H-1B Visa Fee Increase Unpopular Across the Board

Supporters, detractors and reformers of the latest law that will place a $2,000 increase on H-1B visas is not expected to impact American jobs or curtail companies from seeking to use temporary, foreign workers. The measure is expected to sting U.S and India trade relations.

The measure to increase fees on H-1B visas that was attached to the $600 billion border security bill by Sen. Charles Schumer (D-NY) passed both houses of Congress was signed in to law by the president on Aug. 13. What proponents and advocates on all sides of the debate have to ask themselves is whether this measure will have any impact on American jobs and will close loopholes that allow companies to abuse wages for temporary technology workers.

Critics and supporters of H-1B visas are finding the measure to be wholly inadequate and ineffective.

"The actual impact [of the fee hike] will be negligible, since the amount of the fee is minuscule in comparison to the wage savings employers accrue by hiring H-1Bs," said a leading H-1B visa reformer and computer scientist, Professor Norman Matloff of the University of California, Davis, in an interview with eWEEK. "Those savings are in the tens of thousands of dollars each year, multiplied by the (up to) six-year life of the visa."

The increase of $2,000 for H-1B visas affects those companies that employ more than 50 employees in the United States where 50 percent or more of its employee base is made up of visa holders. The measure, as argued by the Indian trade organization Nasscom, is a protectionist measure that is driven by stateside politics rather than an attempt to spur U.S. hiring.

Nasscom has called the fee hike discriminatory and will have a negative impact on U.S. and India trade relations. The bill will most certainly add some cost to the likes of the largest Indian outsourcing companies such as WiPro, Infosys and Tata Consultancy Services. An H-1B will now cost in the range of $4,300 per visa.

"We would like to reiterate that Indian companies only take a fraction (under 12 percent) of the total H-1B visas and U.S. companies, who also use these visas in large numbers will remain unaffected by this bill, thus unfairly reducing the competitiveness of Indian firms," wrote Nasscom in an official statement about the bill on Aug. 6.

"The mainstream U.S. firms abuse the H-1B visa just as much as the Indian firms do," stated Matloff. "All of them use the visa for saving on wages. The mainstream firms tend to hire a higher class of worker than the body shops do, but still the mainstream employers pay the H-1Bs below-market wages. (And as I've said before, this is done in full compliance of the law, which is full of loopholes.)"

One of the biggest supporters of H-1B visa use in the United States, research and engineering scholar Vivek Wadwha who has worked with Harvard, Duke and UC Berkeley, also finds this measure to be unfair and off target.

"They are not targeting the true body shops [with these increased fees]," Wadhwa told CIO.com. "These Indian providers are the cr???me de la cr???me of global companies doing very sophisticated work. They're going after the good guys."

"The demonization of Indian firms in this bill (which is real, in spite of [Sen. Charles] Schumer's denials to the contrary) is unfair and unhealthy," said Matloff. "It will create resentment among influential Indians and Indian-Americans.

Matloff, however, does not think the Indian government will take this up with the World Trade Organization, a threat they have publicly warned of in the last week. Matloff said the measure is worded as country-neutral and India will not necessarily want more attention to drawn to it with the American populace.