The Politics of H-1B Visas

By Donald Sears  |  Posted 2010-08-09

Ah, the Republicans. Oh, the Democrats. Give an inch. Take a mile.

It's hard to know who to believe or trust these days when it comes to American politicians, but when you add in the charged emotions around border security, immigration and foreign workers, things get complex and full of rhetoric and deal making.

A bill that passed the Senate last week that is predominantly about border security has a measure attached to it that would raise the fees on H-1B visas for companies whose employee base is made up of 50 percent or more of visa-holding workers. The fees are increasing by $2,000 a pop--which is being argued as a protectionist measure by opponents. The measure is an attempt to try to close a loophole that allows companies--mostly from Asia and India, companies such as Wipro, Infosys and Tata-- from oversupplying American companies and projects with foreign workers. Why not hire some Americans for the job? If not, well, sorry but we need to pay for the border drones we need down in Arizona, New Mexico and Texas to keep the illegals out.

The two things really have nothing to do with each other, but it's emblematic of how things work in Washington, D.C.: Oh, you want to keep the illegals from working the fields and fast food restaurants of the Southwest (and taking jobs and services away from Americans--a dubious argument at best)? OK, well then, we want to play defense to our higher-paid American jobs and higher-skilled American workers by making it costlier to do business here (which seems silly since it's not closing any loophole at all, just raising fees).

The visa fee hike does not appear to cover the entire bill for the border security legislation, so where does that leave us?

If it gets signed in to law--though it will probably have a tough time passing the House--members of the Senate, Congress and Executive branch will have something else to say they accomplished in 2010. But for technology workers--foreign or U.S.-based--the measure is yet another reason to shake your head, throw up your hands and remind yourself that politicians do what's in their best interest in the name of your best interest.

Here's Bloomberg Businessweek take on why the legislation won't thwart Indian companies from paying the fees:

Infosys, based in Bangalore, spent $12 million on H-1B and L-1 visas in the second half of 2009, according to its regulatory filings. The company, which files about 7,000 to 8,000 visa applications and renewals each year, could see $15 million in added costs from the bill, Keirstead [Kaufman Bros. analyst Karl Keirstead] said. Still, the hikes are "relatively innocuous" for the Indian services companies, he said, compared with their total profit. Infosys posted net income of $1.3 billion for its fiscal year ended in March.

Professor Ron Hira of Rochester Institute of Technology, who believes strongly in closing loopholes in visa law, thinks this whole thing means very little. Hira told Computerworld:

"A $2,000 fee per visa may cut slightly into the bottom lines of these extraordinarily profitable firms, but it isn't large enough to alter their business models," Hira said.

"The cost savings of importing a guest worker versus hiring an American worker is at least an order of magnitude higher than this additional fee, especially with L-1 visas," he said.

Hira, however, believes the legislation signals recognition by government officials that there are loopholes being used to give preferential treatment to foreign workers who are paid less than American workers for the same job.

Rocket Fuel