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RAISE Act Will Hurt Immigrants, Americans and America

Last week, President Trump lent full throated support towards the Reforming American Immigration for a Strong Economy Act (RAISE Act), which will dramatically alter the immigration system in the United States the way we know it. Although this bill, proposed by Republican Senators Cotton and Purdue has little chance of moving through Congress, it has drawn significant attention as it intends to redefine America’s immigration experience over the last two centuries.

The RAISE Act deemphasizes immigration through the family, and instead creates a points system based on skills. A successful applicant must get at least 30 points.  The bill insists on English language proficiency, and allocates 0 to 12 points based on test scores. Those with US professional degrees or a doctorate in a STEM field will get the maximum of 13 points for education. By contrast, a high school diploma gets 1 point, a foreign bachelor’s degree gets 5 points, a US bachelor’s degree gets 6 points, a foreign master’s degree in a STEM field will get 7 points, a US master’s degree in a STEM field will get 8 points and a foreign professional degree or doctorate in a STEM field will get 10 points.

The younger one is the more points he or she will get, and those within the 26-30 years age range will get the maximum of 10 points. 25 big points are given for extraordinary achievement, but you must have won a Nobel prize or gained comparable recognition in a field of scientific or social scientific study. There are no comparable points for extraordinary achievement in the arts or business fields. For sportspeople, you will get 15 points if you won an Olympic medal or placed first in an international sporting event in which the best athletes in an Olympic sport were represented. Those with job offers, based on how much the offered wage will be over the median salary in the state where the job is located, will also get points ranging from 5 to 13. Investment in a new commercial enterprise at $1,350,000 will fetch 6 points; and an investment of $1, 800,000 will fetch 12 points.

The bill eliminates the diversity lottery program, or green card lottery, which awards 50,000 visas annually through a lottery from countries with low rates of immigration to the United States. It caps the number of refugees granted permanent visas to the United States at 50,000 per year. Most devastatingly, the RAISE Act eliminates all the family preferences, and only maintains the preferences for spouses and minor children of permanent residents. Parents of US citizens will no longer be treated as immediate relatives, but can come on renewable temporary visas. The definition of a minor child is changed from 21 to 18. The worldwide family quota is cut from 480,000 to 88,000 minus the number of people paroled into the United States who have not departed within 365 days and have not received a green card within 2 years of getting parole status. Pending family based petitions are voided except for those that are scheduled to get green cards within one year and entry into the United States must happen within one year of the bill’s enactment.

Most pro-immigration reform advocates have not supported this bill, except for some notable  exceptions like Vivek Wadhwa who wrote Why As An Immigrant, I am Not Outraged By Trump’s Immigration Proposal. On the other hand, restrictionist immigration organizations such as FAIR and Numbers USA have readily embraced the bill. The reason for their ready embrace is that the RAISE Act drastically cuts immigration levels, and the points system will prove to be unworkable.  Steven Miller, a senior White House aide and one of the architects of RAISE Act and the travel ban, famously got into a heated exchange with CNN’s Jim Acosta. Acosta asked Miller if the bill would violate the spirit of the poem New Colossus, inscribed at the base the Statue of Liberty, which includes the famous line: “Give me your tired, your poor, Your huddled masses yearning to breathe free.” Miller retorted that the statue is “a symbol of American liberty lighting the world” and the “the poem that you were referring to was added later and was not part of the original Statue of Liberty”, and then went on to combatively quiz Acosta on what level of immigration would violate his “Statue of Liberty law of the land”.  The RAISE Act also appears to be a xenophobe’s delight as its main aim is to restrict immigration levels. Mr. Wadhwa, who is not a xenophobe and is pro-immigrant, approaches his embrace of the bill differently by arguing that the US immigration system needs to attract skilled talent on green cards, rather than temporary H-1B visas, so that they can start the next generation of great companies in the United States rather than depart the United States under our current imperfect system and start companies in competitor nations like China.

