USA Now Struggling with the Temporary Foreign Worker Program

 H1B VISASAre we Exporting or Attracting Talent?

In concert with the recent articles I have presented on my site regarding the Temporary Foreign Worker Program in Canada, it is apparent that the US is also facing this same dilemma, as they prepare to overhaul their distorted immigration system.

America is also grappling with the identical question Canadians have been pondering of late: Do temporary work visas alleviate domestic skills shortages, or facilitate outsourcing?

Nearly half of U.S. employers surveyed say the main reason behind open entry-level positions may be a skills shortage. Meanwhile, in keeping with another study, the number of immigrant-founded tech start-ups has fallen to just below 44% since 2005, down from 52.4%; and according to Mark Zuckerberg’s new immigration advocacy group, 40% of foreign math and science students, reportedly the foremost sought-after by U.S. employers, have to leave the country once they graduate.

On the opposite side, others have long been suggesting that the overwhelming majority of H1B visas, the most favored permit for temporary foreign workers, has systematically been about Indian off-shoring companies like Cognizant, Infosys, Tata and Wipro, that use them to train their workforce. In the mean time, a recent report has found that approximately half of U.S. graduates within the science, technology, engineering, and mathematics (STEM) programs manage to find jobs in their own fields.

The latter set of evidence has led some to suggest that, far from promoting “the information economy” tech firms are bent on acquiring permission to hire additional low-cost foreign workers who will displace the locals. However, there’s a far more benign and convincing explanation: The off-shoring vendors are crowding out Silicon Valley companies, competing with them for the sixty-five thousand H1B visas the U.S. offers annually.

The proponents of the present Senate immigration bill are cognizant of this. Thus, the draft legislation seeks to “rebalance the system away from temporary visas and focus more on permanent visas,” Madeleine Sumption, a Senior Policy Analyst at the Migration Policy Institute.

“The thrust of this bill is to heavily penalize the serious user of H-1B. It’s expressly designed to attack specific business models,” she noted. The bill forbids firms from having over half of their workforce on H1B visas, and imposes penalties on firms who use the permits for 30% of their staff. Instead, it favors work permits, which will result in permanent residency, with the thought that the best and brightest should stay and settle.

What the U.S.’s experience, and Canada’s as well appear to indicate is that temporary worker programs address both skills shortages and facilitate off-shoring, without distortions like mandated caps (or, worse still, provisions that enable foreign workers to be paid less) they would most likely satisfy both needs.

Eliminating the program altogether would likely do very little to stop firms from outsourcing certain kinds of jobs to jurisdictions wherever they’ll be done more cost-effectively. When foreign workers cannot get into the country temporarily for proper training, native staff are typically sent abroad to train them.

At any rate, there is proof that the trend toward off-shoring is truly fizzling out (Developed countries are beginning to take back service-industry jobs too). Happily for U.S. STEM graduates, the wage gap between American and Indian IT wages has been quickly shrinking—not as a result of Indians depressed U.S. salaries, but because the two are converging: Americans have gotten cheaper and Indians costlier.

 

Research Sources: Canadian Business, http://www.canadianbusiness.com/blogs-and-comment/uncle-sam-ponders-its-own-temporary-workers-program-puzzle/  Economist, http://www.economist.com

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