Analysis President Trump's immigration reforms are set to open a divide between Silicon Valley bosses and their technology workers – much as Brexit did. Unlike many of Trump's policies, this one will find favour with Congress and strike a chord with American technology and engineering graduates, who have seen wages stagnate as Big Tech exploited the H-1B visa program.
Currently 85,000 immigrants a year are allocated H-1B visas by lottery. The visa sets a floor wage of $60,000 pa, which hasn't changed since the previous century. This "floor" has had the effect of setting the norm, for both immigrant and native technology workers.
Even Democrats now want the H-1B scheme reformed, with a bill tabled by House Rep Zoe Lofgren (D-California) calling time on the "undercutting the wages of American workers", and doubling the H-1B wage floor to $130,000. It's one of three H-1B reforms tabled in Congress this month – more of which are below.
In a leaked draft Executive Order seen by Bloomberg News, Trump wants changes to the H-1B, L-1, E-2, and B1 work visa programmes to prioritise "the protection of American workers – our forgotten working people".
"Businesses would have to try to hire Americans first and if they recruit foreign workers, priority would be given to the most highly paid," notes Bloomberg.
That's also what the three H-1B bills seek to achieve, in their various ways. Senator Darrell Issa's bill is the most tech worker-friendly: it requires employers to show they couldn't fill the post with an American resident, and sets a wage floor of $100,000. Veteran H-1B reformers Chuck Grassley (R-Iowa) and Dick Durbin (D-Illinois) have dusted off legislation first tabled in 2007, which also requires "good faith" efforts to hire Americans first. Their bill also covers L-1 visas, which they view as a loophole. L-1 visas are given to non-Americans employed by US companies overseas.
Writing in 2015, Dewayne Hendricks, CEO of think tank the Dandin Group, described how Silicon Valley exploited the visa scheme to the detriment of American techies.
"Beginning in the early 2000s, I witnessed first-hand what happens when Silicon Valley tech companies, focused almost exclusively on the near-term bottom line, bringing in massive numbers of guest workers as a prelude to offshoring later development and manufacture," he noted.
"Cypress Semi was a leader in convincing Congress that there weren't enough domestic engineers to meet their needs. In fact, there were but many had families and weren't willing to work, day-in-and-day-out, the often very long hours some SV companies desired and even for those that were amenable companies weren't willing to offer adequate compensation. Companies also weren't willing to adequately encourage education and grooming of domestic engineers. Instead, they got the H-1B visa program greatly expanded at the same time senior domestic engineers were furloughed, many never to work again in tech.
"These foreign engineers, mostly new graduates working (in overtime exempt positions) through jobs shops, were (as required by law) paid the same as the domestic engineers they had replaced but were forced to work more hours (often nearly double). For years I would watch these workers on their way back to their flats in the East Bay late into the evening on BART. In this way tech companies were able to stay within the letter of the law (equal pay to domestic workers) while exacting many more labor hours than they otherwise could. Many of these foreign engineers would later return (not all by choice) to their countries where SV companies had set up subsidiaries or made arrangements with local industry to continue follow-on design, development or manufacture."
Tech bosses who benefit from the visa scheme have taken the issue to heart.
A clutch of VCs have backed the New American Economy coalition, which campaigns to liberalise immigration. Mark Zuckerberg set up a political action committee FWD.us to lobby for more H-1B visas, with the backing of Google's Eric Schmidt and VC kingmaker John Doerr (it lost the support of Elon Musk, however). While in 2012, Microsoft's Brad Smith called for a new, "emergency" visa for STEM graduates allowing 20,000 additional immigrants a year.
The EU referendum last year included a national debate on immigration, with the call for more selective, skilled immigration controls winning the day. Here, as in the US, business lobby groups such as the CBI called for higher immigration.
Silicon Valley surrendered much of the moral high ground when the US Department of Justice investigated claims that companies including Apple, Google, Intel and Adobe had participated an illegal wage-fixing cartel. The DoJ found some evidence of collusion, but settled, and the tech giants agreed to cease and desist all contact on the matter. A civil class action was settled in 2013 after the firms coughed $415m to make it go away. ®