Why H-1B Visas are Bad for America (Big Business Scam Alert!)

FrontPage Magazine ^ | Robert Locke

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Robert Locke

Robert Reich: Consistent Liberal

Why H-1B Visas are Bad for America By Robert Locke FrontPageMagazine.com | January 24, 2001 email this article to a friend

AMERICA'S GENEROUS IMMIGRATION LAWS are increasingly being corrupted and taken advantage of by self-aware economic interests. Take, for example, the H1-B visa program for technical workers, which was recently expanded to 200,000 people per year by the Clinton administration. H1-B allows corporations to bring in cheap foreign technical labor in the computer industry and elsewhere. This is shrinking opportunities for American citizens, driving down their wages, and stunting the production of homegrown talent.

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Industry likes to tell the public that they need to bring in foreign workers because of a so-called "labor shortage." But the very concept of a labor shortage is a sophistry that has no place in free-market economics. Economics teaches that in a free market there are never shortages of anything, only things whose price, as set by supply and demand, is higher than some person wishes to pay. There is not a technical job in America that could not be filled with an American citizen if the employer were willing to pay the right price. The fact that the company in question "cannot fill" the position is merely a function of their desire to set an arbitrary price that they feel like paying. This is not the way of the market, and frankly it is a form of corporate decadence for them to go running to the government for a subsidy in the form of cheap foreign workers.

The emerging pattern in American society has a sinister resemblance to the decadent sheikdoms of the Gulf, which can't pump their own oil without massive foreign labor: Americans handle the financial and marketing side of things while we let foreigners do the engineering and the hard stuff. The national-security implications alone are chilling.

Furthermore, because we have this supply of foreign labor, we let our own technical education system slide, and we never liked math that much in the first place. Frankly, until American industry is served notice that it will have to supply its future technical needs from our own people, it has absolutely no incentive to care. Former Labor Secretary Robert Reich stated "The H-1b program "has become a major means of circumventing the costs of paying skilled American workers of the costs of training them." (Those who blanche politically at taking the word of a liberal like Reich should in fact rejoice at the sight of the opposition being hoisted on its own petard by one of its very few intellectually consistent members.)

H1-B helps promote age and other forms of discrimination by giving companies a ready supply of foreigners who don't have any uppity American ideas about their rights and who can be silenced by threatening to send them back where they came from. Because even companies that don't employ H1-B workers can threaten to do so, H1-B has a chilling effect on industry as a whole.

Though the H-1b has been sold as providing companies access to the "world's best and brightest", reality differs from the sales pitch. The law states the alien must have "a bachelors degree or equivalent". Hardly indicative of the world's best and brightest. Experience shows that the people imported are, in general terms, no better or no worse than domestic workers. Nobody objects to bringing in Nobel-calibre scientists and the like, but this is a tiny number of people, not 200,000 per year.

There are entire companies in America now where native-born Americans are not welcome. Some of them are even growing fat on defense contracts. H-1b visa holders are often "benched" when imported by a contract engineering house or "body shop". They will be brought in and benched until the contract firm has a job opening they can fill. Often they are not paid until they actually go to work at a client firm of the contract house. They may be provided a place to stay, and a small amount of spending money until they get on the payroll.

The final idiocy of the recent raising of the H1-B quota to 200,000 per year is that it was done just as we are almost certainly overdue for a recession. People tend to assume that all technology workers are rich dot-com entrepreneurs; in fact, 95% of them are ordinary middle-class Americans.

The Labor Department has nominal regulations on the books to protect American citizens, but these have so many loopholes as to be ineffective. For example, although Labor Dept. regulations require companies to pay at least 95% of the prevailing wage, companies are free to use biased data in establishing what this wage is. The survey data is always suspect because it is provided by the very companies who will benefit from the results. They spin the data by grouping employees into inappropriate categories, by selective reporting, and by outright dishonesty. Companies who do not use foreign labor are reluctant to answer the survey as it entails some cost and time which could be spent on more productive corporate endeavors. Furthermore, because H1-B workers depress wages, their prevailing wage tends to become a self-fulfilling prophecy. No one ever checks the results of the survey.

Industry likes to claim that it needs H1-B workers "to be competitive in the global economy." However, they can't get even Clinton's Labor Department, which has overseen this massive giveaway program, to buy their line. Department of Labor Office of Inspector General Final Report. Report Number: 06-96-002-03-321 Titled "The Department of Labor's Foreign Labor Certification Programs: The System Is Broken and Needs To Be Fixed" dated 1/24/97, states "In our opinion, not all types of jobs being filled by H-1B aliens necessarily represent jobs that would enhance U.S. employers' abilities to compete in a global economy."

Congress has repeatedly agreed, year by year, to expand the number of H1-B visas, always in exchange for provisions designed to protect American citizens. But this congressional intent is being frustrated.

