Big Win for Tech CEOs, Update

In my last post, I explained why the president’s new order banning issuance of H-1B and other non-immigrant visas is a big win for the tech industry. The ban exempts foreign students, which is the main source the “Intels” use to hire H-1B engineers, whereas the “Infosyses” import workers directly from abroad. This will free up visas that would have been taken by the Infosyses, a windfall for the Intels since each year there are more applications for H-1B visas than the 85,000 cap.

I did go out on a limb a bit in pointing out that most of the pushback on the order had come from sources like the American Immigration Lawyers Association, rather than from Silicon Valley firms. At I wrote that, there was only a tweet from Google’s CEO, Sundar Pichai.

Since then, a number of major tech firms have chimed in. But it’s just posturing; they know the impact of the Trump order on the Infosyses, and the benefit that will bring to the Intels. In fact, they have argued to Congress precisely along those lines, saying in effect, “The Infosyses abuse the system. Give the visas to us instead of them.”

I’ve been told by the insiders that the Trump people are still considering prioritizing the issuance of H-1B visas by offered salary. Of course, again a windfall for the Intels, who pay more than the Infosyses. (Not because the Intel’s don’t underpay their H-1Bs, which they do, but because they hire a higher quality of worker than do the Infosyses.) This would replace the current system, which awards the visa by a lottery.

One aspect I now realize I overlooked, though, is the L-1 visa, specifically L-1B, Intracompany Transfers. In the past, this was used by the Infosyses to circumvent restrictions Congress placed on them in using H-1B. But in recent years, it has also become popular with the big Silicon Valley firms; if the firm failed to win the H-1B lottery, it would “park” the person in one of the firm’s foreign offices, then bring them back to the US after a year under an L-1 visa, which has no caps. Now they won’t be able to do that, at least not without applying for an exemption.

“Can’t tell the players without a scorecard.”

 

26 thoughts on “Big Win for Tech CEOs, Update

  1. I thought the Intels mostly pay level 2 wages – so upping that to level 3 should affect them.

    Also, assuming that this extends forever, the foreign students you mention that switch to H-1B status will essentially be stuck in the US, unable to travel home as they would need a new H-1B visa to return, which the consulates abroad won’t issue due to the ban. That constraint would reduce the attractiveness of the program quite a bit, I think. Only those who could get a Green Card in a reasonable amount of time would choose to go this route.

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    • Yes, Level 3 would help. Re returning home, the executive order exempts those who already hold a valid visa. But as I said, the real issue is a looming Staple a Green Card bill, motivated by those same considerations.

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      • Have you done any calculations to determine whether the bid system will be less damaging to the Intels than an overall level 3 wage floor? That seems to be the case to me. If that is indeed the case, most likely we will see the bid system instead of the wage floor, as Intel lobbying is very strong (it saved OPT, apparently), and Cuccinelli and the various H-1B reform groups seem to be far more concerned about the Infosyses…

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        • Here is a back-of-the-envelope analysis, not directly answering your question but related. I’ll use numbers from Daniel Costa’s May 4 EPI paper. It doesn’t address such questions, but the numbers, together with some assumptions (comments below), make for interesting results.

          1. 250,000 applicants for 85,000 slots.

          2. Half are for the Infosyses, so the new ban would mean 125,000 applicants for 85,000 slots.

          3. 40% are at Levels 3 and 4, i.e. 50,000 applicants for 85,000 slots.

          4. 60% at Levels 1 and 2, so 75,000 of them.

          5. If visas are awarded in order of salary priority, the Level 3 and 4 applicants all get visas, leaving 35,000 slots.

          6. So under a salary-priority system, we will still have 35,000 of the 75,000 Level 1 and 2 applicants securing visas. Pretty remarkable!

          As noted, there are various assumptions in the above computations, e.g. uniformity of various percentages across the Intels/Infosyses divide. Most important, it assumes no bidding, especially no “auction”-style bidding, where applicants hear the bids of others and then bid higher. With a “silent” action, less bidding. Unclear results in any case.

          It does suggest, though, that prioritizing by salary is not enough, and a Level 3 floor (why not Level 4?) would be needed as well.

          Note too, though, that even a bidding system would presumably use percentiles rather than dollars, in order to equalize geographic variations. If they also equalize variation by occupation, we’re back to Square One, as employers scurry to invent new low-level job titles, like the Junior Software Engineer absurdity that HP invented a few years ago.

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          • The 35,000 you mention will mostly be level 2, not level 1.

            A true auction would be a logistical nightmare, requiring multiple rounds of selection, therefore unlikely to happen.

            Assume that the salary priority system for the entire set of 85,000 takes into account all regions of the country and all professions and goes by dollars. It’s therefore very possible that level 2 wages for tech fields in expensive cities (where the Big Tech Intels tend to be located) will outdo level 3 (or maybe even level 4) wages in other cities, especially for less “hot” fields. So, the big Intels will actually love this salary priority system. OTOH, American workers in less expensive areas and less “hot” fields will also be benefited, reducing their political pressure given that the Infosyses are also gone.

