This is the accessible text file for GAO report number GAO-11-505T 
entitled 'H-1B Visa Program: Multifaceted Challenges Warrant Re-
examination of Key Provisions' which was released on March 31, 2011. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Subcommittee on Immigration Policy and Enforcement, 
Committee on the Judiciary, House of Representatives: 

For Release on Delivery: 
Expected at 10:00 a.m. EDT:
Thursday, March 31, 2011: 

H-1B Visa Program: 

Multifaceted Challenges Warrant Re-examination of Key Provisions: 

Statement for the Record by Andrew Sherrill, Director:
Education, Workforce, and Income Security: 

GAO-11-505T: 

Mr. Chairman and Members of the Subcommittee: 

We are pleased to have the opportunity to comment on the H-1B program. 

Congress created the current H-1B program in 1990 to enable U.S. 
employers to hire temporary, foreign workers in specialty occupations. 
The law capped the number of H-1B visas issued per fiscal year at 
65,000, although the cap has fluctuated over time with legislative 
changes. The H-1B cap and the program itself have been a subject of 
continued controversy. Proponents of the program argue that it allows 
companies to fill important and growing gaps in the supply of U.S. 
workers, especially in the science and technology fields. Opponents of 
the program argue that there is no skill shortage and that the H-1B 
program displaces U.S. workers and undercuts their pay. Others argue 
that the eligibility criteria for the H-1B visa should be revised to 
better target foreign nationals whose skills are undersupplied in the 
domestic workforce. 

Our comments in this statement for the record are based on the results 
of our recent examination of the H-1B program, highlighting the key 
challenges it presents for H-1B employers, H-1B and U.S. workers, and 
federal agencies.[Footnote 1] Specifically, this statement presents 
information on (1) employer demand for H-1B workers; (2) how the H-1B 
cap impacts employers' costs and whether they move operations 
overseas; (3) the government's ability to track the cap and H-1B 
workers over time; and (4) how well the provisions of the H-1B program 
protect U.S. workers. A detailed explanation of our methodology can be 
found in our report. Our work was conducted from May 2009 through 
January 2011 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provided a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Summary: 

From 2000 to 2009, the demand for new H-1B workers tended to exceed 
the cap, as measured by the numbers of initial petitions submitted by 
employers who are subject to the cap. While the majority (68 percent) 
of employers were approved for one H-1B worker, demand was driven to a 
great extent by a small number (fewer than 1 percent) of H-1B 
employers garnering over one quarter of all H-1B approvals.[Footnote 
2] Cap-exempt employers, such as universities and research 
institutions, submitted over 14 percent of the initial petitions filed 
during this period. 

Most of the 34 H-1B employers GAO interviewed reported that the H-1B 
program and cap created additional costs for them, such as delays in 
hiring and projects, but said the global marketplace and access to 
skilled labor--not the cap--drive their decisions on whether to move 
activities overseas. 

Limitations in agency data and systems hinder tracking the cap and H-
1B workers over time. For example, data systems among the various 
agencies that process these individuals are not linked so it is 
difficult to track H-1B workers as they move through the immigration 
system. System limitations also prevent the Department of Homeland 
Security from knowing precisely when and whether the annual cap has 
been reached each year. 

Provisions of the H-1B program that could serve to protect U.S. 
workers--such as the requirement to pay prevailing wages, the visa's 
temporary status, and the cap itself--are weakened by several factors. 
First, program oversight is fragmented between four agencies and 
restricted by law. Second, the H-1B program lacks a legal provision 
for holding employers accountable to program requirements when they 
obtain H-1B workers through a staffing company--a company that 
contracts out H-1B workers to other companies. Third, statutory 
changes made to the H-1B program over time--i.e. that broadened job 
and skill categories for H-1B eligibility, increased exceptions to the 
cap, and allowed unlimited H-1B visa extensions while holders applied 
for permanent residency--have in effect increased the pool of H-1B 
workers beyond the cap and lowered the bar for eligibility. 

Background: 

The H-1B program enables companies in the United States to hire 
foreign workers for work in specialty occupations on a temporary 
basis. A specialty occupation is defined as one requiring theoretical 
and practical application of a body of highly specialized knowledge 
and the attainment of a bachelor's degree or higher (or its 
equivalent) in the field of specialty. 

