QuoteBeware the H-1B Visa19 July 2007, 06:13:52 Pro: License to Exploit and Betrayby Ron Hira, Rochester Institute of TechnologyThe rationale for the H-1B program is straightforward. The U.S. has a shortage of workers with specific skills, and the H-1B program allows firms to import the best and brightest to fill those gaps. Proponents claim the program prevents the outsourcing of jobs to low-cost countries and increases the U.S.'s competitiveness. Here's why they are wrong.The H-1B program has been corrupted by a large and growing share of firms that use it for cheap labor and to facilitate the outsourcing of jobs. Gaping loopholes make it very easy and legal to pay below-market wages. In fact, employers admitted to the Government Accountability Office, Congress' watchdog agency, that they use the visas to hire less-expensive foreign workers. And examples of approved H-1B applications show how the program undercuts American workers. In 2006, the U.S. Department of Labor rubber-stamped HCL America's bid to import 75 computer software engineers at $11.88 per hour.The problems don't stop with cheap labor. The H-1B visa is so critical to the offshore outsourcing industry that India's Commerce Minister has dubbed it the "outsourcing visa." Seven of the top 10 H-1B employers are offshore outsourcing firms, none of whom hire many Americans, gobbling up tens of thousands of H-1B visas along the way. Rather than preventing it, the program speeds up the outsourcing of high-wage high-technology jobs.None of this should be surprising given the raison d'etre of modern corporations, maximizing profits. Businesses do not exist to maximize their U.S. workforce or improve competitiveness in the U.S. If companies can lower costs by hiring cheaper foreign guest-workers, they will. If they can hire vendors who hire cheaper foreign guest-workers, they will. And who can blame them? If they don't take advantage of blatant loopholes, their competitors surely will. Cheap labor and outsourcing explain why the H-1B program is oversubscribed.A sizable share of the U.S. high-tech workforce understands this logic, and justifiably views the H-1B program as a threat and a scam. That's the real danger to U.S. competitiveness. Young people considering a technology career see that industry prefers cheaper foreign guest-workers and that the government uses immigration policy to work against technology professionals.Policymakers need to thoroughly reform these corrupted programs. Legislation introduced by Senators Richard Durbin (D-Illinois) and Charles Grassley (R-Iowa) would accomplish this while still giving firms access to the best and brightest. Simply hoping, rather than requiring, corporations to shun the temptation of cheaper labor is not only naïve but also dangerous to the future of U.S. competitiveness. Con: Mutually Beneficial and Fairby Michelle Cham YuThe H-1B visa issue reminds me of the debate on offshoring a few years ago, when the public complained that skilled, cheap Chinese and Indian labor would steal jobs from U.S. engineers and software programmers in developed countries. However, the buzz diminished when the speculation failed to match the reality: A 2005 Bureau of Labor Statistics survey showed that only 4% to 5% of layoffs in the U.S. and Europe resulted from offshoring, while domestic factors such as downsizing caused most job loss. Now a similar scenario has arisen in regard to H-1B visas. Admittedly, the H-1B visa program, supposed to benefit U.S. companies by allowing them to hire well-educated workers from foreign countries, is being exploited by some businesses that are paying these H-1B employees poorly. Nonetheless, the low cost of labor could be just one of the reasons many companies prefer H-1B holders. Some employers with openings for high-end IT positions say they simply cannot find enough adequately trained professionals in their localities to fill their open positions. It's only natural for them to tap into candidates from India and China, where IT education is strong. And even if H-1B visas sometimes result in the hiring of H-1B candidates over American ones, H-1Bs benefit all U.S. citizens. Rather than pay for more expensive American workers, corporations could otherwise choose offshoring in developing countries, where they can hire cheaper workers. Or they could shift to relatively immigrant-friendly countries such as Canada, where Microsoft (MSFT) recently established some operations. That means the U.S. loses out on the tax revenues and consumer spending from H-1B workers they would have hired if it weren't for restrictions and caps. Reducing the number of H-1B visas would cheat the U.S. out of other revenue as well. The top graduate science and engineering schools in the U.S. have a large proportion of Asian students. Many of them are Indian and Chinese citizens who have been provided with fellowships or scholarships from U.S. universities. This group of well-educated workers is finding it hard to win good jobs because of the tightened H-1B visa policy. Consequently, they cannot contribute their intelligence and diligence to the U.S. economy, although the U.S. funded the development of their competence. Finally, the H-1B visa is, as a matter of fact, a scapegoat for the failing education system in the U.S. One theory says the real problem in the U.S. is the lack of focus on, and attention to, fundamental education. The U.S. needs graduates with stronger math and science skills. Restrictions on H-1B visas will not save the future of the U.S. but rather downgrade its vigor and competitiveness.Thanks again to businessweek.

Well, apart from cases of obvious abuse, the question it boils down to is this: Do highly-qualified professionals need protection against competitors who might depress their wage levels (as all competition is bound to do: no matter how much proof you show that you couldn't find a qualified American, if you paid more you probably would) when the presence of foreign highly-qualified professionals quite clearly contributes to America's national wealth? In principle, there's also the question of how many foreigners a society can tolerate without losing its identity, but highly-qualified professionals are typically not the source of trouble with foreigners, so this argument probably doesn't carry all that much weight.Personally, I'd probably regulate it in a more transparent fashion: If you can show proficiency in the local language and a job offer above a certain minimum level that could be periodically adjusted (say 120K for now), you're allowed to come. This would resolve complaints about depressing wage levels since it obviously wouldn't depress anyone's wage level below the cutoff level, except perhaps a little through ripple effects which likely would be more than compensated by increased overall wealth and tax revenue. It would also be much less bureaucratic than the current system, and it would allow people to change jobs or come home and go back as desired.

i think that business needs to be able to employ anybody anywhere. if a company needs 100 quants from China, it should be able to hire them without any limitations, just hire, bring them in, and issue them visas automatically. that's the way to go. otherwise , any limitations have hidden costs and hurt competitiveness of businesses.

