Thread: H-1B demand follows the economy -- down

H-1B demand follows the economy -- down
The number of H-1B visa applications filed thus far is way off from last year's level. But the annual visa cap may still be reached.
By Patrick Thibodeau

April 13, 2009 (Computerworld) Demand for H-1B visas usually fluctuates with the economy, and this year is no exception. In fact, the initial number of H-1B applications filed with the federal government was down even more sharply than expected from the number filed a year ago.

Last April, in just five days, the U.S. Citizenship and Immigration Services received 163,000 applications for the 85,000 visas that were available. For the second straight year, the USCIS resorted to a lottery to award the visas.

The agency on April 1 began accepting H-1B applications for fiscal 2010, which starts in October. But as of last Thursday, nine days into the filing period, only about 62,000 visa petitions had been submitted.

The USCIS said 42,000 of those applications were for one of the 65,000 regular visas that can be issued. Another 20,000 visas are set aside for foreigners with advanced degrees from U.S. universities; the agency has received more than enough applications for those visas but said it is continuing to accept additional petitions.

The economic recession and the resulting widespread job cuts at IT vendors were expected to reduce H-1B demand this year. But immigration attorneys and supporters of the visa program had predicted that the available supply would easily be exhausted again.

And that still may happen, especially after college graduations in May. Foreign students can't apply for H-1B visas until they graduate — a restriction that shut them out of the application process in recent years. That prompted the Bush administration last April to extend the amount of time that some foreigners can continue to work in the U.S. on their student visas.

In late March, Robert Hoffman, co-chairman of Compete America, a lobbying group in Washington, said that H-1B proponents hope to "clear the backlog" of foreign nationals who are in the U.S. but couldn't get visas a year ago. Many of the applications filed for the advanced-degree visas are likely coming from such people, he said last week.

But the overall application numbers "reaffirm that this is a program that essentially tracks with the broader demand" for workers based on the economy, added Hoffman, who is vice president of government and public affairs at Oracle Corp.

The economic connection has been borne out in the past. For instance, in fiscal 2001, when the annual H-1B cap was set at 195,000, the government issued 163,600 visas. But the following year, after the dot-com bubble burst, that number fell by more than half, to 79,100.

Despite the drop in demand for visas, John Miano, an H-1B critic who is founder of the Summit, N.J.-based Programmers Guild, said he still expects the cap to be reached this year.

And the H-1B program is still generating plenty of controversy. Miano said that if H-1B usage were largely driven by the economy, the number of applications should have gone down "close to zero" this year.

IEEE-USA, an organization for engineers, also "continues to be concerned about the H-1B program," said its president, Gordon Day.

Those concerns have to do with competition for jobs at a time of increasing layoffs. IEEE-USA, a unit of what was formerly known as the Institute of Electrical and Electronics Engineers, reported that the unemployment rate for computer-related engineering occupations jumped from 3.3% in the fourth quarter of 2008 to 5.4% at the end of March.

Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) this month are expected to propose a set of H-1B reforms, including a requirement that companies make "good faith" efforts to hire U.S. citizens before bringing in H-1B workers.

Hoffman hopes to avoid piecemeal moves to set new restrictions, arguing that any H-1B changes — including a potential cap increase — should be part of broader immigration reform.

It's unclear whether President Barack Obama would back a cap increase. But last month, in a court filing arguing against a lawsuit seeking to overturn the student-visa extension, the White House said that the inability of employers to obtain H-1B visas is creating "a competitive disadvantage for U.S. companies."

This story originally appeared in Computerworld's print edition. It is a modified version of an earlier story that was posted on our Web site last week.

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