The law originally capped the number of H-1B visas at 65,000 per year; 
the cap was raised twice pursuant to legislation,[Footnote 3] but in 
fiscal year 2004, the cap reverted to its original level of 65,000. 
Statutory changes also allowed for certain categories of individuals 
and companies to be exempt from or to receive special treatment under 
the cap. The American Competitiveness in the Twenty-First Century Act 
of 2000 exempted from the cap all individuals being hired by 
institutions of higher education and also nonprofit and government- 
research organizations. More recently, the H-1B Visa Reform Act of 
2004 allowed for an additional 20,000 visas each year for foreign 
workers holding a master's degree or higher from an American 
institution of higher education to be exempted from the numerical cap 
limitation. In 2004, consistent with free trade agreements, up to 
6,800 of the 65,000 H-1B visas may be set aside for workers from Chile 
and Singapore.[Footnote 4] 

While the H-1B visa is not considered a permanent visa, H-1B workers 
can apply for extensions and pursue permanent residence in the United 
States. Initial petitions are those filed for a foreign national's 
first-time employment as an H-1B worker and are valid for a period of 
up to 3 years. Generally, initial petitions are counted against the 
annual cap. Extensions--technically referred to as continuing 
employment petitions--may be filed to extend the initial petitions for 
up to an additional 3 years. Extensions do not count against the cap. 
While working under an H-1B visa, a worker may apply for legal 
permanent residence in the United States. After filing an application 
for permanent residence, H-1B workers are generally eligible to obtain 
additional 1-year visa extensions until their U.S. Permanent Resident 
Cards, commonly referred to as "green cards," are issued. 

The Departments of Labor (Labor), Homeland Security (Homeland 
Security), and State (State) each play a role in administering the 
application process for an H-1B visa. Labor's Employment and Training 
Administration (Employment and Training) receives and approves an 
initial application, known as the Labor Condition Application (LCA), 
from employers. The LCA, which Labor reviews as part of the 
application process, requires employers to make various attestations 
designed to protect the jobs of domestic workers and the rights and 
working conditions of temporary workers. Homeland Security's U.S. 
Citizenship and Immigration Services (USCIS) reviews an additional 
employer application, known as the I-129 petition, and ultimately 
approves H-1B visa petitions. For prospective H-1B workers residing 
outside the United States, State interviews approved applicants and 
compares information obtained during the interview against each 
individual's visa application and supporting documents, and ultimately 
issues the visa. For prospective H-1B workers already residing in the 
United States, USCIS updates the workers' visa status without 
involvement from State. 

USCIS has primary responsibility for administering the H-1B cap. 
Generally, it accepts H-1B petitions in the order in which they are 
received. However, for those years in which USCIS anticipates that the 
number of I-129 petitions filed will exceed the cap, USCIS holds a 
"lottery" to determine which of the petitions will be accepted for 
review. For the lottery, USCIS uses a computer-generated random 
selection process to select the number of petitions necessary to reach 
the cap. 

With regard to enforcement, Labor, the Department of Justice 
(Justice), and Homeland Security each have specific responsibilities. 
Labor's Wage and Hour Division (Wage and Hour) is responsible for 
enforcing program rules by investigating complaints made against 
employers by H-1B workers or their representatives and assessing 
penalties when employers are not in compliance with the requirements 
of the program. Justice is responsible for investigating complaints 
made by U.S. workers who allege that they have been displaced or 
otherwise harmed by the H-1B visa program. Finally, USCIS's 
Directorate of Fraud Detection and National Security (FDNS) 
collaborates with its Immigration and Customs Enforcement Office to 
investigate fraud and abuse in the program. 

Demand for H-1B Workers Exceeded the Cap in Most Years and Was Driven 
by a Small Number of Employers: 

Over the past decade, demand for H-1B workers tended to exceed the 
cap, as measured by the number of initial petitions submitted by 
employers, one of several proxies used to measure demand since a 
precise measure does not exist.[Footnote 5] As shown in figure 1, from 
2000 to 2009, initial petitions for new H-1B workers submitted by 
employers who are subject to the cap exceeded the cap in all but 3 
fiscal years. However, the number of initial petitions subject to the 
cap is likely to be an underestimate of demand since, once the cap has 
been reached, employers subject to the cap may stop submitting 
petitions and Homeland Security stops accepting petitions. 

