Zulkie Partners

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The United States is letting one of its most valuable resources slip through its borders: highly skilled immigrants. And rather than fighting to hold on to the people who could help turn the economy around, the current trend in immigration policy is rather misguided.

While undocumented immigration has long been a contentious issue in the United States, not enough attention is paid to business immigration. And business immigration could be the key to turning the U.S. economy around.

In recent years, more and more Indian and Chinese students have been coming to the U.S. to pursue higher education. But rather than staying to join the workforce in the U.S., they are then returning home to seek employment. And, following suit, the number of high-tech startups started by immigrants to Silicon Valley from those countries has dropped by 8% over the past seven years. That represents a significant loss of capital and opportunity that is only compounded by the fact that these skilled individuals are taking their ideas overseas.

And the ingenuity that immigrants bring to the nation is undeniable. A study by researcher Vivek Wadhwa, author of The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent, found that 25% of U.S. all patent applications filed in 2006 listed foreign nationals living in the U.S. as inventors or co-inventors. In addition, a quarter of American science and technology companies founded between 1995 and 2005, which employed 450,000 employees, had a foreign-born lead technologist or chief economist.

Another study, Then and Now: America’s New Entrepreneurs, Part VII, co-authored by Vivek Wadhwa, Francis Daniel Siciliano II, and AnnaLee Saxinean concludes that the period of unprecedented expansion of immigrant-led entrepreneurship that characterized the 1980s and 1990s has come to a close. Today, the growth rate of immigrant-founded companies nationwide, at 24.3 percent, has plateaued. In the high-tech hub of Silicon Valley, the proportion of immigrant-founded companies has dropped from 52.4 percent during 1995-2005 to 43.9 percent during 2006-2012.

Immigrant founders of engineering and technology companies have employed roughly 560,000 workers and generated an estimated $63 billion dollars in sales during this time. While the rate of growth of immigrant entrepreneurship has stagnated, these numbers nonetheless underscore the continuing importance of high-skilled immigrants to the maintenance and expansion of the national economy. These findings are interestingly complex, since the two major skilled-immigrant groups — Indian and Chinese — are starting companies at higher rates than they did previously. Historically and today, the United States continues to benefit directly from the contributions of such immigrants. Far from expendable, high-skilled immigrants will remain a critical asset for maintaining U.S. competitiveness in the global economy.

A copy of this paper can be downloaded at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2159875

What is the Solution?

An article by Charles Kenny in Bloomberg Businessweek has a few creative suggestions. First, he proposes the U.S. remove its current caps on H-1B visas. These 85,000 visas, which are released on a first-come, first-served basis at the beginning of April every year, allow American companies to employ foreign workers in specialty occupations, including fields such as engineering and mathematics, without granting them the status of a legal immigrant.

He also finds fault in the EB-5 program, which was instituted in 1990 and gives visas to those who invest at least $500,000 and create 10 jobs. The specifics of the program led to only 3,127 people (just under 23% of all applicants) being approved in the first 10 years of its implementation.

As far as new legislation on immigration goes, Kenny is in support of passing the DREAM Act and the Schumer-Lee Bill, which would grant residency to anyone spending over $500,000 on a house, as well as giving green cards to graduate students in U.S. universities.

All in all, the U.S. needs to do something to fix its current problem with immigration. And the solution is not to keep all immigrants out—it is to strategically let them in. For more information on business immigration law, consult Zulkie Partners LLC.

http://www.businessweek.com/printer/articles/78202-why-more-immigration-not-less-is-key-to-u-dot-s-dot-economic-growth

On June 11, 2012, USCIS received a sufficient number of petitions to reach the statutory H-1B cap for FY 2013. On June 7, 2012, it received more than 20,000 H-1B petitions on behalf of persons exempt from the cap under the advanced degree exemption. USCIS will now reject petitions subject to the cap for H-1B specialty occupation workers seeking an employment start date in FY 2013. Employers wishing to hire first-time, cap subject H-1B workers will have to wait until April 1, 2013 to file their cases for work that will begin no earlier than October 1, 2013, the first day of FY 2014. USCIS continues to accept petitions exempted from the cap and DOD cooperative research worker H-1B petitions as well as Chile/Singapore H-1B1 petitions requesting an employment start date in FY 2013.

