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Reality Check | Ephraim Schwartz » Experts offer proof H-1Bs used to hire cheaper labor

April 27, 2007 | Comments: (0)

Experts offer proof H-1Bs used to hire cheaper labor

Human resources professional, software industry analyst cite first-hand experience and government statistics to prove H-1B visas are often used unfairly as a ploy to keep wages low

Two observations were sent to me following my blog entry, Professor Refutes Claims of IT Job Growth.

Both are worth repeating here.

The first is from a human resources professional, named JMS. JMS has seen first hand how H-1B visas are used to cheat workers, both domestic and foreign, out of a fair wage.

The second is the latest study on IT wages from John Miano. Following the JMS comment are Miano's major points an a link to the full study entitled "Low Salaries for Low Skills Wages and Skill Levels for H-1B Computer Workers, 2005".

From JMS:

"As a Human Resources representative, I see first hand how the H-1B visa and employment based green card programs actually work together to drive U.S. white collar workers from their jobs and even from their careers.

To begin with, the H-1B rules clearly state that an H-1B worker can be hired even when a qualified American wants the job, and any American worker can be terminated in favor of an H-1Ber. H-1B is also a dual intent visa, so an employer may sponsor an H-1Ber for an EB green card for legal permanent resident status.

Companies routinely game the labor certification process for green card sponsorship to defraud even well qualified citizen job applicants in favor of low wage foreigners. They use fake job ads and/or bad faith interviews of American citizens to convince the federal government that they tried to find American workers first.

These practices are common in high tech and even in some non-tech industries, but HR people are told to keep quiet about it or lose their jobs.

I would be in favor of a program that issues a small number of
self-sponsoring green cards for truly innovative foreign nationals on a competitive basis. But very few of the H-1Bers or green card applicants that I have seen in 10+ years even come close to being truly innovative.

Most are just practitioners with skills that actually quite common among the domestic workforce. The only thing special about these foreigners is that they will work for substantially less than Americans in order to have a chance to become legal permanent residents. Thus they are used by management to sweeten corporate balance sheets.

Since my work allows me to have access to salary records, I can tell you that the labor cost savings for H-1Bers and green card applicants is substantially greater than the costs of filing the applications with the government.

Citizens should demand that both the H-1B and EB green card programs be abolished in their current form."
Posted by: JMS at April 26, 2007 09:07 PM

Here are the highlights from John Miano's latest salary study.

- According to the applications filed in 2005, it appears that employers may be significantly understating what U.S. computer workers are earning in order to justify paying low wages to H-1B guestworkers in those occupations. In FY 2005, H-1B employer prevailing wage claims averaged $16,000 below the median wage for U.S. computer workers in the same location and occupation.

- 90 percent of H-1B employer prevailing wage claims for programming occupations were below the median U.S. wage for the same occupation and location, with 62 percent of the wage claims in the bottom 25th percentile of U.S. wages.

- While higher than the prevailing wage claims, the actual wages reported for H-1B workers were significantly less than those of their American counterparts. Wages for H-1B workers averaged $12,000 below the median wage for U.S. work-ers in the same occupation and location.

- The reported wages for 84 percent of H-1B workers were below the median U.S. wage; 51 percent were in the bottom 25th percentile of U.S. wages.

- Many employers make prevailing wage claims using wage sources that are not valid under the law. The Department of Labor routinely approves prevailing wage claims based on these invalid sources.

So, as I said in a previous post, Let's Call Gates' Bluff on H-1B visas.

But I'm taking my call for action a step further: I suggest you send this blog to your Congressional representative and ask for an official investigation to get at the truth once and for all.


Posted by Ephraim Schwartz on April 27, 2007 02:25 PM


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The company who is hiring me has defined some "base salary ranges" for many types of positions.
I cannot tell how common this is for the US IT companies, maybe some of your readers do.

I do not know how wide the "range" was in my case but know that I'm going to get 7% more than the upper base salary limit.

Keep moving forward.

Posted by: letsreboot at April 27, 2007 06:20 PM

Read this, it's a very common abuse:

http://sonyvellayani.blogspot.com/2007/04/evil-called-desi-consultant.html

Posted by: publicus at April 27, 2007 11:21 PM

I've worked with H1B visa workers paid only once every 6 months. If they complained, they would be sent home. (They were paid the full amount, just delayed) They were also forced to work overtime without overtime pay.

Posted by: Tman at April 28, 2007 01:58 PM

Discrimination is always O-Kay…
UNLESS SOMEBODY COMPLAINS.

This is the way our society works.
If nobody complains… then nobody has been harmed.

Nothing they write in these H1B Rules overrides the Civil Rights Act of 1964 nor the EEOC Regulations!

This is unconstitutional… hiring by “national origin�... hiring based on "Age"... this is discrimination.

