Posted on 05/06/2020 11:17:47 AM PDT by NobleFree
H-1B is a flawed visa program:
H-1B is a temporary nonimmigrant work visa that allows U.S. employers to hire college-educated migrant workers as well as fashion models from abroad; nearly 500,000 migrant workers are employed in the United States in H-1B status.1 The H-1B is an important—but deeply flawed—vehicle for attracting skilled workers to the United States. The H-1B visa is in desperate need of reform for a number of reasons that we have explained in other writings,2 but the fundamental flaw of the H-1B program is that it permits U.S. employers to legally underpay H-1B workers relative to U.S. workers in similar occupations in the same region. This report explains how this occurs by describing the H-1B prevailing wage rule and analyzing the available data on the wage levels that employers promise to pay their H-1B employees.
The U.S. Department of Labor (DOL) has broad discretion to set H-1B wage levels, that is, the minimum wage employers must pay their H-1B workers, which corresponds to the H-1B workers’ occupation and the region where they will be employed. By law, DOL must set four H-1B wage levels—which it does according to wage survey data from the Bureau of Labor Statistics’ Occupational Employment Statistics survey. DOL has set the two lowest levels (of the four) well below the local median wage.
We believe that the median wage for an occupation in a local area is reflective of the minimum market rate that should be paid to an H-1B worker in order to safeguard U.S. wage standards and ensure that migrant workers in H-1B status are compensated fairly. By setting two of the four wage levels below the median—and thereby not requiring that firms pay market wages to H-1B workers—DOL has in effect made wage arbitrage a feature of the H-1B program. Changing program rules to require and enforce above-median wages for H-1B workers would disincentivize the hiring of H-1B workers as a money-saving exercise, ensuring that companies will use the program as intended—to bring in workers who have special skills—instead of using the H-1B as a way to fill entry-level positions at a discount.
Wage-level data make clear that most H-1B employers—but especially the biggest users, by nature of the sheer volume of workers they employ—are taking advantage of a flawed H-1B prevailing wage rule to underpay their workers relative to market wage standards, resulting in major savings in labor costs for companies that use the H-1B. Further, our analysis of H-1B prevailing wage levels raises serious doubts about whether H-1B employers, including the top 30 H-1B employers and major U.S. technology firms, use the program solely, or even mostly, to hire workers with truly specialized skills.
The two initial stages to the H-1B application process are: First, an employer must submit a Labor Condition Application (LCA) to the U.S. Department of Labor (DOL), describing the positions they wish to hire H-1B workers for. Once the LCA has been certified by DOL (certifications are mostly pro forma and are only denied for obvious errors and inaccuracies), the employer can then submit a petition to U.S. Citizenship and Immigration Services (USCIS), Form I-129, for approval for an H-1B for a specific worker who will fill a position. (Note that not all LCA approvals result in approved petitions for H-1B worker visas.) Migrants who are not in the United States after USCIS approves a petition for their employment in H-1B status must then take the extra step of applying to the U.S. State Department for a visa.
For the purposes of our analysis, we look at both DOL LCA data and USCIS petition data, as described below.
The two lowest permissible H-1B prevailing wage levels are significantly lower than the local median salaries surveyed for occupations. The two lowest H-1B wage levels set by DOL correspond to the 17th and 34th wage percentiles locally for an occupation. This translates into salaries that are significantly lower than local median salaries—17% to 34% lower on average for computer occupations (which are among the most common H-1B occupations). H-1B employers can reap significant savings by selecting one of the two lowest wage levels instead of the Level 3 wage (the median, or 50th-percentile, wage) or the Level 4 wage (above the median, at the 67th percentile).
Not surprisingly, three-fifths of all H-1B jobs were certified at the two lowest prevailing wage levels in 2019. In fiscal 2019, a total of 60% of H-1B positions certified by DOL had been assigned wage levels well below the local median wage for the occupation: 14% were at H-1B Level 1 (the 17th percentile) and 46% were at H-1B Level 2 (34th percentile).
Likewise, three-fifths of H-1B jobs certified for the top 30 H-1B employers were at the two lowest prevailing wage levels. Twelve percent of all certified positions for the top 30 H-1B employers were set at the Level 1 wage, and nearly half (48%) were certified at Level 2, meaning that 60% (three in five) of all H-1B jobs for the top 30 employers were certified at wages lower than the local median wages for the occupations.
The top 30 H-1B employers play an outsized role in the program. In 2019, 53,377 employers had at least one petition approved for an H-1B worker. However, the top 30 H-1B employers accounted for more than a quarter, or one in four, of all H-1B petitions approved by U.S. Citizenship and Immigration Services for initial and continuing H-1B employment (105,660 of the 389,323 total). Looking at the DOL data on Labor Condition Applications, the top 30 H-1B employers received approval for 371,461 H-1B positions on LCAs, accounting for 38% of the 968,538 H-1B positions certified by DOL in fiscal 2019.
