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American Competitiveness In The Twenty-First Century Act Of 2000: An Answer To The Shortage Of U.S. Technical Workers?

February 21, 2001

Authors: Brenda A. Eckert

It is no secret that the present demand by U.S. employers for technical workers cannot be satisfied from current ranks of U.S. workers. At the same time, an increasing number of U.S. companies either have international affiliates, subsidiaries or joint venture partners or other "ties" with foreign companies, creating the need for greater diversity in the workforce through the international exchange of workers. Faced with these business pressures, many U.S. companies for the first time have begun to recruit foreign nationals from U.S. colleges and universities, from other U.S. companies, and from sources abroad, forcing them to deal with the "thicket" of U.S. immigration laws that appear to hamper their efforts.

Recognizing the international competitive business advantage to be gained from opening their borders to foreign technical workers, other countries, including Canada, adopted immigration laws that would facilitate this trend. However, when U.S. businesses in the late nineties were forced to compete internationally for foreign technical workers, they found that U.S. immigration laws put them at a considerable disadvantage. Backlogs of several years for family-based and employment-based immigration visas or "green cards" prevented foreign workers from countries like the People's Republic of China and India from becoming U.S. permanent residents authorized to work indefinitely for any U.S. employer. To meet urgent business demands for technical workers, U.S. employers had to resort to bringing foreign technical workers to this country on nonimmigrant visas. A nonimmigrant visa permits a U.S. employer to employ a foreign national temporarily in the U.S. for a limited period, with the hope that the foreign worker will be able to obtain a green card before the expiration of the worker's authorized period of stay in the U.S.

U.S. companies without international ties have been forced with increasing frequency to utilize the H-1B nonimmigrant visa category to bring in foreign nationals to fill their urgent need for technical workers. The H-1B nonimmigrant visa category is available to foreign nationals who come to the U.S. to fill a "specialty occupation," namely a professional job position with a minimal educational requirement of a baccalaureate degree or its equivalent in a field directly related to its job duties.

Just as U.S. companies were discovering the H-1B nonimmigrant visa category as the answer to their need to employ technical foreign workers, it failed them. Prior to 1991, there was no limitation on the number of H-1B nonimmigrant visas that could be issued by the U.S. Immigration Service in each fiscal year of the U.S. Government beginning on October 1 and ending on September 30. However, in an effort to protect the U.S. labor force from increasing foreign competition and avoid an erosion of U.S. wage rates, Congress imposed a numerical limitation or "cap" of 65,000 visas in 1991 on the number of H-1B visas available to foreign nationals during each fiscal year of the U.S. Government. It also required U.S. employers utilizing the H-1B visa category to obtain approval of a labor condition application from the U.S. Department of Labor to ensure that foreign national would be paid the prevailing U.S. wage rate for similarly situated U.S. workers in the same geographical area.

The 65,000 cap on H-1B visas initially did not interfere with the need of U.S. employers to employ foreign workers in this visa nonimmigrant category. However by FY 1998, the rapidly escalating need by the U.S. business community to employ foreign workers in technical and other specialty occupations resulted in the 65,000 cap on H-1B visas being reached before the end of the year. Faced with the international competitive disadvantage of not being able to employ sufficient technical workers in the U.S. to meet business plan objectives, U.S. companies placed increasing pressure on Congress to increase the 65,000 H-1B cap.

The initial congressional response to this pressure proved to be woefully inadequate and undoubtedly was based in part on an underestimation of the need for employing foreign technical workers in the U.S. In 1998, Congress enacted the American Competitiveness and Workforce Improvement Act that temporarily increased the H-1B cap from 65,000 to 115,000 for FY's 1999 and 2000. This H-1B cap would decrease to 107,500 in FY 2001, and revert to 65,000 in FY 2002. To appease U.S. labor and generate funds to train U.S. workers for technical and other specialty occupations, a training and education fee of $500 was imposed for new H-1B petitions and some H-1B extension petitions. The proceeds from this new fee were dispersed between the Department of Labor and National Science Foundation for job training, low income scholarships, grants for mathematics, engineering or science enrichment courses and for the administration and enforcement of the H-1B program.

Despite the availability of 115,000 H-1B visas in FY's 1999 and 2000, U.S. employers reached this new H-1B cap in each of these fiscal years and were still clamoring to employ more foreign technical workers in this visa category. As the combined backlog of H-1B visa petitions for FY's 1999 and 2000 mounted at an alarming rate and the time for processing new H-1B petitions grew from 30 days to 90 days or longer, U.S. business once again appealed to Congress for relief, with some U.S. employers raising the prospect of transferring their U.S. technical operations abroad if they could not obtain an effective resolution to this problem.

Just prior to the start of FY 2001, Congress finally responded to the growing competitive need of the U.S. business community to employ foreign technical workers. Although efforts to create a totally new visa category for technical workers floundered, Senate Democrats and Republicans reached a consensus on H-1B legislation in late September 2000 that led to the passage on October 3, 2000, of the American Competitiveness in the Twenty-First Century Act of 2000 (AC21). President Clinton signed this legislation into law on October 27, 2000. It became effective immediately and has some retroactive application to H-1B visa petitions pending before its enactment. Simultaneously, an increase in the training and education fee from $500 to $1000 was enacted for some H-1B petitioners and became effective on December 15, 2000.

