H-1B Visa Program
Multifaceted Challenges Warrant Re-examination of Key Provisions Gao ID: GAO-11-505T March 31, 2011This testimony comments on the H-1B program. Congress created the current H-1B program in 1990 to enable U.S. employers to hire temporary, foreign workers in specialty occupations. The law capped the number of H-1B visas issued per fiscal year at 65,000, although the cap has fluctuated over time with legislative changes. The H-1B cap and the program itself have been a subject of continued controversy. Proponents of the program argue that it allows companies to fill important and growing gaps in the supply of U.S. workers, especially in the science and technology fields. Opponents of the program argue that there is no skill shortage and that the H-1B program displaces U.S. workers and undercuts their pay. Others argue that the eligibility criteria for the H-1B visa should be revised to better target foreign nationals whose skills are undersupplied in the domestic workforce. Our comments in this statement for the record are based on the results of our recent examination of the H-1B program, highlighting the key challenges it presents for H-1B employers, H-1B and U.S. workers, and federal agencies. Specifically, this statement presents information on (1) employer demand for H-1B workers; (2) how the H-1B cap impacts employers' costs and whether they move operations overseas; (3) the government's ability to track the cap and H-1B workers over time; and (4) how well the provisions of the H-1B program protect U.S. workers.
From 2000 to 2009, the demand for new H-1B workers tended to exceed the cap, as measured by the numbers of initial petitions submitted by employers who are subject to the cap. While the majority (68 percent) of employers was approved for one H-1B worker, demand was driven to a great extent by a small number (fewer than 1 percent) of H-1B employers garnering over one quarter of all H-1B approvals. Cap-exempt employers, such as universities and research institutions, submitted over 14 percent of the initial petitions filed during this period. Most of the 34 H-1B employers GAO interviewed reported that the H-1B program and cap created additional costs for them, such as delays in hiring and projects, but said the global marketplace and access to skilled labor--not the cap--drive their decisions on whether to move activities overseas. Limitations in agency data and systems hinder tracking the cap and H-1B workers over time. For example, data systems among the various agencies that process these individuals are not linked so it is difficult to track H-1B workers as they move through the immigration system. System limitations also prevent the Department of Homeland Security from knowing precisely when and whether the annual cap has been reached each year. Provisions of the H-1B program that could serve to protect U.S. workers--such as the requirement to pay prevailing wages, the visa's temporary status, and the cap itself--are weakened by several factors. First, program oversight is fragmented between four agencies and restricted by law. Second, the H-1B program lacks a legal provision for holding employers accountable to program requirements when they obtain H-1B workers through a staffing company--a company that contracts out H-1B workers to other companies. Third, statutory changes made to the H-1B program over time--i.e. that broadened job and skill categories for H-1B eligibility, increased exceptions to the cap, and allowed unlimited H-1B visa extensions while holders applied for permanent residency--have in effect increased the pool of H-1B workers beyond the cap and lowered the bar for eligibility.
GAO-11-505T, H-1B Visa Program: Multifaceted Challenges Warrant Re-examination of Key Provisions
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Immigration Policy and Enforcement,
Committee on the Judiciary, House of Representatives:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Thursday, March 31, 2011:
H-1B Visa Program:
Multifaceted Challenges Warrant Re-examination of Key Provisions:
Statement for the Record by Andrew Sherrill, Director:
Education, Workforce, and Income Security:
GAO-11-505T:
Mr. Chairman and Members of the Subcommittee:
We are pleased to have the opportunity to comment on the H-1B program.
Congress created the current H-1B program in 1990 to enable U.S.
employers to hire temporary, foreign workers in specialty occupations.
The law capped the number of H-1B visas issued per fiscal year at
65,000, although the cap has fluctuated over time with legislative
changes. The H-1B cap and the program itself have been a subject of
continued controversy. Proponents of the program argue that it allows
companies to fill important and growing gaps in the supply of U.S.
workers, especially in the science and technology fields. Opponents of
the program argue that there is no skill shortage and that the H-1B
program displaces U.S. workers and undercuts their pay. Others argue
that the eligibility criteria for the H-1B visa should be revised to
better target foreign nationals whose skills are undersupplied in the
domestic workforce.
