Think companies using H-1B visas are giving U.S. workers a raw deal? You’re right.

Just in time for the latest immigration reform battle and fights over the start-up visa and increasing the number of  available H-1B visas comes a disturbing bit of news from Ron Hira, writing for the Economic Policy Institute.

Hira points out that the top 10 users of H-1B visas, firms like Tata, Infoysys and Wipro, are also big into off-shoring U.S. work. (The full list of companies is here.) He says the often-repeated claim that companies use H-1Bs as a path to permanent citizenship for immigrants is a sham.

 “In 2012, the 10 employers receiving the largest number of H-1B visas were all in the business of outsourcing and offshoring high-tech American jobs,” Hira wrote on EPI’s Working Economics blog. “Many of the jobs that went to H-1B workers should have instead gone to U.S. workers, but employers are not required to recruit them before applying for an H-1B, and can even replace their U.S. workers with H-1Bs. The top 10 H-1B employers were granted an astonishing 40,170 visas; nearly half the total annual quota.”

He told me by phone that companies like to say they use H-1B visas, visas issued to companies who say they can’t find qualified U.S. workers, to build a bridge to permanent residency. But the actions of the top 10 tell a different story, Hira says.

No company on the top 10 list has applied for permanent residency for more than 16 percent of their H-1B workers, Hira’s study shows, and figures in the low single digits is more common.

The real reason H-1Bs are attractive to big business is because companies can pay imported workers less than American workers, based on a federal law that sets the base pay for H-1Bs unreasonably low, Hira says. Although, the law itself seems to require that employers pay H-1Bs the same wage they pay their American workers.

“In reality the whole goal for these companies is to offshore as much as possible,” Hira told me. “It’s a training ground. These workers come in, they learn the job and they take the job back home, usually to India.”

I’ve often felt that the anti-H-1B crowd was a bit hysterical, but Hira’s work is hard to ignore. My guess is this sort of data is going to make things tougher for those backing a very sensible — and potentially beneficial — startup visa initiative in Congress now.

The visa would allow immigrants who raise $100,000 or more to start a business and who meet modest hiring targets to stay and work in the United States.

There is no question that immigrants are vital to Silicon Valley’s start-up culture. One oft-cited piece of research by Vivek Wadhwa and AnnaLee Saxenian concluded that more than half of the start-ups in Silicon Valley were started by immigrants.

And Hira acknowledges that immigrants are key to our innovation economy.

“I’m all for more skilled immigrants,” he told me, “but we’ve got to do it in a way that doesn’t undercut and undermine American workers and also our future ability to innovate.”

It would be a shame if these latest figures on H-1Bs drown out the voices of those making sense on the startup visa. But I can’t really see it going any other way.

(Photo: Protesters call for immigration slowdown at U.S. Rep. Zoe Lofgren’s office in 2000 — Mercury News)


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  • Mike,

    “Startup Visa” Bill is not “Sensible”:

    1) It staples greencards to foreign graduates that have no work experience, without regard to GPA or “exceptionalness.” Microsoft et al is not seeking new grads – the vast majority of their unfilled positions require 3-5 years experience in several specific technologies.

    2) The Entreprenur aspect does not require that ventures by “high tech” – it seems to allow “landscaping” and “dog grooming” ventures which complete directly against Americans and add nothing to U.S. competitiveness. It does not require that ANY Americans be hired. And of those jobs created can be minimum wage “stuffing envelope” or assembly jobs.

    3) There Entrepreneur venture proposes and success tracking are not adequately transparent to taxpayers.

  • Mike,

    Thank you for keeping open mind about the merits of H-1b opponents.

    The BLS prevailing wage is a SHAM for at least two reasons:

    1) most H-1b are designated as “level 1 – entry level” that sets prevailing wage at 17th percentile – or roughly $20,000 below what average Americans are paid.

    2) the level can be adjusted by reclassifying job titles, e.g. a “programmer” rather than “software engineer.”

    DOL is approving H-1b for as low as $5 per hour for “kitchen help” in Saipan, and for many positions under $15 per hour throughout the USA. These are not “best and brighest” wages.

    FACT: Only about 15% of H-1b are for wages over $100,000 – and those are disproportionately managers and legal staff rather than STEM workers.

    PROGRAMMERS GUILD advocates a simple fix to the H-1b program: Set the floor wage at $100,000. The reserves all 85,000 for the highly-skilled and highly paid positions that Microsoft and others claim to need, and eliminates using H-1b to legally displace average-skilled Americans.

    Please see our PR and “yellow box” facts at top of our website PROGRAMMERSGUILD DOT ORG

  • CS PhD

    For years the tech industry has denied and lied, claiming H-1b is not used for outsourcing. The truth is coming out my friend. Companies don’t even sponsor these H-1bs for a green card in most cases, so it’s not even about immigration. It’s a corporate entitlement program designed to lower wages and outsource jobs. Call us “hysterical” if you want, but we were right all along.


    • Jsoh

      Apple’s engineer staff is almost exclusively imported Indians who are paid a lot less and are sent right back after their stint is up.

  • Mike,

    H-1b is legally abused in many ways.

    It has created the absurd immigration loophole where citizens of India, while working for an Indian company, can sponsor each other for greencards.

    Does it make sense that we have turned over control of who gets greencards to foreign corporations and people who are not even U.s. citizens themselves?

