Dean's World

In a recent thread, there was some discussion about my calling Bill Gates a weasel for pushing for the complete removal of the H-1b cap. For those of you who aren't familiar with this lovely little piece of Congressional legislation, the H-1b was instituted in 1990 to allow 65,000 skilled foreigners a year entry to work in the USA. The intent of the law was to provide American firms with the skills that couldn't be found at home they needed to compete in the world economy. Within a decade the number had tripled to 195,000 new visas every year. Through loopholes, even more visas were granted so that by 2002 the H-1b population was estimated to be 710,000.

The H-1b quickly became a hot vehicle for entry to the USA. Foreigners could apply for the H-1b and work in the country while their residency applications were processed - 3 to 7 years on average. Once granted, the H-1b was renewable and gave the foreigner plenty of time to become a United States resident and eventually a citizen if he or she so chose. These visa renewals were automatic and did not apply to the H-1b cap.

But there was a catch: The H-1b needed a firm to sponsor his or her application, and any change in sponsorship resulted in the foreign worker having to resubmit the Green Card application. So, let's say you were in the fourth year of your residency submission, and you lost your job. Boom! To the back of the line you go. The problem was worse for the unlucky few who lost their jobs just before the Green Card was completed. They often would have to go back to their home countries before their resubmittal was granted since the H-1b could only be renewed once.

The prospect of working in America while waiting for a Green Card was quite attractive on its own. H-1b visa holders would be willing to work at a substantially lower wage than similarly skilled Americans. After all, the prospect of citizenship was a benefit that came from the government which cost the sponsoring firm nothing. However the "Sponsorship Trap" lead to even worse abuse, some of which I witnessed first hand.

"Biju" was an H-1b from southern India who worked as a contractor on another team at the division of a bank. Three years into his stay, the bank decided to institute 15% pay cuts across the board to all its contractors. Many of the staffing firms ate the cut, or most of it and passed along smaller cuts to their employees. Biju's passed the full cut to him directly.

Worse, they decided that they would no longer cover their half of his FICA. They would continue to pay his 6% for him, but they would cut that 6% from his pay. Biju was extremely upset - so I contacted an immigration attorney on Biju's behalf. It turns out that at the time - 2002 - Biju's only choice would have been to quit and resubmit his Green Card application for him and his wife. Biju took the 21% cut in pay rather than lose his place in line for a Green Card.

Abuse of H-1b workers is so common that there are bulletin boards where people complain about their treatment.

The H-1b program is supposed to prevent such abuses, but like any law it's only as good as its enforcement - and the H-1b is rarely enforced. The Indian Media covers H-1b and offshoring issues extensively, much better than the American Media. While American politicians and H-1b supporters may believe that H-1bs earn comparable wages, it's an open secret in India that they do not. In an article titled "Why USA Inc Loves H-1b Pros", The Economic Times (of India) writes:

What makes them so attractive? According to a September 2003 survey conducted by the US General Accountant’s Office (GAO), it’s a killer combination of skills of pros from countries like India and their willingness to work on salaries lower than those of Americans with similar qualifications and experience.

That US employers continue to abuse the H1-B by not paying as much as they should is now documented by the GAO. The number of cases under investigation for violation of the condition that H1-B salaries must not be less than those paid to American citizens has doubled from 2000 to 2002. Most of these cases have to do with companies that brought H1-B visa-holders over to the US but did not pay them till jobs were available.

Just how much money have H1-B pros been deprived of by way of unpaid back wages? As much as $1.6 million in 2000, going up to $4.2 million in 2002. With that kind of money being at stake, it wouldn’t be surprising if American recruiters paid lip service to the obligation of looking for people at home before turning to H1-B pros.

No wonder American labour organisations allege that H1-B pros are getting their jobs at the expense of laid-off American workers? Of course, the laws insist that no American citizen should lose their job in a company that has hired a H1-B worker in the past 90 days. They also eliminate the possibility of generating salary savings by insisting on equal wages. But that’s in theory.

I was not the only one to take Bill Gates to task for his comment, the CEO of Information Builder Gerald Cohen did in Computerworld:

Q: A lot of CEOs of companies like yours are saying they just can't find the people, so they're lobbying Congress to get rid of the H-1B visa cap.

A: That's bulls---. A couple years ago that was true, and that's when the cap was raised. You know who wants [to get rid of the cap]? The Indian companies. The way the Indian companies work is they have to have a certain number of people here, and a lot more people back there — so they're the ones who want to get all these people in. And they don't even pay them American wages — they just pay them as cheaply as they can.

Cohen also points to another fact: the connection between offshoring and the non-immigrant visas.

The non-immigrant visas provide an unfair advantage to foreign offshoring firms at the expense of domestic outsourcing firms.

Offshoring firms like to use H-1bs and L-1s (an even worse non-immigrant visa) to anchor the offshoring "pipeline" in the US. American firms that cannot use these visas do not have the low-paid labor to "anchor" their outsourcing pipelines must pay higher wages for Americans to do this job, which results in higher bids. This is yet another way Congress is indirectly subsidizing the sending of jobs abroad. The ITPAA has intervened in two cases on behalf of American outsourcing firms facing such unfair subsidies.

Offshoring is arguably a natural process (evolution is a natural process; Human economic processes are "cultural" - not natural) but the H-1b is just one more way that Congress takes a page from the Soviet Union and manipulates the markets. As such I believe that it should be abolished completely and replaced by either of these options:

1. Green Cards to anyone who comes to work in America. These should be processed timely - in 3-6 months. Just why does it take 3-7 years anyway?
2. Forcing Green Card applicants to live abroad during their application processing.

If business has a right to cheap labor, then we should repeal all labor laws including the minimum wage and EEOC. Our society places limits on business to operate within its norms, and paying people less while they wait for their residency permit is beyond those norms.

For a detailed analysis of the H-1b view this PDF from Federation for American Immigration Reform (FAIR). Also, for further reading visit Professor Norm Matloff's (UC-Davis) webpage here Also don't forget to stop by the ITPAA and browse our 1,600 articles and posts about issues relevant to the IT community.