2004 February 19 Thursday
Current Year H1B Skilled Worker Visa Quota Already Filled

The current year allotment of H1-B visas have already been assigned 5 months into the fiscal year.

WASHINGTON - The federal government won't accept any more applications for a popular visa program that provides skilled foreign labor to U.S. companies, the office of Citizenship and Immigration Services said Tuesday.

Less than five months into the fiscal year there already are enough applications to fill all 65,000 slots for H1-B visas, said Chris Bentley, a spokesman for the agency, a division of the Homeland Security Department.

IT managers in search of cheap programming talent are unhappy.

Adrian Williams, an IT manager at a health-care firm, said Wednesday that his company sometimes hires foreign workers because they have more experience and are more affordable than even some recent college grads; these U.S. workers are sometimes willing to take lesser-paying jobs but take much longer to train.

Executives who hire foreign scientists claim this limit puts them at a competitive disadvantage.

Pulling up the welcome mat to foreign talent when corporate America is gearing up for a turnaround poses a threat to America's global competitiveness, Cheung and other executives said recently. They predicted that a shortage of H-1B visas would force them to pass over promising foreign-born scientists, leave crucial jobs unfilled or delay projects that require special talents that can't be found in this country.

Handing out visas in a first-come first-serve fashion starting at the beginning of each fiscal year is an inefficient way to allocate a scarce resource. I have two proposals for better ways to hand out skilled work visas:

Auction off the visas once a month with one twelfth of each year's visas sold every month. This accomplishes two goals at once. First, it causes more of the visas to be allocated to the most valued workers. Secondly, by doing the auctions continuously throughout the year it assures a continous supply of the most skilled workers to fill slots that come available during the year. A finer time granularity on skilled worker availability will increase market efficiencies of labor allocation. Currently the system allocates visas toward companies which just happen to have openings when the new allotment of slots for a year becomes available at the beginning of a fiscal year. But those users are not, on average, going to be the most productive users of the resource. Yearly quotas handed out all at once are inefficient at allocating resources.

Make fewer visas available at lower salary levels. Which workers are more valuable to the economy? Those who make more or those who make less? On average, more value is going to be generated by those who make more. So why hand out visas for programmers who make $35k per year when we could be handing them out to engineers or scientists who make $70k or $120k or more?

People who make more produce more on average. They pay more in taxes. They are more likely to be net benefits to the economy and less likely to generate costs for the rest of us in excess of the taxes and benefits they provide. A visa allocation system should be designed to optimize for allocation of work permits to workers who will generate the most in benefits and least in costs.

It may be possible to improve upon this scheme above in all sorts of ways. How to factor in the lower salary of a young scientist who is as yet unproven? We expect salaries to increase as a person proves himself. So we might conceivably have lower allowed salaries for younger workers. But we don't want companies to use a scheme of constantly bringing in low-paid workers for a few years and then shipping them back to get new low-paid ones. Such workers might be in occupations where the employer does not expect great growth in productivity as a result of experience. So how to protect against that? Make a company pay more for the visa if the salaries of its H1-B workers are never going up? Or make the visa cost more if the total amount of tax paid by the worker over the life of the visa is low?

The US should try to get the most talent possible from the limited number of H1-B visas, permanent residency visas, and citizenships it hands out to foreigners. How best to do that?

Update: One problem with a pure auction scheme is that some employers who simply want cheap labor will use an auction scheme to bring in large numbers of low-paid workers in some occupation where the gap in salaries between the US and other countries is the largest. A prospective employer would be willing to pay an auction price that is smaller than that gap. From the standpoint of the common good of all American citizens this is not the best reason to bring in immigrant labor. We should want laborers who will pay more in taxes, produce more in goods and services, innovate, and be law-abiding. An auction scheme ought to account for both cost and benefit forms of externalities. With that in mind here are some additional ideas:

