Donald Trump got a couple of things right when he called out Silicon Valley for abusing a U.S. visa program at the expense of American workers, but there are better solutions than the one put forward by the 2016 GOP candidate, angel investor Jason Calacanis said Tuesday.
As part of his immigration reform plan announced last weekend, Trump said he would increase the prevailing wage for H-1B visa recipients in order to encourage employers to hire native workers for well-paying science, technology, engineering and math jobs, rather than flying in foreign workers.
U.S. Citizenship and Immigration Services grants H-1B visas to a limited number of skilled foreigners who agree to work in specialty fields.
Trump said too many workers are being hired at the program's lowest allowable wage levels at the expense of women and people of color, two notoriously underrepresented groups in Silicon Valley.
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"This will improve the number of black, Hispanic and female workers in Silicon Valley who have been passed over in favor of the H-1B program," Trump's campaign website said.
Calacanis said he believes the bottom 20 to 30 percent of H-1B visas are being abused, but the majority are used to recruit smart, skilled talent from around the world.
U.S. Citizenship and Immigration Services makes 85,000 H-1B visas available each year and has hit that cap in recent years. That number is too minor to be considered relevant, but the program presents a divisive issue that Trump can use effectively, Calacanis said.
"This is Trump at his finest. He is bringing in the politics of race and the politics of jobs and xenophobia," he told "Squawk Alley."
Trump singled out Facebook CEO Mark Zuckerberg, saying "Mark Zuckerberg's personal senator, Marco Rubio, has a bill to triple H-1Bs that would decimate women and minorities."
Zuckerberg has called on Washington to pass comprehensive immigration reform. He has also donated to politicians who support reform, including Rubio, who is also running for the Republican presidential nomination, and Sen. Chuck Schumer, Democrat of New York, the National Journal previously reported.
Calacanis acknowledged that Silicon Valley has become a potent political player.
"Has Zuckerberg and the rest of the tech industry gotten super involved and bought a lot of politicians? Of course they have," he said. "The tech industry is catching up with the industries that have bought and sold Washington."
Facebook declined to comment. The Trump campaign could not immediately be reached.
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The H-1B visa presents a way of gaming globalization and attracting foreign workers to the United States rather than outsourcing jobs to countries like India, where intelligent, driven workers are willing to work for far less, Calacanis said. Shutting down the H-1B program would only spur employers to send jobs overseas, he added.
"One part of this puzzle, the H-1B visa, is bringing intelligent Ph.D.s, brilliant founders to this country to create dozens, then hundreds, then thousands of jobs," he said. "And then there's people hacking the system to move IT jobs. We need to separate those two."
The United States can remedy abuses in the H-1B program by making companies pay a free-market rate to utilize the program through an auction system, Calacanis said. The auction proceeds could then be used to retrain American workers.
Companies willing to pay a premium to attract the best of the best would likely win out in such auctions, while those that merely wanted to arbitrage IT salaries would likely be pushed out, he said.