Abuse of the H-1B Program Is Widespread
H-1B should return to goal of recruiting the best and brightest from around the globe
December 28, 2011
The H-1B work visa program should be reduced in scope, not expanded, as the program is fundamentally about cheap labor. Gaping loopholes enable employers to hire tech workers at below-market wages, in full compliance with the law. This has been confirmed repeatedly in statistical studies done in government and academia.
Even Rep. Zoe Lofgren, Congress's most strident advocate of H-1B, admitted that the legally required wages for H-1Bs are well short of market levels. She even said, "We can't have people coming in and undercutting the American educated workforce." Unfortunately, the legislation she has introduced doesn't solve that problem, and unfairly scapegoats the Indian and Indian-American firms. Actually abuse of the program is widespread, including by the mainstream U.S. firms that hire foreign students from American universities. Think of the tax code, which also includes gaping loopholes that are exploited by all the big companies.
Even Vivek Wadhwa, a former tech CEO who advocates liberalization of employment-based green cards, has pointed out, "I know from my experience as a tech CEO that H-1Bs are cheaper than domestic hires. Technically, these workers are supposed to be paid a 'prevailing wage,' but this mechanism is riddled with loopholes."
The industry lobbyists claim H-1B is needed to remedy tech labor shortages, but studies by the Department of Commerce, a university science consortium known as the Computing Research Association, the Urban Institute, the National Research Council all failed to confirm the industry claim. Starting salaries for new computer science graduates are up only 3 percent from last year, according to the Natonal Association of Colleges and Employers, and the San Jose Mercury News found that wages for experienced workers in Silicon Valley are also up by only 3 percent. These small increases are certainly not indicative of a shortage.
Worse, Georgetown University researcher Tony Carnevale found that engineering has the slowest wage growth rate of any major occupation group. Not only does that refute the industry shortage claims, but also it shows the impact of the large foreign influx in terms of suppressing wage growth. The congressionally commissioned NRC study came to a similar conclusion.
Former Fed chief Alan Greenspan has actually lauded the wage-growth suppressing effect of H-1B. Even more outrageously, a 1989 National Science Foundation report called for bringing in large numbers of foreign students with the explicit goal of suppressing Ph.D. salary growth. The NSF equally explicitly forecast that the resulting stagnant salaries would drive U.S. citizen and permanent resident students away from doctoral study, which is exactly what has occurred.
Much has been written about the number of businesses started by immigrant engineers. That is factual, but it should not surprise anyone—given the large number of immigrant engineers, there should be a lot of immigrant-founded businesses. Note also that many Indian-immigrant businesses are engaged in offshoring work out of the U.S., and that Berkeley's AnnaLee Saxenian found that 29 percent of Chinese-immigrant businesses are merely "PC wholesalers"; these businesses don't innovate or otherwise enhance U.S. tech prowess.
The H-1B program should be returned to the goal Congress had back when it created the predecessor H-1 visa—bringing in "the best and the brightest" from around the globe. But only a small fraction of H-1B workrs are in that league. On the contrary, Rutgers University professor Jenny Hunt's study found that immigrant tech workers are actually significantly less likely to innovate (via patents) than are comparable Americans. My own research has shown that the immigrant engineers are less likely to be doing R&D work than are their American peers.