The Biggest Threat to the H-1B Cap

In the last couple of years, a number of proposals have surfaced in Congress to greatly expand the H-1B program, as much as tripling the yearly cap. Many people are concerned about the major impact this would have on U.S. tech workers. (Clearly, I share this concern, but would point out that my other major concern is the lower average quality of the H-1Bs.)

Yet it seems unlikely that those on GridLock Hill will enact such proposals, as they are tied to amnesty for unauthorized immigrants. Next year is a presidential election year, and what with the recent alleged murder of a young woman in San Francisco by an unauthorized immigrant, the murderous rampage in Tennessee by a legal immigrant, Donald Trump’s ill-considered yet apparently quite popular remarks, the SCE and Disney H-1B incidents, and so on, a direct increase in the H-1B cap looks unlikely for the next year or so.

But what IS likely is an indirect way to attain much the same effect as increasing the H-1B cap, in the form of an executive action extending the Optional Practical Training (OPT) portion of the F-1 student visa. OPT allows foreign students to work in the U.S. after graduation for 12 months in general, 29 months for STEM grads. For the latter, then, OPT would run up to 6 years. Unless you believe in wild coincidences, it seems pretty clear that the Dept. of Homeland Security (DHS) chose this 6 figure to coincide with the 6-year duration of the H-1B visa. Moreover, DHS has explicitly stated that that their proposed extension of OPT is motivated as a solution to the “problem” of there not being enough H-1B visas available. In other words, DHS is overtly stating that they intend the OPT extension as an end run around the statutory H-1B cap.

I would guess that DHS’ proposal will be adopted. The industry lobbyists will push hard for it, and sadly, there will not be much opposition. Senator Grassley has expressed concern, good, and of course there is still the lawsuit, which seems to be holding up fairly well so far. But OPT is not widely understood, nor is there sufficient understanding among critics of H-1B of the role of AGE in the whole mess. Review: Most H-1Bs are young, thus cheaper than older (35+) Americans. The legal wage floors for H-1B depend on experience, thus pretty much on age, so hiring young H-1Bs in lieu of older Americans is legal. As I’ve said, in the SCE/Disney cases, AGE was the key factor underlying the wage savings accrued by hiring H-1Bs. OPT workers, by virtue of being new/recent graduates, are almost all young. So, if the DHS proposal goes through, it will become a de facto expansion of H-1B.

In addition, there is my hobby horse, the incorrect assumption — even by many critics of the H-1B program — that the H-1Bs who are hired from U.S. university campuses, rather than imported from India by the Infosyses, are the “good” H-1Bs. Once again, I cannot emphasize enough that this is not just a misunderstanding, but one that is likely to have major consequences, the current OPT proposal being a case in point.

A number of critics of the H-1B program emphasize that the OPT workers enjoy a hiring advantage over Americans in that the OPTs are exempt from employer Social Security tax contributions. Yes, that makes OPTs cheaper to hire than American new grads, but the big savings come from hiring the young OPTs instead of the older Americans.

So, both the Googles and the SCEs will benefit if the DHS proposal is adopted, in almost exactly the same way as from an H-1B increase.