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Deregulation: The Cure For Our Immigration Ills

by Gary Endelman

Gary Endelman Well, come March 8th 2005, desperate employers will be able to file H-1B petitions for 20,000 Master's and PhD graduates of American universities! Jesus and General Jackson, who said Congress never did the right thing? Oh, there are those skeptics who might squawk at the thought of paying a $1500 "training fee" and a $500 "fraud prevention" fee, not to mention a $1000 expedited adjudication fee on top of a $185 filing fee. But, really now, is a paultry $3185 too high a price to pay for the privilege of being an H sponsor? It just might be. Here's why.

While it is true that small businesses with fewer than 25 employees would only have to pay a $750 "training fee", how many such employers will be able to afford it at a time of shrinking profit margins, growing international competition, and rising health care costs? Not many. The whole notion of a "training fee" is the brainchild of former Senator Spencer Abraham (R-Michigan) who brought us more H numbers in 1996 through his leadership of the American Competitiveness and Workforce Improvement Act ( ACWIA). The fact that the government programs underwritten by such a tax on employers largely duplicated pre-existing private sector initiatives was far less important than the reality of regulation established by such a precedent. It was inevitable that, as the demand for H numbers soared, so would the "training fee" from $500 under ACWIA to the elevated levels set by the Congress late last month in the omnibus appropriation bill. Even at $750, the H visa has now become too expensive for the most productive segment of our economy, the one doing the hiring, making the inventions, and creating new jobs. The H has become the visa of choice for Wall Street and Silicon Valley; anyone on Main Street outside the Fortune 500 elite need not apply.

Still, it might be a bit premature for the avatars of the corporate boardroom to break open the champagne just quite yet. In order to sponsor international students and scholars for an H1B visa, big business must make sure that the objects of their affection have made it here in the first place. Last year, the number of foreign students on US campuses fell for the first time in over three decades. According to a survey of 450 academic institutions conducted by the Council of Graduate Schools, there were 45 % fewer Chinese students who applied to American graduate schools compared with fall 2003; those from India were down 28%. 9/11has clearly taken its toll. Even at $ 3185 a popp, there are fewer advanced degree holders available for these high priced visas than there used to be. The dirty secret behind America's high tech edge is that it depends on foreign-grown talent. The National Science Board documented this hard truth last year, finding that 38% of engineering and science PhD's came from somewhere else. ."Ever since the terrorist attacks of Sept.11,"observes Harvard Government Professor Joseph Nye Jr., " getting an American visa has been a nightmare of red tape, and the hassle has deterred many foreign student applications." Seven out of ten graduate schools recently reported declines in first-time international graduate student enrollment. Two-thirds of the 25 American universities with the most international students cited similar erosion in a survey released by the National Association of Foreign Student Advisers (NAFSA) and the Association of International Educators.

While the United States maintains its lead in graduate education in science and engineering for now, Intel's Craig Barrett predicts it will not last for long: " We are not graduating the volume, we do not have a lock on the infra-structure, we do not have a lock on new ideas,and we are either flat-lining, or in real dollars cutting back, our investments in physical science." In a report last year, the American Association for the Advancement of Science predicted that, to honor its commitment to cut the nation's budget deficit in the next five years, the Bush Administration would have to cut research funding at 21 of 24 federal agencies- all those that do or finance science except those involved in space and domestic or national security. It is hardly surprising that the number of student visas issued by American consulates slipped 8% in 2003 after plunging 20% in 2002; these are the two sharpest declines since 1952. F-1 student visa refusal rates rose 35% in 2004 on the heels of a previous record refusal rate of 34% in 2002. The number of advanced degree immigrants admitted dropped through the floor- a 65% decline in 2004 alone. " We're slapping these people in the face," National Academy of Engineering President William Wulf told Business Week. "The long-term costs in good will are enormous."