Wadhwa certainly has a point. We need to reform our immigration system to keep skilled talent, but not at the expense of decimating everything else, including the values represented by the Statute of Liberty. Most economists credibly argue that more immigrants create more jobs, and that restricting immigrants will not necessarily create more jobs for American workers. The RAISE Act keeps intact the annual 140,000 limit for employment-based immigrants that was set in the Immigration Act of 1990, in addition to drastically restricting all other visa categories. Although per country limits are abolished, derivative family members are counted as part of the 140,000 limit which will eat into the pie.  It provides no pathway to permanent residence for lower skilled but essential workers who support the American economy. Despite conflicts of interest, even President Trump’s Mar-a-Lago filed labor applications with the Department of Labor for 15 housekeepers, 20 cooks and 35 servers. Trump’s golf course in Jupiter, FL filed labor applications for 6 cooks. These are for temporary H-2B visas with no green cards at the end of their temporary stay.

Worse still, RAISE Act is cruel to the hundreds of thousands of beneficiaries of approved I-140 petitions from India and China who are caught in the crushing employment-based second and third preference employment backlogs. The bill does not grandfather them, implying that they will need to re-apply under the new points system after waiting for over a decade. Since they have gotten older by 10 or more years, they will lose out on maximum points for age. If their approved I-140 immigrant visa petitions are based on non-STEM degrees, even if they have PhDs, they will not get the same points for education as those with master’s degrees in STEM fields. Even people caught in the China EB-5 backlog will unduly suffer. When they reapply, they will not get any points on the $500,000 investments they have already made as the investment threshold in the RAISE Act that will fetch points have been substantially increased, and they will also likely lose out on English skills.  One can also imagine the backlogs that will be created when hundreds of thousands of in the existing employment-based preferences apply under the points system of the RAISE Act. People will be re-applying over and over again.  The RAISE Act points system, which seems to be a bastardized version of the Canadian and Australian point systems, could lead to other absurd results. If you are 46-50, have English scores in the 6th or 7th decile, have a foreign bachelor’s degree, and have a lucrative job offer, you are flatly disqualified from coming under this system.  Even if you’re age 41-45, and so get 4 points for age rather than 2, you would have only 28 points total and be completely ineligible.  No wonder that FAIR and Numbers USA love the RAISE Act. Mr. Wadhwa ought to rethink his position.

Immigrants with all sorts of backgrounds contribute to the United States, and it is fallacious to think that only those with STEM degree will. If a famous restaurant specializing in North Indian cuisine cannot hire a good tandoori chef on a permanent basis, then the restaurant will not be able to prosper and hire additional restaurant managers, catering supervisors and bartenders from among the US workforce. America, therefore, needs both STEM graduates and Tandoor chefs! Moreover, a nation needs both social justice and good economics; indeed, social justice is the best economics. Therefore, cutting refugee admissions is not a good idea.  A good example of the synergy between social justice and economics is Sergey Brin, who is the co-founder of Google. He came to the United States with his parents at the age of six because they faced anti-Semitism in their native Russia. Although Brin graduated from Stanford in computer science, he did not come to the US on an H-1B visa or would have benefitted under a hypothetical RAISE Act points system.  His parents were able to come into the United States based on an immigration program that was designed to protect foreign nationals from intolerance in their native countries. Still, Brin after coming to the US as a youngster was able to go on to found Google, considered one of America’s best and most innovative companies today. The insistence on learning English before one arrives is also not necessary. Indeed, culture through dance, food and music is best preserved through the language of the country where it emanates, and America will be that much more enriched if it embraces the authentic cultures of immigrants who in good time will learn English – surely, their descendants will speak English.

We should have immigration reform that admits more immigrants rather than less, as David Bier has cogently argued in a recent NY Times Op-Ed. A points system is fine if it compliments other existing immigrant visa categories. A good example was S. 744 that was passed by the Senate in 2013 in a bipartisan manner that comprehensively reformed the immigration system by expanding pathways to permanent residence, and also included a merits system. The RAISE Act does not do this and  is a terrible idea, and furthers Trump’s America First agenda, which like his proposed wall on the Mexico-US border, is based on dubious economics and has not yet proven to have any merit.  While the RAISE Act bans low skilled workers, it may also attract PhDs who may drive Ubers in America. This has been the experience in Canada under the points system, where highly qualified people have immigrated without being matched with jobs. Unlike Mr. Wadhwa,  I am justifiably outraged as an immigrant by Trump’s immigration proposal.