Our comments in this statement for the record are based on the results
of our recent examination of the H-1B program, highlighting the key
challenges it presents for H-1B employers, H-1B and U.S. workers, and
federal agencies.[Footnote 1] Specifically, this statement presents
information on (1) employer demand for H-1B workers; (2) how the H-1B
cap impacts employers' costs and whether they move operations
overseas; (3) the government's ability to track the cap and H-1B
workers over time; and (4) how well the provisions of the H-1B program
protect U.S. workers. A detailed explanation of our methodology can be
found in our report. Our work was conducted from May 2009 through
January 2011 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provided a reasonable basis for
our findings and conclusions based on our audit objectives.
Summary:
From 2000 to 2009, the demand for new H-1B workers tended to exceed
the cap, as measured by the numbers of initial petitions submitted by
employers who are subject to the cap. While the majority (68 percent)
of employers were approved for one H-1B worker, demand was driven to a
great extent by a small number (fewer than 1 percent) of H-1B
employers garnering over one quarter of all H-1B approvals.[Footnote
2] Cap-exempt employers, such as universities and research
institutions, submitted over 14 percent of the initial petitions filed
during this period.
Most of the 34 H-1B employers GAO interviewed reported that the H-1B
program and cap created additional costs for them, such as delays in
hiring and projects, but said the global marketplace and access to
skilled labor--not the cap--drive their decisions on whether to move
activities overseas.
Limitations in agency data and systems hinder tracking the cap and H-
1B workers over time. For example, data systems among the various
agencies that process these individuals are not linked so it is
difficult to track H-1B workers as they move through the immigration
system. System limitations also prevent the Department of Homeland
Security from knowing precisely when and whether the annual cap has
been reached each year.
Provisions of the H-1B program that could serve to protect U.S.
workers--such as the requirement to pay prevailing wages, the visa's
temporary status, and the cap itself--are weakened by several factors.
First, program oversight is fragmented between four agencies and
restricted by law. Second, the H-1B program lacks a legal provision
for holding employers accountable to program requirements when they
obtain H-1B workers through a staffing company--a company that
contracts out H-1B workers to other companies. Third, statutory
changes made to the H-1B program over time--i.e. that broadened job
and skill categories for H-1B eligibility, increased exceptions to the
cap, and allowed unlimited H-1B visa extensions while holders applied
for permanent residency--have in effect increased the pool of H-1B
workers beyond the cap and lowered the bar for eligibility.
Background:
The H-1B program enables companies in the United States to hire
foreign workers for work in specialty occupations on a temporary
basis. A specialty occupation is defined as one requiring theoretical
and practical application of a body of highly specialized knowledge
and the attainment of a bachelor's degree or higher (or its
equivalent) in the field of specialty.
The law originally capped the number of H-1B visas at 65,000 per year;
the cap was raised twice pursuant to legislation,[Footnote 3] but in
fiscal year 2004, the cap reverted to its original level of 65,000.
Statutory changes also allowed for certain categories of individuals
and companies to be exempt from or to receive special treatment under
the cap. The American Competitiveness in the Twenty-First Century Act
of 2000 exempted from the cap all individuals being hired by
institutions of higher education and also nonprofit and government-
research organizations. More recently, the H-1B Visa Reform Act of
2004 allowed for an additional 20,000 visas each year for foreign
workers holding a master's degree or higher from an American
institution of higher education to be exempted from the numerical cap
limitation. In 2004, consistent with free trade agreements, up to
6,800 of the 65,000 H-1B visas may be set aside for workers from Chile
and Singapore.[Footnote 4]
While the H-1B visa is not considered a permanent visa, H-1B workers
can apply for extensions and pursue permanent residence in the United
States. Initial petitions are those filed for a foreign national's
first-time employment as an H-1B worker and are valid for a period of
up to 3 years. Generally, initial petitions are counted against the
annual cap. Extensions--technically referred to as continuing
employment petitions--may be filed to extend the initial petitions for
up to an additional 3 years. Extensions do not count against the cap.
