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.
On December 08, 2009, President Obama outlined a proposal to encourage small business to hire workers in 2010 by opening lines of credit and offering tax breaks. The impact of this proposed measure will be different for foreign-born low-tech entrepreneurs and foreign-born high-tech entrepreneurs. Prior to the crisis, self-employment was spreading among foreign workers in USA and in Europe. According to the U.S. Small Business Administration (2007) “the self-employment rate for foreign-born residents of the Unites States has grown faster that of native born residents over the past ten years”. Lack of access to employment opportunities commensurate with immigrants’ human capital may encourage them to look for self employment, business alternatives.
High-skill and low-skill immigrant entrepreneurs tend to concentrate in certain niches. For example, Salvadorian, Colombian and Dominican firms are concentrated in retail sales and business services (Robinson, 2005). Immigrant-owned firms are mainly retail, wholesale, personal and professional service enterprises and are typically operated by family members. The management structure is comprised of the immigrant owner and his/her close family members and relatives (Page and Plaza, 2006). Foreign-born founders of “high-impact” companies in high tech sectors are concentrated in business services and engineering services and located in the states with large foreign-born residents such as California and Texas. (Hart, Zoltan and Spencer, 2009).