The enactment of AC21 has resulted in a substantial increase (from 116,000 to 195,000) in the number of new H-1B visas available to foreign nationals in each fiscal year of the U.S. Government. It also has improved the portability of H-1B visa status to enable H-1B visa holders to change U.S. employers more easily, and it has enabled H-1B visa holders to remain employed in the U.S. for more than six years while waiting for their green cards. H-1B visa holders waiting for their green cards for 180 days or more may now change U.S. employers without affecting the validity of their green card applications, so long as their new job position is in "the same or a similar job occupational classification" as their current U.S. position. AC21 will facilitate employment-based immigration by technical foreign workers from countries, like the People's Republic of China, where the demand for immigrant visas exceeds the per country limits for each fiscal year of the U.S. Government. Under its provisions, any unused employment-based immigrant visas available in a calendar quarter of a fiscal year will be allocated in subsequent quarters without regard to per country limits. Also, any foreign national who has filed an employment-based preference petition for a green card and is subject to per-country limits will be permitted to extend his nonimmigrant status until his application for a green card is decided. In a further effort to expedite employment-based immigration, any employment-based immigration visas that are available but unused in FY 1999 and 2000 will be "banked" for use in subsequent fiscal years in which the demand for employment-based visas exceeds the overall fiscal-year limitation.

Specifically, the enactment of AC21 has made the following changes to the H-1B nonimmigrant visa program and employment based immigration:

  • The H-1B cap is raised to 195,000 visas for FY's 2001 through 2003.
  • The H-1B caps for FY's 1999 and 2000 are raised retroactively to accommodate the existing backlog for H-1B visas in each of these fiscal years.

    • Any H-1B petition revoked for fraud or willful misrepresentation will be added to the H-1B visa cap in the fiscal year in which the petition is revoked, regardless of when the visa was actually issued.

    • The following foreign nationals are exempted from the H-1B cap: individuals employed at higher educational institutions and their related or affiliated nonprofit entities, individuals employed at nonprofit research organizations and government research organizations, and H-1B physicians who have received a J-l Conrad 20 waiver of the two-year home residency requirement.

    • An H-1B visa holder may change employers and jobs upon the filing of a "nonfrivolous" H-1B petition by the new employer, as long as he is in lawful status at the time of such filing and has not engaged in any unauthorized U.S. employment since his last lawful admission.

    • A foreign national who has reached the applicable six-year period of U.S. stay on an H-1B visa and is awaiting a green card may obtain extensions of his H-1B visa in one-year increments to permit him to remain employed in the U.S. until his adjustment of status application or immigrant visa application is decided, as long as he has a pending immigrant preference petition (Form I-140) and either his Application for Alien Employment Certification or his Form I-140 has been pending for at least 365 days prior to his reaching the six- year maximum stay period.

    • An H-1B visa holder who has filed an application for adjustment of status to obtain a green card that has been pending for 180 days or more may change jobs or employers without affecting the validity of his pending application for a green card, as long as his new job is in "the same or a similar occupational classification" to his current U.S. job position.

    • Unused employment-based immigrant visas in a calendar quarter of the U.S. Government's fiscal year will be allocated in subsequent calendar quarters without regard to per country limits on the availability of immigrant visas.

    • Any available and unused employment-based visas available in FY's 1999 and 2000 are "banked" for use in future fiscal years if the demand for employment-based green cards is greater than the overall cap on such visas in that fiscal year.

    • Any H-1B visa holder or other nonimmigrant visa holder who has a Form I-140 filed on his behalf and who would be subject to the per-country limits for an employment-based green card will be permitted to extend his nonimmigrant status until his green card application is decided.

    • The portion of the H-1B education and training fee allocated to improve U.S. Immigration Service's processing of nonimmigrant visas is increased from 1.5 percent to 4 percent.

    • Fifty-five percent of the H-1B education and training fees will be allocated to U.S. Department of Labor demonstration programs and projects to provide technical skills training for workers.

    • Eighty percent of the grants from the H-1B education and training fees will be for training in high technology, information technology and biotechnology, and no more than twenty percent of the grants will be devoted to training workers for skills in other H-1B specialty occupations.

    • Under the Bidden amendment, up to $20 million may be appropriated to the U.S. Attorney General to fund after-school technology grants to the Boys and Girls Clubs of America for FY's 2001-2006, with such funds coming the Violent Crime Control Trust Fund.

    • A new Immigration Services and Infrastructure Improvement Account has been created, with an authorization to fund appropriations to this account in order to reduce INS processing time of all cases to less than 180 days and eliminate the backlog of pending cases.

    • The U.S. Immigration Service is required to provide a backlog elimination plan to Congress within 90 days of the enactment of AC21 and with annual reports on its provision of services and progress toward improvement in services.


It is obvious the AC21 is calculated to effectuate sweeping changes in U.S. immigration laws to respond to the previously unmet need of U.S. companies to hire qualified foreign technical workers both temporarily and indefinitely. Although only a few months have passed since the enactment of this legislation, it is obvious that many U.S. employers are taking advantage of AC21 to recruit and hire foreign technical workers from abroad and from other U.S. companies. Only time will tell whether this legislation is an adequate response to the current demand for foreign technical workers or whether additional legislation is needed to maintain the competitiveness of U.S. companies in attracting and employing qualified technical workers from other countries.

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