Politics & Policy

Fixing Our Visa System

Give U.S. businesses a chance to bid on visas for the foreign workers they value.

Let me introduce you to Paul, a highly skilled immigrant who came to this country in 1962. When he landed in New York City, he was stranded. He had spent most of his assets traveling to the U.S., leaving him without enough money to travel from New York to Oregon, where he was scheduled to begin his Ph.D. program. But he had a vision of a better life for his family, so he didn’t despair. After a frantic call, he was wired the money to make the trip across the country.

After he earned his Ph.D. in electrical engineering, he was offered a job by Bell Labs, a company where major innovations, including the microprocessor, would eventually launch the computer age. But he was unable to attain a green card to stay in the United States as a permanent resident. Even with his Ph.D., his master’s degree in English, and a job offer from a prestigious firm to help develop cutting-edge technology, he had to return to his homeland. Paul and his family packed up their bags. He went to his bank teller to close his account, but then his luck began to change.

The teller asked why he was closing his account. Paul explained his situation, and the teller told him to expect a call from a congressman. And just like that, a private bill providing immigration for his family was introduced by Representative Wendell Wyatt (D., Ore.) and enacted.

Most such stories don’t end so happily. In fact, this series of events would be nearly impossible today, as Congress rarely considers private bills (although occasionally a member will try to introduce one). The legal way to address these needs is now primarily through the H-1B visa system, which allows non-citizens to work in the U.S. in particular skilled fields, mostly technical, where the need is great.

For decades, politicians have been calling for an expansion of the H-1B visa system. There is a massive disparity between the supply and the demand for these visas.  Companies try to get their applications in as quickly as they can for some share of the 85,000 H-1B visas that are allotted each year on a first-come, first-served basis. In 2008, the cap was reached in a single day. In 2012, all slots, which became available on April 1, were filled by June 12. Recently the House passed the STEM Jobs Act, but it does not increase the overall number of visas. Rather, it changes only how some of the visas are allocated (specifically, removing the caps on particular ethnicities and creating a new category to assist foreign-born workers holding Ph.D. and master’s degrees in science, technology, engineering, or math). 

Many bills have been introduced in Congress to increase the cap. Since more than 1 million people obtain permanent-resident status each year, it makes little sense to limit to only 85,000 the number of slots for highly trained and productive individuals who contribute so much to the U.S. economy. A major reason legislation to raise the cap has failed to pass is that the average person thinks admitting more H-1B workers will mean that Americans will lose their jobs to foreign competition.

In the current H-1B visa system, the price of the visas does not rise or fall in response to market conditions. The entirely predictable consequence is that companies scramble for visas and often fail to get enough of them. A company whose need for the visas is strong receives the same treatment as do companies whose need for them is weak. It’s a failed market model.

We should greatly increase the number of H-1B visas and put them up for competitive bidding. There are many models for this. One is the spectrum auction, whereby telecommunications companies bid on government licenses to transmit signals over specific bands of the electromagnetic spectrum.

Competitive bidding would enable the companies that value visas the most to pay for them. And it would help small and medium-sized businesses, which often have the most difficulty filing their paperwork on time and often lose out to big businesses in the competition for the few available visas. Competitive bidding for visas would mean a rational market governed by supply and demand. If as a society we want to “protect” Americans from foreign workers competing for jobs, then perhaps the best way to do that is to put a price-tag differential on the foreign workers.

For example, let’s say we double the number of H-1B visa allotments. If competitive bidding for 170,000 H-1B visas resulted in an average bid of $60,000 per worker, that surcharge would amount to $10.2 billion in government revenue. I would suggest that those funds be used toward deficit reduction, which would appeal to fiscal conservatives who may not already support H-1B visa expansion. Or the funds could be part of an overall tax-reform plan to generate revenue while keeping marginal tax rates low. Some would argue that these funds could be used to pay for new popular spending projects. Microsoft, for example, has advocated that the number and cost of H1-B visas be increased and that the resulting revenue be used toward new STEM (science, technology, engineering, and math) funding.

Highly skilled immigrants are part of our country’s secret sauce of economic dynamism and innovation. According to one report, 46 percent of America’s top venture-funded companies have at least one immigrant founder. The U.S. economy has the advantage of thousands of foreign workers who not only want to work here but also have the talents and skills that American businesses need. Thousands of highly trained foreigners graduate from American universities every year and are sent out of the country because the H-1B visa limit is so low.

Workers who speak English and have advanced degrees and job offers in vital sectors of the economy are precisely the type of immigrants America needs. American companies should be recruiting workers in our “flat” 21st-century world of competition for talent. There is an international market for recruiting such talent, and the United States is barely in the game.

Oh, and about Paul? His full name was Satya Paul Khanna. He is my grandfather, and I am a product of that private bill back in the 1960s. He passed away a few years ago, but before he did, he taught me much. He taught me the value of family. We have taken care to maintain our roots in India. And he proved that with hard work anything was possible. While at Bell Labs, he helped develop the original equipment for the mobile telephone.

My grandfather was a visionary who understood that while you may not have chosen your particular circumstances, you can certainly choose where you are going.

Derek Khanna works as a policy analyst for a congressional office. The views expressed here are his own.


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