IT’S THE LAW:

Title VII of the Civil Rights Act of 1964
http://www.eeoc.gov/policy/vii.html

UNLAWFUL EMPLOYMENT PRACTICES
SEC. 2000e-2. [Section 703]
a) It shall be an unlawful employment practice for an employer -

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin;

EEOC Regulations
http://www.eeoc.gov/policy/regs/index.html
See 1607 Uniform guidelines on employee selection procedures (1978)
Paragraph B, last sentence…
“However, all users are encouraged to use selection procedures which are valid, especially users operating under merit principles�


If companies choose to use Alternative Selection Procedures (i.e. hire based on something Other than Merit) then it is very likely the company has discriminated against you…
Failure To Hire based on National Origin and Age.
For example: Say a company advertised a job and the job ad includes Something like H1Bs are Welcome.
You apply and the company never contacts you.
You file a complaint at DHR or EEOC.
When investigation has been completed, your request a hard copy of the file.
You find exhibits / evidence that the position “remained open�.
This is discrimination.
EEO is the Law of The Land.

Merit is also basic and fundamental in describing "AGE DISCRIMINATION"...
“The Defendant denied the Plaintiff an Equal Employment Opportunity and
The Plaintiff if over the age of 40 and
The Plaintiff is qualified for the position and
The Plaintiff is more or similary qualified than the other(where other may be anyone) candidates successfully hired and / or
some of the # positions remained open.

MERIT plays a key role... and why it is important to go to college... get a bachelors, get a masters... get a certification(s)... get PhD etc.
Merit plays a key role... regardless of what the H1B rules say.

People need to file complaints… follow the legal process… if you look for discrimination,
You will find it… otherwise, we are forfeiting our Civil Rights.

All the discrimination laws… Age, Race, Gender National Origin are rooted in
Hiring based on the principle of Merit… otherwise, discrimination occurred…
a person has been harmed… they must be made whole.

Colleen

Posted by: Colleen Yuan at April 28, 2007 04:31 PM

JMS:

I should also clarify that the Strategic Plan you refer to is NOT part of the existing H1B Rules (although extremely concerning).

So, let me cite the current H1B Rules and what they say...

20 CFR 655.805 - What violations may the Administrator investigate?
http://www.dol.gov/dol/allcfr/ETA/Title_20/Part_655/20CFR655.805.htm
(I'll cut and paste some of it...)
(7) Displaced a U.S. worker (including displacement of a U.S. worker employed by a secondary employer at the worksite where an H-1B worker is placed), as prohibited by §655.738 (if applicable);
(8) Failed to make the required displacement inquiry of another employer at a worksite where H-1B nonimmigrant(s) were placed, as set forth in §655.738 (if applicable);
(9) Failed to recruit in good faith, as required by §655.739 (if applicable);
(10) Displaced a U.S. worker in the course of committing a willful violation of any of the conditions in paragraphs (a)(2) through (9) of this section, or willful misrepresentation of a material fact on a labor condition application;

(9) Failed to Recruit in Good Faith, as required by §655.739 (if applicable);
20 CFR 655.739 - What is the "recruitment of U.S. workers"
http://www.dol.gov/dol/allcfr/ETA/Title_20/Part_655/20CFR655.739.htm
(again, I will cut and paste only some of it...)
(
1) Legitimate criteria, meaning criteria which are legally cognizable and not violative of any applicable laws (e.g., employer may not use age, sex, race or national origin as selection criteria);.

(j) In addition to conducting good faith recruitment of U.S. workers (as described in paragraphs (a) through (h) of this section),
the employer is required to have offered the job to any U.S. worker who applies and is equally or better qualified for the job than the H-1B nonimmigrant
(see 8 U.S.C. 1182(n)(1)(G)(i)(II));
this requirement is enforced by the Department of Justice
(see 8 U.S.C. 1182(n)(5);
20 CFR 655.705(c)).

I WOULD HIGHLY RECOMMEND READING THESE PARTS OF THE RULES IN THEIR ENTIRETY... CUT AND PASTE THEM INTO YOUR FAVORITE EDIT AND FORMAT IT AND HIGH-LITE THOSE THINGS THAT ARE MOST IMPORTANT TO YOU.

THEN FILE CHARGES WITH YOUR STATE'S DEPARTMENT OF HUMAN RIGHTS OR EEOC OR DOJ-OSC AND PROTECT YOU CIVIL RIGHTS... See Civil Rights Act of 1967 and
EEOC Regulations which includes ADEA and UGESP.
http://www.eeoc.gov/policy/regs/index.html

Posted by: Colleen Yuan at April 28, 2007 04:33 PM

One Final Comment...

The H1B Visa Caps must be lowered.

Please be aware that the H-1B Visa program has adversely affected hundreds of thousands of American Technology Workers who have been repeatedly denied and deprived Equal Employment Opportunities.

Posted by: Colleen Yuan at April 28, 2007 04:46 PM

Reducing the numbers of H-1B, E-3, J, L-1... visas and auctioning them off to the highest bidders a few each month is the most elegant solution for all of the problems.

For H-1Bs that should be 83 permanent visas up for auction each month, with the visa going to the company that offers to pay the highest total compensation to the foreign worker. Once the visa candidate clears his background investigation and it is paid for he would have the property interest in the visa and could change employers at will, but, of course, the bid compensation rate would no longer apply.

