H-1B Visa Needs Reform to Make it Fairer to Migrant and American Workers

The H-1B program provides temporary, nonimmigrant U.S. work visas for college-educated workers and fashion models from abroad. While no one can deny the importance of attracting skilled, talented workers to the United States, the reality is that the biggest beneficiaries of the H-1B program are outsourcing companies that have hijacked the system—using between one-third to one-half of the visas—to replace thousands of U.S. workers with much-lower-paid H-1B workers while also sending tech jobs abroad.1 In addition, these outsourcing companies rarely provide H-1B employees with a path to permanent residence and citizenship. Outsourcing companies, however, are not the only abusers of the system: The vast majority of employers that hire H-1B workers pay them wages below the local average for the occupation.

U.S. employers don’t have to recruit U.S. workers before hiring H-1B workers. Employers and corporate lobby groups claim that they use the H-1B primarily to bring in the “best and brightest” workers from abroad to fill labor shortages in science, technology, engineering, and math fields (STEM). But despite this widely held belief, the contrary is true:

U.S. employers can legally underpay H-1B workers. Corporate lobbyists and other H-1B proponents claim that H-1B workers cannot be paid less than U.S. workers because employers must pay H-1B workers no less than the “prevailing wage.” That is true in theory but:

Here’s what wage savings can look like for H-1B employers: The average software developer in the Silicon Valley commands a salary of $147,000 per year, but an H-1B software developer earning the Level 1 wage is paid $102,000. That’s a savings of $45,000 per H-1B worker per year for up to six years.3

The top 10 H1-B employers use the program for cheap, temporary labor rather than as a bridge to permanent immigration. The H-1B visa is considered a “dual-intent” visa, which means that employers have the option of sponsoring their H-1B workers for lawful permanent resident (LPR) status, which can then lead to citizenship. But the top 10 H-1B employers sponsor very few workers for LPR status. In 2014, Tata Consultancy Services, the top H-1B employer that year, hired 5,650 new H-1B workers but only filed for two permanent labor certifications.4

H-1B workers are often exploited and often arrive in debt, and they are tied to their employers. The H-1B visa itself is owned and controlled by the employer; an H-1B worker who is fired or laid off for any reason becomes instantly deportable. H-1B workers often pay large fees to labor recruiters, which means that many arrive virtually indentured to their employer, fearing retaliation and termination if they speak out about workplace abuses or unpaid wages. And widespread abuses have been documented—even human trafficking and severe financial bondage.5

Outsourcing companies are using the H-1B program to replace U.S. workers and send tech jobs abroad. The top 10 employers of H-1B workers are not innovative high-tech firms like Apple and Google. The biggest users of the H-1B visa are outsourcing/offshoring companies that specialize in information technology (IT). Typically, H-1B workers do computer and engineering work at the office of the U.S. employer but are employed by the offshoring company. The many reported cases of U.S. workers being laid off and replaced by H-1B workers have all been facilitated by this arrangement.6 In multiple incidents, the H-1B workers have been hired with annual wages around $40,000 less than the workers they have replaced. Before they are laid off, the U.S. workers are often forced to train their own H-1B replacements as a condition of their severance packages; this is euphemistically known as “knowledge transfer.” Major, profitable U.S. employers like Disney and Toys “R” Us—as well as public employers and institutions like the University of California and Southern California Edison—have laid off thousands of U.S. workers who were forced to train their own replacements. Eventually, many of these replacements and their jobs were moved offshore.7

1. Many of these jobs are sent abroad once the H-1B workers are trained. Ron Hira, “Top 10 H-1B Employers Are All IT Offshore Outsourcing Firms, Costing U.S. Workers Tens of Thousands of Jobs,” Working Economics Blog (Economic Policy Institute), August 22, 2016; Ron Hira, “Top 10 Users of H-1B Guest Worker Program Are All Offshore Outsourcing Firms,” Working Economics Blog (Economic Policy Institute), February 14, 2013.

2. Information about H-1B-dependent employers and the applicable exemptions for H-1B nonimmigrants can be found at the Department of Labor’s website. See “Fact Sheet #62C: Who is an H-1B-dependent employer?” and “Fact Sheet #62Q: What are ‘exempt’ H-1B nonimmigrants?” Data on median wages of computer workers comes from the Bureau of Labor Statistics (U.S. Department of Labor), Occupational Employment and Wages, May 2016 [online database].

3. Foreign Labor Certification Data Center, Online Wage Library, “All Industries Database for July 2016–June 2017.”

4. Ron Hira, “The Impact of High-Skilled Immigration on U.S. Workers,” Testimony before the U.S. Senate Subcommittee on Immigration and the National Interest, Judiciary Committee, Dirksen Senate Office Building, February 25, 2016.

5. See, for example, “Techsploitation,” Reveal News, The Center for Investigative Reporting, and Farah Stockman, “Teacher Trafficking: The Strange Saga of Filipino Workers, American Schools, and H-1B Visas,” Boston Globe, June 12, 2013.

6. See, for example, the recent 60 Minutes segment “Are U.S. Jobs Vulnerable to Workers with H-1B Visas?” (CBS News, March 19, 2017).

7. Julia Preston, “Pink Slips at Disney. But First, Training Foreign Replacements,” New York Times, June 3, 2015; Julia Preston, “Toys ‘R’ Us Brings Temporary Foreign Workers to U.S. to Move Jobs Overseas,” New York Times, September 29, 2015; Michael Hiltzik, “How the University of California Exploited a Visa Loophole to Move Tech Jobs to India,” Los Angeles Times, January 6, 2017; Patrick Thibodeau, “Southern California Edison IT Workers ‘Beyond Furious’ over H-1B Replacements,” Computerworld, February 5, 2015.

8. Most of these reforms have been proposed in bipartisan legislation sponsored by Senators Durbin and Grassley, which in previous sessions of Congress was also sponsored or co-sponsored by Senators Bernie Sanders and Sherrod Brown and former Senator Jeff Sessions. See, for example, “S.2266 – H-1B and L-1 Visa Reform Act of 2015,” Congress.gov.

9. Daniel Costa and Jennifer Rosenbaum, Temporary Foreign Workers by the Numbers, Economic Policy Institute report, March 7, 2017.

10. U.S. Citizenship and Immigration Services (Department of Homeland Security), Characteristics of H-1B Specialty Occupation Workers: Fiscal Year 2015 Annual Report to Congress, March 17, 2016.

11. U.S. Citizenship and Immigration Services (Department of Homeland Security), Characteristics of H-1B Specialty Occupation Workers: Fiscal Year 2015 Annual Report to Congress, March 17, 2016.

12. U.S. Citizenship and Immigration Services (Department of Homeland Security), Characteristics of H-1B Specialty Occupation Workers: Fiscal Year 2015 Annual Report to Congress, March 17, 2016.

13. Ron Hira, “Top 10 H-1B Employers Are All IT Offshore Outsourcing Firms, Costing U.S. Workers Tens of Thousands of Jobs,” Working Economics Blog (Economic Policy Institute), August 22, 2016; Ron Hira, “New Data Show How Firms Like Infosys and Tata Abuse the H-1B Program,” Working Economics Blog (Economic Policy Institute), February 19, 2015.