No matter how much employers are willing to pay, will there be foreign students for them to sponsor? Maybe not today, maybe not tomorrow, but soon, and perhaps forever, our talent pipeline from the rest of the world will have finally dried up. While the absolute number of foreign students continues to grow, the trends are there if we have the eyes to see them and they are not encouraging. Do we really want to tie the future of the H visa, and by extension the employment-based system as a whole, to an unstable population that increasingly feels it has other options? International students, especially those from the Islamic world, know that the welcome mat on campus is no longer out for them the way it used to be. Other English-speaking countries, such as Canada, Australia and the United Kingdom are ramping up their marketing efforts . "We could lose a whole generation of foreigners who would normally come here to study, " New York Times columnist Thomas Friedman reminds us. In all the excitement over the 20,000 new H numbers, it is easy to forget that we are no longer the only game in town.

There is a more profound reason for concern in this holiday season of our new-found joy. Forget about the new restrictions on the ability of employers to place L-1 intra-company transferees offsite with contractors and business partners. The fate of the H and the L are now forever linked on Capitol Hill so that more numbers for one will inevitably mean more restrictions on the other. Fraud and the need to prevent it now have a price tag- $500. The hunger for H numbers will not soon or quickly ebb, and the price that will gladly be paid will come out of the hide of the L visa. Maybe it will be a prevailing wage requirement enforced through the imposition of a labor condition application. Maybe it will be an audit mechanism or perhaps a recruitment obligation supervised by eagle-eyed DOL inspectors. But, be warned, hard times for the L are coming and soon. That much is certain. Yet, this is not the real reason for us to stay awake at night. No, that is something harder to spot, something subtle and deep, something so fundamental to the way America now approaches employment-based immigration that we may not even be aware of it.

The whole scheme of H compliance rests, as do virtually all new immigration initiatives, on the pernicious notion that micromanagement and mass immigration can co-exist. They cannot. An economically inefficient, blindingly complex system of laws and regulations without clear goals or internal consistency cannot last for long when its daily operations depend upon unceasing scrutiny of employer conduct and worker performance on a widespread scale. There are simply too many cases, too few regulators, and not enough money . Such a system was never designed to do the job it is now being asked to do. Either micromanagement or mass migration will have to go. Inevitably, as we have now seen with labor certification, the system will break down under the weight of its own contradictions. Since immigration restriction is neither politically possible nor demographically realistic, not to mention manifestly contrary to the nation's economic self- interest, what is the answer? Is there a way out of the dilemna in which we seem to find ourselves?

Rather than continuing to raise the cost of complexity, why not try something new, something so simple that the American public might even be able to understand and make sense out of it: Deregulation of our employment-based immigration system. Mass immigration can only exist with a light touch of regulation. Congress should decide how many immigrant visas should be issued in any fiscal year and then charge employers a registration fee. In effect, employers would buy the right to hire foreign-born workers on a permanent basis. Let Congress set the going rate, put willing employers together with willing workers, to use President Bush's felicitous phrase , and then get out of the way so that the parties concerned can sit down and negotiate a deal. Most of the immigration reforms now on the drawing board in Congress and the White House embrace this same vision but limit its application to solving the problem of the undocumented. Why not extend the curative power of market forces to the legal side of the ledger ? Let the market, not government bureaucrats, decide the terms and conditions of service. Keep government involved to set priorities, punish abuses and provide technical expertise when requested to do so. Such a market-driven system would be simple, honest, and transparent. It would protect American workers far better than the false promises of the current system by giving immigrants what they need and want most- true occupational mobility that is not tied to the need for employer sponsorship. For the first time, foreign workers could vote with their feet as they seek to realize in full measure the promise of American life for themselves and their families. No longer would government regulation subsidize an inefficient system that serves mostly to perpetuate itself and protect the vested interests of those elites who take false refuge in its complexity. Deregulation, not more of the same, is the cure for our immigration ills.

About The Author

Gary Endelman practices immigration law at BP America Inc. The opinions expressed in this column are purely personal and do not represent the views or beliefs of BP America Inc. in any way.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.