Common Sense H-1B Reform

Over the last couple of years, the trend in the media has been to lament that we train foreign students in "advanced" STEM degrees here, and then send them home to compete against us, due to a shortage of H-1B visas. The fact that H-1B pundits are careful to use the word "advanced" instead of postgraduate has not escaped me.  In addition to the H-1B educational requirement being set too low, another source of H-1B lobbyist whining is the highly publicized H-1B lottery, which is likely caused by foreign outsourcing firms who suffer no financial penalty when attempting to game the system.

Adjust the H-1B educational eligibility requirement, not the yearly cap.

The logical thing to do is to raise the educational requirement for H-1B to a postgraduate degree.  According to the FY 2012, H-1B data, eliminating bachelors degree eligibility would free up 50% of new H-1B visas.

Data presented by Dr. Ron Hira, shows that legitimate US employers draw heavily from the postgraduate population, while offshore outsourcing firms favor undergraduate degrees.  Additionally, the offshore outsourcing firms have the unlimited Intra-company L-1 visa available to them, once the candidate has one year of experience with the firm.

By raising the H-1B educational requirement, citizen and permanent resident candidates would have a better chance at bachelors degree and associate degree level positions, which are the targeted positions to be moved offshore by the offshore outsourcing firms.  Restated, 50% more H-1B visas would be available to legitimate US employers.

According to the Institute of International Education, there were 311,204 foreign students enrolled in postgraduate programs in the United States in 2012-13.  This might seem like a large number until we factor in the Doctoral programs are four years, and masters and professional degree probably average two years. So the number likely to graduate in 2013 was roughly 126,157 for all declared and undeclared majors (not just STEM). Additionally, some students may not want to stay in the US and other might not graduate, but the 126,157 number is still less than the total number of H-1B initial employment approvals in FY 2012 (136,890),  

Work experience authorizations 

The IIE data also discloses that there were 94,919 international students gaining work experience on the Optional Practical Training (OPT), an unlimited cap, 12 month work permit with a 17 month extension available for STEM graduates.  While working on student visas, these employees are exempt from Social Security and Medicare tax, putting entry level citizens and permanent residents at a huge financial  disadvantage.

H-1B lottery and oversubscription

A second point of contention is the H-1B lottery, that is triggered when the number of applications exceed the 85,000 visa cap.  As reported by the Center for Immigration Studies, this phenomena is primarily caused by companies attempting to game the system.  Due to the fact that H-1B application fees are refunded to the applicant employer (unlike most other visa fees) there is no financial penalty for oversubscribing the H-1B category.

Gaming the number of applications

H-1B dependent employers, employers with a high percentage of H-1B staff, are eligible for something called a multi-slot  Labor Condition Application (LCA).  The multi-slot LCA allows, primarily outsourcing, firms to apply for an unlimited amount of H-1B visa on a single application -- without naming the candidate or providing credential for USCIS/DOL review.

The ability to apply for hundreds of H-1B visas, on a single application, with the knowledge that application fees will be refunded encourages these companies to oversubscribe the visa category, hoping that their consultant (possibly the same candidate) will be placed at the firms who could not attain the visa at a higher premium.  (I.e., if Microsoft doesn't win the lottery on a single LCA, the outsourcing firm, with the un-named H-1B LCAs, can provide the candidate as a consultant.)

Employment based (EB-3) permanent immigration oversubscription

Due to the dual-intent rules available in both the H-1B and L-1 temporary visas, employers can sponsor these employees for permanent residence.  Published figures estimate that there is a backlog of 500,000 workers in the EB-3 (bachelors degree level) employment based permanent residency program.  Due to country of origin limits, these immigrants are primarily from China and India and are on yearly AC21 extensions, taking them well beyond the 5 and 6 year limits of the L-1 and H-1B visas.

As such, bachelor degree permanent residency applicants from non-backlogged countries will gain permanent residency ahead of those on AC21 extension.  Raising the educational requirement for H-1B will reduce the intake of bachelors degree permanent residency applicants and vacant slots can be recovered and distributed to address the AC21 backlog.

The Immigrant Sheetrocker Effect

The street-level consequence of a 12.5% foreign-labor incursion into an unsophisticated labor market causes a 23.4% income loss for natives.
 
