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

FrontPage Magazine ^ | Robert Locke

[JoeMomma]

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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[ContentiousObjector]

I will tell you what is bad for America,

Those pathetic buildings (public and private) that we pass off for schools that are nothing more than glorified daycares and about as capable of preparing American youth for the global economy as Jerry Springer,

Universities that are to pre-occupied with doing corporate research and subsidizing it that it has become to expensive for most families to put their children through university for professional degree (If Bayer wants to give Guinea Pigs Herpes, they can do it with their own money)

America has to import so many professionals because we can't produce our own. I have many H1-B's on my staff because I NEED THEM.

You hear so much about the scores of unemployed skilled workers, okay lets have a look at these unemployed people, most of them are obsolete or .com refugees

If you are obsolete that isn't my problem, you might be a great FORTRAN developer, but we don't use Fortran and have not used it for quite some time.

As for the .com brats, don't get me started on this group of primadonnas... try don't seem to have any conception of how things work in the real world, $40,000 and full benefits for entry level information technology is very competitive. And these punks look at me like I just propositioned them. Mr.Purple Goatee doesn't understand in the real world you don't get paid $80,000 a year to make web pages and expect them to come to work before 2:00 in the afternoon!

America has to make a choice, we can continue with our international discrace of an education system and continue to let our publically funded universities subsidize a trillion dollar industry and in a few generations we will look like a British Colony in the 19th Century as a result of making it impossible for American youth to have a competitive education.

In the 21st Century we are educating American youth the same way we did in the 19th Century? am I the only one who sees a problem with this?

If you don't like H1-B visas then pull your kids out of school and send them to a country that knows how to educate their children

Contrary to popular belief companies do not save money with H1-B visa's, it costs a fortune to bring a person over here, we do it because we don't have a choice.

If You Think Education Is Expensive, Try Ignorance

[brat]

BTTT Thanks for the post, JoeMomma. (Best be putting on your flame proof undies-the C's will be after you!)

[JoeMomma]

Contrary to popular belief companies do not save money with H1-B visa's, it costs a fortune to bring a person over here, we do it because we don't have a choice.

You're obviously not a conservative, because conservatives oppose corporate welfare. What are you doing on FreeRepublic?

My understanding is that, per CFO mag (a pro-H-1B publication), an H-1B costs a company about $6000 per head. Given that H-1B's work for 10-25% below the market rate that an American would work for, that's a net savings to the company in salary expense. The H-1B visa fee is $1000.

As for my own job security, I'm not worried. My skills are up to date. The only threat to my job would be an unmarried worker -- a local or H-1B -- willing to work my job for less money.

You don't need H-1Bs. Employers just justify that so they can abstain from hiring qualified Americans who might demand more of a salary. I'd be willing to bet that for every H-1B on your staff, there is a merit-qualified American within a 10 mile radius (if you're in a large city) who'd do the job for 15% more salary than your H-1B.

The CFO magazine is the smoking gun. They admit that H-1B is about one thing -- cheap labor.

[JoeMomma]

The C's?

Thanks for the BTTT. This is an important issue that needs to be addressed. Fortunately, Rep Tom Tancredo has a bill that will limit H-1B visas to correspond to the rececssion.

The fact that corporations are laying off tech workers while simultaneously lobbying for more H-1Bs is proof enough that corporations have a demand for cheap labor. It's outrageous, and sadly, President Bush is on the wrong side of this issue.

I guess corporate CEOs give more campaign contributions than do unemployed tech workers.

[ContentiousObjector]

You don't need H-1Bs. Employers just justify that so they can abstain from hiring qualified Americans who might demand more of a salary. I'd be willing to bet that for every H-1B on your staff, there is a merit-qualified American within a 10 mile radius (if you're in a large city) who'd do the job for 15% more salary than your H-1B.

Well, if you know where to find them, then you should really start a head-hunting service 'cause we sure as hell can't

And are you suggesting I have a patriotic duty to pay some snotty punk $80,000 a year just because he demands it?

