No takers for H1-B Visas?

The slow recovery of the US economy is affecting the hiring of high-skilled immigrants.  This lower demand is reflected in fewer applications for H1-B visas.  The current annual cap is set at 65,000, with an additional 20,000 for holders of advanced degrees. The present crisis is exhibiting similar characteristics as the 1991 downturn:  1) Lower demand for new foreign high-skilled workers. US firms are not recruiting overseas; and 2) Lower demand for foreign high-skilled graduates of US universities.

The U.S. Citizenship and Immigration Services (USCIS) put out a statement on April 08, 2010 that “it has received approximately 13,500 H-1B petitions counting toward the Congressionally-mandated 65,000 cap during the first two weeks of April 2010.” (See USCIS - USCIS Continues to Accept FY 2011 H-1B Petitions). That’s far fewer than the 42,000 requests filed during the same period last year (See post). Unlike in previous years, foreign graduates of US universities are not finding jobs in US. The applications for foreign workers with advanced degrees have only reached 5,800 applications by April 15, 2010.

This is the second year that the annual quota for H1B visas has not been filled during the first week of April. Since the recession worsened in late 2008, the annual quota has remained open longer than in the previous years (see graph below). For the US 2010 fiscal year (the fiscal year begins on October 1 and ends on September 30), it took until December 21, 2009 to fill the quota (280 days). In 2009, it closed in one day and in 2008, it closed in two days. Only in 2004, when the quota was reduced from 195,000 to 65,000, there were still visa slots available as of October 1, 2003 (323 days). It seems that for the 2011 fiscal year, the annual quota will remain open longer than last year.

Source: USCIS

There are some explanations for this fall off in H-1B applications:
 

• Decline in demand in sectors in which high skilled foreign born are concentrated - Despite the increased in nonfarm payroll employment of 162,000 in March 2010 (See here), employment continued to decline in financial activities and in information. Foreign high-skilled workers are concentrated in the high tech sectors, in business services and engineering services and located in the states with large foreign-born residents such as California and Texas. Companies remain reluctant to hire in these sectors which confirms Federal official predictions of a jobless recovery for the rest of the year.
• The U.S. fiscal stimulus package or the Troubled Asset Recovery Program complicated the hiring of foreign workers for companies receiving federal bailout funds. (The TARP program has been extended until October, 2010).
• The recent USCIS policy of extreme scrutiny of all H1B petitions and its new memorandum on establishing the “Employee-Employer Relationship” in H-1B Petition. (See here) is having an impact on firms’ hiring. This new guideline will affect IT companies that place consultants at client location. 

There are still visas available for skilled workers but not takers, what does it mean for the immigration debate?