Tag Archives: H1-B visa

Immigration Blog

Are H-1B Visa Holders Really Only Hired for Cheap Labor? Let’s Look at the Law, Common Sense and Some Data

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The argument made by critics of H-1B professionals is straightforward – the only reason companies hire them is because they will work more cheaply. In fact, the argument is central to criticism of H-1Bs and will likely never be conceded by critics, since all assertions about skilled foreign nationals rest on the premise that they work more cheaply.

One can recognize the value of permitting skilled foreign nationals to work in the United States without assuming the entry of every individual results in a storybook ending. America is an immense country with large and small employers and when tens of thousands of new people enter the U.S. labor market for the first time each year it is possible some of these individuals will be taken advantage of or will not recognize their true market value. This may be more likely to occur at some small IT services companies, which have been cited in the press.

However, the law, common sense and available data indicate that, on the whole, H-1B visa holders are paid appropriately based on their age and work experience – even if this does not take place in all circumstances.

Under section 212(n)(1) of the Immigration and Nationality Act, employers must pay H-1B visa holders the higher of the prevailing wage or actual wage paid to “all other individuals with similar experience and qualifications for the specific employment in question.”

To knowingly violate this law risks heavy fines, debarment from using the immigration system for hiring skilled individuals and much bad publicity for the company. That is why one rarely hears of any company with a recognizable name found to have willfully underpaid an individual on an H-1B visa.

Think about what would be necessary for a large or even medium-sized company to (unlawfully) maintain two wage scales – one for foreign nationals, one for U.S. workers. The records would be available and accessible to government auditors on demand – and such audits are frequent these days from U.S. Citizenship and Immigration Services. Moreover, a mid-level employee in the human resources department, perhaps several of them, would have to work with a company’s general counsel office and likely an outside law firm in a conspiracy to underpay foreign nationals. All of this would risk the reputation of the company and the livelihood of the employees involved. And since employers generally pay up to $5,000 to $6,000 in legal and government fees to hire H-1B visa holders, to make this conspiracy worthwhile the amount of underpayment would have to be significant.

After all this is done, can the H-1B professional thwart this conspiracy by simply leaving the employer to work elsewhere? Yes. Do H-1B visa holders change jobs? Yes, it happens quite often, particularly when the economy is good. Immigration attorney and former INS general counsel Bo Cooper recently noted in Congressional testimony that his law firm often processes cases for clients for an H-1B professional to move from one employer to another.

Again, none of this is to deny that some individuals may be shortchanged. It’s more to explore the extent to which one can say that H-1B visa holders in general are underpaid and only hired to save money.

What the Research Shows

In a January 2011 report, the Government Accountability Office (GAO) found H-1B visa holders generally earned the same as U.S. professionals when compared in the same fields and age groups. For example, in the category Systems Analysis, Programming, and Other Computer-Related Occupations, the median salary for an H-1B professional was higher ($60,000 vs. $58,000) than for a U.S. professional in the age group 20-29 and the same ($70,000) in ages 30-39. (See Table 1 below.)

Table 1

Median Reported Salaries of H-1B and U.S. Workers: Systems Analysis, Programming, and Other Computer-Related Occupations

Age Group H-1B U.S. Workers
20-29 $60,000 $58,000
30-39 $70,000 $70,000

Source: H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program, Government Accountability Office, GAO-11-26, January 2011, Table 1.; Salaries are 2008.

In the age group 20-39 for Electrical/Electronics Engineering Occupations, the median salary for an engineer in H-1B status was higher than for a U.S. engineer – $80,000 vs. $75,000. (See Table 2.) For some reason, U.S. workers in the age 40-50 range earn more in this field than their H-1B counterparts, but since relatively few H-1B visa holders enter the U.S. after the age of 40 (less than 10 percent) and only a portion of those enter this field it is difficult to know whether the data are significant in any way.

Table 2

Median Reported Salaries of H-1B and U.S. Workers: Electrical/Electronics Engineering Occupations


Age Group H-1B U.S. Workers
20-39 $80,000 $75,000

Source: H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program, Government Accountability Office, GAO-11-26, January 2011, Table 1.; Salaries are 2008.

Table 3 shows in the age group 20-39, H-1B professionals earned $47,237 compared to $35,000 for U.S. professionals for jobs in college and universities.

Table 3

Median Reported Salaries of H-1B and U.S. Workers: Occupations in College and University Education

Age Group H-1B U.S. Workers
20-39 $47,237 $35,000

Source: H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program, Government Accountability Office, GAO-11-26, January 2011, Table 1.; Salaries are 2008.

What Do These Results Mean?

