The Sincerest Form Of Flattery - Highly-Skilled Workers At Our Nations Shores: A Comparison Of America's H-1B And Israel's B-1 Expert Work Visas
The employment of foreign experts with specialized knowledge contributes immensely to the national economies of the United States and Israel, bringing valuable knowledge, innovation, increasing research and development (R&D), production and job growth, among other things. There has always been controversy over the value of these foreign experts to the economy and whether their employment reduces available jobs for citizens. But in times of global economic crisis, these issues are brought to the forefront and complicate the debate.
Like America, Israel is a country of immigrants. Israelis originate from every corner of the globe - Africa, Asia, Europe, Australia, and North & South America. The diversity of Israel's population has helped drive technological innovation and economic growth. Israel has one of the most highly educated populations in the world.1 Between 1990-2001, nearly one million people from the former Soviet Union immigrated to Israel,2 most of whom were college-educated, and at a much higher percentage than native Israelis.3 This has helped boost Israel's high-tech sector and greatly strengthened the national economy. This article will further discuss the benefits that immigration brings to the Israeli and American economies, compare and contrast the eligibility requirements and processes of the foreign expert visas in Israel and the U.S., and discuss the future of these visas.
Employment of Foreign Experts Benefits the American and Israeli economies
The Israeli economy benefits from the work of foreign experts on both macroeconomic and microeconomic levels.4 On a microeconomic level, the employment of foreign experts in Israel has led to the creation of tens of hundreds of new jobs for Israelis.5 Indeed, among the requirements for employment of foreign experts is that for each foreign expert brought to work in Israel, 10 new jobs will be created for Israeli workers.6 Their employment introduces new technologies into the country, which in turn, leads to economic growth on a macroeconomic level.7
Studies show that immigration is good for the American economy. In a paper written by William R. Kerr of Harvard Business School and William F. Lincoln of the University of Michigan,8 Kerr and Lincoln found that during periods when the allocation of H-1B visas were higher, so too were the number of patent applications filed, particularly among Indian and Chinese inventors.9 Conversely, they found that as the allocation of H-1B visas were reduced, the number of patent applications filed also decreased.10 While innovation does not always translate into direct economic gains, another study led by Vivek Wadhwa, a Senior Research Associate at Harvard Law School and Executive in Residence at Duke University,11 found that 25 percent of tech companies nationwide were founded by immigrants from 1995-2005.12 That number was found to increase to over 50 percent when focusing on tech companies in Silicon Valley.13 There is no ambiguity in these numbers - Wadhwa's study also found that in 2005, immigrant-founded tech firms employed 450,000 and had sales of $52 billion.14 These immigrants did not come to the U.S. to be entrepreneurs; rather they were in the U.S. for work or study purposes.15
Recent elections in both the U.S. and Israel, have led to increased discussion of immigration policies. As a result, the future of foreign expert visas - the H-1B in the U.S. and the B-1 foreign expert in Israel - is uncertain. Will these new administrations be able to tackle the challenges of an economic downturn while at the same time recognizing the value of progressive immigration policies, or will they give in to public pressure to keep jobs for its citizens? To some it is simply a debate over fear; to others it smacks of racism and myopia.
General Description of the H-1B and Israel's B-1 Expert Work Visa
The U.S. has several different categories of work visas, of which the H-1B is one of the most competitive.16 This visa category is intended for professionals in a specialty occupation, such as those in accountancy and engineering. Today, there is an annual quota of 65,000 plus an additional 20,000 granted to those with a Master's degree or higher from a U.S. academic institution. Exempt from the quota are those employed by institutions of higher education, non-profit entities, or research organizations. H-1B visa holders may bring their families to live with them in the U.S. (the dependents are not subject to the quota), although their dependents are prohibited from working. The H-1B visa is allocated an initial three-year term, with the possibility of a three-year extension, for a total of six years.
In Israel, there is only one type of work visa, whether the worker is regarded as a professional or a non-professional - the B-1 visa.17 Although the name of the visa is the same for a professional or non-professional visa, however, that is where the similarities end. In contrast to non-professional workers, foreign experts are not subject to numerical limitations and enjoy an expedited approval process. Additionally, unlike non-professional workers, foreign experts may bring their family members to live with them in Israel. In these cases, the family members are not permitted to work and will be granted B-2 visitor visas corresponding to the time period allocated to the foreign expert's B-1 work visa. Foreign experts under Israel's B-1 expert work visa may stay in Israel for an initial period of up to one year and may extend the visa in one-year increments for a maximum term of five-years and three months.
