SUMMARY OVERVIEW OF ECONOMIC/EMPLOYMENT IMMIGRATION SYSTEM NONIMMIGRANTS PERMITTED TO WORK 1-1- 1 B Specialty Occupations Foreign Students POLICY ISSUES AND LESSONS Selecting Immigrants Nonimmigrants

1. Immigration accounts for about 40 percent of US labor force growth, but most immigrants are NOT selected for economic/employment reasons. About 10 percent of the US immigrants who join the labor force each year-45,000-were admitted for economic/employment reasons. This represents about 3 percent of US labor force growth (1.5 million per year).

2. Most of the immigrants "admitted" to the US for economic/employment reasons are already in the US; about 90 percent adjusted from non-immigrant or illegal status to immigrant status in FY96. Thus, immigration for economic/employment reasons is closely linked to the non-immigrant and illegal immigration systems.

3. There is widespread dissatisfaction with the economic/employment immigration subsystem: *employers complain of costs and time required to obtain an immigrant visa

$10,000 to $15,000 and two years *Department of Labor finds that few US employers really want to hire US workers since the foreigner they are sponsoring for an immigrant visa is often already employed *CIR worries that US workers are not being trained for jobs increasingly filled by foreigners, and proposed (1) faster access to foreigners needed for economic/employment reasons in exchange for a $ 10,000 fee paid to train US workers for jobs for which foreigners are requested.

Overview of Economic/Employment Immigration System

1. Few immigrants are admitted to the US for economic reasons. Maximum 140,000 per year, including spouses and dependents. In FY96, the 117,500 employment-based immigrants (including family members) were 13 percent - one in eight - US immigrants. There were about 45,000 principals or persons selected for immigration on economic/employment factors; the others were spouses and children, some of whom entered the US labor force.

The US labor force increases by about 1.5 million per year. Immigrants are slightly less likely than the native born to be in the labor force; about 450,000 immigrants join the labor force each year. Legal immigration accounts for almost one-third of annual labor force increase, about 1.5 million.

Of the immigrants who join the labor force each year, about 45,000 are principals, i.e., persons selected for economic/employment reasons. However, most of them are already in the US labor force when they are recognized as immigrants. In FY96, about 40,000 or 90 percent were already in the US and adjusted their status to that of immigrant.

US economic/employment immigration subsystem has five preferences: ---First, priority workers, max 40,040 per year (including families), including extraordinary ability, outstanding professors, and multinational executives ---Second, max 40,040 per year (including families), professionals with advanced degrees or persons of exceptional ability ---Third, skilled workers and needed unskilled workers, max 40,040 per year (including families, but with an annual limit of 10,000 unskilled)---Special immigrants, max 9,940 per year (including families), with max 5000 religious workers lnvestors - max 9,940 per year (including families)

Three points about economic/employment immigration subsystem:

1. Number admitted is typically less than max 140,000, e.g. 117,500 in FY96, 85,336 in FY95, 123,291 in FY94

2. Most economic/employment immigrants are already in the US and adjust their status from illegal or non-immigrant to immigrant. In FY96, about 90 percent of the principals who entered as economic/employment immigrants were in the US and adjusted their status to immigrant; this is why business is interested in 245(i) extension

3. Issues and options: *Delays, cost and litigation over whether alien has extraordinary ability, whether US workers are available (labor certification). Typical cost Hewlett-Packard estimated in May 1996 that labor certification costs $15,000 and takes 22 months - CIR- recommended in 1995 that US government revise the system, providing faster access to economic/employment immigrants in exchange for a reduction in the annual quota to 100,000,and an employer-paid fee ($10,000 per immigrant worker) that would go into a fund that would support training US workers for the jobs now taken by immigrants.

*Employers can "reward" foreigners by sponsoring them for immigrant status. - DOL inspector general report issued April 1996 found that 99 percent of the 24,000 foreigners requested by US employers for economic/employment reasons in FY93 were already working for the employer who requested them. About one in six of these workers were working illegally for the employer requesting them.