Hanging sheetrock (drywall) appears to be a job that anybody could do, until you actually try it.  The weight of 5/8 inch sheetrock is 2.3 lbs per square foot, or 110.4 lbs per 12 fo0t sheet.  Done properly, the ceiling is first, most rooms require full sheets, each sheet is balanced on your head while you and your partner struggle to get a few nails (requires both hands) into the sheet.  You can nail the sheet if the measurements are correct and the sheet did not get damaged in the process, in which case you start with a new sheet.  Many homeowners will try to save money doing their own sheetrock, but when they find out how proficient professional sheetrock crews are, and how little money they saved trying to do it themselves, most people never want to hang a piece of sheetrock again.

Sheetrock installers are very proficient and  there are hundreds of tricks of the trade.  “Rocking” is almost never an hourly job because the work is so strenuous, your arms are above you head much of the time, which is seriously painful until you get used to it.  Sheet-rockers take jobs on a per-foot basis to stay motivated and profit from their proficiency. There is generally a set minimum per foot price that is upheld throughout the regional market to ensure that this proficiency does not become a liability to himself and his vocation. 

There is an economic equilibrium that most construction markets will fall into, a certain amount of builders will require a certain amount of completions per year, roughly the same number of homeowners will do additions;  therefore, the demand for sheetrock hanging stays relatively static, unless the supply of sheet-rockers increases.  An increase in labor supply can be a hardship, but if the market rate is upheld, everyone adjusts their lifestyle accordingly and there is no hard feelings – it’s just a fact of life.

A problem occurs when there is an incursion of foreign-labor, generally illegal labor and therefore indentured, generally having complete disregard for the per-foot minimum status quo. Having no ties to the community, their only interest is improving life for themselves, bringing in more relatives to the US and “buying” into the market with lower per-foot prices.

Updated: Employment vs. population growth by decade

5/12/2013

A snapshot of the employment situation  for our children and immigrants.

Back in June of 2010, we found that only 1 job new job for each 20 new persons of working age were created in the decade 2000 to 2010.  Effectively a 95% jobless rate among this segment of the population.

This post revisits the “Employment vs. Population Growth” concept. Lower immigration rates and better employment growth since 2010 has only adjusted the working age jobless rate to 79.5% for the new century.

A funny thing happened after the creation of the World Wide Web, being located in the United States is no longer necessary to participate in the global economy.

In the late 1990s corporations found that they could move production to lower cost economies. Corporations, colleges and immigration attorneys formed unions under the guise of “trade associations” and presented numerous defective economic studies on the benefit of lower cost goods and the virtue of immigrant entrepreneurs, guest workers and foreign exchange students.

Hungry politicians took the bait, hook line and sinker, and we are now faced with a too big to fail situation where our politicians are impotent. We are faced with a crap-sandwich, in the form of a Comprehensive Immigration Reform bill (S 744) that will add millions of employment seeking immigrants per year, while facts at hand are being ignored.

A simple aggregate of Bureau of Labor Statistic household data displays how the employment paradigm has changed since the turn of the century.

•  Removing the population and employment growth for those 65 and over negates the Baby-Boomer retirement argument.

Employment to Population Growth (Ages 16 through 64)
Decade	Population Growth	Employment Growth	Employment rate
1950s	7,559,000	7,117,000	94.15%
1960s	15,772,000	13,817,000	87.60%
1970s	25,569,000	21,291,000	83.27%
1980s	15,470,000	17,335,000	112.06%
1990s	18,591,000	16,366,000	88.03%
2000 – 2010	22,268,000	1,048,000	4.71%
Selected Period	Population Growth	Employment Growth	Employment rate
2000 – Apr 2013	25,810,000	5,280,000	20.46%
2010 – Apr 2013	3,542,000	4,232,000	119.48%

 
For the first decade of the 2000s, there was only 1 new job created for every 20 working-age entrants into the workforce. In the decade following (2010 to present) employment growth slightly exceeds population growth, but that is largely because of a reduction in population growth.  If the 119.48% rate (2010 to present) continues for the rest of this decade without change, only 12,696,000 jobs will be created for the 2010s.  Roughly 40 million native born children enter the workforce in the decade, while the national mortality rate is about 15 million per decade.  Combining the two time periods, 2000 to present (April 2013), only 1 job has been created for every five new entrants into the workforce (noninstitutionalized population ages 16 through 64).

Effectively, we are experiencing an 79.5% unemployment rate for the population of new working-age adults added to the population since 2000.  Is this the time to blindly double the rate of legal immigration and surrender to illegal immigration without ever trying to enforce the rules of the 1986 IRCA amnesty which described the creation of E-Verify?


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