The inability to bring in talented, necessary foreign workers may hamper the tech industry’s growth during already-uncertain times. That said, while experts certainly expect the visa restrictions to have a significant impact on the economy, it may be a while before it’s felt.
Thanks to COVID-19, travel has come to a near-screeching halt. Airlines are reporting billions of dollars in losses as personal and professional travel plans have been widely canceled, and international travel is nearly nonexistent. Indeed, even with such low numbers the Trump Administration took further measures to ensure even fewer people will be entering the country in the near future. I’m talking about the recent visa restrictions-- in June, the Trump Administration announced temporary measure to suspend new work visas. This was done on the basis that foreign workers “pose an unusual threat to the employment of American workers” by competing with US citizens for jobs that should, by rights, be theirs. The order will also restrict American companies (and companies with American offices that aren’t necessarily headquartered here) from transferring foreign workers into the US, and blocked the spouses of foreign workers from being allowed to join their US-based partners.
The visa issues being suspended are the H-1B, H-2B, J, and L visas, and the order applies to anyone outside of the US on or after June 24th, 2020, those who do not already have a valid visa, and those who don’t have any other valid travel documentation that makes them eligible to enter the US. Permanent residents, spouses or children of a US citizen, temporary agricultural workers, and people whose entry is “in the national interest as determined by the Secretary of State, the Secretary of Homeland Security, or their respective designees” are exempt. Additional exemptions include healthcare workers in hospitals and medical researchers whose work is related to combating COVID-19, as well as “those that…are critical to the defense, law enforcement, diplomacy, or national security of the United States…or are necessary to facilitate the immediate and continued economic recovery of the United States.”
With that understanding, what does this mean for businesses and their workers? As Investopedia noted, “Employees with approved visas for fiscal year 2021 starting in October will be affected by the rule, according to immigration lawyers. It's unclear at the moment what will happen to renewal applications for those in the U.S. currently.” Similarly, advisors should expect that we will see even further delays in market recovery. H-1B visas are used when employers can demonstrate that suitably skilled US-based individuals can’t be found and workers with the requisite knowledge can only be found abroad.
Businesses already hit by the wide-ranging impacts of the coronavirus, now face an additional struggle. Big tech companies in particular are notorious for their heavy reliance on foreign workers; according to statistics provided by the Department of Homeland Security, 69% (237,837 of 345,262 visas) of approved H-1B visas issued in 2016 were for individuals in computer-related jobs, vastly outpacing any other occupation; architecture, engineering, and surveying came in second with just 8% (27,836 H-1B visas). As can be imagined, executives from Silicon Valley tech giants like Apple, Google, Facebook, Twitter, and Amazon, have had a few choice words about this decision, and none seemed particularly thrilled—quite the opposite, in fact.
The inability to bring in talented, necessary foreign workers may hamper the tech industry’s growth during already-uncertain times. That said, while experts certainly expect the visa restrictions to have a significant impact on the economy, it may be a while before it’s felt. “The immediate impact of the suspension is mostly symbolic until those consular officers reopen,” Julia Gelatt, senior policy analyst at the Migration Policy Institute, said in an interview with the New York Times. However, she cautions that just because we’re not seeing results right now, doesn’t mean that they won’t be felt relatively soon. Between delays in economic recovery, the unknown effects of the ongoing virus, and the uncertain duration of these visa restrictions, advisors will want to keep an eye on the way this plays out but as always, caution clients not to make any hasty investment moves before more information is forthcoming.
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
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