President Donald Trump signed an executive order this week that directs federal agencies to implement a “Buy American, Hire American” strategy and to reform the much maligned H-1B visa. No doubt, lobbyists and congressional staffers are working overtime to develop an even more complex visa system that will be riddled with new loopholes. It will benefit large corporations and immigration lawyers and do little for the American worker – and the technology startups that need the skilled talent the most.
The right solution isn’t for government to set minimum wages or pick winners; it is to let the free markets do their magic. The H-1B visa is indeed problematic: It puts both American and foreign workers at a disadvantage. It ties the foreign workers to the employer and allows the employer to pay them less than they could be earning. The simple fix is to allow H-1B visa holders to work for any employer that pays them the highest wage or for the startup that offers the most rewarding work.
In other words, give immigrants the same rights as American workers and cause companies to pay employees their market value.
Technically, any H-1B worker can change jobs by filing a petition with the government, and some do take advantage of this rule. But there is a catch. The H-1B visa allows a path to permanent residency when an employer sponsors a worker. And this is the carrot that employers offer, one that most people coming to the United States want. Once they accept this carrot, however, they are trapped in limbo.
Here is the problem: For decades, the United States has been bringing in large numbers of workers on temporary visas such as the H-1B, but it never increased the numbers of permanent resident visas, or green cards, available for those who want to stay. There are 140,000 green cards issued per year to employment-based visa holders, and the law stipulates that each nationality may receive no more than 7 percent of the total number of employment-based green cards. Considering that Indian recipients make up 71 percent and Chinese recipients nearly 10 percent of the total H-1B visa holder pool, their green-card wait times stretch as long as 15 years.
Once H-1Bs have started the process of filing for a green card, they cannot change employers or even take new jobs within their existing companies without getting pushed to the back of the queue. Therefore, visa holders are shackled to their sponsoring employer while their careers stagnate and they receive salaries that are lower than they could otherwise make.
This is why opponents of the H-1B visa rightfully claim that American workers are disadvantaged, because they are effectively competing with bonded labor.
The problem could be fixed if the number of permanent resident visas available for skilled workers was increased and the wait times decreased dramatically. But this is not going to happen in this political climate. The most realistic solution is to untether the visa holder from the hiring company. In other words, if a company hires someone on an H-1B visa, and the employee gets an offer of a higher salary, they can leave the company regardless of the status of their green-card application. This way there’s no cheap labor anymore, and market forces take over.
Technology companies won’t support such a measure because it causes them to lose leverage over the employee. Politicians won’t propose such a simple fix because it is not what lobbyists want. Instead, we get a series of convoluted proposals that increase the role of government and disadvantage all workers.
Sadly, there is unemployment in the tech industry, and there are many heart-breaking cases of Americans being displaced by cheap foreign labor. This is not an acceptable situation, and it is why we must fix the salary disadvantage. But there is another problem that needs to be recognized. Very often, the unemployed workers are not in the tech centers where the skills are needed or their skills are not up to date. This can be remedied by providing job training and relocation assistance. That is what the government should focus on.
Let there not be any doubt, though, that Silicon Valley is starved for talent and needs the best and brightest from all over the world to be working for it. It thrives on competition of every form, including technology and skill. Attacking immigrants and demanding that companies hire Americans over people who are more skilled, as the president is doing, is the fastest way to destroy America’s competitive advantage.