President Trump plans to sign an executive order on Tuesday meant to rein in abuses in a visa program that lets some companies replace American workers with foreign ones.
The order would target so-called H-1B visas, which Congress created in 1990 as a way to help companies that can’t find highly skilled technical workers hire foreigners able to do the job. Many companies still abide by the intent of the program, but others seem to be using H-1B visas simply to replace American workers with foreigners willing to work for less.
“We’re taking a more vigorous stance in enforcing violations of the H-1B program,” a senior Trump administration official told reporters on Monday. “We want to make sure guest worker programs don’t become a way of replacing American labor at less cost.”
Big companies including Disney (DIS), Oracle (ORCL) and Cisco (CSCO) have generated controversy by using H-1B workers from countries such as India to do work previously done by Americans, which is not how the program is supposed to work. The law includes stipulations meant to assure that foreigners willing to work for less don’t put Americans out of a job. But there are loopholes, such as outsourcing work to an outside company, which might be the one employing the foreign workers on H-1B visas. So the American workers lose their jobs, the outsourcing firm pays foreigners less than the original workers earned, and the company outsourcing the work saves money.
Trump is scheduled to sign the order while visiting Snap-on Tools in Kenosha, Wisconsin on Tuesday. The order will contain a second provision meant to tighten the rules requiring the federal government to “buy American” whenever possible. Agencies sometimes get waivers from those rules, such as when American-made products aren’t available or they’re too expensive.
“There are going to be fewer waivers granted and new standards for looking at bids,” a second administration official told reporters.
The government issues 85,000 H-1B visas per year, and they’re usually valid for three years. They’re often renewed, allowing a typical H-1B visa holder to work in the United States for six years. The number of H-1B workers in the United States at any one time totals more than 300,000, labor experts believe. They’re concentrated in information technology but have been spreading to other sectors.
The rules say H-1B workers must be paid comparable to the prevailing wage in their industries, which is how the law is supposed to prevent cheap foreign workers from undercutting higher-paid American workers. But nonpartisan studies have found that improper use of the visas suppresses pay for Americans and costs some workers their jobs. Trump campaigned on killing the H-1B program outright, but that would require new legislation passed by Congress, which could be tough given that big tech companies such as Apple (AAPL), Alphabet (GOOGL) and Facebook (FB) say there aren’t enough Americans to fill all their staffing needs in the United States.
In addition to tightening up enforcement on H-1Bs, the executive order would call on four agencies—the departments of Labor, Commerce, State and Homeland Security—to suggest ways to revamp the program to make sure it doesn’t kill American jobs. And while Trump can’t change the number of H-1Bs granted every year, he could change the way they’re granted without Congressional involvement.
H-1Bs are currently given out through a lottery system, but Trump could change that to emphasize certain education levels or skill sets, which might better protect some categories of American workers. Aides also suggested new fees the government could charge as a way to discourage using the visas to replace Americans.
As with many Trump executive orders, the eventual impact will depend on whether the Trump administration makes tangible changes and follows up with legislative proposals.
“If the Administration can force companies to actually pay American wages, this could be helpful,” says Russ Harrison, director of government relations for IEEE-USA, which represents American engineers and lobbies for H-1B reforms. “If this is a real proposal, or even the outline of a proposal, it could jump-start debate on Capitol Hill, which is where most of these reforms need to start.”
During the briefing with reporters, the senior Trump aide mentioned three of the biggest outsourcing firms by name: Tata, Infosys (INFY) and Cognizant (CTSH), all based in India. Such firms apply for the largest number of H-1Bs and typically use them to bring Indian tech workers to the United States. The Trump aide did clarify that his remarks were “not a criticism of any company. It’s a criticism of the way the H-1B program is run.”
Unlike other Trump initiatives, such as his highly controversial efforts to limit immigration from Muslim countries, the plan to reform the rules governing guest workers could be popular. Legislation to tighten the H-1B rules passed the Republican-controlled House in 2012, and were included in a big immigration bill in 2013. That bill failed for reasons unrelated to H-1Bs. If packaged right, such reforms could get further under Trump.
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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman