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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: When Sandeep mcganty first moved to the US from India

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Speaker 2: for college, he had a passion for technology and a

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Speaker 2: laser focus on the future.

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Speaker 3: I was a teenager that was hoping to build a

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Speaker 3: whole new life and whole new career and trying to

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Speaker 3: see where my lux are all my hard work takes me.

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Speaker 2: At that point, after getting a computer science degree from

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Speaker 2: Arizona State University, he teamed up with a fellow Asulum

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Speaker 2: to launch a startup.

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Speaker 3: It's an AA powered real estate investment platform. We run

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Speaker 3: the models on the back end, predicting the revenue of

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Speaker 3: a short term real estate investments or a commercial real

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Speaker 3: estate investments.

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Speaker 2: Sindeep said. They raised four hundred thousand dollars from a

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Speaker 2: private investor and turn their idea into a company valued

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Speaker 2: at over a million dollars. It was just a few

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Speaker 2: years into his time in the US and he was

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Speaker 2: already on track to build the kind of life and

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Speaker 2: career he dreamed of as a teenager, but something else

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Speaker 2: loomed over him. He'd managed to stay in the country

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Speaker 2: legally through a student visa and a series of work authorizations,

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Speaker 2: but a status in the States was still temporary, and

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Speaker 2: that meant he was living with a lot of uncertainty

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Speaker 2: and throughout all this sun deep did your immigration status

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Speaker 2: weigh on you at all? How did it impact your work?

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Speaker 3: So that's been the whole problem. You can't have a

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Speaker 3: solid decisions or like anything solid till you have your

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Speaker 3: immiglations plans solid because you can't buy a house, or

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Speaker 3: you can't build a business, or you can't do whatever

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Speaker 3: you are looking for in your life. It's not something

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Speaker 3: you can be stable on. It impacts in every decision

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Speaker 3: that you are making in your life.

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Speaker 2: Sundeep wanted a more long term plan, so he stepped

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Speaker 2: away from the day to day of running his startup,

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Speaker 2: got a job at another US based company, and set

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Speaker 2: his sights on the H one B, a visa designed

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Speaker 2: for highly skilled workers with employers in the US. A

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Speaker 2: limited number of H one BE visas are handed out

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Speaker 2: each year through a lottery system, and the first time

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Speaker 2: he applied he wasn't picked, or the next or the next.

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Speaker 3: It was really devastating for me. I was like eighty

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Speaker 3: years into the United States and I still don't have

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Speaker 3: a life which I can rely on or a carrier

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Speaker 3: that I can rely on, so I don't have a

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Speaker 3: clarity on what I need to do.

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Speaker 2: Sandeep had the job and the sponsor, but his lottery

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Speaker 2: ticket wasn't drawn.

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Speaker 1: His qualification didn't matter. He's investment and entrepreneurship didn't matter.

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Speaker 1: The fact that he was already employing people and starting

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Speaker 1: a company here didn't matter. It was a complete game

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Speaker 1: of luck.

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Speaker 2: Eric vonn is an investigative data reporter at Bloomberg and

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Speaker 2: for the past few months he's been looking into how

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Speaker 2: the h to one B system actually works, and he

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Speaker 2: found that there's something else at play, making that game

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Speaker 2: of luck even more precarious, and it's stacking the deck

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Speaker 2: against work and employers who seem to be doing everything right. Today.

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Speaker 2: On the show, a Bloomberg investigation reveals how companies have

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Speaker 2: been exploiting loopholes to gain the H one B system

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Speaker 2: and what that could mean for hundreds of thousands of

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Speaker 2: visa hopefuls. Every year, employers in the US submit hundreds

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Speaker 2: of thousands of applications for H one b's, hoping to

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Speaker 2: give their employees a shot at a visa. N H

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Speaker 2: one B typically lasts up to six years and is

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Speaker 2: often an on ramp to permanent residency. The number of

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Speaker 2: visas awarded every year is currently capped at about eighty

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Speaker 2: five thousand. But when Eric tried to figure out the

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Speaker 2: chances of getting one, he noticed that between twenty twenty

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Speaker 2: and twenty twenty three, the number of applications for that

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Speaker 2: limited pool had doubled. That meant the odds of getting

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Speaker 2: an H one B visa were getting worse fast.

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Speaker 1: So as I talk to my friend, they said, go

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Speaker 1: on line. It became very apparent that there's a huge

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Speaker 1: problem in the system.

