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Keep jobs in America by increasing the H-1B quota

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Nikhil Aitharaju came to the United States in 2010 and, after graduating from USC, started his own venture in San Francisco — all the while waiting for an H-1B visa. (Courtesy FWD.us)
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One of the most arresting stories I’ve read about H-1B woes is that of Nikhil Aitharaju on FWD.us. Aitharaju came to the United States in 2010 to pursue a master’s degree in computer science at the University of Southern California. At school, he was impressed by some of his classmates who’d already begun thinking of starting their own companies. During a summer internship in Silicon Valley, Aitharaju met founders and technology specialists who “thrived on taking big, calculated risks” to start companies and build innovative products.

“San Francisco rekindled my interest in entrepreneurship, and this time it stuck,” Aitharaju said.

After graduating, Aitharaju started his own venture, Tint, in San Francisco, even though he was on an F-1 student visa. He had all the normal startup headaches of finding funding, building a product and identifying customers. In addition, Aitharaju had to spend a great deal of his time “talking to immigration lawyers, filing never-ending paperwork and researching every move to ensure immigration laws were not violated.”

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Nevertheless, in two years, and with a 10-person staff, Aitharaju’s company built its signature product: a social media display tool that aggregates content from Facebook, Twitter and the like — and generated $2 million in annual revenue. Yet Aitharaju’s continued residency in the United States was not assured, since he was waiting for an H-1B visa.

“My fate would be decided by a lottery and not by my skill set or my contribution to the economy,” he said.

Aitharaju did have a happy ending. “After months of anguish, I won that coveted H-1B visa through sheer chance.”

The H-1B system is a failure of intent and outcome, with many loopholes that individuals and firms have liberally exploited. It is necessary to plug those loopholes and allow remarkable candidates, like Aitharaju, who create jobs for Americans, to be part of our workforce.

Rep. Zoe Lofgren, D-Calif., a ranking Democrat on the Judiciary Committee’s Subcommittee on Immigration and Border Security, introduced on Jan. 24 the High Skilled Integrity and Fairness Act of 2017, in which she proposes several changes to H-1B processing.

Doing away with the lottery system, the bill recommends that a “market-based” system be applied to the allocation of H-1B visas, with priority to be given first to employers who are willing to pay 200 percent and then 150 percent of the prevailing wages for various job levels.

I agree with Lofgren that the lottery system is a dismal failure. A determination relying on chance to pick who gets to stay and who doesn’t, with little calibration allowed for moral and economic value and accountability, is a lazy solution without much forethought.

The number of H-1B visa applicants has ballooned in the last year. In 2016, there were 236,000 applications received, compared to nearly 233,000 in 2015, which makes the lottery system particularly unreliable. Interestingly, as per the Office of Foreign Labor Certification data for 2015 (most recent), San Francisco was the top city for H-1B certified positions in California, with 26,126 positions and an average wage of $98,871.51. So, Lofgren’s bill has special significance for us in The City.

The H-1B visa quota has not changed since the Visa Reform Act of 2004 drastically downsized the number from 195,000 to 65,000 during President George W. Bush’s tenure, making the whole process even more unreliable: demand has grown, but supply has been slashed.

When the inflow of technology workers became constricted, the H-1B process became a game of chance that all kinds of circumventing tactics mushroomed. Giving the example of his own firm, Srinath Murthy, a friend who ran a consulting company from the early ’90s to 2015, explained that the strategy set for procuring H-1Bs was to “flood” the market: If there was a need for 10 H-1Bs, then his company would hire 30 people and file H-1B applications for about 22 of them, finally ending up with 10 approvals.

“If you believe that consulting companies (small and large ones like Infosys, Wipro) are the bad guys — meaning they eat up H-1Bs and deny larger U.S. companies like Microsoft, Google, Cisco — then [eliminating the lottery system] is a wonderful thing,” Murthy said. And if priority is given to heftier wages, larger companies will get ahead with their applications, and smaller consulting organizations, like the one Murthy ran, will eventually become extinct.

The problem of rising demand and static supply is one that Lofgren’s bill fails to address. In the last four years, the H-1B quota has been reached within the first five days of its release in April.

Generally, companies don’t like the idea of establishing overseas centers, according to Murthy. There’s too much overhead and “if people don’t work under the same roof, productivity suffers,” he said. Companies began to move entire departments to other countries, merely because they couldn’t hire a few needed workers right here.

Murthy emphasized that the only feasible and lasting solution is to increase the H-1B quota to meet the demand.

“Only by increasing the quota will we be able to keep jobs in the United States,” he said. Pointing to the boom of Bangalore, India, as a technology hub in the 2000s, Murthy claims that it was likely linked to the reduction of the quota in 2004.

As President Donald Trump prepares to reevaluate H-1B visas, here’s something to think about: The lottery system is in place to deal with the reduced H-1B quota. If we get rid of the lottery system, we must increase the quota in order to keep jobs in America.

Jaya Padmanabhan can be reached at jaya.padmanabhan@gmail.com. Twitter: @jayapadmanabhan. In Brown Type covers immigrant issues in San Francisco.

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