In the 16 months that Donald Trump has been president, the U.S.'s previously flawed immigration system has gone from bad to worse--particularly for small companies that rely on skilled immigrant labor.

That's the view of entrepreneurs such as Ximena Hartsock. The co-founder and CEO of the civic technology service Phone2Action relies on a visa program for specialized foreign workers, known as the H-1B. She employs several immigrants from Vietnam and parts of Africa at her Washington, D.C.-based company. However, doing so, she says, has become far more challenging since the Trump administration first targeted the program in April 2017.

While the rules governing the program--which was initially established in 1990 and is run by U.S. Citizenship and Immigration Services (USCIS)--haven't budged, the program itself has become more strict. Employers are often required to hand over extra documentation, for instance. And the option to expedite processing was eliminated this year. In the past, employers could pay to fast-track the application decision, a valued option for businesses eager to thoughtfully plan for growth.

Hartsock, who herself is an immigrant and moved to the U.S. from Chile in 1997, says her business is now starting to suffer as a result. "Applying for H-1B visas takes so much time that I, as CEO, should be spending doing other things," she tells Inc. "It has absolutely hurt my business," she adds, noting that her costs associated with hiring through the program have shot up some 24 percent, causing her to lower some salaries at her 65-person business.

What's more, Hartsock fears the program will change further, prompting even more serious business shifts in the future. The Trump administration, for instance, is currently weighing whether to disallow spouses of H-1B visa holders from remaining in the U.S., and it may move to limit the length of the visas, which currently last for three years and are subject to renewal. Each year, USCIS receives more applications than it can legally support--it sets a cap of 85,000--and it then selects the recipients of the visas in a randomized lottery.

Hartsock's Phone2Action is among the dozens of tech companies, ranging in size from startups to behemoths such as Apple, Google, and Microsoft, that have urged Congress to maintain certain aspects of the H-1B visa program. Such companies say they depend on it to recruit and retain critical engineering talent from around the world.

Cause for concern

Critics of the program say that large companies abuse H-1B visas, hiring foreign workers who command lower salaries than Americans would doing the same job. Meanwhile, data suggests that outsourcing firms, such as the Indian giants Tata and Infosys, have historically flooded the application pool, resulting in fewer visas going to the American businesses that really need them. In an effort to rectify these concerns, President Trump last April signed the "Buy American, Hire American" executive order, which seeks to crack down on visa fraud and authorizes USCIS to tighten oversight of the annual application process, which opened this year on April 2.

There is some evidence to suggest that Trump administration reforms have had a tangible impact on the H-1B program. For instance, the total number of applications for visas dropped in 2018 for the second year in a row. Earlier in April, USCIS announced that it received 190,098 applications for the 2019 fiscal year, down from 199,000 in 2017. Meanwhile, between January and August of last year, USCIS issued 45 percent more challenges to employers--officially referred to as "requests for evidence"--which has delayed the issuance of hundreds of visas and, as some immigration lawyers report, an increase in denials.

Collateral damage

Jason Gerlis, the North American regional director at global financial consulting firm TMF Group, says he has noticed the increase in requests for evidence. Although the company rarely applies for H-1B visas specifically, Gerlis often applies for L-1A and L-1B visas for intra-company transfers, which have similarly come under scrutiny as part of Trump's executive order. "We do a few dozen L visas for our clients every year, and we've found that they are very much delayed," says Gerlis. "We used to receive a request for more information maybe one in every four applications, and now we are receiving [them] for every single application."

He adds that his clients who do apply for H-1B visas are growing concerned that the U.S. is no longer an attractive place to operate. "We are hearing from our clients that problems with the visas are making the U.S. comparatively harder to do business in, especially for tech companies," says Gerlis.

Although a company the size and scope of TMF Group can easily absorb the cost associated with requests for evidence--and the uncertainty of the visa application process more generally--the same cannot be said for startups. Indeed, Phone2Action's Hartsock says that the fees associated with the H-1B visa have skyrocketed to around $15,000 per employee, including the cost of the initial application as well as those associated with requests for evidence. Because her company is too small to offer in-house legal support, Phone2Action must pay third-party legal counsel.

Hartsock harks back to her own status as a Chilean immigrant in describing the less obvious, more emotional impact of lobbying Congress to maintain the H-1B visa system. "The psychological effect is a big one," she says. "Foreign workers applying to jobs are much more nervous about the process, and even our existing H-1B workers are worried that they will be kicked out of the country," she adds, noting that one employee is considering working from Europe as opposed to the U.S.--a move Phone2Action would support.

Manny Medina, an Ecuadorian immigration and the founder and CEO of Seattle-based software company Outreach, is experiencing similar growing pains related to the H-1B visa reforms. In particular, Medina says that he's finding it more difficult to poach employees from larger tech companies such as Amazon and Microsoft because the potential hires are concerned that such a move could put their visa status in jeopardy. "The current environment is making things uncertain, so H-1B holders are afraid to leave their jobs, making it difficult for smaller companies [like mine] to attract talent," Medina says. His 260-person company does more than $10 million in annual revenue.

The "tip of the iceberg"

To be sure, there are others who say that any move to crack down on abuse of the H-1B visa system is a step in the right direction. Ronil Hira, an associate professor of public policy at Howard University, has worked with several former employees at companies including Disney and Southern California Edison, who have claimed in a series of lawsuits that they were not only replaced by cheaper H-1B workers, but also forced to train those replacements.

"This is only the proverbial tip of the iceberg," Hira told senators in 2016 testimony about the program. The way he sees it, the language of the law allows many foreign and domestic corporations to game the H-1B system, both robbing Americans of high-paying jobs and exploiting the foreign workers who end up doing them.

"Most of the abuse [that occurs in the H-1B visa system] is legal," Hira tells Inc. "If USCIS is scrutinizing the applications more this year, then that's good, and they should have done it before."

Still, he insists that not very much has changed since Trump took office; the wage minimums remain the same, which means that U.S. companies can theoretically onboard foreign employees, who generally are willing to work for lower salaries than U.S. workers. "Despite all the hoopla about how Trump was cracking down, it was more bark than bite," he says. It's also worth noting that while USCIS says it saw a drop in the total number of H-1B applications this year, it has also warned against filing multiple petitions for a single worker, which could explain the lower number.

For Outreach's Medina, however, the changes have been real--if not so obvious or economic. He characterizes the social climate under President Trump as "hostile," and adds that even in Seattle, a famously progressive area of the country, he now hears the occasional racial slur on the street. "As an entrepreneur, I was really looking forward to being part of the solution," Medina says, referring to his desire to create more American jobs. But with reforms to the H-1B visa program, especially, "this is setting us back significantly," he says. "I can no longer go to Ecuador and say the U.S. is the best place to start a company."

Published on: Apr 23, 2018