The H-1B Equation
The H-1B Equation
Date: Thursday, March 03, 2005 3:03 PM
JOB DESTRUCTION NEWSLETTER
by Rob Sanchez
March 03, 2005 No. 1208
On March 8th there will be an additional 20,000 H-1B visa holders
taking jobs in the U.S. Although the visas won't officially be
available until the 8th, there has been a stampede to reserve the visas
so they have all been taken.
I have included two Computerwold articles by Patrick Thibodeau that
discuss this event.
The first article has some interesting statistics. The first shows that
the salaries of H-1Bs are declining in a broad range of job categories.
That's no surprise, but then it's followed by a study by David Foote
that claims salaries of U.S. workers increased, while H-1B wages
continued downward.
I really doubt that salaries for American workers are going up while at
the same time salaries for H-1Bs are going down. It's far more likely
that salaries for both are going down because the labor market is being
glutted by too many skilled workers. The Foote study may be flawed and
the article gives some information about the difficulty of doing these
studies but unfortunately doesn't make the connection that the Foote
study has suspicious results. Something is definitely wrong with
Foote's equation!
Here are two major sources of error that could cause false conclusions,
and I guarantee you there are many more:
* The Labor Department lumps the information into job categories that
don't easily match with jobs in the private sector.
* The government doesn't track visa holders and doesn't know the rate
at which H-1B visa holders lost jobs in proportion to U.S. workers.
You can find more about the Foote group by going to the following
website. I bri
http://www.footepartners.com/
They have strong ties with the Meta Group and Gartner so their bias is
probably towards the corporate point of view. I don't know if that's
why their study yielded such odd results.
The second article has an interview with John Borrelli, dean of a Texas
graduate school, who pushed the education button. We have heard this
before, most recently on Lou Dobbs:
Borrelli said U.S. students aren't as interested in engineering
and science studies as foreign students are. "We are not
preparing our students out of high school to compete in the area
of science and engineering very well," he said.
Another university dean made it very clear why he likes foreign
graduates - they are slaves to the universities!
The foreign students "will do everything they can to stay
here," he [the dean] said.
I am starting to feel like I'm flogging a dead horse here, but I urged
people to email Lou Dobbs to demand that Norm Matloff debate these
education myths. My pleas for action went over like a lead-filled
balloon. I don't know if people are just apathetic to the point that
sending email is too much to ask, or perhaps the majority of people
that get this newsletter really believe that Americans are poorly
educated and don't have the skills necessary for today's science and
engineering jobs. (I would prefer you send email to Dobbs than spend
time sending one to me to answer this question!)
As you can see, if these myths are not challenged they tend to
propagate through our media as gospel truths. Matloff is quoted at the
end of the article and I think it's a good quote, but where were his
comments on education?
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http://www.computerworld.com/governmenttopics/government/story/0,10801,100059,00.html
The H-1B Equation
Salary data shows split with wages of U.S. workers
News Story by Patrick Thibodeau
FEBRUARY 28, 2005 (COMPUTERWORLD) - Next week, the U.S. government will
begin accepting H-1B applications from companies that want to take
advantage of an increase in the fiscal 2005 visa cap to hire foreign
workers who have advanced degrees from U.S. universities.
Up to 20,000 new H-1B visa slots are becoming available. Opponents of
the cap increase say the graduates being hired will take jobs from U.S.
workers, including IT staffers. Supporters argue that foreign workers
are important to the country's economic health. At the core of the
debate lies a question that's likely to re-emerge as the application
process begins again: Do H-1B visa holders help or hurt the U.S.
workforce?
A Computerworld analysis of wage data from approximately 290,000 H-1B
applications filed with the U.S. Department of Labor shows that H-1B
salaries declined across the board between the 2001 and 2003 federal
fiscal years in a number of IT job categories. They include
programming, systems analysis, networking, end-user support and quality
assurance (see interactive database tool). The wage decline mirrored
what was happening to the pay of U.S. IT workers - at least until 2003,
when the salary trends diverged, according to research firm Foote
Partners LLC.
The government's Labor Condition Application database provides data
only on new H-1B visa applicants and visa holders seeking a change of
status. In addition, the Labor Department lumps the information into
job categories that don't easily match with jobs in the private sector.
Moreover, the government doesn't track visa holders and doesn't know
the rate at which H-1B visa holders lost jobs in proportion to U.S.
workers.
But David Foote, president and chief research officer at Foote
Partners, said there was a split in 2003: The salaries of U.S. workers
increased, while H-1B wages continued downward. That finding comes from
comparing the H-1B data compiled by Computerworld and processed by
Eastland Data Systems Inc. with salary information that New Canaan,
Conn.-based Foote Partners collected through surveys of about 46,000
private-sector and government IT professionals.
