H-1B Facts

Reader, Paul Nelson of Annapolis wrote in the July 30, 2014 edition of The Baltimore Sun that he is shocked that more than half of H-1B visas go to foreign outsourcing firms annually.  Nelson owns a US based technology firm and feels that US employer should have preference on H-1B approvals.

Here are some other H-1B facts:

  • H-1B “Dependent” firms are allowed to file blanket Labor Condition Application (LCA) for an unlimited amount un-named H-1B candidates on a single application – so much for the Department of Labor screening for the Brightest and Best.  (Source)
  • The H-1B program can be oversubscribed, causing a lottery to take place.  If the US employer does not “win” the H-1B visa lottery, the foreign outsourcer can provide the candidate at a higher premium.
  • Unlike other visa programs, the H-1B filing fees are refunded; there is no financial penalty for “gaming” the system with unreasonable amounts of applications.  (Source)
  • The foreign outsourcing firms predominately employ candidates with simple undergraduate degrees; US employers use a much higher percentage of candidates with postgraduate degrees.  Thus, the offshore outsourcing firms are displacing advanced degreed candidates, most often educated in the US, with candidates who only possess a bachelor’s degree. (Source)
  • The H-1B is a dual-intent visa, which can lead to permanent residency.  Presumably, candidates with a bachelor’s degree are displacing those with an advanced degree. (Source)
  • The OPT and CPT (for STEM degrees) are work authorization programs for foreign students, limited to 12 and 29 months respectively.  While these students are working on a student visa, they are exempt from Social Security and Medicare contributions, placing US candidates at a huge cost disadvantage.  (Source)
  • The H-1B (six year temporary visa) has two 3 year terms, but under rules know as AC21, the H-1B can be extended indefinitely by employers for the cost of applying for permanent residency.  (Source)
  • The offshore outsourcing firms have access to the unlimited Intracompany L-1 visa, but the requirement of one year overseas employment for admissibility appears to be too burdensome for them. (Source)
 So yes Mr. Nelson, US based firms are not only losing talent to foreign outsourcing firm, the are losing access to US educated, advanced degreed candidates because over 50% of all 136,890 H-1B initial employment approvals in FY 2012 were for ordinary bachelors degree level or below. (Source)