by Karen M. Kroll

The Curse of the H1-B Visa Program

Dec 29, 20118 mins
H-1B VisasIT Leadership

How it works is limiting for companies and frustrating for the non-immigrant temporary workers themselves. How can it be fixed?

The H1-B visa program, like most elements of America’s immigration policy, generates plenty of criticism. In congressional testimony this year Texas Instruments human resources senior vice president Darla Whitaker said the program “limits employer flexibility, and diminishes productivity,” and the Government Accountability Office, Congress’ own investigative arm, conceded that “as currently structured,” H1-B visas “may not be used to its full potential, and may be detrimental in some cases.”

Even more scathingly, Rochester Institute of Technology public-policy associate professor Ron Hira, claimed H1-B and other guest worker programs “have made it too easy to bring in cheaper foreign workers, with ordinary skills, who directly substitute for, rather than complement, workers already in America.”

And if the 21-year-old program — which has produced more than a million petitions or visa extensions from fiscal 2006 to 2010 — is sometimes berated by the companies who use it, and the experts who see its policy shortcomings, H1-B just as often is vilified for the frustrations it creates for the employees in the system.

So now, fixes are being proposed, for the H1-B and for the permanent resident “green-card” system in general, to make the system work better for the many companies that need to use nonimmigrant workers on a temporary basis, as well as for those workers themselves.

There’s no doubt that H1-B non-immigrant classification could be extremely helpful to companies and beneficial to the workers, if managed properly. It’s designed, after all, as a vehicle to let qualified aliens seek temporary admission here to work in his or her field of expertise. As the U.S. Citizenship and Immigration Services explains it, H1-B allows employers to bring in foreign-born skilled workers for up to six years — one three-year term, with one renewal — to fill positions for which they are unable to find suitable domestic employees.

Often, those positions are technology-based, such as computer programmers, for whom there is a constant shortage in this country.

Lots to Fix

So, what all needs to be corrected?

For one thing, the permanent immigration system.

While the H1-B program may have served a useful purpose at one time, critics say it suffers from numerous structural flaws. For starters, their temporary nature limits the H1-B’s usefulness to companies trying to attract top talent, says Patrick Wilson, director of government affairs with the Semiconductor Industry Association. “You don’t go after top talent for a couple of years,” Wilson says. “You want to make them a permanent part of the workforce. These are real game-changing players.”

But the permanent immigration system has grown so mindbogglingly backlogged — a highly skilled Indian national could wait up to 70 years to receive a green card, according to an October report by the National Foundation for American Policy, a public policy research group — that the H1-B has become the method of choice among employers who really want permanent workers.

Moreover, currently workers that the program brings into the U.S. can find themselves in truly precarious situations, since the employer holds the visa. “That gives the employer a lot of power over the worker,” Hira says. If the company terminates an H1-B employee, he or she is “out of status” with immigration authorities; that is, the employee has violated the terms of his or her lawful status.Another tenet of conventional wisdom — that the H1-B visa is an initial step toward citizenship — also doesn’t hold up, says Jim Jefferies, vice president for government relations with IEEE-USA, the U.S. division of the Institute of Electrical and Electronics Engineers. “They (the employees) can start a parallel path to citizenship, but the H1-B doesn’t move them to the path.”

In fact, the H1-B visa can actually complicate employees’ ability to work while also gaining residency. Here’s how: Employees on H1-B visas who accept a new position or promotion, even with the same employer, effectively move their application for a permanent-resident green card to the end of the line. “Employees have turned down promotions so they don’t have to give up their place in line,” says Gene Irisari, director of government affairs with Texas Instruments.

Hi Per-Employee Cost

Even employers who are concerned about the welfare of their employees on H1-B visas can find the requirements onerous. Logistics Management Solutions LC, a third-party logistics provider based in St. Louis, used the H1-B program as it expanded its operations to Mexico, says LMS chief financial officer Scott Hunt. Management’s goal was to bring in an employee who could speak Spanish, and also was an expert in the Mexican highway system and carrier industry.

But, says Hunt: “The process is very cumbersome from a documentation and legal cost perspective. We didn’t feel that you could just go on your own, download the forms and fill them out.” LMS engaged outside counsel to assist in their efforts. Between time spent on the process and outside fees, obtaining the visa ran the company between $15,000 and $20,000, Hunt estimates.

Moreover, the company didn’t have the ability to determine what it was going to pay the new employee, Hunt says. Instead, the Missouri Department of Labor determined the employee’s salary. While LMS wasn’t trying to offer a cut-rate salary — indeed, it was willing to pay for the skills its needed — the fact that the company didn’t know what it would be paying made budgeting difficult.

The Wage Differential

Perhaps most disturbing about the H1-B program: its apparent use by some companies to bring in large numbers of relatively low-skilled workers, rather than those possessing specific expertise, and pay them below-market wages. For instance, Infosys, the IT consulting firm, was approved for 10,000 H1-B visas between 2007 and 2009, Prof. Hira said in his testimony. Wipro, another consulting firm, hired more than 7,000 H1-B workers over the same period.

“They’re not using the H1-B for the best and brightest,” he says. In fact, the GAO report found that less than 1% of employers garnered one-quarter of the H1-B approvals over the past decade. The program doesn’t limit the number of H1-B visa workers that any one company can hire, Hira notes. (Neither Infosys or Wipro responded to a request for comment.)

A 2007 report by the Center for Immigration Studies shows a significant difference between the wages paid to H1-B visa holders and their domestic counterparts. “H-1B wages averaged $12,000 below the median U.S. wage based on occupation and location,” according to the report, “Low Salaries for Low Skills Wages and Skill Levels for H-1B Computer Workers.”

The report also states that “employers who used the Department of Labor’s skill-based prevailing wage system classified most workers (56%) as being at the lowest skill level (Level I) as did most State Employment Security Agency (SESA) wage determinations (57%). This suggests that most H-1B computer workers are low-skilled workers who make no special contribution to the American economy, or that employers are deliberately understating workers’ skills in order to justify paying them lower salaries.”

To be sure, a number of companies eschew these practices. “That’s a different business model and bears no resemblance to our companies’ models,” says the SIA’s Wilson. “We don’t want employees who are highly valued to be thought of as a fly-by-night labor model.”

Some Proposals, and Some Hope

Several changes to the H1-B visa program are critical, experts say. One is increasing the wage floor, “so companies don’t use guest workers for cheaper labor,” says Professor Hira. He also would cap the percentage of any company’s H1-B holders at 15 percent of its U.S. workforce.

The SIA’s Wilson recommends that every qualified graduate student in a U.S. STEM program (science, technology, engineering and math), who has a bona fide job offer, be permitted to apply for a green card on an expedited basis. “You don’t want to give a master’s degree in engineering to a brilliant young engineer, then ship them home to a competitor,” he says.

In what some see as an encouraging sign, the Fairness for High-Skilled Immigrants Act of 2011, H.R. 3012, was introduced in September and passed in November. The bill, sponsored by Jason Chaffetz (R-Utah), would eliminate the per-country limit on employment-based immigrants. That should allow employees from countries like India and China to more quickly move through the application process to receive green cards, Irisari says.

Streamlining employment-based immigration has become increasingly critical. In the past, highly skilled, foreign-born workers were more willing to wade through the voluminous red tape of the U.S. immigration process. Today, they can choose from a growing number of attractive labor markets. “We’re competing worldwide,” for talent, Irisari says. “We never want not to have the best and brightest in the U.S.”