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October 24th 2019

How does the “Buy American and Hire American” Executive Order affect the H-1B visa?

We take a closer look at how the Buy American and Hire American executive order may impact noncitizens hoping to apply for an H-1B visa to pursue their career ambitions in the U.S.

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President Donald Trump signed the “Buy American and Hire American” Executive Order at the White House in April 2017 in an effort to create more jobs and higher wages for American workers.

The executive order seeks to ensure that only the most skilled and highest-paid noncitizen workers receive H-1B visas to live and work in the United States.

Below, we take a closer look at how the Buy American and Hire American executive order may impact noncitizens hoping to apply for an H-1B visa to pursue their career ambitions in the U.S.

The Buy American and Hire American executive order

The executive order issued on April 18, 2017, titled “Buy American and Hire American”, outlineS President Trump’s goal of “putting American workers first.” The order directs U.S. government agencies to ensure that American goods and the country’s workforce receive priority over imports and noncitizen workers.

Another stated goal of the executive order is to combat alleged fraud and abuse of visa and immigration systems. One visa that has come under scrutiny as a result of the order is the H-1B program, which is open to highly-skilled foreign nationals who are sponsored by U.S. companies for up to six years.

President Trump directed USCIS and the Department of Homeland Security (DHS) to review existing policies and strategies associated with the H-1B visa to limit or eliminate alleged fraud committed by noncitizens to enter the U.S.

Executive orders, however, cannot change existing laws or set new ones as the U.S. Congress controls immigration laws related to immigrant and nonimmigrant visas. What the executive order has done, however, is put a spotlight on the H-1B and other employment-related visas.

What is the H-1B visa?

The H-1B visa is a nonimmigrant visa that allows foreign nationals to gain a work permit to enter, live, and work in the U.S. There are term limits for the H-1B visa, including an initial duration of three years and an extension of up to three more years.

The applications for H-1B visas are usually higher than quotas for a given year, with applicants selected through a random computer-generated lottery. For instance, 85,000 H-1B slots were made available by USCIS for the current fiscal year.

Out of the 85,000 visa limit, 20,000 are reserved for advanced degree holders or individuals with a U.S. master’s degree. The other 65,000 spots are designated for skilled individuals with a bachelor’s degree.

Applicants may only submit an H-1B petition through a sponsoring American employer, who must then file the paperwork with the Department of Labor (DOL) and USCIS, and pay the H-1B application fees.

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How President Trump’s policies affect the H-1B visa

At this time of writing, two years have passed since President Trump signed the “Buy American and Hire American” executive order. Several policy adjustments have since been introduced by USCIS that affect the H-1B program, including changes in procedures and processes.

On the two-year anniversary of the executive order, USCIS also released a statement in which Director L. Francis Cissna suggested that the agency’s recent changes have improved the protection of wages for U.S. workers, enhanced the agency’s ability to detect and prevent fraud and increased the overall transparency of those programs. One of the major changes has been the introduction of H-1B datasets, which shed light on the hiring practices of various U.S. employers. The H-1B Employer Data Hub allows the public to view a U.S. company’s petition history by searching the employer name, city, state, or zip code.

An increase in denial rates

There are some reports that denials of new H-1B petitions are higher compared to two years ago.

The denial rate of H-1B applications stood at 10 percent and 13 percent in Fiscal Year (FY) 2016 and 2017, respectively. In FY 2018, the denial rate jumped to 24 percent and reached 32 percent in FY 2019.

Some attorneys and employers allege that USCIS has adjusted its standard of proof for approving an H-1B petition without the guidance of new laws or regulations. They argue that USCIS now takes a more critical look at specific jobs and educational experiences to determine whether they constitute a specialty occupation. 

This increase in the denial rate may have affected both new H-1B visa applications and H-1B extension petitions, which previously stood at 4 percent in FY 2016. This has jumped to 12 percent in FY 2018 and eventually reaching 18 percent through the first quarter of FY 2019.

