By Stephen Yale-Loehr and Ted J. Chiappari**

On April 2, 2007, over 130,000 petitions arrived by courier at the U.S. Citizenship and Immigration Services (USCIS), submitted by employers vying for the 58,200 H-1B specialty occupation visa numbers that will become available on October 1, 2007, the start of the next federal fiscal year. The USCIS, which allows petitions to be filed up to six months in advance, is still sorting out by computerized random selection who the lucky filers will be. Employers not selected in the lottery, and those who didn’t manage to file their petitions in this first wave, will for the most part have to do without this useful temporary work visa category until October 2008. That is when the next batch of H-1B numbers becomes available, absent congressional action to alleviate this problem.

            Purely domestic American companies have few visa categories to import skilled foreign workers temporarily. The H-1B visa category is by far the most important. Multinational corporations can transfer personnel from their overseas offices on an L-1 temporary visa, and treaties the United States has with many of our trading partners allow foreign-owned companies to bring in foreign workers with the same nationality as the corporate parent on an E visa. U.S.-owned companies without foreign operations don’t have these options, and must generally rely on the H-1B.

            As background, before a foreign national can apply for an H-1B visa, the U.S. employer must have a petition approved that establishes to the satisfaction of the USCIS that the U.S. employer is offering a job that requires at least a bachelor’s degree in a specialty field (or its equivalent) and that the foreign national meets those requirements. Charles Gordon, Stanley Mailman & Stephen Yale-Loehr, Immigration Law and Procedure § 20.08 (rev. ed. 2007). As part of that petition, the employer must also notify U.S. workers at the worksite that it intends to employ a foreign worker. That notice must include the job title, the proposed salary, and the prevailing wage for the occupation, among other information. Id.

Congress first imposed an annual quota on H-1B visas in 1990, but the quota of 65,000 wasn’t reached until 1996. The tech boom of the 1990s and the resulting shortage of qualified workers convinced Congress to raise the annual cap temporarily in 1999 to 115,000 and again in 2001 to 195,000, where it stayed until 2003 before dropping back down to 65,000.

Carve-outs for Singaporean and Chilean professionals, created by bilateral agreements with those countries, have reduced the annual H-1B total to 58,200, although unused H-1B numbers for those two countries are supposed to become available again at the beginning of the next fiscal year. Of the 6,800 set aside for Chileans and Singaporeans, only approximately 700 were used in fiscal year 2006, and the USCIS claims that the 6,100 unused visa numbers were in fact incorporated into the 2007 H-1B quota. See http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=138b6138f898d010VgnVCM10000048f3d6a1RCRD&vgnextchannel=91919c7755cb9010VgnVCM10000045f3d6a1RCRD.

In 2004 Congress added an additional20,000 H-1B visa numbers for foreign nationals who have a master’s degree or higher from a U.S. college or university.  About 7,000 of that separate 20,000 allotment remains unused for the next fiscal year.

            Who is affected by this oversubscribed quota? As indicated above, domestic employers who can’t find sufficient U.S. talent lose their most important vehicle to import temporary skilled labor. Which employers are most affected? According to a USCIS report issued in November 2006, computer-related occupations account for the lion’s share of the H-1B petitions approved: approximately 43% in 2005 (the most recent year analyzed), with occupations in architecture, engineering and surveying a distant second at 12%. U.S. Citizenship and Immigration Services, Characteristics of Specialty Occupation Workers (H-1B): Fiscal Year 2005 (Nov. 2006) [hereinafter USCIS FY 2005 H-1B Report], Table 8A, page 12, at http://www.uscis.gov/files/nativedocuments/H1B_FY05_Characteristics.pdf. This is clearly one reason that computer industry organizations such as the Software and Information Industry Association and coalitions such as Compete America are lobbying to raise or eliminate the cap on H-1B visas. See, e.g., an April 7, 2007, SIIA press release at http://www.siia.net/press/releases/H1b_Limit%20Reached.pdf and a recent CNN.com article at http://www.cnn.com/2007/TECH/biztech/04/04/tech.visas.ap/index.html.

Thousands of foreign nationals seeking to work here are also obviously hurt by the H-1B cap. Approximately 44% of H-1B petitions approved in 2005 were on behalf of Indian nationals, followed by nationals of mainland China at 9%. USCIS FY 2005 H-1B Report, at Table 4A, page 7. The unavailability of H-1B numbers has led India to push for more H-1B numbers at the World Trade Organization. See, e.g., International Relations Center/Foreign Policy in Focus, U.S. Immigration Policy on the Table at the WTO (Nov. 30, 2005), available at http://www.fpif.org/fpiftxt/2962.

