In my recent study on H-1Bs, I find no evidence that H-1Bs are generally used to displace U.S. workers and that, in fact, H-1B requests are associated with employment gains for American workers. But there is no doubt that there are exceptions to the rule, and Congress should take action to address them. But how?
One solution would be to enable a freer labor market to protect workers. An unscrupulous employer, in the course of negotiations, could pay an H-1B worker below the market wage but only because that worker cannot legally walk away from the negotiation. He is not permitted to maintain legal status while pursuing employment opportunities elsewhere.
Fortunately, there’s no evidence that this abuse is widespread, but Congress should strengthen worker protections by easing the rules for H-1Bs to leave their initial employer. H-1Bs should be given a grace period of 60 days to find a new employer rather than lose their status immediately. Also, workers who have applied for a green card should be entitled to keep their place in line after switching employers. If H-1Bs could leave a job in which an employer attempts to underpay them, employers would have no advantage to hiring them over Americans.
Another proposed “solution” is a regulatory approach suggested at a recent Senate Judiciary Committee meeting by a witness from the Economic Policy Institute (EPI). “Prior to hiring an H-1B, all employers should be required to actively recruit American workers,” he concluded. “This would ensure that the H-1B program is being used as it’s intended.”
This may seem like common sense, but consider how this regulatory approach would interact with the free market approach. Imagine you are an H-1B who is given 60 days to find a new employer. You walk away from an employer who attempts to underpay you, but if all employers must recruit for 60 days prior to hiring you, your likelihood of finding a new job drops dramatically.
In other words, a recruitment requirement would actually put H-1Bs even more at the mercy of their employers by limiting their options. This would, in turn, hurt American workers as well by making H-1Bs more attractive to an unscrupulous employer.
The EPI witness misses something else as well. When Congress created the H-1 visa in 1952 and the H-1B in 1990, its intent was to allow American companies to quickly hire a foreign skilled worker without having to wait. It recognized that leaving a single high skilled position unfilled for extended periods costs the economy thousands of dollars every month.
Congress should unleash the free market in defense of H-1Bs and American workers first and study the effects of the change before pursuing regulations that could punish the economy unnecessarily.