Outsourcing firms hit hardest

Companies that may have been hit hardest by the policy changes are outsourcing firms based in India and other nations. These companies typically file tens of thousands of H-1B petitions every year and often beat out American firms to more approvals.

Critics of the existing H-1B system often point to the fact that outsourcing firms consistently pay the lowest wages among H-1B sponsoring employers. Historically, the average wages of H-1B workers sponsored by outsourcing firms are lower compared to noncitizens sponsored by Apple, Microsoft, Google, and other Silicon Valley companies.

The significant increase in denial rates may have led some to accuse USCIS of directly targeting these outsourcing firms.

Adjustments to the H-1B lottery

A section of the executive order mentions the Trump Administration’s desire to welcome the most highly skilled foreign nationals in the U.S. The recent changes to the H-1B visa lottery processes are connected to this stated goal. 

Previously, the lottery would select advanced degree applicants to fill the 20,000 spots. Those who were not picked would still have another chance in the general 65,000-visa lottery.

USCIS adjusted the way the lottery operates from FY 2020 onward. All H-1B petitions now go through the general 65,000-visa lottery first, after which advanced degree holders who are not picked get a second chance in the 20,000-visa lottery.

In a statement, the agency highlighted the new rule as a “Merit-Based Rule” and suggested that its change in the lottery process could result in up to 16 percent more advanced degree holders gaining an H-1B visa.

A shift in foreign workers to Canada

A recent Envoy Global survey highlighted by Dice shows that U.S. companies are shifting jobs to Canada due to confusion with the H-1B program. 

Around 65 percent of the companies surveyed said they felt Canadian policies were more favorable towards hiring noncitizens compared to American programs. About 20 percent said they had established at least one new office in Canada, while 38 percent were considering Canada as a place to establish new staffers.

Canada is already a significant tech hub, especially in areas such as Toronto that host over 1,700 tech companies. The same report claims that more tech jobs were added in Toronto in 2019 compared to U.S. hubs such as the Bay Area, Seattle, and D.C.

Future of the H-1B visa

Many H-1B applicants and visa holders may face uncertainty about what the future holds given the current changes, including newcomers entering the final year of their first three-year visa.

The pathway to citizenship through the H-1B visa, however, still remains. You may apply for permanent residency through an employment-based Green Card once you’ve found a U.S. company willing to sponsor you.

The takeaway

The H-1B visa offers skilled workers from around the world the chance to work and live in the U.S. It also benefits American companies that can hire talented individuals with skills that are scarce among the domestic workforce. You can find more information about this particular visa in our ultimate guide to the H-1B visa.

While the process of applying and obtaining the visa may appear daunting, this guide is intended to help simplify the process of starting your new life in the U.S. After you have been approved for your H1-B visa and are preparing to travel to the U.S., consider how you will live during your stay — especially how you manage your finances from setting up a bank account to managing your credit. In the U.S., credit history is important in securing things necessary for everyday life from credit cards to utilities and even your apartment. 

How Nova Credit can help you establish credit in the U.S.

Nova Credit creates a global Credit Passport that helps people bring their credit history with them when they move to the U.S. While your credit history won’t be transferred to national bureau databases, creditors and lenders can use your Credit Passport to evaluate your application for a loan, apartment, and other services. 

Nova Credit currently connects to international credit bureaus in Australia, Brazil, Canada, India, Mexico, Nigeria, South Korea and the UK.

More from Nova Credit:

H-1B visa holders in the United States: An overview

H-1B visa stamping: H-1B visa interview documents and more

How to check H-1B visa processing times

All about H-1B Labor Condition Applications

The H-1B extension checklist: What you should bring for H-1B renewals 

How to find out if you've been selected in the 2020 H-1B lottery

How to Find H-1B Sponsors in 2020

H-1B to Green Card process: Everything you need to know about changing your status

The ultimate guide to the H-1B visa 

H-4 EAD: How to obtain work authorization when your spouse has an H-1B Visa

How to check the status of your H-1B visa application

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