Why We should Increase the H-1B Cap

Once again, Congress is considering a bill to raise the H-1B visa cap. The sponsors of this bill are three Democrats and three Republicans, the group of six being spread out across the ideological spectrum. (The primary sponsor is Orrin Hatch, who is the 29th most conservative of the 100-person chamber, and one of the co-sponsors is tied for fifth most liberal.) One would thus think that the bill has high hopes. However, if things go the way they have the last couple of times a cap raise was proposed, the bill will be shelved before any serious progress can be made. It seems that there is a general fear that allowing more H-1B workers into the country amounts to outsourcing or otherwise harms U.S. workers. However, a plain consideration of all the evidence should lead one to support raising the H-1B visa cap.

The first point to consider is that the current H-1B cap of 65,000 (with an additional 20,000 for workers with master’s degrees) is the same as the cap from the mid 90’s. In other words, it’s terribly outdated. The cap was first reached in 1997 and hit again in 1998. In response to this and increasing demand for IT workers, a law was passed to temporarily increase the cap to a height of 115,000 until returning to 65,000 in 2002. There were several reasons for instituting a temporary cap; one of those being the possible threat of Y2K related difficulties and outages, another being the experimental nature of Congress’ intent. However, the higher cap accompanied the .com bubble’s collapse and 9/11. Because of these and other issues, the political will and apparent need to import more specialized laborers was low at the end of the program, so the cap was not revisited.

H-1B visas are good for three years and one-time renewals are cap exempt, so the full effect of returning to the old cap wasn’t felt until 2008. It may be a “cheap shot” to say this, but the reduction of H-1B workers in the country seems to have coincided with the financial collapse and the recession rather than a boon for U.S. workers. But this needs to be said, because there is significant opposition to increasing the H-1B cap on economic grounds.

This view is based on the claim that foreign workers “take” jobs from their U.S. counterparts, leading to unemployment and further strife. However, this view seems to ignore the labor certification process, which ensures that there is no U.S. worker attempting to get the job sought by the foreign national. It also makes sure that companies don’t pay foreign workers less than they would for U.S. workers.

Some H-1B opponents seem aware of this–but are still unconvinced. They don’t believe the labor certification process is effective–and instead argue that employers can still get away with paying less for H-1B labor. If this were true, one would expect H-1B petitions to increase during the recession. It would be a perfect time to replace expensive U.S. workers with cheap foreign labor. However, this did not happen, as H-1B petitions in fact decreased during this time. For fiscal year 2011’s H-1B season (of petitions sent in 2010 for employment in 2011), it took almost ten months for the cap to be reached. In stark contrast, the cap was reached less than one week after the start of the most recent H-1B season.

When a company cannot hire an H-1B worker, in many cases it will not be able to proceed in the business plan or project that he or she would have worked on. The worker will likely instead work in a different country but in the same field, meaning that he or she will help a foreign company compete against an American one. If the U.S. were to allow this worker into the H-1B program rather than turning him or her away, there might be one more American innovation or marketable product. These things attract investment and create jobs requiring less specialized skills, which are ones that American workers can more easily fill.

The proposed legislation would increase the cap to 195,000 and uncap those with advanced degrees in STEM (science, technology, education and math) fields. It is our view that it should be passed right away. Under President Obama’s immigration executive action plan announced last November, the labor certification process is being “modernized.” It should provide greater protections for U.S. workers than the old process, so very few U.S. workers (if any) would be displaced by an increase in the H-1B c ap.