A July 17, 2012 Seattle Times news article, Seattle ranks high in skilled workers on H-1B visas, reports on a new Brookings Institution study showing that while Seattle ranks high in the number of skilled foreign workers for H1B visas, the Seattle metropolitan area fails to benefit from H-1B user fee grants for local worker training. The Brookings report, The Search for Skills: Demand for H-1B Immigrant Workers in U.S. Metropolitan Areas, notes that companies like Microsoft, Amazon, University of Washington, TMobile, Starbucks, Boeing and other major Seattle area companies are some of the largest users of H-1B visas for foreign professional workers. For every application filed, the employer pays government filing fees of up to $5550 per worker (depending upon company size and certain other criteria). A portion of those fees go into a US Department of Labor (DOL) training and development fund that issues grants to localities for training of US workers. The fund has raised billions of dollars. The 38-page report is the first of its kind to analyze the geographic spread of the grant recipients. The report found that the Seattle-King Workforce Development Council had received only two grants amounting to less than two million dollars over a 10-year period. The DOL recently rejected three Council applications for grants.

The Brookings Institution report is an interesting read for a number of reasons. It has a good description of how the H-1B program works, the fee structure, and visa usage across the country including how the fees have been distributed over a 10-year period by region. For the Seattle-Tacoma-Bellevue metropolitan area, the report shows:

9633 Labor Condition Applications (LCA) were filed in 2010-2011 translating to 5.60 LCAs per 1000 workers by 2808 employers, of which 3.5% were cap-exempt employers. The 9633 LCAs filed represent only 3% of the total share of LCAs that were certified during the period, but Seattle-Tacoma-Bellevue rated 9th in terms of intensity of demand in relation to the number of jobs in the area. 48.4% of those LCAs were filed by the top five employers. (LCAs are filed with DOL as a prerequisite application for H-1B petitions filed with USCIS. The LCA indicates the proposed job title, intended dates of employment, proposed wage, prevailing wage and other employer liabilities and certifications including compliance with posting notices required to advise US workers at the worksite(s).)

The report further states:

Finally, some metros have one or a few employers driving demand for the metro, supported by many others that request smaller numbers of workers. This subset is characterized by ecosystems of research and development through clustering in computer products, biotechnology, or medical research. In these metro areas–such as Seattle, WA, Portland, OR, Durham, NC, San Diego, CA, and St. Louis, MO–one employer makes a large number of requests, and many smaller employers register a few requests each. In Seattle, Microsoft is the highest requesting employer, followed by Amazon, and over 2,000 other companies also submitted LCAs for H-1B workers

Of the 9633 LCAs filed in this region, they covered 47 different occupations of which 47% came from the top occupational group (computer science/engineering occupations). Notably, our regional use of H-1Bs is primarily based on corporate demand (with most H-1Bs being subject to the cap) compared to research centers such as Durham, N.C., where demand is driven by universities and nonprofit or government research organizations that are not subject to the cap. In our region, we have Microsoft, the top user of all H-1Bs nationally. More than 50% of the regional demand is for STEM occupations, including health care. Our area received $1.9 million in fee grants (mentioned above) representing $.72 per worker over 16 years old in the area. By comparison, New Haven-Milford, Ct. received $12 million in user fee grants while employers used only 955 H-1Bs, representing $13.59 per worker in the area, clearly showing a disproportionate use of user fees funds for worker training in relation to H-1B visa use in the region. However, some people question whether the issue is even relevant. Should the government foster innovation through regulation in the US instead of having government entities depend upon government funds for worker training? Or should that fee money be better spent in communities with higher unemployment or other training circumstances even though H-1B use is lower?

The Brookings Institution report is interesting for another reason. It looks at how the program has been used over a ten-year period. It also provides an important timeline showing in what years the annual cap was reached quickly versus the few years when the cap was never reached which shows market supply and demand in light of economic conditions. The report also raises the important question of whether visa policies hinder or provide incentives for offshoring jobs. This topic was raised during a Brookings forum discussion of the report, and is also mentioned in a Computerworld article. Outsourcing jobs abroad has been an election issue, but most people don’t really understand how our business immigration policies affect outsourcing. While this report gives a good statistical background on how the H-1B visa program has worked (or not) over the years, it is only one business visa category among several that influence entrepreneurism, investment and job creation in the US by foreign nationals.

Finally, the report recommends the creation of “an independent standing commission on labor and immigration removed from politics that can adjust the cap for H-1B visa applicants based on local employer skills needs and regional economic indicators. The federal government should also channel H-1B visa fees to skills training in areas that are currently being filled by H-1B workers at the metropolitan level.” Who would serve on such a panel, how it would make its decisions, and the formula for “adjusting the cap” is surely to be a point of contention or concern as the recommendation does not seem to consider having a market based non-cap system despite the report demonstrating clearly how the cap has and hasn’t worked in different economic and political climates.