H-1B Visa Backlog May Hinder American Innovation

Annie Erling Gofus - Oct 05 2022
Published in: Global Workforce
Immigrants have long been an important part of American innovation.

Research has found that immigration is vital to innovation. More immigrants living and working in a specific region are linked with a higher rate of invention and related economic growth, according to several historical immigration trends. When immigration is more restricted, businesses are less successful, and job and wage growth slows. Immigration limitations especially affect tech companies and organizations that conduct cutting-edge research and development.

Immigrants have also been shown to be more entrepreneurial in studies. According to survey data collected between 2008 and 2012, 25% of businesses in the United States were created by first-generation immigrants. According to other studies, immigrants are more inclined than native-born U.S. citizens to file patents.

Some people think that the current H-1B guest visas are at the heart of the problem. The H-1B visa was created in 1990 to assist employers to find skilled personnel when there are shortages in the labor market. Employers submit applications to the United States Citizenship and Immigration Services (USCIS) to recruit international talent that is fully qualified for certain, highly skilled jobs. Most employment visas, including those for foreign graduates, require a bachelor’s degree in a relevant area.

According to the USCIS, there are about 580,000 H-1B visa holders currently in the United States. These H-1B workers make up a minor portion of the overall U.S. workforce and immigrant pool. They are, however, disproportionately concentrated in science, technology, engineering, and mathematics (STEM) fields, particularly those that are computer-related and rely on cutting-edge technologies.

The H-1B application procedure is becoming increasingly outdated and failing to live up to its intended purpose of allowing world-class innovative businesses to tap into the talent reservoir. The number of H-1B visa holders who may enter the United States is limited by Congress each year, and that limit has now been far surpassed by the labor market’s needs.

USCIS has implemented a lottery system in place of the first-come, first-serve approach. USCIS announced on August 23 that it has received enough petitions to meet the 65,000 H-1B visa cap and the 20,000 H-1B visa advanced degree cap for FY 2023, which began October 1. Hundreds of thousands of skilled workers from abroad try to cross the border into the United States every year and ultimately fail.

For many highly educated foreign people, the United States has long been a desired destination to pursue the finest career possibilities. But the United State’s position may be lost to rivals such as the United Kingdom or Canada. If the United States continues to restrict skilled immigration so severely, these countries will be forced to implement similar reforms in order to attract and retain highly educated young people.

The H-1B Visa System Cannot Keep Up With Demand

The H-1B visa is a three-year temporary work visa that can be renewed once for three years, but it’s not a road to permanent residency on its own. H-1B visa holders may start the procedure for a green card to stay in the United States permanently while they are still residing there as tourists.

The annual limit is currently set at 65,000 visas, with 20,000 additional spots available to workers with graduate degrees from U.S. universities. This is down considerably from the yearly cap of 195,000 set in the early 2000s. USCIS accepted petitions on a first-come, first-serve basis until the annual cap was reached in the 1990s and early 2000s.

In 2014, the number of H-1B applications began to rise rapidly, prompting USCIS to implement a lottery system. Only 26% of the 483,000 applications received were accepted for processing in FY 2023.

Immigration restrictions have had a negative impact on the computer and software industries, which are reliant on foreign talent. Since the start of the H-1B program, the United States has had a scarcity of qualified computer professionals. Despite heavy investment in STEM education at U.S. universities, several businesses claim that they are having difficulty meeting their hiring demands, especially in computer-related fields. Software engineers and developers from other countries are in great demand by American businesses.

According to a study by the National Foundation for American Policy, between 2005 and 2018, 55% of all H-1B visas were issued to individuals in computer-related professions. However, computer-related professions account for less than 5% of the overall workforce. Foreign-born workers make up 55% of the workforce increase in artificial intelligence-related employment since 2000.

The delays in the H-1B program have had a significant impact on other STEM specialties as well. Teachers in higher education, as well as biochemists and engineers, are disproportionately represented in H-1B applications. Many of these individuals’ appeals appear to be losing out in the lottery due to the high amounts of IT-related applications.

The lengthy backlog in the employer-sponsored green card pipeline is due to the fact that new yearly applications have long exceeded available slots. Even as their visas are linked to their present employer, approximately 1.4 million H-1B workers are now waiting in line to apply for permanent residency. In many sectors, employees frequently transfer jobs in order to discover the greatest chances, so the existing system may severely limit a person’s economic and professional prospects.

The current backlog for Indian guest workers is over 90 years. According to estimates, there are roughly 200,000 children of immigrants on the waiting list for permanent residency. When they reach 21, these youngsters risk losing their family-based status. There are currently around 215,000 pending applications that will expire before they are ever processed.

Proposed Policy Changes Can Improve the System

President Biden and his administration have committed to changing the system, but proposed policy changes are not yet perfect. President Trump proposed replacing the lottery with a salary-based ranking system in 2020. USCIS would rank the petitions based on the wage offered by the employer rather than using a lottery to pick candidates. The higher-ranking USCIS candidates would be processed first, with the cap eventually being hit. Such a system would, in principle, favor the most skilled and qualified people over those with lesser qualifications.

This plan would disproportionately harm young recent graduates, many of whom are highly motivated to immigrate to the United States. Other issues include the fact that racial and gender-based pay gaps remain an issue in the United States. The court rejected the regulation before it went into effect.

The H-1B visa clause in the EAGLE Act states that no more than half of a company’s employees can be H-1B workers. The EAGLE Act would also eliminate the per-country limit on employment-based permanent residency applications. The decades-long backlog for Indian foreign workers might be addressed by removing this cap. The removal will also benefit citizens of other nations, such as China. In 2020, the Senate passed the Fairness for High-Skilled Immigrants Act without opposition, which is a good sign for the EAGLE Act.

The STAPLE Act, which was introduced in 2017, aims to give Ph.D. holders from U.S. universities priority for work visas and permanent residency. This, like similar initiatives in Canada and the United Kingdom, seeks to entice foreign students to enroll in graduate programs, then encourage them to stay in the country permanently. If foreign students were allowed to stay in the United States, up to 100,000 per year who graduate from U.S. colleges and universities would do so.

There are reasons to be optimistic about reform. The number of immigrants in the United States has never been higher. New green cards are granted at a rate of about 1 million each year. According to Gallup poll data from 2021, support for increasing immigration has outnumbered opposition for the first time since Gallup began tracking attitudes toward immigration in the 1960s.

A number of proposals to reverse the reductions in immigration restrictions made during the Trump administration have already been put forward by the Biden administration. However, the negative effects on American workers continue to make immigration politics difficult. Reform is therefore still uncertain, which presents a barrier to any efforts to turbocharge the United States’ innovation agenda.

Worldwide ERC® wrote recently about how more talent will move globally in the 2020s than ever before. In 2019, annual inflows hit new highs in 20 out of 25 OECD countries (excluding the U.S.). Although work-visa-based migration dropped in many countries during COVID-19, it has started to rebound and is approaching pre-pandemic levels.

Employers are still fighting to navigate a complicated web of immigration laws and restrictions in many countries. Despite the many complications, U.S. employers continue to hire and manage workers with H-1B visas, and these visa-holders will continue to play a vital role in the U.S. economy and workforce.