Is Trump’s Proposed Scrapping of the H-1B Lottery in Favor of the Highest Wage Such A Good Idea?

By Cyrus D. Mehta and Sophia Genovese-Halvorson

Employers have already begun preparing for the upcoming H-1B visa lottery season.  The annual H-1B cap is limited to 65,000 visas per year for applicants with bachelor’s degrees, and an additional 20,000 for those with master’s degrees from US universities. The filing period begins on April 1, 2017. H-1B petitions received during the first five business days of April – April 3 to April 7 – will be given consideration under the lottery. Based on last year’s filings, the odds of getting an H-1B visa in the lottery is approximately 33%.

The H-1B lottery has been viewed as benefitting larger employers, mainly Indian IT firms that file a large number of petitions, over smaller employers who wish to focus on employing a single or few employees. A class action lawsuit, Tenrec, Inc. v. USCIS, challenging the annual H-1B lottery as contravening the INA, seeks to disrupt the status quo by allowing all employers to file on a first come first served basis. Under this plan, those who are not among the first 85,000 H-1B petitions received would be placed in a queue or wait list instead of being denied due to the quota having already been met. If this lawsuit is successful, it will certainly produce a long queue for the coveted 85,000 H-1B visas, and so most will still not benefit even after the lottery is dismantled.

Now Trump seeks to also disrupt the H-1B visa lottery, according to an article in Reuters. Specifically, Stephen Miller, senior advisor to the Trump administration, has suggested that the USCIS should abolish the H-1B lottery as we know it and replace it with a system which favors those who file on behalf of prospective employees with the highest wages. This proposal is similar to the one made by IIEE-USA, which, in addition to giving priority to employers who are willing to pay higher wages, suggest that the USCIS should also give lower priority to H-1B dependent employers. Most H-1B dependent employers, who have more than 15% of their workforce on H-1B visas happen to be Indian IT companies. This is also similar to the proposed reordering of access to H-1B visas in the Grassley-Durbin bill, which seeks to curtail the H-1B visa program in many other counterintuitive ways, including imposing mandatory recruitment of US workers before an H-1B petition is filed. Although a preeminent commentator, Vivek Wadhwa,  has praised the proposal on the grounds that Indian IT companies have been abusing the H-1B visa, we have several concerns about the proposed restructuring.

First, this preferential system would exclude entry-level professionals, some of whom have recently graduated from US universities. These entry-level professionals, while full of skill and talent, are not typically afforded higher wages at the beginning of their careers. If the H-1B program were to look unfavorably upon wage-earners commanding Level 1 wages in the DOL wage classification system, then we would be systematically excluding highly skilled, young workers that have the potential to positively impact the US economy and various professional sectors. While employers using the H-1B visa program have been criticized for excessively relying on the Level 1 wage, paying such a wage is not per se unlawful if the individual is being hired for a position with less than 2 years of experience and which requires supervision.

Second, by favoring foreign nationals with the highest wages, we may end up in a situation where a foreign national is making more than his or her American counterpart. Under the H-1B law, the employer must pay the higher of the prevailing or the actual wage. See INA 212(n)(1)(A)(i). If an employer wishes to bid for a worker by offering a higher than market wage, then the employer may have to adjust the wage for all similarly situated workers. This may not necessarily be a bad thing if all wages rise, but if the rise in wages is a result of an H-1B auction due to an artificial limitation in the number of visas, it could also have the effect of artificially distorting wages. It may also result in the inequitable result where American workers may be paid less than foreign H-1B workers, resulting not just in H-1B violations but also in discrimination lawsuits against employers. Therefore, under this proposal, the H-1B program may be criticized for causing imbalances between foreign and American workers.

