Business owners of all political persuasions share a number of fairly basic beliefs. One of those beliefs is that excessive government interference in markets for goods, capital and labor, is bad policy and bad practice. At the same time, the general public agrees that government should intervene where there is an incentive for, or the actual incidence of, fraud or unfair manipulation of those markets. We see that balance played out in the field of securities, where markets are allowed to operate under flexible conditions, subject to government regulations and federal prosecutions aimed at preventing fraud in the marketplace, or punishing individuals and companies who engage in it and harm the public. We also see this in the international realm. For example, the US regularly criticizes China for its direct support of various industries, which results in below market costs for production of goods that are then “dumped” in US and world markets, which in turn lets those Chinese producers gather more market share unfairly. The ultimate result – harm to our economy and to US workers, confirming that unwise government interference in market forces can have terribly harmful effects.
It is more than a little interesting to see how support for free and flexible market forces disappears when we examine the field of immigration. Instead of flexible markets and smart government regulation, we have seen a war of widespread government interference waged against employers who are seeking to hire workers in response to market demands.
With respect to highly skilled workers, the last several years has seen higher and higher rates of government interference. In these immigration cases, government interference is reflected in Requests for Additional Evidence (“RFE”)and in outright denials. The evidence of such interference is staggering.
International employers with US facilities can transfer workers with specialized knowledge to their US locations under the L-1B category if the foreign worker has a highly complex skill set and has worked for a foreign affiliate of the US location for at least one year. According to a 2012 Report by the National Foundation for American Policy, in fiscal year 2011, USCIS issued RFE’s in 63% of all L-1B cases; and it denied 27% of them; total governmental interference: 90% of all L-1B cases in 2011.
For L-1A workers (Executives and Managers), the RFE rate was equally astounding: in 2004, USCIS issued RFE’s in 4% of all L-1A cases; in 2007 it did so in 24% of the cases; in 2011 it did so in 51% of all such L-1A cases. USCIS also denied some 14% of L-1A cases in 2011; total governmental interference: 65% of all in L-1A cases in 2011.
L-1A and L-1B jobs are not ones that can be done easily by US workers; they require significant training and experience overseas. Yet USCIS hammered the petitioners in these cases.
The H-1B category allows US employers to sponsor workers to fill year round jobs that require a college degree candidate. Only 85,000 such visas are available each year, a tiny fraction of the US workforce. Each year these visas are gone long before the end of the fiscal year; in 2011 all 85,000 visa numbers had been used by November 22, 2011, barely 45 days into the fiscal year. RFE’s in H-1B cases rose from 4% in 2004, to 18% in 2007, to 35% in 2009. It remains high – 2011 saw RFE’s in 26% of those cases.
Denials in H-1B cases also have been high: denials rose from 11% in 2007 to 29% in 2009, and have remained near 20% since then (21% in 2010 and 17% in 2011). Total governmental interference: 43% in fiscal year 2011 for H-1B cases.
The most shocking area of governmental interference exists for employers who want to hire workers to perform manual labor in year round jobs, or really any kind of labor that does not require a degree or international experience. For these jobs, the government says that the employer cannot sponsor the worker for a temporary visa. The employer only can sponsor the worker for a green card, a process that currently takes about 7 years. No one would put up with that kind of delay if the government said you had to wait for 7 years to get a crown for a split tooth, or an operation for infertility, or any other serious procedure. No one would put up with a 7 year delay if it prevented them from buying a car to replace the only car you owned when that one had been wrecked.
That kind of government market interference was widespread in the Soviet Union, which gave us a shining example of the worst possible kind of governmental intrusion in everyday life.
Yet Congress is intimidated into complete inaction and incompetence by a hardcore group of anti-immigration zealots who want to see more and more government regulation and interference in the immigration field. And their champions are well represented in Congress: Senator Chuck Grassley of Iowa, a vocal supporter of free trade agreements (that clearly will help his constituents) is equally vocal in his calls to add additional restrictions on the H-1B program, claiming that “thousands of qualified Americans remain out of work while companies are incentivized to import foreign workers.” Senator Grassley also claims that employers turn to the H-1B system as a cheap alternative to hiring US workers. That sound bite, easy as it is to throw about, is contrary to a detailed 2008 study by the National Foundation for American Policy, a study that confirmed that the H-1B program is a job creator. And as any employer who has filed an H-1B case knows, it is anything but cheap, and certainly not filled with incentives.
Similarly restrictive policies are now being seen in state legislation, but with serious and clearly unintended consequences. The recent experience in Alabama provides us with a perfect example of what happens when a state changes its laws to support dysfunctional federal immigration law and policy. After passing that law, Alabama saw a mass exodus of undocumented and documented residents. After the law was enacted, the Alabama Center Business and Economic Interests conducted a study about the effects of that new law. The study confirms that the law has resulted in the loss of between 40,000 and 80,000 workers who earned between $15,000 and $35,000 per year, and an indirect loss of between 70,000 and 140,000 jobs in the state. Not too good for a law that was billed as a sure-fire way for Alabama to put the unemployed back to work.
It is likely that the members of the Alabama legislature who rushed this law into place did not understand the basic problem with US immigration law. They likely were voting for the law while asking, rhetorically, “Why don’t they (the undocumented) just get in line like everyone else?” The reason is that there is no line; there no way for their employers to sponsor them for temporary visas if the jobs involve manual labor, the job needs to be filled a year round, and the worker does not need a degree to do the job. (There was a temporary visa category for such workers from 1942 to 1962, but not since then.) Now supporters in the Alabama legislature have called for a re-evaluation of the law; heeding too late the warnings of those who explained that the law would not solve the problem. As Alabama has seen, the law has done exactly what supporters of common sense reform have predicted for years: if we lose those workers, our economy will crash. Alabama has demonstrated on a state wide basis exactly what will happen nationally if we continue to adhere to an enforcement only policy.
And all this has happened in the guise of helping US workers and businesses, when in reality, the vehicle that Alabama used was a more intrusive system of governmental interference in the labor markets.
Whether the discussion involves highly skilled H-1B and L-1 workers, or workers in industries that require manual, non-degree labor on a year round basis, the moral of this story is clear: government should stay out of the labor market control business as much as possible, and concentrate on ferreting out fraud where it exists. Simply put, the US government and state governments must stop waging this war of increased interference by “RFE, Denial and No Visa for You”.
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