H-1B Visas - Here We Go Again!

April 23, 2002

A start-up, software development firm headquartered in western Pennsylvania is developing an exciting, new product. The company needs several software engineers and programmer analysts to complete the product development and quickly get the software to market, so it recruits heavily on campuses around the country, in newspapers and, of course, on the Internet. It unfortunately finds that, despite these efforts, it cannot locate enough people to fill these positions.

The Internet recruiting does, however, reveal a group of highly-skilled computer professionals living and working in India who have the exact skill sets and academic backgrounds that the company needs. The human resource manager contacts them and learns that they are very interested in coming to the United States to work for the company.

The company determines that to get them here, it needs to secure what are known as H-1B nonimmigrant (temporary) visas on their behalf. It immediately files the necessary documents with the appropriate U.S. government agencies and anxiously waits for a decision so that it can get them to the United States and on its payroll as quickly as possible.

Three weeks later, the company receives a letter from the Immigration and Naturalization Service ("INS") which indicates that the annual limitation on H-1B visas has been reached so the company will have to wait until the beginning of the government's next fiscal year, (October 1) to bring them to the United States. This is simply unacceptable. The company needed these people yesterday—not on October 1. The human resource manager calls the company attorney and says, "Wait a minute, it's only May 15—there are 4½ months left and they already ran out of H-1B visas? How can that be?" The attorney responds that yes, the human resource manager is (unfortunately) correct, and absent some necessary changes, the problem will only get worse next year.

Does this sound familiar? I have had this discussion with many of our clients both this year and last year—and will in all likelihood (again absent some necessary changes) have again in upcoming years. Why does this keep happening? Is there a solution?

The H-1B is one of several temporary visas available to foreign nationals who are interested in living and working in the United States. This visa, which is specifically designed for "professionals" filling "specialty occupations," basically has two requirements. First, the foreign national must have, at a minimum, a bachelor's degree in an academic discipline relevant to the intended position. Second, the position that he/she will be filling must be one that requires at least this academic background. Assuming these requirements can be satisfied, the petitioning U.S. employer files applications with the Department of Labor and the INS. These petitions are typically processed in anywhere from 3 to 12 weeks and, utilizing the resultant INS Approval Notice, the employee can secure this visa status and work for this employer in the United States.

Until fiscal year 1998 (October 1, 1997 through September 30, 1998) 65,000 H-1B visas were available every year to U.S. employers. Also, until that time, this had not been a significant problem for employers since the allotment had only been reached once before (in fiscal year 1997), very late in the year. This all changed last year when, on June 12, 1998, 3½ months before the close of the fiscal year, the H-1B "cap" had been reached. As a result, companies like the one described above had to wait until October 1 to hire any new employee requiring an H-1B visa.

This scenario was unacceptable to the many companies in industries that rely heavily on H-1B workers for a small—albeit very important—component of their work force. As a result, these companies, assisted by numerous other organizations (including the American Immigration Lawyers Association), lobbied extensively for relief in the form of more H-1B visas. After an intense battle on Capitol Hill, these efforts came to fruition when Congress passed legislation increasing the number of H-1B visas from 65,000 to 115,000 for fiscal year 1999. Although the number of visas is to decrease again in the upcoming years, employers breathed at least a temporary sigh of relief with these much-welcomed developments.

Well, this relief turned out to be very short-lived. Despite a 50,000 increase in the number of visas, the INS ran out of H-1B visas this year on April 9, 1999 -- more than a month earlier than last year! Moreover, as a result of the already-building demand for H-1B visas in the next fiscal year (the INS has announced that there are already 40,000 people "in line"), it is likely that next year's quota will be exhausted by the end of this December!

Why is this happening? For whatever reason, there are simply not enough U.S. citizen/permanent residents to meet the intense demand for these positions. The demand is intense; according to a report issued by the U.S. Department of Commerce, the average annual growth rate for computer systems analysts, computer scientists and computer engineers will top 100% by the year 2006. This means more than 1.3 million new IT workers will be needed to fill job openings and replace workers leaving the field. According to the Information Technology Association of America, this translates to a shortage of 346,000 programmers, systems analysts and computer scientists in the United States in 1998.

Who will fill all of these jobs? Not U.S. workers. According to another report prepared by the American Electronics Association, high-tech degrees—including engineering, math, physics and computer science—declined 5% between 1990 and 1996. Preliminary findings from 1997 and 1998 indicate that this trend is continuing. As the president of that association, William Archey stated, "Although there are some bright spots in the . . . . results, the bottom line is that the U.S. educational system is not adequately preparing our youth for today's information age economy."

Of the students in the United States who are preparing for technical careers, more and more are foreign nationals. Although foreign nationals earned only 7% of technical degrees at the bachelor level in 1996, they secured 32% of the masters’ degrees and 45% of the doctorates. In contrast, while U.S. students are starting to take more math and science courses at the primary level, they still rate poorly among industrialized countries. According to the Third International Mathematics and Science Study completed last year, out of 21 countries tested, U.S. high school seniors placed 19th in math and 16th in science.

What is the answer? In my opinion, it is two-fold. First, we must better prepare students in the United States to go into these fields. Congress recognized this when, as part of last year's "deal" to increase the number of H-1B visas, it began requiring employers seeking H-1B visas to pay a $500 surcharge on each petition. This surchage will be paid into a scholarship fund to train U.S. workers. Although it is still too early to tell how successful this program will be, it is a step in the right direction.

This is, however, only part of a long-term solution. Training junior high school students in math and science will not help high-tech companies throughout the United States who need computer professionals today. As things now stand, these companies have only one answer—securing H-1B visas for these highly-skilled foreign national professional workers. In order that they can—and, in so doing, continue to fuel our country's ongoing economic growth—we must increase the allotment of H-1B visas. Again, although this may not be our best long-term solution, it is all that we have now to solve this very serious problem. Please contact your legislators and, perhaps pointing to your own example, urge them to address this problem by increasing the annual allotment of H-1B visas.

For more information, please contact llebowitz@cohenlaw.com.