Trading Visas for Business Deals

Bad Public Policy

By Joaquin F. Otero on December 1, 1997

pp. 7-10 in Immigration Review no. 30, Fall/Winter 1997-98

In recent years, both the Congress and the Executive Branch have adopted policies which enable U.S. trade negotiators to offer non-immigrant visas in return for overseas business opportunities for U.S. companies.

While it is fair that foreign business persons be allowed to enter the United States to oversee and manage their investments, the U.S. government needs to retain tight control over who is allowed to enter and remain in the country, including whether or not such a person has a right to enter our labor market.

The practice of trading immigration visas for business opportunities restricts the ability of the president and the Congress to administer U.S. immigration law and protect the interests of U.S. workers. American workers have much to lose from U.S. government policies that permit government negotiators to use non-immigrant visas as a bargaining chip during discussions of trade and investment programs.

Trade agreements bind U.S. immigration law

The function of the Office of the U.S. Trade Representative is to negotiate trade and investment agreements which promote the interests of U.S. businesses abroad. This usually involves negotiating legally binding agreements that allow for the movement of workers across national borders.

Unfortunately, in the haste to open up previously-closed foreign markets to U.S. businesses, U.S. trade negotiators often conclude agreements which bind U.S. immigration law. This practice limits the ability of policymakers to correct abuses or deficiencies in our immigration system.

Under the current immigration system, an unscrupulous employer could be allowed to bring into the United States (under the H-1B program) 20 computer programmers from India at lower wages than their American counterparts and do so without any effort to promote the recruitment of U.S. workers. Many companies that engage in this practice hide behind a mountain of paperwork and a failed regulatory policy.

While this type of behavior may not be the norm, it clearly is a violation of the spirit in which the visa program was created. And it is a practice that is unfair to American workers and those businesses that follow the rules.

Because the United States has binding commitments on the movement of people under the World Trade Organization's General Agreement on Trade in Services (GATS), some of the measures used to correct these visa abuses could be considered inconsistent with our international obligations. For instance, if the U.S. Congress were to decide to reduce the numerical quota for H-1B workers from the current 65,000 to 50,000, agreed to in the Uruguay Rounds, this action could be challenged by the WTO as a violation of the provisions of GATS. Under the agreement the quota has been bound (indefinitely) at the 65,000 level or higher.

NAFTA has unintentionally created a common labor market for professionals in North America which allows Canadian professionals to be in direct competition with U.S. professionals without any regard for labor market implications. Because NAFTA is a legally binding agreement, the United States could not unilaterally impose a numerical restriction or labor market tests on NAFTA entries without paying some type of trade compensation to Canada or Mexico.

Another example of bad public policy in this area are the trade NAFTA visas for Canadian nurses. Canadian nurses do not need visas to enter the U.S. and there is no labor market test to determine entries and no numerical restriction on how many can be admitted. Shortly after the U.S./Canadian Free Trade Agreement, the number of Canadian nurses entering the U.S. increased rapidly until the situation stabilized somewhat in 1995. Presently, entries of Canadian nurses run at an average of 6,000 per year.

Abuses in the temporary visa system

While many of the employers utilizing the H-1B program do not misuse it, there are glaring abuses with the visa. One notable case involved Syntel, Inc., a computer personnel/services contractor, whose workforce was more than 80 percent H-1B non-immigrants. Syntel contracted with American International Group, Inc. (AIG), a large insurance company, to provide services in the place of nearly 250 U.S. workers, which AIG laid off. Adding insult to injury, the laid-off U.S. workers were required to train their H-1B non-immigrant replacements during their last few weeks of employment. Even more astonishing is that laying off and displacing U.S. workers is permitted in the H-1B program.

What was illegal, however, was Syntel's underpayment of its Indian computer programmers by nearly 20 percent below the wage required by law — about $34,000 per year versus the prevailing wage rate of more than $41,000 per year. As a result of this case, Syntel agreed to pay nearly $78,000 in back wages to 40 H-1B employees and take other steps to recruit and train U.S. workers in order to reduce its dependence on an H-1B non-immigrant workforce.

Another example of H-1B visa abuse is in the health care field and involves Rehab One, a Michigan company which went into the business of providing temporary physical therapists — in this case, exclusively H-1B workers from Poland — to health care facilities primarily in Texas. A Department of Labor investigator found that the company actually paid its Polish therapists as little as $500 per month during certain periods, though it was required to pay a prevailing wage of as much as $2,800 per month.

During the 104th Congress (1995-96), the Clinton Administration advocated reforms to the H-1B program to correct these abuses but the reforms were not enacted. Specifically, the Administration's proposed reforms required employers seeking access to H-1B temporary workers to attest that:

  1. They have not laid off or otherwise displaced U.S. workers in the occupations for which they seek non-immigrant workers in the periods preceding and following the employer seeking such workers; and,
  2. In certain circumstances, they have taken timely and significant steps to recruit and retain U.S. workers in these occupations.

The third proposal sought to reduce the allowable period of stay under the H-1B program from six to three years to better reflect the "temporary" nature of the presumed employment need.

Due to intense business pressure, Congress did not adopt those reforms.

Another visa being abused by U.S. employers is the D-1 visa. By exploiting and misusing the limited crewmember visa privilege (D-1 visas), domestic airline carriers are hiring foreign-national crews to work on international flights in positions that traditionally have been held by U.S.-based flight attendants.

United Airlines employs over 2,600 foreign crew members in seven bases around the world. American recently hired 800 to fly routes between U.S. and Latin America. Delta and Northwest are also involved in this practice. Carnival Airlines is hiring flight attendants from Turkey.

The peculiarities of the D-1 visa allows foreign nationals multiple entries into the United States as employees of domestic airlines, though they are required to depart the country at least once every 29 days. However, many become de facto permanent U.S. residents, through misuse of the D-1 visa, displacing U.S. citizens find from good jobs, in their own country, for which they are fully qualified.

America is an immigrant nation with a long, proud tradition of inclusion and diversity, a tradition which has helped it become the world's leading economic power.

However, our non-immigrant visa policy was never intended to be used as a tool to displace U.S. workers. We should be working towards a policy that encourages the training of U.S. workers and eliminates the unfair advantages held by employers who bypass the spirit of H-1B visas. We should not let the few who abuse the visa system put in jeopardy the interests of U.S. workers and the nation at large.

Joaquin Otero has a long history of involvement in labor issues. He has served as Deputy Under Secretary and Assistant Secretary-Designate for International Labor Affairs at the U.S. Department of Labor . In 1991, Mr. Otero became the first Hispanic-American elected as AFL-CIO Vice President and Executive Council member prior to this (1971-1993) he served as International Vice President for the Transportation Communications International Union (TCU).