The data show one needs to compare individuals with similar ages and fields when comparing salaries. Since U.S. professionals tend to be older than H-1B visa holders, U.S. professionals will tend to earn higher salaries. But that doesn’t mean H-1B professionals are only hired because they earn less. Recent U.S.-native-born college graduates earn less money than more experienced native-born professionals in the same field. Does that mean recent native-born college graduates are paid less than more experienced individuals because of wrongdoing by American employers? Of course not. Salaries in America are based on a variety of factors. Individuals with greater experience should be expected to earn higher salaries.

Conclusion

There are reforms that would make the situation better both for workers and legitimate employers. First, strengthen the rules for whistleblowers and make such rules more widely known. Second, increase portability for individuals with pending green card applications so it is easier for a professional to leave a current job if necessary. Third, increase the employment-based green card quota and/or exempt from the quota individuals who received a masters degree or higher from a U.S. university, which would move many people into permanent resident status much more quickly. The green card backlog makes it even more important that Congress refrain from enacting crippling restrictions on H-1B visas, since otherwise it would be difficult for skilled foreign nationals to work in the United States.

The debate over H-1B visas is rarely civil. But hopefully more people will agree that individuals born outside the United States have much more to offer America than, as critics assert, a willingness to work for less money.

Immigration Blog

Little Known Fact: Indians and Others on H-1B Visas Fund Scholarships and Job Training for Americans

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One of the more surprising aspects of America’s debate about high skill immigration is how little attention focuses on the fees paid by employers of H-1B visa holders. Indians generally make up roughly half of H-1B professionals, though it varies from year to year, so the fee issue should be of interest to the Indian American community, particularly since it can play a role in the broader immigration policy debate.

Back in 1998, when Congress debated an increase in the H-1B quota, a compromise was reached to raise the 65,000 annual limit for temporary visas for high skilled professionals. The policy debate over increasing the annual H-1B limit centered largely on whether America and U.S. employers were doing enough to train and educate Americans for high skill jobs in the technology field. Under the legislation passed in 1998, Congress raised the H-1B quota for three years, but also assessed a $500 fee on for-profit employers each time they hired (or renewed the status of) an H-1B professional, with the money going towards scholarships and job training.

In 2000, Congress again temporarily boosted the annual quota on H-1B visas and this time raised the training/scholarship fee to $1,000. After both the fee and H-1B quota increase ended in late 2004, Congress raised the H-1B training/scholarship fee to $1,500 ($750 for smaller companies) and provided 20,000 H-1B visas annually (in addition to the 65,000 quota) for individuals who received a masters degree or higher from a U.S. university. Congress also added a $500 anti-fraud fee on each H-1B and L-1 visa.

Lots of Money Raised, But Little Attention

The money raised from this training/scholarship fee has quietly grown over the years. In fact, its growth has been so quiet that nobody seems to have realized how much money has been spent by employers on these fees and where the money has gone.

A recent study from the National Foundation for American Policy concluded:

In addition to paying skilled foreign-born professionals the same wages as comparable American workers, government data show U.S. employers have been required to pay over $3 billion in mandatory government fees since 2000. The data call into question critics’ assertions H-1B visa holders are hired to save money. Data from U.S. Citizenship and Immigration Services obtained by the National Foundation for American Policy (NFAP) show from FY 2000 to FY 2011, employers have paid over $2.3 billion to the federal government in H-1B scholarship/training fees (generally $1,500 per individual), while a $500 anti-fraud tax/fee on each H-1B and L-1 visa has cost employers more than $700 million.

(A copy of the study from the National Foundation for American, where I serve as executive director, can be found here.)

Where Has the Money Gone?

There is no scandal here. No one claims the money has not gone to its intended purpose. But it is clear this topic has fallen through the cracks. Employers gain no political credit for paying the fee and neither the U.S. Department of Labor nor the National Science Foundation give much publicity to the training or scholarships that the fee funds. Nor do employers gain much credit for their individual efforts to train workers or support education.

According to the most recent annual budget document of the National Science Foundation, due to the H-1B fees assessed on each H-1B professional hired, “Approximately 58,000 students have received scholarships ranging from one to four years.” The scholarships can be as high as $10,000 and are used by U.S. undergraduate and graduate students pursuing math and science degrees.

Examining past budgets finds over 100,000 U.S. workers have received training via the H-1B fees paid by employers. In its annual budget document the Department of Labor describes its H-1B-funded job training initiatives as targeting “skills and competencies in demand by industries for which employers are using H-1B visas to hire foreign workers.”

Table 1

College Scholarships and Job Training Funded by Employers

Through H-1B Fees: FY 2000 to FY 2011

College Scholarships through National Science Foundation 58,000
Job Training through Department of Labor 100,000 +

Source: National Science Foundation, U.S. Department of Labor, National Foundation for American Policy.

