Biden’s Dilemma: Appease Labor or Immigrant Groups on H-1B Visas

As a candidate, President Joe Biden promised reform, saying “high skilled temporary visas should not be used to disincentivize recruiting workers already in the U.S. for in-demand occupations.” Now in office, his administration is considering increasing the wages companies have to pay H-1B workers, which would reduce the incentive for companies to hire foreign workers. This summer, it quietly — and unsuccessfully — defended in court a Trump-era rule that would have replaced the lottery system currently used to allocate visas with one that prioritizes the highest-paying jobs. Both Democratic senator Dick Durbin of Illinois and Republican senator Chuck Grassley of Iowa had long been calling for the change, saying in a joint letter that the “H-1B visa program is greatly in need of reform.”

But full scale reform is going to prove tricky for a president who campaigned as a champion for both workers and immigrants. Because while many pro-labor groups say the program lines the pockets of the likes of Google and Facebook at the expense of American workers, immigration advocates, along with business interests, oppose measures to rein it in, saying that doing so will hurt American competitiveness by narrowing access to a badly needed pipeline of high-skilled talent. Politically, H-1B reform is pegging two powerful Democratic constituencies against each other. Meanwhile, getting anything through a sharply divided Congress won’t be easy.

In 2015, the AFL-CIO, the largest federation of unions in the country, released a report castigating Walmart for its reliance on the H-1B program “to meet the company’s routine needs for information technology (IT) labor, potentially displacing U.S. workers.” The International Federation of Professional and Technical Engineers (IFPTE), a labor union, has urged Congress not to expand the H1-B program because of “widespread abuse.” (The AFL-CIO declined to comment for this article.)

On the other side, the American Immigration Lawyers Association (AILA) has said that increasing the wage scale for foreign workers would hurt American businesses. “Especially in an economy like we have now, where there is a skills gaps and jobs that aren’t being fulfilled, I think the H-1B program really helps to address those needs,” said Sharvari Dalal-Dheini, government relations director at AILA.

Though reforms to high-skilled worker programs tend to be overshadowed by more high-profile immigration issues such as protecting Dreamers and creating a path to legalization for undocumented residents, H-1B reform could drastically change the landscape of business and immigration in the U.S. There are roughly 600,000 H-1B visa holders in the country, the vast majority from China and India. Most of these jobs are in tech, but companies can also use the program to hire, say, Spanish-language teachers or doctors with special skills.

So far, Biden has walked a fine political line, not saying too much but embracing some moderate reforms behind the scenes — trying to navigate what Stephen Yale-Loehr, a professor of immigration law practice at Cornell University calls “a political conundrum for the administration.”

“It seems like Biden is trying to thread the needle here,” said Varun Nikore, president of AAPI Victory Fund, a super PAC dedicated to the political mobilization of Asian Americans and Pacific Islanders. “Because not only did he campaign on immigration reform, but he was probably one of the most pro labor candidates, and presidents, we’ve had in a while.”

The Labor Shortage Puzzle

Proponents of the H1-B program say that U.S. firms need access to foreign STEM talent in order to remain competitive, an argument that hinges on the existence of a domestic labor shortage in the tech world. Unemployment in the tech sector is significantly lower than it is for the economy overall, which business groups say is evidence that domestic tech workers are doing pretty well and foreign workers are mostly filling demand above and beyond what the domestic workforce can supply.

The problem is, historically it’s not clear that there has been a labor shortage in tech. Skeptics point to the fact that median wages in the sector haven’t increased everywhere in the country, or all that dramatically. “What happens when there’s something in short supply?” said Ron Hira, an associate professor of political science at Howard University and research associate with the pro-labor Economic Policy Institute (EPI). “You have a price mechanism. In this case, it would be wages. So, anything in shortage you’d see wages going through the roof.” The fact that there haven’t been dramatic wage spikes, he says, suggests that claims of labor shortages in the U.S. are overblown.

Instead, Hira and others believe that corporations have become accustomed to paying below market wages through use of the H1-B program. Employers are required to pay H-1B workers the higher of either the actual wage paid to a worker in a comparable role at their company, or the average wage for similar workers based on occupation, geography and experience. Employers select this “prevailing wage” from four levels set by the Department of Labor.

