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Tuesday, November 1, 2005

H-1B: Rhymes With Slavery

Nov 1 2005 12:58PM | Permalink |Comments (12) |

If you've been 'outsourced' and are having a hard time finding another job, or if your boss is hanging Damocles' Sword of job outsourcing (either to someone based in another country, or to a H-1B or equivalent worker in your country) over your head as an incentive to work ever harder, the results of a recent salary study will likely be of great interest. It validates what I've long suspected; that one of the fundamental reasons why many tech companies are so strident in their demands for relaxed visa quotas is because they can then exploit the resultant lower-cost workforce.

Here are a few particularly damning quotes from Ephriam Schwartz' column in InfoWorld:

On average, applications for H-1B workers in computer occupations were for wages $13,000 less than Americans in the same occupation and state

Miano [who wrote the report] went out of his way to be balanced, and whenever possible he gave the benefit of the doubt to the employer.

The average salary for a programmer in California is $73,960, according to the OES [Occupational Employment Statistics]. The average salary paid to an H-1B visa worker for the same job is $53,387; a difference of $20,573.

Don't get me wrong; unlike some politicians and vigilante groups, I am absolutely not in favour of locking down the US borders to immigration. With the exception of Native Americans, we're all immigrants to within a generation or a few: my father's side of the family hails from Germany, for example, my mother's parents moved from Belgium to the United States after World War I, and my wife's parents came here after Castro rose to power in Cuba. But the results of this study point to rampant abuse of the immigration system, which benefits no one; not the employee who's displaced, not the replacement employee who's exploited, not the company itself (considering factors such as overall employee morale, corporate image in the minds of progressive-minded shareholders, customers, and partners, etc), and not the country (in the eyes of its fellow world citizens) who sets the immigration policy and looks the other way when the abuse occurs.

Reader Comments

at 11/1/2005 1:53:34 PM, WorkerBee said:
So what do you propose?

at 11/2/2005 2:40:33 PM, rahc said:
And to make matters even worse, the US Senate has included a measure into the Budget Bill to increase the H1B visa cap and the fee for it. In esence, the US Senate is selling our jobs for $500 a crack.
Sen Byrd has presented an amendment to the Budget Bill removing the items on immigration. Immigration has no place in a fiscial and Budgetary bill.

at 11/3/2005 2:14:15 PM, Joel said:
It didn't appear from the article that they took job experience into consideration when doing the salary comparison. My company pays exactly the same salary to US and H1B employees. However, if there were an 'average salary survey', the H1Bs might come out lower on average because they have fewer years in the work force on average than the US workers. Many have only been out of school 1-5 years. There aren't a lot of H1Bs who have been here 10 years because they would have already gotten their green cards. Now, if he said that folks meeting the "entry level software programmer" on H1Bs were paid significantly less than citizens in the "entry level software programmer", then that would be significant to me. I just don't see that analysis in the article.

at 11/8/2005 2:36:06 PM, AS Templeton said:
I think it's wrongheaded to cast H-1B workers as victims or slaves -- setting minimum wage standards for imported scab tech labor totally defeats industry's original intent for H-1Bs: create a cheap onsite labor pool. Setting these standards will only hasten job loss to India and China.

H-1B visas in practice are aimed at reducing the high-end employee costs of tech companies; there are still sufficient domestic graduates to meet the entry positions -- tho that will soon no longer be true because students going into engineering are increasingly rare, for reasons that need no explanation here.

And don't get me wrong either: I *do* support a Southern-US border lockdown, because the current situation only reinforces contempt for the laws of our land, beyond just immigration laws. Such contempt suits the agenda of the progressivist-anarchist PC crowd, but only serves to destabilise the socioeconomic fabric of the US.

at 8/5/2006 11:12:01 AM, Days_go_by said:
It is very easy to blame H1-B workers for wage supressions.
The law is there to protect American worker's wages and interests, DOL is required to certify that no Americans are ready to pick up those jobs.
So, why do you complain?
If the system fails it is because DOL failed to implement the law properly. If they start enforcing the law wages for everyone will go up.
And talking about American wages, how many times has the minimum wage increase initiatives been defeated in Congress?
Ya, blame that too on H1-b, that H1-B are coming here to flip the burgers for minimum wage.
Globalisation is here to stay, if you can't compete, get out of the way, there is an army of talented and hard working ready to work day and night in China, East Europe and India.
If you don't let them work here, work will go over there.
Then you can spend you time leisurely fishing and partying on the weekends and flip burgers over the weekdays, an American Dream truly.
Stop bitching about H1-B, stand up and compete.