About 165,000 US workers applied for these 24,000 jobs when the employer advertised for US workers as required-almost seven US applicants per job - but in virtually every case, the US workers were found not qualified, and the foreigner was hired. Once in the US, economic/employment immigrants can seek any job, and some do not go to work for the employer who sponsored them for admission, or soon change jobs, i.e., there is no guarantee that admitting a foreigner to fill a vacant job will in fact result in the foreigner admitted filling the job in question.

*There is an October 1997 proposal to eliminate the 10,000 unskilled immigrant slots; the backlog is 90,000 foreigners. Most unskilled immigrants are foreigners who worked illegally or as non-immigrants as housekeepers and nannies, and their often professional US employers sponsor them for immigrant status. Between 1988 and 1996, the US admitted as unskilled immigrants some 40,000 housekeepers, nannies and domestic workers, plus 15,000 cooks and chefs, 3,000 auto repair workers, 252 fast-food workers, 199 poultry dressers, 173 choral directors, 156 landscape laborers, 122 short-order cooks, 77 plumbers, 68 doughnut makers, 53 baker's helpers, and 3 8 hospital janitors.

3. Investor etc visa a failure, probably because of US system of taxing world wide income.

Nonimmigrants Permitted to Work

The US issues about 20 types of non-immigrant visas that permit employment, from A visas for foreign government officials to NAFTA TN visas for professionals from Canada and Mexico employed in the US.

The purpose of non-immigrant visas is to permit foreigners to be in the US for a specific time and purpose; non-immigrant visas that permit employment are meant to fill vacant US jobs, add to the supply of US talent, facilitate US business, enrich US life with foreign athletes and entertainers, and permit foreign students to work and learn in the US. There are few common threads through these non-immigrant programs. Perhaps the major leitmotiv is that, under US immigration law, all persons applying to enter the US temporarily are assumed to be intending immigrants, and the burden is on the foreign visitor to prove that she will in fact return to an established residence abroad when her studies, job, or other reason for being in the US ends. Two separate agencies, the Department of State's consular offices abroad, and the Immigration and Naturalization Service at US ports of entry, have the authority to decide that a temporary visitor is in reality an intending immigrant, and to deny that person admission, even if her US employer has received certification to employ her temporarily.

On the other hand, the US allows most categories of non-immigrants to bring their families with them to the US, to be treated as employees in the US labor market, and thus be protected by minimum wage and union organizing laws on the same basis as US workers, and to adjust to permanent resident or immigrant status while in the US. The exceptions to the adjustment - to - immigrant option are trainees and exchange visitors, who must return home for six months to two years. The possibility of adjustment makes several of the non-immigrant programs that permit employment in reality "probationary immigrant programs, in the sense that, if a foreign student or foreign worker proves to be very valuable to a US institution or employer, that employer may sponsor the foreigner for immigrant status.

Most non-immigrant workers are treated as nonresident aliens for tax purposes, and taxed only on their US earnings. The key identifying number in the US tax system is the Social Security number, which is issued only to persons authorized to work in the US. Aliens who are not authorized to obtain SSNs, but are obliged to report their US earnings, are instructed to write "section 205(c)" in that part of the return designated for the SSN, and to send their tax returns to the Internal Revenue Service.

Non-immigrants play a small but growing role in the US labor market. In a US labor force in which there were over 140 million persons with some work experience in 1996, between 500,000 and 700,000 non-immigrant foreigners were employed at least sometime during the year, making non-immigrant foreigners less than one-half of one percent of all persons with US work experience. It should be emphasized that INS data are for admissions of foreigners, they double count individuals in cases where a foreign worker leaves the US temporarily and returns. On the other hand, many of the foreigners admitted under the various non-immigrant programs can remain in the US for more than one year, so that the number of e.g. foreign students or professionals in the US labor force can be larger than the admissions in any year.

H-1B Specialty Occupations

The largest special-purpose employment program is the H-IB program, which allows a maximum 65,000 foreign professionals to enter the US each year. Each foreign professional is permitted to stay in the US for up to six years, so that a maximum 390,000 H-IB workers can be employed in the US at any one time. DOL approved employer requests for 60,179 H-IB workers in FY94, 61,591 in FY 93, and 57,125 in FY 92.

