New Rules for H-1B Visas: What You Need to Know
The Trump administration is tightening access to visas that many high-tech firms rely on
WASHINGTON—The Trump administration introduced long-anticipated changes to the H-1B visa program for high-skilled foreign workers on Tuesday, aimed at tightening eligibility for a program highly valued by U.S. high-tech firms and other employers.
The changes, some of which come under immediate effect and all of which will likely face legal challenges, would make it tougher for applicants to qualify for an H-1B visa and significantly more expensive for companies to sponsor them.
Here are a few things you need to know about the new policies.
Didn’t the Trump administration already ban new H-1B visas?
In June, President Trump announced a temporary ban on H-1B and several other foreign-worker visa types for new applicants still abroad. He justified the ban, which was set to last through the end of 2020, as a necessary measure to protect American workers who lost their jobs during the coronavirus pandemic.
However, a federal judge in California last week temporarily lifted the ban on most companies that were suing to strike it down, and the State Department later announced it would halt all enforcement of the ban while litigation continues. The new rules apply to all H-1B applicants, here or abroad, and aim to set more permanent restrictions.
Who could be affected by the changes?
Anyone currently applying for a new H-1B visa or a renewal of an existing visa. All of those people are subject to new wage requirements imposed by the Labor Department, as well as new regulations from the Department of Homeland Security governing which degrees and occupations qualify for H-1B visas.
One major change applies to any H-1B visa worker who is employed by one company but working primarily on site at a second. Such arrangements are particularly popular among large companies that contract with outside information-technology or human-resources companies. Any employee in that situation could receive only a visa good for one year, as opposed to the more typical three years.
The change, should it take effect, would be particularly onerous for hundreds of thousands of Indian workers. Because of caps on permanent residence status for Indians, they are caught in a yearslong backlog and rely on H-1B visas to remain in the country legally in the meantime. Many of these people are employed by IT companies that place them with clients. Under the proposed rules, they would need to have their visas renewed each year, a process that would cost their employers thousands of dollars each time.
Do the rule changes affect current visa holders in any way?
Anyone working on a valid H-1B visa wouldn’t immediately be affected. Anyone who has filed an H-1B visa petition with U.S. Citizenship and Immigration services by early December also wouldn’t be affected.
In the future, will fewer applicants qualify for H-1B visas?
Yes. The Department of Homeland Security estimated Tuesday that about a third of applicants who put in for H-1B visas in the past five years wouldn’t have qualified for them under the proposed new set of rules.
That is the case for a variety of reasons. Among the most significant are more restrictive standards for what qualifies as a “specialty occupation”—the fields ranging from software engineers to doctors to architects that H-1B recipients are permitted to work in.
DHS will require that applicants have at least a bachelor’s degree, eliminating the possibility that some applicants enter the U.S. with years of relevant experience that could earlier have been deemed equivalent to a college education. The new rules also specify that the degree must be in a directly relevant field, meaning applicants for a job as a computer programmer likely couldn’t have a degree in economics or engineering.
Those more restrictive standards could also make it tougher for some entire job categories to qualify for H-1B visas—because if more than one degree type can qualify an applicant for a particular job, that job wouldn’t be considered sufficiently specialized to be eligible for an H-1B worker. That provision would target newer fields like artificial intelligence or market research, where specific degrees don’t exist or aren’t common.
The government has already cited some of these objections in seeking to reject H-1B visa applications, with differing amounts of success. The rejection rate for H-1B visas has risen under the Trump administration, from 6.1% in 2016 to 15.1% in 2019.
How soon could these changes take effect?
Starting immediately, applicants and their sponsoring companies must make sure they are complying with new wage requirements set by the Labor Department, which significantly raise the benchmark salaries H-1B visa recipients must be paid. An entry-level electrical engineer in San Jose, Calif., for example, would be required to receive a salary of $127,042, compared with the current requirement of $88,712, according to Labor Department data.
The new wage requirements enter force Thursday and will affect any applicant who hasn’t filed paperwork with the Labor Department before then as part of his or her application.
The other major changes stem from a rule published by DHS that isn’t set to take effect for two months. Those include the shortened visa requirement for contract workers and the tightened rules around specialty occupations.