While working under an H-1B visa, a worker may apply for legal
permanent residence in the United States. After filing an application
for permanent residence, H-1B workers are generally eligible to obtain
additional 1-year visa extensions until their U.S. Permanent Resident
Cards, commonly referred to as "green cards," are issued.
The Departments of Labor (Labor), Homeland Security (Homeland
Security), and State (State) each play a role in administering the
application process for an H-1B visa. Labor's Employment and Training
Administration (Employment and Training) receives and approves an
initial application, known as the Labor Condition Application (LCA),
from employers. The LCA, which Labor reviews as part of the
application process, requires employers to make various attestations
designed to protect the jobs of domestic workers and the rights and
working conditions of temporary workers. Homeland Security's U.S.
Citizenship and Immigration Services (USCIS) reviews an additional
employer application, known as the I-129 petition, and ultimately
approves H-1B visa petitions. For prospective H-1B workers residing
outside the United States, State interviews approved applicants and
compares information obtained during the interview against each
individual's visa application and supporting documents, and ultimately
issues the visa. For prospective H-1B workers already residing in the
United States, USCIS updates the workers' visa status without
involvement from State.
USCIS has primary responsibility for administering the H-1B cap.
Generally, it accepts H-1B petitions in the order in which they are
received. However, for those years in which USCIS anticipates that the
number of I-129 petitions filed will exceed the cap, USCIS holds a
"lottery" to determine which of the petitions will be accepted for
review. For the lottery, USCIS uses a computer-generated random
selection process to select the number of petitions necessary to reach
the cap.
With regard to enforcement, Labor, the Department of Justice
(Justice), and Homeland Security each have specific responsibilities.
Labor's Wage and Hour Division (Wage and Hour) is responsible for
enforcing program rules by investigating complaints made against
employers by H-1B workers or their representatives and assessing
penalties when employers are not in compliance with the requirements
of the program. Justice is responsible for investigating complaints
made by U.S. workers who allege that they have been displaced or
otherwise harmed by the H-1B visa program. Finally, USCIS's
Directorate of Fraud Detection and National Security (FDNS)
collaborates with its Immigration and Customs Enforcement Office to
investigate fraud and abuse in the program.
Demand for H-1B Workers Exceeded the Cap in Most Years and Was Driven
by a Small Number of Employers:
Over the past decade, demand for H-1B workers tended to exceed the
cap, as measured by the number of initial petitions submitted by
employers, one of several proxies used to measure demand since a
precise measure does not exist.[Footnote 5] As shown in figure 1, from
2000 to 2009, initial petitions for new H-1B workers submitted by
employers who are subject to the cap exceeded the cap in all but 3
fiscal years. However, the number of initial petitions subject to the
cap is likely to be an underestimate of demand since, once the cap has
been reached, employers subject to the cap may stop submitting
petitions and Homeland Security stops accepting petitions.
If initial petitions submitted by employers exempt from the cap are
also included in this measure (also shown in figure 1), the demand for
new H-1B workers is even higher, since over 14 percent of all initial
petitions across the decade were submitted by employers who are not
subject to the cap. In addition to initial requests for H-1B workers,
employers requested an average of 148,000 visa extensions per year,
for an average of over 280,000 annual requests for H-1B workers.
Figure 1: Number of Initial Petitions for New H-1B Workers Submitted
by Employers Relative to the Cap, FY 2000-FY 2009:
[Refer to PDF for image: multiple line graph]
Fiscal year: 2000;
Total initial H-1B petitions submitted to Homeland Security[B]: 161,589
Initial H-1B petitions subject to cap: 150,368
H-1B petition cap level: 115.
Fiscal year: 2001;
Total initial H-1B petitions submitted to Homeland Security[B]: 201,195
Initial H-1B petitions subject to cap: 184,139
H-1B petition cap level: 195
Fiscal year: 2002;
Total initial H-1B petitions submitted to Homeland Security[B]: 108,956
Initial H-1B petitions subject to cap: 89,574
H-1B petition cap level: 195,000.