  • For each dollar of federal income tax paid by an H1-B visa holder a few pennies should be refunded to the employer to partially repay the auction cost the employer paid to get the work permit. This would make employers favor workers who they expected to make more money since such workers would pay more taxes and pay back part of their permit costs. There should not be a full dollar-per-dollar deduction because the foreign worker is generating costs for the citizenry.
  • The employer should put up a cash deposit or insurance policy when the worker enters. If the work visa holder or a dependent of the visa holder is convicted of a felony in the United States then deposit should be forfeited to the government. This gives employers an incentive to hire people who seem like they are very law-abiding. A method of paying the costs with insurance would even create a market in which insurance companies would have an incentive to collect information on potential workers to determine risks.
  • If a worker becomes an illegal and remains in the country when the work visa expires then, again, some value of a bond or deposit would be forfeited to the government. This could work something like a bail bond and there could even be extradition bail bond agencies to hunt down and deport illegal overstayers.
  • A scientific citation ratings mechanism could be developed to rate the relative scientific value of potential workers. The relative values could be used as additions to academic scientist salaries to boost scientists up into salary categories that have more visas available.

Update II: Another advantage of a visa auction is it reduces the amount of subjective judgements of value made by government workers. Plus, it reduces uncertainty and opportunity cost caused by application time delays by compressing the amount of time it takes for an employer to get a work permit.

Update III: There is another problem with an auction system: Some potential employees can't be tested for their talent level without being employed for a while. Also, some occupations have a far greater amount of variability in productivity from one worker to the next. There is a narrower variation in productivity among truck drivers for example than among computer programmers or engineers. It is harder to judge in advance the level of productivity of workers in occupations that have larger variations in performance. If all visas are for an equal period of time then the companies bidding on them are going to tend to favor bidding for visas for job positions where productivity is more predictable in advance. A company that might want to try out an engineer for 6 months to find out if that engineer is a star or mediocre is going to tend to not want to pay for a work permit that lasts for, say, 6 years. Therefore there should be a market for permits that are extensible. In fact, an argument could be made for a market for, say, 50,000 6 month or 1 year permits where then a smaller market for, say, 35,000 5 year extension permits would be available at the end of the 6 months.Those companies that were most impressed by their workers would be willing to then bid more for the extensions.

Share |      By Randall Parker at 2004 February 19 03:56 PM  Immigration Border Control

Bob Badour said at February 19, 2004 7:29 PM:

It already takes too long to begin a new H1B for most small businesses that might show an interest. I was recently involved with helping a company that had to take a pass on an awesome candidate because they needed someone who could start sooner than they could arrange a new H1B. Since the candidate in question does not yet have Canadian citizenship, he did not qualify under NAFTA.

This is depressing news for a wannabe like me.

Invisible Scientist said at February 21, 2004 2:59 AM:


I believe that there exists an immigration lottery program which
randomly gives green cards to many thousands of foreigners from
all over the world each year, and this is completely random, regardless
of how unskilled they might be. The US will ultimately lose leadership
and competitiveness in all areas unless we quickly give citizenship
to skilled and high IQ people.

Invisible Scientist said at February 21, 2004 3:00 AM:


I believe that there exists an immigration lottery program which
randomly gives green cards to many thousands of foreigners from
all over the world each year, and this is completely random, regardless
of how unskilled they might be. The US will ultimately lose leadership
and competitiveness in all areas unless we quickly give citizenship
to skilled and high IQ people.

Ray said at February 21, 2004 12:44 PM:

I think that immigrant jobs don't exist in a vacumn. There's evidently a high demand for low-wage, skilled programmers and the like. If it doesn't exist in the US, it may move abroad -- with much greater cost savings, but far greater long-term costs to us (if the work moves overseas, so, eventually will the R&D, the training, and the body of expertise).

Rob Sanchez said at February 25, 2004 10:51 AM:

All the talk about shortages of H-1B visas is just pure flapdoodle. In addition to the 65,000 visas issued, there are significant numbers of exempts, including those that are applying for extensions. None of the H-1B shortage shouters even consider hiring American citizens.

To find the truth instead of the types of fiction that Adrian Williams writes, get a free subscription to the "Job Destruction Newsletter" by emailing H1BNews@ZaZona.com and put SUBSCRIBE in the subject.