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Speaker 2: And that problem goes back to the way the system

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Speaker 2: was designed.

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Speaker 4: Since the very beginning, the program has sort of been

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Speaker 4: dogged by concerns that certain companies were kind of finding

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Speaker 4: a way to get a disproportionate share of the visas.

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Speaker 2: That's Bloomberg investigative reporter Zachmeider. He says the flaws in

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Speaker 2: the system trace back to the way that H one

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Speaker 2: B program was set up in response to pressure from

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Speaker 2: tech companies that started building in the nineteen eighties.

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Speaker 4: Employers in the US were telling Congress, we can't get

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Speaker 4: enough workers in certain fields, especially kind of high tech fields,

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Speaker 4: and so when Congress reformed its immigration laws in nineteen

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Speaker 4: ninety they said, we're going to create this category of

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Speaker 4: visa called H one B that's going to be specifically

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Speaker 4: for kind of high skilled workers that you don't think

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Speaker 4: you can find in the American job market.

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Speaker 2: At first, this system was first come, first serve. The

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Speaker 2: vision was that employers would apply for the visas gradually

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Speaker 2: throughout the year, and once they ran out, the government

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Speaker 2: would stop granting them. But by the mid two thousands

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Speaker 2: it was clear that the system needed to change because

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Speaker 2: on April first every year, when the visa application window opened,

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Speaker 2: the United States Citizenship and Immigration Services Office would be overrun.

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Speaker 1: Hundreds of thousands of applications would comeing in literal paper

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Speaker 1: boxes from FedEx, and the US government would have so

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Speaker 1: much trouble process in those paperwork there wasn't enough time

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Speaker 1: for them to figure out who came first and who

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Speaker 1: came second. It became a necessity to run a random.

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Speaker 2: Lottery, a random lottery with very expensive tickets.

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Speaker 1: Imports had to file a full visa application, which run

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Speaker 1: hundreds of pages. They have to pay thousands of dollars

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Speaker 1: in application fees. They have to describe exactly what job

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Speaker 1: they want to fail here's the individual, here's the job,

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Speaker 1: here's the salary we kind of pay them. Here's the

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Speaker 1: location to go work from.

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Speaker 2: But in any lottery, the odds of winning go up

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Speaker 2: if you buy more tickets. The same principle applied to

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Speaker 2: the H one B lottery. Employers who could submit more

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Speaker 2: applications had a better chance of getting their employees' visas,

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Speaker 2: and zach says that gave an advantage to certain types

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Speaker 2: of companies, like huge it outsourcing firms mostly based overseas.

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Speaker 4: Let's say you're an outsourcing company that has two one

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Speaker 4: hundred thousand workers in India and you have a need

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Speaker 4: for a certain number of those workers to be in

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Speaker 4: the United States for a certain period of time. If

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Speaker 4: you say, figure you need a thousand of them next year,

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Speaker 4: but you're not too particular about which thousand, then you

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Speaker 4: can simply do the math and you could say, well,

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Speaker 4: my chances of success in the lottery are are, you know,

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Speaker 4: twenty five percent, and I need one thousand people. So

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Speaker 4: I'll put in four thousand applications of people who would

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Speaker 4: be good enough at those roles and I'll get about

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Speaker 4: one thousand. And so while your company that just had

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Speaker 4: the one worker has a twenty five percent chance of

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Speaker 4: getting what they want. The outsourcing company can kind of

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Speaker 4: leverage its foreign workforce to get one hundred percent of

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Speaker 4: the visas they want.

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Speaker 2: In twenty twenty, the Trump administration changed the application process.

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Speaker 2: Instead of entering the lottery with a full fledged application,

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Speaker 2: employers would only need to fill out a short form

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Speaker 2: and pay a ten dollars fee to get their employee's

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Speaker 2: name in the mix. Then, only if their lottery ticket

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Speaker 2: was drawn would they need to go through with the

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Speaker 2: whole application. The goal was to cut down on paperwork

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Speaker 2: and save money, but it also had another effect.

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Speaker 1: And that massively increase the opportunity to flood the lottery.

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Speaker 2: When tickets got cheaper in twenty twenty, Eric and Zach

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Speaker 2: said it created opportunities for another kind of company to

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Speaker 2: gain the system. Staffing firms. These firms essentially work as

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Speaker 2: middleman recruiting foreign workers and connecting them with contract jobs

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Speaker 2: at US based companies, and part of their pitch is

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Speaker 2: that they can get you in each one B visa

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Speaker 2: because of how a depth they've become at gaming the system.

