Proposed H-1B visa reform could hurt home-grown innovation, says medtech association

President Trump has begun to follow through on another one of his campaign promises—reforming the H-1B visa program. He signed an executive order on April 18 directing federal agencies to implement a “Buy American, Hire American” strategy, part of which asked department heads to suggest reforms for granting those visas.

H-1B visas are distributed via a lottery system to skilled foreign workers to temporarily fill positions for which, ostensibly, domestic workers with the appropriate skill set can’t be found. Tech companies are avid supporters of the program and, in fact, have lobbied aggressively in the past for an increase in the number of slots. Currently, the United States grants 65,000 H-1B visas annually in addition to 20,000 more that are given to applicants with the equivalent of a U.S. master’s degree or higher. But tech is not the only beneficiary of this program—advanced manufacturing, which is experiencing a skills gap of its own, and the life sciences also have a stake.

The StarTribune in Minnesota provided some data on the impact of the H-1B program in the state’s medical technology hub. On Tuesday, the daily newspaper reported that the Mayo Clinic hired 947 H-1B visa employees and Medtronic got 576 from the period between 2014 and 2016.

Nationally, in fiscal year 2016, Carefusion and Illumina respectively filed for 105 and 103 Labor Condition Applications (LCAs), aka H-1Bs, putting them in the number one and two position in the medical equipment and supplies manufacturing category, according to statistics compiled at myvisajobs.com. A total of 1700 jobs were filled in that category through the program, which is small potatoes compared with the 336,513 applicants under the computer systems designs and related services category. But a crackdown on the program could have a noticeable effect on medical research, according to some executives.

“There’s a real crisis of science going on in this country,” said Cedric Francois, CEO of Apellis Pharmaceuticals, a startup that is working on immune-therapy drugs, in a recent Bloomberg article. About half of Apellis’s staff come from abroad, largely brought in on the H-1B visas, reported Bloomberg.

Minnesota’s medical technology trade group, Medical Alley Association, also has cautioned that ill-considered reforms in the H-1B program could adversely affect the U.S. leadership role in innovation. “The H-1B visa program is critical for the U.S. to continue to attract the best talent and to meet the increasing needs for high-skilled innovators that keep our industries strong,” association CEO Shaye Mandle told the StarTribune. “Medical Alley supports an expansion of the H-1B visa program.”

Critics of the program claim that it is rife with abuse and serves to depress wages, because foreigners will work for less than Americans. One egregious example that got a lot of attention a couple of years ago involved Walt Disney World laying off 250 tech employees—some of them longtime employees with stellar performance reviews—and replacing them with foreign workers brought in on H-1B visas. Adding insult to injury, some of the laid-off employees were required to train their replacements as part of their severance agreement. It’s far from the only example of corporations using the program in, if not strictly illegal, at least morally reprehensible ways.

Trump’s executive order was light on details and, rather, articulated a directive to the four department heads (State, Justice, Homeland and Labor) to recommend rules that would stamp out abuse of the visa program. He did make it clear, however, that he doesn’t like the use of a lottery system to distribute visas, preferring a more merit-based approach. There has also been talk of requiring that jobs handed out to H-1B applicants pay an annual salary $130,000 or more, thus removing a financial incentive for companies to recruit foreign workers. The annual income among H-1B applicants currently ranges from an average low of $70,000 to a high of $141,000 (at Apple, naturally), according to myvisajobs.com.

It’s early days when it comes to a possible revamp of the visa program, and the executive order will have no immediate impact. As CNN noted, “it’s unclear what exactly the four department heads . . . will be able to accomplish administratively and what will need to be done through congressional legislation.” And since this is not a strictly partisan issue, moving it through Congress could take a very long time, indeed.

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