at 11/2/2007 8:44:25 AM, Brad Ward said:
There have always been problems with the free markets when it is influenced by government subsidies to corporations like H1B visas. To explain simply what's going on, consider this thought experiment:
There are two sellers, #1 & #2, and many buyers in the same market. The two sellers would like to buy their supply to make their product at a low price. The supply includes all inputs to make the product such as materials, labor, manufacturing processes, etc. Ultimately, these two sellers would like to sell their products at a high price and make a profit. Well one day, seller #1 decided that they would like to make more profit but they can't figure out how to take more market share from seller #2 to increase profits. During a meeting with management, seller #1 decides to lobby the government for more H1B visas to help them be more competitive against seller #2 because their labor rate is too high. The government agrees with seller #1 and decides to increase the H1B visa quota. Like magic, the labor rates fall as predicted because of the increase labor supply, and this makes seller #1 happy. Seller #1 can now buy their supply at a lower cost. This in turn, allows their profits to increase because they are still selling high. If seller #2 doesn't take advantage of the H1B visas or the resulting new labor rates, then their profit will be lower because they are still buying the supply at a higher price than seller #1. Therefore, seller #2 will see a decrease in profits. If seller #2 continues to be unprofitable, then they will go out of business after some period of time. Well seller #2 wants to stay in business, so they take advantage of H1B visas as well. So who wins and who loses? Since the labor rate obviously goes down, then the workers for seller #1 and #2 will take a financial loss.
That's what happens when the government intervenes. The government basically allowed the sellers to profit at the expense of someone else-the workers. This may not be the intention, but it is certainly the result. Now, let's consider what happens without government intervention:
There are two sellers, #1 & #2, and many buyers in the same market. The two sellers would like to buy their supply to make their product at a low price. The supply includes all inputs to make the product such as materials, labor, manufacturing processes, etc. Ultimately, these two sellers would like to sell their products at a high price and make a profit. Well one day, seller #1 decided that they would like to make more profit but they can't figure out how to take more market share from seller #2 to increase profits. During a meeting with management, seller #1 decides to lobby the government for more H1B visas to help them be more competitive against seller #2 because their labor rate is too high. The government disagrees with seller #1 and decides to not to increase the H1B visa quota. Seller #1 is not happy and goes back to management with a different strategy. This time seller #1 decides to improve their manufacturing process to be more efficient and increase productivity. Seller #1 can now buy their supply at a lower cost because they were innovative. In turn, this allows their profits to increase because they are still able to sell high or even slightly lower than before they were innovative. If seller #2 doesn't become more innovative, then his profits will be lower because he is still buying the supply at a higher price than seller #1. Therefore, seller #2 will see a decrease in profits. If seller #2 continues to be unprofitable, then they will go out of business after some period of time. Well seller #2 wants to stay in business, so they become more innovative. So who wins and who loses? Everyone wins because these two sellers are doing more with less. The results are lower supply costs and increased profits that benefit their shareholders and workers. Moreover, the buyers of their products benefit because the price of their products will ultimately decrease.
We're essentially making a choice between capitalism and socialism. Should the government make rules that benefit one at the expense of another?

at 1/15/2009 1:12:26 PM, longward said:
what happens when seller #3 comes along and ships jobs to india that work out cheaper than all the "innvation" or whatever ? sellers #1 and #2 are screwed .
And what if seller #3 is abroad . No new US law your likely to suggest implementation binds him .

To me this whole debate reads as people coming to terms with globalization flattening out the world where well paid american workers compete directly with those who will work for the sandwich but are not ready to accept it because it defies a century of economic history . Somehting has changed that something is #1 opening up of eonomies across the world #2 IT jobs unlike automotive or other infrastructure intensive jobs can be shipped abroad easily .
Guess what ? companies in the US will find a way to employ the person who'll work for a sandwich and if they wont a company abroad will . Things have changed, American wages WILL go down whether you like it or not . Deal with it or you'll be left WAY behind.

at 2/26/2009 6:12:42 PM, HeritageGuy said:
Check out this from the Heritage Foundation: H-1B Workers: Highly Skilled, Highly Needed, Heritage Foundation, James Sherk, May 6, 2008, www.heritage.org/research/labor/wm1916.cfm
"The median H-1B employee earns $74,250 a year—90 percent more than the median private sector salary of $39,100.[7] The average H-1B salary of $78,600 is 50 percent above that of the average U.S. worker's of $50,300."

You guys can decide who is more credible. This doesn't look like slavery to me.

at 2/26/2009 6:28:15 PM, Andy T said:
HeritageGuy - and they don't pay FICA taxes...who's the real slave in all this?

at 3/8/2009 7:32:17 PM, Slave said:
I am not an American. I am an Indian. H1B SLAVE. I am bound to my employer(Master). He decides where I should work even if was offered many times a much better pay than what I am getting now I could not take that offer because I am bound to my employer. If I take that offer I will have to restart the immigration process by which I will loose 6 years and the money I spent on attorney fees and USCIS fee. We need another Lincon to free H1B slaves from slavery. God Bless and save America from the only country in the world which still actively practices slavery.

at 3/18/2009 2:14:56 AM, Payday Loan said:
The H-1B is a non-immigrant visa in the United States under the Immigration & Nationality Act, section 101(a)(15)(H). It allows U.S. employers to temporarily employ foreign workers in specialty occupations. Microsoft has been in the headlines than they could possibly want. In the news had been Microsoft's first layoffs in the companies’ history, and then a snafu with the severance cash advance packages they gave to laid off employees. Now Sen. Charles Grassley has said that Microsoft should lay off workers employed on H1-B visas first, which the company has flatly refused. The company said that they practice nothing but fairness in its hiring practices, and the same in layoffs. Accusations of racism have been flying after the request, and Microsoft maintains that it will continue to hire employees on a strictly merit base, and will not resort to discrimination in any way, shape or form.

at 7/7/2009 2:04:00 PM, Mike said:
i am on h1b and yes, h1b guys are slaves. they cant skip jobs easily because future employers refrain from spending 6000 dollars on h1b visa transfer. current employer know this position and exploit the h1b worker.

also, if h1b guy is laid off - by law- he has to leave country next day. now how will i sell my car, sofa , tv , blah blah in 1 day. So, I better lick my employer's as* in order to keep my job. My employer know this and again exploits me.

MAKE H1B INDEPENDENT OF EMPLOYER. This will prevent abuse of the visa...

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