H-1B visas really do drive down salaries and deprive U.S. IT workers of jobs

Charges one employer fired 40 IT workers to hire H1-Bs may not be true, but it happens. A lot.

Eighteen IT workers who were fired from Molina Healthcare, Inc. are asking a California court to force their former employer to compensate them for allegedly hiring foreign workers under H-1B visas while laying off those from the U.S.

The lawsuit, filed by 18 former security analysts and programmers laid off last year, is part of the latest bubble of conflict over H-1B visas, which are designed to let technical specialists from other countries find work in the U.S.

The 18 were among 40 laid off in January, 2010, a decision they now claim was to leave room to hire more H-1B workers.

There's no word from Molina over what it thinks of the lawsuit (bet on someone using the word "unfounded" and claim to be defending the healthcare of Los Angelenos by cutting costs in IT).

There's also no response yet from Cognizant Technology Solutions, the IT services company that provided the H-1B workers to Molina, under terms of a contractor-employment deal opponents of the H-1B program call "bodyshopping."

Under that practice, service companies hire legions of foreign workers under H-1B visas, bring them to the U.S., and contract them out to employers here.

Many of those end-user companies are accused, as was Molina, of firing U.S. based IT workers with high salaries and hiring contractors under H-1B visas to replace them.

The practice is illegal, and the accusers often show signs of anti-immigrant bias or outright racism, at least part of which is reflected in the lawsuit, which claims Molina's IT department discouraged celebration of American holidays but favored Indian holidays, that American workers were snubbed by the large number of Indian-born managers and that meetings were often held in Hindi rather than English.

None of those claims is substantiated, and most of them sound wildly exaggerated, if not made up entirely.

James Otto, the attorney for the 18 workers laid off at Molina, did claim in an interview with Computerworld that the IT department at Molina was known as "little India."

Molina applied for 168 H-1B visa hires between 2000 and 2010, according to data from the Dept. of Labor.

It applied for 15 H-1Bs in 2010, but withdrew two.

On the list of companies hiring the most H-1B visa workers, Molina is No. 2,568.

On the other hand, Cognizant Technology Solutions -- named in the lawsuit as the contractor supplying most of the immigrant workers to Molina – is No. 15 on the list of H-1B employers.

Between 2000 and 2010 it applied for 7,638 H-1Bs, and was denied 239 times.

In India Cognizant hires so many technical workers for the U.S. that it is tracked as a major employer in its own right.

So, when it was kicked off a U.S. visa program that is dedicated to approving the import of executives and managers into the U.S. as part of a corruption probe by the U.S. Embassy in India, it was big news.

No specific charges have been brought, however; there has been no indication that the ban will stay in place and demand for Cognizant's services hasn't dropped enough to cause any concern to investors, according to financial analysis in BusinessWeek.

 The H-1B visa business is booming.

Whether the Molina IT department was known as "Little India" or some other nickname is irrelevant to the lawsuit. Firing residents to hire temporary workers is illegal, as is underpaying guest workers to save money compared to the cost of hiring residents.

There is a lot of cheating on those rules, however, and the result is a general suppression of wages in IT nationwide and the corruption of the H-1B visa program to the benefit of employers and at the cost of both jobs and long-term career prospects for resident and H-1B worker alike, according to a 2007 report from the Center for Immigration Studies, a non-partisan think tank that focuses on immigration issues.

Specifically, CIS found:

  • On average, H-1B workers earn a lot less than citizens or legal residents – an average of $13,000 less for the same job in the same location, according to data from FLCDataCenter.com – an H-1B disclosure site. Eighty five percent of guest workers made less than the median wage for the same job and location. Pay for 62 percent of H-1B workers fall below the 25th percentile of all U.S. IT wages.
  • That's a good indication there's a lot of cheating going on among employers, few of whom are ever investigated because the law authorizing H-1Bs forbids the Department of Labor from investigating abuses on its own initiative unless the Secretary of Labor gives personal permission.
  • A 2008 report from CIS concluded that, since 1999, there were enough H-1B visas issued for employers to have filled 87 percent of the net new IT jobs created with guest workers.
  • However, CIS also found there is no cause-and-effect relationships between the creation of new jobs and H-1Bs – a claim made mainly by the consulting companies who hire rafts of foreign workers.
  • In fact, during that time the number of actual IT jobs dropped – sharply between 2000 and 2001, followed by a slow recovery that, in 2005, was still a million jobs short of the number in 1998.
  • During the same period the number of H-1Bs peaked (during 2001), but remained largely stable by comparison.

