During the past 15 years, immigrants have launched 25 percent of all venture-backed U.S. public companies and 40 percent of venture-backed public companies in the high-tech sector, according to a study commissioned by the National Venture Capital Association. These immigrant-founded high-tech companies have generated half of the jobs in the sector.
Recruiters working to bring in the next generation of immigrant innovators face new obstacles in their attempt to attract both non-immigrant candidates who want to become permanent U.S. residents and immigrants who want to enter the U.S. with green cards in hand. The most talented employees worldwide are increasingly unwilling to tolerate the long waits and uncertainty entailed in immigrating to the United States. Instead, they are going to Europe, Canada, Australia and other countries where knowledge workers face fewer immigration difficulties.
A total of 1.1 million people obtained legal permanent-resident status in the U.S. in 2005, including 246,878 workers who achieved permanent status under employment-based preferences. The 2005 number was significantly higher than the 155,330 who achieved permanent status under employment-based preferences in 2004 and almost three times the 81,727 who achieved permanent residence in 2003, but shortages of knowledge workers have increased dramatically in the past year.
Of those who received permanent residence, 220,000 achieved it through an adjustment in their immigration status, a much higher proportion than in past years, but a path still filled with uncertainties. Only 26,878 were new arrivals, the lowest number in five years. Although employers have improved their ability to import talent under non-immigrant visas and then convert them to permanent-resident status, the extremely low number of new arrivals who receive permanent status indicates that U.S. recruiters still face a hugely imperfect playing field.
Despite the arduous requirements for labor applications and the time-consuming recruitment and documentation process required, employers looking for top talent in hard-to-fill positions need to integrate permanent-residence immigration into their recruiting process to create a solid pipeline of foreign candidates.
The National Science Foundation and a dozen other research groups have documented the fact that U.S. immigration policy is out of step with global trends in science, engineering and business. Recruiters for U.S. companies will find it increasingly difficult to do their job unless basic immigration policy is revised, starting with the labor certification process.
The labor certification process requires that the position must be for a permanent full-time employee and the employer must attest to the qualifications, wages and conditions of employment. The employer must also meet requirements for specific recruiting efforts for the position, including advertising for the position with specific content about the job and the employer.
For professional positions, the recruiting efforts must include at least three out of 10 standard recruiting outreach methods, and none of these can be used more than 180 days prior to filing the application. The recruitment report describing the recruiting efforts for the position must detail the number of U.S. workers rejected and the reasons for the rejections. Experts agree that the recruiting requirements are time-consuming, expensive and incompatible with best practices in recruiting.
The employer must submit detailed job information to the Department of Labor’s PERM (Program Electronic Management Review System) centers, where the applications are routinely approved unless the agency’s anti-fraud or audit procedures trigger a delay. Records related to the labor certification, including the recruitment report, must be maintained for five years. Failure to provide the documents during an audit may result in up to two years of supervised recruiting—a penalty that no employer wants to incur.
Under the new PERM rules for all labor certification applications filed since March 28, 2005, the Department of Labor set a goal for making decisions on electronically filed applications within 45 to 60 days, but this is only a goal and the DOL is not bound by it. Although application-processing times have improved under PERM, the improvement has generated more backlogs at other steps in the process in the Citizenship and Immigration Services.
"The permanent-residence process is still deeply flawed, but for the most part, PERM has worked well for moving cases through the system," notes Ted Ruthizer, partner and immigration chair at Kramer Levin Naftalis & Frankel in New York. "Employers must, however, meet the recruitment guidelines. Even with PERM working well, it still takes six months of recruitment and three months for approval."
"If only a bachelor’s degree is required for the position, the employer may face backlogs going back five years," Ruthizer says. "For the advanced-degree candidates or those with a bachelor’s degree plus five years of experience, the process can be managed in one year unless the candidate is Chinese or Indian, in which case the applications are backlogged for years."
"The PERM attempt to streamline the process for permanent status has made some improvements, but achieving permanent status is still an uneven process and delays still occur," says Ian Band, partner and business immigration law expert at Hunton & Williams in Washington. "The visa backlogs for many countries are still years long, and there is no way to predict when a green card will be issued. Employers and candidates can go straight for a green card, but it can take one to five years, and predicting when the card will be issued is impossible."
H-1B and L-1 adjustments
Immigration experts agree that the best immediate solution to the obstacles recruiters face is to continue to push for an expansion of the H-1B visa cap by Congress in 2007.
"The most pressing issue is the H-1Bs," Band says. "Employers have tried using the H-3 and J-1 training visas and the O-1 visas, but these are difficult."
In 2006, Congress created 20,000 emergency exemptions from the H-1B caps for foreign students who received an advanced degree from a U.S. university. In 2005, U.S. universities awarded 55 percent of master’s degrees and 67 percent of Ph.D.s in electrical engineering to foreign nationals, according to the American Association of Engineering Societies.
In computer sciences and related fields, foreign nationals make up one-half to two-thirds of the graduate students at U.S. universities. Many remain in the U.S. under temporary work visas, but recruiters for U.S. companies cannot fully tap this significant talent pool given the caps on temporary visas and restrictions on green cards.
"There has also been talk about exempting all advanced-degree holders no matter where they received their degree, which would free up a large number of H-1Bs," Band reports. "Many H-1B employees want permanent status, but achieving that can take four to five years, and it’s still a crapshoot."
For H-1B employees, Ruthizer advises employers to prepare to file for H-1Bs in April and begin working toward permanent-residence status for the employee as soon as possible.
Permanent status can be reached through adjustments to L-1 visas, which are issued for intra-company transfers for up to five years for workers with specialized knowledge or seven years for managers or executives.
"There is no cap on L-1 visas, but some members of Congress think there should be, and this would be an absolute nightmare for companies," Band says.
Band advises companies to obtain a blank L-1 petition for the company and all of its subsidiaries.
"The company files a blank petition listing all of its related firms," he says. "Then the company and the subsidiaries that have been approved can file directly at the embassy for L-1 visas without having to go through the immigration service."
Band notes that some of his clients are recruiting abroad for the purpose of bringing employees into the U.S. after the one year of employment that the L-1 requires before these employees can be transferred to the United States.
"L-1s for executives and managers are not problematic, but L-1s for workers with ‘specialized knowledge’ have become more tricky," he notes. "More of these requests are challenged to see if the workers have knowledge that is specific to the company."
Recruiters who hope to use L-1 visas to bring employees into the U.S. are hampered by their inability to promise them that the L-1 can be converted to permanent residence. When key professional workers know they may encounter five-year delays in obtaining a green card, U.S. employers may simply fall out of the running for recruiting top candidates on a global scale.
A decade ago, when the U.S. was still the undisputed leader in many high-tech industries, foreign national job candidates may have been willing to endure the hardships of the U.S. immigration system. Today, they have access to equally compelling opportunities in countries where uncertainties and time required to complete the immigration process are less burdensome. U.S. employers will have to continue to address this serious problem at the political level as the new Congress turns to immigration issues in 2007.