65,000 H-1B Visas—Will Our Economy Benefit or Hurt When the Cap Goes Back Down?

In October, the H-1B cap will revert to 65,000 from 195,000. Employers who utilize the H-1B program extensively will know that this is a huge reduction in availability of the H-1B program for the employment of foreign nationals on a temporary basis in a professional occupation. For the last four years the cap has ranged from 107,500 to as high as 195,000 between FY 1999 and FY 2002. Generally an H-1B approval counts against the cap when the foreign national has not been in H-1B status (with exceptions of course). Given the continuing economic slump, many wonder whether the sharp decrease will even have an impact on the economy. Of course there will be an impact, the more important question is - will it be good or bad?

So, what impact, if any, will the decrease in the H-1B cap have on our economy, U.S. businesses and employers? Initially, the driving factors in the legislative push and eventual success of increasing the H-1B cap was the high demand for IT workers as the high tech industry catapulted itself along with the economy to heights never imagined at a rate never expected. Unfortunately, since March 2001 the down-turn in our economy and the bursting of the dreamlike dot-com bubble has reduced the demand for IT workers and similar computer occupations drastically. Historically, employment of these workers in H-1B status accounted for the majority of H-1Bs granted; therefore, the dramatic drop in employment in this industry is now reflected in the number of approved H-1B petitions for new admissions.

Based on the general economic trends, what do the numbers tell us about the H-1B program, its uses, its users and its impact on the economy? When you look at the statistics released by Legacy INS, the number of H-1Bs actually used each year do in fact mirror the needs of employers based on economic trends. The reports have provided the following account of the filings:

The significant drop in the number of petitions filed and those filed for individuals obtaining H-1B status for the first time seem to indicate that the H-1B program accurately reflects the needs of employers and the economy. But, should this necessarily mean that lowering the H-1B cap is actually beneficial? How quickly will we be able to increase this number when there is a revival of the high tech sector or other sectors as the economy eventually begins to improve?

Even if the economic slump continues for a while, what about industries that are and will continue to experience a high shortage of professionals in specialty occupations, i.e. health care? How will employers in these industries cope with only 65,000 visas? In spite of the losses in the high tech industry, U.S. employers nationwide continued to utilize the H-1B program in 2000, in 2001 and 2002. In these years, irrespective of the high tech industry, new petitions filed and counted against the cap still exceeded the 65,000 which will be in effect for FY 2003. It is clear that U.S. businesses continue to rely heavily on the H-1B program, moreover, a mere 65,000 visas per fiscal year will not support our economy’s current or future needs, which in turn will impact our ability to remain competitive in the increasingly global economy.

Numbers don’t lie. In FY 2001, 89,403 of the initial employment petitions filed were for specialty occupations other than computer-related professions. These visas were utilized by other occupations including engineering and architecture, administrative (accountants and sales), education, medicine, life sciences, mathematics, art, writing, legal, and fashion models. In fact, occupations in medicine, health care and education are perfect examples of industries that are suffering from a shortage of workers and which continue to grow and demand the skills of foreign workers to fill vacant and critical positions. These occupations and the numerous others that rely on highly-educated professionals could face extreme competition with each other and with the IT sector in FY 2003 when only 65,000 new visas are available.

Again, numbers don’t lie. A July 27, 2003 article in The Washington Post titled "Immigrants Fill Workforce Voids" recites the findings of a Northeastern University study and states that "most of the nearly 16 million jobs created from 1990 to 2001 were filed by new immigrants, allowing the nation’s labor force to expand by 11.5 percent. Without immigration, the workforce would have increased by only 5 percent, overall economic growth would have been limited." The top industries for new immigrants included retail trade, manufacturing, professional services, business/repair services and construction. Specifically 50.3% of the 16 million jobs created, that is over 8 million jobs, would have remained vacant if not filled by immigrants.

Even with the $1,000 training fee paid by employers to fund training programs, scholarships and grants, there is still a shortage of U.S. students graduating with advanced degrees who can fill the specialized positions for which there is a high demand. Many of these programs are just starting or have started with students at a young age who have not even begun their undergraduate studies. How long will employers have to wait to fill the openings for scientists, doctors, accountants, pharmacists, analysts, artists, engineers and architects?

Foreign workers have for decades fueled our economy by filling these positions and numerous other positions, creating new advanced technologies, performing ground-breaking research benefiting numerous governmental and research organizations, and enhancing our cultural and economic status. The decrease in the H-1B program cap will have a significant impact on our economy and our ability to compete in the foreign marketplace and further maintain our current health, technology and educational systems that tend to rely heavily on foreign workers with advanced degrees. The numbers don’t lie: our economic well-being is dependent on the contributions of foreign nationals. Given the continuing economic slump, will the drop to 65,000 impact our economy? Of course it will.

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