The H-1B Temporary Professional
Worker Visa Program
Testimony of
Austin T. Fragomen
Chairman
Of
American Council on International Personnel
before the
Subcommittee on Immigration and Claims
U.S. House of Representatives
August 5, 1999
Good afternoon, Mr. Chairman and members of the House Subcommittee on Immigration and Claims. Thank you for the opportunity to testify on the H-1B Temporary Professional Worker Visa Program.
The American Council on International Personnel (ACIP) is a not-for-profit trade association founded in 1972. Our mission is to facilitate the movement of personnel across national borders. We do this through educational seminars and publications aimed at helping human resource professionals understand and comply with our complex immigration laws. ACIP also works with Congress and the Administration to develop policies which help U.S. employers compete in today's global economy by ensuring access to needed professionals. ACIP has over 300 corporate and institutional members, each with at least 500 employees worldwide. Our members file tens of thousands of nonimmigrant visa petitions each year and devote untold resources to complying with our laws.
There are three issues I would like to address today: Why are U.S. employers using more H-1B visas? Who is using these visas? And, Do we need more H-1B visas?
First, why are employers using more H-1B visas? There are several simple answers to this question: a growing economy, tight labor markets and globalization. The U.S. economy is as strong as at any time since World War II. Unemployment among college graduates is less than 3 percent. The shortage of highly educated workers reaches across all fields but is especially profound in engineering, science and technical fields. Because a high percentage of new graduates in these fields are foreign nationals, companies can either seek H-1B visas for these workers or open facilities abroad.
In addition, American companies continue to expand their global workforce. As they enter markets in Asia, Latin America, Europe and the Middle East, companies are putting together international teams to engage in marketing and manufacturing. Employees from all countries, including U.S. citizens, are increasingly transferred from one country to another on a project basis. Some of these H-1B workers are cutting-edge researchers and managers who are recruited by global headhunters; others are new graduates of U.S. universities who will receive formal training and experience in the United States before being stationed abroad. H-1B professionals currently comprise less than one-tenth of one percent of the U.S. workforce but are vital to multinational corporations building a global workforce. There is global competition for the best and brightest among this new breed of worker, and U.S. employers need ready access to this pool even if U.S. workers are generally available. The H-1B is not just the "high tech worker shortage visa."
Having identified why we are using more H-1B visas, the question becomes: Who is using these visas? Unfortunately, statistics are sorely lacking. Although ACWIA requires INS to track the occupation, country of origin, salary, education and other biographical information about H-1B workers beginning in FY2000, we are skeptical about their ability to provide accurate information. INS recently released a list of the top 20 corporate users of H-1B visas for FY98. Part of this widely circulated list was published in the Wall Street Journal. A number of the so-called "top 20 users" are ACIP members so we had the opportunity to compare INS' data to the companies' own records. The results were disturbing. INS grossly overstated usage in all cases; by up to 600 percent in some cases. For example, INS reported that Intel accounted for two percent of the visas when, in fact, they had only 297 new H-1B approvals last year. INS reported figures for another company that were greater than its total U.S. workforce. When we raised these concerns with INS, we were informed that the figures were drawn from a different and larger pool than the 65,000 visas approved under the FY98 cap. It is still not clear what INS was counting and we have requested that they reexamine their figures. ACIP opposes the release of such misleading and inaccurate data. Concern about a company's H-1B dependence can negatively influence stockholder decisions.
Such gross errors in the numbers we can verify independently lead us to question the accuracy of the count against the cap that we cannot confirm. Most immigration experts believe INS continues to inappropriately allocate petitions against the cap. Since INS first thought the cap was reached in FY96, the business community has engaged in discussions with them about the appropriate means of counting petitions against the cap. Granted, their forms and computer systems are not set up to make this an easy task, but it has been three years and the same issues remain unresolved. On December 30, 1997, INS published a proposed regulation on counting H-1B petitions. ACIP submitted comments at that time pointing out several errors in the proposed methodology. That regulation still has not been finalized. It is apparent that the cap will continue to be reached each year, and we ask for Congress' help in ensuring the count is accurate.
Because we cannot rely on INS for data, we have tried to piece together our own usage statistics. ACIP has conducted telephone interviews with our members in a variety of industries across the country about their H-1B usage. We found that most of our members are using only a few more H-1B visas than in previous years. Usage trends, however, vary by industry with large increases in the sectors in which U.S. companies dominate the global market. For example, traditional manufacturing and consumer goods companies use few H-1B visas to begin with. They are using slightly more as they invest in research and expand international marketing activities. Major technology firms such as those engaged in semiconductors, biotechnology and software development report a slight upswing in H-1B use. Although these firms hire hundreds of H-1Bs per year, H-1B workers remain a very small percentage of their workforces. Significant increases in H-1B usage are reported by large retailers, financial services and professional services firms due to the increasing globalization of these businesses. Retailers and financial services firms need employees with language and cultural skills vital to success in new markets. Their employees gain experience in the U.S. on H-1B visas and then are transferred abroad. The largest increases are in the professional services firms, including consulting, law, engineering and telecommunications, which are building international teams to work on discrete projects. Teams are transferred from one project to the next, often crossing international boundaries several times within a year. The short-time, high learning curve and technology-sensitive nature of the projects prohibits companies from putting together and training domestic teams for each new project. If the U.S. wants to maintain its lead in these fields, our immigration policy must accommodate these activities.