Fiscal year: 2003;
Total initial H-1B petitions submitted to Homeland Security[B]: 108,017
Initial H-1B petitions subject to cap: 88,182
H-1B petition cap level: 195,000.
Fiscal year: 2004;
Total initial H-1B petitions submitted to Homeland Security[B]:
163,229;
Initial H-1B petitions subject to cap: 143,334;
H-1B petition cap level: 65,000.
Fiscal year: 2005;
Total initial H-1B petitions submitted to Homeland Security[B]:
117,370;
Initial H-1B petitions subject to cap: 97,540;
H-1B petition cap level: 85,000[A].
Fiscal year: 2006;
Total initial H-1B petitions submitted to Homeland Security[B]:
121,602;
Initial H-1B petitions subject to cap: 102,196;
H-1B petition cap level: 85,000[A].
Fiscal year: 2007;
Total initial H-1B petitions submitted to Homeland Security[B]:
121,633;
Initial H-1B petitions subject to cap: 100,503;
H-1B petition cap level: 85,000[A].
Fiscal year: 2008;
Total initial H-1B petitions submitted to Homeland Security[B]:
122,446;
Initial H-1B petitions subject to cap: 100,208;
H-1B petition cap level: 85,000[A].
Fiscal year: 2009;
Total initial H-1B petitions submitted to Homeland Security[B]:
105,850;
Initial H-1B petitions subject to cap: 87,573;
H-1B petition cap level: 85,000[A].
Source: GAO analysis of Homeland Security CLAIMS 3 data.
[A] Includes 20,000 visas allocated to workers graduating from U.S.
master's programs or higher.
[B] Total initial petitions submitted to USCIS includes all initial
petitions that were entered into its data system, including those from
cap-exempt employers. Reported numbers only reflect petitions entered
into USCIS's Computer Linked Application and Management System,
Version 3 (CLAIMS 3) data system and processed by USCIS, not the total
number submitted, which is likely higher in years when the cap is
reached. Petitions submitted under the master's cap cannot be
differentiated and are therefore included in these data.
[End of figure]
Over the decade, the majority (over 68 percent) of employers were
approved to hire only one H-1B worker, while fewer than 1 percent of
employers were approved to hire almost 30 percent of all H-1B workers.
Among these latter employers are those that function as "staffing
companies" that contract out H-1B workers to other companies.[Footnote
6] The prevalence of such companies participating in the H-1B visa
program is difficult to determine. There are no disclosure
requirements and Homeland Security does not track such information.
However, using publicly available data, we learned that at least 10 of
the top 85 H-1B-hiring employers in fiscal year 2009 participated in
staffing arrangements, of which at least 6 have headquarters or
operations located in India. Together, in fiscal year 2009, these 10
employers garnered nearly 11,456 approvals, or about 6 percent of all
H-1B approvals. Further, 3 of these employers were among the top 5 H-
1B-hiring companies, receiving 8,431 approvals among them.
Most Interviewed Companies Said the H-1B Cap Was Not a Key Factor in
Their Decisions to Move Operations Overseas but Cited Other Program
Burdens:
To better understand the impact of the H-1B program and cap on H-1B
employers, GAO spoke with 34 companies across a range of industries
about how the H-1B program affects their research and development
(R&D) activities, their decisions about whether to locate work
overseas, and their costs of doing business.[Footnote 7] Although
several firms reported that their H-1B workers were essential to
conducting R&D within the U.S., most companies we interviewed said
that the H-1B cap had little effect on their R&D or decisions to
locate work offshore. Instead, they cited other reasons to expand
overseas including access to pools of skilled labor abroad, the
pursuit of new markets, the cost of labor, access to a workforce in a
variety of time zones, language and culture, and tax law. The
exception to this came from executives at some information technology
services companies, two of which rely heavily on the H-1B program.
Some of these executives reported that they had either opened an
offshore location to access labor from overseas or were considering
doing so as result of the H-1B cap or changes in the administration of
the H-1B program.
