With Trump keeping his promises with respect to other key issues like Trans Pacific partnership and Affordable Care Act, the focus is now on Immigration and H1B.
The news from Trump’s office is President Trump will announce key H1B and Immigration reforms. He is likely to add stringent conditions to H1B process and possible taxes on misuse.
Yesterday USCIS (US Immigration Services – Organisation dealing with VISA) increased filing fees across the board for various non immigrant and immigrant applications.
Possible bad news for DREAMERS and potentials immigrants from Middle Eastern Countries are also expected.
Some Good News
There is a possibility of good news for immigrants who are on waiting list for Green Card, as Trump had promised a delegation Indian Emissaries on increasing removing cap for Immigrant applications for India and China. If this cap is lifted it will pave way for several H1B holders to become Green Card holders and eventually citizens.
Currently waiting list is very high and Indian immigrants who applied for Green Card on or before 2005 are receiving their Green Card in 2017. This will also reduce H1B abuse by eliminating this VISA for these folks.
Business Impact
Outsourcing companies are expected to be worst affected due to H1B reform with the change in Fee or salary structure expected to affect margins directly. Indian and Chines companies will be watching Wednesday’s developments closely.
In near term companies in USA will also be impacted by sudden shortage of skilled or experience resources if the rule changes cause mass exodus of employees in Non Immigrant VISAs.
Trump administration has shown what is to come in next few months for companies using H1B, the filing fee was increased by 35% on the second day and first full day of the administration. While these fees are not going to dent margins , they will eventually add up. The increase also signals the expected trend.
As soon as the Trump administration has sworn in , new fees and forms went effective immediately. The filing fee increases have been a sharp 30-50% increases across the board for H1B, Green card processing etc.
New H1B filing fee is $460 effective immediately, before Jan 23 2017, this fees was at $340. This is 35% increase.
Additionally the I-140 Immigrant Petition for Alien Worker filing fee increase by $120 to $700.
There is a burning debate going in both American and Indian Technology sectors pertaining to H1B VISA reforms. These debates were started by Donald Trump’s victory and fueled by his “America First” slogan. Additionally some of the new legislation introduced by Darrel Issa and another one by Chuck Grassley & Dick Durbin, has created excitement and confusion within the industry.
Both of these laws focus on setting a minimum Salary for H1B’s and other financial restrictions in obtaining the VISA. The truth is they wouldn’t need a new system to establish this, there is already a well planned and detailed system of wages followed for every H1B VISA.
Prevailing wages for H1B (Labor Condition Application – LCA )
For an employer to apply for a H1B VISA the following process needs to be completed.
Determine the role of an prospective employee defined with Department of Labor. link – Labor Site for wages
Identify the skill level per Department of Labor site –Link to pdf
Determine the location by State and County where the employee will be working.
Find the prevailing wage for the role,skill level and location. Wage Search here.
This wage updates every year (3rd quarter of every year) with Cost of living adjustment.
This wage revision happens every time a H1B employee applies for extension, change of role or change of location.
How is H1B Salary determined
Does the prevailing wage system work ?
If followed legally this system works to the benefit of employee and reduces incentive for hiring H1B vs local hire.
Playing with above data you can clearly see for the same role in Idaho and California , the wage will vary 20K-30K per annum.
Minimum salary in locations like New York, New Jersey and Los Angeles will be already near or above 100K.
What is broken in the prevailing wage system?
Not all employers inform the employees of the role/skill selected for the current job.
Some employers choose the lowest possible role to keep the employee’s salary lower.
While a minimum wage in Chicago is 110K per annum, the same role and skill will be 80K in a suburban location 25 miles from Chicago city. Employers tend to keep these lower cost locations to avoid paying City salaries while still working near a city.
What is the current situation in H1B abuse?
Most of big name companies have already outsourced all their immigration needs to US firms like Fragomen Worldwide. This has reduced the blame and abuse drastically reduced in these Tier 1 outsourcing companies. These include companies like TCS, Infosys, Wipro & HCL . Most of these companies have been always under constant audit and added scrutiny has cleaned up some of the rot.
There are still other smaller firms who work as body shops by keeping employees in payroll and contracting them to other firms for commissions. These firms typically have 10-50 employees and will not have actual contracts or orders for projects, instead they will supply employees for Time & Material pricing model. These firms will not raise any flags due to exemptions for small companies and will not have resources for hiring larger firms and are known to indulge in false resumes and W2 forms.
Despite all this the availability of employees for new technologies is very thin. More than anything these firms provide training for the employees in the newer skills and guide them in placements.
In most cases employers who hire for newer skills expect future employees with experience in newer technologies and Local employees who are displaced due to Mainframe or COBOL struggle to gain newer technology expertise due to lack of opportunities or better trained competition.
Will discuss possible solutions in subsequent articles, please add your comments and will reply/update if any corrections.
