Trump signs executive order against hiring H1B visa holders for federal contracts

Topics Covered: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Trump signs executive order against hiring H1B visa holders for federal contracts:

Context:

President Donald Trump has signed an executive order preventing federal agencies from contracting or subcontracting foreign workers — mainly those on H-1B visa — from hiring.

What will change now?

The order bars federal agencies from hiring H-1B visa holders and other foreign workers in place of US citizens or green card holders.

What is H1B visa?

The H1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise.

Why is it popular?

To keep costs in check, federal agencies in the US — and various other countries — either hire a large number of foreign workers or outsource their back-end database updation and other jobs to business process outsourcing firms from around the world. Such jobs in developed countries pay minimal wages, which are not lucrative enough for employable individuals in these countries.

Implications of this move:

The executive order requires all federal agencies to complete an internal audit and assess whether they are in compliance with the requirement that only US citizens and nationals are appointed to the competitive service.
As a result, the Department of Labour will also finalise guidelines to prevent H-1B employers from moving H-1B workers to other employers’ job sites to displace Americans workers.

Immediate reason for this change:

The latest order follows the federally-owned Tennessee Valley Authority’s (TVA) announcement that it will outsource 20% of its technology jobs to companies based in foreign countries.

TVA’s action could cause more than 200 highly-skilled American tech workers in Tennessee to lose their jobs to low-wage, foreign workers hired on temporary work visas.

Trump’s arguments:

Outsourcing hundreds of workers is especially detrimental in the middle of a pandemic, which has already cost millions of Americans their jobs.
National security risk: Given the current climate of rampant intellectual property theft, outsourcing IT jobs that involve sensitive information could pose a national security risk.
This will help combat employers’ misuse of H-1B visas, which were never intended to replace qualified American workers with low-cost foreign labour.

What’s the concern? Why India and Indians are worried?

The latest move comes over a month after the Trump administration in June 23 suspended the H-1B visas along with other types of foreign work visas until the end of 2020 to protect American workers in a crucial election year.

The latest executive order will also impact workers of Indian companies that are on contract with federal agencies.

Bigger federal agencies such as state-run banks give the contract for supply and maintenance of their databases and other services to bigger Indian companies such as Infosys, TCS, or Wipro.

How it would affect the US?

The new executive order is based on misperceptions, and misinformation. Such a measure could slow down the recovery phase of the US as countries start unlocking.
The order is particularly coming at a time when there is a huge shortage of STEM skills in the US that workers on short-term non-immigrant visas like H-1B and L-1 help bridge.

Insta Facts:

Of 65,000 new visa applications approved every year, an average 1,800 to 2,000, or roughly 3%, are H-1B visas granted to workers employed by federal agencies.
As many as 70% of the H-1B visa goes to people from India.

What next?

Mr. Trump said he favours a merit-based immigration system that brings in high-skilled people that creates jobs inside the US and not take jobs of Americans. An immigration bill in this regard will be introduced shortly.

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