Is there a chance the new changes won’t take effect?
Both sets of rules are very likely to be challenged in court by business and immigration groups. Legal experts say the process the administration used to issue them—so they take effect immediately, without first undergoing a public-comment period—makes them more vulnerable to be struck down.
The administration said the rushed process was necessary because H-1B visa workers could be filling jobs that might otherwise fall to jobless Americans during the coronavirus pandemic. However, the administration has lost numerous other cases where it rushed out a policy without first conducting a sufficient analysis on how the change would impact people already relying on the programs the government wants to alter.
DHS’s policy has an additional vulnerability. It was issued by Chad Wolf, the acting secretary of Homeland Security, who two federal courts have ruled is serving illegally in that role. Should a judge in a theoretical H-1B case decide the same, the rule could be struck down for the sole reason that Mr. Wolf didn’t have the authority to issue it.
Should Democrat Joe Biden win the presidential election next month, he could also seek to reverse the changes, though that might entail a monthslong regulatory process. The Senate could also vote to undo the changes with a simple majority.
Fed minutes leave room for manoeuvre on interest rate policy
Officials stressed flexibility in US central bank effort to push up inflation
Federal Reserve officials offered few additional clues to investors on the implementation of the central bank’s new monetary policy guidance, saying it was not an “unconditional commitment” to keeping interest rates low regardless of economic conditions.
At last month’s FOMC meeting, the US central bank said it would not increase interest rates until the economy had reached full employment, and inflation had reached 2 per cent and was on track to exceed that target for some time.
That solidified its resolve to keeping rates at their current level of close to zero for years to come, reinforcing its dovishness. But investors have been grasping for more details, since the central bank was deliberately vague on how it would interpret the new macroeconomic milestones it was setting — and the minutes did little to change that.
According to the readout published on Wednesday, Fed officials said the timeline for such a move would depend on how quickly or slowly the economy recovered from the coronavirus pandemic.
If the outlook was weaker, the expectation would be that interest rates would remain close to zero “for a longer period”, while “a shorter period at the current setting” would come with a stronger outlook, they said. The Fed also suggested its guidance could change if there were other big economic or financial shifts, such as the emergence of asset bubbles.
“Circumstances could arise in which the committee judged that it would be appropriate to change its guidance, particularly if risks emerged that could impede the attainment of its economic objectives,” they added.
Stephen Stanley, chief economist at Amherst Pierpont, said the minutes fell short in terms of offering up the specifics that investors have been clamouring for.
“Given all of the changes that we got in the statement and with the new framework, I thought there would be a lot of meat in the minutes fleshing out those changes. But on that front, I was a little bit disappointed,” he said. “Markets are craving some sort of black-and-white rule that they can sink their teeth into.”
Mr Stanley attributed the lack of specificity to the fact that FOMC members themselves have yet to reach a unanimous consensus. Two voting members dissented from the new statement in September, with Dallas Fed president Robert Kaplan saying he would have preferred that the Fed “retain greater policy rate flexibility”. Meanwhile, Neel Kashkari, the president of the Minneapolis Fed, sought to keep rates close to zero until inflation reached 2 per cent “on a sustained basis”.
The Fed minutes were released amid rising concerns about the fate of the US recovery due to the breakdown in negotiations in Washington over further fiscal stimulus, and some evidence in the data of slower job growth and weaker consumption.
Those worries were already apparent in mid-September. “Many participants noted that their economic outlook assumed additional fiscal support and that if future fiscal support was significantly smaller or arrived significantly later than they expected, the pace of the recovery could be slower than anticipated,” the minutes said.
Fed officials also warned about the potential economic damage that could arise should the coronavirus outbreak continue to rage on nationwide.
“Participants remained concerned about the possibility of additional virus outbreaks that could undermine the recovery,” the minutes said. “Such scenarios could result in increases in bankruptcies and defaults, put stress on the financial system, and lead to disruptions in the flow of credit to households and businesses.”
Some investors have also criticised the Fed for not providing more guidance when it comes to its asset purchases. It is currently buying approximately $80bn of Treasury securities of all maturities per month and $40bn of agency mortgage-backed securities, to push down market interest rates.