    The unsensible “Startup Visa” Bill will make this worse by loosening the per-country green card quotas.

    Many H-1b are sponsored to residential addresses. What top research projects are occuring out in the three bedroom house in the burbs?

    The “employer” (aka “good buddy”) can file an LCA claiming they will pay a fair wage. But any sweetheart deal can be occurring to kick-back wages or not get paid at all.

    There is no transparency or W2 reporting to stem this. No pending billl fixes any of these known problems.

    Fix the problems FIRST, such as the wage loopholes, and there will be no need to raise the caps above the current 85,000.

    • Being an Indian and living in India, it pains to hear that Indians and Chinese have over time abused US immigration laws. More so, the US government had for a long time turned a blind eye. America has been a land of opportunities for the most talented, and the social IQ of Americans has been far higher than the rest of the world. Importing innumerable low skilled workers is definitely going to dilute the American Society standards, what it is known for.

      Having said that, I think the US needs to fine tune its startup visa act so that it truly filters the best people from around the world. Simply stamping green cards to STEM graduates doesn’t make sense – there are so many of them who go to US for higher studies by paying hundreds of thousands of dollars. Does it make them “brighter” , I would say No. Nevertheless, it looks like a good starting point and requires more work to filter the best. It certainly shouldn’t have enough loopholes so that herds simply flock to US and get green cards stamped.

      • Deepak,

        You have a good grasp of the issues – much better than 90% of U.S. Congressmen. Perhaps what we need is an H-1b program for people like you to run for U.S. Congress? (I’m only partially joking.)

        I agree there should be a means for both exceptional foreign graduates and foreigners with bonafide entrepreneural proposal and funding to launch it in the USA. But website ventures like “a specialized social media or dating or business consumer matching” should generally be rejected. The market is flooded with these already. It’s very hard to turn a profit on the web. There needs to be some sort of business behind the website. And as I stated, as currently drafted, a dog grooming business or massage parlor could qualify for the “startup visa.”

        The language is flawed: It does not provide public transparency to the ventures, does not mandate periodic checkpoints, does not require the jobs created to pay more than minimum wage, and does not require any Americans to be hired. It will degenerate into an immigration loophole with all sorts of bogus venture sponsorship assistance and kickbacks.

  • Kapil

    Mr. Ron Hira,
    I am on H-1B but I am not going to apply for Green Card. You said only 16 percent applied for permanent residency. I feel this number is huge considering the number of years we have to wait for your residency application to approve. You are basically stuck with one employer.
    Will you enroll for a PhD which takes 10 years and work with a professor that takes advantage of you since your PhD is in his hands?? No right. I am sure you won’t.
    I don’t want to wait for 10 years to get a permanent residency.
    Understand the facts.

  • Kapil,

    You raise good points that have no easy solution.

    I presume that even on H-1b – without GC sponsorship pending – it’s much harder to leave an employer for a “better” job. (Better could be more pay, or it could mean working on new development rather than maintaining old PowerBuilder and ASP classic apps.) What I’ve witnessed is employers using H-1b for these “less desirable” jobs – not because they require more skill, but because if you assign an American these tasks they will seek another job. This is “misuse” of H-1b – the free market should cause wages for less desirable positions to rise. H-1b perverts the free market and causes shortages.

    The two extreme solutions to labor market shortage are:

    1) Let anyone who wants to come to America do so

    2) Be very restrictive – admit foreign labor only after a labor market test and for jobs paying above a certain wage, such as $100k – and don’t allow the person to subsequently get a GC and then compete with and displace Americans from other jobs.

    WSJ and some others might advocate #1. I oppose it – people would continue migrate until our wages and living standard dropped as low as the place they are coming from. How many Chinese would gladly come to USA and work at fast food for $4 per hour? It’s better than $5 per day in dangerous factory.

    I understand you cited PhD as an analogy for indentured status. But PhD is interesting. How critical are PhD to the U.S. economy? What jobs require them, and why? What do these jobs pay? (I recall that my best and most dynamic professors did not have PhD – instead they had 20 years in the real world.)

    IMHO “masters degree” has no value in STEM: In computer science it’s similar coursework to get BS or MS. I have not witnessed the programmers that continued to get MS or MBA have any better software development skills. Other than PERM ads where the H-1b being sponsored happens to have an MS degree, seeing MS as a job requirement is very rare.

    If I could make the rules I would break the relation between temporary employment visas and greencards. As I posted above it’s absurd we are allowing foreigners to determine who can become a U.S. citizen. That should be a different process – similar to getting admitted to the best universities: Take the SAT, show a distinguished background. It’s absurd that hacking on an old PowerBuilder app is sufficient to earn U.S. citizenship.

    If I got a chance to work in Switzerland, I would not expect that work experience would lead to me becoming a Swiss citizen. Why do temp workers in USA have a different expectation?

  • SVEngineer

    “I’ve often felt that the anti-H-1B crowd was a bit hysterical, but Hira’s work is hard to ignore.”

    Of course the anti-H-1B crowd is right. It is the pro-H-1B that refuses to the truth that is just in front of their eyes. And the reason the pro H-1B group doesn’t see it because they have been bought by the cheap labor lobbyists. As Dr. Paul Krugman said in one of his opinion pieces on the New York Times, people don’t see the truth if they are getting paid not seeing the truth.