Here’s the deal with President Trump’s Executive Order on H-1B visas

On Tuesday, President Trump signed an Executive Order entitled “Presidential Executive Order on Buy American and Hire American.” Section 5 of the EO directs the Attorney General, and the Secretaries of State, Labor, and Homeland Security to “suggest reforms to help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.”

(Although the EO directs this to be done “as soon as practicable,” President Trump’s nominee for Secretary of Labor – Alexander Acosta – has not yet been confirmed.)

"Right now, widespread abuse in our immigration system is allowing American workers of all backgrounds to be replaced by workers brought in from other countries to fill the same job for sometimes less pay,” the President said yesterday at a Snap-On Tools facility in Kenosha, Wisconsin. “This will stop." He added, "Right now, H-1B visas are awarded in a totally random lottery, and that's wrong. Instead, they should be given to the most-skilled and highest-paid applicants, and they should never, ever be used to replace Americans." (The President was quoted in Politico’s “Morning Shift.”)

Are H-1B visas too easy to get?

The reality is that it is already very difficult for U.S. employers to secure H-1B professional work visas for their foreign workers. The U.S. Customs and Immigration Services recently announced that in the first week of this month – the first week in which it accepted petitions for new H-1B “slots” for 2017 – it received 199,000 petitions for only 85,000 “slots.” So, as it has done in past years, the USCIS conducted a “lottery” to randomly select the 85,000 petitions to be processed. The remaining 114,000 petitions will be sent back, unprocessed.

(Even if the petition is accepted for processing, that does not necessarily mean that the petition will be approved by the USCIS.)

Fewer H-1B petitions were filed in 2017 as compared with 2016 and 2015. In April 2016, employers filed 236,000 H-1B petitions. In April 2015, they filed 233,000. Presumably, the decrease in 2017 indicates that employers may be less willing to gamble on the H-1B lottery.

Is a “lottery” the best solution?

The President has said that he thinks H-1B visas should go to the most-skilled, most-highly-compensated workers and should not be used to displace American workers.

Regarding the most-skilled workers, there is already a set-aside of 20,000 of the 85,000 new visas available, for those who have earned advanced degrees from U.S. universities.

Regarding compensation, employers can’t pay H-1B workers less than they pay similarly situated Americans. The regulations require that H-1B workers be paid the higher of the “prevailing wage or actual wage” being paid by the employer. The prevailing wage is set by the U.S. Department of Labor based on data from the Bureau of Labor Statistics.

President Trump is apparently referring to two large India-based IT consulting companies that manage to snag a large percentage of each year’s H-1B quota. These companies can pay their workers less than the actual wage being paid by their clients to the clients’ employees, as long as the consulting companies pay at least the prevailing wage.

Use of contractors, whether they are foreign or U.S. workers – or outsourcing labor to increase flexibility and reduce costs – is not new. But the President is probably correct that the H-1B program should not be used for this purpose.

Some employers may welcome an opportunity to pay more to get truly exceptional foreign workers. But that could create a whole new problem: H-1B workers who are paid more than their American counterparts.

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