Bloomberg News

America Losing Technology Workers Denied in Visa Lottery

March 28, 2013

Start-Up Sweats Out Visa Application as H-1B Lottery Looms

People repeat an oath of allegiance during a naturalization ceremony in San Diego. Demand is high and immigration and company officials say the 65,000-cap on visas could be reached within five days after the application period opens April 1. Photographer: David Maung/Bloomberg

Cristina Martinez Mortola has a lot riding on her application for a temporary skilled-worker visa. So does her boss, SendHub co-founder Garrett Johnson.

Martinez Mortola is competing for one of 85,000 H-1B visas that make up the U.S. government limit for this year, and demand is so high that 65,000 of those may be awarded through a lottery. Random selection means more risk for the technology companies that dominate these visas, and also may leave them waiting for months to find out if their employees are chosen.

“Every company lives and dies by the talent it has access to,” Johnson said. And Martinez Mortola, who manages customer support for his web-and-mobile-communication startup’s 100,000 clients, is ”invaluable,” he said.

Martinez Mortola, 28, a Panamanian with a master’s degree in engineering management from the University of Southern California in Los Angeles, has worked at the Menlo Park, California-based company since August. Her current visa expires in June.

While she can apply for an extension of her visa if SendHub’s petition for an H-1B is denied, she says if both fail she’ll have to leave her husband and job in the U.S.

Government and company officials say the cap on the H-1B visas could be reached within five days after the application period opens April 1.

If applications exceed the limit in that time period, which the U.S. Citizenship and Immigration Services has said could happen, the slots will be awarded by lottery rather than by order of filing.

Reaching Quota

The employer-sponsored visa allows 65,000 professionals with a college degree or equivalent experience to work in the U.S. for three years with extensions to six years and beyond. It took 10 weeks to reach the quota last year and until Nov. 22 in 2011. An additional 20,000 slots are available for the first petitions for employees with a master’s degree or higher from a U.S. university. That allows for 85,000 H-1B workers plus those granted under other exemptions.

“It really is a race,” said Neil Ruiz, a senior policy analyst at Washington-based Brookings Institution who studies issues involving the visas. Immigration is already a hot topic in Washington, and he said demand for H-1Bs could focus the issue more intensely. “If the cap is reached fast, that will spark controversy,” he said.

This year’s competition for visas takes place against the backdrop of a national immigration debate. Two bills -- one to make the H-1B system more restrictive and another to raise the cap -- have been introduced in Congress this year. The proposals, or parts of them, could be included in a broader package on immigration being drafted by a bipartisan group of eight senators, which the White House anticipates could be filed in April.

‘Real Constraint’

Technology companies including Intel Corp. (INTC:US), the world’s largest chipmaker, say more H-1B visas would keep jobs in the U.S. and prevent the uncertainty caused by a lottery.

“That puts a real constraint on our ability to hire the skilled workers we need to allow us to innovate, create new products and create new jobs,” said Peter Muller, director of government relations for Intel.

Workers’ groups including the AFL-CIO and some academics say raising the cap would cost Americans jobs. Companies don’t have to try to hire U.S. workers before seeking H-1B workers, and critics say a rule requiring that visa holders earn a standard industry wage is tough to enforce.

Companies in computer, math and science fields dominate H- 1B visa applications and have spent years pushing for a higher quota. For the fiscal year ended Sept. 30, 2011, 48.9 percent of approved petitions for initial employment were in computer- related occupations, and 11.3 percent went to architecture, engineering and surveying professionals.

Demand Growing

Demand has grown as employers have drained the U.S. talent pool, said Emily Lam, senior director of health care and federal issues at Silicon Valley Leadership Group. The San Jose, California-based policy group, whose members include AT&T (T:US) Inc. and Yahoo! (YHOO:US) Inc., is pushing for immigration changes.

“The economy is picking up,” Lam said. ”Many of our employers are saying that hiring is robust.”

The unemployment rate for information workers in February was the lowest for that month since 2007, according to non- seasonally adjusted data from the U.S. Bureau of Labor Statistics. Computer, engineering and science occupations will grow by 17 percent between 2010 and 2020, compared with 14.3 percent for all U.S. occupations, based on BLS projections.

The 65,000 cap for H-1B workers has been in place since 2003 with the masters exemption added in 2005. There are exceptions for not-for-profit groups that conduct research, universities and governmental research organizations. The program went to a lottery for fiscal years starting October 1, 2007 and 2008.

Letter to Obama

More than 100 technology company leaders including Facebook Inc.’s chief executive officer Mark Zuckerberg sent President Barack Obama and lawmakers a letter this month urging market- based limits for high-skilled visas.

Silicon Valley leaders from Lam’s group are prioritizing green card expansion, she said. Green cards allow workers to stay in the U.S. permanently. Employers must try to fill a position with an American first, there are limits on the number allowed from each country and the approval process is lengthy.

Because H-1B visas are faster to obtain, Lam said industry leaders want a higher or demand-tied cap as a complement to green card reform. That way, workers can use the visas as they await green cards. “We’d definitely like to see an increase in both,” she said.

Academics who have said the H-1B program encourages employers to hire foreign instead of U.S. workers say raising the cap could cost Americans jobs.

‘Prevailing Wage’

Employers misuse the program by hiring from abroad at entry-level wages while bypassing more expensive domestic workers, said Norman Matloff, a University of California Davis computer science professor.

Despite a requirement that companies pay a “prevailing wage” for the industry, Matloff said H-1B workers often prove cheaper because it’s hard for the government to gauge proper salaries. “You are not asked, for example, whether the foreign national that you’d like to hire has special technical skills,” he said. “The employer can hire the same quality person for a lower wage.”

A January 2011 Government Accountability Office report said 54 percent of H-1B labor applications were for workers earning entry level wages.

Lower Wage

Outsourcing companies are among the largest users of H-1B, said Ron Hira, an associate public policy professor at Rochester Institute of Technology in New York and co-author of “Outsourcing America.” The businesses bring workers to the U.S., hire them out into temporary, basic jobs and earn money from the wage paid by the outside companies, Hira said. That wage is still lower than what Americans would make, he said.

“They’re using this for labor arbitrage, wage arbitrage,” Hira said. “The program as it stands is obviously disadvantaging American workers, American engineers, but it’s also disadvantaging firms that want to hire American workers.”

Senator Chuck Grassley, an Iowa Republican, has proposed that companies be required to try to hire American workers first, among other restrictions.

A separate bill, introduced in January, would raise the H- 1B cap to 115,000 and allow it to climb to 300,000 based on demand, and expand green card access. The measure is sponsored by Republican Senators Orrin Hatch of Utah and Marco Rubio of Florida and Democrats Amy Klobuchar of Minnesota and Chris Coons of Delaware.

For Martinez Mortola, the wait to learn her petition’s fate will be long. A yes would be “the best news of my entire life,” she said.

“The lawyer tells me, ‘You are going to get it because of your master’s degree,’” she said. “But I always tell her, you never know.”

To contact the reporter on this story: Jeanna Smialek in Washington at jsmialek1@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net


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