And for the record, we pay H1-B's the same ammount as their American counterparts and we pay to bring their family over if they so choose, we also have a program to assist them in getting residency and citizenship if they so choose,

[Dave S]

Oh yes the hoards of Mexicans crossing the border with their H-1B visas to drive down information technology costs. LOL.

[Dave S]

I'd be willing to bet that for every H-1B on your staff, there is a merit-qualified American within a 10 mile radius (if you're in a large city) who'd do the job for 15% more salary than your H-1B.

Yeah, I bet the H-1B on staff would do the job for 15% more salary too, whats your point? Are you saying that the "merit-qualified" American is unemployed because he refuses to work for the going rate? He would rather sit around and have his wife or parents support him? Why doesnt he get an education and offer a service that is needed by industry.

[JoeMomma]

And for the record, we pay H1-B's the same ammount as their American counterparts and we pay to bring their family over if they so choose, we also have a program to assist them in getting residency and citizenship if they so choose,

Again, you're obviously not a conservative, because conservatives oppose corporate welfare of this sort.

Perhaps you're one of the few people who actually use the program honestly and not for salary-redux purposes. A recent article ion CFO Magazine is a smoking gun though. The H-1B is primarily used to reduce the salaries that American tech workers can demand.

But your claims really beg the question -- isn't it cheaper to train an slightly-less-than-qualified American than to go the H-1B route and bring their family over and assist them with citizenship. I'm familiar with personnel and immigration matters, and I'm not oblivious to the rather minimal costs of the H-1B program and costs to train employees. In fact, training an American programmer in a new programming language is actually cheaper than the rather pricey steps you mentioned above since programming languages build on one another -- if you understand one of them, you can easily pick up and become proficient in another. I have a lifetime 50-something mainframe programmer on my staff that I'm having ZERO trouble training in a Linux enivornment and web programming. And it costs less than H-1B costs although he costs me more in salary than an H-1B.

For a 6-year H-1B visa, it's a net cost savings to the company because you're getting someone who will work for a lower-than-market salary for that period of time. If you convert that person's visa to an L-1 after one year, you have cheap labor for as long as you want.

AGain, I know the costs involved in the H-1B program, and they are more than it would take to train an American with progrgamming skills and less than the salary that American would demand. I think the bottom line is the bottom line -- H-1B is for salary redux purposes.

Plus the H-1B program is rampant with abuse -- there's a loophole big enough for a Mack truck to go through. Anyone who gets an H-1B can fire the 'redundant' American worker the next day and enjoy the cost savings of the H-1B.

[JoeMomma]

Yeah, I bet the H-1B on staff would do the job for 15% more salary too, whats your point? Are you saying that the "merit-qualified" American is unemployed because he refuses to work for the going rate?

That 'going rate' was rigged by the US Government in their artificial H-1B flood of the job market. Only corporate interests would ask the government to put corporate salary savings over the needs of Americans.

He would rather sit around and have his wife or parents support him? Why doesnt he get an education and offer a service that is needed by industry.

There are Americans with skills out there. They just get looked over because H-1Bs have driven the salary down artificially by flooding the job market.

As a conservative you should not support corporate welfare of this manner. H-1B is corporate welfare.

[Dave S]

As a conservative you should not support corporate welfare of this manner. H-1B is corporate welfare.

You keep throwing out this statement but Ive not seen anywhere in any of the crap that youve posted what you mean? How many dollars is the Federal Government spending on this program besides the cost of stampting a visa application? Are you saying the government is going out and actively recruiting these employees? If you want to win over any but the race baiters and anti immigration people you need to get a hell of a lot more specific.

I hope you own or are at a high level in your company. If your management found out you were paying more to an unqualified applicant to learn a computer language than you could to hire a qualified applicanat to immediately address your companies problems and needs, they might fire you. Intead of paying them to work, you are paying them to learn to work. With typical gratitude, they will cross the street and work for your competitor shortly after they get trained and get a better offer.

Sounds like affirmative action to me. Like going out and hiring only blacks over whites regardless of their past performance, just so you can be politically correct.

[max61]

You keep throwing out this statement but Ive not seen anywhere in any of the crap that youve posted what you mean?

Ah, let's see if we can explain this to you.

