The Department's proposed new rules on the H-1B program are deeply disappointing as they:
- Do nothing for U.S. workers displaced by this needlessly large program;
- Lavish millions of dollars in savings on the employers of H-1Bs;
- Seem to invite huge additional numbers of applications, which will just give industry new arguments for higher ceilings; and
- Create a new way of doing business that seems to be an invitation to gaming.
The main problem with the H-1B program is that it denies U.S. workers jobs and runs counter to the thrust of the president's Hire America program.
Unless I missed it completely, there is nothing in the proposed regulations that helps U.S. residents recapture any of the nearly one million jobs currently held by H-1Bs. (I saw nothing in the document as useful as an estimate of the reach of the program, the nearly one million estimate is my own.)
On the other hand, there are numerous pages that deal lovingly with how DHS proposes to save the H-1B employers millions in administrative costs. One of these tabulations seems to indicate that when employers secure one or more H-1B lottery tickets the new system will cost them all an extra $6.2 to $10.3 million, but when they do not get selected it will save them $47.3 to $75.5 million, for a net savings of $41.1 to $65.2 million.
Currently, a would-be employer of one, or thousands of, H-1B workers(s) must file a complete Labor Condition Application (LCA, ETA-9035) for each H-1B job with the U.S. Department of Labor (DoL), and a nonimmigrant worker petition (I-129) with the Department of Homeland Security (DHS). There are usually more than twice as many such application packages filed as slots available (65,000 for those with at least a bachelor's degree, and 20,000 for those with at least a master's). DHS then holds a lottery among the master's degree applications; those applications that are not accepted then go into a second lottery along with the bachelor's degree applicants.
The proposed new process would cut down on the paperwork by 1) setting up an electronic registration system; and 2) by running the lotteries first, and then asking those employers who won in the lotteries to file applications for the jobs that were selected. Thus employers would need only to submit the application packages in cases where they had already won the lottery, thereby saving themselves millions in administrative costs as a result. The non-handling of the losing applications would also save the government some money, and that is useful.
This brings up yet another savings for the employers, which I did not see spelled out in the proposal, though it may be hiding in the text.
There are a range of fees laid on each of the applications to DHS (but none on the ones that go to DoL.) These run from $1,710 to $7,210 with the H-1B-dependent firms paying $4,000 a pop more than other firms.
Currently, the fees must be paid when the applications are filed, and are returned later if the applications are not selected. Under the new system the fees would only be applied to already-accepted applications.
Under the old system, the employers who did not win were making a substantial, no-interest loan to Uncle Sam. This will no longer be true. There is to be no fee for the initial registration; the fees will be paid only for those winning the lottery.
My sense is that the combination of completing all the forms and lending the feds thousands per application serves to reduce the number of applications filed under the current system. With neither of these brake-like functions in place, I suspect that the number of registrations, under the new system, will increase sharply.
With minimal paper work, and no fee-paying, H-1B employers will be able, if they want, to game the system at will. Let's take five small H-1B outsourcing entities, each known to the others; each would like 20 new H-1Bs from lottery. If all five file for 20 each they are likely to get four of the aliens they want (assuming a 5:1 ratio of applications to slots.)
On the other hand, the five might collude before the registration period, share their lists of potential H-1B aliens, pooling their 100 candidates; then each would file for 100 them. If the lottery produced 20 winners and 80 losers for each of the firms, on average, then the five could trade among themselves, each getting about the number people that they had wanted.