H-1B Visa Holders Earn More Than U.S.-Born IT Professionals, Study Claims

Findings from a new IT salary study conducted by researchers at the University of Maryland challenge the notion that H-1B visa workers depress the wages of American-born citizens and that American corporations only hire H-1B visa workers for cheap labor.

By Stephanie Overby
Thu, May 20, 2010

CIO

One of the biggest complaints about the federal government's H-1B and L-1 visa programs is that they could be used by corporations to hire skilled workers born outside the U.S. at wages lower than the U.S. market rate. Indeed, anti-H-1B visa activists say the program depresses American IT workers' salaries and robs them of jobs.

But new research from the University of Maryland seems to contradict anti-H-1B visa activists' claims about the immigration program's impact on American wages. In fact, the research suggests that foreign-born IT professionals with temporary skilled worker visas actually earn more than their American counterparts, not less.

Hank Lucas, professor of information systems at the University of Maryland's Robert H. Smith School of Business, and assistant professor Sunil Mithas examined the effect of immigration policies on IT salaries using data from online salary surveys conducted from 2000 to 2005 by InformationWeek and management consultancy Hewitt Associates (HEW).

After adjusting for educational qualifications, work experience, and other individual characteristics, Lucas and Mithas found that IT professionals without U.S. citizenship earned 8.9 percent more than American citizens. Tech workers on temporary visas, such as the H-1B and L-1, were paid 6.8 percent more than those with U.S. citizenship, and green card holders took home 12.9 percent more than their American-born counterparts, according to Lucas' and Mithas' research, published this month by the Institute for Operations Research and the Management Sciences.

The professors say restrictive visa policies resulted in even higher salary premiums. In years when applications exceeded the annual caps for H-1B visas, salaries for all non-U.S. citizen IT workers—that is, visa or green card recipients—rose relative to the salaries of American-born IT professionals, say Lucas and Mithas.

Mithas says the study was driven by the lack of compelling data around claims that foreign-born IT professionals are taking away jobs from American workers.

"Much of the immigration debate in this country ignores skill levels," says Lucas, adding that the influx of non-U.S. citizens has a much different impact on job availability and wages for unskilled labor than it does for skilled workers. U.S.-born citizens and foreign workers can potentially benefit from an influx of skilled workers, Lucas says.

H-1B Salary Survey Ignites Controversy

The Lucas-Mithas research deviates from the findings of other studies investigating the effect of temporary visa programs on the salaries of U.S. IT professionals. According to Lucas and Mithas, H-1B visa holders earned an average of $75,358 from 2000 to 2003, compared with the average U.S. citizen's salary of $66,836. (The InformationWeek survey did not ask about visa status in 2004 and 2005). But according to the U.S. Citizenship and Immigration Service (USCIS), the median salary for H-1B visa holders in computing professions during the 2000 to 2003 period was just over $50,000.

"It [seems]strange to me that the authors would depend on sampled data when we have the whole census of new H-1B recipients' salaries reported [by] the USCIS, at least in aggregate terms," says Ron Hira, associate professor of public policy at the Rochester Institute of Technology. "For computing occupations those data show low wages relative to Bureau of Labor Statistics wages for Americans. The median salary for new H-1Bs is comparable to the entry-level wages for freshly minted bachelors in computer science, as reported by the National Association of Colleges & Employers. So half the new H-1Bs are being paid at- or below entry-level wages."

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