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November 2, 2020 10:05 pm

Tech Startups Say New Pay Rules for H-1B Visas Are Unaffordable

New rules from the Trump administration restricting skilled foreign workers are unnerving U.S. startup hubs, as founders and investors say the limitations will hamstring their ability to recruit top-tier talent to grow their businesses [Editor's note: the link may be paywalled; free syndicated source]. From a report: The changes to the H-1B visa program announced in October will make qualifying for the work visas much tougher and compel employers to pay foreign workers drastically higher wages. Those rules hit especially hard for technology startups, whose founders and rank-and-file are often immigrants and which usually pay employees a lower salary but compensate with stock options. Many salaries under the new rules start at $208,000, even for inexperienced workers. "It's already expensive, it was already a high bar, and we are making it prohibitive," Kate Mitchell, co-founder of venture-capital firm Scale, said of the H1-B program. The administration has said the rules are designed to ensure U.S. workers get priority for jobs. "For too long, foreign worker programs have been abused at the expense of American workers," a spokesperson for the Labor Department said. The new rules "will help put an end to these harms." The H1-B rules are the latest in a string of immigration restrictions dating back to the travel ban against citizens from predominantly Muslim countries that Mr. Trump issued a week after his inauguration. The cumulative effect has left some tech startups weary of doing business here, founders say. Some founders say they are shifting hiring and growth plans away from the U.S., establishing engineering hubs in Eastern Europe and sending new recruits from American universities who would require a U.S. visa to work instead at satellite offices in Canada. Nearly a third of all venture-backed startups are founded by immigrants, according to a 2016 report from the National Bureau of Economic Research. More than half of startups valued at $1 billion or more have at least one immigrant founder, according to a 2018 paper from the National Foundation for American Policy, a nonpartisan think tank. Several of the highest-valued venture-backed companies today, including payments company Stripe and stock-trading app Robinhood, have at least one immigrant founder and collectively thousands of employees. Much of the high-tech industry has long wanted overhauls to the H-1B program so companies have an easier path to obtain visas in a competitive hiring environment. The administration says low-cost foreign workers are taking jobs from Americans.

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