Eligibility requirements for both the H-1B and Israel's B-1 expert work visa are stringent. The H-1B requires that the job itself be in a specialty occupation and that the employee have a four-year undergraduate degree or its foreign equivalent. In some cases, professional experience can be substituted for the degree requirement. Employers must pay their H-1B employees an amount equal to or greater than the "prevailing wage" in the county/state in which the employee will be based. In contrast, Israel's B-1 expert work visa requires that the salary of the employee be double the Israeli average and the B-1 employee must provide at least two of the following: 1) unique qualities and skills that will be passed on to an Israeli replacement, 2) creation of job opportunities (for every foreign expert 10 new Israeli jobs will be created), 3) knowledge and experience not readily available in the Israeli market, 4) high level of specialization and education, or 5) be engaged in managerial or R&D positions.
The application process for the H-1B and Israel's B-1 expert work visa are similar. The H-1B visa can be obtained via change of status or consular processing, while the B-1 expert work visa is generally limited to consular processing. A change of status may be made only in cases where the foreign expert is already in Israel on a B-2 visitor visa. Both visa types require a labor certification and employer sponsorship. The advantage of the H-1B is that the employee is not tied to a specific employer once they have acquired their visa, while the B-1 foreign expert must stay with that employer for the entire allotted term.
Because many more visa applications are submitted than there are visas available, a random selection process is held for the H-1B visa each year beginning on April 1. To be eligible for random selection, the entire application, as described above, is submitted to the United States Citizenship and Immigration Service (USCIS), with the applicable fee. If the application wins a slot and is approved, the employee may start working on October 1 of that year. As there is no limitation on the amount of B-1 foreign expert visas that can be allocated each year, the process is less competitive, although no less selective. Generally, the process takes 90 days and requires labor certification from the Ministry of Industry, Trade and Labor (MOITAL) and issuance of a visa by the Ministry of Interior (MOI) via the relevant Israeli consulate abroad.
Both applications must contain details of the job position, salary, and the employee's professional and academic credentials. Although neither country requires that the job be advertised, Israel does place particular emphasis on a sufficient showing that no qualified Israeli employee has been found for this position.
Future of the H-1B and Israel's B-1 Expert Work Visa
As mentioned earlier, the futures of both the H-1B and Israel's B-1 expert work visas are uncertain. Each year, the H-1B cap is reached earlier than the year before. For the 2007 H-1B allotment, the cap was reached in May 2006; the 2006 allotment was reached in August 2005, while the 2005 allotment was reached in October 2004.18 The restrictive cap is a point of contention in the H-1B program. Proponents argue in favor of raising the cap, while detractors point to evidence of fraud in the program as a basis for restricting the program further. In 2008, the USCIS published a report assessing fraud in the H-1B program.19 The report lists findings of fraud and technical violations in the H-1B program by petitioners and beneficiaries with certain common characteristics.20 For example, the report found that smaller, less established companies have a higher incidence of fraud and technical violations than do larger, more established companies.21 The restrictive cap and the prevailing wage requirement, which often results in the employer paying the foreign expert less than what market forces would require them to pay an equally qualified American, seems to provide incentive for the commission of fraud, especially among smaller, less established companies that may have more motivations to pinch pennies where they can.
In contrast, there is little to no fraud in Israel's B-1 foreign expert program. This could be attributed to a number of reasons -- to the significantly higher salaries paid to Israel's B-1 foreign experts in comparison to Israeli workers in similar positions or to the lack of any cap on the allocation of Israel's B-1 foreign expert visas, etc. In order to hire a foreign expert, the program's stringent rules force the company to place a higher economic value on the foreign expert employee. By raising the bar, there is less incentive for the company to hire a foreign expert, but it still enables the company to do so. This has helped reduce or eliminate the incidence of fraud in the Israeli foreign expert program. Nevertheless, the concept of hiring foreigners to work in high-paying jobs is not popular among the Israeli citizenry. The requirement that firms must show that there are no qualified Israelis to fill the position and that the salary must be double the local average, has not quieted the controversy, particularly during times of economic recession. Indeed, Israel has not been immune to feeling the effects of the global crisis in terms of layoffs and rising unemployment. Due to the controversial nature of Israel's B-1 foreign expert visa, governmental committees meet on a regular basis to review the program, evaluate the impact the program has on Israel's local and national economies, and recalibrate the program and its requirements as necessary.