Given the sharp increase in issuance by the Treasury department to fund record stimulus packages passed earlier this year, some market participants believe the US central bank must soon buy more longer-dated debt or risk a potentially sharp rise in yields that could disrupt the Fed’s efforts to ensure financial conditions remain loose.
In this area, the minutes indicated that additional clarity may soon be forthcoming.
“Some participants also noted that in future meetings it would be appropriate to further assess and communicate how the committee’s asset purchase programme could best support the achievement of the committee’s maximum employment and price-stability goals,” they said.
“With no serious discussion about the possibility of increasing the pace of its large-scale asset purchases at this meeting either, we would view the minutes as hawkish,” added Paul Ashworth, chief US economist at Capital Economics.
Long-dated US Treasuries sold off after the release of the minutes, with the yield on the benchmark 10-year higher by 0.05 percentage points at 0.79 per cent. The S&P 500 continued its march higher, rising 1.7 per cent on Wednesday.
UK university staff prepare for industrial action over Covid
Unions vote for disputes or strike ballots as more face-to-face teaching suspended
Staff at universities across the UK are taking the first steps towards industrial action over “unravelling” Covid-19 management, as two more institutions suspended face-to-face teaching in response to virus outbreaks among students.
Representatives of the University and College Union, the largest union for university staff, at Leeds, Birmingham and Warwick said on Wednesday that their branches had voted in favour of disputes or strike ballots over coronavirus risks.
Vicky Blake, the union’s national president, warned of a “serious threat” of industrial action.
It follows weeks of disagreement between management and staff at universities, with students returning for a new term amid a surge in infection rates nationwide.
While most institutions have pushed ahead with in-person teaching and a return to campus, unions have demanded more stringent safety measures. These include online learning as a default positions and halting the return of students until a reliable track-and trace system has been implemented.
Cases of coronavirus have been confirmed at dozens of UK universities, with hundreds of students testing positive at several institutions, including Liverpool, Manchester, Birmingham and Sheffield. Thousands of students have been confined to halls of residence across the country.
Newcastle and Northumbria universities on Wednesday announced they would move immediately to online teaching in response to the city’s rising infection rate, which authorities fear is being driven by students.
The decision follows similar moves by universities in Sheffield and Manchester, and a threat by the UCU to ballot its Northumbria members to strike unless the university moved to online delivery.
The only exceptions to the universities’ online policy, which will apply for three weeks before being reviewed, will be courses where in-person teaching is “essential” and for research that must be done on campus. In a letter to university staff, Northumbria’s vice-chancellor Andrew Wathey said it was in line with the Department for Education’s guidance for responding to coronavirus.
Eugene Milne, the city of Newcastle’s director of public health, who advised the change, said measures to control the “large outbreak” among students showed some initial signs of working, but case numbers were still growing and more students had yet to arrive in the city. “It is essential that changes are made to stop the virus spreading,” he said.
UCU welcomed the decision to go to online-only teaching, but said the universities needed to do more to support staff and students.
Warwick university’s UCU branch on Wednesday said members had “unanimously” passed a motion mandating the union to hold a ballot on industrial action, while counterparts in Leeds also voted last week to register a dispute.
James Brackley, a representative at Birmingham UCU, said the union had registered a dispute on Friday over face-to-face teaching and an enforced return to campus, although the university said it had yet to receive formal notification.
Ms Blake said recent votes represented a “serious threat” of future action and indicated a “storm brewing” among university staff. “You will see a theme emerging of staff betrayed by their employers who have spent the summer spinning and selling the myth of a ‘Covid safe’ student experience that is now dangerously unravelling before all of our eyes,” she said.
Raj Jethwa, the chief executive of the University and Colleges Employers Association, which speaks on behalf of higher education institutions, said employers had “planned tirelessly” on health and safety issues and had “engaged with staff and students” throughout the process.
“Given how hard employers have been working with unions locally to make campuses as safe as they can be in the current environment, any ballot for industrial action is naturally disappointing,” he said.
ICO’s final report into Cambridge Analytica invites regulatory questions
After more than three years, Elizabeth Denham, the UK’s Information Commissioner, has closed her investigation into improper data handling by the SCL and Cambridge Analytica group.
