Economy, Visa Restrictions Scaring Away Foreign Workers


Every year on April 1, the government opens a lottery for 65,000 H-1B visas, skilled non-immigrant workers. (In practice, mostly tech guys from India.) And every year, within days Washington gets flooded with so many applications it quickly stops accepting them, picking who gets in at random.

Except this year. A week after the April 1 start of H-1B season, so far USCIS has only received enough petitions to fill half of the 65,000 cap.

What’s going on?

  • The lousy economy, obviously.
  • Congress put new restrictions in place against banks taking TARP money from using H-1B workers, reducing the pool of eligible employers.
  • There’s a million ways to scam the system, but recently there’s been a federal crackdown on H-1B fraud. The takes some of the incentive to use H-1B workers out of the system.
  • Over the past year there’s been a shift in the political wind against the program, with Senator Charles Grassley writing an open letter to Microsoft (MSFT) saying the company had a “moral imperative” to prioritise American jobs amidst layoffs. Microsoft held firm, but many companies don’t want the PR headache, particularly if unemployment and the resulting anti-immigrant backlash gets worse.

If the H-1B application period closes with fewer than 65,000 petitions, the macroeconomic effects are fairly predictable: A smaller labour pool means tech salaries will rise, which is good for IT workers, and bad for companies hoping to trim expenses at their tech cost centres.

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