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Speaker 4: The new opportunity worked like this, if I have a

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Speaker 4: person who I want to help get a visa. I

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Speaker 4: can simply just create a bunch of other companies or

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Speaker 4: just conspire with other companies that already exist to put

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Speaker 4: that person's name in multiple times. And so it becomes

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Speaker 4: a system where essentially, if someone wants a visa and

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Speaker 4: they can kind of work with these a group of

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Speaker 4: these very small companies, they can almost be guaranteed to

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Speaker 4: get one. And so the chances really skyrocket for people

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Speaker 4: who are willing to work with these kind of companies

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Speaker 4: that are willing to cheat and kind of budge ahead

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Speaker 4: in the lottery. And so anybody who's just doing it

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Speaker 4: the old fact way of like I actually have a

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Speaker 4: real job and I want this work or to have

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Speaker 4: an H and B, they get pushed to the end

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Speaker 4: of the line because they're not putting the person's name

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Speaker 4: in more than once.

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Speaker 2: Zach says. Those staffing firms have been able to fly

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Speaker 2: under the radar because many of them are very small.

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Speaker 4: If it was Apple or Tesla that did this, I

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Speaker 4: think with thousands of employees, I think the government would

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Speaker 4: have caught on pretty quickly and probably tried to do

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Speaker 4: something to them. But these are all like companies you've

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Speaker 4: never heard of. Often that don't really have much physical existence,

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Speaker 4: like maybe they have an office, maybe they don't. Maybe

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Speaker 4: they're just like an LLC that somebody created without much

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Speaker 4: real existence at all.

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Speaker 2: For a long time, it was impossible for reporters like

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Speaker 2: Eric and Zach to figure out the extent of the

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Speaker 2: problem or which companies were the worst offenders.

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Speaker 1: That data was never public and we had to file

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Speaker 1: a FOY lawsuit. So for the first time we're able

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Speaker 1: to say exactly how many companies are gaining the system,

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Speaker 1: and we were very surprised because we've found thousands and thousands

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Speaker 1: of them, and it became immediately clear that these staffing

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Speaker 1: companies have sometimes ninety nine percent one hundred percent of

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Speaker 1: their entries. Are these multiple entries as compared to a

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Speaker 1: regular company such as Apple, Google would usually have less

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Speaker 1: than five percent.

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Speaker 2: There are legitimate reasons for someone to have multiple applications

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Speaker 2: entered on their behalf, say if they have competing offers

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Speaker 2: from several companies to sponsor them, but those situations are uncommon.

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Speaker 2: So when Eric found these instances in which one hundred

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Speaker 2: percent of the company's applicants were being entered multiple times,

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Speaker 2: the stat was striking.

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Speaker 1: I thought there was a problem, but it was so

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Speaker 1: much worse than I imagined. And it turned out almost

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Speaker 1: half of all the vs that were approved last year

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Speaker 1: when you're either outsourcing or staffing companies, meaning for most

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Speaker 1: of the folks who study and live and work in

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Speaker 1: the US who have a job offer from one of

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Speaker 1: the top companies like Google and Tesla, they're losing out.

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Speaker 2: So Eric and Zach identified the biggest H one B cheaters.

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Speaker 2: The question was would anything be done to stop them?

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Speaker 2: That's after the break. A Bloomberg investigation found that about

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Speaker 2: half of the coveted H one B skilled worker visas

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Speaker 2: between twenty twenty and twenty twenty three were going to

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Speaker 2: outsourcing companies and staffing firms, and then an estimated one

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Speaker 2: in six involved the slippery tactic of submitting multiple lottery

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Speaker 2: entries for the same person. What's the impact of this

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Speaker 2: type of gaming of the system? Who exactly is this hurting?

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Speaker 4: I think the big picture is it's hurting the American economy.

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Speaker 2: According to a twenty twenty three Wharton School study, for

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Speaker 2: every ten H one B visas the top US multinational

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Speaker 2: companies lose out on, nine jobs are moved abroad. The

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Speaker 2: Federal Reserve Bank of Richmond estimated that reducing the number

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Speaker 2: of high skilled immigrant workers in the US by ten

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Speaker 2: percent would shrink the economy by about eighty six billion dollars.