Posted by: jgo at April 29, 2007 06:52 PM

The h-1b program is a legal restriction (not a free-market tool) it creates a class of people that are afraid to leave their employer.

In open testimony before congress, a job applicant was not considered for a job, simply because she could not be sponsored on an h-1b visa.

The George Bush Department of labor did nothing about this, even though most americans would consider this a clear (and well-witnessed) case of discrimination against a worker, simply because of their national origin.

Competition for some jobs is not free, nor fair, because the foreign candidates (in several completely unrelated areas) enjoy an artificial legal classification that makes them preferable to U.S. Citizens.

All workers are asking for is to open this market to U.S. citizens, for a fair competition for jobs. Some employers (such as Wipro, Tata...) do not want this to occur. It's not surprising that these same IT Offshoring firms are the biggest users of h-1b visas.

The Indian Commerce Minister himself referred to the h-1b visa, as the "Outsourcing Visa".

It is clear that Indian IT Offshoring firms prefer the h-1b Visa, because they can keep control over their employees, and then bring them home in order to continue the offshoring process.

The H-1b program is the new "Slave-Master's" whip and collar.

Offshoring, errodes the tax base. This errosion of the tax-base is helping to create a huge annual budget deficit. Because spending has been based upon rosier than reality projections of national income growth.

Sadly, Republicans have a history of making tax-cuts and then predicting a balanced budget based upon a rosier-than-reality growth in U.S. Income. This never happens, and so that is why the american people are stuck with an 8 trillion (almost 9 trillion) dollar national debt, that is growing rapidly.

Half of a typical engineers salary goes to taxes. Taxes that defend the world from terrorism, keep our senior citizens healthy, keep up our infrastructure, and keep up our fire and police departments.

And that pay a huge service on the National debt.

We need to treat this country like a business (a little fairness on the part of traitorious business interests could go a long way), and because India and China already treat their economies as a business. We need to realize (fundamentally and deeply) that we need full employment in the U.S. at all times. One default by the U.S. government, and the world will be slung into a recession, possibly a severe depression.

Business leaders need to understand, that high U.S. wages pay service on a huge national debt. If this service is not paid, the resulting default will cause the world-wide depression. Something that is not in the best interest of business.

Hey Japan had a 2% unemployment rate for a decade, what the heck is wrong with everyone working? Inflation in the U.S. is also a function of resources and productivity. Instead of preaching about the value of being unemployed, I think Republicans ought to start think a little more positive.

Namely, conserve resources, increase productivity.

And end h-1b induced slavery.

Posted by: Jake Leone at April 30, 2007 07:47 AM

Will you guys stop complaining? Doesn't anyone see how H-1B sponsoring is similar to outsourcing? Except with H-1B, the companies actually have a chance to get a worker who is willing to leave their culture, family and country behind - all in order to be successful. That same worker will spend his hard-earned money here, in the US, keeping the economy going. If anything, these people should be met with wide open arms, because they are interested in succeeding and working hard.

The right to pursue happiness should be universal, and not only for those who immigrated into the US earlier.

The labour market is very capable at self-regulating, and imposing artificial barriers and creating bureaucracy around hiring decisions only causes things to get more and more complicated, but sooner or later the market forces prevail, as numerous waves of globalization have shown in the past.

Posted by: IB at May 2, 2007 11:40 AM

Some companies (not all of course) definitely abuse workers. Skilled IT workers from India come to the US on H1Bs with the employers promise of sponsoring them for a Green Card after a few years. The cost of this promise for the worker is low wages and lack of mobility for that period.

Many of the companies doing this contract these workers out to American companies at fairly low rates and still take a good cut. I've heard of *skilled* IT workers being contracted out at $50 per hour.

Now, how much does the worker get from that? Perhaps $25 or $30. That amounts to 50K-60K per year maximum which is far below the prevailing rates in most metropolitan centers. But what can the worker do? Complain and they get sent back to their homeland. The only alternative is to stick it out until they can get a Green Card (not guaranteed of course) and then leave. In the mean time, wages are driven down for American workers as the prevailing wage is undercut by these companies.

It's not the H1B program that is at fault here, but the lack of enforcement of wages and the unscrupulousness of a subset of employers.

Posted by: james cross at May 8, 2007 07:15 PM

Immigrants have traditionally been the work horses and the economic backbone of the US society. It can be seen as cheap labor, unfair competition, or slavery. Immigrants have played a victim and a scapegoat role during economic downtime. The label just shifts from one ethnic group to another. If a country may improve its quality of life and economy for its people, who wants to leave the comfortable hometown, say goodbye to loved ones, work so hard, and tolerate insults and attacks in an unfriendly foreign land?

Let us wish that more politicians in many countries can use wisdom, conscience, and kindness to improve the system for their people. By then, H1B visa or green card issues may need to use a different name to continue the game of prejudice and bigotry.

Dr. Trudy Hu,
http://www.DrTrudy.com
---------------------------

Posted by: Trudy Hu at May 24, 2007 08:03 PM

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