Emotions Run Hot on H-1Bs

Emotions Run Hot on H-1Bs

Numbers difficult to track; impact of visas debated

By BRIAN SULLIVAN
(April 29, 2002) 
It would be easier to separate sheets of wet tissue paper pounded flat by a hammer than to separate fact from fiction in the H-1B debate.

Employers say foreign workers fill gaps left by a dearth of qualified U.S. residents.

Unemployed IT workers and their allies say there’s no labor shortage. They claim that employers are just trying to cut IT costs and drive down wages by hiring foreign workers at lower pay rates.

The truth lies somewhere in between, but clarifying the issue is difficult because emotions run high and statistics are either contradictory or dated. For example, the Immigration and Naturalization Service (INS) stopped tracing H-1B data after the Sept. 11 attacks. Other oft-cited numbers were issued in 1998 or early 2000.

Still, the available data does bear out that H-1B workers are often younger and better educated than their American peers and are seeking permanent resident status. Most H-1B holders in the computer industry are hired to fill systems analyst and programming jobs. Some receive the prevailing wage, while others make less working in job shops. But the numbers are meaningless to many.

“The problem with the whole issue is that it gets into matters of immigration,” said Robert D. Austin, assistant professor of IT management at Harvard Business School. “And that turns into us vs. them.”

 

U.S. Labor Dept. Rules for H-1B Visa holders

 A company must compare the prevailing wage for a position to the actual wage it pays other workers in similar positions. It must then pay the H-1B holder the higher of the two.


 A company must post notice of its intent to hire H-1B visa holders and inform other employees and anyone who negotiates salaries for them. If there is no one who negotiates for all employees, then the company must post two notices in places visible to all workers for at least 10 days.


 Companies that violatethese rules are subject to fines.

 

So it’s not surprising that the debate often drifts into rhetorical battles, giving rise to such unsubstantiated extremes as the charge that all the H-1B workers in a New Jersey office cheered as across the Hudson River the World Trade Center towers fell.

The following are some of the arguments on each side:

• Companies have created an indentured servant class out of H-1B visa holders, according to Norman Matloff, a professor at the University of California, Davis.

• Companies don’t hire average IT workers, but rather engineers with advanced degrees, said Paula Collins, director of government relations for human resources and education at Texas Instruments Inc.

• Companies would rather hire U.S. residents because it costs $1,000 in fees to hire an H-1B holder, said Margaret Wong, an immigration lawyer in Cleveland.

According to the last INS report regarding which companies hire the most H-1B workers, covering October 1999 to February 2000, Motorola Inc. (618), Oracle Corp. (455) and Cisco Systems Inc. (398) topped the list. Others in the top 25 included Intel Corp., Microsoft Corp. and Sun Microsystems Inc. Most of those companies wouldn’t comment.

Cisco said that the INS numbers are out of date, noting that it has backed off its H-1B program and has actually done little hiring of any kind recently. Layoffs caused by the downturn have increased the number of qualified U.S. workers in the marketplace, Cisco said.

“Basically, we have been a user of the program almost exclusively to hire electrical engineers, all of whom or most of whom have master’s degrees or Ph.D.s,” said a Texas Instruments spokesman. Statistics do show that more foreign nationals receive advanced degrees in engineering, computer engineering and computer science.

In the 2000-01 academic year, foreign nationals took 60.4% of computer engineering master’s degrees. They earned 68.9% of computer science and 51.8% of combined computer science and engineering master’s, according to Richard Heckel, technical director at Houghton, Mich.-based Engineering Trends Inc. His firm tracks graduate information from U.S. engineering colleges. As for Ph.D.s, foreigners took 66.1% in computer engineering degrees, 54% in computer science and 54.3 % in combined computer science/engineering.

But that matters only if you believe the companies; Matloff, a vigorous critic of H-1B visas, says he doesn’t. His research shows that only 1% of H-1B holders have Ph.D.s and only 7.5% have master’s degrees.


Rebuttal Commentary From Norm Matloff:

Concerning this article from Computerworld. I have a number of comments:

“The problem with the whole issue is that it gets into matters of immigration,” said Robert D. Austin, assistant professor of IT management at Harvard Business School. “And that turns into us vs. them.”

So it’s not surprising that the debate often drifts into rhetorical battles, giving rise to such unsubstantiated extremes as the charge that all the H-1B workers in a New Jersey office cheered as across the Hudson River the World Trade Center towers fell.

This, together with the remarks before and after the passage, is apparently meant to suggest that critics of the H-1B program are xenophobic or racist. Fortunately most supporters of the industry don’t make such charges, but it has come up in Computerworld before. The editor-in-chief, Maryfran Johnson, once made such an assertion in print, and when I asked her about it in e-mail, she said that if any programmer who contacts her so much as mentioned the fact that most of the computer-related H-1Bs come from India, she immediately dismissed him/her as racist.

(I should mention, though, that in a recent communication with a member of [my] e-mail list, Ms. Johnson said she no longer has this attitude. I should also mention that Computerworld was once of the first publications to run stories in which some critics questioned the industry’s “labor shortage” claims. That was in part because at the time one of the senior editors was upset that the local Boston school officials were crying “teacher shortage” when this editor’s wife, a teacher, could not get a job with those same schools.)

