The 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.
The 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.
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