The Negative Impact of H1B Visa Reforms

The Indian technology industry is a multi-billion dollar behemoth. Around 55% of the work of these giant corporations comes from America. Also, around 15% of the workforce is deployed in the United States using visas like H1B, L1, etc. H1B happens to be the most used since it allows for workers to stay for 6 straight years in the United States. Hence, outsourcing companies are saved the trouble of the administrative costs that arise from sending people over to the United States over and over again. This nonimmigrant long term work visa has drawn a lot of flak after it has repeatedly been used to displace American workers.

Several articles have been written about how H1B visa reforms will affect the Indian IT industry. However, this article will focus on the adverse impact of Donald Trump’s megalomaniacal policies on the United States itself.

The Argument for H1B

Defendants of H1B i.e. the outsourcing companies believe that they are indeed adding to the value chain. They believe that a large number of people are employed in the United States, thanks to the work they do. As a result, the American government reaps huge amounts in taxes. Also, the relatively cheap labor helps to keep the cost of living low. This enables the government to have lower inflation. The outsourcers have repeatedly pointed out at these numbers to convince average Americans that they are better off with H1B visa workers than without them.

The Argument against H1B

Donald Trump and his brand of patriotic Americans are frowning upon the explanation being given by these outsourcers. They believe that H1B visa workers are not exceptionally skilled workers that are brought into the United States to perform some complex tasks. Instead, most of the tasks that these people perform are routine back office jobs. These jobs require a medium level of skill that is available to the American population. According to Trump, there is no need to import these workers. In fact, these jobs pay relatively well i.e. close to the median American wage. Hence, these jobs could very well be the bedrock of the resurgence of the dwindling American middle class. Trump believes that visa programs are routinely abused. There may be some truth to it. But recklessly implementing anti-immigration policies has several drawbacks.

Makes America Less Competitive

Donald Trump wants to make America great again. However, it was the economic freedom that made America great in the first place. Right through the ages, America has benefitted from the fruits of people who came in to make a better life. Without immigrants, America would face a severe crunch of people who would start or manage huge companies. Apple’s founder Steve Jobs was born to immigrant parents. Microsoft CEO Sathya Nadella is also of Indian origin, and so is Google’s Sundar Pichai. If Trump’s proposals are brought into effect, a lot of these people would not be in the United States. They would be taking their hard work and innovation to another country and making it great! Making America great again should be about attracting more talent and not deporting the one that is already there!

More Outsourcing

With Trump’s rules in place, companies would have to work with the limited talent pool that the American universities churn out. It is a well-known and well-documented fact that American Universities churn out few students from Science, Technology, Engineering and Math students. These degrees are most commonly pursued by immigrants.

Hence, companies would be faced with the choice of cheaper talent elsewhere versus expensive American talent. Most companies would simply outsource their jobs to other countries across the world. Low-cost destinations like India, China, and Philippines, would be more than happy to accept the increased work opportunities created by H1B visa reforms.

Organizations today have gone global. No country can single-handedly enforce protectionist policies even if that country happens to be America. Donald Trump may end up creating more of the problems that he wanted to get rid of!

Colleges Lose Money

The education sector in the United States will also be hit severely by the H1B visa ban. This is because a large number of immigrants into the United States are from India and China. These immigrants come as students and obtain college degrees from American universities. Once these degrees are obtained, these people then pursue jobs in the United States itself. If there is no prospect of future employment in the United States, there would be no reason for Indians and Chinese to opt for extremely overpriced American education.

This would cause a lot of college seats in the United States to stay empty or be filled only after giving huge scholarships. To make up for the loss American Colleges may have to raise tuition fees. This would further exacerbate the circle i.e. fewer Americans with technical knowledge and STEM degrees pushing the jobs overseas.

To sum it up, protectionism doesn’t work. The world has seen many attempts at protectionism and the history books are full of failure stories. Maybe, we are headed towards another one or maybe not. However, the road to blocking of H1B visas will be a lengthy one wherein no immediate action is expected.


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