But an analysis by EPI found that, in 2019, employers certified 60 percent of all H-1B jobs at the two lowest levels — leading to questions about whether corporations were classifying these jobs at artificially low levels to avoid paying higher wages.

“We suspect there is misclassification going on,” said Faraz Khan, a legislative representative and researcher with IFPTE. The alternative, he said, is that employers are actually hiring H-1B workers at the lowest skill rungs. “Then the question becomes why are we not creating a policy that encourages employers to fill those lower skill jobs in the domestic labor market.”

Wages can be pushed down by other factors, too. H-1B visas are held by employers, which means there are restrictions on the free movement of labor. Foreign workers can’t simply leave the company if their wages aren’t competitive. “I felt like I had no option to negotiate whatsoever,” said a Pleasanton, Calif.-based former H-1B worker and now-green card holder who didn’t want to be identified for fear of professional repercussions. He guesses he was paid 25 to 35 percent less than his domestic counterparts as an H-1B worker.

“People who have been here for 10 years, or even some people who were born and brought up here who’ve been in good jobs making six figures, suddenly they’re losing their jobs just because [their employers] found somebody from India who would do it for $50,000,” said Choudhary.

Critics of the current program say this wage discrepancy is a powerful incentive for employers to avoid hiring U.S. workers. Companies aren’t required to look for a U.S. worker to fill a job before pursuing an H-1B unless they are “H-1B dependent” (their proportion of H-1B workers surpasses a certain threshold). And the H-1B program is so popular with employers that since fiscal year 2014, U.S. Citizenship and Immigration Services has received more H-1B petitions in the first five days of filing than the entire annual cap of 65,000 (an additional 20,000 are available for foreign students graduating with a master’s degree or higher from a qualifying U.S. institution). According to previous estimates by the Department of Labor, the cost to companies if the administration were to increase the wage scale for H-1B workers would be well into the billions.

Some argue that the H1-B visa program lifts all boats: There is research showing that an increase in foreign STEM workers as a share of a city’s total employment increases wages for domestic workers more broadly. But for many workers, any aggregate benefits of the program are far outweighed by the costs. In 2015, Disney famously fired over 200 U.S. workers, some of whom said they were made to train their H1-B-holder replacements.

“There are so many people who live for this issue, who vote on this issue,” said Sara Blackwell, an employment attorney who represented workers in the Disney case and campaigned for Trump (though she later said she felt “betrayed” by the former president because he didn’t do enough to reform the H1-B visa program). “But they’re too afraid to say it out loud.”

“A Dirty Industry”

One of the biggest arguments made by tech and other companies against making it harder for foreigners to come in on an H-1B visa is that it would dissuade the “best and brightest” from coming to the U.S. But several of the people I spoke with said that’s not always the case. “It’s a mixed bag,” said the Pleasanton, Calif.-based former H-1B worker about the caliber of the H-1B visa holders he worked with.

In recent years, H-1Bs have been awarded by lottery because the number of visa applicants has far exceeded the annual cap. Immigration advocates say that this shows the scope of the need for high-skilled foreign workers. But critics say that has led to a proliferation of mediocre workers.

There’s also the problem of players who want to cheat the system.

By far the biggest purveyors of the H-1B system are large corporations and third party staffing firms — Cognizant, Infosys, Tata Consultancy Services, Wipro and others — that bid for projects at corporations like Walgreens and Facebook, which rely heavily on foreign workers. These staffing firms recruit and sponsor workers under H-1B visas and then contract them out to U.S.-based companies in need of talent.

Often, these arrangements fill legitimate gaps in the labor force and stay well within ethical and legal boundaries. But some staffing firms, under pressure to gain a competitive advantage, resort to illegal practices. To obtain an H1-B visa, workers are supposed to have a job already lined up. But firms have been known to hire workers without a job match, so that they have the talent ready to deploy when bidding on projects.

If a job doesn’t materialize, less scrupulous firms may dock the worker’s pay or refuse to pay them altogether, leaving them incomeless in a foreign country. Though the practice — known as benching — is illegal, foreign workers eager to remain in the U.S. often feel they have no recourse to recoup what they’re owed. “They’re really after people who are vulnerable,” said the worker from Pleasanton.

Another way third-party staffing firms seek to get a leg up on the competition is by encouraging foreign workers to artificially inflate or outright lie about their qualifications. A…