Are Businesses Misusing H-1B Visas?

By Samuel Greengard

Over the last several years, there’s been a steady stream of news stories and complaints from business executives about a talent shortage in so-called STEM (Science, Technology, Engineering and Mathematics) areas. Many organizations, particularly in the technology arena, have made it standard practice to hire foreign workers through H1-B visas. There’s an estimated 700,000 H1-B holders currently working in the United States.

Conventional thinking is that H1-B visas are critical. The program was created in 1990 to allow businesses to bring skilled workers to this country. However, Norman Matloff, a University of California, Davis, professor of computer sciences, argues that myths, misconceptions and outright deceptions prevail.

 “There’s plenty of evidence that there is no labor shortage in the STEM areas,” he states. “Lobbyists and major tech companies have convinced the public and politicians that a problem exists so they can benefit financially.”

Matloff, who authored a new Economic Policy Institute report, “Are foreign students the ‘best and brightest’?, Data and Implications for Immigration Policy,” asserts that H-1B workers often serve as a cheaper labor source for companies—particularly tech firms that aren’t fond of hiring more costly workers who are age 35 and above.

In addition, they provide a more predictable employment situation for businesses. “The H-1B and green card programs give the employer heavy leverage to force workers to stay,” Matloff says.”If a worker changes employers, he or she often must start over with the multiyear green card process.”

Although there’s nothing illegal about hiring foreign workers for less, Matloff describes the situation as “handcuffing” and says that it creates a de facto form of indentured servitude, often for lower wages than American expect. “If you are a Silicon Valley employer, you don’t want engineers and developers to leave you in the midst of urgent projects,” he points out. “It is a financially advantageous situation.”

Silicon Valley Congresswoman Zoe Lofgren (D) stated in 2011 that the average wage for computer systems analysts in her district was $92,000. However, the U.S. government’s prevailing wage rate for H-1B workers for the same job stood at $52,000. In fact, several independent studies back Matloff’s contention, and a 2011 Government Accountability Office (GAO) report concluded that significant reforms to the H-1B system are necessary.

Congress is considering bills that would either expand or limit H-1B visas. The Immigration Innovation Act (S. 169), referred to as I-Squared, aims to increase the cap from 65,000 annually to 300,000. Meanwhile, the H-1B and L-1 Visa Reform Act attempts to redefine the term “prevailing wage” so that it would, as Matloff puts it, “reflect the true market wage.” It would also extend H-1B-dependency restrictions to all employers.

Matloff says that some industry observers blame Indian or Indian-American outsourcing firms operating in the United States for abusing the H-1B visa—allegedly by creating low-cost workforces—while mainstream American firms presumably use the visa to fill skills shortages. “In reality, the problem is across the board,” he argues. “The Indian [companies] merely serve as an easy target.”  

Among other things, the Economic Policy Institute report suggests tying visas to a legitimate job offer, while using a formula that incorporates STEM percentiles; eliminating employer incentives for using foreign workers as cheap labor; and eliminating the practice of using green card sponsorship to render foreign workers captive.