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Speaker 2: So there's the economic toll, there's the toll on H

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Speaker 2: one B hopefuls who are competing in a lottery that's rigged,

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Speaker 2: and then there's the toll on the H one B

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Speaker 2: recipients whose futures are now tied to companies that skirt

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Speaker 2: the rules.

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Speaker 1: So I've interviewed a number of workers and formal workers

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Speaker 1: at these staffing companies, and what they told me was

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Speaker 1: they usually knew full wow that staffing companies pay them

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Speaker 1: very little, and there was no job security, and they

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Speaker 1: often had to sign contracts that forbid them from leaving

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Speaker 1: the company for years, and most equageously, they were often

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Speaker 1: asked to pay the lawyer fees and visa fees and

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Speaker 1: registration fees, which is not allowed.

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Speaker 2: Eric and Zach wanted to know what happened to the

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Speaker 2: companies that they found were bending the rules.

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Speaker 4: Now, some of the visa recipients have had their visas

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Speaker 4: taken away and have to be sent home or whatever.

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Speaker 4: But the companies themselves which offer were kind of the

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Speaker 4: masterminds of this don't really have any consequences that we

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Speaker 4: can see. And so what the government says in response

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Speaker 4: is essentially they don't have the authority to bar anyone

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Speaker 4: from the lottery, and so as long as people keep

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Speaker 4: submitting applications and there's nothing on the application that looks suspect,

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Speaker 4: they have to keep handing out visas to these companies.

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Speaker 2: Have you gotten comment from any of these companies, what

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Speaker 2: do they say about their practices.

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Speaker 4: We spoke to a representative of the staffing industry who

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Speaker 4: said that the laws are actually pretty vague and that

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Speaker 4: in his view, it wasn't really clear, especially during the

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Speaker 4: first couple of years of this new program, that it

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Speaker 4: was actually forbidden to collude with other companies to put

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Speaker 4: people's names in multiple times. And even after it kind

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Speaker 4: of became more clear that that wasn't allowed under the law,

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Speaker 4: the government may have not followed the proper procedures to

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Speaker 4: kind of make sure everyone is aware of that. And

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Speaker 4: so from the staffing industry's perspective, it wasn't so much

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Speaker 4: cheating as more just like they saw an opportunity in

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Speaker 4: the law and they took.

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Speaker 2: It that opportunity. No longer exists. Last year, the US

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Speaker 2: government made a significant change to the system that shifted

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Speaker 2: the dynamics of the lottery.

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Speaker 1: So last year the government introduced new rules so that

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Speaker 1: each candidate has an equal chance in the lottery. So

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Speaker 1: instead of selecting on the number of registrations submitted by employers,

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Speaker 1: each candidate, regardless of how many registrations they have, has

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Speaker 1: an equal chance. So that drastically removed the incentive to cheat.

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Speaker 1: That removed the incentive for staffing companies to collude and

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Speaker 1: submit multiple registrations.

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Speaker 2: And Eric says that change has had an immediate effect.

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Speaker 1: This year, according to government data, the number of multiple

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Speaker 1: registrations decline ninety percent.

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Speaker 2: Specific loopholes like these have been opening and closing for decades.

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Speaker 2: But a big takeaway of Erican Zac's reporting is that

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Speaker 2: the H one B program has fallen far short of

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Speaker 2: its initial goal.

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Speaker 4: Immigration is a very difficult issue for Washington. The last

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Speaker 4: time there was a real effort to reform the immigration

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Speaker 4: system was more than a decade ago, and it kind

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Speaker 4: of famously failed and collapsed. And up until this point,

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Speaker 4: even when there's been times of a lot of consensus

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Speaker 4: about fixing H one B, it's always been thought of

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Speaker 4: as something we have to resolve as part of this

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Speaker 4: bigger immigration deal, which means that in practice it will

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Speaker 4: never get done.

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Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder.

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Speaker 2: This episode was produced by David Fox. It was edited

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Speaker 2: by Aaron Edwards and Jason Grotto. It was fact checked

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Speaker 2: by Adrianna Tapia and mixed by Blake Maples. Our senior

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Speaker 2: producers are Kim Gettlelson and Naomi Shaven, and our senior

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Speaker 2: editor is Elizabeth Ponso. Nicole bumsterbor is Our executive producer.

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Speaker 2: Sage Bauman is Bloomberg's head of podcasts. Thanks so much

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Speaker 2: for listening. Please follow and review The Big Take wherever

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Speaker 2: you get your podcasts. It helps new listeners find the show.

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Speaker 2: We'll be back tomorrow