Trump’s populist visa restrictions will hit tech industry hard

Karlin Lillington: Double whammy for Irish techs as Australia and US change visa rules

This week delivered a double whammy for Irish people thinking of working in two popular destinations, Australia and the US.

On Tuesday, Australian prime minister Malcolm Turnbull announced he would scrap the 457 visa programme, regularly used by Irish emigrants of all skills levels. Later the same day, US president Donald Trump signed an executive order that could lead to significant restrictions on the H-1B work visas that are heavily used by the technology industry.

The US H-1B programme, a three-year renewable visa, targets “highly skilled foreign workers in speciality occupations”, according to the US Department of Labor website. H-1Bs are heavily oversubscribed. Some 199,000 people applied this year before the US government stopped accepting applicants, but only 65,000 visas are given annually (plus another 20,000 for those with graduate degrees from US universities).

Every year for the past five years, the number of applicants has hit that limit five days after the annual process opens, which triggers a lottery distribution of the visas.

Irish workers were awarded 3,200 of the visas between 2010 and 2015. Many of those are likely to have gone to large scale tech employers here such as Google, Facebook and Microsoft, to enable Irish employees work in their US operations.

Programme reform

The H-1B programme definitely needs reform. As far back as I have known of the programme – decades, now – there have been a variety of complaints, including that foreign workers are cheap short-term hires. A key beef now is that a huge number of H-1Bs – around a third in 2014 – go to outsourcing consultancies that bring in tech-skilled workers for contract work. But – surprise – it isn’t exactly clear what Trump intends to do.

At the order signing, Trump spoke about the “theft of American prosperity” by lower-wage immigrant workers. He suggested visas will become harder to get, with the highest waged applicants prioritised to supposedly protect American jobs. Unless, it seems, workers are doing low-paid, non-unionised jobs at places such as Trump’s own hotels, or his son’s winery. The Trumps employ dozens of workers on the alternative H-2B and H-2A visa programmes for temporary workers. Neither of those programmes has been criticised by Trump.

Trump’s statements at the signing, and the fact that he did it at a tool manufacturing company in Wisconsin, would have you thinking plenty of blue collar workers are losing their jobs to H-1B holders.

Rewarding visas to higher paid and qualified workers means the most powerful tech companies, with plenty of cash and other resources, win.

More populist nonsense. According to US government figures, two thirds of those H-1B applications each year are for jobs in comparatively well-paid STEM (science, technology, engineering and mathematics) occupations, with others in finance, business, healthcare and life sciences. And though there are occasional anecdotal examples, there’s no clear evidence that many (much less most) H-1B holders constitute a cheap workforce, or that their presence adversely affects wages overall (keeping in mind they comprise just 85,000 workers annually in a US workforce that numbered 123 million in January).

Actually, there's evidence of the opposite. US labour department statistics show that H-1B holders earn more than primary degree-holding US citizens, $76,356 (€71,224) compared to $67,301 (€62,766) annually. The American Immigration Council notes: "When comparing workers of the same age cohort and occupation, H-1B workers earn higher wages than their native-born counterparts" in 17 of 20 age cohort and occupation groups.

So, prioritising the costliest jobs for H-1Bs isn’t likely to deliver many US blue-collar jobs or increase wages, just nab more very high end STEM workers for companies that can afford them.

Winners and losers

Rewarding visas to higher paid and qualified workers means the most powerful tech companies, with plenty of cash and other resources, win. Startups or smaller companies, including Irish companies that wish to set up in the US and want to bring over, say, their engineering team or some management, lose.

And the tech and related sectors already receive the lion’s share of H-1Bs. Though some in the tech sector cautiously welcomed the order, this is typical industry hypocrisy. Why should tech – and specifically, the biggest or best funded companies – hog even more of the visas, due to their ability to pay higher salaries?

Long term in the US, this move is going to stifle rather than promote innovation, company expansion and job creation in sectors where immigrants have been a creative driving force for decades. And big companies may simply opt to bring more jobs offshore (perhaps a small scrap of upside for Ireland).

Limiting H-1Bs in this way will also truncate the creative cross-fertilisation and broader skills acquisition that benefits countries such as Ireland, when workers and entrepreneurs can spend time abroad and return with enhanced abilities. Such enriching movement helped drive the Irish tech success story from the 1980s onward.

A federal review of the entire US immigrant worker visa programme is promised in the order. We have to hope wiser heads, with more productive reform ideas, will prevail by then.