Conclusion

Thirty percent of every H-1B fee goes to scholarships provided to U.S. students through the National Science Foundation. Fifty percent of the fee is allotted to training programs. That means every time an H-1B visa holder is hired (or his/her status is renewed), $450 goes to fund a scholarship for a U.S. student and $750 is sent to provide job training for a U.S. worker.

It is good that U.S. workers and students receive training and scholarships. Whether that money, particularly $3 billion worth, should come directly from employers when they hire H-1B professionals is less clear but it has been U.S. government policy for a decade. If these fees are to continue, then they should figure more prominently in the debate over skilled immigration. The fees call into question the assertions made that 1) employers hire H-1B visa holders to save money and 2) companies do not help educate and train students and workers. There is one point everyone should agree on – even in Washington, $3 billion is a lot of money.

Immigration Blog

Green Cards or H1B Visas? That’s the Question Posed at Recent House Hearing

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Should Congress raise the limits on H-1B temporary visas or only for green cards? That was the question at a House immigration subcommittee hearing, held on March 31st. And the question may foreshadow the course of future legislation. Given that typically half of H-1B visa holders were born in India, the issue is of importance to the Indian-American community.

As those who have gone through the immigration process as either an employee or an employer know, the primary difference between an H-1B temporary visa and an employment-based green card is the answer to the query: “How long can you stay?” If you have a green card, you can stay in the United States the rest of your life, so long as you don’t commit a crime that makes you deportable or leave for an extended period of time. And even those exceptions essentially disappear if you become a U.S. citizen.

In contrast, an H-1B visa generally only allows an individual to stay in the U.S. for up to 6 years (renewable after three years), with the only exception being that the immigration service can grant an extension of H-1B status if a green card application is pending.

At the hearing, former Democratic Congressman Bruce Morrison, a Washington, D.C. consultant, represented the IEEE, the electrical engineers professional group. He summarized the difference between green cards and H-1B visas like this: “With ‘green cards’ you do not have to write endless rules regarding portability and prevailing wages. The job market sorts all this out. Employers keep their workers by providing an attractive employment opportunity. Employees keep their working conditions up by having options. That is the better way to attract and keep foreign-born talent without adversely affecting American workers or exploiting the foreign born.”

Morrison added, “In short, there are no problems for which green cards are not a better solution than temporary visas. And there are no problems with the H-1B program itself that a system built on green cards will not help to fix.”

There is considerable debate about the extent to which H-1B temporary visas results in either harm for American workers or exploitation of foreign workers. However, at the hearing, the tone was considerably negative among both members and witnesses toward H-1B visas, while generally positive toward increasing the number of green cards for highly skilled foreign nationals. The only defender of H-1B visas was Bo Cooper, former general counsel of the Immigration and Naturalization Service and now a partner at the law firm of Berry, Appleman and Leiden LLP.

Cooper noted that given the long waits for employment-based green cards due to years of backlogs and the long processing delays even when a number is current, it may never be wholly realistic to have a U.S. immigration policy that relies solely on green cards and eschews H-1B temporary visas. For example, in addition to the need to bring individuals into the country on projects or shorter-term assignments, it can take several months, in some cases years, to complete the highly bureaucratic labor certification process for employment-based green cards with the U.S. Department of Labor.

Cooper testified, “The H-1B is often the only way to get highly skilled foreign professionals on the job quickly, when the economy needs them. The H-1B is often the only way to bring in a person with pinpointed skills to perform a crucial temporary assignment. And it is overwhelmingly the only way to bring bright foreign talent across the bridge to permanent residence, and a permanent role as contributors to the U.S. economy.”

It remains unclear whether Congress will pursue legislation that includes more green cards, more restrictions on H-1B visas, or a combination of the two. The bottom line is that the debate on this issue is not over. It really has just begun.

Immigration Blog

The beginning of Brain Drain 2.0?

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There has been a lot of sound and fury over the introduction, or rather the re-introduction of the proposed Startup Visa  by Sen. Kerry and Lugar in the Senate. Much of the commentary coming out of India (including mine) almost pre-supposes that the legislation will be passed shortly though this is not necessarily the case. In fact, the prior version of the Bill expired in Congress in 2010 since it couldn’t gain enough momentum. Even the most ardent supporters of the legislation only give it a 1% chance of success and predict it will go the way of the previous legislation unless sufficient political momentum is built up through lobbying and community mobilization.  Nonetheless, the introduction of the Bill provides an opportunity to discuss the basic premises underlying the Bill, and their possible impact.

