Study says H-1B visa policies benefit large companies rather than startups

U.S. visa policies are discouraging foreign tech workers from working in startups, according to a study by Cornell University and UC San Diego researchers.

The study, quoted by Los Angeles Times in a report last month, examined the hiring of foreign workers educated in science and engineering at American universities. These workers apply to and get offers from startups at the same rate as U.S. citizens, but they are only half as likely to be hired.

“We often see great innovations coming from Google and Apple, but a lot of their innovation is actually from buying startups,” John Skrentny, director of UC San Diego’s Yankelovich Center for Social Science Research and one of the authors of the study, was quoted as saying in a statement. “These startups have trouble accessing the foreign talent our best universities are graduating.”

The LA Times report said quoting the study that the disparity is important because access to foreign talent gives companies a competitive edge that startups are missing out on.

The study was published recently in the Proceedings of the National Academy of Sciences.

The employment discrepancy is not explained by foreign workers’ preferences for secure jobs or higher pay, the study said. “Rather, larger, more established companies have an advantage over startups in sponsoring foreign employees for H-1B or permanent residency visas,” it said.

The LA Times said quoting the study that, “Startups typically have limited resources and managerial attention, and recruiting talented workers is a major activity for founders. This may be particularly challenging for technology startups seeking to hire highly specialized PhDs, as the number of potential employees with the necessary expertise may be small and difficult to find.”

The new study is based on a nine-year survey of 2,324 people with a doctorate in science, technology, engineering and math fields, beginning in graduate school. They studied at 39 top U.S. research universities.

Many of the H-1B visas go to information technology businesses, Kevin Carroll, executive director of technology trade group Tech San Diego, was quoted as saying by LA Times, adding that large companies such as India’s Tata Consultancy Services scoop up visas for their projects.

“But there has been a movement in the past couple of years to make sure that smaller and midsize companies are also having access to these H-1B visas,” Carroll said.

Carroll was quoted as saying that even if access is expanded, these visas will remain out of reach for many startups because of the time and expense of getting them.

The study was funded by the National Science Foundation, the Ewing Marion Kauffman Foundation Junior Faculty Fellowship and the Alfred P. Sloan Foundation.

Meanwhile, a San Diego Union Tribune report said August 19 that denial rates for high-skilled worker visas have quadrupled since 2015, a trend that makes it much harder for companies that rely on these workers to find and retain talent.

According to data from U.S. Citizenship and Immigration Services, denial rates for first-time H-1B visa applicants increased from 6 percent to 24 percent between fiscal years 2015 and 2018. The trend is growing. Through the first half of fiscal year 2019, USCIS denied 33 percent of initial H-1B visa applications, data shows.

Stuart Anderson, the executive director for the National Foundation for American Policy, said the denials hurt companies in two ways as it limits growth because companies cannot hire new employees and secondly it jeopardizes quality control because experienced employees, who are denied their visa renewal, have to stop working.

The Union Tribune report said quoting USCIS data that Microsoft, IBM, Deloitte, Ernst & Young, Wal-Mart, Google, Amazon and Facebook all had their worker visa denial rates increase between 2015 and the first half of 2019.

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