Linda Evans said at February 26, 2004 5:38 AM:

The H-1B visa program has become nothing but an American worker replacement program. It is a common myth that there is a requirement in the H-1B visa laws that the employer must first consider an American citizens for the job. It is a myth that the H-1B is used only to hire workers with "special skills" that can't be found in the U.S. and it is also a myth that the H-1B's must be paid the same as Americans. The truth is that employers are required to pay 95% of the prevailing wage, but the prevailing wage is anything the employer says it is--and now that the cap has dropped, I believe even the useless prevailing wage requirement is gone. My husband and his co-workers lost their computer programming jobs when their employer imported H-1B's and made the Americans train their replacements in order to receive severance. We later learned that the H-1B's are earning about half what the Americans had been earning. I contacted the U.S. DOL and learned that this is legal--they reinforced this information in writing and stated there are no protections for Americans in the H-1B visa laws. In the nearly two years since my husband was dumped on the street like garbage by his greedy employer, we have seen a number of ads for jobs in this country in which the ads state the company is hiring H-1B visa holders only. I am now in contact with former tech workers throughout the country who are doing any low-skilled labor they can get in order to buy food. Some have lost their homes and everything they ever worked for. Corporations have shown repeatedly--they are after cheap labor and if they have to cry "shortage" to get Congress to go along with their plan to replace American workers, they will certainly do so.

Paul Noel said at February 26, 2004 6:56 AM:

This continual argument that runs around that we are somehow missing out on getting smart people for the USA and thus improving our competitive state is just plain a lie.

I worked for Intergraph Corp on the LPD-17 program (US Navy - USS San Antonio and 11 others)
During that time the US Navy was attempting to deal with a serious problem with the lack of Native Ship Building technology because there was little or no ship building outside the US Navy. Their goal with the program was to reestablish Domestic Ship Building so that the US could have reserve capacity and cut the cost of US Warships. Our tech was good. We cut the cost of a warship over its lifespan by about $4 Billion. Over 12 ships that is $48 Billion saved for the taxpayers of the USA. We cut the production cost of ships by 80%.

The staffing was more than 1/2 foreign. This would appear to back up the H-1B program argument. Please note that 30 people did this for the USA. Our paycheck for the Company was $36 Million per year for about 5 years and for the actual workers... Well we got about $50 k each.

Critical to the progress here was that the USA would develop a competitive ship building industry. This was the key goal. Because of the Foreign H-1B types, the source code was stolen by a H-1B from the PRC (Read Spy) and taken to China. This made the product have little or now non military use in the USA. The product was sold immediately to Russia, Norway, Poland and South Korea. Eventually it was even sold to China. In the end the original problem of the US having dramatically higher cost warships against cheaper ones elsewhere remains unchanged. The Domestic Industry is essentially destroyed by the product.

The US Navy now faces much cheaper production of China and India and others because of our work and the USA has its tax base undermined that might have supported the Navy.

What we are facing here is a Classical Trade War. The USA has its products marked up about 150% by US State and Federal Taxes while world wide and now with H-1B etc domestically we face untaxed competition which wipes us from the market. Our industrialists claim to be saving the country while they loot it this way. What is worse because they simply do not understand the morals of the people they are dealing with around the world, they are actually losing out even on the items they control.

India and China are actively embarked on a program to STEAL as much US Technology as they can. These Globalist US Companies are playing into their hands.

Bob Badour said at February 26, 2004 9:58 AM:

Linda and Paul,

I agree that the H1B system is perverse, but for perhaps slightly different reasons. I think it is in the best interests of the US to encourage intelligent, productive scientists and engineers to immigrate to the US. My objection is the H1B system does not do that.

Contrast the situations: The US tolerates almost unrestricted immigration of the poor, illiterate and perpetually unproductive from neighbouring countries--and even from around the world. The US strictly limits the affluent, literate and exceptionally productive immigrants both in number and in duration. This is perverse.

Consider the dynamic of the H1B system and the dotcom meltdown. Whether urban myth or truth, I heard stories of H1B's abandoning their leased BMW's in company and airport parking lots when they lost their jobs and were forced to repatriate to their homelands within 10 days. Thus, the H1B system brought in hundreds of thousands of foreign technology workers for training and experience in the US market and then shipped them back to the former Soviet states, to India and to China, where they are willing to work as offshore outsourced workers for 10 cents on the dollar.

