(Friday, 13 April 2018)
By Mona Shah, Esq. & Hermione M. Krumm, Esq.
Recent trends in EB-5 investment have seen huge interest from India, especially among H-1B professionals. This is largely due to the uncertainty surrounding America’s largest guest worker visa, the H-1B. On 6 April 2018, US Citizenship and Immigration Services (USCIS) announced that the congressionally mandated H-1B visa cap for fiscal year 2019 had been reached only five days after the agency began accepting applications. Yet again, the fates of many professionals and skilled workers in the US remain uncertain, driving interest in the EB-5 visa program in an effort to attain security.
The H-1B Guest Worker Visa
The H-1B visa is America’s most popular guest worker visa, allowing American companies to employ skilled foreign workers in specialty occupations that require theoretical or technical expertise. These are often specialised jobs that can be challenging to fill. It has benefitted the tech industry enormously, and other sectors, including healthcare, science, and finance, have also used it to fill gaps in their workforces. The H1-B candidate must have at least a bachelor’s degree. Once approved, H-1B visa holders are entitled to legally work in the US for up to six years, with the possibility of extensions.
It is a popular visa, but applications far outweigh visa numbers. This year, like last, hundreds of thousands of applicants will be disappointed. In 2018 there were 336,107 petitions for only 65,000 visas for the general category and 20,000 visas for the advanced degree exemption; only 197,129 were granted approval.1 The applications were finally chosen randomly through a lottery system.
Popular with Indians
The H-1B skilled worker visa program has been traditionally popular among Indian professionals. In fact, India is the country of origin for more than 80% of H-1B recipients 2, amongst which, many are in the technology sector, ranging from software engineers to computer programmers. The companies that bring in the most H-1B workers, however, are not Silicon Valley tech firms but IT services firms, many based in India, that specialise in consulting or outsourcing. These companies, which include Tata Consultancy Services, Cognizant, Infosys, Wipro, Accenture, IBM India, and Deloitte, are contracted by other companies to do IT work. According to an analysis by Ronil Hira, a professor of public policy at Howard University, in 2014 nearly one-third of new H-1B visas went to 13 of these so-called “outsourcers.” (Tata received the most visas, with 5,650, while Amazon, the tech company with the highest number, got 877.) 3
Critics of the program argue that IT service companies tend to hire H-1B workers for lower-paying entry-level work. For example, Axios reported that 72.4% of Tata’s H-1B visa filings were for jobs paying between $60,000–$70,000 a year.4 Companies like Amazon, Apple, Facebook, Google, and Microsoft mostly filed for jobs that paid well above $100,000.5
According to a report published by Statista, the number one industry that filed most work visa applications in FY 2016 was the computer systems design and related services sector, counting 336,500 among all 399,349 petitions.6
“Buy American and Hire American”
Recent years have seen the demand for H-1B visas soar, while far outstripping supply. On 18 April 2017, President Trump signed an executive order that put H-1B and similar programs under new scrutiny. Titled “Buy American and Hire American”, it directs federal agencies to review whether existing policies adequately prioritise American products and protect American workers. This was also reflected in USCIS’ stringent adjudication of H-1B petitions, as seen by last year’s wholesale issuance of Request for Evidence (RFE) Notices and Notices of Intent to Deny (NOIDs). As a result, H-1B visas are increasingly difficult to obtain.
Difficulties for spouses of H-1B holders
The difficulty surrounding skilled foreign workers has also extended to the spouses and dependents of H-1B holders (H-4 visa holders). Since President Trump took office, rumour has it that the Department of Homeland Security (DHS) intends to strip H-1B holder’s spouses of work authorisation. It is true that for many years since the H-4 visa program inception, H-4 visa holders had not been provided with any work authorisation. This changed under the Obama administration, on 26 May 2015, when USCIS passed the Employment Authorization for Certain H-4 Dependent Spouses rule.
Soon after the H-4 Visa Employment Authorization Document (EAD) rule was enacted, thousands of H-4 spouses applied for H-4 visa EADs and received their first chance to work in the US. Recent data from the US Department of State shows that the number of H-4 visa recipients increased from 47,206 in 1997 to 136,393 in 2017. Most of these visas have been consistently allocated to family members from India, nearing 118,000 in 2017, and this constitutes 86% of all H-4 visa recipients in that year.
One might argue allowing spouses of H-1B holders to work makes the US more competitive. For example, when employers seek to attract talented foreign nationals to work for them, their spouses may continue to nurture their own careers, thus making any job offer that includes the ability of family members to work more appealing. This, in turn, has brought the US in line with other Western countries that compete to attract highly skilled workers. Evidence has shown that immigrant scientists and engineers are more likely to choose a country where their immediate family members are welcome. 7 Furthermore, with many H-4 spouses being female, the ability to work empowers women to contribute their skills to the American economy while ensuring the wellbeing of their families – this is especially important and concurrent with the #MeToo and #EqualPayforEqualWork movement.
The Trump administration, however, clearly has a different agenda in mind. On 14 December 2017, after widespread speculation, DHS published an agenda item “Removing H-4 Dependent Spouses from the Class of Aliens Eligible for Employment Authorization” 8 in the Fall 2017 regulatory agenda, intending to revoke the employment eligibility of H-4 dependent spouses. The proposed regulation is reported to need further revision and finalisation is expected by June 2018.
Backlogs in other immigrant categories
Another factor which has pushed foreign talents, especially those from India, to consider filing for EB-5 is undoubtedly the massive backlog in the EB-2 and EB-3 immigrant visa categories. EB-2 visas are ideal for professionals with advanced degrees, or exceptional ability. EB-3 visas are for foreign skilled workers, professionals or certain other workers. While historically the H-1B to EB-2/EB-3 transition might be a viable option, the long waiting time for EB-2 (currently anticipated to be 11+ years10 ) and EB-3 (currently anticipated to be 12+ years ) to obtain a green card, which is only exacerbating as time goes on, has rendered it nearly impossible.
Trump’s “Buy American and Hire American” order aimed to address some of the concerns surrounding the H-1B visa system. However, how far it will have a chilling effect on high-skilled immigration – and on the economy remains to be seen. In the short term, however, the changes or proposed changes in the H-1B and H-4 realm, coupled with the severe backlog in EB-2 and EB-3, and the noise around family-based immigration, have undoubtedly steered Indian nationals away from the skilled worker route to immigrate into the US, towards EB-5, as shown by the growing numbers of EB-5 investors coming from India.