Many employers we interviewed cited costs and burdens associated with
the H-1B cap and program. The majority of the firms we spoke with had
H-1B petitions denied due to the cap in years when the cap was reached
early in the filing season. In these years, the firms did not know
which, if any, of their H-1B candidates would obtain a visa, and
several firms said that this created uncertainty that interfered with
both project planning and candidate recruitment. In these instances,
most large firms we interviewed reported finding other (sometimes more
costly) ways to hire their preferred job candidates. For example,
several large firms we spoke with were able to hire their preferred
candidates in an overseas office temporarily, later bringing the
candidate into the United States, sometimes on a different type of
visa. On the other hand, small firms were sometimes unable to afford
these options, and were more likely to fill their positions with
different candidates, which they said resulted in delays and sometimes
economic losses, particularly for firms in rapidly changing technology
fields.
Interviewed employers also cited costs with the adjudication and
lottery process and suggested a variety of reforms:
* The majority of the 34 firms we spoke with maintained that the
review and adjudication process had become increasingly burdensome in
recent years, citing large amounts of paperwork required as part of
the adjudication process. Some experts we interviewed suggested that
to minimize paperwork and costs, USCIS should create a risk-based
adjudication process that would permit employers with a strong track-
record of regulatory compliance in the H-1B program to access a
streamlined process for petition approval.
* In addition, several industry representatives told us that because
the lottery process does not allow employers to rank their top
choices, firms do not necessarily receive approval for the most
desired H-1B candidates. Some experts suggested revising the system to
permit employers to rank their applications so that they are able to
hire the best qualified worker for the job in highest need.
* Finally, entrepreneurs and venture capital firms we interviewed said
that program rules can inhibit many emerging technology companies and
other small firms from using the H-1B program to bring in the talent
they need, constraining the ability of these companies to grow and
innovate in the United States. Some suggested that, to promote the
ability of entrepreneurs to start businesses in the United States,
Congress should consider creating a visa category for entrepreneurs,
available to persons with U.S. venture backing.
In our report, we recommended that USCIS should, to the extent
permitted by its existing statutory authority, explore options for
increasing the flexibility of the application process for H-1B
employers. In commenting on our report, Homeland Security and Labor
officials expressed reservations about the feasibility of our
suggested options, but Homeland Security officials also noted efforts
under way to streamline the application process for prospective H-1B
employers. For example, Homeland Security is currently testing a
system to obtain and update some company data directly from a private
data vendor, which could reduce the filing burden on H-1B petitioners
in the future. In addition, Homeland Security recently proposed a rule
that would provide for employers to register and learn whether they
will be eligible to file petitions with USCIS prior to filing an LCA,
which could reduce workloads for Labor and reduce some filing burden
for companies.[Footnote 8]
Limitations in Agency Data and Systems Hinder Tracking the Cap and H-
1B Workers Over Time:
The total number of H-1B workers in the United States at any one point
in time--and information about the length of their stay--is unknown
due to data and system limitations. First, data systems among the
various agencies that process H-1B applications are not easily linked,
which makes it impossible to track individuals as they move through
the application and entry process. Second, H-1B workers are not
assigned a unique identifier that would allow agencies to track them
over time or across agency databases--particularly if and when their
visa status changes. Consequently, USCIS is not able to track the H-1B
population with regard to: (1) how many approved H-1B workers living
abroad have actually received an H-1B visa and/or ultimately entered
the country; (2) whether and when H-1B workers have applied for or
were granted legal permanent residency, leave the country, or remain
in the country on an expired visa; and (3) the number of H-1B workers
currently in the country or who have converted to legal permanent
residency.
Limitations in USCIS's ability to track H-1B applications also hinder
it from knowing precisely when and whether the annual cap has been
reached each year--although the Immigration and Nationality Act
requires the department to do so.[Footnote 9] According to USCIS
officials, its current processes do not allow them to determine
precisely when the cap on initial petitions is reached. To deal with
this problem, USCIS estimates when the number of approvals has reached
the statutory limit and stops accepting new petitions.
