Insights into the forces shaping our industry.
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Industry Commentary
“Nearly half of Fortune 500 companies were founded by first or second-generation immigrants1”
The current Administration has kept us on our toes this last year, with the ongoing tariff negotiations, and, most recently, the deregulation of energy efficiency lightbulb standards. The regulating and deregulating of policies affects the Electrical Industry as whole, yet differently by vertical.
Through our daily conversations with industry leaders, we hear what companies are willing to invest to recruit a new employee. In the power distribution manufacturing sector, we found that companies are disinclined to invest into H1B (or any) visa holders for various reasons. Wire and cable manufacturers have a similar hiring thought and favor US citizen or Green Card holder candidates.
Lighting design firms, however, are struggling with the shortage of lighting designers. We are finding that firms are increasingly becoming less disposed to candidates with a work visa, at a time when there aren’t enough US citizens or Green Card holders in lighting design to fill those positions. Some lighting companies will consider a candidate that actively has an H1B and doesn’t need to go through the lottery to minimize their risk. These small lighting design firms (typically between 5 – 20 employees) have seen firsthand hiring, sponsoring and training an employee only for that person to lose in the lottery or unable to upgrade their student visa and are sent home to their home country within a year after they start.
How new H1B policies negatively affects the US and its companies
Lack of diversity. Envoy, “a company that helps US companies process visa applications” conducted a survey of 400 respondents and found “companies report that a key benefit of hiring foreign talent is knowledge of global business practices outside the US and having unique and diverse experiences and perspectives”.2 Diversity is especially important for market decisions. Jeremy Robbins of New American Economy’s concurs, “the US is putting obstacles in front of people who want to come here and could help our companies grow and outcompete other companies around the world.6”
A loss in investment. As mentioned above, we’ve heard directly from companies how they lost time and money devoted to developing H1B talent. Sponsoring an employee can cost anywhere between $1,600 – $7,400 (depending on attorney costs) not including salary and training expenses.3 Changes in immigration can also affect companies in other aspects. The Envoy survey also concluded the following: 26% saw a delay in projects, 25% had to increase budgets, 22% moved work overseas, 14% were unable to fulfill client projects; and the most intriguing finding, 85% said the new immigration policies have had an impact on their hiring.2
US will lose contribution from foreign students. US universities have a seen a decrease in international applicants while our Canadian neighbors recognized an increase. New international student enrollment declined by 6.6% for the 2017/18 academic year and foreign students contributed $42.4 billion into the US economy.4 University of Illinois – Urbana Champaign, for example, stated its international students have contributed an overall $382 million into its campus and local economics.5 In general, foreign students will pay 2 – 3 times more in tuition than a state/US citizen, plus room and board and other living costs.
The skills gap. There are other factors to the growing skills gap: the rate baby boomers are retiring and the lack of emphasis in teaching and developing STEM skills at a young age. Though, a 2015 Bureau of Labor Statistics study found “severe shortages in qualified computer science and engineering workers, compared to the number of open jobs in those fields” analyzing which STEM fields had a sufficient or an inadequate supply of quality candidates.6 IndustryWeek reported that “the National Association of Manufacturing and Deloitte predict the U.S. will need to fill about 3.5 million jobs by 2025; yet as many as 2 million of those jobs may go unfilled, due to difficulty finding people with the skills in demand.7”
Moving forward
Focus on our youth. Encourage young America to consider a STEM path and invest the time and capital to develop work ready skills. Get involved in your local schools and communities. Southwire is an exemplar company with their 12 for Life program that has developed the skills of over 2,900 high school students.
Consider hiring F1 visa students working on OPT. In 2008, in response to the growing demand for STEM workers, the United States Citizenship and Immigration Services agency passed a rule extending the time STEM degree holders can work in the US post-graduation.8 OPT doesn’t require sponsorship and provides employers the opportunity to employ a US trained STEM graduate for up to 36 months. And consider this: the average employee tenure is 3 years…
Don’t abuse the law. Richard Burke of Envoy highlighted the instances where “Disney and Southern California Edison replaced their entire IT departments with outsourced H-1B workers…in which American talent was obviously available, so they shouldn’t have warranted H-1B workers.6” Decisions like this is the reason for the negative attitudes toward H1B visas.
Companies shouldn’t let changing policies discourage them from considering visa holders. Consider the opening quote, great ideas come from all those with different cultural backgrounds. And diversity provides an instrumental perspective when making business decisions. When used properly, H1B visa holders can help the US economy and encourage national/global competitiveness and innovation.
2. https://www.siliconrepublic.com/careers/h1b-visa-envoy-richard-burke
3. https://redbus2us.com/h1b-visa-filing-fee-summary/
4. https://www.investopedia.com/news/impact-trumps-h1b-visa-crackdown-5-charts/
5. https://illinois.edu/about/rankings.html?
6. https://www.vox.com/2019/2/28/18241522/trump-h1b-tech-work-jobs-overseas
7. https://www.industryweek.com/talent/2-5-americans-say-stem-worker-shortage-crisis-levels
8. https://redbus2us.com/opt-stem-extension-rules-work-for-5-years-with-valid-stamping/