With its analysis of new data from the government, the nonprofit, nonpartisan National Foundation for American Policy (NFAP) makes crystal clear:  Over the past four years, the U.S. Citizenship and Immigration Services (USCIS) has dramatically increased its denials of L-1 and H-1B petitions and much of the increase in denials involves Indian-born professionals and researchers. NFAP also reports a dramatic increase in denials of O-1 “extraordinary ability” petitions, and an across-the-board increase in requests for additional evidence (RFEs) for all of these categories. The data suggests that USCIS has changed the standards for these petitions, beginning in 2008–09, despite no change in the law or relevant regulations and, as a result, has demonstrated its capacity to keep skilled foreign nationals out of the United States. Here are some of the statistics from the report:

• Denial rates for L-1B “specialized knowledge” petitions rose from 7 percent in FY07 to 27 percent in FY11. In FY11, 63 percent of L-1B petitions were delayed due to RFEs; in FY04, only 2 percent received RFEs.
• Denial rates for L-1A executives and managers petitions increased from 8 percent in FY07 to 14 percent in FY11. RFEs increased from 4 percent in FY04 to 51 percent in FY11.
• Denial rates for H-1B petitions increased from 11 percent in FY07 to 17 percent in FY11. (In FY09, the denial rate was 29 percent.) RFEs rose from 4 percent in FY04 to 26 percent by FY11.  (In FY09, the RFE rate was 35 percent.)
• Denial rates for O-1A extraordinary ability petitions rose from 4 percent in FY08 to 8 percent in FY11. For O-1As, RFEs increased from 1 percent in FY04 to 27 percent in FY11,
• Country-specific data on new (initial) L-1B petitions indicate USCIS is more likely to deny a petition from an Indian-born professional than from a national of another country. The denial rate for Indian-born applicants for new L-1B petitions rose from 2.8 percent FY08 to 13.4 percent in FY11. (In FY09, the rate was 22.5 percent.)  The drop in FY11 Indian denials can be attributed to a 40 percent decline in the number of receipts for new L-1B petitions for Indian professionals between FY10 and FY11.

Employers already are selective about who they sponsor and thus petition for those who they believe meet the standard for approval. They complain, rightly so, that the time lost due to the increase in denials and RFEs are costing them millions of dollars in project delays and contract penalties, while aiding competitors that operate exclusively outside the United States. Denying these businesses the ability to transfer these key personnel harms innovation and job creation in the U.S. and encourages employers to keep more resources outside the country to ensure predictability.

As noted by NFAP, the dramatic increase in denial and RFE rates for employment petitions raises serious questions about the training, supervision, and procedures of adjudicators and of the government’s commitment to maintaining a stable business climate for companies competing in the global economy.

On January 19, 2012, President Obama by Executive Order outlined several initiatives to improve visa and foreign visitor processing and promote travel as a way to create jobs and spur economic growth in the United States. The travel and tourism industry, he stated, is the country’s leading service sectors and sources of exports, yet its market share of spending by international travelers has dramatically fallen over the last 10 years. The President ordered all appropriate agencies to develop, within 60 days, an implementation plan to achieve a number of specific goals: (1) increase the nonimmigrant visa processing capacity in China and Brazil by 40 percent over the coming year; (2) ensure that 80 percent of nonimmigrant visa applicants are interviewed within three weeks of receipt of their application; (3) increase efforts to expand the Visa Waiver Program and travel by nationals of Visa Waiver Program participants; and (4) expand reciprocal recognition programs for expedited travel, such as the Global Entry program. The President also established a Task Force on Travel and Competitiveness to develop the “National Travel and Tourism Strategy.”

Dovetailing with this Executive Order, the White House  and the Departments of Homeland Security (DHS) and State (DOS) announced on January 31 steps they will take to attract and retain foreign-born entrepreneurs and highly skilled immigrants and stimulate economic growth. These include regulatory changes that would:

• positively affect F-1 foreign students and their spouses;
• permit spouses of certain H-1Bs to obtain work authorization;
• broaden the scope of allowable evidence for EB-2 outstanding professors and researcher; and
• make it easier for professional nonimmigrant workers from Australia, Chile, and Singapore to continue working while their extension of status requests are pending.

DHS also announced a new Entrepreneur in Residence Summit to seek information and ideas from the entrepreneurial community and academics on how to maximize current law to attract foreign entrepreneurial talent.

Waiver of Visa Interview

Several government initiatives aimed at reducing nonimmigrant visa wait times are now in play. Most significantly, DOS announced a new pilot program to waive the nonimmigrant visa interview requirement for certain visa renewals. Under the program, slated to run for two years, certain visa renewals that are more than 12 months but less than 48 months post-expiration will be eligible for renewal without a consular interview for the same visa category.  The visa interview waiver will be available to foreign nationals who have previously had their 10-print fingerprint scan collected; it will not be available to applicants who were previously denied a visa or who are listed in the Consular Lookout and Support System (CLASS) or require a Security Advisory Opinion. Nor will the interview waiver be available to applicants who may have failed to comply with U.S. immigration laws or who are applying in a “high-threat” or “high-fraud” location.  Only certain types of visas will be eligible for this benefit, and although DOS has not yet released a comprehensive list, it is projected that F, J and M visas will be included.  On February 13, the U.S. Embassy, Beijing launched its visa interview pilot program for certain B, C, D F, J, M, and O visa holders consistent with the procedures outlined above by DOS. More details are likely to emerge over the next few weeks.

