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Trump administration proposing to end H1B extensions

It appears at least a section of the Trump administration is working on reducing the effectiveness of H1B visa program. The target here is American Competitiveness in the 21st Century Act (AC21), which was passed with bipartisan support in 1998.

AC21

Sections of the act allows H1B works to continue working in United States, while they are waiting for a Green Card. Currently it takes 12-15 year for Indian immigrant to obtain Green Card, i.e. after they have qualified and have a approved petition. This is primarily due to annual limits  set per country. Countries like Pakistan and Srilanka enjoy quicker turnaround (less than 6 months) as there is not qualified candidates from these countries and per country limit is not based on the population of the original country.

Current Law & Tweaks

As H1B in its original form allowed candidates upto a maximum of 6 years, AC21 allowed candidates who have approved I140 (Permanent resident), but awaiting country quota. While a legislation is needed to change this condition, Trump administration doesn’t have enough votes. Hence tweaking of the wording of the document is being considered. Eitherway the end result might be mass deportation of nearly half a million well paid H1B candidates.

Impact

While most of them might continue to perform the same job from their home country, this will impact local property values, property taxes,  Social security taxes etc. At an average these individuals and families contribute to the local economy and will set a path where companies might move their offices to countries with less restriction.

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Trump and conservatives are advocating socialism, minimum wage for USA

Background

It might sound ridiculous and hypocritical, but Trump and Bannon army are advocating Socialism in Technology sector and in a bad way.  Currently USA has one of the most vibrant technology sector thanks to immigrants and employer’s ability to hire someone right out of college even if they are in remote part of the world.  This gave rise to the likes of Sundar Pitchai and Satya Nadella (Both H1B candidates), who run two biggest brands in Technology.

Minimum wage for low level employee

It is widely known conservatives hate minimum wages when it is applied to waiters, store clerks and other low paid jobs. Setting a minimum wage of $15 per hour seems to throw everything off balance for conservatives. The main argument being, not to interfere in Business liberty and  market will determine the salaries. On the other hand same conservatives and Trump in particular enjoy benefits of imported labor under H2 Visas.  These low wage workers make less than $12 per hour, or less than $25,000 per year.

Minimum wages for Tech Industry

While the conservatives hate minimum wages when it comes to the poor, they want to fix minimum wage of $100,000 ($41.6/hour)  for the tech industry. Currently an average H1B makes $85,000 per annum ($35 per hour). Tech industry is booming in USA and the industry averages nearly 2 times the salaries in rest of the world.

Possible motives

The only reason for the minimum wage is hatred towards Tech industry, which is generally considered liberal in their ideology.  This is way for Trump’s team to kill the Tech industry and probably replace with low paying coal or manufacturing industry.

Other standout reason being, the more successful folks in the industry are recent immigrants from Asia and India in particular. With the anti immigrant narrative, any action on people of color will rally the base, while destroying a liberal sector.

End Result

Companies like Apple have already moved their manufacturing  and their tax headquarters  out of USA, it wouldn’t take much time to move the development headquarters to Canada, Mexico and India in near future. Already all Top 20 Software giants have more than 1 center in India, all the displaced employees and the jobs will be easily accommodated out of USA. Trump is just giving a reason to do so.

 

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How does low wage H1B’s affect US economy? How low are H1B wages ?

Most of the hate and vile comments towards H1B visa program carry an important message, “Americans are losing jobs to cheap wages of H1B”.

Let’s have a look at some key factors.

Indians occupy upper Middle class of US economy, per US Census Bureau  with a median income twice as of average American.

H1B Salaries

Average H1B employee makes a salary of around $86,000 per annum (source) and most places this average at nearly $40,000 above median income of their locations.

Also consider this US DOL sets a minimum wage of $60,000 per annum for a H1B and add legal fees borne by employer ($5K per year), also add the travel and relocation fees from India of $10K.  To hire a junior programmer with minimal experience in a small town, it will cost an employer at least $75K per annum.

American College Graduate Salaries

American college graduates are feeling the pinch more than ever in the last few years, they come out of college with more loans and struggle to make ends meet. Average college student coming out of a college in US makes less than $50K per annum (source). Then why aren’t US students flocking to get these jobs?

Skills

As a good guideline, kids who enjoy mathematics and reasoning tend to enjoy programming and software development.  While countries like India are  very strong in Mathematics and Science, US is seeing a decline and considered below average by annual exams. (source)

Stress and work-life balance

Software and IT industry is considered high stress due to its ad hoc work schedule, sharp learning curve and critical decision making. Not everyone will enjoy software development and the challenges with it. Most American’s expect a job with flexible work schedule and work-life balance, which sometimes can be tough to come in this industry.

Blaming wages will help pass some laws and get some votes, at the end jobs might go to countries like India when H1B’s go back to their home countries. Unless there is a fundamental shift in education and hardwork, US will struggle to match H1B  employees.