Third, entrepreneurs who wish to obtain H-1B visas through their own startup companies will also suffer under this proposal. Their startups may not be able to pay them a higher wage than necessary in order to compete for an H-1B visa. Still, these startups hold promise to become successful and create jobs if the founder is able to remain in the US on an H-1B visa. This is why the USCIS provides entrepreneurs to get sponsored through existing visas such as the H-1B in the Entrepreneur Pathways Portal.  Although the USCIS has finalized a special parole rule for entrepreneurs, the final rule’s preamble acknowledges that Entrepreneurs Pathways compliments the parole rule and the two can thus harmoniously exist.  Even Wadhwa has stated that we are not encouraging startups and thus shooting ourselves in the foot, noting that “Google and Facebook can buy all the talent they want — it’s the startups who are struggling… The good thing is we have a powerful innovation system, and there are good things happening in Silicon Valley anyway, but the bad news is there’s a lot happening in other countries that would’ve happened here if we had let people come here. America gave a gift to the world.”

Fourth, while it has become fashionable to throw IT companies under the bus these days, they have to also be part of the solution. The use of IT consulting companies is widespread in America (where even the US government contracts for their services), and was acknowledged by Congress when it passed the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA) by creating onerous additional attestations for H-1B dependent employers. The current enforcement regime has sufficient teeth to severely punish bad actors.  IT consulting employers who hire professional workers from India unfortunately seem to be getting more of a rap for indiscriminately using up the H-1B visa even if they abide by H-1B rules regarding wages. However, it is this business model that has provided reliability to companies in the United States and throughout the industrialized world to obtain top-tier talent quickly with flexibility, at affordable prices that benefit end consumers, and promote diversity of product development. This is what the oft-criticized “job shop” or “body shop” readily provides. By making possible a source of expertise that can be modified and redirected in response to changing demand, uncertain budgets, shifting corporate priorities, and unpredictable fluctuations in the business cycle itself, the pejorative reference to them as “job shop” is, in reality, the engine of technological ingenuity on which progress in the global information age largely depends. Such a business model is also consistent with free trade, which the US promotes when it’s in their favor, but seems to restrict when it applies to service industries located in countries such as India that desire to do business in the United States through their skilled personnel.

The solution instead lies in increasing H-1B caps in Congress rather than reordering who can have access to H-1B visas under an artificially small quota. As we have previously blogged, by continuing to limit the H-1B program US employers will remain less competitive in the world markets. By limiting the availability of H-1B visas, employers are missing out on much-needed innovation in US industries, especially in the STEM fields. This failure to innovate within the US domain may encourage employers to look to overseas markets in order to develop and expand their companies. This is bad news for the US economy. H-1B workers have historically helped to improve the US economy, which in turn helps to create more jobs for Americans.

It is also a fact that more H-1B workers are needed in the IT sector as the United States does not produce enough computer professionals of their own. Most American IT workers are self-taught, as opposed to being formally trained at an institution, according to one US-based IT worker who spoke to the authors for this blog. Moreover, the United States has more venture capital investments for new companies than most other countries, but lack the domestic labor force to reap the benefits of such investment, thereby making the need to bring in H-1B workers ever more necessary to grow startup companies.

Lastly, the United States is no longer the only player in the game. The “Silicon Valleys” in China and India are vastly more agile for quick development and production, largely due to the availability of skilled workers. Meanwhile, American innovative companies are hamstrung for lack of them and are thus forced to move more of their research and development facilities overseas. The most talented will go to countries where they are more welcomed, which may no longer be the United States.

