Trump wrong about H-1B? Threat of 'being Bangalored' illogical: US study

Trump's policy on H-1B visas comes at a time when the Indian IT industry is already facing a tough business environment. Image via Shutterstock
Did US President Donald Trump get his H-1B visa math wrong? A report by a US think tank, the National Foundation for American Policy (NFAP), thinks he did. 

One of the key findings of the report was that fears in the US that H-1B visas granted to foreign workers, especially Indian techies, were draining the job market of opportunities for the natives were exaggerated at best, and, "illogical" if seen in the context of data. 

The 9,356 new H-1B petitions for the top seven Indian-based companies approved in financial year 2016 represent "only 0.006 per cent of the US labour force" , the report said, adding that while the "threat of job loss has long been exaggerated by critics, it reaches illogical proportions when discussing fewer than 10,000 workers in an economy that employs 160 million workers nationwide".

In April this year, Trump signed an executive order called 'Buy American and Hire American' to protect the American industry from unfair competition and stop the "misuse" of H-1B visas. (Read more)

Job-loss, ostensibly caused by immigrant workers, has long been a contentious and politically, sometimes even racially, charged topic in the US. During his campaign, Trump had promised to bring American jobs back to the US. Other lawmakers have also raised the issue in the past. The report, for its part, contests many of the 'reasons' cited for tightening immigration regulations. 

The numbers just don't add up

According to the 'H-1B visas by the numbers' report by NFAP, the April 2017 unemployment rate in the US for "computer and mathematical science" occupations was 2.5 per cent – a very low rate, even lower than the 4.4 percent for "all occupations", according to Bureau of Labor Statistics data. The unemployment rate for "architecture and engineering" occupations is even lower at 2.1 per cent. 

These numbers, the report posits, "illustrates a disconnect between reality and claims" that high-skilled foreign nationals are preventing US workers from pursuing careers in technology-related fields. 

More jobs than workers

In fact, contradicting claims that foreign workers will gobble up all the jobs, the report cites, which used data from the Bureau of Labor Statistics to show that there would be "1.4 million more software development jobs than applicants who can fill them by 2020... and there are more than 500,000 open computing jobs nationwide."

Despite the data and what it indicated, Indian information (IT) technology majors are already facing the heat of tightening visa norms, which, along with a challenging business environment and the shift to artificial intelligence and digital technologies, has already claimed scores of jobs in the sector (Read more). The inclement weather faced by the industry has even brought down the fat paychecks for big names like Infosys' Vishal Sikka and Wipro's Azim Premji. (Read more)

Visa restrictions could actually kill more jobs

Trump has not been kind to companies engaged in outsourcing. "Being bangalored", a euphemism for losing your job to outsourcing entered the American lexicon years ago. In his election rallies, Trump had promised to put an end to this. However, if the report's findings are to be considered, clamping down on immigration will only lead to more outsourcing. 

"Economists note that if policymakers want less 'outsourcing', then they should increase immigration. The more Congress and executive branch agencies restrict immigration, particularly the use of H-1B and L-1 visas, the more likely companies are to increase their investments outside the United States, both in their own offices and affiliates, and through contracting out to other companies. New restrictions on the ability of IT services companies to hire people on H-1B visa holders or transfer in employees with specialised knowledge will increase the amount of work that is performed outside the United States," the report explained.

Trump's lower wages argument may be wrong too

When Trump signed the aforementioned executive order in April, a senior official from his administration had claimed: "about 80 per cent of H-1B workers are paid less than the median wage in their fields". (Read more)

During the same White House briefing, the Trump administration had also accused IT firms TCS and Infosys of gaming the H-1B visa lottery system. 

However, it appears that the "80 per cent" remark may have also been based on incorrect data.

The report explained that the aforementioned figure was based on data from the Department of Labor database that "includes multiple applications for the same individuals, since a new filing is generally required when an H-1B professional moves to a new area". This fact, the report added, meant that the system ends up counting anymore who works in more than one geographic location twice or even thrice. 

"An employer will likely file only one labor condition application (LCA) with the Department of Labor (DOL) for a senior engineer who will work in the company’s main office. But the employer would be required to file multiple applications for a younger worker who will be moved around to different offices throughout the year. In that way, the database would be skewed toward listing fewer higher-salaried senior workers as compared to younger workers – those most likely to be moved around and who make less money because they have less experience. That is why any statistic that relies on the DOL database, such as the 80 per cent figure cited in the background briefing, can be misleading," the report explained. 

Even more strikingly, the report cited data from the Government Accountability Office to show that H-1B workers were earning the same, and even more, when compared to their US counterparts. (See table)

Source: IFAP's H-1B visas by the numbers report

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