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Simon Hankinson & Brent Orrell: Should the U.S. Rethink the H-1B Visa Program?
00:28:26
On this episode of Future of Freedom, host Scot Bertram is joined by two guests with different viewpoints about the country’s H-1B visa program. First on the show is Simon Hankinson, Senior Research Fellow in the Border Security and Immigration Center at the Heritage Foundation. Later, we hear from Brent Orrell, senior fellow at the American Enterprise Institute. You can find Simon on X @WatchfulWaiter1 and AEI at @AEI.
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- [00:09]
A
Welcome to FUTURE of freedom. I'm your host, Scott Bertram. Future of Freedom is a production of Franklin News Foundation. To support this show, go to franklinnews.org donate. We bring you interviews today from different sides of the debate over the H1B visa program here in the US in a little bit, we'll be joined by Brent Orell, senior fellow at the American Enterprise Institute. AEI.org first we talk to Simon Hankinsing. He is a senior research fellow in the Border Security and Immigration center at the Heritage Foundation. Simon, thanks so much for joining us.
- [00:50]
B
Good morning. Thanks for having me.
- [00:52]
A
Talking today about the H1B visa program and some changes the Trump administration has enacted there. For listeners who might not know, set the table for us, please. What exactly is the H1B visa program and originally, what was it designed to do?
- [01:09]
B
Well, the program started in 1990. There was an older version that was replaced by what we now call the H1B in the early 1990s. And the idea was that it would supply a fairly limited number of highly skilled specialty workers at a time when there was a, a need for it, a bit of a tech boom, and a supposed lack of qualified Americans to take those jobs. And over the years, it has expanded, I think, far beyond what it was intended to be and largely become an immigrant visa program.
- [01:43]
A
Yeah. You write in this piece@Heritage.org that the program has gone off the rails. And we can get in more detail. But briefly, what do you see that's changed over the past few decades that has taken it away from that original purpose?
- [01:56]
B
The main thing is that it is in the name. It is a temporary non immigrant visa. The idea was a worker would come for three years, work and then return to their home country. And what has happened is over the years, they've chiseled away at that so that the $65,000 sorry, 65,000 person cap originally in the bill has been overwhelmed by adding spouses who are on H4 visas of family members, adding 20,000 for graduates with STEM degrees. In brief, it's a little more complicated. And then exempting H1BS for certain nonprofits and other organizations. And then in addition, when people convert from an H1B to permanent residency, which I guess was contemplated when the law was passed but was not the purpose of it, they kind of backdoored ways to allow people to remain, particularly from India and a few other countries with very long backlogs due to the per country caps. So the main changes are, one, the numbers have blown out of proportion and two, it's become a permanent visa. And the effect has been that it has replaced American workers with cheap for foreign labor, which I'm sure was not the purpose of the bill in the first place or the provision.
- [03:20]
A
You write in the piece that many of the top employers of H1B workers are foreign based outsourcers who hire thousands of low wage H1BS then farm them out to US industry. How does that work in practice?
- [03:35]
B
Well, let's just say so out of the top 10 petitioning companies for H1BS, I'm looking here at at least four of them are these outsourcing companies. So to take one, you've got Cognizant Consultancy Services, Infosys, HCL American, et cetera, which are, you know, companies that provide a range of services. But one of them is outsourcing. So they can either say to an American company, hey, you know, you've got a phone center or tech support center or whatever in Chicago or in Miami, we'll take it to India or Manila and we'll do it for less money. That's one type of outsourcing. But the other is instead of, let's say Google directly petitioning for an H1B which they do, there will be a middleman company which will petition for an H1B and then when they get to America, farm them out to go work at Google. So they take a cut out of Google's pay and also the individual's salary of course, to be a middleman like a labor broker.
- [04:37]
A
The big name companies meta Apple tech companies, a lot of them will say we just can't find enough qualified American workers to fill these roles. That's why we need programs like this. Do you see any evidence that that is the case? Are there not enough American workers to fill these jobs?
