By Russel SK
[su_pullquote align=”right”]Americas new protectionist President, through his early actions, is aiming to narrowly protect American jobs.[/su_pullquote]
During his inauguration speech in Washington on January 20th, U.S. President Donald Trump vowed to follow his trademark policies, proclaiming, We will follow two simple rules: buy American and hire American.
Americas new protectionist President, through his early actions, is aiming to narrowly protect American jobs. The new legislation, introduced in the U.S. House of Representatives, aims to double the minimum salary of H-1B visa holders from $60,000 to $130,000.
My legislation refocuses the H-1B program to its original intentto seek out and find the best and brightest from around the world, and to supplement the U.S. workforce with talented, highly-paid, and highly-skilled workers who help create jobs here in America, not replace them, said Congresswoman Zoe Lofgren.
Here are a few things we need to know about the newly introduced bill.
What is the H-1B Visa?
The H-1B visa is an employment-based, non-immigrant visa category under the Immigration and Nationality Act, section 101(a) (15) (H). It allows U.S. employers to temporarily employ foreign workers in specialty occupations.
The issuing of H-1B visas requires the theoretical and practical application of a body of specialized knowledge and requires the visa holder to have at least a Bachelors degree or its equivalent.
Key highlights of the legislation
As mentioned earlier, the legislation aims to increase the minimum wage of the H-1B visa holders to $130,000, more than double that of the current minimum of $60,000. It aims to create an environment where all workers are treated equally and to move towards a system where employers hire the most skilled workers without any regard to their national origin.
The legislation sets aside 20% of the annually allocated H-1B visas for small and start- up employees to make sure that small-scale businesses have equal opportunity to hire high- skilled workers.
The Bill also removes the per-country cap” for employment based immigration visas to ensure equal distribution.
The legislation aims to give preference to students educated in the U.S. for H-1B visas rather than a computerized lottery system.
How are Indians affected by this bill?
The IT-industry
[su_pullquote align=”right”]According to Computerworld’s analysis of government data, nearly 86% of the H-1B visas issued for workers in computer occupations go to Indian workers.[/su_pullquote]
Indian IT-outsourcing companies have been the top recipients of the H-1B visas in the past. According to the Economic Policy Institute, the top 10 sponsors received more than 25,000 visas, accounting for nearly 30% of the total quota in 2014. Among these firms, nearly half of them have their headquarters in India. According to Computerworld‘s analysis of government data, nearly 86% of the H-1B visas issued for workers in computer occupations go to Indian workers.
David Ricardos thesis of comparative advantage explains why countries engage in international trade even when one countrys workers are more efficient in producing every single good than workers in the other countries. Given that there are differences in labour productivity between countries, if two countries engage in free market trade, then each country will increase its overall consumption by exporting the good for which it has a comparative advantage and importing the other good.
Indian IT companies like TCS, Wipro, Infosys, shall be hit badly | Photo Courtesy: AbhineetIt is a known fact that outsourcing is a significant factor for creating a lot of jobs in India and bringing prosperity to the country as well. However, this was not done at the expense of American jobs. Enabling U.S. firms to hire foreign skilled labour provided a cost-efficient solution to their businesses and helped them to innovate as well ensure the growth of their firms. Indian outsourcing firms such as Infosys, Wipro, and Tata Consultancy Services are expected to be badly hit by this bill.
The non-IT industry
India has the second largest number of international students in the U.S., some 165,000, i.e., half the number of Chinese international students in 2016 according to Forbes. But India dominates the H-1B visa recipients, winning more than all other countries combined.
Studying in the U.S. is a real pathway for many foreigners to find jobs in the U.S. International students, in most cases, pay full tuition to study in the U.S., bringing an economic contribution to schools and local communities. According to the institutes Open Doors report, international students contributed $36 billion to the U.S. in 2015-2016, with 17% of the funding coming from university scholarships. If the incentive of finding a job is lost, it will bring down the number of international students coming to the U.S., thereby impacting university revenue and affecting domestic students in the future as well.
The problem which Donald Trump wishes to address is not expected to be solved just by hiring locals.
Local hiring will be good provided these skills exist in the first place, says Sanchit Vir Gogia – CEO, Greyhound Research. U.S.-based organizations are definitely dependent on H-1B visa holders, as these are highly skilled workers not only contributing to the U.S. IT industry but also to other industries like banking and real-estate.
Trump, being an ex-entrepreneur, is expected to maintain a business-friendly environment in the U.S. The story of the Indian IT firms needs to be brought into focus in the U.S. The new legislation only brings about a cloud of uncertainty and is more likely to hamper the economys goal of sustainable development.