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H1B Visas: Why They’re Broken and What we Can Do

Coders should be made in America, but when we don't have enough it just damages our economy to keep them from immigrating, says . (Photo courtesy Shutterstock)

Coders should be made in America, but when we don’t have enough it damages our economy to keep more from immigrating, says author Solomon. (Photo courtesy Shutterstock)

(“Community Insights” are articles by members of the Techonomy community, contributing to the ongoing dialogue that is our raison d’être.)

It looks like the Trump administration may further restrict work visas for technology workers by making changes to the H1B program. If it does, that will send the cost of such tech workers skyrocketing, since they are already in high demand. That might be a good thing for my company, 10x, a technology employment agency. And while it may also increase the pay for technologists in the US, it is ultimately bad for innovation, growth and the health of the overall economy.

H1B Visas were created when it became apparent we needed to import specialized technological and scientific talent that we don’t have sufficiently available in the U.S. The concept of this is reasonable. When you need something and don’t have it, you find a way to get it. So far so good. But there are several inherent problems with the current H1B system, and even more with the Trump Administration proposal being discussed that would reduce the number of such visas issued.

The Problems

First of all, the impact of reducing the amount of H1Bs issued will go far beyond just the tech sector. Virtually every company in our economy is steeped in technology, and it will be harder and harder for all companies (especially non-tech companies) to get the tech talent they need. The Trump administration and some media outlets talk about H1Bs as a problem unique to the technology industry, but that could not be further from the truth.

If this program is diminished or dismantled, companies will be likely to move their tech and innovation projects to offices and divisions in other countries. This will ultimately defeat the supposed goal of the current proposal– to put more Americans in these jobs. It also poses an additional problem, which is that startup founders will have to start their companies in places where there is an abundant supply of technology talent–in other words, anywhere but here.

We have already observed startup scenes popping up everywhere and anywhere tech talent can be found. One former Microsoft employee who was denied an H1B went home to India and started his own company. It’s now valued at $7 billion. That is a lot of lost tax revenue and jobs for the U.S.

One of the biggest problems with the current system is that the $60,000 minimum salary threshold for H1B visa holders is too low. Paying low wages allows companies to bring in specialized help as a cost-savings measure rather than because there are no options here.

By far the biggest issue is that the H1B program only addresses the symptoms of the disease but does nothing to cure the root cause. If we want to reduce the number of foreign workers brought in, we need to train more people here for these jobs.  Clearly, our education system is failing to provide enough people with the needed specialized skills.

The job market has room for them, which is why many of these tech jobs are going outside the United States and to people brought in on these visas. If we don’t address the cause, the problem will grow massively. According to the New York Times, the U.S. has a shortage of about 110,000 computer science jobs annually.  The fact that no one speaks of our education failings in connection to the visa/immigration problem is emblematic of a national problem of short-term thinking.

The Solutions

While clearly the current conversation around immigration reform is polarizing, there are several solutions which relate to H1Bs that might be agreeable to the majority of people and companies concerned with the law. But that assumes that everyone agrees we need to frame the solution as long term and broad reaching.

Here are some solutions that are strategic as well as tactical:

  • Increase the minimum salary for H1Bs to $120,000 from its current level of $60,000. This, combined with the other costs of bringing in foreign workers, will cause employers only to seek to use H1Bs when they truly can’t find someone here, instead of just trying to find someone less expensive they can import.
  • Taking a page from carbon credits, for each H1B granted the employer should either:
    1. Train an American worker to be able to take over the position/skill upon the completion of the visa term, or
    2. Contribute money to workforce development programs.

There is no question that massive employment change is coming. The workforce is moving toward temporary and short-term work at an unprecedented pace.  As we see that machines can perform many functions better than humans, automation and partial automation are going to wreak havoc on employment, sector after sector. If we don’t rethink all aspects of our educational system and relationship to work, we are going to be woefully unprepared for the coming changes. At the very least, maintaining pathways for the talent we need now to keep coming from other places while we  do all we can to protect American jobs should be the short term tactic. The long term strategy should be making much more investment in education and workforce training.

Educating people for technical and skilled roles must be taken seriously, and incorporated into all conversations that relate to employment.

Michael Solomon is an entrepreneur and the founder of 10x Management, a tech talent agency. 

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  • Joel Block

    Thank you Michael Solomon for this well-reasoned article. The American tech industry as a whole needs to invest more of their intellectual and capital resources into addressing their long-term educational needs. Given global competition for skilled tech labor is a reality, it makes sense for the tech industry to cooperate at all levels to recruit, educate, and train American students to become IT workers.

    • Marty

      BS. We have Americans training their foreign replacements. A first world country only imports 3rd world workers because of cost.

  • idic5

    article: ‘If we want to reduce the number of foreign workers brought in, we need to train more people here for these jobs. Clearly, our education system is failing to provide enough people with the needed specialized skills.

    ‘The job market has room for them, which is why many of these tech jobs are going outside the United States and to people brought in on these visas. ‘

    The author is repeating the claim that there is a shortage of tech labor in the US. I have been hearing this claim since the late 1990s. So Is this true? THe US has never responded to this vor 20 yrs? Sounds hard to believe.

    HOw many IT people are we churning out of our colleges? Of course, he does not give any stats or back up for this claim

    He is invoking a guy named Vivek something ( can’t recall his last name) here ignoring the fact that many ( how many ?) of the H-1bs are more pedestrian types and not geniuses. Of course, he cherry picks someone who left the US to build a 7 billion company implying this is the typical profile of the H-1b visaholder.

    ‘One former Microsoft employee who was denied an H1B went home to India and started his own company. It’s now valued at $7 billion.’

  • idic5

    article: ‘One of the biggest problems with the current system is that the $60,000 minimum salary threshold for H1B visa holders is too low.’
    — I was an AMerican IT worker who was displaced by H-1b workers along w/ about 250 some others in my wave; there was another few waves that summed up to at least a 1,000 AMericans who lost jobs to H-1b.

    I told a mgr I knew at my old company that I ‘d be willing to come back to work even at whatever you paid these people. He said I wd not at what the company pays them. What do you pay them, I asked?

    $20, 25-30k– and he added , this what WE pay the outsourcing firm; I dont know what they ultimately get paid. BtW, this is in the back waters of downtown Chicago at a fortune 100 insurance firm in 2010 so that you place this data.

    SO one point here that the author fails to touch is that there is some sort of convoluted pay mechanisms going with a probably gaming of the system; probably there is the nominal compensation reported to the govt ( if there is any reporting at all) and then there is the real compensation.