New USCIS Data Show H-1B Denial Rates Remain Low
Following the tumultuous Trump years, when H-1B denial rates reached as high as 24%, employers now see denial rates, on average, of 2%, the lowest on record, according to a new analysis. The denial rates on H-1B petitions declined in Donald Trump’s last year after his administration suffered several legal defeats that reversed U.S. Citizenship and Immigration Services (USCIS) policies. Despite fewer denials, companies face the prospect of 80% of H-1B registrations failing to result in hiring a foreign-born employee due to the low annual limit on H-1B petitions.
Low Denial Rates But Not Enough Visas
“The denial rate for (new) H-1B petitions for initial employment in FY 2022 was 2%,” according to a new National Foundation for American Policy (NFAP) analysis of USCIS data. “The H-1B denial rate declined during the final year of the Trump administration after judges declared many of its H-1B-related actions unlawful. That forced a legal settlement and changes to restrictive immigration policies that resulted in the denial rate for new H-1B petitions for initial employment in FY 2021 dropping to 4%, far lower than the denial rate of 24% in FY 2018, 21% in FY 2019 and 13% in FY 2020.”
H-1B petitions for “initial” employment are usually cases for new employment. For companies, those approved petitions would count against the H-1B annual limit of 85,000 (65,000 plus a 20,000-exemption for individuals with advanced degrees from a U.S. university).
H-1B petitions for “continuing” employment are primarily for existing employees. The denial rate for H-1B petitions for “continuing” employment was 2% in FY 2022, far below the 12% denial rate in FY 2018 and FY 2019. The denials during the Trump years distressed many employers because they lost long-time employees who were denied H-1B extensions and forced to leave the country. USCIS Director Ur Jaddou rescinded an October 2017 memo that had directed adjudicators to no longer give deference “to the findings of a previously approved petition.” That rescission, and the lawsuits and legal settlement, made extensions of existing H-1B employees rational and predictable.
Despite high-profile announcements of technology company layoffs, the demand for high-skilled talent in the U.S. remains high. “About 79% of workers recently hired after a tech-company layoff or termination landed their new job within three months of starting their search, according to a ZipRecruiter survey of new hires,” reported the Wall Street Journal. Fortune notes that even with the layoffs “most tech companies are still vastly larger than they were three years ago.”
The unemployment rate in computer and mathematical occupations was 1.5% in January 2023, lower than 12 months earlier, according to the Bureau of Labor Statistics. In architecture and engineering occupations, the unemployment rate was 1.7% in January 2023, also lower than the year before.
Today, employment for people with computer-related skills goes far beyond well-known tech companies and includes nearly all businesses and organizations in America with a digital footprint. That is one reason the H-1B annual limit of 85,000 is so inadequate, equaling 0.05% of the U.S. labor force.
Congress established the cap of 65,000 on new H-1B petitions before the spread of the World Wide Web, smartphones, e-commerce, social media, electric vehicles and numerous other innovations that have fueled the demand for people with technical skills. Increasing output by growing the labor supply would reduce inflationary pressure and improve the U.S. standard of living, according to economists.
In April 2022, USCIS reported, “For FY 2022, we received 308,613 H-1B registrations . . . For FY 2023, we received 483,927 H-1B registrations.” Since the annual limit is only 85,000, that means over 80% of H-1B registrations for FY 2023 and over 70% for FY 2022 did not result in an employer hiring a new foreign national employee chosen in the random selection process.
Research Shows Concerns About H-1B Visa Holders Are Misplaced
H-1B visas play a vital role in the U.S. immigration system—and the U.S. economy—because they are usually the only practical way to hire long-term international students or other high-skilled foreign nationals. At U.S. universities, international students account for 74% of the full-time graduate students in electrical engineering and 72% in computer and information sciences, and 50% to 70% in mathematics, materials sciences and other technical fields.
Under U.S. law, when petitioning for an H-1B professional, employers must pay the higher of the actual or prevailing wage paid to U.S. workers with similar experience and qualifications. Employers also typically pay substantial legal and government fees not needed if the employee was U.S.-born. The median annual salary for H-1B visa holders was $108,000 in FY 2021, according to USCIS. In computer-related occupations in FY 2021, the median salary for H-1B visa holders was $111,000 and the average salary was $118,000.
To oppose the admission of high-skilled foreign-born scientists and engineers, critics have relied on a lack of understanding of economics. Critics typically argue there is a fixed number of jobs that new people, such as foreign-born engineers, will “take” from others, what economists refer to as the “lump of labor fallacy.”
A host of research has emerged over the years detailing how admitting foreign-born individuals benefits the U.S. economy and likely helps, not harms, U.S. workers.
– Glassdoor concluded in an analysis: “Across the 10 cities and roughly 100 jobs we examined, salaries for foreign H-1B workers are about 2.8 percent higher than comparable U.S. salaries on Glassdoor.”
– University of Maryland researchers Sunil Mithas and Henry C. Lucas, Jr., examined the skills and compensation of over 50,000 information technology (IT) professionals, and found, “[C]ontrary to popular belief, non-U.S. citizen IT professionals are not paid less compared to American IT professionals.”
– In a May 2020 NFAP study, University of North Florida Professor of Economics Madeline Zavodny concluded, “H-1B visa holders do not adversely affect U.S. workers. On the contrary, the evidence points to the presence of H-1B visa holders being associated with lower unemployment rates and faster earnings growth among college graduates, including recent college graduates.”
– After examining the last recession, economists Giovanni Peri, Kevin Shih, Chad Sparber and Angie Marek Zeitlin found maintaining the H-1B annual numerical limits harms job growth for U.S.-born professionals: “The number of jobs for U.S.-born workers in computer-related industries would have grown at least 55% faster between 2005-2006 and 2009-2010, if not for the denial of so many applications in the recent H-1B visa lotteries.”
– Research by Britta Glennon, an assistant professor at the Wharton School of Business at the University of Pennsylvania, found new restrictions on H-1B visas likely push jobs out of the United States, concluding, “[A]ny policies that are motivated by concerns about the loss of native jobs should consider that policies aimed at reducing immigration have the unintended consequence of encouraging firms to offshore jobs abroad.”
Since it is unlikely that Congress will pass meaningful positive reform of employment-based immigration in the next two years, it would likely require administrative action from the Biden administration to make companies in America more competitive in acquiring global talent. One step, as recommended in an NFAP report by economist Madeline Zavodny, is to extend work authorization to all spouses of H-1B visa holders. Such a move would bring the United States in line with Canada’s policies on spousal work authorization.
Another action would be to extend employment authorization to all beneficiaries of approved employment-based immigrant visa petitions, which would enhance the ability of the United States to retain talented individuals and improve the lives of many foreign-born scientists, engineers and physicians. A leaked memo produced (but not released) during the Obama administration concluded USCIS had the authority to enact this policy.
“The Biden-Harris Administration believes that one of America’s greatest strengths is our ability to attract global talent to strengthen our economy and technological competitiveness,” according to a 2022 White House statement. Taking steps to make it easier for employers to attract and retain talent would align the administration’s words and actions.