The vast majority of employers that use the program employ very few H-1B workers. In fiscal 2019, 86% of the 53,377 H-1B employers were approved by USCIS for five or fewer H-1B workers, including both new and continuing H-1B workers, while the top 30 H-1B employers were approved for an average of 3,522 H-1B workers each.
Half of the top 30 H-1B employers use an outsourcing business model. Fifteen of the companies listed in the top 30 H-1B employers have a business model based on outsourcing jobs; these companies place their H-1B hires at third-party client sites. These companies rely on the H-1B program to build and expand their business, which sometimes includes sending U.S. jobs overseas.
Major U.S. firms—not just outsourcing companies—pay low wages to their H-1B employees. Major U.S.-based technology firms that hire H-1B workers directly, rather than contract them out to third-party employers, had significant shares of their certified H-1B positions assigned as Level 1 or Level 2, the two lowest wage levels in fiscal 2019, both of which are below the local median wage:
DOL should act. The H-1B prevailing wage should reflect realistic market wage levels and help prevent downward pressure on U.S. wage rates in H-1B occupations. To accomplish this, we recommend that DOL use its existing authority to set the lowest (Level 1) wage to the 75th percentile for the occupation and local area and also require that wage offers to H-1B workers never be lower than the national median wage for the occupation.
Congress should act. Further, to ensure that future administrations do not reduce wage levels, Congress should enact a statute setting reasonable minimums for H-1B wage levels and providing DOL with new legal authority and funding to conduct random audits of H-1B employers to verify that they are not manipulating job titles and wage levels in order to underpay H-1B workers. The H-1B and L-1 Visa Reform Act of 2017, introduced by Senators Chuck Grassley (R-Iowa) and Richard Durbin (D-Ill.), would vastly improve the H-1B program along these lines.3 The Act would eliminate the two lowest wage levels, so that H-1B workers could not be paid at a wage that is lower than the local median (50th-percentile) wage, and would grant DOL new authority to increase audits and hire additional staff. [...]
Just need to kill the whole program. Not needed anymore and any changes will continue to have exploitable loopholes.
Both parties support importing cheap labor, don’t know how we are going to eliminate the whole program.
And some use it to pay above standard wage.
15% unemployment should do the trick.
There have been significant changes to the program in the past few years, which made it a lot harder to pay a Level 1 wage or do third party placements. They also cracked down on degree mills, and on employers who had arrangements where they would force the employee to return a lot of their salary to their employer.
There is still a lot of improvement needed in this program. A LOT.
No, it doesn’t need improvements, it needs to be canceled. The major multinational corporations abusing the job visa programs will never stop abusing these program. They will find loopholes and just out right bend the law until it is broke to get the cheap labor.
Bullshit. Americans just can’t get hired in any positions due to extreme Indian racism, castism and nepotism. We can’t even file EEOC complaints are Indians are considered minorities.
Ban ALL Indians and Communist Chinese from the US for a period of at least 10 years. This includes OPTs, filthy H4EADs and H1Bs
Companies should be required to pay H1-B visa workers at least one and a half to twice the prevailing wage for that occupation, as well as a special tax.
The H1-B program is for the greater good of driving up the stock price of Microsoft and Google. What’s a few hundred thousand middle-class engineering jobs in comparison to the benefits that flow from increased wealth to the oligarchs?
Obviously, this is sarcasm. The whole program is corrupt and needs to be killed in its entirety. Not reduced, killed!
Those few with jobs that genuinely cannot be done by any American. They're the exception - the article describes the rule.
End the abused and unneeded program!!! Deport all H1B, and other visa workers. They are only needed to lower wages. There are plenty of Americans for these jobs!
Bill Gates is going around the world as an expert telling people what to do. I don’t think he ever graduated college.
His firm copied CPM and made it MS DOS.
He has benefitted by paying cheap labor at the expense of American labor.
Kill the H1-B program, or at the least, suspend it indefinitely. And get the current H1-B recipients out of here ASAP.
Name one.
Did the article calculate the tax dollars they are avoiding as well. Good thing our leadership keeps the coroprate crony welfare tap wide open
Well duh. You didn’t need a fancy study to tell you that. Just ask them directly. They’ll tell you they get paid well below what Americans make. They’ll openly say that’s why there are so many Indians working there (up to 1/4 of the back office staff I’ve seen at several major banks).
I don’t blame them. Its a better deal than they can get back home. If its legal companies are going to take advantage of it. It simply should not be legal. Its terrible for Americans.
They’ve been doing this since at least 1995. 25 years is a long habit to break.
H1B Blue State Real Estate bootstrapping - bump for later...
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