There were 43,000 visas issued by DOS to H-IB workers in FY94, and the INS reported that there were 106,000 admissions of H-IB workers in FY94, 118,000 admissions in FY95, and 144,000 admissions in FY96---anINS admission occurs each time that an H- I B worker enters the US. It is estimated that 40 percent of the new H-IB visa approvals are for high-tech jobs such as programmers.

H-1B foreign workers are admitted to the US "to perform services in a specialty occupation." Foreign professionals may enter the US without a formal test of the US labor market if the US employer who sponsors them has filed an appropriate H-IB Labor Condition Application with the DOL that, inter alia, asserts that the employer is seeking US workers, and will pay the non-immigrant foreign worker, the prevailing wage for the job (see sample form).

The employer seeking H- 1 B non-immigrants must post the notice of intent to hire them for at least 10 days in the workplace, place a job order with the local employment service office, and place an ad in a professional or general publication for at least three days. Employers must keep records on US workers who applied, and why they were not hired.

The H- 1 B alien admitted must meet the requirements of the job and occupation as specified in the LCA and the ads.

If the H-113 worker is dismissed before the end of the period for admission the employer must pay "the reasonable costs of return transportation of the alien abroad."

The jobs for which H-IB temporary foreign workers are imported to fill must require professional skills, which is usually interpreted to mean that the individual filling them must have a BS/BA - it is not enough that the foreign worker has a BS/BA, the job must require such a degree. This leads to confusion in occupations such as nursing-many Filipinas have BS degrees, but nursing in the US does not require a BS [Beginning October 1, 1995, foreign nurses are admitted under the H- 1 B program].

The H-113 program was largely designed by high-tech US companies that wanted to bring computer programmers and other foreigners into the US. These firms argued that, since they compete in a global economy, they need to have access to the best and brightest of the world's workers without unnecessary government-imposed costs and delays. Thus, the US Department of Labor must approve employer Labor Condition Applications that assert, e.g., that the going wage for computer programmers is $30,000 per year, unless the LCA is "obviously inaccurate." However, neither the US government nor many employers have an easy way to document the prevailing wage in an occupation.

Since there is no government test of the employer's assertion that US workers are not available, and because the H-IB program is meant to meet urgent and short-term business needs, and DOL is prohibited from investigating employers of H-IB workers until there is a complaint filed. There have been several widely-publicized abuses of the H- 1 B program - both employer and worker representatives agree that the H- I B program has been abused by so-called "body shops" or contractors who replace fired US workers or who pay the foreign workers less than the employer promised to pay in the LCA. For example, Syntel, a Michigan computer programming firm whose labor force in 1995 was 80 percent H-IB workers from India, supplied "contract" programmers for insurance company AIG after AIG laid off its US programmers. Under current H- I B rules, it is legal for a US firm to lay off its workers, and then subcontract with another firm for the services that the US workers provided.

Mastech, the company that maintains the White House's computerized correspondence tracking system, was investigated in 1995 for misusing the H1-13 program to import over 1,000 of its 1,200 workers. One witness testified before the US Senate in September 1995 that his application for 40 H-113 programmers to be paid $4.50 per hour was approved by DOL in nine days.

DOL reported that its investigations of complaints found that most employers with H-113 workers were paying the foreigners less than promised in the attestation, and that most US employers treat H-113 workers as entry-level rather than professional employees. This means that H-113 programmers paid $20,000 may be used to replace US workers paid $50,000 per year.

DOL recommended that US employers requesting H- I B workers be required to attest that they did not lay off US workers to make room for the foreign workers, that the employer lay out a plan in the attestation to recruit US workers, and that H- 1 B workers be limited to three years in the US. However, despite extensive criticism, the H- I B program is not being modified in pending immigration reform legislation in 1996.

The H-IB program was criticized most recently by the DOL inspector general, who concluded in May 1996 that the H-IB program is often used by US employers who were already employing a foreign worker and wanted to legalize his status. One California investigator estimated in 1995 that 40 percent of employer applications for H-IB workers to fill vacant jobs are "fraudulent," in the sense that the alien is already working, and the employer simply wants to legalize his or her status.

