Where have all the H-1B Applications gone?

by Dru Wynings. Average Reading Time: about 2 minutes.

Most of you will think that the title is an attempt at fear mongering with regards to outsourcing. It’s not at all. Rather, I’d like to bring to everyone’s attention yet another example of how our economy is suffering.

Applications for the H-1B visa, the non-immigrant visa that so many tech companies rely on to support their growth, have steeply declined in the last year. For FY08 (applications are taken in 2007), the entire quota had been applied for by the end of the day they were released. As of July 10th only 45,000 applications have been filed, and that’s a full 3 months later.  I don’t know about you guys, but this is ALARMING. This is an indicator that the future of technology and innovation will not likely come from within the United States, but will become more prominent in the likes of India and China. The workers are not deeming the United States as the land of opportunity, as it has become increasingly harder to find a job, and have voted with their feet, so to speak, as they decide to stay in their respective countries.

Whenever H-1B visas are brought up, you usually here two arguments for and against them. Some argue that H-1B visas have been the main contributor to the outsourcing of jobs in the United States to foreign countries where labor is much cheaper. On the other hand, some believe that H-1B visas are instrumental to the success of technology companies. Reid Hoffman, CEO of LinkedIn, happens to fall into the latter category. A few months ago on TechCrunch he wrote about his solution for a stimulus package in which he place a great deal of emphasis on startups. In his editorial, he writes:

Abolish the limit on H-1B Visas. Remove the cap on H-1B visas and impose a 10 percent payroll tax beyond the benchmark salary for each visa. Then channel the proceeds from the payroll tax into US re-education programs.

This is a country founded on immigration. We should welcome the best and the brightest as our own. Abolish the H-1B cap, and give me an economic reason for preferring local. I’ll only do foreign if I need to. A 10 percent payroll tax for each H-1B visa can be reinvested in whatever it takes to get American talent up to the same level. This has been proposed previously, but a payroll tax ensures that H-1Bs are used for skilled labor, not cheap labor.

He and others make a good point. Immigrants have founded more than half of all Silicon Valley start-ups in the past decade. These companies employed 450,000 workers and grossed $52 billion in 2005.

Personally I think the quota should be eliminated altogether. Unfortunately for the United States, doing so wouldn’t be helpful now given the lack of applications this year. Is this foreshadowing something much worse? That perhaps the U.S. isn’t the “Land of Opportunity” for foreigners like it once was. As innovation in technology enables worldwide collaboration, it will prove interesting to see how some adapt while others falter.