Trump Calls for Changes to H-1B Program, Procurement Process in ‘Buy American, Hire American’ Order

Trump Calls for Changes to H-1B Program, Procurement Process in ‘Buy American, Hire American’ Order

President Donald Trump is expected to sign an executive order titled “Buy American, Hire American” that calls for changes to the H-1B temporary skilled worker visa program, Reuters reports:

The order he will sign on Tuesday will call for “the strict enforcement of all laws governing entry into the United States of labor from abroad for the stated purpose of creating higher wages and higher employment rates for workers in the United States,” one of the senior officials said.

It will call on the departments of Labor, Justice, Homeland Security and State to take action to crack down on what the official called “fraud and abuse” in the U.S. immigration system to protect American workers. The order will call on those four federal departments to propose reforms to ensure H-1B visas are awarded to the most skilled or highest paid applicant.

Neither Trump himself nor the heads of these agencies can unilaterally make changes to the system by which the visas are allocated—that requires an act of Congress—but H-1B reform was already on Congress’s radar. While the latest round of H-1B applications opened without any rule changes, the Trump administration has warned employers that it will use the full extent of its executive powers to crack down on companies that use the visa program to replace American citizens with cheaper foreign workers.

While early indicators pointed to a possible spike in the number of H-1B applications, the uncertain future of the program appears to have had the opposite effect, CNN reports, and US Citizenship and Immigration Services announced on Monday that it had received fewer than 200,000 H-1B applications this year for the first time since 2014. Although the 199,000 applications submitted in this round still far exceed the annual H-1B cap of 85,000, they was notably fewer than the 236,000 that USCIS received last year:

“In an atmosphere of uncertainty, I suppose it is not surprising that fewer petitions were filed this year,” said Betsy Lawrence, the director of government relations for the American Immigration Lawyers Association. “Some IT firms in India announced they were reducing the number of lower-experienced workers they were filing petitions for, meaning more of those jobs will stay in India rather than being relocated to the U.S.”

Lawrence said it will be difficult to know what contributed to lower numbers until there’s more data. “Many employers have been unsuccessful in petitioning in past years so they might have been less willing to go to the trouble and expense of preparing petitions,” she added.

Meanwhile, writing at HRE, Peter Cappelli highlights a recent study from the National Bureau of Economic Research looking at who wins and who loses from the H-1B program:

So who benefits? The companies that employ them, leading to lower prices for the goods and services they produced and in turn benefits for consumers. I’m in India as I write this column, talking with people in the IT world. They say that young Indian IT workers love the idea of going to the U.S. on H1-B visas. They make a lot more money while they are there, and it’s generally a time in their lives where, if they have families, spouses and kids, can more easily come with them for the three-plus years of the program. So U.S. employers can get their pick of overqualified candidates.

Who loses? U.S. employees in computer science see their wages lower as a result. Here’s the finding that may be a surprise: College enrollment in IT programs declines when the H1-B visa program expands. Why should that be? Because there aren’t as many IT jobs available to U.S. workers, and wages for them are lower, so some students would otherwise pursue that field go elsewhere.

Trump’s order also takes aim at the procurement process, ordering a 220-day review of exemptions to the “Buy American” rules that require federal agencies to give preference to US companies when purchasing goods or services. These waivers are included in trade agreements with around 60 other countries; if the review finds that they hurt American workers by allowing foreign companies to undercut their employers, officials told the New York Times, these deals could be renegotiated.