Immigration lawyers have openly advised US employers to describe "the relevant job opening tightly enough that the INS recognizes an American probably isn't readily available for the position, but not so tightly that the INS suspects the description is being tailored for a specific foreign individual" who is already at work. In 1995, only once in every 200 times did the employer who requested foreign workers hire a US worker who was referred to the vacant job for which the foreign was sought (Mike McGraw, " Boon or boondoggle?; Visa programs hurt US workers, foster abuse," Kansas City Star, July 16, 1995). US employers who violate their LCAs are subject to fines of up to $1000, and face a one-year suspension of their right to participate in the H- I B program.

Foreign Students

The US issues two types of non-immigrant visas to foreign students - FI visas are granted to academic students, and M1 visas to vocational students, with F2 and M2 visas available for dependents who accompany them. In FY94, almost 400,000 students and dependents were admitted with these four types of student visas, up from 326,000 in FY90-4here is no limit on the number of foreign students and trainees who may be admitted to the US.

In 1992-93, there were an estimated 439,000 foreign students actually in the US, and 71,000 Americans studying overseas (1991-92). Over half of the foreign students in the US were from Asian countries, led by China, 45,130; Japan, 42,840; Taiwan, 37,340; India, 35,950; and South Korea, 28,520.

Foreign students and trainees initiate the process of coming to the US by applying for admission to one of the 22,300 US schools that have been approved to admit foreign students - about 6,000 more US institutions applied for permission from the US Attorney General to admit foreign students, and were rejected. After being admitted, so-called Mesignated school officials" in these approved US educational institutions provide the foreign student or trainee with an 1-20 Form indicating that the student is coming to the US to pursue a full course of study.

The foreign student then goes to a US consulate in his country, and obtains a student visa after convincing the consular officer that she has sufficient English language ability and funds to pursue the planned course of study in the US. The alien may be required to post a bond to ensure his maintenance of foreign student status in the US.

Upon enrollment in the US, an F-1 foreign student may accept on-campus employment immediately in an enterprise operated by or on behalf of the school if a US resident will not be displaced as a result. The foreign student's employment may not exceed 20 hours a week while school is in session (See Work options for Foreign Students chart).

The student may work full-time when school is not in session, including during the student's vacation, if the student is eligible and intends to register for the next term or session. Dependents of F 1 students (with F2 visas) are not permitted to work.

An F-1 student may not accept off-campus employment for one academic year, usually after at least the first nine months of US study. There are two types of permissible off-campus employment:

1 . Attestation employment, or employment after a US employer unsuccessfully tries to recruit US workers for at least 60 days at the prevailing wage, and then a foreign student is hired(See the complicated Employer labor attestation chart).

2. Severe economic hardship employment, when the foreign student seeks permission from the INS to work because of the loss of financial aid, home country currency devaluation, or unexpected medical bills.

Permission for foreign students to work "off-campus" was included as a three year pilot program in Section 221 of the IMMACT of 1990, and went into effect in 1992. In November 1995, DOL extended the validity of attestations submitted by US employers seeking to hire foreign students for off-campus work until September 30, 1996-the program's expiration date.

DOL issued regulations implementing the off-campus work program on November 6, 1991, and required US employers seeking to employ F1 foreign students in off-campus jobs to "attesC that they tried to recruit US workers for at least 60 days, that the US employer the actual wage at the work site, or the prevailing wage for the occupation in the area, whichever is higher, and that the employer documented why any US workers who applied for the vacant job were not hired.

Employers seeking to hire F-1 foreign students do not have to submit documentation of their search efforts and pay offers, but they do have to make such documentation available upon request. Employers who '1nowingly furnish any false information in the preparation of the attestation form" may commit a felony "punishable by $10,000 fine or five years in the penitentiary, or both."

DOL estimated in 1991 that 40,000 US employers would request the employment of 125,000 F1 students each year; however, far fewer employers requested foreign student workers.

The INS may also grant F 1 students employment authorization to seek jobs with any US employer due to severe economic hardship. After one academic year of US study, a foreign student may apply to the INS for up to one year of work authorization "to alleviate severe economic hardship due to unforeseen circumstances."

In order to receive hardship employment authorization, the school where the foreign student is employed must certify, on INS form 1-538, that the foreign student is in good standing, that the student has documented an economic necessity to work off-campus because of unforeseen circumstances that arose after entry into the US, that the off-campus employment will not interfere with the student's full course of study, and that the off-campus employment will not exceed 20 hours per week while school is in session.