If initial petitions submitted by employers exempt from the cap are 
also included in this measure (also shown in figure 1), the demand for 
new H-1B workers is even higher, since over 14 percent of all initial 
petitions across the decade were submitted by employers who are not 
subject to the cap. In addition to initial requests for H-1B workers, 
employers requested an average of 148,000 visa extensions per year, 
for an average of over 280,000 annual requests for H-1B workers. 

Figure 1: Number of Initial Petitions for New H-1B Workers Submitted 
by Employers Relative to the Cap, FY 2000-FY 2009: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2000; 
Total initial H-1B petitions submitted to Homeland Security[B]: 161,589
Initial H-1B petitions subject to cap: 150,368
H-1B petition cap level: 115. 

Fiscal year: 2001; 
Total initial H-1B petitions submitted to Homeland Security[B]: 201,195
Initial H-1B petitions subject to cap: 184,139
H-1B petition cap level: 195 

Fiscal year: 2002; 
Total initial H-1B petitions submitted to Homeland Security[B]: 108,956
Initial H-1B petitions subject to cap: 89,574
H-1B petition cap level: 195,000. 

Fiscal year: 2003; 
Total initial H-1B petitions submitted to Homeland Security[B]: 108,017
Initial H-1B petitions subject to cap: 88,182
H-1B petition cap level: 195,000. 

Fiscal year: 2004; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
163,229; 
Initial H-1B petitions subject to cap: 143,334; 
H-1B petition cap level: 65,000. 

Fiscal year: 2005; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
117,370; 
Initial H-1B petitions subject to cap: 97,540; 
H-1B petition cap level: 85,000[A]. 

Fiscal year: 2006; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
121,602; 
Initial H-1B petitions subject to cap: 102,196; 
H-1B petition cap level: 85,000[A]. 

Fiscal year: 2007; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
121,633; 
Initial H-1B petitions subject to cap: 100,503; 
H-1B petition cap level: 85,000[A]. 

Fiscal year: 2008; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
122,446; 
Initial H-1B petitions subject to cap: 100,208; 
H-1B petition cap level: 85,000[A]. 

Fiscal year: 2009; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
105,850; 
Initial H-1B petitions subject to cap: 87,573; 
H-1B petition cap level: 85,000[A]. 

Source: GAO analysis of Homeland Security CLAIMS 3 data. 

[A] Includes 20,000 visas allocated to workers graduating from U.S. 
master's programs or higher. 

[B] Total initial petitions submitted to USCIS includes all initial 
petitions that were entered into its data system, including those from 
cap-exempt employers. Reported numbers only reflect petitions entered 
into USCIS's Computer Linked Application and Management System, 
Version 3 (CLAIMS 3) data system and processed by USCIS, not the total 
number submitted, which is likely higher in years when the cap is 
reached. Petitions submitted under the master's cap cannot be 
differentiated and are therefore included in these data. 

[End of figure] 

Over the decade, the majority (over 68 percent) of employers were 
approved to hire only one H-1B worker, while fewer than 1 percent of 
employers were approved to hire almost 30 percent of all H-1B workers. 
Among these latter employers are those that function as "staffing 
companies" that contract out H-1B workers to other companies.[Footnote 
6] The prevalence of such companies participating in the H-1B visa 
program is difficult to determine. There are no disclosure 
requirements and Homeland Security does not track such information. 
However, using publicly available data, we learned that at least 10 of 
the top 85 H-1B-hiring employers in fiscal year 2009 participated in 
staffing arrangements, of which at least 6 have headquarters or 
operations located in India. Together, in fiscal year 2009, these 10 
employers garnered nearly 11,456 approvals, or about 6 percent of all 
H-1B approvals. Further, 3 of these employers were among the top 5 H-
1B-hiring companies, receiving 8,431 approvals among them. 

Most Interviewed Companies Said the H-1B Cap Was Not a Key Factor in 
Their Decisions to Move Operations Overseas but Cited Other Program 
Burdens: 

To better understand the impact of the H-1B program and cap on H-1B 
employers, GAO spoke with 34 companies across a range of industries 
about how the H-1B program affects their research and development 
(R&D) activities, their decisions about whether to locate work 
overseas, and their costs of doing business.[Footnote 7] Although 
several firms reported that their H-1B workers were essential to 
conducting R&D within the U.S., most companies we interviewed said 
that the H-1B cap had little effect on their R&D or decisions to 
locate work offshore. Instead, they cited other reasons to expand 
overseas including access to pools of skilled labor abroad, the 
pursuit of new markets, the cost of labor, access to a workforce in a 
variety of time zones, language and culture, and tax law. The 
exception to this came from executives at some information technology 
services companies, two of which rely heavily on the H-1B program. 
Some of these executives reported that they had either opened an 
offshore location to access labor from overseas or were considering 
doing so as result of the H-1B cap or changes in the administration of 
the H-1B program. 

