Time to Drop the H-1B Visa Program
By Laura Peters, Lead Technical Editor -- Semiconductor International, 5/1/2007
Last week, a couple of days into receiving H-1B visa petitions, the U.S. Citizenship and Immigration Services (USCIS) announced that it met its congressionally mandated cap for fiscal year 2008. Or, as some people might say, highly qualified, cheap labor sure sells quickly. Like many government programs, the H-1B visa program was probably started with the best of intentions: To help high-tech and other key industries ensure access to the “best and the brightest,” allowing them the ability to temporarily hire foreign workers with rare skills to fill positions for a period of up to eight years. But, with insufficient oversight and worker safeguards, the program has, at least in some cases, failed to sufficiently protect workers, and may be doing little to help U.S. companies prosper. Presently, none of the recommendations made by the IEEE to protect foreign and domestic technology workers have been included in the latest legislation before the U.S. Congress; only the proposed raising of the cap was included, which was pushed for by prominent CEOs.
The controversy over the granting, filling and alleged abuse of H-1B visas is fairly well documented. Some experts say that while the original intent of the visas was to help U.S. companies hire workers with unique skills, the effect has been to facilitate the move of highly skilled jobs abroad, such as engineering and computer science. Many employees talk about large-scale layoffs, followed by the hiring of H1-B visa employees. The IEEE has also contended that it has driven down the wages paid for skilled labor because either foreign workers have been hired at lower levels than an equivalently skilled U.S. worker would be paid (13% lower, according to a study by John Miano of the Programmers Guild) or, over the course of the worker's employment, pay raises become unnecessary because they have no choice but to remain with the employer or return to their country of origin where the job did not exist.
Of course, conditions change quickly in high-tech and related industries. In 1998, eight of the 10 companies that benefited from the H-1B visa program were U.S. companies. But a review of the latest information from the U.S. government showed that the majority are now not U.S. companies — in fact, no preference is given to U.S. firms, only U.S. employers.¹ Although the USCIS does not reveal which companies are awarded visas, we can assume that the applicant population reflects the population of granted visas (it is performed on a first come, first served basis); in 2006, seven out of 10 applicants were Indian firms. The top three were Giants Infosys Technologies, Wipro and Cognizant Technology Solutions — all Indian firms that provide services to U.S. companies, including tech support. Critics claim that these Indian companies are using the visas to attract workers from their home countries, making them more effective at outsourcing jobs in India. The defenders claim they are improving the services provided to their customers — many of which are U.S. companies — and creating jobs in the United States at the same time.
The outsourcing issue is just one problem with the visas, as cited by the IEEE.² The bigger issue has to do with paying foreign workers less for the same job, and having little accountability for doing so. “Rather than having to pay current prevailing wages identified using standardized procedures, employers are free to use a variety of sources to establish the validity of the wages they intend to pay.” In addition, legislators in Congress are making decisions regarding the visa caps when there is limited data to go on. According to Tom Abate of the Technology Chronicles, the USCIS has not only refused to reveal the raw data regarding the H-1B program, but it has also neglected to issue the annual reports on the program required by law since 2003.³ The public (and Congress) do not know:
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The actual number of visas issued
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The jobs for which they were issued
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The actual pay vs. what was recorded on the visa application
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Which companies have been granted visas
In blogs and articles published on the Internet, both laid-off and H-1B workers have reported abuses. Many have claimed that the visa program is not about hiring the best and brightest, but the cheapest workers. Raising or lowering the caps would only change the magnitude of the abuses, distrust and anger surrounding this issue. The first reforms of this program were called for in 2004. It's time to stop waiting for this broken system to fix itself, and let traditional global market forces do the work instead.
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Just a little logic will tell you what the H1B program does.
The law of supply and demand applies to labor.
When supply increases or demand decreases the price of a commodity(like labor) goes down. Producers make less, supply decreases and the price reaches a balance. It''s a nice feedback system that works well, It''s called Capitalism and Free trade.
When Government interferes in the Free market that is socialism or Communism.
These Cheap visa indentured servants who lack the rights of Americans to change jobs, join unions, negotiate salaries, and who are baited with the Carrot of U.S. citizenship and the favorable exchange rate. Are just tools to depress wages.
