Wall Street Journal
By Sara Murray
July 15, 2013
An obscure provision in the Senate immigration bill that makes it tougher for some firms to tap high-skilled, foreign workers could sharply reduce the economic boost the legislation provides, a new study shows.
The analysis by Kevin Hassett, director of economic policy studies at the conservative American Enterprise Institute, says the Senate’s immigration bill would be twice as nice for the U.S. economy if it relaxed provisions that limit the ways certain companies can use foreign hires. The provisions were designed to protect American workers.
The Senate legislation would make up to 180,000 high-skilled visas, known as H-1Bs, available. That’s up from the 65,000 available under the current system. But the more generous allotment of visas comes with stricter requirements, particularly for companies with high shares of foreign workers.
Under those requirements, companies with a lot of foreign workers – mostly Indian outsourcing companies – would have to pay higher fees to bring in additional foreign labor and some could be barred from receiving new visas. That’s sure to be bad news for Indian outsourcing firms but Mr. Hassett said there’s a downside for American companies, too.
Another provision in the Senate bill says any company that has a workforce with 15% or more foreign workers can’t act as an outplacement firm for H-1B workers. That means hundreds of Fortune 500 companies (think Wal-Mart Stores Inc. and J.P. Morgan Chase & Co.) that contract with Indian firms to find high-skilled foreign workers may have to find another way of doing business.
The combination of new restrictions means a lot of the new visas could go unused, Mr. Hassett said. “If we shut that industry down it’s going to take a while for a new approach to evolve,” Mr. Hassett said in an interview. “In the meantime, we don’t get those H-1B folks.”
And the H-1B folks tend to bring economic benefits. One study showed that adding 100 H-1B workers can generate 183 jobs for U.S. natives.
With the high-skilled visa restrictions included, the Senate immigration bill would increase gross domestic product by $204 billion over a decade and federal revenues by $38.6 billion, according to Mr. Hassett’s analysis.
But if the high-skilled visa requirements were changed, it could boost GDP by $473 billion and revenues by $89.6 billion, according to the study.
The visa restrictions were hardly an accident. Illinois Sen. Richard Durbin, a Democrat who helped craft the legislation, has long pushed for more protections for American workers who could find themselves in competition with high-skilled foreign workers for jobs. Mr. Durbin pushed to include provisions to increase the cost of hiring foreign workers and put limits on companies that are heavily reliant on foreign labor.
Rod Bourgeois, a senior research analyst at Sanford C. Bernstein & Co. LLC, said it’s the Indian firms that face the most perilous consequences if the Senate legislation were to become law.
“There is no political argument that’s viable in D.C. to say we need to take care of four Indian firms,” Mr. Bourgeois said.
And while that might mean those firms can’t snap up as many visas, he said other companies — such as Microsoft Corp. and IBM — will snatch up some of them. “If the outplacement ban goes through it will hurt the Indian firms,” he said. But “I think other companies will pick up some of the slack.”
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