- [04:56]
B
No, I think that's just what they've been saying because fundamentally they're companies and their job is to make money and they want to do that by hiring the cheapest possible labor they can get their hands on. So to them it doesn't really matter where that labor comes from. If you look at the data in the last few decades, 71% of the jobs in Silicon Valley, which is obviously the tech center of the United States, have gone to foreign workers. And at the same time, 74%, almost three out of four Americans who have STEM degrees that science, technology, engineering and math can't get a job or haven't taken a job in a STEM field. So they're working in all kinds of different things, maybe productively, but they're not doing STEM work. So, no, I think that's a red herring. I think that they've been saying that since the early 90s and at the same time encouraging young people to go and study stem. Study coding. We've got girls who code, minorities who code. Everyone's being shoved into this supposed pipeline to prosperity, but when they graduate, they're not finding jobs. So at the moment we have this weird situation where you have big companies like Amazon and Meta and Google laying off American citizens, not hiring recent graduates, and petitioning for foreign workers all at the same time.
- [06:13]
A
Those same companies, I think Meta has been fined $4.75 million and Apple's been fined $25 million for discrimination. This new executive order by President Trump puts a $100,000 fee on new petitions for H1B temporary workers. If they're already paying millions of dollars in fines, will $100,000 be enough to dissuade them from continuing down this path?
- [06:39]
B
No, that's the short answer. I mean, let's put it in perspective, right? I was just looking at one big Indian outsourcer yesterday. I think it was Infosys, but don't quote me on that. And they had quarterly profits of $5 billion and they got fined, I think, a few years ago. There are lots of companies that have been fined for discriminating against American workers. But look, if you find me 25 cents for speeding, it's not going to make much difference because I can afford it. And finding these companies tens of million dollars is like finding me a quarter or even less because they have such huge, huge profits. As for the 100,000, it sounds very impressive in the beginning and I'm not against it. I think it's a good start, but it's not going to be enough. There's been some good research to show that if you average that 100,000 out, it's a one off fee over the lifetime of an H1B. Let's say they do three years and then extend for three years, and then they keep extending and extending, extending until they can get their green card, which could be decades. In some cases, $100,000 disappears pretty quickly when you average it out. In addition, that only applies to people applying overseas. So it doesn't apply to people who are already here on a student visa or some other category visa. And I think what we're going to see is companies figuring out that workaround and trying to exploit it to do what they've always done.
- [07:55]
A
You acknowledge in the piece There are some H1B holders that are genuinely high talent individuals that we probably want here in the United States. What would a fair system look like that would allow that to occur while eliminating the problems?
- [08:12]
B
That's a good question. Well, one thing they could do is use the O1, that's an alien of outstanding ability visa, which was the sort of Einstein visa that also has been exploited to bring in questionable supermodels and entertainers and so on. But that would be one category and another would be to significantly raise the minimum salary of the H1B which is currently something like $60,000, which is set again 30 years ago. It hasn't risen with inflation. That's not what it costs to hire someone in a tech field. Right now in California you can't live on $60,000 a year given the housing prices and all the taxes. They significantly raised the minimum salary and then maybe made it competitive so that companies had to bid on the top numbers that would dissuade them from replacing American workers. Because there needs to be a channel. I don't think anybody objects to having the Sergey Brins and Elon Musk's and Pierre Omidyars. I mean politically they might object, but in terms of their brilliance and what they contribute to the economy, I don't think people object to that. But what they object to is taking an American who say 50 years old, been working hard, feeding his family or her family and has skills and is getting paid a decent wage saying hey, sorry, you gotta train your replacement because we're bringing in a cheap foreign worker to save money, good luck finding a job. And everybody knows right now the market is really hard. And if you are a 50 year old skilled worker with a decent income, you're going to have a really tough time changing jobs.
