This change could cause over 500,000 H-1B visa holders to lose their jobs and trigger large scale H1B self deportation. Indian and Chinese nationals would bear the overwhelming majority of the effect since they account for over 82% of H-1B issuance.
The new proposed regulations are part of President Trump's "Buy American, Hire American" initiative and are currently being drafted in memos between DHS department heads. The administration is evaluating whether they can reinterpret language in existing regulations to stop giving extensions.
“The idea is to create a sort of (H1B) ‘self deportation’ of hundreds of thousands of Indian tech workers in the United States to open up those jobs for Americans,” according to a source briefed by DHS officials.
Proposal abolishes extensions during Green Card processing
Currently H-1B workers are allowed one 3 year extension of their initial H1B visa period of 3 years. If an H-1B worker has a pending Green Card application at the end of this 6 year period, current regulations allow almost unlimited extensions until their Green Card processing is completed.
For Green Card applicants from India and China, there are enormous waiting queues for Green Card processing. This causes hundreds of thousands of workers from these countries to be stuck in "H-1B limbo" for up to 12 years waiting for their Green Cards to be processed. If DHS enacts the proposed changes, H-1B holders that have applied for Green Cards would lose their jobs and be forced to leave the US at the end of their sixth year, i.e. "H1B self deportation."
Some estimate more than 1 million H-1B visa holders are waiting for Green Cards
“This would be a major catastrophic development as many people have been waiting in line for green cards for over a decade, have US citizen children, own a home,” according to Leon Fresco, a former deputy assistant attorney general during the Obama administration. Fresco estimates over 1 million H1-B visa holders are in the US waiting for green cards, predominantly from India.
The proposal is part of a wider effort of the Trump administration to remake the rules surrounding H-1B visas. The administration has also announced that they intend to eliminate the ability of H-1B spouses to work in the US which would add economic pressure on H-1B families.
Many key tech luminaries are immigrants
One debate centers around the fact that the H-1B visa was intended to address a shortage of skilled workers, not become a path to citizenship. However, many skilled foreign workers have entered via H-1B visas before they became permanent residents and ultimately US citizens. H-1B supporters are quick to point out that many of America's iconic leaders are immigrants.
A long list of US tech luminaries are immigrants that could've been affected by this proposal, including names like Tesla's Elon Musk, Microsoft's Satya Nadella and Google's Sergey Brin and Sundar Pichai. Tech immigrants have created tremendous value for the US tech industry and stock market. A Center for American Entrepreneurship study found that 43% of the Fortune 500 companies were founded by immigrants or their first generation children.
Skilled tech worker shortage drives H-1B popularity
US administrations have periodically tweaked H-1B rules to make it more difficult and expensive to hire foreign workers. Yet, H-1B visas continue to be immensely popular and visa allocations are used up within a few days of their annual release every April. The reason is simple: the United States does not have enough STEM workers with the skills the tech industry needs.
Tech industry is poised to mobilize against the proposal
Many hope the current Trump administration proposal is not implemented. It is still being debated inside DHS and the tech industry appears poised to mobilize against it. Lawyers representing companies are highly likely to file lawsuits if the proposal is implemented without Congressional approval.
The thriving US technology sector has been an important driver in the US economy as whole other industries have migrated off shore. Among the arguments for maintaining the status quo are:
If the US ejects huge numbers of tech workers, other countries will greatly benefit as work will migrate to where the workers are. The chances of the next Apple, Uber or Google being developed outside the US would increase.
Foreign workers pay into the US tax system and contribute significantly to the US economy beyond their direct contribution of valuable skills.
Exacerbating the tech talent shortage would weaken US competitiveness and accelerate companies being forced to move tech centers and work outside the US.
1/8/18 Update: See our analysis of the H1B extension rules and likelihood that DHS can make this change without approval from Congress here.