At first glance her findings, which were released on Tuesday, dispel many of the accusations put forward by whistleblowers and digital rights campaigners over the course of 2018.
The most serious of these was that the digital marketing specialist had colluded with Russia to steer the results of the Brexit referendum and broken US campaign rules during the 2016 presidential election. Campaigners had also previously argued the company failed to delete contentious data sourced from Facebook without users’ permission when asked.
Denham told a parliamentary select committee on Friday that “on examination, the methods that SCL were using, were in the main, well recognised processes using commonly available technology”.
But the findings (available here) also introduce questions about the breadth and scope of the regulator’s current remit. Chief among them is whether the ICO, as an independent body funded in part by fees and government grants, is well suited to evaluating wrongdoing — both in terms of resources and expertise — which extends beyond the immediate remit of data protection law and UK jurisdiction.
The origins of its Cambridge Analytica inquiry hark back to a subject access request (SAR) by US academic David Carroll, a US citizen, in 2017. He wanted to better understand how his personal data was being used to profile him for microtargeting in electoral campaigns.
At the time of the SAR, however, it was unclear whether the ICO was obligated to respond to requests originating from foreign citizens, even if they pertained to the handling of their personal data in UK territory. Most lawyers now agree the investigation has set a precedent that they the ICO can and will investigate in such scenarios, exposing the body to potentially even broader internationally-flavoured investigations in the future.
The ICO’s final report noted the Cambridge Analytica probe constituted “one of the largest and most complex ever carried out by a data protection authority”. Analysis by the regulator also touched upon more than 700 terabytes of data seized from the group’s London office under warrant in 2018.
As of October 2018, the ICO’s investigation has run up costs of £2.4m versus an annual budget currently projected to top £50m.
No smoking gun
A key controversy surrounding Cambridge Analytica has been the degree to which the company continued to rely on controversial data sets it acquired from Facebook, even after Facebook had asked them to delete them.
The original Facebook data was sourced from Dr. Aleksandr Kogan, an academic at Cambridge university, who had developed the psychographic techniques which Cambridge Analytica had become known for. While Kogan’s models were informed by data samples generated from a personality test he ran on Facebook with the permission of users, it later transpired the data also included information scraped about the friends of users without permission.
The ICO’s report, however, found that Cambridge Analytica had made efforts to delete the data when Facebook requested it to do so in 2016. The authority also noted the company had begun efforts to replicate the Kogan data on a fully independent and permissioned basis as far back as 2015.
But the report cautioned that some derivative data persisted until it was deleted in 2017, a move signed off by then chief executive Alexander Nix.
The ICO hence noted “it is suspected” that some parts of the original Kogan data may have been used in connection with political campaigning for the US 2016 presidential election, albeit in modelled form:
For example, it is understood SCL (through contracts with firms including AIQ) deployed advertising on the Facebook Platform which was targeted to specific voter demographics informed by the profiling that had been undertaken by SCL/CA and GSR
Sources at Cambridge Analytica, however, have always disputed this, claiming that the data was only being quarantined for modelling comparison reasons. As it stands, the final report offers no compelling evidence to dispute that.
Guilty of overselling psychographics?
Another unpopular finding by the Commissioner relates to how ineffective the group’s predictive analytics really were. Potentially very. As noted in the report (our emphasis):
. . . while the models showed some success in correctly predicting attributes on individuals whose data was used in the training of the model, the real-world accuracy of these predictions — when used on new individuals whose data had not been used in the generating of the models — was likely much lower. Through the ICO’s analysis of internal company communications, the investigation identified there was a degree of scepticism within SCL as to the accuracy or reliability of the processing being undertaken. There appeared to be concern internally about the external messaging when set against the reality of their processing.
The group’s famous marketing slogan, meanwhile — that it had over 5,000 data points per individual on 230m adult Americans — was also deemed to have been an exaggeration by the Commissioner. The actual data points the companies held looked more like this:
But what about Brexit?
The scale of Cambridge Analytica’s involvement in the Leave.EU Brexit campaign is probably the question that has plagued UK digital rights campaigners’ minds most in recent years. But the conclusions from the ICO report are unlikely to be welcomed.