- [09:43]
A
You point out in the piece 6.1% of recent college graduates with computer science majors are unemployed. Is that mostly about this visa competition and H1B visas, or are there also other deeper issues inside the tech labor market we should be aware of?
- [10:01]
B
Well, if I'm not mistaken, I think that wasn't just people with tech degrees. I think that was the overall figure for college graduates. Recent college graduates was like pushing 7%. Whereas for people in the market a lot longer, older people, it was half of that. That's the average. And I'm not an expert in the technology field per se. I do visas, I do immigration. But I would say right now, based on people, young people I know looking for jobs, that the market is unusually tough. Something like half of kids who graduated in the last year have not found a job. And if you look at the STEM graduates who have found jobs, a lot of them are in non STEM fields, whether it's Starbucks or teaching or whatever they can get. We've got a weird economy right now. I'm not going to describe it in terms of whether it's a recession or it's growing or things are good or bad, but it's definitely weird. I think artificial intelligence has thrown up a giant question mark that no one really understands. Everyone seems to think that artificial intelligence is going to replace an awful lot of pretty simple work, white collar work, largely office work, no one really knows how and how fast. So everybody's plowing billions of dollars into it. And I think companies are reluctant to hire until they can figure out whether they need to or not.
- [11:19]
A
Should we be concerned that tightening up H1B visa requirements might protect domestic jobs in the short term, but perhaps weaken innovation over time? If the process seems too onerous, perhaps some of those really high talented individuals won't make the effort to even attempt to come to the U.S. i wouldn't.
- [11:42]
B
Be concerned about that. That is the argument you're going to hear from people who are basically open borders, who want there to be no limits on foreign labor. They're going to say that you're going to screen out the next genius, the next Einstein, the next guy who's going to cure cancer or whatever. I mean, I guess that's not impossible. Sure. But what this program largely does is bring in average workers. Most of the people coming in on H1BS, I think like 80% of them are actually paid below the average wage in their field. Microsoft was one company where they studied and found that they were paying 82%, I think, of their H1B hires lower than the prevailing wage. Well, why are they going to pay them lower than the prevailing wage if they're that great? So, yeah, amongst the millions of H1B workers, there might be a few gems that get screened out. But by and large, tightening up on H1BS will protect American workers. And there already exist enough channels to bring in the really valuable people, the geniuses, into this country to help with our innovation and our economy.
- [12:44]
A
Earlier this year, Senator Grassley, a Republican, and Senator Durbin, a Democrat, both wrote to the CEOs of major tech companies, companies asking for information about the hiring of H1B. So there does seem to be some bipartisan agreement that there's something wrong, that there are problems in the process. Why is it so tough to find reform when both sides at least in part, seem to agree there is something to correct.
- [13:07]
B
Well, you know, look to the money, right? There are interest groups that have a lot of stake in this, whether it's employers, ethnic lobbies, politicians with local concerns. H1B has some lobbying muscle behind it. What I'm seeing that's new is a sort of public, a growing public awareness about just how unfair the system is. And you know, we probably don't have time to talk about this, but the process where you convert from an H1B to a legal permanent residency, it's called the perm process, is the shorthand is just rife with fraud and nepotism. And you have companies that, that outright say that they're trying not to hire American citizens. They'll put ads in Sunday newspapers that they know no one reads or subscribes to. They will sometimes accidentally, explicitly say this job is only for H1BS, which is illegal. And we're now seeing actually the Department of Justice Civil Rights Division, which is very encouraging, take some of these complaints seriously that American workers have been going on about for years and they're starting to investigate companies. And I think we're going to see some prosecutions and some progress on that front.
- [14:17]
A
Simon Hankinson is a senior research fellow in Border Security and Immigration center at the Heritage Foundation. That's Heritage.org you can read his recent piece also@Heritage.org as well. Simon, thanks so much for joining us here on Future of Freedom.
- [14:31]
B
Been my pleasure. Thank you.