Many employers we interviewed cited costs and burdens associated with 
the H-1B cap and program. The majority of the firms we spoke with had 
H-1B petitions denied due to the cap in years when the cap was reached 
early in the filing season. In these years, the firms did not know 
which, if any, of their H-1B candidates would obtain a visa, and 
several firms said that this created uncertainty that interfered with 
both project planning and candidate recruitment. In these instances, 
most large firms we interviewed reported finding other (sometimes more 
costly) ways to hire their preferred job candidates. For example, 
several large firms we spoke with were able to hire their preferred 
candidates in an overseas office temporarily, later bringing the 
candidate into the United States, sometimes on a different type of 
visa. On the other hand, small firms were sometimes unable to afford 
these options, and were more likely to fill their positions with 
different candidates, which they said resulted in delays and sometimes 
economic losses, particularly for firms in rapidly changing technology 
fields. 

Interviewed employers also cited costs with the adjudication and 
lottery process and suggested a variety of reforms: 

* The majority of the 34 firms we spoke with maintained that the 
review and adjudication process had become increasingly burdensome in 
recent years, citing large amounts of paperwork required as part of 
the adjudication process. Some experts we interviewed suggested that 
to minimize paperwork and costs, USCIS should create a risk-based 
adjudication process that would permit employers with a strong track- 
record of regulatory compliance in the H-1B program to access a 
streamlined process for petition approval. 

* In addition, several industry representatives told us that because 
the lottery process does not allow employers to rank their top 
choices, firms do not necessarily receive approval for the most 
desired H-1B candidates. Some experts suggested revising the system to 
permit employers to rank their applications so that they are able to 
hire the best qualified worker for the job in highest need. 

* Finally, entrepreneurs and venture capital firms we interviewed said 
that program rules can inhibit many emerging technology companies and 
other small firms from using the H-1B program to bring in the talent 
they need, constraining the ability of these companies to grow and 
innovate in the United States. Some suggested that, to promote the 
ability of entrepreneurs to start businesses in the United States, 
Congress should consider creating a visa category for entrepreneurs, 
available to persons with U.S. venture backing. 

In our report, we recommended that USCIS should, to the extent 
permitted by its existing statutory authority, explore options for 
increasing the flexibility of the application process for H-1B 
employers. In commenting on our report, Homeland Security and Labor 
officials expressed reservations about the feasibility of our 
suggested options, but Homeland Security officials also noted efforts 
under way to streamline the application process for prospective H-1B 
employers. For example, Homeland Security is currently testing a 
system to obtain and update some company data directly from a private 
data vendor, which could reduce the filing burden on H-1B petitioners 
in the future. In addition, Homeland Security recently proposed a rule 
that would provide for employers to register and learn whether they 
will be eligible to file petitions with USCIS prior to filing an LCA, 
which could reduce workloads for Labor and reduce some filing burden 
for companies.[Footnote 8] 

Limitations in Agency Data and Systems Hinder Tracking the Cap and H-
1B Workers Over Time: 

The total number of H-1B workers in the United States at any one point 
in time--and information about the length of their stay--is unknown 
due to data and system limitations. First, data systems among the 
various agencies that process H-1B applications are not easily linked, 
which makes it impossible to track individuals as they move through 
the application and entry process. Second, H-1B workers are not 
assigned a unique identifier that would allow agencies to track them 
over time or across agency databases--particularly if and when their 
visa status changes. Consequently, USCIS is not able to track the H-1B 
population with regard to: (1) how many approved H-1B workers living 
abroad have actually received an H-1B visa and/or ultimately entered 
the country; (2) whether and when H-1B workers have applied for or 
were granted legal permanent residency, leave the country, or remain 
in the country on an expired visa; and (3) the number of H-1B workers 
currently in the country or who have converted to legal permanent 
residency. 