For the record:

1. I’ve never heard anything like that crazy rumor regarding 9-11, and if that rumor had any circulation at all I believe I would have heard from my national network of programmers.

2. The foreign-born programmers on my e-mail list are among the most vociferous critics of H-1B abuses. This is natural, since they often get to see the abuses in more detail. And, needless to say, being replaced by an H-1B of one’s own ethnicity doesn’t make it hurt any less.

I was curious how about Professor Austin, whom I had not heard of before. A quick check of the Web revealed that he is a Fellow of the Cutter Business Council, which rents out consulting services to business. It’s not fully clear what his position on H-1B is from that one little quote above, but he certainly would seem to have an incentive to toe the industry party line.

The following are some of the arguments on each side:

* Companies have created an indentured servant class out of H-1B visa holders, according to Norman Matloff, a professor at the University of California, Davis.

This isn’t a matter of dispute. Congress recognized that fact when it eased (though far from eliminated) the conditions which create that de facto indentured servitude status.  The indentured servitude metaphor actually came from the H-1Bs themselves.

* Companies would rather hire U.S. residents because it costs $1,000 in fees to hire an H-1B holder, said Margaret Wong, an immigration lawyer in
Cleveland.

The average employer of an H-1B is underpaying him/her by, according to the most conservative estimates (i.e. mine), $10,000 per year, for the 5+ years of the indentured servitude. That’s $50,000, again, conservatively. So a one-time legal fee of $1,000 is nothing. And the employer saves the headhunter fee. One does have to account for the green card process, but the employer is WAY ahead financially, and that’s not even adding in the value of what the employers euphemistically refer to as H-1B “loyalty.”

* Statistics do show that more foreign nationals receive advanced degrees in engineering, computer engineering and computer science.

This is quite true, but it is a flagrant red herring as far as the H-1B debate is concerned. The vast majority of computer-related H-1Bs don’t have a graduate degree. The author notes that I say this, but there is a twist to it:

* But that matters only if you believe the companies; Matloff, a vigorous critic of H-1B visas, says he doesn’t. His research shows that only 1% of H-1B holders have Ph.D.s and only 7.5 % have master’s degrees, though other research says otherwise.

“Other research”? I wrote to the author this morning, stating that (a) as far as I know, there is no other research, and (b) my research is confirmed by recent INS data. The INS finds a figure of 1.6% for computer-related H-1Bs with PhDs, very similar to my 1% derived from other sources.

The author wrote back and told me that he didn’t write that last clause (“though other research says otherwise”). It apparently was added by an editor. He graciously thanked me for the correction, and said it would be fixed. I just checked the online article, and sure enough, the offending clause is now gone. (Presumably it will be in the print version, though.) So, when the author wrote in his lead, “It would be easier to separate sheets of wet tissue paper pounded flat by a hammer than to separate fact from fiction in the H-1B debate,” I might add that it is REALLY hard to “separate fact from fiction in the H-1B debate” when editors choose to add some fiction even when the reporter didn’t have some. :-)

Again, the “advanced degree” argument — a favorite of the industry lobbyists — is a just a device created to distract attention from the real issue, which is cheap labor. Lobbyists know that educationally-based arguments “sell” very well. So in this case they try to paint an image that there must be “something wrong” with America’s young people — “Why Johnny Can’t Do a PhD.” The fact is that “Johnny” simply understands that there is a huge financial disadvantage to going for a PhD in computer science. The NRC report, though heavily biased in favor of industry, conceded that it would take — are you ready for this? — FIFTY YEARS for an American CS student to make up for the financial losses he/she would incur by spending 5-6 years getting a PhD instead of going out to make money right after graduation with a Bachelor’s degree.

Even for those H-1Bs who do have advanced degrees, they are paid less than Americans (U.S. citizens and permanent residents) with those same degrees; see for example the study done by Prof. Paul Ong at UCLA and my own study, both of which corrected by highest degree attained.

There really is no remaining dispute as to whether the H-1Bs are paid less than comparable Americans. This is shown in

* the study at UCLA, which found that the immigrant engineers were paid 33% less than comparable Americans

* the study at Cornell University, which found underpayment of H-1B programmers and engineers by 20-30%

* my study at UC Davis, finding that immigrant programmers and electrical engineers were paid 15-20% less than comparable Americans

* the report by the Immigration and Naturalization Service, which found that the computer-related H-1Bs were paid a  median of $53,000 per year, far below the national median of  $66,000 for this field

* the audit done by the Department of Labor, finding that 19% of the H-1Bs were not even paid the salaries promised by the employers on the visa application forms

* the report by the National Research Council, which found that “H-1B workers requiring lower levels of IT skill received lower wages, less senior job titles, smaller signing bonuses, and smaller pay and compensation increases than would be typical for the work they did”

* articles in respected pro-business publications such as Forbes Magazine (“Indian programmers working in the U.S. on temporary H-1B visas typically earn 25% to 30% less than their naturalized colleagues”) and the Wall Street Journal (“recruiting foreign talent is cheaper than hiring Americans”

* statements by the H-1Bs themselves, who have formed the national organization ISN (www.isn.org) with a goal of persuading Congress to reform the program

Norm

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