- [14:33]
A
Now to hear another side of the argument about the H1B visa program, we talk with Brent Orell, senior fellow at the American Enterprise Institute, aei.org for more. Brent, thanks so much for joining us.
- [14:46]
C
Oh, well, it's my honor. Thanks for having me.
- [14:49]
A
Talking today about the H1B visa program and recent adjustments, changes by the Trump administration, you wrote a piece over at AEI called an own goal H1B policy. In it, you describe a growing shortfall in advanced STEM credentials. To the best you can tell, what's driving that shortage? Education, demographics, policy, something else. Why are we short?
- [15:16]
C
You know, that's a really good question. I think it's both a supply and a demand issue. We have an enormous and vibrant highly productive high tech sector across all domains in the United States. And it's anything that large is going to create some trouble in terms of filling all the available jobs. In fact, I would argue that there is no way to fill the gap entirely. It's because if you, the more people you educate or bring in you, you're Just the demand, I think, would tend to grow. So it's not a question of can we fill it or not. It's a question of what are we leaving on the table, both with our own population and with people who want to come here as immigrants.
- [16:13]
A
There is an argument, critics of importing some of these workers question whether or not there really is a stem shortage or of companies are using visas in the program to sort of hold down wages overall, pay people less than they might have to pay American workers. Any truth to that? Should we be looking at that angle?
- [16:35]
C
You know, as with most economic questions, you can find data to support almost any view. My sense of this is that there's no such thing as having too many people with advanced stem freeze. I mean, they're just, they, they, they contribute a disproportionately high amount of our total economic activity. And, you know, and we can't. It's not good for the economy in the long run for us to be turning people away who, who have these kind of degrees. Clearly we're not, we don't have enough Americans, you know, who are interested in pursuing very, very difficult degrees. I mean, this, you know, there's only so many people who have the basic skills that they need and educational background and frankly, intelligence that they need in order to fill these, what are mainly research jobs, research and development type jobs. So I don't think that the, the evidence is all that compelling that this is impacting wages. The talent is so scarce globally that I don't think anybody's getting away with anything.
- [18:00]
A
The new surcharge the Trump administration has placed on H1B visas, $100,000. You suggest in the piece at AEI that this could shift competition in favor of large firms like Nvidia or Google over small firms or over startups. How does that work in pract?
- [18:19]
C
Well, $100,000 to you and to me is a lot of money. $100,000 for Nvidia or Google or Meta is like the money they lose in their couch cushions. So they're going to be able, they'll be able to pay the freight to get the people that they want, people that they need to do the jobs. So it's really in the area of startups, I think, that are most affected by this and people who are building new technology outside of the big, what do they call them, Magnificent seven companies who have to really scrape and scramble to make their businesses go. They don't have $100,000 laying around that they can necessarily, that they can throw at getting an H1B approval. So that just means that these large companies who already have tremendous advantages in the market get another advantage on top.
- [19:30]
A
You mentioned in the piece talent could flow to Canada, to Europe, to Asia. Are the other strengths of the United States and its economy and its ability for innovation, are they not enough to overcome something like this?
- [19:47]
C
It's a tricky question, right, because it's arguable right now that America is less open to immigrants of all kinds than they've been in, than we've been in long time, many years. It's not that it's unprecedented in her history, but it's unusual. And so I think that that has the effect of reducing the attractiveness. You know, money, money's great and, and we'll pay you to come here and pay you, you know, a good wage. But being welcome is also important. And I think that particularly say a nation like Canada, right toward north, advanced economy and very welcoming to outsiders, to newcomers who are coming to the country not to live off of, off of public systems, but to contribute to the growth and dynamism of the country. I think that goes for many European countries as well. I don't know enough about Asia to comment on that, but we, I think we have given up. One of our, one of our main advantages for attracting high tech workforce is freedom, freedom to create and freedom to be integrated into our society. So I definitely think it's not, it's not just money. It's not that draws people to the United States, never has been. It's also about the, you know, the stability and the rights and the, and the freedom that we enjoy.