Limitations in USCIS's ability to track H-1B applications also hinder 
it from knowing precisely when and whether the annual cap has been 
reached each year--although the Immigration and Nationality Act 
requires the department to do so.[Footnote 9] According to USCIS 
officials, its current processes do not allow them to determine 
precisely when the cap on initial petitions is reached. To deal with 
this problem, USCIS estimates when the number of approvals has reached 
the statutory limit and stops accepting new petitions. 

Although USCIS is taking steps to improve its tracking of approved 
petitions and of the H-1B workforce, progress has been slow to date. 
Through its "Transformation Program," USCIS is developing an 
electronic I-129 application system and is working with other agencies 
to create a cross-reference table of agency identifiers for 
individuals applying for visas that would serve as a unique person-
centric identifier.[Footnote 10] When this occurs, it will be possible 
to identify who is in the United States at any one point in time under 
any and all visa programs. However, the agency faces challenges with 
finalizing and implementing the Transformation Program.[Footnote 11] 
We recommended that Homeland Security, through its Transformation 
Program, take steps to (1) ensure that linkages to State's tracking 
system will provide Homeland Security with timely access to data on 
visa issuances, and (2) that mechanisms for tracking petitions and 
visas against the cap be incorporated into business rules to be 
developed for USCIS's new electronic petition system.[Footnote 12] 

While a complete picture of the H-1B workforce is lacking, data on 
approved H-1B workers provides some information about the H-1B 
workforce. Between fiscal year 2000 and fiscal year 2009, the top four 
countries of birth for approved H-1B workers (i.e., approved initial 
and extension petitions from employers both subject to the cap and cap-
exempt) were India, China, Canada, and the Philippines. Over 40 
percent of all such workers were for positions in system analysis and 
programming. As compared to fiscal year 2000, in fiscal year 2009, 
approved H-1B workers were more likely to be living in the United 
States than abroad at the time of their initial application, to have 
an advanced degree, and to have obtained their graduate degrees in the 
United States. Finally, data on a cohort of approved H-1B workers 
whose petitions were submitted between January 2004 and September 
2007, indicate that at least 18 percent of these workers subsequently 
applied for permanent residence in the United States--for which about 
half were approved, 45 percent were pending, and 3 percent were denied 
by 2010.[Footnote 13] 

Restricted Agency Oversight and Statutory Changes Weaken Protections 
for U.S. Workers: 

The provisions of the H-1B program designed to protect U.S. workers-- 
such as the requirement to pay prevailing wages, the visa's temporary 
status, and the cap on the number of visas issued--are weakened by 
several factors. 

First, H-1B program oversight is shared by four federal agencies and 
their roles and abilities to coordinate are restricted by law. As a 
result, there is only nominal sharing of the kind of information that 
would allow for better employer screening or more active and targeted 
pursuit of program abuses. For example, the review of employer 
applications for H-1B workers is divided between Labor and USCIS, and 
the thoroughness of both these reviews is constrained by law. In 
reviewing the employer's LCA, Labor is restricted to looking for 
missing information and obvious inaccuracies, such as an employer's 
failure to checkmark all required boxes on a form denoting compliance. 
USCIS's review of the visa petition, the I-129, is not informed by any 
information that Labor's Employment and Training Administration may 
possess on suspicious or problematic employers. With regard to 
enforcement of the H-1B worker protections, Wage and Hour 
investigations are constrained, first, by the fact that its 
investigators do not receive from USCIS any information regarding 
suspicious or problematic employers. They also do not have access to 
the Employment and Training's database of employer LCAs. Second, in 
contrast to its authority with respect to other labor protection 
programs, Wage and Hour lacks subpoena authority to obtain employer 
records for H-1B cases. According to investigators, it can take 
months, therefore, to pursue time-sensitive investigations when an 
employer is not cooperative. 