Charles C. Masten, Inspector General, H-1B Labor Condition Application (LCA) program made the following comments. "Audit findings in a recently issued OIG report found that both programs fail to adequately protect American jobs or wages, as intended by Congress.  The audit discovered that the Department's role amounts to little more than a paper shuffle for the PLC program and a "rubber stamping" for LCA program applications….The OIG also found that the labor market test, which is designed to ensure that there are no qualified U.S. workers available to fill the positions for which the application has been filed, is perfunctory at best… Despite annual expenditures of approximately $50 million on DOL's foreign labor certification programs, the OIG found that DOL's role in the PLC and LCA programs did little to add value to the process of protecting U.S. workers' jobs and wages."

America's high-paying technical jobs are one of its most precious assets and they should not be squandered on foreigners.  America has been the most competitive nation on earth for years without importing mass foreign technical labor.  We are sending a message to our young people not to take technical careers, where they will be forced to compete against cheap foreigners, and making ourselves dependent on people with no intrinsic loyalty to us.  The entire H1-B program should be abolished, and the few authentic geniuses out there should be brought in under other, existing programs."

 

You can e-mail Robert Locke at lockerobert@hotmail.com.

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[blueriver]

The whole premise behind the H-1B visa policy is that there are supposedly not enough qualified engineers to satisfy corporate America's requirements. This may have been true two years ago. As we all know this not true any longer. When companies downsized in 2001 they laid off American's and kept H-1B visa holders. Most engineers that were laid off can not find jobs. Companies are still able to hire foreigners because the H-1B policy has not changed.

[Reaganwuzthebest]

Does India have the same kind of minimum wage laws we have? Do company employees get health benefits? Do they have the same kind of wage scale we have?

Even assuming they do, and I doubt it, how do you explain the grinding poverty? You say it's because they're protectionist, but during our history as a nation until recently, mostly since NAFTA and the end of the cold war, so were we. Theodore Roosevelt campaigned on it.

Maybe part of India's problem is overpopulation. They have upwards of 700 million people. If we keep listening to the voices of the WSJ, we're going to have that many here soon, possibly by the end of the century. If we had eyes, we would see the danger of that prospect by looking at countries like India and China. Not everyone is employable, and those that aren't have to be taken care of by the state.

BTW, I didn't mean to imply Indian people aren't smart or resourceful, only that bad policies do have consequences.

[koba]

Overpopulation, corrruption, and the socialist system are some of India's problems. When you have a country of 1.2 billion people (or so) and it is a little more than half the size of the U.S. you're going to have a lot of poverty. In a socialist system, you don't really compete to produce the best products. Many of the jobs are government jobs and effectively guaranteed for life with a lock-step system in place that rewards seniority, not competence or excellence. The deadwood get promoted along with everyone else. There are a lot of smart people in India and many of them get out of there. The socialist system there will be very difficult to change. Private industry is getting bigger, but many Indians want to be in system where they're guarenteed lifetime employment. In 1948, when England give them independence, India had two choices: follow English socialism or American capitalism. India went with socialism.

[Carry_Okie]

Programming is going overseas. Project managers, systems analysts, trainers, will always be staffed here.

That doesn't follow. Without the coding experience or having led a team of such, how does one become a project manager? You know damn well what this means to our kids. This model follows that of the assemmbly worker, the maintenance tech, the machinist, the manufacturing engineer, the CAD designer, and now the coder. Even a large number of CEOs are from overseas.

Hollowing out is real. You are papering over your profit on selling out domestic producers.

[Reaganwuzthebest]

...a country of 1.2 billion people

It has more people than I thought.

Even in our Capitalist system, we have enormous poverty. Some would say do away with the welfare state, and while it sounds good it's never going to happen. Politicians barely have the spine to cut back on the increases. I think at the very least though, we should not give illegal aliens anything but a one-way ticket back home. What would be even worse is if WE were a country of a billion. There's no way we could sustain a population of that size and keep a welfare state.

I'm not against immigration, just that right now it's lacking in common sense. You don't import people while Americans are being laid off, and you DON'T let millions of illegals pour in here with no enforcement.

[Poohbah]

Does India have the same kind of minimum wage laws we have?

No. We insist on shooting ourselves in the foot--the minimum wage defines not only the minimum price of labor, it defines the minimum JOB that can be done--specifically, the anticipated return on hiring someone for the job must exceed the artificially inflated price of that person's labor.

Do company employees get health benefits?

Not automatically. It IS worth noting, however, that when a party other than the end consumer of health care (the patient) pays for all bills, the price of health care climbs at a rate far exceeding inflation. Hmm. Interesting. Ya think there MIGHT be some sort of cause and effect there? Or am I just one of those crazy Friedmanite economists?

Do they have the same kind of wage scale we have?

No. And that is why so many companies are looking at moving their coding work offshore--because the return on investment is higher.

Even assuming they do, and I doubt it, how do you explain the grinding poverty?

They started out with less per capita wealth, a lower level of educational achievement, and then compounded their problems by making some amazingly stupid decisions from 1947 to about 1975 or so, and those decisions are only NOW getting reversed. One of the policies they engaged in was to frequently seize foreign-owned assets. The government then sold these assets off at sweetheart prices to folks with better political connections than business sense, the assets would be driven straight into the dirt, and other foreigners would quickly repatriate their capital OUT of India.

