Recently, R Chandrasekhar, president of Nasscom had said that the industry requires high-skilled workers which are not available in the US . He said that according to data available, Indian IT companies have created 4.11 lakh jobs in the US of which 1.5 lakh are direct employment. Besides job creation, Indian IT industry has also contributed to the US economy in terms of tax payment, social security outgo and CSR activities.

That is close to half a million jobs in the US. This isn’t a small number by any means.

What could the new order translate into?

The whole point behind getting foreign workers for high skilled professional jobs is because the US lacks talent in such departments.

To make his point even clearer, Chandrasekhar quoted data from an Indian IT company which tried hiring in the US. Out of the 4,000 people interviewed only about 20 could be hired, facts which have been shared with the relevant authorities in the US. This is not to say that US does not have skilled workers, but they are not necessarily qualified with the skills that are needed.

How it affects the IT employee

An IT associate consultant with a leading IT company (who agreed to speak on the condition of anonymity), who has worked in the US for many years and would soon be going there on an H-1B visa, said that nothing is certain as of now.

“It is not known if Trump will stop issuing new visas or stop renewing existing H-1B visas - it’s open for debate. Both the options are not practical and it is not so easy to follow through on executive orders which take such measures. They can be legally overturned as well. Trump will most likely raise the minimum wages for H-1B visa holders, which will make it difficult for companies issuing these visas,” said the consultant.

According to the Bloomberg report, the median wage at outsourcing firms for H-1B visa holders was less than $70,000 whereas US companies such as Apple, Google and Microsoft, paid their employees over $100,000 for the same program. According to the associate consultant we spoke to, these minimum wages depend on the parts of the US you are working in. This will itself put a strain on the outsourcing company’s finances and it will prefer issuing less H-1B visas. In fact, the consultant has seen a significant drop in the H-1B visas issued by his own IT company.

According to the consultant, with a wage has high as $130,000 two things could play out, either Indian IT companies will try to compensate for that by increasing their hourly charges or they will work remotely. “In the first case, the US companies will have to pay more for using Indian IT services. Whereas in the second case, if the US clients are unwilling to pay higher charges, majority of the Indian employee base could return to India and work from here. At the client’s IT end, it could result in chaos and lot of back and forth, as their worker base is working remotely. In both the scenarios, the job would remain with Indians,” he said.

Data from the US

source: tradingeconomics.com

According to the Bureau of Labour Statistics report, the unemployment rate in the US is at 4.7 percent . If one goes by the chart above, it is definitely in a better state than it was post the 2008 years. And over these years, the drop in unemployment rate is despite the fact that there have been immigrant workers. According to law, there is a cap of 85,000 on the H-1B visas that can be issued.

So even if Trump does go ahead and raises the minimum wages, to prevent more H-1B visas from being issued, the reality on the ground according to past reports states that there would be few US natives who can fill in those high skilled work profiles.

Speaking to Bloomberg, Gary Burtless, a senior fellow at Brookings Institute research labour markets has said that immigrant STEM workers have played a large role in job creation in the US and building American companies. “Discouraging such people to apply for visas to enter the United States to work – I can’t imagine how that can be considered to be in the American national interest,” said Burtless.

R Chandrasekhar of Nasscom has also said that Indian IT services companies have always been fully compliant with the law and there has been no case of any wrong doing by an Indian company. He said that while the IT industry is open to any kind of checks in the system, there shouldn’t be any hindrance in the smooth operations of such companies.