With new administrations in both countries recently taking office and global crises looming, it is not known how immigration policies will be impacted, but it seems clear that they will be. A recent development in the U.S. is foreboding. In February, a bill was passed restricting banks and other financial institutions that receive taxpayer bailout money from hiring employees on H-1B visas.22 What this means for this year's H-1B lottery is not clear. We will have to wait and see.
Although the crisis has indeed become global, the crisis will not stop globalization in terms of foreign expert relocation or otherwise. Rather, it will lead to an adjustment that will make foreign expert relocation more cost-efficient. These adjustments could include a reexamination of corporate policies, streamlining and increased efficiencies, and hopefully immigration reform. In the morass of competing concerns, it is of paramount importance that immigration reform will not be forgotten in the morass. This is the time for our representatives to enact reform measures, recognizing the positive impact that the employment of foreign experts has on the Israeli and American economies.
End Notes1World Education Indicators, United Nations Educational, Scientific, and Cultural Organization (UNESCO) Institute for Statistics, (2006) available at: http://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=121&IF_Language=eng&BR_Country=3760&BR_Region=40500; Israel in Figures 2007, Central Bureau of Statistics (CBS), 14, available at: http://www.cbs.gov.il/www/publications/isr_in_n07e.pdf.
2Immigrant Population from the USSR (former) by year of immigration, CBS, Table 1, available at http://www1.cbs.gov.il/www/publications/migration_ussr01/pdf/tab01.pdf; Friedberg, Rachel M., The Impact of Mass Migration on the Israeli Labor Market, 116 THE QUARTERLY JOURNAL OF ECONOMICS 1373 (2001) (Friedberg), available at: http://www.econ.brown.edu/fac/Rachel_Friedberg/Links/friedberg_qje.pdf.
3Immigrants from the former Soviet Union between the years 1990-2001, Introduction, CBS, available at: http://cbs.gov.il/publications/alia2001/word/h_intro_mavo4.doc (Hebrew); See also Friedberg at 1376; Cohen, Sarit, Bar-Ilan University and Hsieh, Chang-Tai, Princeton University, Macroeconomic and Labor Market Impact of Russian Immigration in Israel, 3, 7-8, Table 1 (2000), available at: http://www.biu.ac.il/soc/ec/wp/11-01/alia.pdf.
6Employment Services Committee Report to Examine the Extent of Employment of Foreign Workers in the Israeli Economy from July 2001, headed by Mr. Yaakov Buchris - Committee Chairman and Senior Professional Advisor to the Minister of Labor and Social Affairs, Recommendations to the Industry Branch (Buchris Report).
8The Supply Side of Innovation: H-1B Visa Reforms and US Ethnic Invention, William R. Kerr and William F. Lincoln, Harvard Business School Working Paper 09-005 (2008) (Kerr and Lincoln), available at: http://www.hbs.edu/research/pdf/09-005.pdf.
11America's New Immigrant Entrepreneurs, Vivek Wadhwa, AnnaLee Saxenian, Ben Rissing, Gary Gereffi, Master of Engineering Management Program, Duke University; School of Information, U.C. Berkeley (2007) (Wadhwa), available at http://ssrn.com/abstract=990152.
15See id. at 35; Education, Entrepreneurship and Immigration: America's New Immigrant Entrepreneurs, Part II, Vivek Wadhwa, Ben Rissing, AnnaLee Saxenian, Gary Gereffi, School of Engineering, Duke University, School of Information, U.C. Berkeley, Kauffman Foundation, 3, 8, 14 (2007), available at: http://ssrn.com/abstract=991327.
18Petitions Filed on Behalf of H-1B Temporary Workers Subject to or Exempt From the Annual Numerical Limitation, 73 FR 15389 (2008), available at: http://www.uscis.gov/propub/ProPubVAP.jsp?dockey=b7c6b13ad59bbd54a3c1df9bd9723aa1.
19H-1B Benefit Fraud & Compliance Assessment, USCIS (2008) available at: http://www.aila.org/Content/default.aspx?docid=26841.
22American Recovery and Reinvestment Act of 2009, P.L. 111-05 (2009) (Stimulus Bill) (applies to banks and other companies receiving money or credit under the Troubled Assets Relief Program (TARP)), available at: http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.1.enr.
Amit Acco is a founding partner and head of the Israeli department of Kan-Tor & Acco in Ramat Gan, Israel. Kan-Tor & Acco (KTA) is a global relocation law firm comprising three inter-related practice areas: Israel-bound relocation, U.S.-bound relocation, and Global relocation.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.