The President’s Executive Order

Today President Trump issued his long-awaited Buy American, Hire American executive order. A number of people have asked me what this means for the H-1B work visa and related programs such as Optional Practical Training (OPT). Let’s take the latter first.

As many of you know, OPT is an extension of the F-1 student visa. Though it was intended to give foreign students a chance to work in one-year internships after earning their American degrees, it became an unofficial supplement to H-1B. Presidents George W. Bush and Barack Obama both extended it much beyond one year, and it now serves in essence as a backdoor way to expand the yearly cap on new H-1B visas. There is no cap on OPT.

So OPT is a major issue. However, it is not mentioned in the executive order. Why not? Once again, this is an “Intels Good, Infosyses Bad” issue. As always, by “Infosyses” I mean the outsourcing firms that “rent” H-1B programmers to U.S. firms, with the “Intels” meaning the companies that hire H-1Bs directly. I strongly disagree with this view, which has been vigorously promoted by the Intels, basically a scapegoating tactic to deflect attention away from themselves.

What is that related to OPT? The answer is that it involves foreign students, the group favored by the “Intels,” and Trump long ago (August 2015) announced an Intels Good, Infosyses Bad policy, and he has been consistent on it ever since (contrary to the “flip-flopping” claim made by the Washington Post and many others). Remember, one of Trump’s strongest and closest supporters has been Silicon Valley’s Peter Thiel, who presumably talked up Intels Good, Infosyses Bad with Trump early on.

In other words, no surprise that OPT wasn’t in the executive order. But there is another part of the executive order, much subtler effect Intels Good, Infosyses Bad:

(b) In order to promote the proper functioning of the H-1B visa program, the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security shall, as soon as practicable, suggest reforms to help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.

(Emphasis added.) Note the “or”! What is this?

For years, various individuals and organizations have proposed doling out the visas in the order of offered salary. This presumably would reduce usage of H-1B for cheap labor, and it has “market based” quality to it: A worker who is really highly paid must be worth a lot to his/her employer, and thus ostensibly to the national economy. I support this idea, but only in its pure form, and have warned that a weakened version may be worse than no reform at all.

A few weeks ago, I met with a prominent partner of a major national immigration law firm, at this man’s request, in preparation, he said, for a meeting with the Trump people. I asked him about the proposal to issue visas in order of offered salary. He was quite strongly against it. I was surprised, but I shouldn’t have been. The Intels do pay some high salaries to foreign engineers (though note the comment later in this post), but they also hire lots  of other foreign STEM workers at quite modest salaries. These workers do tend to have Master’s degrees, and sure enough, press reports today stated that the ranking of visas could be made on the basis of giving priority to Master’s people rather than just to those in the upper pay echelons. In the phrase “most-skilled or highest-paid” in the executive order, “most-skilled” likely refers to Master’s/PhD holders.

In other words: All those companies cited by proponents of Intels Good, Infosyses Bad, such as Disney, SCE and so on, would hire the foreign students with Master’s degrees. They won’t have CS degrees from MIT, but will have Master’s in Information Science from Cal State Long Beach, say, and will be much cheaper than the Americans. I did say “hire,” by the way; even if outright replacement of Americans were banned as part of the deal, the employers would just wait for attrition, hiring the foreign students one at a time. In terms of impact, it would be very similar to Staple a Green Card. These employers won’t save quite as much money as they did by renting from the Infosyses, but it will still be a sweet deal.

And this is the part that even many critics of H-1B don’t understand. They see that the Intels pay their H-1Bs more than the Infosyses do, and they thus accept the Intels Good, Infosyses Bad Koolaid. As I have pointed out many times, this is highly deceiving. Both the Intels and the Infosyses are using the H-1B program for cheap labor. The Intels do hire a higher class of worker, typically one with a Master’s degree in CS or EE, but the Intels are doing so on a cut-rate level. It’s like going to a Toyota dealer, and having a choice of 25% off invoice for either a Corolla or a Camry; the Camry is more expensive, but you are still getting a bargain for a Camry-class car.

“Nature abhors a vacuum,” and if there are holes in a statute or in the regs, the employer will rush in just like air rushes into the a temporary vacuum. Result: American tech workers, especially the ones over age 35, still lose out.

So, I have been hoping that the Trump administration would look beyond Intels Good, Infosyses Bad in forming policy. Today’s announcement was disappointing and unsurprising, but “hope springs eternal.”