To improve Labor's oversight over the H-1B program, we recommended 
that its Employment and Training Administration grant Wage and Hour 
searchable access to the LCA database. Further, we asked Congress to 
consider granting Labor subpoena power to obtain employer records 
during investigations under the H-1B program. To reduce duplication 
and fragmentation in the administration and oversight of the 
application process, consistent with past GAO matters for 
Congressional consideration, we asked Congress to consider 
streamlining the H-1B approval process by eliminating the separate 
requirement that employers first submit an LCA to Labor for review and 
certification, since another agency (USCIS) subsequently conducts a 
similar review of the LCA.[Footnote 14] 

Another factor that weakens protection for U.S. workers is the fact 
that the H-1B program lacks a legal provision to hold employers 
accountable to program requirements when they obtain H-1B workers 
through staffing companies. As previously noted, staffing companies 
contract H-1B workers out to other employers. At times, those 
employers may contract the H-1B worker out again, creating multiple 
middlemen, according to Wage and Hour officials (see figure 2). They 
explained that the contractual relationship, however, does not 
transfer the obligations of the contractor for worker protection to 
subsequent employers. Wage and Hour investigators reported that a 
large number of the complaints they receive about H-1B employers were 
related to the activities of staffing companies. Investigators from 
the Northeast region--the region that receives the highest number of H-
1B complaints--said that nearly all of the complaints they receive 
involve staffing companies and that the number of complaints are 
growing. H-1B worker complaints about these companies frequently 
pertained to unpaid "benching"--when a staffing company does not have 
a job placement for the H-1B worker and does not pay them. In January 
2010, Homeland Security issued a memo--commonly referred to as the 
"Neufeld Memo"--on determining when there is a valid employer-employee 
relationship between a staffing company and an H-1B worker for whom it 
has obtained a visa; however officials indicated that it is too early 
to know if the memo has improved program compliance. To help ensure 
the full protection of H-1B workers employed through staffing 
companies, in our report we asked that Congress consider holding the 
employer where an H-1B visa holder performs work accountable for 
meeting program requirements to the same extent as the employer that 
submitted the LCA form. 

Figure 2: Limited Accountability for Employers Hiring H-1B Workers 
through Staffing Companies: 

[Refer to PDF for image: illustration] 

Traditional H-1B employers: 
Accountable employer (accountable under H-1B employer requirements); 
Worker, H-1B visa. 

With staffing companies: 
Accountable staffing company: worker; 
Staffing company[A]: worker; 
Employer: Worker, H-1B visa. 

Source: GAO review of Labor information. 

[A] In some cases there may be more than one staffing company involved 
in placing the H-1B worker. 

[End of figure] 

Finally, changes to program legislation have diluted program 
provisions for protecting U.S. workers by allowing visa holders to 
seek permanent residency, broadening the job and skill categories for 
H-1B eligibility, and establishing exemptions to the cap. The 
Immigration Act of 1990 removed the requirement that H-1B visa 
applicants have a residence in a foreign country that they have no 
intention of abandoning. Consequently, H-1B workers are able to pursue 
permanent residency in the United States and remain in the country for 
an unlimited period of time while their residency application is 
pending. The same law also broadened the job and skill categories for 
which employers could seek H-1B visas. Labor's LCA data show that 
between June 2009 and July 2010, over 50 percent of the wage levels 
reported on approved LCAs were categorized as entry-level (i.e. paid 
the lowest prevailing wage levels). However, such data do not, by 
themselves, indicate whether these H-1B workers were generally less 
skilled than their U.S. counterparts, or whether they were younger or 
more likely to accept lower wages. Finally, exemptions to the H-1B cap 
have increased the number of H-1B workers beyond the cap. For example, 
87,519 workers in 2009 were approved for visas (including both initial 
and extensions) to work for 6,034 cap-exempt companies. 

Conclusions: 

Taken together, the multifaceted challenges identified in our work 
show that the H-1B program, as currently structured, may not be used 
to its full potential and may be detrimental in some cases. Although 
we have recommended steps that executive agencies overseeing the 
program may take to improve tracking, administration, and enforcement, 
the data we present raise difficult policy questions about key program 
provisions that are beyond the jurisdiction of these agencies. 

The H-1B program presents a difficult challenge in balancing the need 
for high-skilled foreign labor with sufficient protections for U.S. 
workers. As Congress considers immigration reform in consultation with 
diverse stakeholders and experts--and while Homeland Security moves 
forward with its modernization efforts--this is an opportune time to 
re-examine the merits and shortcomings of key program provisions and 
make appropriate changes as needed. Such a review may include, but 
would not necessarily be limited to: 

* the qualifications required for workers eligible under the H-1B 
program, 

* exemptions from the cap, 

* the appropriateness of H-1B hiring by staffing companies, 

* the level of the cap, and: 

* the role the program should play in the U.S. immigration system in 
relationship to permanent residency. 

