Immigration Reform: A Wake-Up Call

Friday, June 1, 2007 - 01:00

When Microsoft Chairman Bill Gates testified before the Senate Committee on Health, Education, Labor and Pensions at the beginning of March during a series of hearings discussing the state of American competitiveness, the visionary behind the world's foremost technology company sounded a grave alarm to politicians. The United States, he said, had better figure out a way to attract a highly skilled workforce from outside its borders or lose its edge in the global economy - not just in technology, but in other industries as well. Sitting square in the center of the issue are the country's immigration policies, currently being hotly debated in the Senate and poised to undergo the most radical legislative changes in nearly 20 years.

"Unfortunately, America's immigration policies are driving away the world's best and brightest precisely when we need them most," Gates said during his testimony. "It makes no sense to tell well-trained, highly skilled individuals - many of whom are educated at our top colleges and universities - that the United States does not welcome or value them. For too many foreign students and professionals, however, our immigration policies send precisely this message."

Gates, of course, was mainly talking about the unprecedented shortage in H1-B visas, the cap for which stood at 65,000 at the time of his testimony. Shortly after his appearance, demand outstripped supply at a rate of nearly 2:1 on the first day of filing, prompting a lottery system to award the visas. And while the Senate bill approves an annual boost of 50,000 H1-Bs - bringing the total to 115,000 - many agree that it's just a small baby step in the long walk toward immigration reform. Gates, for his part, told his audience back in March that an "infinite" number of the visas would be enough.

Then there's the proposed points-based immigration system, another highly controversial part of the immigration bill that would drastically change the way the United States grants green cards - from a system currently skewed toward uniting families and letting employers decide who to sponsor to one that looks foremost at skills and education. Some insiders question the strategy of suddenly introducing an untested system as a way to select immigrants without first running a pilot program.

What is clear, however, is that there are certainly no easy answers - and the outlook could change at any given moment. But while immigration reform is desperately needed, few can agree on exactly how to go about it. To shed a bit more light on where things stand, Austin T. Fragomen, one of the nation's preeminent immigration attorneys and a partner in the firm of Fragomen, Del Rey, Bernsen & Loewy, shares his thoughts on these and other issues below.

Editor: Do you agree with the overall notion that U.S. companies in the high tech and financial sectors have been unable to sustain their competitiveness because they are unable to recruit talented workers? How have U.S. immigration laws contributed to this problem?

Fragomen: Competitiveness requires that U.S. companies have access to the most talented resources possible, which means they must have the ability to effectively recruit from outside of the United States. In order to do this, you have to have proper incentives in place to attract the top talent. Our immigration system has historically been favorably designed to facilitate this. What's happened, though, is that our immigration system has created major dysfunction because of rather parochial concerns starting with security and spilling over into protectionism and a misunderstanding over the whole global phenomena of outsourcing. It's been manifested profoundly with the H1-B visa issue, which has caused U.S. companies to have to change their recruitment methodology. As far as the cap being raised from 65,000 to 115,000, I still don't think it's a high enough number. The number of cases that were filed this year and subject to the cap were well over 115,000. Yes, it's nice to have more numbers, and there is a mechanism to adjust upward, but to start with a number that's less than demand seems unreasonable. Of course, there will be a higher number of lottery winners next year, so it's a start, but definitely not enough. Senator John Cornyn introduced legislation last year that would exempt from the H1-B cap anyone who has an advanced degree from a U.S. university, among other things, which I think makes a lot of sense. If someone comes to the U.S. for school and earns a master's or PhD, why would we subject them to this ridiculous scenario of a lottery with people who hold a bachelor's degree from abroad? In terms of trying to build intelligent national policy, it's outrageous. There needs to be the right exemptions and the right numbers in order to craft good policy.

Editor: What industries are facing the biggest problems based on the H1-B shortage?

Fragomen: The industries that are the three largest consumers of H1-Bs are high tech, consulting - primarily the companies that do IT consulting - and financial services. Technology, for example, is a pretty broad umbrella, and the issue also applies to a lot of new technology ventures such as web-based companies, software development firms and biotechnology firms. So the shortage actually hurts a number of smaller, entrepreneurial businesses that rely on foreign scientific talent as much as the largest corporations.

Editor: What challenges will U.S. companies face when they recruit students already present in the U.S. who are under F-1 visas?

Fragomen: A foreign person who graduated in the U.S. can work for a company in practical training for a year with an F visa. If a company has a foreign student and wants to keep them longer, it's customary to file for an H1-B. But the reality is, if there's no H1 available based on the current shortage, it becomes a huge problem for both parties since they quickly run out of time. This will no doubt create a disincentive for foreign students to attend school in the U.S. if their investment is not guaranteed to pay off in the end with a permanent position with an American company. Temporarily, there is one slight change that could be made: to extend the period of practical training under F-1 status to two years from one. It would put off the problem, yes, but students would have a better chance of gaining H1 status. It can be done administratively, but nothing will happen until we have clearer answers from Congress.

Editor: How do you feel about the points-based system for the issuance of green cards?

Fragomen: There is a chance that this could put U.S. employers in a worse position than the current legislation, but there's no way to know for sure because the government has not tested such a system. In my mind it's rather irresponsible. Similar countries that have the systems - like Australia, Canada and England - have redone them, revamped them and tweaked them since their introduction in order to get it right. Let's put it this way: the employer community thinks it will be worse off because the current system is employer-sponsored. It works as it is, and the employers who need people can get them successfully approved. This new system is not employment-based and is not driven by an employer's application. It's driven by the individual's application, so how can you even be sure you'll get people who are employable? It's takes control out of the employer's hands, and while anything is possible in terms of an amendment, this is the most serious effort ever to introduce such a system. It certainly could happen unless the employer community can convince Congress that it's premature and should be introduced over a period of time.

Editor: Do you believe these challenges are driving businesses to locate in jurisdictions where they don't face the same burdens in recruiting skilled workers? If so, where?

Fragomen: I think it's becoming a big concern, but companies are motivated by cost savings as well as by access to well-educated workforces. Say a software company decides it wants to move part of its operations to India. They're not doing it just because it can't get H1-Bs in the U.S. But I do think that if a company does move abroad, it will have to be somewhere there is a large pool of persons highly skilled in their occupations. For technology, China and India are the obvious ones. For financial services, they're going to go to London and Hong Kong.

Editor: How critical is it that the right legislation be passed immediately?

Fragomen: No doubt about it, this year's H1-B lottery was an unmitigated disaster, and next year will be no better unless there are some changes. Our firm's head of government relations is working full time as we speak, trying to give the right advice to Senate staff on how to effectuate whatever changes we can in the proposed legislation as it evolves. And while the Bush administration, the Democrats and Republicans are trying to work out compromises on the key issues, it's not something that is done easily, as immigration tends to be very contentious. However, it's a positive sign that we're finally addressing what really are big social policy issues. The bottom line for us is that the practice of immigration law is becoming increasingly more complicated. We've shifted our focus to being the firm that can execute complex immigration strategies for our clients. We're not just executing paperwork.

Austin T. Fragomen is Chairman of Fragomen, Del Rey, Bernsen & Loewy's executive committee and heads its National Foreign Visa practice. Among his many professional affiliations, Mr. Fragomen chairs the American Council on International Personnel and is Vice-Chairman of the Center for Migration Studies. The 130-attorney Fragomen, Del Rey, Bernsen & Loewy is a world leader in immigration law, with staff located in 30 offices throughout the Americas, Asia Pacific and Europe.

Please email the intervieweeat afragomen@fragomen.com with questions about this interview.