Battle for H-1B Visas

We’ve all heard the clamor in Washington and the national media about immigration reform.

Immigration reform is a hot topic - how will it affect the ability to bring in foreign workers?

By Royale Class

One portion of the pending immigration reform that may have a direct impact on American companies is the H-1B visa program reform. This controversial program allows companies to bring skilled foreign workers into the U.S. for stays of up to three years. According to a July 16th article in the CommonWealth magazine, more than 1,200 Massachusetts companies hired 5,481 skilled foreign nationals through the program in 2012. The article goes on the report that Massachusetts ranks 6th in the country, behind California, New Jersey, Texas, New York and Florida.

 

The federal H-1B visa program currently allows some 65,000 foreign technical workers with “exceptional skills” to come and work in the United States. Many of these, not surprisingly, end up working for major tech companies like Google, Microsoft, IBM and Facebook. However, there has also been an upswing in staffing these foreign workers in more than just high tech. Life sciences, law professions, health care, colleges, banks, construction firms and even public school systems have all seen an uptick in H-1B visa applications.

As the debate over immigration reform goes on, there is a proposal to effectively double the amount of available visas each year – going from 65,000 up to 110,000. With this proposed increase, some are questioning the effectiveness of the program. Do the visas actually attract the “best and brightest” or, as some allege, are they simply a mechanism to attract cheap foreign technical labor at the expense of out-of-work skilled American IT workers?

Back in February, Norman Matloff, professor of computer science at the University of California, Davis published a report through the Economic Policy Institute and drew two controversial conclusions about foreign students that graduate through U.S. programs.

His first point, that “on a variety of measures, the former foreign students have talent lesser than, or equal to, their American peers.” His second conclusion is perhaps even more controversial: “skilled-foreign worker programs are causing an internal brain drain in the United States.” He goes on to explain in the report:

Though the United States should indeed welcome the immigration of “the world’s best brains,” are the foreign students typically of that caliber? The tech industry has put forth little to support such assertions. It has pointed to some famous immigrant success stories in the field but, in most cases, the people cited, such as Google cofounder Sergey Brin, never held foreign-student (F-1) or work (H-1B) visas (Brin immigrated with his parents to the United States at age 6). And more importantly, neither the industry nor any other participant in this national debate has offered any empirical analysis documenting that the visa holders are of exceptionally high talent.

Perhaps one of the most interesting components of Matloff’s analysis is that most H-1B workers – ostensibly the “best and brightest” in the world – don’t really make that much money. Perhaps a better way to put this is that they don’t make as much money as one might expect, given their pedigree as a highly skilled worker.

According to Matloff’s analysis, foreign workers with degrees in computer science and electrical engineering make about 6% less than comparable Americans. In his report, Matloff extends his research and comes to some surprising conclusions. At a few of the giant U.S. tech firms that take a large share of the H-1B visas available each year, including Google, Microsoft, Intel and eBay, foreign “highly skilled” workers are hardly that, based on the wages they are being paid.

Facebook CEO, Mark Zuckerberg, went on record in April and said, “Why do we offer so few H-1B visas for talented specialists that the supply runs out within days of becoming available each year, even though we know each of these jobs will create two or three more American jobs in return?”

While Mr. Zuckerberg is certainly entitled to his opinion, it appears that the facts don’t necessarily substantiate his claim. In June, a report published by Georgetown University showed that recent graduates in information systems are dealing with an unemployment rate of 14.7%. Computer science majors face an unemployment rate of 8.7%. Hard to believe with unemployment numbers like that that the supply could be running dry.

Is there something more malicious happening here?

The CommonWealth magazine reported that the Massachusetts Company that received the most H-1B visas in 2012 was Patni Americas, Inc. of Cambridge (which has since been acquired by iGate Corp. from Fremont, CA). Both of these companies provide outsourcing services to other businesses. In 2012, Patni filed for 1,779 H-1B visas and received 1,260 – or 23% of the total issued to companies in Massachusetts. According to the information reported by Adam Sennot and Bruce Mohl in The CommonWealth, Patni brings foreign workers into the United States on visas and then contracts them out to do information technology work for American firms. 

iGate, the new owner of Patni Americas, made the headlines in Canada back in April when press reports indicated 45 IT professionals at the Royal Bank of Canada were being replaced by temporary foreign workers brought into the country by the firm. According to reports, Canadian officials are investigating whether the outsourcing broke federal rules.

According to Ronil Hira, associate professor of public policy at the Rochester Institute of Technology and the author of Outsourcing America, more than half of all H-1B visas issued nationally in 2012 went to outsourcing firms such as Patni. Hira claims that the firms pay their H-1B workers less than American workers and use the savings to secure work from American firms looking to outsource functions at lower costs.

The battle continues for immigration reform, and there is no clear path to victory for either side of the argument. One thing is clear, however, the American workforce has been dealt many hard blows since “The Great Recession,” and too many talented, hard working Americans are struggling to find good work and decent benefits for their efforts.

What are your thoughts? Should we be sourcing professionals from around the globe to do work here? Are there other alternatives that aren’t being considered?

Until next time, I've gotta 'Lotta opinion about everything
Lori

PS: If you haven't already, take a look at "The Anti-Staffing Agency Manifesto" and see how we're waging the talent war on a whole new level. We'd love to hear from you and to know what you think.

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Sources: “The Massachusetts H-1B Connection.” CommonWealth Magazine. July 16, 2013. Retrieved from http://www.commonwealthmagazine.org/Departments/Statistically-Significant/2013/Summer/001-The-Massachusetts-H1B-connection.aspx

“H1-B Visas: Clever Trick for Cheap Tech Talent?” Inc. Magazine. July 2, 2013. Retrieved from http://www.inc.com/eric-markowitz/are-h1bs-just-a-clever-trick-for-cheap-labor.html