New U.S. visa restrictions curb foreign hiring
By Paul Rubino, Senior Director, U.S. Expatriate Tax
New U.S. visa restrictions effective until the year’s end will make it harder both for American companies to hire foreign workers and for multinationals to transfer their workers to the U.S.
The executive order, issued by the Trump administration, became effective June 24 and suspends the issuance of most new H-1B, H-2B and L visas. Designed to funnel more jobs to Americans during a time of record high coronavirus-related unemployment, the measure is also part of a broader pattern of the administration’s tightening of immigration policy.
Who is affected
The order suspends four types of visas affecting multinationals:
- H-1B visas, available to foreign workers with bachelor’s or post-graduate degrees. Used primarily by technology employers to fill highly-skilled jobs in the U.S.
- H-2B visas, available to workers in lower-wage jobs and common in industries including landscaping, forestry, seasonal construction and seasonal hospitality.
- L-1 visas, used by multinationals to temporarily transfer executives or skilled employees to a U.S. branch office, parent company, subsidiary or affiliate.
- L-2 visas, which allow the spouses and children of L-1 workers to accompany them and obtain work permits or attend school.
In addition, a separate policy change ends the requirement for the U.S. government to issue work permits to people seeking asylum.
Who is exempted
The new restrictions do not apply to:
- Workers who are already in the country under existing visas, or workers whose visas have been approved, though they have not yet traveled to the U.S.
- Healthcare workers treating or researching Covid-19.
- Workers in the food-supply chain, specifically including those in the seafood and food packaging industries.
- Anyone else whose presence is “necessary to facilitate the immediate and continued economic recovery of the United States.”
Pronounced effect in India
Multinationals may decide not to open or expand U.S. offices if they are no longer able to obtain visas to bring in employees. Others may stop sending employees to work for U.S. firms.
India is particularly affected. Seventy-two percent of H-1B visa holders come from the subcontinent, mostly to work for the tech industry. Many are hired through outsourcing companies such as Tata and Wipro. India also has the highest share of L-1 and L-2 visas. Nasscom, a trade group that represents Indian IT outsourcing firms, said the restrictions were misguided and would be harmful to the U.S. economy.
Jobs for Americans
The White House estimates that the new restrictions — combined with measures passed in April to suspend a diversity green-card lottery and a program granting visas at the request of U.S. family members or employers — would free up to 525,000 jobs by the end of the year, making them available to out-of-work Americans. The Migration Policy Institute estimates the number of job openings will total about 325,000.
Unemployment in the U.S. is at historically high levels, with over 20 million people currently receiving benefits, according to the Department of Labor. The new restrictions will have no immediate effect because the U.S. State Department had already suspended most visa appointments globally since the pandemic took hold in the U.S. in March. In May, for example, the U.S. Citizenship and Immigration Services issued a total of 143 visas, compared with more than 13,000 in May, 2019.
Technology company leaders at Amazon, Apple, Google, Microsoft, Dell and other multinationals were quick to criticize the new order, saying that foreign employees have played an important role in creating the innovations that make the U.S. a strong global competitor. Software alliance BSA said access to foreign talent is a critical component of the country’s economic recovery.
Criticism also extended beyond the tech industry. Jon Baselice, the executive director of immigration policy for the U.S. Chamber of Commerce, said feedback from manufacturers, accounting firms, pharmaceutical companies and others indicates executives are concerned the restrictions will hurt their businesses. Thomas Donohue, the Chamber’s CEO, said restrictions would “push investment and economic activity abroad, slow growth and reduce job creation.” Several Republican Senators drafted a letter to President Trump emphasizing the value of guest worker jobs.
Nevertheless, the H-1B program has always been controversial, with opponents saying companies often use it to save money by hiring cheaper foreign workers instead of Americans.
Further changes and uncertainty ahead
In addition to imposing the current restrictions, the administration is working with the Labor Department to change the way the H-1B program works. Instead of using the current lottery system, the 85,000 visas awarded each year would go to the highest-paid job applicants, resulting in higher salaries for visa holders and putting them on a more even footing with American workers. Another change would add new rules for contract workers.
It’s possible that the tightening of visa restrictions could lead to more offshore outsourcing in India and other countries, particularly since U.S. companies have grown more comfortable with remote work during the pandemic.
Another possibility is legal challenges. According to Sarah Pierce, a policy analyst at the Migration Policy Institute, said companies may be able to contest the order if they have invested money in consultations with attorneys and other immigration specialists to help them with a process that was suddenly changed.
But the restrictions are very likely to remain in place in October, when most H-1B visas traditionally are issued. Multinationals doing business in the U.S. should plan accordingly.