Jawabean's right. When I graduated, the global workforcewas about 250 million. To be sure, chinese, russians, indians did something but it was shitty little stuff. They've now wised up big time.If the USA chooses to keep out smart people, they are not going to sit happily in a mud hut, they are going to compete with the USA either in countries like britain which has a policy based upon economic rationality, rather than the corrupt racism which drives US immigration policy. Or they will stay at home and build firms which combine smarter people with a lower cost base. The US will lose. Look at London overtaking Wall St. Finance will lot be last industry lost to america by Creationists.

Jawabean's right. When I graduated, the global workforcewas about 250 million. To be sure, chinese, russians, indians did something but it was shitty little stuff. They've now wised up big time.If the USA chooses to keep out smart people, they are not going to sit happily in a mud hut, they are going to compete with the USA either in countries like britain which has a policy based upon economic rationality, rather than the corrupt racism which drives US immigration policy. Or they will stay at home and build firms which combine smarter people with a lower cost base. The US will lose. Look at London overtaking Wall St. Finance will not be the last industry lost to america by Creationists.

I'm with DCFC and Jawabean on this. Anything that adds to a country's population of smart, hard-working people is a double-plus good thing in my book. (I say give automatic citizenship to every foreign graduate student that gets a Ph.D). Sure, I can see that we don't want H-1Bs to be indentured slaves to some unscrupulous recruiter, but that doesn't mean that wages should be protected.Protectionism never works -- it creates lazy workers, government bureaucracies, and non-competitive exports. A country can decide to lose some jobs now or even more jobs later. Like it or not (I, personally, like it), we all live in a global economy.I think the heart of the problem is that too many people see the economic pie (i.e., jobs) as a fixed thing to be allocated as a scarce resource. They think that adding another person (i.e. an H-1B worker) implies that everyone else gets a little bit less. That's the outdated thinking behind France's ludicrous 35 hour work week (and France's high unemployment and declining exports). But if the last 2 centuries of economic development prove one thing its that the pie is NOT fixed (perhaps the notion of a pie is an example of a metaphor that does more harm than good). Wealth (monetary, intellectual, or social) at the societal or individual level is not a conserved quantity. Wealth can be increased or diminished in proportion to the quality of the returns that the wealth create. A society can do much better for itself and its members if it can create an environment that attracts human and monetary capital with offers high returns.

The reality is that folks on H1B visas tend to be paid less than their American counterparts, so it seems that the primary reason companies hire on H1Bs is to save on labor costs.I've said it before, the business model has changed.Companies no longer need to bring programmers etc in from the 3rd world to save money. They can leave them in the 3rd world and let them program there and pay them even less.

QuoteOriginally posted by: Traden4AlphaSure, I can see that we don't want H-1Bs to be indentured slaves to some unscrupulous recruiter, but that doesn't mean that wages should be protected.That rule is for the benefit of Americans who don't want to get their wages depressed, not for the H1-Bs. For the H1-Bs, the effect is quite the opposite: They're tied to one employer no matter what, and if they want to change employers they have to look silently without being found out while still with their original employer--unless that employer happens to be supportive, as is luckily the case for me since in consulting the entire business model is based on people staying for a few years, moving on, and evangelizing for the consulting firm.

QuoteOriginally posted by: ppauperThe reality is that folks on H1B visas tend to be paid less than their American counterparts, so it seems that the primary reason companies hire on H1Bs is to save on labor costs.I've said it before, the business model has changed.Companies no longer need to bring programmers etc in from the 3rd world to save money. They can leave them in the 3rd world and let them program there and pay them even less.That's correct ., now almost all big Wall Street Firms opened their OWN developement centers/Global Service Centers in India and recruting Programmers directly without relying on Indian Companies like TCS, WIPRO etc snd even moving the development groups or Team Leads to Indian Off shore facilities.

The H1-B visa could have worked "maybe" if it was not biased. With the lottery system, workers from India benefit the most from the lottery because in the pool of candidates you have like 90% indian and its very likely that a sample chosen will clearly consists of Indian workers.Nothing against Indians, but I think others ougth to benefit as well. There is a very aggressive outsourcing firm, called Tata Consulting, and boy these guys are good they will help any american company looking for cheap or should I say "free" labor.

One reason for so many Indians in this space is that their education system is not very corrupt, and if someone looks like they have done well in education, that is usually true.Chinese qualifications are less dependable, sometimes quite appallingly so.Also, of course Indians routinely speak good English, some can pass for Brits before they even leave their native country.But in both cases, endogenous demand is rising fast rapidly reducing the pay gap.

QuoteOriginally posted by: DCFC Look at London overtaking Wall St. Finance will not be the last industry lost to america by Creationists.Interesting point, I always tought that wall street was way ahead of London, obviously thats really not the case. When you say London is overtaking, are you refering in terms of high paying/good quality quant jobs or capital ie volume of transcations?

I always find it funny when te yanks get upset about immigrants. I always ask which particular tribe the complainant is from.The US is a country of recent immigrants. I understand people wanting to pull the ladder up now that they are in, as many people fear a level playing field, but it is strange seing teh mental contotrions that people go through to justfy it as being somehow noble.I know it is not hapening on this thread, but when I worked in the US, it was a common theme. Colleagues with surnames such as Bader, LaRoche, Diaz or Kennedy saying, with a straight face, that they had to defend against these damned foreigners coming in.