Last week, President Trump issued an executive order calling on his federal agencies to conduct a review of the H-1B visa program, which allows employers to hire “skilled” foreign workers.
About 460,000 H-1B visa workers are employed in the United States, predominantly in high-tech sectors like information technology and software development, with up to 85,000 new visas awarded by a random lottery each year.
But the program has long been criticized as a way for U.S. companies to pass over skilled American workers and instead hire foreign workers at far lower salary rates than their American counterparts. As well, the program has increasingly been captured by companies that use the program to offshore American jobs. Meanwhile, these foreign workers are tethered to their employers, making them vulnerable to exploitation.
For years, members of Congress have tried to address rampant abuses in the system only to run into resistance from powerful companies in the tech industry that have embedded the program in their business model.
Throughout his presidential campaign, Trump pointed to the H-1B system as an instance of how Washington puts politics before the needs of Americans and pledged to reform U.S. visa programs as part of his America First platform. But if he wants to achieve real reform, instead of using it as yet another opportunity to villainize immigrants, Trump will have to navigate a tricky political landscape—something that thus far has completely outstripped his capabilities.
I spoke with Daniel Costa, director of immigration law and policy research at the Economic Policy Institute, about the problems with the H-1B program and what to make of Trump’s new executive order.
What follows is an edited and condensed version of our conversation.
Justin Miller: What was the original intent of the H-1B visa program?
Daniel Costa: It’s basically a temporary worker program to bring people from abroad to work in what’s called a specialty occupation—all that means is somebody is coming in to work in a job that requires the education that you at least get with a bachelor’s degree. It’s for educated guest workers, basically.
When companies who use the program talk about it, they always say it’s for when they can’t find a U.S. worker—when there’s a labor shortage—and that the workers who are coming in are the best and the brightest. People sometimes say that the intent of the program is for that, but the rules were never written that way, so it’s hard for me to say what the intent really was. But people think of it in that way, in part, because there’s been a good PR job from the tech industry and because people don’t understand the program very well.
What are the driving factors that you would say have compromised the H-1B program?
The low wages are the main problem, since you can pay an H-1B worker so much less than a comparable U.S. worker, that gives huge incentive to employers who can cut costs. And the companies that have taken advantage of that the most are actually the IT outsourcing companies. Say you’re Bank of America and you want 30 staffers to do your back office IT; you can just call one of these outsourcing companies and say, "I need this many people for this kind of project." Those kinds of companies make up the biggest employers that get the most H-1Bs—in any given year these outsourcing companies get between one-third to one-half of all those visas.
The micro-data that we’ve seen through FOIA requests show that they’re paying on the lowest range of wages, especially compared to other companies that don’t have that business model. And these outsourcing companies are the ones that have been involved in all the big scandals where U.S. workers have been forced to train their own replacements, and the H-1B worker takes over a job of an American worker who was earning $100,000 and the H-1B worker is earning around $60,000.
So how do these big tech companies like Google and Facebook utilize the program?
They’re not perfect either. While some of the main, most egregious scandals have been with the outsourcing companies, everybody—including Apple, Microsoft, Google—is using the program to pay low wages.
These companies, even though they’re paying slightly higher wages than the outsourcing companies and are applying for more green cards to keep their workers in the U.S. permanently, are still taking advantage of the program by paying low wages. If you look at the wage of a software developer in Silicon Valley, the going rate is around $150,000 a year, but you can pay the level-one wage to someone you bring in on a H-1B and it’s about $40,000 less than the local average wage. You multiply the $40,000 by six years (which is the length of the visa), and times that by the number of H-1B workers you have, that’s a lot of money.
Trump declared last week, when introducing his executive order, that the program “should include only the most skilled and highest-paid applicants and should never, ever be used to replace American workers.” In terms of the actual executive order that he issued, what does it do in practice?
Well it does nothing in practice as of now, and has no teeth to it. It only had two bullet points about immigration. One was directing federal agencies to look into fraud and abuse in the immigration system generally. The other was about H-1B and specifically referencing the program’s lottery—every year, there’s more petitions for H-1B workers than there are slots for workers, and so because it’s not clear in the law that you can prioritize one application or another, the government has always allocated them by a random lottery.
The bullet point is basically saying, if you read between the lines, “We shouldn’t be doing this in a random way; we should be doing it in a way that prioritizes the highest-paid, highest-skilled workers.” It doesn’t propose how it’s going to do that, but it’s a signal that they’re looking into a regulation that would prioritize the visas in some way rather than doing it randomly.
What would an ideal regulation do to address the current problems with the H-1B system?
On the lottery specifically, they would just create a prioritization scheme that would then allocate the petitions that have a level four [the highest of the prevailing wage levels] to go first, then the level three, and then the level two, and so on. Or they could set it up in some other way, like the bipartisan Durbin-Grassley bill, which has a prioritization scheme that’s not just wages; it also prioritizes STEM degrees from U.S. universities [along with several other factors].
What are the big unanswered questions for you regarding how the Trump administration intends to move forward on this?
The biggest unanswered question to me is what they’re going to do with the Labor Department. The proposed budget cut of 21 percent for the next fiscal year is across the Labor Department. You could propose the best regulation in the world to protect migrant and American workers, but if you’ve got nobody at the Labor Department to enforce it and investigate abuses, it’s going to be totally pointless.
What are the pitfalls of substantial and impactful H-1B reform?
The biggest obstacle to reform is really the division on this. There’s [Utah Senator Orrin] Hatch’s I-Squared Act [which seeks to expand the program without reform], which has had people like [Democratic Senators] Amy Klobuchar and Chris Coons, and [Republican Senator] Marco Rubio on it, so there’s a bipartisan coalition on that side. And there’s a bipartisan coalition on the Durbin-Grassley side, which would reform the system by cutting out the two lowest wage levels, and require that you first recruit U.S. workers. Jeff Sessions, Bernie Sanders, and Sherrod Brown have also signed on to the bill in the past. So you’ve got the far right and far left together on that; then there are the left and right centrists on the Hatch bill.
So what ends up happening is you really need legislative reform, but it’s also quite possible that those two sides are going to cancel each other out and nothing will get done. It’s also possible that the Trump administration, if they end up doing a new prioritization scheme with other regulations enforcement and while cracking on abusive employers, that might put some pressure on employers to negotiate around some of the Durbin-Grassley-type reforms. But it’s anybody’s guess as to what happens—it’s just too hard to tell.
What’s the topline takeaway for you on Trump’s purported interest in reform?
I’m skeptical. If you look at the specific, narrow language that they’re hinting at by itself, it looks like a promising development. When you consider it in the whole context of the criminalization of immigrants generally and the scapegoating and everything else the Trump administration has done, as well as the proposed budget cuts, it’s really hard to believe that the administration is going to move forward with this in a way that actually protects migrant and U.S. workers and helps raise their wages.