- [21:39]
A
Is there a political dimension here in that tech leaders don't want to appear to oppose President Trump's agenda? Is there a, is there, is there more of a political weight being placed on this discussion than a true economic weight being placed on this discussion?
- [21:57]
C
Yeah, I mean, on the one hand, I think they can see our tech leaders can see the market advantage that we've already talked about to reducing or making H1B visas more expensive or reducing them. On the other hand, they also know that the kind of talent that we are leaving on the table is extremely valuable to our companies, to American companies. And on balance, I think that that probably works out to being pro immigration and I think a pro H1B visa, I should say, and I think you could read that in the comments of people like Sam Altman and head of Nvidia that I quoted both of them in the article and they were trying to say two diametrically opposed things at the same time, which is we support tougher immigration laws and we support H1B visas for the tech industry. And they're trying to say it in a way that they didn't, didn't incur the wrath of the administration for sounding like they opposed his, his immigration, President Trump's immigration policy. But in their heart of hearts, I suspect they know that on balance is a huge advantage for them and their businesses and a major loss in terms of brain power for the United States.
- [23:45]
A
Is this the kind of talent that could be cultivated here in the US Meaning could companies simply spend more, invest more in training Americans rather than relying on foreign labor through the H1B visa program?
- [24:01]
C
Yeah, I mean, it goes back to the question that you asked at the beginning about whether, you know, we have the internal resource effectively. Demand is unlimited, I think, and supply for whatever reason is, is limited among Americans, you know, American citizens. And I think it goes to just how difficult this kind of work is and how rare it is to find the, the skill sets that are necessary to do it. So certainly, you know, but if these companies, you know, financed independently, financed more degree programs and there, there would probably be takers, but I'm not sure that there's that many people that have the skills, abilities and interest to, to do this work just because it is so high level, it is so difficult.
- [25:11]
A
You mentioned earlier that for bigger companies, Nvidia, Google, others, this $100,000 likely would not prevent them from, from doing this anyway. They've got that sort of money available. When we talk about the raw numbers, if larger companies continue to operate essentially as they have previously, what's kind of that raw number that would be affected with smaller companies, with startups?
- [25:39]
C
Yeah, I don't have any. One of the challenges here is that the H1B data is not very granular. It doesn't really tell us about the size of the companies that are applying.
- [25:54]
B
But.
- [25:56]
C
Just thinking about it in terms of who's got the resources to absorb this cost, I think it's pretty clear that the larger companies have a significant advantage over the smaller ones.
- [26:09]
A
And then finally you mentioned at the very end the policy seems likely to exacerbate the US talent deficit. What would be the fallout, the detriment of some of these innovations, these workers operating outside the US not, not doing it here in America?
- [26:27]
C
Yeah, I mean, it could be any number of things. We could be sending talent to foreign adversaries. We could be. I believe I read recently that China was trying to make it easier for non citizens to these very talented citizens who moved to China could go to our adversaries, could go to our friends in Europe and elsewhere in the world. And that's just we're going to be competing, we're always going to be competing with other countries on this. We have a, we do have a lead. We are, we are the technology giant in terms of especially in terms of basic research. But that's not like a birth rate. That is something that the US has to continually cultivate. So we're putting that lead. We're, we're narrowing the margin of our own lead. That's what I meant by the own goal. We're marrying a narrowing margin of our own need through policies that discourage immigration for H1B workers.
- [27:40]
A
Brent rel is senior fellow with the American Enterprise institute. More@aei.org Brent, thanks so much for joining us here today on Future of Freedom. We thank both of our guests for joining us, Simon Hankinson, senior research fellow in the Border Security and Immigration center at the Heritage foundation, heritage.org and Brent Orell, senior fellow at the American Enterprise Institute. AEI.org to find additional episodes of Future of Freedom, go to Apple Podcasts, Spotify or wherever you get your audio. Thank you for listening to Future of Freedom, a production of Franklin News Foundation.