US firms are just as guilty, and here’s why.

By Norman Matloff
May 3, 2017

Americans were stunned last year by news that Disney Corp. had laid off dozens of its American IT staff, and replaced them with foreign workers on the H-1B work visa. Although a judge ruled the company didn’t violate visa laws in the layoffs, news of similar incidents followed, such as at Southern California Edison and the University of California, San Francisco. In all cases, the foreign workers were “rented” from Indian outsourcing firms such as Infosys.

The issue arose in the Republican primary debates, and reportedly resentment of the abuse was a major contributor to Hillary Clinton’s loss of Florida in the general election in the 2016 US presidential race. A number of reform proposals have been made, in both the legislative and executive branches. Unfortunately, most of them incorrectly presume that abuse of the visa is limited mainly to firms in India, which I will refer to as the Infosyses. In reality, the U.S. mainstream firms are just as culpable, in fact arguably more so.

U.S. employers are deflecting attention from their own abuse of H-1B by promoting the notion that they use the visa responsibly, while the (conveniently non-Western) Infosyses are cheating. Where I come from, we call this scapegoating.

Those critics point out that the Infosyses tend to pay below-average wages. But so do U.S. firms. The wage rules for H-1B and green card sponsorship are broken down into Levels I, I, III and IV, with Level III being the median. For software developers, the most common type of foreign tech worker, the green card data show the following percentages of foreign workers at Levels I or II making below-median wages: Amazon 91%; Facebook 91%; and Google 96%. These firms, putatively in the vanguard of advanced technology and certainly in the vanguard in Capitol Hill lobbying regarding H-1B, are paying almost all of the foreign workers wages below the median for the given region.

So the Infosyses are not the only ones using the visa for cheap labor. Granted, U.S. firms do tend to hire a higher class of workers, often with a U.S. master’s degree, compared to an Indian bachelor’s for the Infosyses. But the mainstream firms are still getting a bargain; Level II corresponds to the 33rd percentile of wages.

All this flies in the face of U.S. firms’ claim that they hire foreign workers to obtain “the best and the brightest,” or to obtain workers with rare skill sets. On the open market, both of these traits would command above-median wages, not the lower levels.

The four-tiered wage floor system also rebuts the familiar refrain from supporters of H-1B that Congress did not intend the visa to be used for cheap labor. On the contrary, when Congress instituted the four-level system in 2004, it replaced the old two-level structure. The new Level I was well below the old Level I, clearly motivated by inexpensive labor.

Moreover, the fact that U.S. firms typically sponsor their H-1Bs for green cards gives them not only cheap labor, but also immobile labor. During the multi-year wait for a green card, the foreign worker is effectively immobile — and thus can’t leave the employer in the lurch by jumping to another firm in the midst of an urgent project. The Infosyses rarely sponsor for green cards, so in this sense, U.S. firms are actually more culpable of abuse.

As H-1B activist Aman Kapoor told The Washington Post last month, “These companies want more control over their employees. An immigrant worker has few rights and is now stuck with the employer for many years.” Immigration attorney David Swaim, who designed Texas Instruments’ immigration policy but now is in private practice, has a Web page in which he openly promotes employers to hire H-1Bs instead of Americans, for the purpose of obtaining immobile workers.

The scapegoaters additionally obfuscate the issue by promoting an incorrect interpretation of the H-1B statute. An “H-1B dependent employer” is one with 15% or more of the workforce consisting of H-1B workers. Such employers are required to recruit U.S. citizens or permanent residents before resorting to hiring a foreign worker. The statute exempts the employer from the recruitment requirement if the annual salary is at least $60,000. But critics of the Infosyses incorrectly cite this provision as meaning that the Infosyses are allowed to pay an H-1B only $60,000. Update this 19-year-old figure, they say, and the H-1B problem is solved. But this is not the case at all. All employers must pay at least Level I, which for tech is well above $60,000.

Recently Infosys, under fire regarding H-1B, announced a plan to hire 10,000 Americans. Well, we’ve heard this from the industry before whenever the H-1B issue heats up. They keep their promise for a while, but soon revert to their old ways.

A simple approach to the problem, suggested originally by the CWA labor union and reportedly under consideration by the Trump administration, would dole out the visas in order of an employee’s rank based on salary. This solution would be market-based and easy to implement, and would go a long way to cleaning up this mess. But it would have to be applied to all H-1B employers, not just the Infosyses.

Norman Matloff is a professor of computer science at the University of California, Davis.

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