Corporations solicit the government for a program to allow them to import labor under the guise that there is a shortage of qualified workers, when in fact there is not nor was there ever. The government then eases immigration restrictions in specific classes of labor in response to this request even though there has never been a shortage of labor.

The end result is that the cost for labor is reduced. Which from a corporate standpoint is fine, however from an individual standpoint, it sucks.

The free market that so many in corporate America claim to revere appears to not apply to the labor market.

The H1-B program can be summarized as nothing more than SCAB LABOR.

Think of it in these terms, for every H1B laborer in this country that holds a job, there is one less job available for a graduating college student, unemployed technician, or engineer.

Now just what don't you understand about this?.

---max

[Reaganwuzthebest]

The WSJ types know full well that the H-1B fraud is for the purpose of importing scab labor. It sounds simplistic, but it's a fact that corporate hacks see cheap labor as THE way of increasing their portfolios and Christmas bonuses.

Their philosophy of the free market system is unhibited, unfettered access to labor not just in the US but in the world. There are plenty of programmers in this country to do these jobs, and many more who'd be willing to do them if not for the competition of cheaper foreigners.

What escapes the grasp of these corporations is that without a strong, viable working middle class who's going to buy their products? Henry Ford was an anti-semite and a fascist. But before that stupidity infected his brain, he understood the concept of giving his employees a livable wage. Who was going to buy his cars if people couldn't afford them? There are actually many in the corporate world (and some in Congress) who would like to do away with minimum wage laws. If only they didn't have that pesky standard to meet, then think of how much more money they could get at Christmas?

If India is such a smart country with so many brilliant programmers out-programming us, then why is their country a third world hell hole? Because they don't require of their companies what we do here, a fair wage for a day's work. The same goes for Mexico and most other countries in the world.

These suicidal policies of "bring in the world" to compete in the labor force is going to do nothing more than eventually turn us into the same kind of country these people are leaving.

[EdReform]

H-1B Hall of Shame

Lies of Immigration Lawyers

[NMC EXP]

Its a global economy. Better get used to it.

The often repeated excuse for a race to the bottom. The implied premise is that the US must be entirely immersed in this "global economy". The extent to which the US is involved in the "global economy", and therefore the degree of threat to the standard of living of US citizens need not be a done deal. We can participate in global trade to the extent it benefits the citizens of this country.

Get a skill someone is willing to pay more than minimum wage for or suffer the consequences.

The consequences of competing with Indian or Chinese labor in any job or profession is lower wages for the American. Global labor competition will result in a globally weighted average wage.

Regards

J.R.

[EdReform]

"MORE H1-B VISAS; FEWER PROBLEMS?"

"Re: visa fraud and abuse"

[WRhine]

Oh yes the hoards of Mexicans crossing the border with their H-1B visas to drive down information technology costs. LOL.

I was talking about your comment on "borders". Yes, what does that have to do with H1B visas? Yet you had to slip it in anyway. LOL.

[EdReform]

H-1B Pizza Makers

(H-1B -- it not just for IT and other high-tech positions anymore)

[RogueIsland]

The next wave is companies simply outsourcing projects, and then entire departments, offshore. India, Malaysia, the Phillipines, South Africa are all prime sources of IT talent.

It's always fun when companies do this. Every company I've ever worked for (as either a perm or a contractor) who did this ended up with such a botched mess on their hands that they ended up paying triple to get U.S. contractors in to fix the disaster.

[skeeter]

ABR's fixation on the physical condition of many Americans leads me to wonder whether he/she doesn't have a less savory motive for ranting on the topic as he/she does, as this kind of insult is popular among the non-natives among us.

[q_an_a]

H1 B bad for Republicans too!! Take a look at the countries that fill most of the H1 B programs. They where all taking money from Russia till the wall came down. They all think that the state has a better idea. India was afraid of KFC. Is this who we want voting in our next election? Any idea why so much of the Calif vote goes to Dems? Half the new voting folks are H1B. Better get this fixed.

If I was running an advertisement on education I'd show all the silicon valley millionaires that came here, with an education in Pakistan or India that cost a lot less than in LA. Then, I'd ask out of work high school grads what is the difference in the education in india and in LA? The retail republican