	Background

The H-1B program enables companies in the United States to hire foreign  workers for work in specialty occupations on a temporary basis. Homeland Security’s U.S. USCIS has primary responsibility for administering the H-1B cap. Demand for H-1B Workers Exceeded the Cap in Most Years and Was Driven by a Small Number of Employers

Over the past decade, demand for H-1B workers tended to exceed the cap,  as measured by the number of initial petitions submitted by employers,  one of several proxies used to measure demand since a precise measure  does not exist. As shown in figure 1, from 2000 to 2009, initial petitions for  new H-1B workers submitted by employers who are subject to the cap  exceeded the cap in all but 3 fiscal years. Over the decade, the majority (over 68 percent) of employers were  approved to hire only one H-1B worker, while fewer than 1 percent of  employers were approved to hire almost 30 percent of all H-1B workers. Among these latter employers are those that function as “staffing  companies” that contract out H-1B workers to other companies. The  prevalence of such companies participating in the H-1B visa program is  difficult to determine. Most Interviewed Companies Said the H-1B Cap Was Not a Key Factor in Their Decisions to Move Operations Overseas but Cited Other Program Burdens

To better understand the impact of the H-1B program and cap on H-1B  employers, GAO spoke with 34 companies across a range of industries  about how the H-1B program affects their research and development  (R&D) activities, their decisions about whether to locate work overseas,  and their costs of doing business. Many employers we interviewed cited costs and burdens associated with  the H-1B cap and program. Limitations in Agency Data and Systems Hinder Tracking the Cap and H-1B Workers Over Time

The total number of H-1B workers in the United States at any one point in  time—and information about the length of their stay—is unknown due to  data and system limitations. First, data systems among the various  agencies that process H-1B applications are not easily linked, which makes  it impossible to track individuals as they move through the application and  entry process. Limitations in USCIS’s ability to track H-1B applications also hinder it  from knowing precisely when and whether the annual cap has been  reached each year—although the Immigration and Nationality Act requires  the department to do so. Restricted Agency Oversight and Statutory Changes Weaken Protections for U.S. Workers

The provisions of the H-1B program designed to protect U.S. workers— such as the requirement to pay prevailing wages, the visa’s temporary  status, and the cap on the number of visas issued—are weakened by  several factors. First, H-1B program oversight is shared by four federal agencies and their  roles and abilities to coordinate are restricted by law. Another factor that weakens protection for U.S. workers is the fact that  the H-1B program lacks a legal provision to hold employers accountable to  program requirements when they obtain H-1B workers through staffing  companies. Finally, changes to program legislation have diluted program provisions  for protecting U.S. workers by allowing visa holders to seek permanent  residency, broadening the job and skill categories for H-1B eligibility, and  establishing exemptions to the cap. Finally, exemptions to the H-1B cap have  increased the number of H-1B workers beyond the cap. Such a review may include, but would not  necessarily be limited to  the qualifications required for workers eligible under the H-1B program,    exemptions from the cap,  the appropriateness of H-1B hiring by staffing companies,  the level of the cap, and  the role the program should play in the U.S. immigration system in  relationship to permanent residency.
Why GAO Did This Study

This testimony comments on the H-1B program. Congress created the current H-1B program in 1990 to enable U.S. employers to hire temporary, foreign workers in specialty occupations. The law capped the number of H-1B visas issued per fiscal year at 65,000, although the cap has fluctuated over time with legislative changes. The H-1B cap and the program itself have been a subject of continued controversy. Proponents of the program argue that it allows companies to fill important and growing gaps in the supply of U.S. workers, especially in the science and technology fields. Opponents of the program argue that there is no skill shortage and that the H-1B program displaces U.S. workers and undercuts their pay. Others argue that the eligibility criteria for the H-1B visa should be revised to better target foreign nationals whose skills are undersupplied in the domestic workforce. Our comments in this statement for the record are based on the results of our recent examination of the H-1B program, highlighting the key challenges it presents for H-1B employers, H-1B and U.S. workers, and federal agencies. Specifically, this statement presents information on (1) employer demand for H-1B workers; (2) how the H-1B cap impacts employers' costs and whether they move operations overseas; (3) the government's ability to track the cap and H-1B workers over time; and (4) how well the provisions of the H-1B program protect U.S. workers.

What GAO Found

From 2000 to 2009, the demand for new H-1B workers tended to exceed the cap, as measured by the numbers of initial petitions submitted by employers who are subject to the cap. While the majority (68 percent) of employers was approved for one H-1B worker, demand was driven to a great extent by a small number (fewer than 1 percent) of H-1B employers garnering over one quarter of all H-1B approvals. Cap-exempt employers, such as universities and research institutions, submitted over 14 percent of the initial petitions filed during this period. Most of the 34 H-1B employers GAO interviewed reported that the H-1B program and cap created additional costs for them, such as delays in hiring and projects, but said the global marketplace and access to skilled labor--not the cap--drive their decisions on whether to move activities overseas. Limitations in agency data and systems hinder tracking the cap and H-1B workers over time. For example, data systems among the various agencies that process these individuals are not linked so it is difficult to track H-1B workers as they move through the immigration system. System limitations also prevent the Department of Homeland Security from knowing precisely when and whether the annual cap has been reached each year. Provisions of the H-1B program that could serve to protect U.S. workers--such as the requirement to pay prevailing wages, the visa's temporary status, and the cap itself--are weakened by several factors. First, program oversight is fragmented between four agencies and restricted by law. Second, the H-1B program lacks a legal provision for holding employers accountable to program requirements when they obtain H-1B workers through a staffing company--a company that contracts out H-1B workers to other companies. Third, statutory changes made to the H-1B program over time--i.e. that broadened job and skill categories for H-1B eligibility, increased exceptions to the cap, and allowed unlimited H-1B visa extensions while holders applied for permanent residency--have in effect increased the pool of H-1B workers beyond the cap and lowered the bar for eligibility.