Increasing quotas in the employment-based preferences, along with the H-1B visa quota,  is the best way to reform the H-1B visa program, rather than to further shackle it with reordered lotteries, stifling laws and regulations, labor attestations, and quotas. If there is a concern about IT companies displacing US workers, such as what happened at Disney, then increasing the wage of an exempt worker from $60,000 (which was set in the 1990 Act) to something higher might be palatable in exchange for more H-1B visas annually and no further restrictions. If an H-1B dependent employer does not hire an exempt worker, then it needs to undergo an additional recruitment and anti-displacement attestation. This has been proposed in the Protect and Grow American Jobs Act sponsored by Congressman Issa, which increases the wage for an exempt H-1B employee from $60,000 to $100,000. If at all Congress wishes to impose restrictions on the H-1B visa, the Issa bill is preferable to the Grassley-Durbin bill.

Still, artificially raising wages above market wages would hurt the ability of US businesses to use the expertise of IT consulting companies in becoming more efficient, and thus passing on the benefits to consumers and even creating new jobs. Perhaps, the $100,000 wage can be lowered for certain exempt workers, such as those who have been sponsored for permanent residence through the dependent employer or those who have graduated in certain STEM disciplines.

Regardless of how one reorders access under the lottery, there will always be a shortage if the cap is limited to a mere 85,000 visas per year. For FY 2017, the USCIS received over 236,000 H-1B petitions, all vying for one of the 85,000 visas available. This means that some 151,000 or more people – highly qualified individuals with dreams and career aspirations – will likely be denied the ability to work in the US. This is not for lack of skill, this is not for lack of good moral character, but for an arbitrary cap system that limits their upward mobility and stifles US innovation in many fields. A system which seeks to provide preferential treatment to the highest paid foreign workers within the confines of an artificially low quota are unlikely to improve the position of US companies seeking to be competitive in global markets.

[Sophia Genovese-Halvorson, who is pursuing her JD degree at Brooklyn Law School,  is a Legal Intern at Cyrus D. Mehta & Partners PLLC]

 

 

Wanted: Great STEM and Tandoori Chicken

By Gary Endelman and Cyrus D. Mehta

There is no doubt that a Startup Visa would unleash amazing entrepreneurial activity in the United States, which would result in many jobs. The latest version of the Startup Visa Act 3.0 would provide 75,000 visas to individual who are already here in F-1 and H-1B status if their companies receive an investment of $100,000 per year and employ a minimum of two workers in the first year. A three year visa would be given to those who meet this condition. If within the three years, they employ an additional worker each year, they can apply for permanent residency.

According to a Kauffman Foundation study, the Startup Visa could conservatively lead to the creation of between 500,000 and 1.6 million jobs, which in turn could give a boost to the US economy of between $70 billion and $224 billion a year. A more optimistic estimate would result in 889,000 jobs and a boost to the economy of around $140 billion per year. Vivek Wadhwa, a big proponent of this bill, estimates an even bigger boost if half of these companies are engineering and technology companies. Many of these entrepreneurs, according to Wadhwa, will go on to build new companies based on their success, and could also develop breakthrough technologies and some of them could also be the next Google or Apple.

So if this is a no-brainer, why is Congress not passing the Startup Visa Act 3.0? The truth is that no standalone immigration bill will pass unless it is tied to a broader Comprehensive Immigration Reform bill. Indeed, there is an interesting debate between Wadhwa and Congressman Luis V. Gutierrez on this issue. Guiterrez, although he supports a Startup Visa, has openly admitted that he will not allow it to pass unless Congress is willing to reform the entire immigration system.  Wadhwa feels this is “political gamesmanship” on the part of Guiterrez, and that the Startup Visa can be passed first in order to give the American economy a big boot and this would lead to increased public acceptance for broader immigration reform. Guiterrez, on the other hand, feels that once he allows this to happen, it will be more difficult to pass comprehensive immigration reform.

The disagreement between Gutierrez and Wadhwa may be a false polarity. A nation needs both social justice and good economics; indeed, social justice is the best economics. A good example of the synergy between social justice and economics is Sergey Brin, who is the co-founder of Google. He came to the US with his parents at the age of six because they faced anti-Semitism in their native Russia. Although Brin graduated from Stanford in computer science, he did not come to the US on an H-1B visa or benefitted under any employment or investor visa category in our immigration system. His parents were able to come into the US based on an immigration program that was designed to protect foreign nationals from intolerance in their native countries. Still, Brin after coming to the US as a youngster was able to go on to found Google, considered one of America’s best and most innovative companies today.