One area where we have noted a downturn in H-1B usage is among the major domestic computer-consulting firms. At the same time, we are seeing large numbers of spin-offs and start-ups in this field. Firms specializing in e-commerce and the Internet which either did not exist several years ago or which had few employees have been hiring H-1B and U.S. workers at a rapid pace. These companies need cutting-edge technological expertise as well as language and cultural skills to get a foothold in the U.S. and global markets. This growth fuels our economy and we expect it to continue.
Now that we've answered why companies are using more H-1B workers and who is using them, the question is: Why aren't 115,000 visas enough? If we examine the facts, it is not surprising that we have used 115,000 visas this fiscal year. As demonstrated in Appendix A, H-1B usage has fluctuated with the economy since the arbitrary cap was implemented in fiscal year 1992. This is the third year in a row that we have reached the H-1B cap. Although we appreciate the increase in the cap which Congress passed last year, we have created a situation of rolling backlogs that will only worsen. Approximately 5,000 visas were rolled over from FY97 to FY98, 20,000 rolled over from FY98 to FY99 and we project more than 40,000 will roll over into FY 2000. Congress recognized this issue last year during the intense negotiations over the H-1B bill and allocated extra numbers to take care of the FY98 rollover. Unfortunately, because the bill was not passed until after the beginning of FY99, this backlog reduction did not occur. Thus, we 20,000 visas rolled over from FY98 to FY99. Examined in this light, we have used only 95,000 visas this fiscal year - not 115,000. Appendix B project s usage for the next five years. Based on these figures, we have dug ourselves into a hole.
ACIP members unequivocally believe the cap must be raised but we are also committed to broader reform of the employment-based immigration system. We strongly support the bill (S.1440) introduced in the Senate by Senators Phil Gramm, Trent Lott and Mitch McConnell. This bill would increase the cap to 200,000 visas per year for fiscal years 2000, 2001 and 2002 and would exempt two categories of workers from the cap: persons with at least a master's degree who earn at least $60,000 annually and person's with at least a bachelor's degree who work for an institution of higher education. We think this legislation recognizes the value H-1B workers bring to our economy and we hope the House will consider similar legislation. We have recently become aware of another proposal in the House to provide badly needed work authorization to certain students graduating from U.S. universities. This is an important concept which should be further explored. At a minimum, we need legislation to address the backlog problem. We recognize that any of these measures is only a stopgap while broader reform of the employment-based immigration system is debated.
We appreciate the allegations of fraud and abuse in the H-1B program as well as the allegations that H-1B foreign workers have negatively impacted U.S. workers. While ACIP believes that visa fraud is an important issue we do not believe it has a statistically significant impact on the availability of H-1B visas. Most fraud is concentrated in a few consular posts. Some of the fraud is illegitimate companies using the H-1B visa to accommodate relatives or friends but the numbers are small. Other fraud relates to fake credentials. In cooperation with U.S. employers, INS and the State Department have made significant strides at ferreting out fraudulent credentials. ACIP strongly supports the expansion of such efforts. At the same time, we oppose increasing scrutiny of all employers or restricting the availability of H-1B visas as these will have little impact on fraud. As we testified before this Subcommittee in May, ACIP believes INS must work smarter by distinguishing and giving expedited processing to companies with proven track records.
Not only is the fraud issue overstated, there is no evidence that companies are violating the H-1B wage and working condition requirements. The Department of Labor has found a few companies to be underpaying H-1B workers or otherwise violating the regulations. These companies should be and have been sanctioned. We strongly believe that the threat of debarment from all immigration programs is sufficient deterrent for the vast majority of the companies to take extreme pains to ensure they are in compliance with these complex laws.
There have been some allegations that H-1B workers adversely impact U.S. workers. These anecdotes are inconsistent with the statistical evidence of shortages in many occupations. In our opinion, the H-1B program has become a scapegoat for other phenomena in the workplace, mainly corporate reengineering. Companies have been selectively downsizing to shed units made obsolete or unprofitable due to technological change and globalization. They have outsourced many non-core competencies, particularly in the information technology arena. At the same time that U.S. workers are being laid-off because of this restructuring, firms are hiring and retraining workers, including H-1B workers, for their other business units. Most allegations of abuse arise in the context of outsourcing. There is almost no evidence of one-to-one displacement elsewhere. We do not mean to make light of the difficulties laid-off U.S. workers face, but we would not blame it on the H-1B program.
