Wednesday, October 26, 2005

A new study shows that companies hire foreign workers for cheap labor, not skill

Ephraim Schwartz:

It appears there is hard evidence to prove that employers are using the H-1B visa program to hire cheap labor; that is, to pay lower wages than the national average for programming jobs.

According to “The Bottom of the Pay Scale: Wages for H-1B Computer Programmers — F.Y. 2004,” a report by Programmers Guild board member John Miano, non-U.S. citizens working in the United States on an H-1B visa are paid “significantly less than their American counterparts.” How much less? “On average, applications for H-1B workers in computer occupations were for wages $13,000 less than Americans in the same occupation and state.”

Miano based his report on OES (Occupational Employment Statistics) data from the Bureau of Labor Statistics which estimates wages for the entire country by state and metropolitan area. The report’s H-1B wage data came from the U.S. Department of Labor’s H-1B disclosure Web site.

Miano went out of his way to be balanced, and whenever possible he gave the benefit of the doubt to the employer. For example, he used OES data from 2003 because this is the wage information that would have been available to the employers when filing an LCA (labor condition application).

Miano had some difficulty matching OES job codes with LCA job titles, which employers typically create. Where both the OES and the LCA listed a job as “programmer/analyst,” Miano took the conservative approach of assuming that the LCA was describing a programmer, a job title that typically earns a lower wage than a systems analyst.

Nonetheless, Miano’s report shows that wages paid to H-1B workers in computer programming occupations had a mean salary of $52,312, while the OES mean was $67,700; a difference of $15,388. The report also lists the OES median salary as $65,003, or $12,691 higher than the H-1B median.

When you look at computer job titles by state, California has one of the biggest differentials between OES salaries and H-1B salaries. The average salary for a programmer in California is $73,960, according to the OES. The average salary paid to an H-1B visa worker for the same job is $53,387; a difference of $20,573.

Here are some other interesting national wage comparisons: The mean salary of an H-1B computer scientist is $78,169, versus $90,146 according to the OES. For an H-1B network analyst, the mean salary is $55,358, versus the OES mean salary of $64,799. And for the title “system administrator,” there was a $17,478 difference in salary between the H-1B mean and the OES mean.

H-1B visa workers were also concentrated at the bottom end of the wage scale, with the majority of H-1B visa workers in the 10-24 percentile range. “That means the largest concentration of H-1B workers make less than [the] highest 75 percent of the U.S. wage earners,” the report notes.

While it would be difficult to prove that any one particular employer is hiring foreign workers to pay less, the statistics show us that, for whatever reason, this is exactly what is happening on a nationwide basis. Miano says lobbyists will admit that a small number of companies are abusing the H-1B program, but what he has found in this research is that almost everyone is abusing it.

“Abuse is by far more common than legitimate use,” he says.


US Senators push for 50% hike in H-1B visas

The H-1B visa issue revisited


At 6:21 PM, Anonymous Anonymous said...

Plus here is another trick: Bring an H-1B with high level skills over in a lower level position, say an entry level programmer, and when he gets here put him to work on higher level jobs. Even if the employer brought him in at a reasonable wage for a starting programmer, he may be working for a lot less than the job he is actually doing would be paid on the open US market.

The H-1B guy is in the US and making more than he would be in India even at a low level programmer's pay so he's happy. The employer is getting a high priced talent for a lot less so he's happy. A US tech worker is getting screwed royally but he apparently doesn't count and may not even know it's going on. Who will find out if the H-1B doesn't spill the beans? Chances are that any US workers who work with the H-1B have no idea what he is being paid even if they know what he is actually doing. Fewer still would be in a position to find out enough to connect all of the dots.

As the great progressive politician Henry Howell of Virginia used to say, "There's more folks sneakin' around in the dark than just Santa Claus!"

At 3:57 AM, Anonymous Anonymous said...

" lower wages than the national average for programming jobs."

I don't doubt the truth of this -- that H-1Bers earn less than the "national average" wage, however that is calculated (which I would like to know).

But you have to be a little bit careful here, e.g. to compare peer wages, i.e. people with about the same level of experience and/or education and/or expertise (roughly in that order of priority, IMO). Because the law requires H-1Bers be paid a "prevailing wage", and these are the factors looked at to determine that.

However, after years of seeing it, I am absolutely sure the H-1B is a vehicle to practice age discrimination. And naturally older American workers who are replaced by H-1Bers, or not even given a chance at an interview, earn more, sometimes a lot more, than your average H-1Ber, who is typically a lot younger, quite often a new graduate. So they replace experienced people, which means they have an aggregate lower wage for that reason alone.

At 9:02 AM, Anonymous Anonymous said...

"However, after years of seeing it, I am absolutely sure the H-1B is a vehicle to practice age discrimination."

Absolutely true - no doubt about it. And another little tid-bit: Since the overwhelming majority of H-1B's in IT jobs are young men, this practice lowers the number of women overall in that profession even if that is not the real purpose of importing H-1B's.

On the business end of it, you gotta admit that, unlike US women, those young third world guys aren't going to be using family related leave (parental leave at birth, FML, etc) even if they are entitled to it. Taking care of kids is women's work in their society! Big advantage to businesses who hire them.


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