            If the priority system were instead set by percentiles based on location and/or profession instead of the absolute magnitude of the salaries, both the big and the small Intels would easily game it by inventing BS job titles as you pointed out, so they win again, although not by as much as with the previous option. Also, American workers in less expensive areas and fields will not see much benefit.

            Therefore I find the first option I mention more likely.

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          • ** inventing BS job titles and/or moving workers around. The H-1Bs will still be indentured, so an expensive city level 2 H-1B in a less expensive city is still preferable to an American.

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          • Universities and non-profits, of course, will be unaffected by a salary priority system. They will also fight a wage level floor tooth and nail along with the Intels, and at the very least, will try to get themselves exempted from it.

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          • Oh, by the way, the wage level floors can also be defeated by inventing BS job titles and moving workers around. Therefore, the solution that actually benefits Americans the most seems to be using the descending order of the dollar amounts of salaries across all cities and fields.

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          • Just to be clear: In the above calculation, we’d have 35,000 out of 85,000 cheaper workers even with a bidding systems AND a ban on the Infosyses.

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  2. Thank you for bringing up the L visass. As you may know, I know it very well. I located Tata staffing document on a Siemens ICN server in Lake Mary, FL. Just about all of our ‘trainees’ were L-1b visa holders.

    As I understand, under L-1b visas there are no salary rules or quantity limits.

    I realize people here are not fans of President Trump, but IMO he has done more for American workers than any other president in my lifetime.

    After we broke the news on L-1b abuse, Obama loosened the rules on L-1b visas; http://www.washingtonexaminer.com/did-you-know-obama-just-took-new-executive-action-on-immigration/article/2562053

    my 2004 house testimony http://commdocs.house.gov/committees/intlrel/hfa91679.000/hfa91679_0.HTM#104

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    • I had heared that the consulates in India already denied the vast majority (80-90%) of L-1B visas for the workers of the Infosyses (which will now be 100%, good), but not for their L-1A managers, who then apply for EB-1C green cards and squeeze out the truly talented EB-1A/B folks from the EB-1 channel. This abuse of L-1A also needs to end, and India is also not the only country responsible for this. While L-1A is currently blocked by this order, I’m not optimistic that the bar will continue, as many high-level executives of companies in developed countries such as the EU use it to set up operations in the US. At the very least, L-1A should remain banned for Indian nationals forever.

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  3. While we’re at this, can we also have a discussion about the incessant demands of American Managers to have lower cost of IT personnel. Note following points –

    1. While I was working for some IT projects, the American contractors used to charge $250 hourly rate and were duly replaced by Indians at a much lower rates.

    2. In most of America, IT/software occupations are considered blue collar and people in these occupations are looked down upon. The suit-wearing executives / managers want to reduce the cost of this workforce anyhow they can. And the people in these occupations aspire to wear the suits. It should also be noted that in several IT departments across America, several American IT managers only have Indian contractors as their reports.

    3. The Intels are actually the worst, I’ve said this in the past. They will go to any length to reduce labor costs, note that “global supply chain” is their invention and should be damned.

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    • Your Point 2 is very important. As I’ve said before about Obama but really almost any politician, Obama was a liberal arts student in school. In my experience, this segment of society does indeed look down on techies/engineers. I believe that is why, for instance, the IT implementation of Obamacare was initially a disaster — the Obama people just viewed it as “plumbing.” (Of course, another reason was their outsourcing the project to an H-1B firm.)

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  4. A new American company called “Crossover for Work” with roots in the SV is taking the phenomenon to the next level by helping American customers hire a programmer based anywhere in the world. Instead of your own and several of your comrades’ keyboard war here, I hope you dismantle, revolt and take down some of your own companies that are hijacked by a few execs are turned into a profiteering machines rather than innovation engines.

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  5. A new American company called “Crossover for Work” with roots in the SV is taking the phenomenon to the next level by helping American customers hire a programmer based anywhere in the world. Instead of your own and several of your comrades’ keyboard war here, I hope you dismantle, revolt and take down some of your own companies that are hijacked by a few execs and turned into a profiteering machines rather than innovation engines for social good and building America as was the case after WW2.

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    • H4 and H-1B *visas* are both banned. All aliens currently outside the country cannot obtain those documents to enter the country.

      H4 and H-1B *statuses* are not banned. Aliens inside the country can still acquire these statuses, which is most unfortunate.

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  6. And the issue goes beyond the elite club of the Ackamans, Icahns or Soros of America. In 1990, there were only about 1 trillion US$ in circulation. Today it’s 50 trillion. It was America’s plan to be the Superpower by using its currency. The US$ is reserve currency of the world and only people who are doing well anywhere are the ones who have access to US$. Maybe you should revolt against this as well, and tell your own Government if they want to do good which they think they are doing by setting up factory and call center, instead give people skills and technology.

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  7. What do you mean by “free up visas” if the visa program itself is suspended? This would mean no H-1Bs are given until the freeze is lifted.

    And if Level 3 and 4 are eliminated, then the remaining 35,000 aren’t going to get H-1Bs at those levels, meaning all 85K visas are given at Levels 1 and 2.

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