Last week, the Trump administration announced that the H1-B Visa programme would require applicants to make payments of $100,000 per year.
There was a fair bit of backpedalling immediately after the announcement – it now seems like it will be a one-off charge rather than an annual fee, and current holders would not have to reapply. In addition, there are unverified rumours that foreign students might be exempted when they leave university and look for employment.
Even so, despite the awkward clarifications, the H1-B Visa programme is essentially dead. $100,000 is only affordable to a tiny minority of people, especially those from the Asian subcontinent, from where most H1-B visa holders hail. Few companies will be willing to front this amount either, unless they are very rich, which would hurt small companies trying to attract the best talent.
It is easy to react knee-jerkily to this announcement and predict everything from the collapse of technology leadership to the end of American influence on the Indian subcontinent. However, as usual, the reality is more nuanced. To understand the implications of crippling this programme, we need to examine some numbers.
The programme mandates 85,000 H1-B visas per year for those with a bachelor’s degree and a body of highly specialised knowledge in various fields, mainly tilted towards STEM and business. More recently, a special provision was made for holders of master’s degrees, who receive their own sub-classification. About 60% of new applicants per year are approved.
The visas previously attracted a maximum one-time fee of $5,000 and lasted for 6 years, after which re-application was straightforward. There are currently about 450,000 holders of the H1-B visas living in the country.
Anyone who has followed the debate about H1-B visas – whether the programme should be cancelled, downgraded, or made more expensive – will remember Elon Musk’s outsized reaction when he was criticised for his defence of the programme. He said: “Take a big step back and f*** yourself in the face. I will go to war on this issue the likes of which you cannot possibly comprehend.”
Legendary
Ignoring the spiciness of the language, this is clearly an emotional issue for entrepreneurs and founders. The programme was created in 1990, and in the intervening 35 years, the performance of some successful applicants has been legendary. Consider this pantheon: CEOs of Microsoft, Alphabet, Zoom, Micron, Coursera, PepsiCo, and BEA Systems (to name just a few). If one adds the core engineering talent at many STEM-adjacent companies, the list is very long indeed.
The question then arises: how could anyone object to this programme? It has clearly been good for the US and good for US relations with the home countries of these candidates (most specifically India, whose nationals comprise 71% of all H1-B visa holders according to a New York Times article this week).
The answer is, unsurprisingly, politics and the depressing culture of blame. Here is the narrative: these people are coming here from other countries and taking high-skill jobs away from Americans at below-market salaries. So let’s stop them from coming, because it is their fault.
The narrative has some small kernel of truth – some H1-B visa holders will indeed work for lower salaries than their US counterparts, at least initially. There is also some truth to the accusation that some successful candidates probably gamed the system somewhat and did not really deserve the visa. However, the larger accusation of “taking away American jobs” is an overstatement.
Fallacy
Here is the fallacy behind the crippling of the programme.
Those highly skilled individuals will now try to migrate to other developed countries that are happy to have them (apparently, Canada is already rolling out the welcome mat). Many of them will still end up engaging with US companies that need their skills, only remotely – one does not have to be on-site these days, as everyone knows.
More damaging still is that this cohort will either find homes in new host countries where they will contribute lifelong and multigenerational value, or they will stay in their home countries and end up helping them increase their competitive positions relative to the US.
What about US citizens? Will the job market suddenly grow wings? The answer is obviously no. Even if the entire programme were completely cut, there would only be 85,000 elite new job listings created per year – not a lot in the grand scheme of things. Some of this work (at least those requiring just a screen and advanced cognitive skills) will be outsourced over the internet anyway.
What does Trump gain from this? He gets to tell his base that he is fulfilling a promise and protecting American jobs. Who could object to that?
However, the truth is different. He is preventing the smartest of the smart from coming to the US, assimilating, and making the outsized contributions that are the hallmark of highly educated and hard-working immigrants everywhere.
The US will be disadvantaged, and other countries will benefit. Perhaps not catastrophic harm, but just another own goal in the long game of global competition.
[Image: Sourav Debnath on Unsplash]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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