More Visas = greater supply of engineers= lower wages = less Americans entering field = lobbying for more cheap labor H1B''s.....
Less visas = increased wages for engineers = Americans entering field = Less visas needed.
The companies who whine about the lack of engineers are the same ones who glorify free trade with country''s that have lower standards of living, and few if any enforced labor or environmental laws.
Also does anyone know the proportion of male to female visas? I see very few women getting these, shouldn''t it be around %50 or is the program biased?
Thomas E. Stoll - 12/17/2007 1:25:00 PM CST -
There have always been problems with the free markets when it is influenced by government subsidies to corporations like H1B visas. To explain simply what's going on, consider this thought experiment:
There are two sellers, #1 & #2, and many buyers in the same market. The two sellers would like to buy their supply to make their product at a low price. The supply includes all inputs to make the product such as materials, labor, manufacturing processes, etc. Ultimately, these two sellers would like to sell their products at a high price and make a profit. Well one day, seller #1 decided that they would like to make more profit but they can't figure out how to take more market share from seller #2 to increase profits. During a meeting with management, seller #1 decides to lobby the government for more H1B visas to help them be more competitive against seller #2 because their labor rate is too high. The government agrees with seller #1 and decides to increase the H1B visa quota. Like magic, the labor rates fall as predicted because of the increase labor supply, and this makes seller #1 happy. Seller #1 can now buy their supply at a lower cost. This in turn, allows their profits to increase because they are still selling high. If seller #2 doesn't take advantage of the H1B visas or the resulting new labor rates, then their profit will be lower because they are still buying the supply at a higher price than seller #1. Therefore, seller #2 will see a decrease in profits. If seller #2 continues to be unprofitable, then they will go out of business after some period of time. Well seller #2 wants to stay in business, so they take advantage of H1B visas as well. So who wins and who loses? Since the labor rate obviously goes down, then the workers for seller #1 and #2 will take a financial loss.
That's what happens when the government intervenes. The government basically allowed the sellers to profit at the expense of someone else-the workers. This may not be the intention, but it is certainly the result. Now, let's consider what happens without government intervention:
There are two sellers, #1 & #2, and many buyers in the same market. The two sellers would like to buy their supply to make their product at a low price. The supply includes all inputs to make the product such as materials, labor, manufacturing processes, etc. Ultimately, these two sellers would like to sell their products at a high price and make a profit. Well one day, seller #1 decided that they would like to make more profit but they can't figure out how to take more market share from seller #2 to increase profits. During a meeting with management, seller #1 decides to lobby the government for more H1B visas to help them be more competitive against seller #2 because their labor rate is too high. The government disagrees with seller #1 and decides to not to increase the H1B visa quota. Seller #1 is not happy and goes back to management with a different strategy. This time seller #1 decides to improve their manufacturing process to be more efficient and increase productivity. Seller #1 can now buy their supply at a lower cost because they were innovative. In turn, this allows their profits to increase because they are still able to sell high or even slightly lower than before they were innovative. If seller #2 doesn't become more innovative, then his profits will be lower because he is still buying the supply at a higher price than seller #1. Therefore, seller #2 will see a decrease in profits. If seller #2 continues to be unprofitable, then they will go out of business after some period of time. Well seller #2 wants to stay in business, so they become more innovative. So who wins and who loses? Everyone wins because these two sellers are doing more with less. The results are lower supply costs and increased profits that benefit their shareholders and workers. Moreover, the buyers of their products benefit because the price of their products will ultimately decrease.
We're essentially making a choice between capitalism and socialism. Should the government make rules that benefit one at the expense of another?
Brad Ward - 11/2/2007 9:46:00 AM CDT -
I agree completely. The H1B program has never been anything more than an effort to drive down the wages of skilled technologists. The people working under those visas are essentially indentured servants of the companies that employ them.
Steve Rosenblum - 5/23/2007 10:55:00 AM CDT -
I typed a very long comment and the correct code. This is very discouraging.
Tracey Coleman - 5/2/2007 10:50:00 AM CDT