Although USCIS is taking steps to improve its tracking of approved
petitions and of the H-1B workforce, progress has been slow to date.
Through its "Transformation Program," USCIS is developing an
electronic I-129 application system and is working with other agencies
to create a cross-reference table of agency identifiers for
individuals applying for visas that would serve as a unique person-
centric identifier.[Footnote 10] When this occurs, it will be possible
to identify who is in the United States at any one point in time under
any and all visa programs. However, the agency faces challenges with
finalizing and implementing the Transformation Program.[Footnote 11]
We recommended that Homeland Security, through its Transformation
Program, take steps to (1) ensure that linkages to State's tracking
system will provide Homeland Security with timely access to data on
visa issuances, and (2) that mechanisms for tracking petitions and
visas against the cap be incorporated into business rules to be
developed for USCIS's new electronic petition system.[Footnote 12]
While a complete picture of the H-1B workforce is lacking, data on
approved H-1B workers provides some information about the H-1B
workforce. Between fiscal year 2000 and fiscal year 2009, the top four
countries of birth for approved H-1B workers (i.e., approved initial
and extension petitions from employers both subject to the cap and cap-
exempt) were India, China, Canada, and the Philippines. Over 40
percent of all such workers were for positions in system analysis and
programming. As compared to fiscal year 2000, in fiscal year 2009,
approved H-1B workers were more likely to be living in the United
States than abroad at the time of their initial application, to have
an advanced degree, and to have obtained their graduate degrees in the
United States. Finally, data on a cohort of approved H-1B workers
whose petitions were submitted between January 2004 and September
2007, indicate that at least 18 percent of these workers subsequently
applied for permanent residence in the United States--for which about
half were approved, 45 percent were pending, and 3 percent were denied
by 2010.[Footnote 13]
Restricted Agency Oversight and Statutory Changes Weaken Protections
for U.S. Workers:
The provisions of the H-1B program designed to protect U.S. workers--
such as the requirement to pay prevailing wages, the visa's temporary
status, and the cap on the number of visas issued--are weakened by
several factors.
First, H-1B program oversight is shared by four federal agencies and
their roles and abilities to coordinate are restricted by law. As a
result, there is only nominal sharing of the kind of information that
would allow for better employer screening or more active and targeted
pursuit of program abuses. For example, the review of employer
applications for H-1B workers is divided between Labor and USCIS, and
the thoroughness of both these reviews is constrained by law. In
reviewing the employer's LCA, Labor is restricted to looking for
missing information and obvious inaccuracies, such as an employer's
failure to checkmark all required boxes on a form denoting compliance.
USCIS's review of the visa petition, the I-129, is not informed by any
information that Labor's Employment and Training Administration may
possess on suspicious or problematic employers. With regard to
enforcement of the H-1B worker protections, Wage and Hour
investigations are constrained, first, by the fact that its
investigators do not receive from USCIS any information regarding
suspicious or problematic employers. They also do not have access to
the Employment and Training's database of employer LCAs. Second, in
contrast to its authority with respect to other labor protection
programs, Wage and Hour lacks subpoena authority to obtain employer
records for H-1B cases. According to investigators, it can take
months, therefore, to pursue time-sensitive investigations when an
employer is not cooperative.
