Why Tougher US Visa Rules For Highly-skilled Foreign Workers Could Be America's Loss And China's Gain - TheStreet

Why Tougher US Visa Rules For Highly-skilled Foreign Workers Could Be America's Loss And China's Gain

H-1B visas are issued temporarily to highly educated immigrants who work in specialised occupations, such as technology or medicine Trump's new visa rules for foreign workers have seen denial rates rise and the technology sector squeezed when it comes to hiring overseas talent
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Why Tougher US Visa Rules For Highly-skilled Foreign Workers Could Be America's Loss And China's Gain

When 29-year-old Nora Xu flew to the United States six years ago, she was hoping to pursue a stable life in the country by studying computer science, like millions of bright Chinese students before her.

She sealed part one by picking up a bachelor's and master's degree. Part two has been more difficult though, and after applying for hundreds of suitable positions, she has yet to land an entry-level job.

"This year has been extremely difficult for foreign students and employees … there are too many obstacles and I feel no one is supporting us," said Xu, who has applied for about 8 positions per day in the US. "Especially with the Trump administration, I feel he just wants to sweep us [foreign students] out of the US."

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Xu's job search has been hampered by the pandemic but things were made even more difficult after the Trump administration last week announced significant changes in the H-1B visa program, which is a possible pathway to US citizenship for foreigners.

An H-1B visa is issued temporarily to highly educated immigrants who work in specialised occupations, such as technology or medicine. The new rules require US companies to pay higher wages to skilled foreign workers, narrow the type of degrees that qualify foreign workers for certain jobs, and shorten the visa period for certain H-1B employees.

And the brunt is being felt by younger foreign talent, who are looking for entry-level jobs after college and who now face being edged out in favour of domestic candidates due to the higher salary requirements placed on prospective employers.

"No one can compete with American workers when they're given a fair and level playing field, which has not happened for decades," said President Donald J. Trump in a White House statement last week. The Trump administration in May also accused the Chinese government of using "graduate students to steal intellectual property and technology from the United States", allegations that the Chinese government has repeatedly denied.

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Ken Cuccinelli, the No. 2 official at the Department of Homeland Security, said in a news conference call last week that he expects about one-third of H-1B visa applications would be rejected under the new set of rules, according to The Wall Street Journal.

"The new restrictions may prompt many foreign nationals to return home, both because it may be harder for them to receive a job offer and because of the uncertainty caused by the new rules," said Stephen Yale-Loehr, a professor of immigration law at Cornell Law School.

A man wearing a face mask on the steps of Harvard University's Widener Library, in Cambridge, Mass. Photo: AP

A man wearing a face mask on the steps of Harvard University's Widener Library, in Cambridge, Mass. Photo: AP

"Even if former vice president Joe Biden wins the election, these rules will take effect before he becomes president. And Biden's immigration platform also includes requiring higher wages for H-1B workers," he added.

The visa changes come amid rising tensions between the world's two-biggest economies, and a policy push by China to achieve greater self-sufficiency in core technology areas, such as semiconductors and artificial intelligence. An escalating tech war has seen China's network equipment and smartphone giant Huawei Technologies cut off from US-origin technology by the Trump administration and ByteDance's short video hit TikTok facing a ban in the US unless it finds a US partner.

The stakes are high for the US as several academic studies have shown that immigrants have historically contributed greatly to economic ingenuity in the country. Mainland China-born workers play an important role in the US, accounting for 11.9 per cent of all H-1B visas approved in the year to September 30, 2018, the second-largest ethnic group after India, according to a report by the US Department of Homeland Security (DHS) last year.

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Among international students majoring in computer science and maths in US universities, Chinese nationals were the third-largest group behind Indians and Nepalese in the 2018-2019 academic year, accounting for 19.9 per cent of students, according to the Institute of International Education.

And the technology industry attracts the most H-1B visa holders, with computer-related occupations accounting for about two-thirds of these visa holders, according to the same report by the DHS.

The US unemployment rate in computer-related occupations increased to 3.5 per cent in September compared with 3 per cent in January - indicating stable demand for these skilled workers. The unemployment rate in other occupations jumped from 4.1 per cent to 7.8 per cent over the same period, according to a report this week by the National Foundation for American Policy, using data from the Bureau of Labor Statistics' current population survey.

"The latest Bureau of Labor Statistics data show the US unemployment rate in occupations most common for H-1B visa holders did not change significantly between January and September 2020," researchers wrote in the report.

"It is not sensible to make long-term immigration policy by citing the short-term employment situation affected by an unprecedented health crisis, particularly since numerous academic studies have shown that foreign-born individuals do not adversely affect [the employment situation for] US workers," they wrote.

Since 2017 the Trump administration has flagged its intention to to tighten up the H-1B visa program. Denial rates for new H-1B petitions for initial employment rose from 6 per cent in 2015 to 29 per cent through the second quarter of this year, according to another report by the National Foundation for American Policy, which analyses data from the United States Citizenship and Immigration Services (USCIS).

