Tech's beloved H-1B visa is flawed. Here's why.

H-1B visas by the numbers
H-1B visas by the numbers

The H-1B visa is the most popular pathway for foreigners to work in the United States.

It is also widely believed that the H-1B program is abused.

Among the most common complaints: Visas aren't just given to the most highly trained workers. Companies use H-1B visas to get cheap foreign labor. Startups lose out to big outsourcing firms, which gobble up a disproportionate share of the visas.

The debate over the program has never been so important or timely.

President Trump has said he wants to crack down on misuse of work visas. A draft executive order that started circulating in January would alter numerous visa programs, including the H-1B.

In addition, several legislative efforts in Congress, from Republicans and Democrats, aim to change how the program works.

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There are 85,000 H-1B visas available annually, and in recent years, demand for them has far exceeded the supply. As a result, the visas are doled out by a lottery system.

All kinds of companies, from health care to media, use H-1B visas to help fill their workforces. But tech is the sector most commonly associated with H-1Bs. Tech firms -- big and small -- say they need the H-1B program to hire trained talent that it can't find at home.

The facts surrounding H-1Bs are shaded in gray. Here is what you need to know about three major issues in the debate.

Complaint #1: Visas aren't given to only the most highly trained workers

H-1Bs are frequently touted as a way for the best-trained workers to come to America.

In reality, the vast majority of H-1B holders have only bachelor's degrees. At the three companies with the most H-1B employees (Tata Consultancy, Cognizant Technology and Infosys), 80% of visa holders just have bachelor's degrees, according to Ronil Hira, an associate professor at Howard University who studies the H-1B program and outsourcing industry.

Critics say it's unlikely that people with bachelor's degrees are necessary to fill the so-called skills gap and that these people are just taking jobs from Americans.

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Of the 85,000 visas handed out annually, 20,000 are reserved for people with advanced degrees. But there's no prioritization within the lottery system. That means many of the most highly educated workers could be turned away.

"This is the heart of the issue that legislators have begun to tackle: how to prioritize who should get the H-1B visa and also to make sure Americans are not displaced by workers brought in by the visa program," said Neil Ruiz, executive director of the Center for Law, Economics and Finance at George Washington University.

Complaint #2: H-1Bs allow employers to import cheap labor

Critics fear that H-1Bs pave the way for cheap foreign labor. But there are some safeguards that should theoretically prevent that from happening. Employers are required to pay H-1B visa holders, at a minimum, a job's prevailing wage, which varies by job description and location.

The first step in the process is for employers is to get approval for the salary they intend to pay, and 80% of these approvals are for entry-level jobs or slightly above, according to Hira.

Such wages are "substantially less than the average wage an American worker earns in those occupations in those locations," said Hira. (Not all of these approvals become full-fledged H-1B applications.)

h1-B visa united states

As part of a comprehensive visa reform effort, Representative Zoe Lofgren, a California Democrat who represents Silicon Valley, has proposed changing the wage requirements for H-1B petitioners. Her bill would set the bar much higher to squeeze out employers who don't pay enough.

A group of professors is studying how H-1B holders affect the economy, using data from the dot-com bubble between 1994 and 2001. In a working paper, they found that wages for U.S. computer scientists were lower in 2001 as a result of the influx of H-1B visa holders.

Complaint #3: Startups get the short end of the stick

The existing H-1B program doesn't exactly work in favor of entrepreneurs with fledgling companies.

Some startups don't even bother applying on behalf of prospective employees because the process is so expensive and there's no guarantee that they'll be chosen in the lottery. It's impossible to compete with the big tech companies and offshoring firms that often submit a huge amount of applications, entrepreneurs argue.

Immigrants who want to start companies also have a hard time with the current system.

More than 50% of U.S. "unicorns," or privately held companies worth $1 billion or more, have at least one immigrant founder, according to the National Foundation for American Policy. And those companies have each created roughly 760 American jobs.

But it's difficult to launch a company while in America on an H-1B, because the program requires foreigners to show that they can be hired, fired, paid and controlled by an employer -- essentially, they can't be at the helm of a company.

The U.S. doesn't have a special visa for immigrants who start companies. As a result, entrepreneurs may set up shop in countries that do, such as Canada and France. Many advocates in Silicon Valley have for years been pushing Congress to establish a startup visa in the U.S.

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