To improve Labor's oversight over the H-1B program, we recommended
that its Employment and Training Administration grant Wage and Hour
searchable access to the LCA database. Further, we asked Congress to
consider granting Labor subpoena power to obtain employer records
during investigations under the H-1B program. To reduce duplication
and fragmentation in the administration and oversight of the
application process, consistent with past GAO matters for
Congressional consideration, we asked Congress to consider
streamlining the H-1B approval process by eliminating the separate
requirement that employers first submit an LCA to Labor for review and
certification, since another agency (USCIS) subsequently conducts a
similar review of the LCA.[Footnote 14]
Another factor that weakens protection for U.S. workers is the fact
that the H-1B program lacks a legal provision to hold employers
accountable to program requirements when they obtain H-1B workers
through staffing companies. As previously noted, staffing companies
contract H-1B workers out to other employers. At times, those
employers may contract the H-1B worker out again, creating multiple
middlemen, according to Wage and Hour officials (see figure 2). They
explained that the contractual relationship, however, does not
transfer the obligations of the contractor for worker protection to
subsequent employers. Wage and Hour investigators reported that a
large number of the complaints they receive about H-1B employers were
related to the activities of staffing companies. Investigators from
the Northeast region--the region that receives the highest number of H-
1B complaints--said that nearly all of the complaints they receive
involve staffing companies and that the number of complaints are
growing. H-1B worker complaints about these companies frequently
pertained to unpaid "benching"--when a staffing company does not have
a job placement for the H-1B worker and does not pay them. In January
2010, Homeland Security issued a memo--commonly referred to as the
"Neufeld Memo"--on determining when there is a valid employer-employee
relationship between a staffing company and an H-1B worker for whom it
has obtained a visa; however officials indicated that it is too early
to know if the memo has improved program compliance. To help ensure
the full protection of H-1B workers employed through staffing
companies, in our report we asked that Congress consider holding the
employer where an H-1B visa holder performs work accountable for
meeting program requirements to the same extent as the employer that
submitted the LCA form.
Figure 2: Limited Accountability for Employers Hiring H-1B Workers
through Staffing Companies:
[Refer to PDF for image: illustration]
Traditional H-1B employers:
Accountable employer (accountable under H-1B employer requirements);
Worker, H-1B visa.
With staffing companies:
Accountable staffing company: worker;
Staffing company[A]: worker;
Employer: Worker, H-1B visa.
Source: GAO review of Labor information.
[A] In some cases there may be more than one staffing company involved
in placing the H-1B worker.
[End of figure]
Finally, changes to program legislation have diluted program
provisions for protecting U.S. workers by allowing visa holders to
seek permanent residency, broadening the job and skill categories for
H-1B eligibility, and establishing exemptions to the cap. The
Immigration Act of 1990 removed the requirement that H-1B visa
applicants have a residence in a foreign country that they have no
intention of abandoning. Consequently, H-1B workers are able to pursue
permanent residency in the United States and remain in the country for
an unlimited period of time while their residency application is
pending. The same law also broadened the job and skill categories for
which employers could seek H-1B visas. Labor's LCA data show that
between June 2009 and July 2010, over 50 percent of the wage levels
reported on approved LCAs were categorized as entry-level (i.e. paid
the lowest prevailing wage levels). However, such data do not, by
themselves, indicate whether these H-1B workers were generally less
skilled than their U.S. counterparts, or whether they were younger or
more likely to accept lower wages. Finally, exemptions to the H-1B cap
have increased the number of H-1B workers beyond the cap. For example,
87,519 workers in 2009 were approved for visas (including both initial
and extensions) to work for 6,034 cap-exempt companies.
Conclusions:
Taken together, the multifaceted challenges identified in our work
show that the H-1B program, as currently structured, may not be used
to its full potential and may be detrimental in some cases. Although
we have recommended steps that executive agencies overseeing the
program may take to improve tracking, administration, and enforcement,
the data we present raise difficult policy questions about key program
provisions that are beyond the jurisdiction of these agencies.
The H-1B program presents a difficult challenge in balancing the need
for high-skilled foreign labor with sufficient protections for U.S.
workers. As Congress considers immigration reform in consultation with
diverse stakeholders and experts--and while Homeland Security moves
forward with its modernization efforts--this is an opportune time to
re-examine the merits and shortcomings of key program provisions and
make appropriate changes as needed. Such a review may include, but
would not necessarily be limited to:
* the qualifications required for workers eligible under the H-1B
program,
* exemptions from the cap,
* the appropriateness of H-1B hiring by staffing companies,
* the level of the cap, and:
* the role the program should play in the U.S. immigration system in
relationship to permanent residency.
GAO Contact and Staff Acknowledgments:
If you or your staffs have any questions about this statement, please
contact Andrew Sherrill at (202) 512-7215 or sherrilla@gao.gov.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this statement.
