Donald Trump’s H-1B reforms will make America poorer

A strong recovery for the US would require talent to be drawn from all over the world

By Kurt Wagner

Newly announced reforms to the H-1B immigrant visa system have the potential to reduce the number of foreign workers allowed into the US, just as the Donald Trump administration intends. The problem is that goal makes no sense. If implemented, the changes will seriously harm many businesses — small firms and health-care providers especially. Overall, they’ll harm US workers, not help them.

Trump has already modified the H-1B program, which brings 85,000 skilled workers to the US a year, but the new rules go further. The policy tightens the definition of “speciality” occupations that qualify for H-1B status and prevents companies from hiring foreign workers unless they have degrees that precisely match available job postings — making it impossible to hire a worker with an engineering degree as a software programmer, for instance.

Also Read: Another blow to Indian techies? US tightens H-1B visa rules

To prevent businesses from undercutting wages, the government will also require employers to increase the salaries of H-1B visa holders. The highest-skilled immigrants will have to be paid at the 95th percentile of the prevailing wage for their occupations, up from the 67th percentile under current rules. And visas for workers hired by information-technology placement firms will be limited to one year, a change affecting tens of thousands of people, mostly from India.

The administration expects the changes to reduce demand for H-1B visas by one-third and sees this as a triumph for US workers. In fact, it’s a defeat. Nearly two-thirds of H-1B recipients work in “computer-related” fields, where labor is in short supply. The third-quarter unemployment rate for programmers was 2.9%, compared to 8.8% for all US workers, and vacancies in the sector are up 4.7% since April. These jobs increase consumer demand and help companies expand by filling critical roles. In other words, skilled immigrants spur growth and help create jobs for American workers.

Also Read: Democrats flay Trump for announcing new curbs on H-1B visas sans public scrutiny

The new rules will discourage innovation and entrepreneurship by making the cost of employing foreign talent prohibitive for small businesses. US-based startups that rely on skilled immigrants for IT services will outsource more tasks to workers outside the US And, in the midst of a pandemic, the changes will worsen shortages of health-care workers. The new policy requires all medical professionals on H-1B visas to be paid at least $208,000, regardless of speciality or experience. For many clinics and hospitals in underserved areas, that’s unaffordable.

Normally, public review might have allowed these defects to be exposed and remedied before the rules took effect. Not this time. The Office of Management and Budget issued waivers allowing the departments of Labor and Homeland Security to move forward without completing the usual review process. At a minimum, the courts should suspend the new rules until they’ve received public comment. Congressional leaders should also insist on closer scrutiny and remind the administration that far-reaching changes to immigration laws should be carried out through legislation, not executive fiat.

Also Read: Trump's new visa rules credit negative for Indian IT industry, may impact margins by up to 5.80%

The most important point is the simplest: The strongest possible US economic recovery requires more talent drawn from the rest of the world, not less. A smart immigration system would recognize this fact, and in that way advance the interests of all Americans.