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Chinese students involved in robotics, aviation, engineering and hi-tech manufacturing - priority areas in Beijing's "Made in China 2025" industrial policy blueprint - face tighter controls in particular, such as delays in visa approvals as a result of additional reviews, which have put their academic and professional career prospects at risk.

Foreign students who hold degrees in any of the STEM fields - science, technology, engineering and mathematics - can only remain in the US for up to three years under what is officially known as "optional practical training", known as an OPT visa, if they do not obtain an H-1B visa.

An H-1B visa is issued temporarily to highly educated immigrants who work in specialised occupations, such as technology or medicine. Photo: Handout

An H-1B visa is issued temporarily to highly educated immigrants who work in specialised occupations, such as technology or medicine. Photo: Handout

The new visa requirements raise the wage level of entry-level workers to the 45th percentile of their profession's salary from the 17th, while the wage level for the highest-skilled workers has been raised to the 95th percentile from the 67th, according to a document published by The Employment and Training Administration (ETA), a sub-agency of the Department of Labor.

In practice, the wage level is different based on the specific roles and the state where the job is based. A search on the Foreign Labor Certification Data Center, which is under contract with the US Department of Labor, Office of Foreign Labor Certification, showed that the prevailing annual wage of a level one software engineer applicant working in Seattle has been raised from US$92,100 to US$139,880 based on the new rules which came into effect last Thursday.

"With the new restrictions, the wage for a junior position has now been adjusted to a senior level, and as such it will be much harder for fresh graduates to find jobs," said Xu.

A 24-year-old software engineer, surnamed Bai, who works at Microsoft, said the new rules are onerous.

"I've never met an [entry level worker] who was offered a package more than US$125,000 … in general, a fresh graduate would need two promotions to meet the new basic salary [to apply for an H-1B visa]," said Bai.

The new DHS rules, which come into effect in 60 days, also narrow the definition of "special occupations" and tighten the requirements around educational requirements for certain jobs. "The petitioner will have the burden of showing that there is a direct relationship between the required degree in a specific speciality and the duties of the position," it says in its new rules document.

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Amazon and Google employees have faced a 15 per cent denial rate for H-1B petitions for initial employment in 2020 compared with 1 per cent in 2015. Cognizant, one of the largest IT services providers in the world, faced a 52 per cent denial rate, compared with 8 per cent in 2015, according to the National Foundation for American Policy, analysing data from USCIS.

Amazon, Google and Cognizant did not immediately reply to requests for comment on the issues raised in this story.

Meanwhile, China has launched several State-sponsored programs, including the controversial Thousand Talent Plan, to lure foreign-trained top talent back to the country with generous packages, from research funding to tax cuts. Many cities in China offer special packages for foreign-educated students, including obtaining hukou - a permanent residency permit which entitles them to many benefits in a Chinese city.

Beijing also relaxed its immigration rules last year, opening the door to more highly-skilled overseas workers who have in-demand expertise and those whose annual income or taxes reach a specific threshold, and allowing a greater number of foreigners the opportunity to become permanent residents.

Some Chinese academics have said the US loss will be China's gain.

"The new US changes [on visa rules] will significantly cut the chance of foreign students working in the country after graduation … these difficulties may see US-educated Chinese students choose to return home, which will benefit China's technology industry," said Junhui Qian, a professor of economics at Antai College of Economics and Management, Shanghai Jiao Tong University.

Qian, who returned to China more than 10 years ago after obtaining a PhD degree in economics from Rice University in Texas, said that if the Democrats win the election, it is possible that they could row back some of the more "extreme measures" taken by the Trump administration.

A federal judge in San Francisco this month partially blocked the Trump administration from enforcing a visa ban, which Trump issued in June, prohibiting foreigners on employment-based visas, including the H-1B visa, from entering the US by the end of the year.

However, Qian said given the high unemployment rate in the US, many US citizens will support the tighter policy. "So we can't expect a reversal in visa and immigration policy after the November election."

Meanwhile, a popular online forum 1point3acres.com, which attracts many US-educated Chinese workers, has offered a live page on developments in US visa policy and a link for users to join a lawsuit against the latest regulations.

"Litigation is being planned challenging the October Department of Labor interim final rule dramatically changing wage rules impacting H-1B, H-1B1, E-3 and PERM filings," it said.

For 26-year-old Marvin Xu, who majored in data science in graduate school and has been working as a data analyst at a small US company in Chicago for a year, his H-1B visa application outlook is now shrouded in uncertainty.

Xu, currently on an OPT visa, needs to negotiate with the company to raise his annual salary by at least US$20,000 to meet the new wage requirements for an entry-level H-1B visa.

"The new restrictions will definitely hit foreign students … This is sure to spark a backlash from Chinese and Indian skilled migrants," said Xu. "For normal people like me, it looks as though the political environment has become more important than individual effort."

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