In addition to Andrew Sherrill (Director), Michele Grgich (Assistant
Director) and Erin Godtland (Economist-in-Charge) led this engagement
with writing and technical assistance from Nisha Hazra, Melissa
Jaynes, Jennifer McDonald, Susan Bernstein (Education, Workforce and
Income Security); and Rhiannon Patterson (Applied Research and
Methods). Stakeholders included: Barbara Bovbjerg (Education,
Workforce, and Income Security); Tom McCool (Applied Research and
Methods); Ronald Fecso (Chief Statistician); Sheila McCoy and Craig
Winslow (General Counsel); Hiwotte Amare and Shana Wallace (Applied
Research and Methods); Richard Stana and Mike Dino (Homeland Security
and Justice); Jess Ford (International Affairs and Trade). Barbara
Steel-Lowney referenced the report.
[End of section]
Footnotes:
[1] See GAO, H-1B Visa Program: Reforms Are Needed to Minimize the
Risks and Costs of Current Program, [hyperlink,
http://www.gao.gov/products/GAO-11-26] (Washington, D.C.: Jan. 14,
2011).
[2] Over the 10-year period, about 94 percent of all submitted
petitions (initial and extensions) were approved.
[3] The cap was increased to 115,000 for fiscal years 1999 and 2000 by
the American Competitiveness and Workforce Improvement Act of 1998 and
to 195,000 for fiscal years 2001 through 2003 by the American
Competitiveness in the Twenty-First Century Act of 2000.
[4] For more information about key H-1B laws and related provisions,
please refer to appendix V of GAO-11-26.
[5] We analyzed other proxies for demand including the number of
employers submitting petitions for H-1B workers, the time it takes to
reach the cap, and requests for high-skilled workers via other visa
programs; however, none of these measures allowed us to provide a
precise measure of demand. See GAO-11-26 for more detailed information
on these indicators of demand.
[6] Staffing companies, many of which also outsource work overseas,
may place H-1B workers at the worksites of other employers as part of
their business model.
[7] GAO interviewed 34 companies--including individual structured
interviews with 31 companies and group discussions with 3 companies.
The selection of 31 firms constitutes a nongeneralizable sample and
cannot be used to make inferences beyond the specific 31 firms
selected. See appendix I of [hyperlink,
http://www.gao.gov/products/GAO-11-26] for more information on our
focus groups and individual interviews.
[8] Registration Requirement for Petitioners Seeking to File H-1B
Petitions on Behalf of Aliens Subject to the Numerical Limitations, 76
Fed Reg. 11,686, 11,698-11,689 (Mar. 3, 2011).
[9] 8 U.S.C. § 1184(g).
[10] The "Transformation Program" is a multiprogram, multiyear effort
to modernize business processes and information systems.
[11] For more information on these challenges, see GAO, Homeland
Security: Despite Progress, DHS Continues to Be Challenged in Managing
Its Multi-Bullion Dollar Annual Investment in Large-Scale Information
Technology Systems, [hyperlink,
http://www.gao.gov/products/GAO-09-1002T] (Washington, D.C.: Sept.15,
2009).
[12] See [hyperlink, http://www.gao.gov/products/GAO-11-26] for
complete information on our recommendations, matters for Congressional
consideration, and comments we received from the agencies involved in
the H-1B program.
[13] This cohort includes workers whose approved petitions (initial
petitions from employers both subject to the cap and cap-exempt) were
submitted between Jan. 1, 2004, and Sept. 30, 2007. Of the 311,847
approved petitions reviewed, we were able to obtain unique matches
with US-VISIT data for only 169,349 petitions. Of these, we determined
that 56,454 (18 percent of 311,847) submitted a petition for permanent
residence by 2010.
[14] To further improve oversight as well as transparency of H-1B
program requirements, we also recommended that Labor require
businesses to post notice of the intent to hire H-1B workers on a
centralized Web site accessible to the public--similar to other
temporary visa programs.
[End of section]
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