I think the US would have benefited far more by having these individuals as permanent residents and citizens losing their jobs and starting entrepreneurial ventures. They are exactly the sort of bright, motivated individuals who end recessions and transform economies. Instead, they are now syphoning off the remuneration of those who remain and that would ordinarily attract bright motivated individuals to seek the technology training that has kept the US in the lead.

The US needs to replace the H1B system with a system that focuses on those scientists and engineers who want to relocate permanently because they embrace US values and with a system that gives those scientists and engineers permanent residency quickly. After stringent vetting, residency should be automatic and immediate.

At the same time, the US needs to enforce immigration law and to deport all of the illegals. The illegals contribute little and consume much.

ravi said at April 3, 2004 8:50 AM:

i heard that for april 2004 they are going to release another 20000 h1B quotas are they available now or not and if they r going to file h1B quota in april and when are these ins papers released.

KING said at April 5, 2004 11:24 AM:

hi can you please tell how can i check that my ins is agenuine or not through online . how can i veryfy my visa is correct or not.

Prasanth said at May 13, 2004 9:53 PM:

can U give me more details about this year H1b visa Quota. b's there are so many words on this issue, no one giving correct answers..Thanks

Hemal said at September 30, 2004 12:02 AM:

I was going thru you right-up on the H1B visa status for the year 2004. Its too imformative and gives a clear picture of the current scenatrio.

I am too keen to read your personal comments on the acceptability of fresh H1B application from October 1st, 2004. I want you to tell me whether the risks involved in fresh H1B visa appliction would be much more higher or that the Visa officer would be much more simpler in issuing the Visas this time.

Your expert comments on my email id would be of much help to me.

Thanks and regards,

IFA said at November 20, 2004 7:56 PM:

There is more to the H1-B visa program than just replacing American jobs. It seems to be replacing American companies too. The government sent in Intergraph Corporation to evaluate my company plans. They not only took my plans, but teamed with a company from India. I have written to senators, congressmen, the President, and several agencies that are suppose to be investigating fraud, waste and abuse. Not a single person will assist my company, nor any of the other business owners that Intergraph is hurting. Someone sent me a tip in my email that I needed to go look up the company in the H1-B database. Sure enough, they were there, 67 times.

I don't know what is going on with America, the government, large corporations and foreign companies/laborers, but I can say this much, our government doesn't want to hear from us. Not only that, I have a lawsuit against Intergraph Corporation, and when they couldn't make the lawsuit fail, they went to the U.S. District Court to get the judge to stop the subpoenas and the requests for documents. The Small Business Administration is doing the same. They want the documents to be stopped from being turned over in another lawsuit. The judge not only approved their request, but he put a 60 day stay on the lawsuit, and assisted them in going after a multi-million dollar contract using my information.

And I really don't want to hear about the "hard working immagrants" either. The company from India is not qualified to do the work, and in fact, called me up asking me to tell them how to do the contract. They also offered me a substancial amount of bribe money if I would drop my protest against the contract award. When I refused, I was told they and the government were working on erasing my fingerprints from the plans so no one would know where the plans came from. I'm sure there are exploited workers here who are nothing more than slaves, and my heart goes out to them. But something is entirely wrong with what is happening when the courts are stepping in to prevent this from being stopped.

If you are interested in reading about my story, you can find some of it here. I'm working on creating my own web site, because there is so much to tell, that can't really be said in someone else's forum.

For those who are saying Americans are whining about the H1-B visas, you must not be personally affected by it. When our own government is preventing Americans from working, then wouldn't you think there is something bigger about this that we are all missing?

Story: http://www.rescueamericanjobs.org/discuss/viewtopic.php?t=1113&sid=be6e02c6a1274561f6a316ff72026364

Santosh Bhutekar said at February 22, 2008 2:08 AM:

Can I work on dependent visa if my husband is having H1B Visa (USA) & he is working in USA?

Please answer.

Thanks & Regards,
Santosh Bhutekar

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