An evaluation of the Pilot Foreign Student Employment Program in 1994 concluded, after interviews with designated school officials, foreign students, and US employers, that there was 'Videspread dissatisfaction" with how the program had been designed and implemented (Casals and Associates, 1994, xi), even though there had been only about 2500 employer attestations involving a "few thousand foreign student workers. DS0s are usually foreign-student advocates, and they disliked the labor market protections for US workers that were included in the Pilot Foreign Student Employment Program.

Few US employers expressed much interest in the program, so that the program became a "student-driven" employment search (Casals and Associates, 1994, xii)--if the foreign student needed a job, he found a US employer who would hire him, and then worked with the employer to complete the paperwork. Indeed, the report concluded that there was very little US-foreign student competition for off-campus jobs because of separate networks that moved US students into some workplaces, and foreign students - especially those enrolled at less selective and lower tuition public institutions," into others (Casals and Associates, 1994, xii).

Casals and Associates concluded that the "few thousand foreign student workers employed in 1991-92 had no significant labor market impacts in a US work force of 125 million, but they did not rule out future labor market impacts. Their report devoted considerable attention to a 1991 Price Waterhouse study that concluded, based on a mail survey of 1500 F-1 students in 1991, that half of the (too high estimate of ) 753,000 post-secondary foreign students in the US in 1991 were employed, usually part-time, and usually off campus.

Price Waterhouse made a number of assumptions, and concluded that foreign student workers had and were not likely to have significant negative labor market impacts on US workers. Casals and Associates emphasized that the Price Waterhouse reached this conclusion via its assumptions: Price Waterhouse assumed that 2.45 foreign student workers were equivalent to one US worker, and that there were no significant labor market impacts of foreign workers unless foreign students were 1 percent or more of the local labor force, and the unemployment rate was 5 percent or more.

Policy Issues and Lessons

Selecting Immigrants

There are two major ways to select immigrants for economic/employment reasons:

- supply-oriented admissions would e.g. admit Nobel prize winners or award points for persons who have characteristics that are likely to make them successful in the US, such as many years of education, knowledge of English, assets to bring to the US, youth, good health etc.

- demand-oriented admissions admit foreigners selected by US employers to fill vacant jobs, under the theory that the US employer knows who is best qualified. However, to ensure that employers truly seek US workers, they must attest that they have sought US workers, or the Department of Labor must certify their recruitment efforts

- Canada and Australia combine supply-oriented and demand-oriented admissions fo economic/employment immigrants by adding points if the foreigner has a job offer.

Non-immigrants

The US in the late 1970s and early 1980s was eager to "learn from Germany" how to manage non-immigrants or guest workers. 1 participated in this effort to learn from Europe, and concluded that the European systems worked without the litigation so common in the US because:

Most of the foreign workers were recruited under government-to-government agreements

2. The Employment Services that determined whether foreign workers were needed, what prevailing wages were etc were actively involved in the labor market, making one-third or more of all job placements

3. Some of the countries from which guest workers were recruited were growing very- fast (Italy), so that emigration pressure declined over time

We nonetheless rejected European style guest worker programs for the US, for several reasons:

1. The foreign workers were really probationary immigrants who could earn an immigrant status, not non-immigrants as under US law. - This explains why, for example, legal non-immigrant farm workers employed seasonally 10 or more years in US agriculture could not become legal immigrants under the legalization programs of 1987-88, while illegal farm workers employed 90 days could become immigrants.

2. Under the growth-without-workers scenario of 1960s Europe, guest worker programs could be macro or shotgun oriented, with de facto sector-wide labor certification because "everyone knew" there were too few workers. In the US, by contrast, there was little agreement on labor shortages, so there is constant pressure to retain labor certification.

. However, the US Employment Service was not a credible arbiter of the need for labor prevailing wages, prompting a great deal of litigation.

1 see a growing disjuncture in non-immigrant programs. At a time when there is a growing need for better labor market information to decide whether e.g. non-immigrant workers are needed, governments are reducing their presence in labor markets.