H1B Visa Policy Changes May Not Be as They Seem

Policy governing the issue of H1B visas has changed as a result of the leadership change following the 2020 election. The availability of the H1B visa, particularly popular among US companies for dealing with the domestic shortage of in-demand IT talent with immigrants from India and the Far East had been restricted via executive order during the Trump presidency. The Biden team has reversed the restrictions resulting in a steep drop in H1B visa application denials. Moreover, the cap for annual applications for the visa was met for 2021 before the end of February. While organizations reliant on H1B tech workers may be feeling some relief, but there still may be some suffering in store.

The Biden policy directive suspended a Trump administration policy to allocate H1B visas based on an applicant’s wages and skills. The Trump rule established that applicant’s salaries be tied to the 45th percentile (or above) of the average pay rate for an entry level position and reaching to the 95% percentile for high skilled workers. In practical terms, this meant that, based on baseline salary data from the US government, a junior computer systems manager coming to the US on an H1B would need to be earning at least $140,000 annually. A senior level information systems manager would need to be earning more than $207,000 to qualify for an H1B. The Biden suspension of the Trump allocation plan returns policy to the former practice of accepting qualified applications on the basis of a random lottery.

For many of the larger businesses that leverage H1B visas to advance their IT goals, this comes as some relief as immigration policy research from the Cato Institute suggests 73% of job offers made to H1B applicants by US businesses would be ineligible to meet these high allocation requirements. The research also suggested wages would have to rise by tens of thousands to meet the threshold.

But the suspension of the Trump rule was only meant to provide the new administration time to consider the ramifications of the policy and weigh its value. The possibility still exists for the rule to be implemented in 2022 after the suspension period ends and the impact has been more closely examined.

Sarah Butcher from eFinancial Careers sums up the danger nicely saying, “The new rule could conceivably impact investment banks. Median wages for ‘securities, commodities and financial services sales agents’ in New York City are $131k, so junior traders on H1B visas would need salaries of $120k to be eligible. However, it’s consulting firms that stand to suffer the most.”

The Cato data also revealed estimates suggesting 83% of historic H1B job offers extended by consulting giant, Accenture would have been rejected under the Trump H1B rules. 98% of offers extended by Deloitte & Touche would have been prohibited; 23% at McKinsey & Co.; 32% at EY, and 47% at Deloitte Consulting. 

As contingent workforce management professionals know too well, IT resources are in chronically high demand and short supply. Not just in financial industry roles, but in nearly all industries. This warrants keeping a close eye on how the Biden team proceeds because though there is temporary respite now, many of the jobs filled using H1B visas this year will be too costly in 2022 should the new wage requirements be reinstated.

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