Friday, March 3, 2017

Should an H-1B be free?

H-1B visas allow employers to hire skilled foreign workers in a limited set of specialized occupations that require a college degree.  The visa is good for three years and can be renewed for another three.  During this period visa holders have the option of applying for a Green Card for permanent residence.

In 2015 the eight largest H-1B employers were (in descending order) Cognizant, Infosys, Tata Consultancy Services, Accenture, Wipro, HCL, Tech Mahindra Americas, and IBM India.  All of these firms do IT outsourcing and rely on workers from India.

There are only 65,000 H-1B visas given each year, well below the number of requests.  The visas are allocated by a lottery system.

But maybe not for much longer.  WSJ reports that someone in the Trump administration has remembered some basic economics: price ceilings create shortages.  Why should the H-1Bs be free?  

One adjustment under consideration would be to allocate the visas to the firms that pay the highest salaries.   This means more foreigners in high wage occupations (e.g., surgeons) get admitted than those in relatively low wage gigs (e.g., most of today's IT consultants).  

Another approach would be to auction off the visas.  This would force firms to put their money where their mouth is regarding labor shortages.

Finally one could argue for more visas, but I do not think that argument is going to go very far for at least the next four years.

1 comment:

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