According to the Commissioner, the authority found (our emphasis):
. . . no further evidence to change my earlier view that SCL/CA were not involved in the EU referendum campaign in the UK — beyond some initial inquiries made by SCL/CA in relation to Ukip data in the early stages of the referendum process. This strand of work does not appear to have then been taken forward by SCL/CA.
On Russian involvement, meanwhile, the Commissioner reminded that the ICO had already handed over what evidence they had found to the National Crime Agency. The final report by the Digital, Culture, Media and Sport Committee revealed in February 2019 that this pertained to the discovery of Russian IP addresses in the data associated with Aleksandr Kogan’s server. The Commissioner added the investigation had not found any additional evidence of Russian involvement in material contained in the Cambridge Analytica servers it had since obtained. The National Crime Agency, meanwhile, is yet to pursue any action.
Last, the Commissioner said she identified “no significant breaches of the privacy and electronic marketing regulations and data protection legislation that met the threshold for formal regulatory action.”
The single successful action against the Cambridge group was against SCL Elections for their failure to comply with an enforcement notice sent to them when they were already in administration. The fine paid was £18,000.
But the authority’s penalty actions also extended to the following groups:
• Facebook (£500,000) paid 04 November 2019
• Vote Leave (£40,000) paid 29 April 2019
• Leave.EU (£15,000) paid 15 May 2019
• Emma’s Diary (£140,000) paid 29 August 2018
Who watches the watchmen?
In total, the data trove amassed by the ICO over the course of its investigations included 42 laptops and computers, 700 TB of data, 31 servers, over 300,000 documents, and a wide range of material in paper form and from cloud storage devices.
Now that its investigation has concluded, the ICO will be required under its own data control guidelines to either return the data sets to their owners — in this case SCL’s administrators — or dispose of them securely.
According to the final report, the Commissioner’s office is already ensuring that “any data, models and derivatives are safely destroyed” and that “several items obtained have been subsequently disowned and we are taking measures via our forensic technology provider to destroy these safely ourselves.”
That, FT Alphaville assumes, implies the underlying data that many continue to believe single-handedly “hacked” the 2016 Brexit and American elections, could soon be lost forever.
If that’s the case, it may shortly become even harder to disprove the uncomfortable proposition that Cambridge Analytica’s main data-related crime was overselling its own capabilities rather than actually hacking democracy with the help of the Russians.
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Closing Stock Market SummaryThe S&P 500 rose 1.7% on Wednesday, primarily driven by renewed stimulus hopes and secondarily coronavirus-related optimism. The Nasdaq Composite gained 1.9%, the Dow Jones Industrial Average gained 1.9%, and the Russell 2000 gained 2.1%.
After President Trump said he called off stimulus negotiations yesterday, he later clarified that he still wanted stimulus but in the form of standalone bills for airlines, small businesses, and citizens ($1200 payments). This jump-started the futures market, and news that Eli Lilly (LLY 148.96, +4.83, +3.4%) requested emergency use authorization for its COVID-19 antibody treatment supported the rebound effort.
Accordingly, airline and retail stocks were some of today's biggest gainers, but the wealth spread around to every sector in the S&P 500 and every Dow component. The cyclical materials (+2.6%), consumer discretionary (+2.5%), and industrials (+2.2%) sectors rose more than 2.0%. The real estate sector (+0.3%) underperformed.
Inside the communication services sector (+0.9%), Netflix (NFLX 534.66, +28.79, +5.7%) rallied nearly 6% after Pivotal Research Group raised its price target on the stock to a Street-high $650 from $600. Facebook (FB 258.12, -0.54, -0.2%) was excluded from today's gains amid antitrust concerns stemming from a report from the House antitrust committee.
Essentially, today was a reset to yesterday's highs before President Trump upset the market with tweets. The S&P 500 closed back above its ascending 50-day moving average (3372).
Separately, the FOMC Minutes for the Sept. 15-16 meeting provided no surprises. Fed officials expressed concerns regarding a recovery if there is no more fiscal stimulus and remained in agreement that the current environment is disinflationary.