Both Wadhwa and Guiterrez have a point. However powerful the stimulus flowing from the Start Up visa, enactment of Comprehensive Immigration Reform along with the Startup Visa would be infinitely more potent. Reforming a broken system, which includes legalizing the 10 million plus undocumented immigrants in the US, as well as providing quicker and more sensible pathways to legal status, could unleash even greater wealth. Immigrants of all stripes are essentially very entrepreneurial. An undocumented person who is provided legal status can also start a business and this individual need not be a STEM (Science, Technology, Engineering or Math) graduate. Even a non-technology company can create jobs such as a restaurant or grocery chain. Immigration should not be viewed as a zero sum game, and giving opportunities to foreign nationals in the US can result in more American jobs. Under our broken system, it is virtually impossible for an entrepreneur who wishes to start a North Indian cuisine restaurant to bring in a foreign national tandoori chef. A reformed immigration system should hopefully give this entrepreneur access to such a chef from India. A restaurant’s success is possible because of its chef, and when that great tandoori chef can be quickly hired from India, people will start coming to the restaurant resulting in the hiring of restaurant managers and waiters locally in the US. This restaurant’s success can then be replicated, and the entrepreneur can develop a branded chain of tandoori restaurants all over the US, resulting in many more jobs locally.

According to another report sponsored by Cato Institute – The Economic Benefits Of Comprehensive Immigration Reform by Raul Hinjosa-Ojeda, the legalization of 11 million immigrants would be equivalent to more than $1.5 trillion added to GDP over 10 years. The study considered the economic impact under three scenarios: a legalization program that would ultimately result in a pathway to citizenship, a temporary worker program with no option for permanent resident status and the deportation of undocumented immigrants. Hinjosa-Ojeda concludes that the legalization of undocumented immigrants would provide the most economic benefits to the US. On the other hand, removing undocumented immigrants would be most expensive, costing $2.6 trillion to the GDP over a 10 year period.

The debate between Wadhwa and Gutierrez can be put in a larger perspective. If you believe, as Wadhwa does, that the purpose of immigration is to create wealth, unleash creativity and foster productivity, then the focus should be on entrepreneurs and highly skilled professionals. This explains his approach. If, however, you are mainly concerned with social justice, then you argue for a more comprehensive approach which is what Gutierrez does. It comes down to what you think is most important and what you think has true moral legitimacy. For those who use immigration to bring about social justice, it is family not employment immigration that is morally legitimate. The focus is on using immigration to help the individual immigrant, reunite families, to fight intolerance, poverty and injustice. It is not to make American employers more competitive, and there’s also an impulse to protect US workers.  Wadhwa, on the other hand, sees an ethical value and legitimacy in work itself, in work as a creative expression of individual talent. He looks for new avenues especially in STEM fields to unleash creative potential within the culture and context of a capitalist economy.

The economic boom that an enlightened immigration policy would ignite is generational in its dimensions. The immediate benefit from the entrepreneurial energy of the immigrant generation would be transformed and expanded by the diversified talents of succeeding generations. The Tandoori cook of one generation is often followed by the cutting-edge geophysicist of the next. Precisely as the American economy itself is inherently dynamic, the role that immigrants play in it also constantly evolves. For this reason, the sharp contrast provided by Gutierrez and Wadhwa that seem so vivid now will, over time, fade into a more nuanced yet no less compelling portrait.  Gutierrez realizes that an enlightened immigration policy can only exist in a compassionate society where social mobility is a lubricant of national cohesiveness. Wadhwa appreciates that immigration is an asset to be maximized not a problem to be controlled. Like all transformational moments in American history, this is pre-eminently a time to try something new.

A month before signing the Emancipation Proclamation, Abraham Lincoln spoke to our issue in our time:

The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew. We must disenthrall ourselves, and then we shall save our country.