You say it's because they're protectionist, but during our history as a nation until recently, mostly since NAFTA and the end of the cold war, so were we. Theodore Roosevelt campaigned on it.

Actually, we began moving to a free trade environment during and after World War II. It makes some sense to temporarily protect immature American industries, but as a long-term policy, it acts as a disincentive to necessary reinvestment and modernization, and we will wind up with, for example, the 1970 & 1980s-era American auto industry. Are you REALLY that desperate for the quality, reliability, and quality of the AMC Pacer or the Ford Pinto?

Maybe part of India's problem is overpopulation.

Go get a book by P.J. O'Rourke called All the Trouble in the World, and read the chapter on "Overpopulation: Too Much of You, Not Enough of Me." That should disabuse you of that notion. Heck, read the whole damn book.

They have upwards of 700 million people. If we keep listening to the voices of the WSJ, we're going to have that many here soon, possibly by the end of the century.

Actually, they have close to 900 million. We should be looking covetuously at Indian markets instead of China--it's almost as big, it is a stable parliamentary democracy, and that nation HAS learned from its bone-headed economic decisions and are embracing capitalism, unlike China.

If we had eyes, we would see the danger of that prospect by looking at countries like India and China. Not everyone is employable, and those that aren't have to be taken care of by the state.

"Work or starve" does a LOT to correct the problem of people not being employable. The unemployable STAY unemployable when the state subsidizes that condition. Gee, maybe there's a lesson in there, huh?

BTW, I didn't mean to imply Indian people aren't smart or resourceful, only that bad policies do have consequences.

And they are suffering those consequences, and learning from them. They are correcting their policies slowly, painfully, and messily. They exemplify Churchill's dictum that liberal democracy (and he meant liberal in the classical sense) is the worst form of governance in the world, with the exception of everything else.

America has worked overtime to get rid of Adam Smith's "invisible hand." Well, that hand is now giving us the invisible middle finger.

[Poohbah]

Even in our Capitalist system, we have enormous poverty. Some would say do away with the welfare state, and while it sounds good it's never going to happen.

Then the point is academic, even if you completely closed immigration--our home-grown leeches will sooner or later consume more than the entire American economy COULD produce, no matter how much it was protected, and then we would have two options: demand tribute from every other nation on Earth, and eventually start a global war, or experience an economic collapse.

The welfare state is the root of our problems. It takes from the productive and rewards the unproductive. This has two pernicious effects: it keeps the unproductive in that state because it doesn't give them any incentive to become productive, and it lowers the productivity of those who ARE productive, because they receive less reward than they otherwise would receive for being more productive.

[UnBlinkingEye]

If there are hundreds of thousands of Americans with the proper skills and who are fluent in the computer languages that Microsoft and other H-1B hirers are looking for why isnt there rampant unemployment in the computer programming field?

There is rampant unemployment in the computer programming field. Hundreds of thousands of jobs have been lost, yet the H-1B program continues. Note to our elected officials, we know who you are and will be glad to return the favor.

[UnBlinkingEye]

India had two choices: follow English socialism or American capitalism. India went with socialism.

We spoke about this in prior threads, my conclusion is that India continues to maintain the caste system.

[koba]

Their caste system dosen't have much to do with their economic system.

[UnBlinkingEye]

Their caste system dosen't have much to do with their economic system.

The caste system forces people into a predisposed economic and social class. I may be mistaken, but I thought your background came from that regime.

[koba]

No, it dosen't neccessarily force anyone into anything. The lower castes are now a "protected" class like blacks here. They get quotas in universities, quotas in government jobs, etc.

[Poohbah]

There is rampant unemployment in the computer programming field. Hundreds of thousands of jobs have been lost, yet the H-1B program continues.

Yeah, I know some people who are unemployed as programmers.

The unemployed code-bashers I know all refuse to develop new skills unless a sugar daddy (read: employer) pays them to go back to school. So they look for FORTRAN and COBOL jobs that pay more than anyone's willing to fork over--essentially, they make it cheaper to completely replace legacy applications.

Price yourself out of the market, and you'll find yourself unemployed.

[UnBlinkingEye]

The unemployed code-bashers I know all refuse to develop new skills unless a sugar daddy (read: employer) pays them to go back to school. So they look for FORTRAN and COBOL jobs that pay more than anyone's willing to fork over--essentially, they make it cheaper to completely replace legacy applications.

I've sent out well over a hundred resumes, since my last employer went bankrupt, and have had only three responses, two interviews and no job.

My background is C/C++ coding for Microsoft Windows, including ActiveX and ATL, ISAPI, TCP/IP, four years as a project lead on three different efforts. I am currently studying Java, HTML, XML, SOAP, SQL on the Windows 2000 Professional platform using Enhydra as a Web server.

The hitech sector in Washington state has been devastated.

[Poohbah]

Yeah, Microsoft's woes dragged the entire state into the dumper.