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What Trump’s H-1B visa executive order actually does

It’s a warning shot to employers.

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President Trump likes to say that he doesn’t want to announce in advance when he’s going to launch an attack. But on Tuesday, he signed an executive order that did just that.

While on a visit to the headquarters of Snap-On Tools in Kenosha, Wisconsin, the president ordered an interdepartmental review of the H-1B visa program, which allows companies to bring “skilled” foreign workers to fill jobs in the US for a few years. Administration officials have made it clear that “review” means they expect Cabinet officials to suggest changes to the program — either by way of regulation or by asking Congress to pass a bill — in the name of better protecting American workers.

In Kenosha, Trump drew a bright line on the H-1B visa: It “should include only the most skilled and highest-paid applicants and should never, ever be used to replace American workers.”

A review of the H-1B program was one of many provisions included in a potential executive order drafted during the presidential transition, which would have taken much more aggressive steps to limit a broad array of work visas. Since arriving in office, however, the Trump administration appears to have focused its efforts on the H-1B program, which awards 65,000 visas a year to people with “highly specialized knowledge” (in practice, jobs requiring at least a bachelor’s degree, and often involving technology).

The administration, following Trump’s rhetoric on the campaign trail (and that of some populists like current Attorney General Jeff Sessions), has portrayed the H-1B program as a way for unscrupulous business owners to hire cheap foreign labor, rather than hiring qualified American workers or training US citizens for high-skilled jobs.

Over the past few weeks, the administration has suspended a practice that allowed employers to get their applications processed within six weeks (instead of several months) if they paid a higher fee, and issued a warning on the day visa applications opened for 2018 that the government would be cracking down on employers who used H-1B workers for jobs Americans could fill. And now, with this executive order, it’s declared that the H-1B visa is a top enemy of the pledge to “Hire American.”

The executive order doesn’t change H-1B policy on its own, and it doesn’t set a timeline for when the review will be completed.

The administration has already hinted at some of the changes it would like to see: It might try to change the existing way the government defines the “prevailing wage” in an industry (the de facto minimum wage for an H-1B visa holder in that industry) and might start handing out H-1B visas for the highest-paid jobs and best-educated employees rather than giving any applicant who meets the basic requirements for the visa a chance.

It’s not clear whether it will try to make those changes as regulation (and whether that could survive a legal challenge). Fundamentally, though, the administration is going to have to decide what kind of high-skilled visa program it wants.

If Trump wants to make it harder for outsourcing firms to use H-1Bs to staff call centers, and make it easier for tech giants such as Google and Microsoft to bring over high-level engineers, he could find a surprising amount of bipartisan agreement. But if he wants to follow the lead of chief strategist Steve Bannon and Attorney General Sessions, and crack down on H-1B visas across the board in the name of protecting American “civic society” (in Bannon’s words), he’ll be gratifying the narrow populism of his most ideological supporters.

Everyone wants to fix the H-1B visa, but no one agrees on how to do it

Very few people are satisfied with the way the H-1B program works now. For the past several years, so many businesses have sought H-1B visas that the government has gotten more applications on the first day visa slots are open than it has visas available for the entire year. As a result, it’s had to award the 65,000 slots by lottery — meaning that businesses go through the entire process of putting together an application (for a worker they’re trying to hire, or one who’s already here) without having any idea of whether it will be approved.

Many of the slots in the visa lottery go to outsourcing or contracting firms that depend on H-1B visas to staff their workforce. These companies have slightly more regulatory hoops to jump through (as “H-1B-dependent” firms) but still manage to be in the top 10 companies holding the most H-1B visas, year after year. As a senior administration official put it on a press call explaining the new executive order, they’re “putting extra tickets in the lottery raffle.”

According to many Democrats and pro-business Republicans — as well as the tech firms, like Google and Facebook, that have really upped their lobbying game on Capitol Hill in the past several years — this is a problem because those visa slots should instead be going to better companies to fill better jobs. They point out that many fast-growing startups build on the contributions of H-1B visa holders to create jobs for US citizens, and that many companies pay their H-1B visa holders more than the average American makes in a comparable job (rebutting the charge that H-1Bs are a way to undercut wages).

In this view, fixing the H-1B visa means making sure that visas go to the right employers — by putting tougher regulations on “visa-dependent” employers, by favoring businesses that actually allow their H-1B-holding employees to apply for green cards instead of cycling through temporary workers, or simply by doing a better job of enforcing the regulations on the books.

But there’s another way to look at the H-1B visa: that it’s a problem because it allows jobs to go to foreign workers instead of Americans, full stop. In this view, there aren’t really “good” and “bad” companies for H-1B visas — just more and less egregious violators. Fixing the H-1B visa might mean requiring employers to do more to demonstrate that they’re trying to hire Americans for the job instead, or even to train Americans to do a job they can’t find native workers to fill — or simply cutting the number of visas awarded across the board.

That’s a position more in line with the views of Bannon, who’s expressed concern that people “from South Asia and East Asia” are coming to the US to get engineering degrees “and take these jobs,” and who’s said that the number of Asian and Asian-American CEOs poses a threat to American “civic society.”

The changes the Trump administration is already hinting it’s going to seek — adjusting the wage scale, and allotting H-1Bs based on high salary or education level instead of lottery — kind of split the middle. Requiring businesses to pay slightly more for H-1B employees would knock out the outsourcing firms, but requiring them to pay a lot more would knock out a lot of nonprofits, small businesses, and startups. And awarding visas to the 65,000 highest-paying jobs every year could force a salary arms race, which would be fine for Google but not so good for companies whose pockets are less deep.

Ultimately, it’s going to depend on what the presidential review finds. The executive order Trump signed Tuesday is just the beginning. The attack on H-1Bs is still to come.

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