U.S. Treasuries finished lower on the longer-end of the curve, sending those yields back to their highest levels of the week. The 2-yr yield finished unchanged at 0.15%, while the 10-yr yield increased four basis points to 0.79%. The U.S. Dollar Index finished flat at 93.64. WTI crude declined 1.8%, or $0.71, to $39.96/bbl.
Reviewing Wednesday's economic data:
- Consumer credit contracted by $7.2 billion in August consensus $14.1 billion) after increasing an upwardly revised $14.7 bln (from $12.3 billion) in July.
- The key takeaway from the report is that August marked the sixth straight monthly contraction in revolving credit, which is something that hasn't happened since late 2010 - early 2011, underscoring the more restrictive credit stance adopted by lenders in the wake of the COVID shutdown and rise in unemployment.
- The weekly MBA Mortgage Applications Index increased 4.6% following a 4.8% decline in the prior week.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the NFIB Small Business Optimism Index for September on Thursday.
- Nasdaq Composite +26.7% YTD
- S&P 500 +5.8% YTD
- Dow Jones Industrial Average -0.8% YTD
- Russell 2000 -3.4% YTD
Arm expects tough scrutiny in China over Nvidia deal
Long-serving chief Simon Segars says sale of UK company is likely to be held up by regulator
Simon Segars, chief executive of the UK chipmaker Arm Holdings, has said that he expects tough and protracted scrutiny from China over Nvidia’s $40bn takeover of the company, as tensions rise over the implications of the contentious deal for the global chip industry.
China’s chipmakers have urged Beijing to probe Nvidia’s proposed acquisition of Arm on the basis that it would hand the US company control over essential technology used in many of the world’s smartphones and data centres. That has led to concerns that regulators in China may not sign off the acquisition.
Speaking to the Financial Times on Tuesday, Mr Segars argued that the Chinese regulators would want to review the combination of Arm and Nvidia thoroughly, though he remained confident the deal would ultimately proceed. “It’s a tough place at the moment with geopolitics so we’ll have to play that very carefully,” he said, adding that regulatory clearance across all of its markets will “take a long time”.
Arm has a joint venture with local investors in China, the control of which has been in dispute. As a result, China’s antitrust regulator will have the right to review the proposed Nvidia deal.
Mr Segars also dismissed concerns in the UK, where Arm is headquartered, over the switch of its ownership from Japan’s SoftBank to Silicon Valley’s Nvidia as overblown. “The nationality of the parent company is irrelevant,” he said, adding that two of Arm’s three founding shareholders — Apple and VLSI — were American.
The sale of Arm, which was bought by SoftBank in 2016, has led to a backlash in Britain over fears that the US technology giant could move the chipmaker, which is widely seen as the crown jewel of the UK’s technology industry, out of its headquarters in Cambridge. The government could still ask the Competition and Markets Authority to review the transaction on “national security” grounds.
Nvidia has made commitments to keep Arm in Cambridge and will spend £40m on a new supercomputer for Cambridge to ease concerns over the takeover.
Mr Segars said he had held early discussions with the UK government, as has Nvidia, and that the company’s commitments to invest in Cambridge should chime with the government’s ambition to make the UK an “R&D superpower” as the city’s new computing power attracts more engineers and technology companies. “What’s not to like here?” the 30-year Arm veteran said.
Mr Segars spoke alongside Nvidia chief executive Jensen Huang at Arm’s annual conference this week. Mr Huang joked that he had “paid an Arm and a leg” to acquire the British company but that it would be “worth every penny” over time.
Mr Huang tried to allay concerns over Nvidia’s ownership of Arm — which until now has been a neutral player in the chip industry, licensing its technology to all players — saying he would protect that business model.
Mr Segars said he had reassured his biggest customers — chipmakers that rely on its low-power designs — in a similar way to 2016 when SoftBank took over the company. Despite the industry’s reliance on Arm’s designs, he said Arm and Nvidia would need to communicate the positive impact of the takeover. “If you upset customers then they will find a different solution to the problem they want to solve. It’s not take it or leave it,” he said.
Arm also unveiled new technology during its developer conference including “Project Triffid”, which is testing an ultra-low-power chip design that could be used by logistics companies to monitor food shipments.