Microsoft Proposes Adding 20,000 H1Bs at $10,000 Each

The Brookings Institution held September 27, 2012 a panel discussion, entitled Education and Immigration Reform: Reigniting American Competitiveness and Economic Opportunities. The discussion kicked off with a presentation by Microsoft Executive Vice President and General Counsel, Brad Smith, who proposed a two-pronged solution to what he described as a critical shortage of computer science graduates from America’s colleges and universities. [See Brookings Institution, Event Transcript (unrevised).]

First, Smith said, we need to invest more in science, technology, engineering and math (STEM) education, at all levels, creating a pipeline for talented American students to enter high-tech fields upon graduation. Second – and to help pay for these investments – Smith proposed two new high-fee options that would allow well-heeled employers to hire more STEM talent from overseas: adding 20,000 new H1B visa slots per year for STEM workers, and reallocating 20,000 green cards each year for the same purpose. Under Smith’s proposal, a STEM-only H1B visa would cost the sponsoring employer $10,000, while a STEM-only green card would cost $15,000. The Microsoft proposal would generate $500 million per year to pay for STEM education initiatives across the country.

According to Smith, Microsoft currently has over 6,000 open jobs, more than 3,400 of which are for engineers, software developers, and researchers. Unemployment in computer-related fields, he said, is 3.4 percent, well under the four percent benchmark that economists count as full employment. This year alone, Smith contends, the U.S. economy will generate 120,000 new jobs that require a bachelor’s degree in computer science, while U.S. colleges and universities can only meet about a third of that demand each year.

It should be no surprise that, IF Smith’s proposal were to become law (a big IF), it would give a significant competitive advantage to large companies, like Microsoft, that can afford to shell out ten to fifteen thousand dollars per employee for a special STEM-only visa or green card. Overseas competitors also may be among Microsoft’s targets, according to Jacob Kirkegaard of the Petersen Institute for International Economics in Washington DC, who, according to Bloomberg Businessweek:

“… said raising the fee to $10,000 could give Microsoft a recruiting edge against India-based outsourcing companies whose payrolls are heavy with workers brought over on H1B visas. One such company, Tata Consultancy Services, is the second-highest user of H1B visas behind Microsoft, according to a Brookings report.”

[See Microsoft Offers U.S. Big Bucks for H1B Visas, The Seattle Times, by Kyung Song, Knight-Ridder/Tribune, Bloomberg Businessweek, 27.Sep.2012.]

With a new round of budgetary belt-tightening approaching, Microsoft’s pay-to-play proposal may win some friends on Capitol Hill – but also its share of enemies: companies that could not afford to take advantage of the program would surely oppose it, fearing competitive harm. Yet, even if this specific proposal goes nowhere, we may well see this quid-pro-quo approach in future legislation: business gets what it needs, and pays dearly for the privilege.

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