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Sen. Charles Schumer's Rationale For H And L Fee Increase Makes No Sense!

by Krishna Palagummi

The chief architect of the outrageous H-1B and L-1 additional fee measure, Mr. Charles Schumer (D-NY) called Indian technology companies “Chop Shops”, a term which refers to a place where stolen cars are dismantled to sell off the parts. It is pretty clear that by doing a bit of ‘India bashing’, the Senator and in fact a good portion of American politicians these days are scoring cheap political points ahead of the upcoming November elections. The buzz words to get face time in front of voters seem to be Outsourcing = Jobs to India = Bad for American Economy = Loss of American Jobs.

Looking for a rationale behind Sen. Schumer’s bill, which passed into law on August 13, I ended up concluding that the Senator’s and his staff’s knowledge of immigration law and its interplay with U.S. economy is far below elementary, at best. Read this from the Senator’s press release:

Border Funding is Fully Offset By Fees on Companies That Offshore High-Paying American Jobs - The bill raises fees on H-1B visas (for temporary skilled workers) for companies who have more than 50 percent of their employees on H-1B visas (this does not affect U.S. tech companies). The bill also raises fees on L visas (given to multi-national transferees) for foreign companies. The L visa is often used by foreign companies to circumvent the requirements of the H-1B visa. Schumer added, No doubt, we need to comprehensively reform our broken immigration system, and this plan is a first step in that process.

It is clear that Senator Schumer's press release is filled with hatred towards H and L work visa program and his fee increase measure was a punishment. Senator Schumer thinks that the measure will definitely hurt “foreign” tech companies but will not hurt U.S. tech companies. What is the definition of a U.S. company? In simple terms, an entity incorporated in the U.S. with a Federal Employer ID Number, paying taxes in the U.S. to the Federal and State governments. How did Senator Schumer come up with the rationale to differentiate what he sees as H-1B companies from rest of the U.S. tech Companies”? Going with his definition, if a U.S. incorporated corporation with 50 employees out of which 26 are H-1B - then it is not a “U.S. company” but an H-1B company from some alien planet. Does it not matter to Senator Schumer that 1) this company is actually based in the U.S.; 2) employs individuals here (not to be confused with outsourcing the job out of U.S.); 3) pays employee and employer portion of taxes, to the U.S. Federal and State governments; and 4) generates business helping the U.S. economy by making purchases of computers, desks, chairs, vehicles, leasing premises, etc.

Senator Schumer appears to cling to the buzz word outsourcing. Mr. Senator there is a difference between offshoring and bringing foreign nationals to work in the United States. If a company ships a job out of U.S., it would be appropriate to call it offshoring. On the other hand, if a U.S. based company is bringing highly skilled professionals to work in the U.S. at its clients' offices, it is not necessarily offshoring the jobs out of United States. The jobs still stay within the United States. These jobs are generally the ones where there is acute shortage of American workers which is the reason why U.S. companies make an effort to overcome the shortage by bringing highly skilled and qualified foreign workers in H-1B or L-1 status. Also, it is important to note that the H-1B and L-1 jobs are not necessarily “cheap, low paying jobs” as is projected to Americans by the Washington politicians. A vast portion of H-1B and L-1 wages are comparable to jobs filled by American workers. Senator Schumer's headline for the press release (good from P.R. point of view) itself is inaccurate based upon the above interpretation.

Senator Schumer's thoughtless bill which has been passed into law in absolute haste is in fact going to severely hurt the U.S. economy. Here's how. Now that the fee for an H-1B or an L-1 is so ridiculously high, companies will now be inclined to start convincing their clients in taking the projects and executing them out of U.S. in some other country. This is because it might be lot cheaper and time-efficient to ship what was supposed to be an H-1B job out of U.S. rather than going through 60 million hurdles of bringing an H-1B individual to the U.S. Starting with outrageous filing fees, 10-page queries (RFEs) from USCIS after filing a work visa petition, likely denials – and even if approved- visa refusals at the consulates – and if visas were issued- airport detentions and sending foreign nationals back – the U.S. immigration policy with regard to work visas has turned into an extremely restrictive one – thanks to the Obama Administration's unwritten policy of keeping foreign nationals at bay.

Senator Schumer states that L visa program has been used to circumvent H visa program. Why? The Senator does not provide explanation. The eligibility requirements for H and L visas are quite different. To start with, H-1B needs at least a Bachelor's degree, an L does not. In order to obtain an L visa, the foreign national must have been employed abroad for at least one year. This is not necessary for an H-1B. Senator Schumer thinks that a company employs an individual for one full year abroad with the intention ONLY to circumvent the U.S. immigration law by applying L visa and not H visa. Would it make business sense to employ somebody for one year abroad for no reason or for the only reason of applying under L visa? I am shocked to learn that the Senator is arriving at these narrow-minded, erroneous conclusions about the whole H and L visa programs and in the process, misleading American people.

Senator Schumer succeeded in convincing his colleagues on both sides of the aisle that the only way the U.S. could fund the Border Security program is by punishing small and midsize U.S. companies (read my definition above) that are barely managing to survive in these tough economic conditions. The fee increase measure will significantly impact the U.S. by 1) not being able to attract the hardworking, best minds anymore; 2) motivate the U.S. companies (includes his definition as well) to seriously consider outsourcing/offshoring overseas now; 3) not being able to generate revenues by way of taxes; and 4) losing revenues that could have been generated by these U.S. companies with employees in the U.S. Lastly, if the number of H and L visa filings are reduced as is the case currently, the funding for the Border Security program will not be as much as Senator Schumer hypothesized.

About The Author

Krishna Palagummi joined The Chugh Firm in 2004. He is part of its business immigration team where he coordinates with The Chugh Firm's clients with regard to all business immigration needs, including but not limited to, work permit visas for foreign nationals, lawful permanent residence (green card) process, and U.S. citizenship/naturalization. He also handles Dept. of Labor audits on behalf of The Chugh Firm's clients. In addition, he regularly conducts immigration compliance audits at clients' offices.

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