That this Bill is being introduced in a country which has always been highly conflicted about migration and at a time when the economy is in the relative doldrums speaks volumes in itself. Senator  John Kerry, while talking up the Bill, described it as one that was meant to keep America’s leadership in the innovation sphere. In his words, “Global competition for talent and investment grows more intense daily and the United States must step up or be left behind.”  Other countries such as the United Kingdom are also coming out with versions of their own, indicating that these words go beyond mere hyperbole.  The emphasis of immigration policies seems to have shifted from attracting new talent to retaining the foreign talent trained in the United States that is already at hand. It is with this intent that H1B visa holders and foreign students have been included within the ambit of the Visa for the first time.

Going by the numbers, there will be many takers for this Visa if and when it comes into fruition. According to the U.S. Government Accountability Office (GAO), Indians make up 46 per cent of all H1B visa holders, the numbers of which range between 650,000 to 1 million.  Similarly, there are over 100,000 Indian students in the United States. According to a Brookings Institution Study,  between 1994 and 2005, 10,836 doctorates or  11% of all Doctorates awarded in the Science and Engineering streams, went to students  from India.

Whatever discussion there is in India is around the impact of the proposed Bill on the nascent startup ecosystem in India which was gathering steam partly on the back of the reverse migration phenomenon. One blog post even goes as far as to use the title “Startup Visa And The Impact on Indian Startup Ecosystem [BrainDrain 2.0].” Another post wonders why the Indian government doesn’t come out with a Startup Visa of its own to attract Indian and other entrepreneurial talent to india.  However, the bottomline remains that none of this will help unless it becomes easier for businesses to set up shop in India.  Till then, any wannabe entrepreneur, given a chance, will wing his way to Silicon Valley, considering it better to be a participant in the brain drain than have his brain in the drain. If the competition for talent and skills gets any tougher, the Indian government could consider the easy way out and did what it once did in 1964 when it restricted the issuance of passports to medical personnel  “to check their exodus in the national interest.”

Immigration Blog

Notes on the Great Indian Exodus

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The Indian-American Diaspora in the United States has historically evoked mixed feelings in India, running the gamut from envy, to resentment to admiration.  Now, apparently, it is the Diaspora that feels a mixture of envy resentment and admiration every time they come home to a rapidly changing India.  Even as one ponders over this improbable turn of the dice, news items such as this about the rising tide of illegal migration from India into the United States make one wonder whether moffusil India is yet to get the memo…that the green pastures of the West are gradually turning brown. Or, are people willing to sell all their worldly belongings and put life and limb at risk in their efforts to get out because the green pastures back home are still so illusory, and seemingly ephemeral?

Reading these news reports, it’s almost as if people from different states have devised different routes to migration. The above report mentions that most of the migrants are Sikhs, who, once caught, ask for political asylum citing religious persecution back in India. Of course, the very nature of illegal immigration is such that there is no way to verify these claims and they might well be from any country in the South Asian region. This would also explain why India was cited as one of eight countries that had refused to take back illegal immigrants in a Congressional Bill that sought to sanction such countries. Statistics from the DoJ’s Executive Office for Immigration Review show that, from 2006 to 2009,on an average, a thousand Indians have applied for asylum every year. Whilst 450 were granted asylum in 2006,the authorities seemed to have wised up since then, with the number of approvals seeing a precipitous decline.

The other case that hit the headlines was that of the Tri-valley University scam. From all accounts, there were students who enrolled in good faith as well as those who were willingly party to the scam. With 20,000 H1-B visas reserved for those who have a masters or a higher degree from American institutions, one may well see an increase in scams such as this.

For the Indian government, handling student issues is a headache, especially since the missions are under staffed and barely able to cope with normal consular duties. This is even as the media turns the continuing saga into a pot boiler. There is the cruel step-mother in the form of the U.S. government, the over-protective father personified in the Indian government, and then there are the hapless students and their guardians, shouting from the rooftops about their mistreatment by the stepmother and abandonment by the father despite protestations to the contrary.  Even though the media frenzy has resulted in some positive developments, this promises to be a long drawn out affair as the various cases wind their way through the judicial process. One wonders if there is any coordination between the nodal Ministries of External Affairs, Overseas Indian Affairs, and Human Resource Development. In the case of the students returning from Australia after the student related troubles there last year, the Human Resource Development Ministry has now been tasked with recovering the balance of the fees due to the students who have cut short their education in Australia after the change in the Australian government policies.

It goes without saying that the great Indian exodus continues largely because of the abysmal failure of successive governments to provide adequate education and generate employment opportunities to the youth. Since that state of affairs is unlikely to change any time soon, the only advice one can give the government is to create posts in its missions abroad specifically to deal with Indian student affairs!

Endpiece: All this is even as there is by all accounts, a reverse migration of professionals taking place from the United States to India, with some predicting as many as 100,000 returning over the next ten years.  Whilst this can’t be confirmed independently,t he U.S. Census Bureau does show a decline in both permanent residency and citizenship figures from India.

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