Further, we dispute the notion that U.S. companies are using more H-1B visas because they are failing to train U.S. workers. While we acknowledge that there is an enormous skills gap in this country, we would assert that U.S. companies are taking steps to meet this challenge. I am awed by the array of education and training efforts ACIP member companies have in place. Programs range from K-12 partnerships to scholarships and tuition reimbursement to on-site retraining. Our members spend billions of dollars each year on these efforts. Many of ACIP's member companies have also been recognized for their outstanding commitment to diversity in the workplace. As the labor market tightens, their efforts to reach out to minorities, women, the disabled and the disadvantaged have intensified. These efforts are aimed at addressing workforce needs that are much larger than what the H-1B program could ever meet. ACWIA attempted to aid these efforts through the $500 training fee. While we did not oppose that fee, it is important to understand that education and training will have little impact in the near term therefore we should not too closely link the H-1B program with opportunities for U.S. workers.
Companies need access to skilled workers from around the globe now more than ever. We are competing with other nations to attract skilled workers in biotechnology, semiconductors, information technology, consulting, retail and many other sectors. It is not hard to understand why we are using more H-1B visas. What is hard to explain is why the United States is making it more difficult to recruit and retain skilled foreign workers when Australia, Canada, Germany and other countries are welcoming them. We need to consider how the H-1B program fits into our broader employment -based immigration system and that it meets the needs of employers in the 21st century.
Thank you for this opportunity to present ACIP's views. I would be happy to answer any questions you may have.
H-1B USAGE
Fiscal Year H-1B Petitions Approved Under Cap
57,125
61,591
60,179
54,718
55,141(1)
65,000 (2)
65,000 (3)
115,000 (4)
PROJECTED H-1B DEMAND
This chart demonstrates the need to increase the H-1B cap enough to account for projected demand over the next five fiscal years. These projections are calculated from a base of 85,000 which represents FY98 demand. If the economy continues at its current pace, most immigration experts predict at least a 20% increase in demand over each of the next several fiscal years.
Fiscal Growth in H-1B Demand
Year 10% 15% 20% 25% 30%
FY99 93,500 97,750 102,000 106,250 110,500
FY00 102,850 112,413 122,400 132,813 143,650
FY01 113,135 129,274 146,880 166,015 186,745
FY02 124,449 148,666 176,256 207,520 242,769
FY03 136,893 170,965 211,507 259,399 315,599
Austin T. Fragomen, Jr., is a partner of Fragomen, Del Rey, Bernsen & Loewy, P.C. a national law firm practising exclusively in the area of immigration and nationality law. Mr. Fragomen is resident in the New York office. He attended Georgetown University (B.S., 1965) and Case Western Reserve University (J.D., 1968).
Mr. Fragomen served as Staff Counsel to the U.S. House of Representatives Subcommittee on Immigration, Citizenship and International Law from 1968 to 1970 and as an Adjunct Associate Professor of Law at New York University School of Law from 1975-1986. He serves as Vice-Chairman of the Board of Directors of the Center for Migration Studies, and an Editorial Board Member of the CMS publication International Migration Review; is Chairman of the Board of Directors of the American Council on International Personnel; and Chairman of the Practising Law Institute's Annual Immigration Institute.
Mr. Fragomen is editor-in-chief of the semi-monthly publication Immigration Law Report, and co-author of the publications Immigration Procedures Handbook, Immigration Employment Compliance Handbook and Immigration Fundamentals as well as the treatise Immigration Law and Business.
He serves as a member of the steering committee of the business coalition American Business for Legal Immigration (ABLI) and has testified before congressional committees on numerous occasions.
Mr. Fragomen is a member of the District of Columbia Bar Association, The Association of the Bar of the City of New York, the American Bar Association and the American Immigration Lawyers Association.
1. 0 Final count for FY96. INS reported in August 1996 that the 65,000 cap had been reached. Upon reconsideration of its methodology, INS determined that certain amended petitions and applications for extension of status had been improperly counted toward the cap. It is likely that H-1B usage for fiscal years prior to 1996 also inaccurately includes these petitions.
0 Cap reached September 1, 1997. 5,099 approvals rolled over to FY98.
0 Cap reached May 11, 1998. 19,431 approvals rolled over to FY99.
0 INS announced June 15, 1999 that enough petitions were pending to reach the cap. Only petitions filed prior to mid-April are being approved under the cap. Over 40,000 are expected to roll over to FY00.