President Obama’s November executive order deferring the deportation of millions of illegal immigrants has set off a lot of angry news talk. Unfortunately, that chatter has drowned out straight discussion about the part of the executive order that deals with high tech workers and about why immigration reform is needed in the first place. For those of us in the startup community, this reform is particularly interesting.
As the United States moves deeper into the 21st century, it's beginning to change from an economy driven by the manufacturing of widgets to an economy driven by the manufacturing of digits. Or as Netscape co-founder Marc Andreesen is known to have said: "software is eating the world."
“Technology workers are so scarce that their wages have risen to the point where if they rise much higher then it would not be profitable to employ them,” said Alex Nowrasteh, immigration policy analyst at the Cato Institute, a think tank.
The shortage, however, isn't a general shortage. This shortage is of a particular type. More than generalist software developers, like full stack developers, most tech companies are at pains to find specialist computer skills.
Because the digital technology sector is pushing hard to innovate, specialist skills should be in demand for years to come.
Unable to find enough American workers to fill those specialist positions, tech companies are searching abroad for help. The ebs and flows of that search for high tech foreign workers is well illustrated by the time it takes employers to claim the 85,000 H-1B visas available each year (the H-1B visa is the primary visa used to bring over highly skilled immigrant workers).
Between the 2009-2011 recession it took almost a full year to claim all of the visas available. However, as unemployment dropped and the economy improved, visas are now being claimed in a week or less. Leading to a new problem: tech demand for high skilled labor is now bigger than the restricted supply the US government allows in every year.
Frustrations with the system
The main way tech companies get foreign talent into the United States is the H-1B visa. Capped at 65,000 visas per year for immigrants with undergraduate degrees, with an additional 20,000 visas granted to immigrants with graduate degrees or higher, the H-1B visa impedes the hiring of foreign-born tech workers, creating a shortage when there is no one available in the United States to fill the role.
That shortage is further inflamed by the fact that after six years immigrants on the H-1B visa have to leave the United States. To stay in the U.S. they have to get a green card (permanent residency), but often can’t because of additional restrictions on the number of green cards issued per country. Chinese and Indian immigrants can wait in legal limbo from seven to 10 years for permanent residency. And while they wait their ability to change jobs is near impossible because they don’t want to abandon their employer’s permanent residency sponsorship.
All of this can get confusing very quickly. For immigrants who are interested in living and working in the United States permanently it discourages and frustrates them. For tech companies desperately in need of high tech talent, it adds an unnecessary layer of uncertainty to the most profitable part of their business: innovative talent.
This brings us to president Obama's recent executive order on immigraiton. Unable to help tech companies by changing the immigration and permanent resident admission caps (only Congress can do that), the president has come up with a number of clever ways to reform the law from within.
Giving immigrants more certainty & mobility
Firstly, the order seeks to alleviate pain by giving immigrants more work freedom and a more secure status while they wait to become permanent residents.
“In particular, they can get employment authorization and advance parole, which allows them to work and travel without the restrictions of the H-1B. They can work anywhere,” said Mark Davidson, immigration lawyer at Davidson and Schiller LLC in Chicago. “Second, it allows them to be portable, which refers to the right to continue the process to permanent residency without having to stay with the same employer that filed their labor certification and filed their immigrant visa petition.”
The order also encourages high tech immigrants to put down roots in America by easing restrictions on their families. Spouses and children can now get work authorization. “Essentially, this creates greater job mobility,” said Davidson.
By providing a more secure status while waiting for permanent residency and by allowing immigrant's spouses and children to work, the executive order could make staying in America more desirable. It also loosens the high tech labor market, something that could benefit startups who are starved for talent, but can’t afford the money and labor required to bring over immigrant workers.
Obama's startup visa
The president has also proposed changes that sound like his version of the startup visa — a proposed visa for entrepreneurs who want to start companies in the United States.
Specifics on how this part of the executive order will work are vague, but the White House said in a statement it will “expand immigration options for foreign entrepreneurs who meet certain criteria for creating jobs, attracting investment, and generating revenue in the U.S.”
Longer post-graduation visas for STEM degrees
The White House has not fully filled in the details on this, but some have speculated that the president could extend the time foreign-born STEM graduates of American universities are able to stay on Optional Practical Training (OPT), a visa that allows students to work for a limited amount of time after graduation. It is believed that graduates, who can work up to 29 months now, might be able to work 48 months.
However, “what he is going to do with OPT is exceedingly vague,” said Davidson. “We assume there is going to be some generous realizing of the standard.”
A more generous standard is likely to mean a broader definition of STEM graduates.
Also, ”immigrants will probably have an easier time extending their OPT than they have in the past,” said Davidson.
As of 2010, only 35 percent of H-1B visas went to foreign born STEM graduates. Keeping foreign-born graduates in the United States might help reverse a brain drain, where foreign born students take spots at American universities only to take their knowledge home with them later.
Expanding the usage of the L-1 visa (intra-company transfers)
In recent years the L-1 visa, “has been subject to such high standards, that it is nearly impossible to use the category anymore,” said Davidson. The L-1 visa is used for intra-company employee transfers. For example, a company transfers an employee from their office in Dehli, India to San Jose, California. Also, it can be used by foreign companies to set up offices in the United States.
The president may relax the L-1 visa, giving multi-national corporations another option for bringing employees over to the United States, thus lowering the pressure on the 85,000 limit on H-1B visas.
Some improvements, but a reality check is needed
The president’s executive order gets rid of some uncertainty of working on a temporary H-1B visa, widens the path to permanent residency and allows family members of primary visa holders to put down roots in America. Unfortunately, those things just push out the sidelines a bit, giving tech companies more running room within the immigration system.
“Obama is not really addressing [the visa restriction]; he is addressing things that alleviate the pain,” said Davidson.
The pain itself can only be removed by an act of Congress. And more and more people think the economic realities should push Congress to think harder about immigration reform. Studies have shown that highly skilled immigrants tend to be complimentary to American workers
, tech companies clearly need the help and America has a proud tradition of immigrant driven enterpreneurship including the likes of Alexander Graham Bell, inventor of the telephone, industrialist Andrew Carnegie, and Nikola Tesla, pioneer of modern alternating current electricity.
"We have a great cultural of assimilation in this country. Anybody in the world can become an American," said Nowrasteh. Besides, “from the economy perspective it is a sort of no-brainer.”
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