Partnership for New York City Finds That Inaction on H1-B Visas Driving Business Abroad

According to a new report by the Partnership for New York City, political deadlock in Washington D.C. on immigration is hurting the American economy and negatively impacting New York City’s global competitiveness. In the report, Winning the Race for Global Talent, the Partnership found that whole functions of companies and professional service firms are being relocated overseas to places where there is easy and immediate access to world talent.

The most serious problem for New York business is the current cap on professional visas, known as H-1Bs. There is a national cap of 65,000 H-1B visas annually (with a further 20,000 slots available to graduates of U.S. educational programs). Individual employers currently apply for an allocation of H-1Bs beginning on April 1 of each year. Demand, however, dwarfs the available supply. In 2007, more than 150,000 applications were received on the first day alone.

The Partnership found that of the ten thousand plus employers applying for H-1B visas in New York City most are small businesses that require foreign talent to connect them to global markets. In 2006, only 11% of the H-1B visas granted in New York City went to employees of the city’s Fortune 1000 companies.

As part of its research, the Partnership also conducted an unprecedented survey of international companies in its membership that have headquarters or major operations in New York. It found that thousands of jobs are being lost or relocated due to current federal visa and immigration policies. One bank reported that its New York offices lost 100 new hires in 2007 because appropriate visas were not available.

“Unfortunately, the debate over border security and the millions of foreigners residing in the U.S. illegally threatens to distract from what should be unifying causes ― American competitiveness, economic growth and job creation,” said Kathryn Wylde, President & CEO of the Partnership for New York City. “In an increasingly global economy, having a mobile workforce becomes that much more critical. The intention of imposing a cap on H1-B visas was to discourage employers from hiring foreign workers instead of qualified domestic workers, but in 2006, new H-1B professionals comprised just 0.07% of the total U.S. labor force, suggesting that this is not a significant source of displacement. And, in fact, in one striking example from the Partnership’s survey, one H-1B visa holder helped keep 900 jobs in the United States.”

According to one response to the survey from a financial services company, “U.S. work visa restrictions impair our ability to recruit and hire the best talent in a highly competitive global market. The restrictions put U.S. firms at a disadvantage compared to non-U.S. firms with employees predominantly based in overseas locations. We believe that these restrictions, if not relaxed, will diminish New York’s status as the world’s financial capital and hinder NY-based companies’ ability to compete globally.”

The New York Tri-State area has the largest concentration of H-1B visas in the country, with 21.04% of the total. The second largest concentration of H-1Bs is in California (18.22%). The top 20 users of H-1B visas in New York City include banks and investment firms and their technology suppliers as well as two top universities (Columbia and New York University) and two major medical centers (Mount Sinai and Memorial Sloan-Kettering).

Other types of visas that are critical to business needs are the L-1 visa, designed to allow employers to transfer employees from other countries to U. S. offices, and short-term B-1 visas. Companies are reporting significant delays in processing L-1 visas and long wait times and frequent denials of B-1 visas.

Said one survey respondent, “Our company’s ability to relocate existing staff into the U.S. for certain positions is severely hampered by the time required to obtain proper immigration permits and restrictions places on family members or accompanying partners. Therefore, in a very competitive industry, our available talent pool is significantly reduced. This is a primary reason why London is becoming a more competitive financial center at New York’s expense. It is simply much easier to build a team and manage talent mobility abroad than in the U.S.”

The Partnership recommends a series of actions that need to be taken quickly to help American cities and companies compete on a level playing field with other international employment centers and maximize U.S. job creation:

Allowing the H-1B visa cap to respond to market demand;

Enacting an exemption from the H-1B cap for students with higher degrees in Science Technology Engineering and Math (STEM);

Extending the term of Optional Practical Training visas from 12 months to 29 months;

Increasing the Employment-Based Green Card cap from 140,000 currently to 290,000;

Supporting visa policies which facilitate normal international business operations, including the continuation of L-1 visa “blanket” petitions for companies with U.S. subsidiaries or affiliates with combined sales of $25 million+ or a U.S. workforce of at least 1000 employees;

Establishing guidelines and procedures for expedited and/or pre-clearance of temporary business visa applications (B-1 Visas) and the implementation of policies to expedite the processing of business/professional visas for temporary workers.

“The Partnership for New York City stands ready to help address the issue of professional and travel visas, as well as play a constructive role in moving the larger, more contentious immigration debate towards reasonable ground ― including a path to citizenship for millions who have acted responsibly while living and working in the U.S.,” said Kathryn Wylde.

Read the complete report: Report