Limiting L-1 Visas: How to Harm America’s Business Climate and Kill Jobs

Robert D. Atkinson June 18, 2020
June 18, 2020

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The Trump administration has rightly made a big push to get more foreign companies to locate operations in the United States and get American-headquartered multinationals to move more work back onshore. There is even a branch of the Department of Commerce – Select USA – whose job is to promote such activity.

This is why it is so surprising that President Trump is proposing actions that would discourage foreign and domestic multinational companies from opening or expanding operations in the United States. I am talking about the President’s proposal to temporarily ban the issuances of L-1 visas.

The L-1 visa is “a non-immigrant visa for intra-company transfers for candidates who are already working for the company that intends to open or expand operations in the U.S. It could also be the U.S. parent company that wants one of its employees working in its subsidiary to work in the U.S.”  And let’s be clear: these are not visas for low-skill, low-wage workers. Nor are they visas intended to let people permanently live in the United States. Congress established the visa in 1970 with the express purpose to encourage more investment in the United States by multinational companies by letting them temporarily move executives into U.S. operations.   

These visas are integral to the operation of global companies. Multinational companies regularly move executives around the world to different operations, in part to give them exposure to other markets, but also as the process of gaining more responsibility and moving up in the company.  But if you can’t be assured that you can move your own executives temporarily into the United States when you need to, you would rightly think twice about expanding or establishing operations in the United States. This proposed ban, even though purportedly temporary, is simply weakening the U.S. business climate; sending out a big signal: “We are not open for business.”

If there are cases of companies abusing the L-1 process, such as using it instead of the H1B visa (for which there are caps) then Immigration and Customs Enforcement should penalize the guilty companies, although these cases appear to be quite limited. But cutting off the program entirely will only hurt the U.S. economy. 

And the idea that this would help domestic employment is short-sighted. If all nations enacted similar rules, then Americans working for multinationals here would not be able to move to foreign nations, meaning fewer job openings here. Moreover, without the ability to bring top level workers here, companies are more likely to do the opposite: expand operations overseas, something the president clearly does not want.

There are plenty of reasons for the administration to want to limit low-wage, low skill immigration, including the fact that it reduces the incentives of companies in the United States to invest in technology to become more productive. But high-skill immigration is completely different. That makes America more productive, more innovative, and more competitive. As such, the L-1 restriction is the wrong answer.