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Why It's Time to Reform the H-1B Visa Program The very tool we need so much is complicated, time-consuming and cost-prohibitive. Why is that?

By Matthew Faustman Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


We often take for granted the adage that the United States is a melting pot, that we are a nation of immigrants. In fact, this country has been built on the shoulders of hard-working men and women from all over the globe.

Related: Charging a Startup with a VISA -- Just Not the Kind You Think

But, romanticism aside, we can't forget how important immigration is to our economy -- how encouraging an influx of talented, skilled workers from around the world is the the key to maintaining our country's competitiveness in a fast-changing global market. As the world grows ever-smaller and more interconnected, that focus is more important than ever.

In fact, to remain competitive in this globalized world, the United States needs to attract and retain brainpower -- the best and the brightest -- not build barriers. Those who are turned away instead go away and build, invent and innovate products and businesses for our competitors. It's ironic that many "free market" advocates here in this country are card-carrying protectionists when it comes to immigrant labor.

Instead, we need to emphasize bringing foreign talent to our shores, and traditionally, one of the best (or at least most common ways) to do that is the H-1B visa program -- used to employ foreign workers in occupations requiring specialized skills and at least a bachelor's degree. Given that the United States needs to do everything in its power to attract these highly-skilled foreign workers needed by so many businesses, the question becomes . . . Why is the H-1B process so complicated, time-consuming and cost-prohibitive?

In fact, today, as has been true for more than a decade, the demand for highly-skilled, foreign workers far exceeds the number able to attain H-1B visas. Congress continues to arbitrarily cap these visas at 85,000, 20,000 of which are allotted to workers holding a master's degree or higher.

For the past three years, the nation has met that cap within the first week that applications are accepted. In 2015, for example, 233,000 petitions were filed, but, again, only 65,000 were accepted, a 28 percent acceptance rate. This meant, and means, that, as demand continues to increase and the cap stays put, we're denying employment to thousands upon thousands of highly-skilled foreign workers -- and to more every year.

Related: What Businesses Need to Know About Immigration Visas

But, why?

Is the reason for easing up on H-1B visas to protect American jobs? The truth is that, rather than reduce the number of jobs for native-born workers, H-1B workers help inspire job creation. A study by the National Foundation for American Policy found that U.S. technology companies surveyed increased their total employment by five workers "for every H-1B position requested."

For companies with fewer than 5,000 employees, the benefit was even greater: "Each H-1B position requested . . . was associated with an increase of employment of 7.5 workers, the study said.

Another study, by Harvard Business School, found that the H-1B visa program for skilled foreign professionals "has played an important role in U.S. innovation patterns" over the past 15 years. Specifically, the study found a direct correlation between an increase in H-1B caps and an increase in the overall number of inventions and patents, thanks to the "direct contributions of immigrant inventors."

It also seems that the arbitrary limits being set on the number of H-1B visas may be having the opposite effect on the U.S. labor market than Congress intended. A number of polls of U.S. technology companies have shown that, faced with these limitations on hiring skilled foreign workers, companies react by moving more of their business outside the United States -- to regions where this skilled workforce is available.

For these reasons, it's absolutely critical that Congress begin to incrementally lift its arbitrary cap on the number of H-1B visas. It's time to reevaluate our priorities and the way our visa programs are constructed. Voices throughout the tech community and beyond have been calling for change for years, but little has been done to amend the system.

While calls for reform have been growing in volume, and bills like the "H1-B and L-1 Visa Reform Act of 2015" and the "Immigration Innovation Act of 2015" have been introduced in earnest, Congress hardly seems to be in a rush. Today, both bills still languish in committees.

Sadly, rather than working toward a consensus on reform to simplify immigration policies and make them more inclusive, the government's top priority (and the only thing lawmakers have been able to agree on) seems to be on creating policy that makes more money for Washington. To wit, the only reform that's been passed in the last six months increases the cost of an H-1B application.

Indeed, last December, a new law went into effect requiring any U.S. company with more than 50 employees to pay an additional $4,000 if more than half of its employees already hold such visas. This makes an already-expensive and complicated process even more cost-prohibitive. The overall cost to employers of applying for an H-1B visa already costs upwards of $5,000 per employee.

So, while smaller companies and startups with fewer than 50 employees may be able to avoid the additional costs, these organizations hardly have it easy acquiring H-1B visas for their employees. Overall, the process can be extremely time consuming and a drain on already-scant resources.

For example, as I wrote last year, a company, even before filing a visa petition, has to file a Labor Condition Application with the U.S. Department of Labor that essentially attests that its aim to hire an H-1B employee will not adversely affect any U.S. citizen-workers. This creates a time sink for companies having to show they have the cash flow necessary to provide prospective H-1B employees with the correct wages -- and more.

Given how tight cash can be in the first few years of growth, many small businesses end up foregoing the process to save themselves from jumping through the LCA's hoops – even if they have the time and cash to obtain a visa. Which many do not, despite the fact that the younger employees who obtain the visas can save these companies money in terms of salary and training; they tend to have a greater facility with technology, social media and metrics.

Today, however, we're seeing things trending in the opposite direction. Because of the maze of paperwork and the difficulty of acquiring visas, businesses are increasingly reluctant to hire foreign college students -- in spite of the fact that the number of foreign college students in the U.S. is on the rise, a 49 percent increase since 2000, according to the Brookings Institution.

In 2000, as the same numbers show, only 30 percent of foreign grads from U.S. universities were able to obtain an H-1B visa.

A university's solution

Some schools, like the Kelley School of Business at Indiana University, have taken matters into their own hands. In 2014, the school created its IU Immigration Bridge Program, to aggregate its resources and bring together corporate recruiters, immigration law firms and graduates to help students navigate and streamline the H-1B process.

The program reflects just how deep the problem has become. Change has been so slow at a policy level that even our universities -- not the most agile or reactive of institutions -- are creating their own workarounds to address visa gridlock.

That's why, when we talk about reforming our visa programs, we're not just talking about lifting caps on the number of visas issued: Instead, we need to consider creating an additional, complementary visa geared toward the foreign college students (graduates of both U.S. and international institutions) who find themselves being pushed to the back of the H-1B applicant line (because companies prioritize older, more skilled foreign applicants).

As the U.S. economy has rebounded, we've seen an uptick in employment levels, nowhere more explosive than in "STEM" fields: science, technology, engineering and mathematics. Job growth has skyrocketed in these innovation-rich fields, which now play an increasingly vital role in our increasingly connected world.

So, we ask ourselves: Should we be denying these companies -- businesses which represent one of the most active and innovative areas within our economy – access to the most skilled foreign talent, whatever its country of origin?

Related: The Lack of Visa Options for Entrepreneurs is Hurting America's Economy

We live in a time where a highly skilled labor pool is only going to become more important to the health of the U.S. economy, especially as the population ages, and as more jobs require advanced technical skill. We need to be doing everything we can to welcome the best and brightest to our shores, and to encourage them to stay, rather than build paperwork barriers to keep them out. That's both good business and good policy.

Matthew Faustman

CEO and Co-founder, UpCounsel

Matt Faustman is the CEO and co-founder of UpCounsel, the fastest-growing online workplace where businesses can easily hire trusted business lawyers, corporate lawyers, patent lawyers and many other types of legal professionals. He frequently posts on the UpCounsel blog on business legal issues, efficiency and the future of labor. 

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