NCPA - National Center for Policy Analysis

H-1B Visa Quotas Greatly Restrain Small Business Expansion

July 3, 2012

U.S. Citizenship and Immigration Services (CIS) announced recently that it had filled its annual H-1B visa quota for foreign high-skilled workers. The announcement comes about five months earlier than last year, signaling that U.S. businesses are expanding again. But many companies must now wait until next year to attempt to hire needed talent, says David Bier, an immigration policy analyst at the Competitive Enterprise Institute.

This constraint is slowing business' renewed growth by limiting their access to the highly skilled workers that they need. This not only harms corporations, but also undermines the recovery of the national labor market.

  • As America's technology and service-based economy has expanded over the last decade, its demand for high-skilled labor has increased greatly.
  • Yet during this same period, Congress has allowed the H-1B quota for high-skilled workers to drop in half -- from 195,000 in 2001 to 85,000 today.
  • The Government Accountability Office (GAO) found last year that in most years, the demand for these workers exceeds the government-imposed cap.
  • The inability to bring these workers to domestic operations limits the ability of companies to expand, thereby restricting their additional hiring of American workers.
  • A 2009 National Foundation for American Policy study found that every H-1B request is correlated with five new jobs at major firms and more than seven jobs at firms with less than 5,000 employees.

Further studies have found that these policies disproportionately affect some businesses. Specifically, small businesses are almost completely shut out of the market for foreign workers because they lack the ability to pay overhead prices to go through the immigration process.

  • One company estimated the cost of the H-1B and green card process at $16,000.
  • More than 60 percent of small businesses surveyed by the GAO "incurred significant business costs resulting from petitions denied due to the cap, delays in processing H-1B petitions, and other costs."
  • Most small businesses cannot afford the expenditure necessary to hire a consultant or expert who is adept at getting applications submitted and approved.
  • Large, multinational companies can sidestep the problem entirely by locating operations offshore in countries with freer immigration policies; Microsoft, for example, now has a foreign office in Vancouver for this exact reason.

Source: David Bier, "H-1B Visa Quotas Greatly Restrain Small Business Expansion," Forbes, June 17, 2012.

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