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What Trump’s H-1B Order Means For Tech Startups

What Trump’s H-1B Order Means For Tech Startups

Posted by PanamericanWorld on April 19, 2017

The H-1B visa is a controversial visa for highly skilled workers used widely in the tech world. Trump's order is to open a review of the H-1B system, and require companies to prove that they're hiring only the "most-skilled or highest-paid" applicants. The idea is to cut down on companies that use the visa to replace American workers with foreigners, who they pay less for doing the same job.

Earlier this year our colleagues at the American City Business Journals broke down the companies that use the H-1B visa most in the city. The companies at the high end of the list included Tata, InfosysCapgemini and Cognizant Technologies, large outsourcing companies that have been criticized for their use of the visa to hire foreign workers at lower salaries. In the future, it's likely that these companies are going to have to work a lot harder to prove their hires aren't undercutting American workers.

For smaller startups, however, H-1B reform will likely be welcome. We've talked to several tech startups that have had difficulty hiring the uniquely highly skilled workers that are integral to their startups' success (and are often trained at Illinois universities). They need the best and the brightest, whether American or foreign-born, to give their startups a competitive advantage, and the current H-1B lottery often squeezes out the smaller players.

However, there's no word yet on a visa for foreign-born entrepreneurs, who aren't well-served by any visa but have founded about half of the country's high growth startups (and half of Illinois' unicorn companies).

hile on a visit to the headquarters of Snap-On Tools in Kenosha, Wisconsin, the president ordered an interdepartmental review of the H-1B visa program, which allows companies to bring “skilled” foreign workers to fill jobs in the US for a few years. Administration officials have made it clear that “review” means they expect Cabinet officials to suggest changes to the program — either by way of regulation or by asking Congress to pass a bill — in the name of better protecting American workers.

In Kenosha, Trump drew a bright line on the H-1B visa: It “should include only the most skilled and highest-paid applicants and should never, ever be used to replace American workers.”

A review of the H-1B program was one of many provisions included in a potential executive order drafted during the presidential transition, which would have taken much more aggressive steps to limit a broad array of work visas. Since arriving in office, however, the Trump administration appears to have focused its efforts on the H-1B program, which awards 65,000 visas a year to people with “highly specialized knowledge” (in practice, jobs requiring at least a bachelor’s degree, and often involving technology).

The administration, following Trump’s rhetoric on the campaign trail (and that of some populists like current Attorney General Jeff Sessions), has portrayed the H-1B program as a way for unscrupulous business owners to hire cheap foreign labor, rather than hiring qualified American workers or training US citizens for high-skilled jobs.

Over the past few weeks, the administration has suspended a practice that allowed employers to get their applications processed within six weeks (instead of several months) if they paid a higher fee, and issued a warning on the day visa applications opened for 2018 that the government would be cracking down on employers who used H-1B workers for jobs Americans could fill. And now, with this executive order, it’s declared that the H-1B visa is a top enemy of the pledge to “Hire American.”

The executive order doesn’t change H-1B policy on its own, and it doesn’t set a timeline for when the review will be completed. 

The administration has already hinted at some of the changes it would like to see: It might try to change the existing way the government defines the “prevailing wage” in an industry (the de facto minimum wage for an H-1B visa holder in that industry) and might start handing out H-1B visas for the highest-paid jobs and best-educated employees rather than giving any applicant who meets the basic requirements for the visa a chance.

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