Additionally, Brazilian citizens younger than 16 or older than 66 who are applying for an initial visa or renewal visa (regardless of classification) and are citizens or residents of the country in which they are applying can forgo the consular interview and fingerprint requirement.

Expanded Service in Brazil and China

Besides the changes to the interview requirements in China and Brazil noted above, DOS has expanded its visa processing capacity in those countries by deploying additional personnel, expanding visa sections, and using new systems to facilitate travel from these countries. In late 2011, DOS had reported a record demand for visas for nationals from Brazil and China, a 50 percent increase in one quarter. For Brazil, the increase in demand reflected a 200 percent increase in five years; for China, a more than 30 percent increase from last year. Noting that every additional 65 international visitors to the U.S. translates into one additional travel and tourism-related job, Brazil and China are now considered key growth markets for the United States.

Visa Waiver and Global Entry Programs

The expansion of the Visa Waiver program to additional countries will mean that fewer international business and tourism visitors will need to apply for a visa. Citizens from 36 countries currently can participate; last month, Taiwan was nominated for inclusion.  Pressure is now on DHS and DOS to increase the number of countries whose eligible citizens can travel without making a formal application.

In another move to ease the international-arrival process, DHS Secretary Napolitano announced a final rule, effective March 7, 2012, making the Global Entry program a permanent one and providing CBP with the ability to expand the program to additional U.S. international airports. Global Entry allows certain pre-approved, low-risk travelers to streamline the international arrivals and admission process at airports.  Currently, the program is available to U.S. citizens, permanent residents, and certain other nationals. In addition, the rule changes the age eligibility criteria to allow more families to participate in the program: persons under age 18 who meet the general eligibility criteria and have the consent of a parent or legal guardian will now be eligible to participate in Global Entry. DHS advises that those individual currently enrolled will not experience a break in membership or need to re-apply when the program becomes permanent. Members currently participating in the pilot will have their time credited to the five year membership. According to DHS, the majority of travelers using Global Entry are processed in under five minutes.

Upcoming Regulatory Proposals 

As mentioned above, DHS also announced a number of regulatory changes that would:

• expand the eligibility requirements so that more F-1 students would be eligible for 17-month optional practical training (OPT) rather than 12-month OPT now available to them;
• permit spouses of F-1s to enroll in part-time academic classes, rather than only vocational or recreational classes;
• provide work authorization for H-4 spouses while their H-1B spouse waits for his or her adjustment of status application to be decided;
• expand the scope of evidence of academic achievement to prove that a professor or researchers is outstanding; and
• permit E-3 Australians and H-1B1 Chilean and Singaporean nationals to continue to work for 240 days with their same employer while their extension of status requests are pending, provisions that are available to other nonimmigrant workers.

All of these initiatives come as welcome news, from the more modest to bold. The regulatory changes and visa interview waiver could positively impact American business and facilitate the entry and employment of needed talent at a time when the U.S. continues to struggle to recover economically and remain competitive. But, as highlighted below, real change must happen – and happen fast – at the adjudicatory level, where immigration and consular officers wield tremendous power and ability to keep out skilled foreign nationals. Rigid, restrictive interpretations of regulatory eligibility requirements by front-line decision makers will trump more generous policies time and time again.

H-1B Professional Specialty Worker Cap Update: As October 1 marked the beginning of the new fiscal year, visas are now immediately available for new H-1B cap-subject petitions. As of October 7th, USCIS reports that 41,000 new H-1B cap-subject petitions were receipted and another 19,100 petitions for foreign nationals with advanced degrees for FY2012. There are 85,000 new H-1B visas available annually, of which 20,000 are designated for advanced degree holders.  For FY2011, H-1B visas became unavailable as of January 26, 2011.

Tough Penalties Levied Against School District in Maryland for H-1B Violations Become Final:  A Department of Labor Administrative Law Judge approved a settlement agreement with Maryland’s Prince George’s County School District (PGCSD), located in the Washington, D.C. metro area, to pay sizeable fines for major violations of the H-1B program, including failure to pay wages and to maintain documentation as required. Under the agreement, PGSCD is barred from hiring any new foreign workers for two years and must pay a civil penalty of more than $100,000 for violating the H-1B program and over $4 million in back wages to more than 1,000 teachers.

Over the last several years, government agencies involved with the H-1B program have stepped up their enforcement and auditing efforts. Employers and their human resource personnel are wise to make sure their public access files and other records relating to their H-1B employees are up to date and in good order.