GAO Contact and Staff Acknowledgments: 

If you or your staffs have any questions about this statement, please 
contact Andrew Sherrill at (202) 512-7215 or sherrilla@gao.gov. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this statement. 

In addition to Andrew Sherrill (Director), Michele Grgich (Assistant 
Director) and Erin Godtland (Economist-in-Charge) led this engagement 
with writing and technical assistance from Nisha Hazra, Melissa 
Jaynes, Jennifer McDonald, Susan Bernstein (Education, Workforce and 
Income Security); and Rhiannon Patterson (Applied Research and 
Methods). Stakeholders included: Barbara Bovbjerg (Education, 
Workforce, and Income Security); Tom McCool (Applied Research and 
Methods); Ronald Fecso (Chief Statistician); Sheila McCoy and Craig 
Winslow (General Counsel); Hiwotte Amare and Shana Wallace (Applied 
Research and Methods); Richard Stana and Mike Dino (Homeland Security 
and Justice); Jess Ford (International Affairs and Trade). Barbara 
Steel-Lowney referenced the report. 

[End of section] 

Footnotes: 

[1] See GAO, H-1B Visa Program: Reforms Are Needed to Minimize the 
Risks and Costs of Current Program, [hyperlink, 
http://www.gao.gov/products/GAO-11-26] (Washington, D.C.: Jan. 14, 
2011). 

[2] Over the 10-year period, about 94 percent of all submitted 
petitions (initial and extensions) were approved. 

[3] The cap was increased to 115,000 for fiscal years 1999 and 2000 by 
the American Competitiveness and Workforce Improvement Act of 1998 and 
to 195,000 for fiscal years 2001 through 2003 by the American 
Competitiveness in the Twenty-First Century Act of 2000. 

[4] For more information about key H-1B laws and related provisions, 
please refer to appendix V of GAO-11-26. 

[5] We analyzed other proxies for demand including the number of 
employers submitting petitions for H-1B workers, the time it takes to 
reach the cap, and requests for high-skilled workers via other visa 
programs; however, none of these measures allowed us to provide a 
precise measure of demand. See GAO-11-26 for more detailed information 
on these indicators of demand. 

[6] Staffing companies, many of which also outsource work overseas, 
may place H-1B workers at the worksites of other employers as part of 
their business model. 

[7] GAO interviewed 34 companies--including individual structured 
interviews with 31 companies and group discussions with 3 companies. 
The selection of 31 firms constitutes a nongeneralizable sample and 
cannot be used to make inferences beyond the specific 31 firms 
selected. See appendix I of [hyperlink, 
http://www.gao.gov/products/GAO-11-26] for more information on our 
focus groups and individual interviews. 

[8] Registration Requirement for Petitioners Seeking to File H-1B 
Petitions on Behalf of Aliens Subject to the Numerical Limitations, 76 
Fed Reg. 11,686, 11,698-11,689 (Mar. 3, 2011). 

[9] 8 U.S.C. § 1184(g). 

[10] The "Transformation Program" is a multiprogram, multiyear effort 
to modernize business processes and information systems. 

[11] For more information on these challenges, see GAO, Homeland 
Security: Despite Progress, DHS Continues to Be Challenged in Managing 
Its Multi-Bullion Dollar Annual Investment in Large-Scale Information 
Technology Systems, [hyperlink, 
http://www.gao.gov/products/GAO-09-1002T] (Washington, D.C.: Sept.15, 
2009). 

[12] See [hyperlink, http://www.gao.gov/products/GAO-11-26] for 
complete information on our recommendations, matters for Congressional 
consideration, and comments we received from the agencies involved in 
the H-1B program. 

[13] This cohort includes workers whose approved petitions (initial 
petitions from employers both subject to the cap and cap-exempt) were 
submitted between Jan. 1, 2004, and Sept. 30, 2007. Of the 311,847 
approved petitions reviewed, we were able to obtain unique matches 
with US-VISIT data for only 169,349 petitions. Of these, we determined 
that 56,454 (18 percent of 311,847) submitted a petition for permanent 
residence by 2010. 

[14] To further improve oversight as well as transparency of H-1B 
program requirements, we also recommended that Labor require 
businesses to post notice of the intent to hire H-1B workers on a 
centralized Web site accessible to the public--similar to other 
temporary visa programs. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site, 
[hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional 
information. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: