Let’s Take a Vacation from the H-1B Program

By David North on January 25, 2023

An industry source says that 1,035 high-tech employers laid off 158,951 workers last year, a large fraction of whom were H-1Bs.

How is the immigration system going to react to this in 2023?

Why, it is going to bring in — unless something changes — some 100,000 more H-1Bs later this year, making life for high-tech workers, both aliens and citizens, that much tougher and perhaps causing a fall in wages for all concerned.

H-1B employers are in the habit of asking for several times as many workers as they really “need” because of the lottery for these workers; in CY 2022, they filed for 484,000 private sector slots and got 85,000 workers. Another 15,000 or so slots went to universities and nonprofit agencies, which are not covered by the statutory ceilings.

The 484,000 applications number is totally misleading, as many, probably most, H-1B employers overstate their needs to get what they really want. There are 20,000 slots available for H-1B candidates with advanced degrees; once that lottery ends, those not selected with advanced degrees are thrown into a second lottery for those with bachelor's degrees — there is a ceiling of 65,000 for this category. A couple of years ago, USCIS had to conduct three lotteries to get to 85,000. They had to run the extra lotteries because many employers, faced with workers won in the lottery that they really did not want, withdrew their applications. Maybe that will happen again this year.

So what will happen when the bloom on the high-tech industry is gone, and layoffs, not hirings, are the new normal? What will be constant is the usually denied truth that H-1B workers are younger, cheaper, and more docile than American workers. There would be appear to be four potential variables at play as to how many H-1B workers employers will request. These are:

  1. Employers’ sense of labor “needs”;
  2. Federal ceilings on these workers;
  3. Federal fees for these workers; and
  4. The element of timing.

Employers Sense of “Needs”. Of the four variables, this is the most dynamic one. While the feds’ ability to make changes in the immigration rules are limited by law, regulation, and the massive political power of the high-tech employers (as opposed to the minimal strength of the American workers, who appear to be reluctant to do anything as sensible as joining a union).

Will the tycoons, such Elon Musk of Tesla and Twitter fame, abstain from seeking new H-1Bs on the grounds that it would look bad to toss out a bunch of workers (including lots of Americans) and then seek new alien ones? Don’t count on it.

Bear in mind that some of these layoffs, such as the 6 percent at Microsoft, are not massive reductions caused by a change in management. If one loses a high-tech job at Twitter, it means that you got caught up in an avalanche of firings. On the other hand, if you lost a job at Microsoft it may mean that you had become too old, too expensive, too unruly, or simply not very productive and management wanted done with you. And perhaps the next round of H-1B hiring would produce a better, cheaper worker.

My suspicion is that the attraction of H-1B workers is such that employers will keep asking for new ones, but at a lower rate than last year, and not so much of a reduction as to obliterate the need for the lotteries.

Government Ceilings. The administration will probably do nothing to seek congressional approval of a vacation from H-1B for a year; nor will it take regulatory steps to reduce the inward flow of new H-1Bs. It will be interesting to see if a single member of Congress will even introduce a bill to cut off new H-1Bs for a single year.

Fees. The government has taken one small step, however, in the right direction. It has proposed a new USCIS fee schedule, as reported previously, lifting the H-1B pre-registration fee from $10 to $215; if the new fee is non-refundable, as was the old $10 one, then it would slightly increase the cost of hiring H-1Bs and would depress, a bit, the number of applications. The increase will not, however, impact this year's recruitment.

Timing. The timing of hiring an H-1B is always awkward. The employer must pull together an application and fee before an early April deadline, but the earliest he can expect the H-1B worker (assuming that all the applications are in order, all fees paid, and winning the lottery) is after October 1. This element makes it more likely that an application will be made than a more flexible and timely arrangement; the employer does not want to miss the opportunity to get that H-1B and will apply, knowing that if withdraws the application, he will only lose $10 (plus the cost of applying.)

So given the huge layoffs, will some gutsy member of Congress take the step of introducing a bill for an H-1B vacation, or even a one-year reduction in ceilings? We will see.

My comments assume, perhaps naively, that most employers use good faith, or close to it, as they approach the H-1B system; my colleague John Miano recently suggested a completely different set of problems, involving fraud, which makes things that much worse.