The conclusion of years worth of analysis and reports, at least from this one group, is that H-1B visas depress wages, damage the employment prospects of U.S.-based IT workers and do nothing for the economic benefit of the guest workers themselves, many of whom run out their visas in low-paid jobs and remain in the country afterward illegally, CIS concluded.

It recommended the feds revamp the H-1B program to favor employers less and be more fair overall:

How to fix the H-1B

  • Retain annual cap of 65,000 visas;
  • Limit number of H-1B visas an individual employer can obtain based on its number of employees (to keep bodyshops from hiring hundreds);
  • Employers should use standard federal sources for prevailing wage data and base H-1B worker salaries on them;
  • Employers should pay H-1B workers at a level higher than the average wage for the same job (to make replacing U.S.-based workers less attractive);
  • Employers should be required to provide a standard occupation code (SOC) as a job description when applying for the visa
  • The U.S. Citizenship and Immigration Service should make data on wages and employers of H-1B visa holders public, rather than having less precise data channeled through the Labor Department or through the FLCDatacenter.

Those recommendations, spelled out in a 2007 report, aren't going to be fulfilled any time soon.

In January, the non-partisan federal General Accounting Office released a report designed to identify weaknesses in the H-1B program and ways to fix it.

CIS researchers said the report's assumptions and conclusions made it look more as if it were written by an association of manufacturers trying to lighten their labor costs than an objective agency watching out for the rights of U.S. residents.

"The report is a double disappointment; first, because it misses the central point of the program, the deliberate depression of wages; and secondly, because the government rarely puts as much money and person-power into an analysis of a foreign worker program as it did into this one," according to a January blog entry from David North, immigration researcher and former assistant to the U.S. secretary of labor."

GAO recommendations to Congress:

  • Review qualifications for workers in the program, exemptions from the cap, level of the cap and whether it's appropriate to let consulting and staffing companies hire most of the H-1B workers.
  • Give the Dept. of Labor the power to subpoena employer records to help investigate H-1B abuses;
  • Hold the company for whom the H-1B recipient works – not the staffing company – responsible for sticking to the rules of the program;
  • Improve tracking of the status and location of H-1B workers by connecting them to immigration-tracking databases then under development;
  • Require that H-1B visa data be available online and that businesses hiring gust workers post updates of their status;
  • And (most unbelievably) that the Employment and Training Administration – which administers the H-1B program – give access to its database to the Dept. of Labor's Wage and Hour Division so the pay of guest workers can be tracked. (Who knew the DoL couldn't see that data? What rationalization could there possibly be that would justify that?)

All of which means nothing to the 40 IT people laid off at Molina or the 18 who said it laid them off illegally.

There's no real evidence so far that's true.

There is real evidence that many other employers cheat – on the salaries they pay H-1B visa workers as well as in the number of residents they employ – and that both immigrants and locals are hurt by it.

There is no evidence Congress is going to do anything about it.

According to the evaluation of CIS, in fact, the GAO's report is evidence that even the GAO barely recognizes H-1B abuse as a problem or that the weak solutions it suggests will either generate any action in Congress, or do any good if they did.

In the meantime, U.S. employment figures dipped again this month, according to the Bureau of Labor statistics, and IT employment remains flat or growing only slowly.

Welcome to the early 21st Century: showplace for employment rules and corporate abuses that look an awful lot like those of the late 19th century gone global and digital.

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