USCIS statistics show that 23% of H-1B petitions approved in 2005 were on behalf of foreign nationals already in the United States. USCIS FY 2005 H-1B Report, at Table 3, page 6. It is unknown how many of these were foreign students in F-1 or J-1 status, but American universities have partnered with U.S. companies in such coalitions as Compete America to push for more H-1B visa numbers. If foreign students choose not to study in the United States because of limited chances of career development here, the universities will lose a significant source of revenue from foreign students, who typically pay full tuition. According to Open Doors 2006, the annual report produced by the Institute of International Education, international students contribute $13.5 billion dollars to the U.S. economy through tuition and living expenses. Institute of International Education, Open Doors 2006: International Students in the United States, available at http://opendoors.iienetwork.org/?p=89251. Sixty-three percent of all international students receive a majority of their funds from personal sources, and more than 68% of all international student funding comes from sources outside of the United States if other sources of funding such as assistance from home country governments or universities is added in. Id.

Moreover, education was the third largest occupational division for H-1B employers in 2005, constituting 12% of approved petitions that year. USCIS FY 2005 H-1B Report, at Table 8A, page 12. So both U.S. universities and industry benefited when Congress in 2004 exempted from the H-1B visa quota those workers employed by U.S. institutions of higher education and not-for-profit research organizations.

With higher education, the high tech industry, our trading partners and President Bush in favor of increasing H-1B visa numbers, who is opposed to them? The most vocal critics of the H-1B program are, not surprisingly, the representatives of American high-tech workers, including the Communication Workers of America, the Programmers Guild and the Institute for Electrical and Electronics Engineers (IEEE-USA). Citing concerns about the well-being of U.S. workers and the domestic high-tech industry, some politicians, including Rep. Tom Tancredo (R.-Colo.), have even called for the abolition of the H-1B program.

            Such opposition to the program makes a quick fix in Congress unlikely. Any legislative relief is further complicated by concerns about border security, the number of undocumented foreign nationals already in the United States, and the perceived need for a new guest worker program, which have led to calls for comprehensive immigration reform. Various proposals have surfaced. On March 22, 2007, Representatives Luis Gutierrez (D-Ill.) and Jeff Flake (R-Ariz.) introduced H.R. 1645, the Security Through Regularized Immigration and a Vibrant Economy Act of 2007 in the House of Representatives. The STRIVE Act, as it is called, would indeed be comprehensive. It addresses border security, interior enforcement, and improved systems to verify employment authorization. It also would increase the annual number of H-1B visas to 115,000, with future market-based increases up to a cap of 180,000, and with unlimited exemptions for holders of U.S. master’s degrees and for graduates of foreign universities with at least master’s degrees in science, technology, engineering or mathematics. Senator Edward Kennedy (D-Ma.) is expected to introduce a comparable comprehensive immigration reform bill in the Senate shortly.

            For those employers recruiting candidates with advanced degrees from U.S. institutions, the H-1B is still a viable option for now, although those additional visa numbers will be used up shortly. Also, employers should remember that the H-1B cap only applies to new H-1B petitions. H-1B extensions, requests for a change of employer for someone already in H-1B status, and requests for concurrent employment are not affected by the cap. Without legislative relief, however, many employers will have to explore alternative nonimmigrant visa categories. These include the O-1 for persons of extraordinary ability and the J-1 for trainees, as well as the visa options created by various free trade agreements for nationals of Canada, Mexico, Singapore, Chile and Australia. These options are limited, however.

As Microsoft chairman Bill Gates told Congress last month, “America should be doing all it can to attract the world’s best and brightest. Instead, we are shutting them out and discouraging those already here from staying and contributing to our economic prosperity. . . . America will find it infinitely more difficult to maintain its technological leadership if it shuts out the very people who are most able to help us compete. Other nations are recognizing and benefiting from this situation. They are crafting their immigration policies to attract highly talented students and professionals who would otherwise study, live, and work here. Our lost opportunities are their gains.” Testimony of William H. Gates before the Senate Health, Education, Labor and Pensions Committee (Mar. 7, 2007), at http://help.senate.gov/Hearings/2007_03_07/Gates.pdf. A congressional solution is needed to fix the H-1B cap problem, and soon.

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* This article originally appeared in the April 23, 2007 issue of the New York Law Journal. Copyright © 2007 New York Law Publishing Company. The authors thank the Journal for permission to reprint this article.

** Stephen Yale-Loehr is co-author of Immigration Law and Procedure, published by LexisNexis Matthew Bender. He also is of counsel at Miller Mayer in Ithaca, N.Y., and teaches immigration law at Cornell Law School. Ted J. Chiappari is a partner at Satterlee Stephens Burke & Burke LLP in New York City.