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Last February, the Los Angeles Times reported the Congressional testimony of a Walt Disney Co. employee who was laid off and replaced by a foreign worker.

The testimony was designed to illustrate how big corporations were leveraging the U.S. visa program to replace higher-paid technology workers with lower paid foreign workers. The prior year, Disney, Southern California Edison, and other companies made headlines as they fired their technology teams and replaced them with IT staff from India.

President Trump has claimed foreign-born workers are taking the jobs of American citizens. It’s caused an outcry that will surely extend beyond his first 100 days, continue to make headlines, and galvanize public opinion.

But is the idea that foreign-born workers are stealing American jobs just "fake news?"

It turns out the answer to this complicated and delicate issue is both “Yes” and “No.”

Purpose of the H-1B Visa Program

In 1990, Congress created the requirements for H-1B visa holders in order to help bring in more technology workers at a time when American higher education institutions were failing to turn out science, technology, engineering and mathematics (STEM) graduates. Silicon Valley companies like Google, Microsoft, and Apple, lobbied Congress for increasing the H1-B visa holders’ quotas, so more engineering and software professionals could legally come to this country and contribute their talent.

But in 2015, the Economic Policy Institute released findings that a select few companies were abusing the intent of the H1B visa by bringing in lower cost foreign technology workers to replace Americans with the same training. Here are some examples:

  • In fiscal year 2013, Infosys sponsored 6,269 H-1B visas holders. At that time, they were the number one employer of H1-B visa holders in the country.
  • Tata Consulting Services had the second highest number of H-1B visa holders that year, with 6,193.
  • Both firms were based in India and specialized in outsourcing technology professionals who were paid on average $20,000 less than American workers in the same role.
  • Roughly 12,000 American technology jobs were lost that year because of these firms, which provided companies like Southern California Edison (SCE) with lower-paid Indian workers.
  • These companies did not follow up by sponsoring green cards for these workers who were being used solely to make a profit.

Both Tata and Infosys have a history of running afoul of the law in these areas. In 2013, Tata paid a fine of $30 million and Infosys $34 million to settle visa fraud cases.

While these were highly publicized examples of companies gaming the system, this is not the norm when it comes to the U.S. H1-B visa program. 

Majority of H1-B Visas Aren’t Displacing Anyone

Like most arguments, there is a flip side to this coin. An April 2017 Newsweek article presented less sensationalized statistics showing there are really two types of H1-B corporate beneficiaries: the “chop shops” like Tata and Infosys, and businesses who genuinely need highly skilled workers that they simply cannot find in the U.S.

Companies like Apple, Google, and Microsoft, all make extensive use of the H1-B visa program. There is no sign that these companies are making a profit in the same way as Tata or Infosys. Netflix holds the top spot for the highest average amount paid to tech workers, at $187,293. The remaining companies listed as paying the highest salaries to H1-B visa holders are hospitals and health systems.

According to Live Mint, here are some examples of the average salaries for H-1B visa holders at U.S. companies:

  • Google        $125,000      
  • Apple          $120,000      
  • Microsoft    $114,034
  • Amazon      $109,000
  • Oracle         $98,262
  • Qualcomm $92,043 

Now compare these figures to non-U.S. based companies that provide outsourced workers:

  • Capgemini  $74,776          France
  • Mindtree     $70,000          India
  • Wipro          $68,078          India
  • L&T              $56,892          India

WBUR in Boston pointed out that sponsoring an H-1B candidate is not cheap, and in many markets, there simply isn’t enough tech talent to fill the need. MathWorks, a Massachusetts software company is quoted as saying it is tough to find experienced computer engineers in even a highly educated area such as Boston. 

Newsweek also pointed out that the American workers who were replaced at SCE were older and potentially with outdated skills. Many were trained on the job and lacked a master’s degree, which many of the H1-B visa holders had.

Live Mint concluded that the problem lies primarily with India-based outsourcing firms that have chosen to exploit loopholes in the H-1B visa process. They stated:

The statistics…underline the fact that India’s IT COMPANIES
bear part of the blame for the backlash against H1-B visas.

Has the H-1B Visa Program Been Hijacked?

Let’s not lose sight of the original intent of the H1-B visa program, which is to bring in highly skilled workers when no Americans with equal skills could do the job. Unfortunately, unscrupulous companies found a way to exploit the system for profit, leaving American workers frustrated and angry.

When it comes to H-1B visa holders, corporate greed has usurped common sense. Today, six outsourcing firmshold 20 to 30 percent of all H1-B visa applications and the majority of H1-B visa holders have only a bachelor’s degree. 

While these problems clearly exist, we would counsel caution as Congress moves to remedy any abuses of the H1-B visa program. With the current fervor in the media related to immigration, we run the risk of swinging the pendulum too far when considering changes to a system that has helped U.S. companies find talent from around the world.

Over the past several months, there have been bills circulating in the House to raise the minimum annual wage requirement for H1-B visa holders. Currently, the requirement is $60,000, which was set in the early 90s and is clearly outdated. However, legislation seeking to raise this bar too high could harm the technology industry and negatively affect the American economy.

Immigration is a complicated issue. If you’re seeking a clear path to a U.S. visa or citizenship, Katz Law Office, Ltd., can help. Contact our experienced and knowledgeable team today to schedule a free consultation.

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