In the category covering data communications and networking jobs, for
instance, U.S. salaries rose 6.2% in fiscal 2003, Foote said. H-1B
salaries declined 2% during that period, according to the Labor
Department data. Foote said U.S. salaries in other IT job categories
grew at rates ranging from 1.5% to more than 6%, while H-1B salaries
saw declines of 1% to 5%.
In 2003, "the economic recovery began in earnest," Foote said. Salaries
for U.S. workers increased because companies were trying to hold on to
IT staffers who hadn't been laid off during the technology spending
downturn, he noted. Meanwhile, offshore outsourcing increased, as did
the use of contract companies that rely on H-1B visa workers.
Because clients didn't want contract-labor costs to eat into their
offshore savings, contractors had to be competitive, according to
Foote. "If they can't convince the client of theirs to pay more for the
talent, then they just have to get the talent cheaper," he said.
The fight over H-1B visas ultimately revolves around the opinions and
experiences of IT managers and workers.
Jesus Arriaga, CIO at Keystone Automotive Industries Inc., an auto
parts distributor in Pomona, Calif., is among those questioning the
need for more H-1B visas. In prior jobs in California in the late
1990s, he worked at companies that used H-1B workers, who were
typically paid less than their U.S. counterparts. "It's just like
offshoring," he said. "You're probably going to get similar skills at a
lesser cost."
Nonetheless, Arriaga said that at Keystone, he's more interested in
hiring U.S. workers, "especially when you have colleagues that have not
found work." When U.S. workers "get bypassed because other foreign
workers are coming in and taking their jobs, I don't think that's
right," he said.
Russell Lewis, CIO at GFI Group Inc., a New York-based financial
services firm, has hired H-1B workers as full-time employees and has
sponsored them for permanent residency green cards. Lewis said that his
goal is to hire the best person for a particular job and that he has
seen no savings in hiring H-1B workers full time.
"By saying, 'Well, the H-1B workers bring a cheaper labor force to the
U.S.,' typically, our experience is that it doesn't do that," Lewis
said.
Some H-1B workers attribute wage problems to IT contractors - sometimes
called "body shops."
A Labor Department employee who works in the H-1B program and asked
that his name be withheld said most complaints concern contractors who
either paid H-1B employees below the prevailing wage or "benched" them,
meaning they weren't paid between contracts.
Rajiv Dabhadkar, a former H-1B visa holder and IT programmer who
returned to India last year, said he was always paid below prevailing
wage levels by contractors. In addition, he once found out that he
wasn't receiving medical insurance even though there was a paycheck
deduction for the benefit.
"I've been really hurt by the visa system," said Dabhadkar, who formed
a group in Mumbai, India, called NoStops.Org that provides call center
support to H-1B and other tech workers.
The 20,000 additional H-1B visas will become available on March 8.
Other changes to the H-1B program will also go into effect in the next
few weeks, including a revamping of the government-mandated two-tiered
prevailing wage system under which visa holders are paid.
H-1B workers are supposed to be paid a prevailing wage, based on state,
federal or private-survey employment data. Most companies use federal
or state salary data, according to immigration attorneys, who said the
current system doesn't give employers much flexibility - often forcing
them to pay a wage that is higher than an employee's skills and
training warrant.
On March 8, the law will be changed to allow four tiers of pay in each
prevailing wage category, enabling companies to pay H-1B visa holders
something between the top and bottom levels of the prevailing wage
scale.
"It has been a virtual nightmare dealing with a two-tier system," said
David Nachman, an immigration attorney in Saddle River, N.J. "What
we're seeing now is [that] finally the Department of Labor is coming to
an understanding of what the real world is."
But Ron Hira, an assistant professor of public policy at the Rochester
Institute of Technology in New York, said the four-tier system "will
only push wages down ... for many of those workers that were probably
in between the two [tiers]."
Another change next month requires employers to pay 100% of a
prevailing wage for new and extended H-1B petitions. That rate is now
95% of the prevailing wage. Also, the fees for an H-1B application,
including the cost of accelerated processing, will rise from $185 to
$3,185.
Frida Glucoft, a partner at Mitchell Silberberg & Knupp LLP in Los
Angeles and chair of the law firm's immigration department, said the
prevailing wage and application fee increases will likely discourage
some companies from hiring H-1B workers.
Still, Glucoft expects the 20,000 new visas approved by Congress last
fall to be gone in a week.
IT WAGE DATA 2001-2003
JOB CODE FY 2001 AVERAGE H-1B FY 2002 AVERAGE H-1B FY 2003 AVERAGE
H-1B % CHANGE 01-02 H-1B % CHANGE 01-02 U.S. IT % CHANGE 02-03 H-1B %
CHANGE 02-03 U.S. IT
030 $60,357 $60,554 $59,701 -2.8% -1% +1.8%
031 $60,234 $57,041 $56,136 -5% -7% -2% +6.2%
032 $53,024 $48,062 $46,882 -9% -7% -2% +4%
033 $58,933 $54,415 $51,947 -8% +0.8% -5% +1.8%
039 $66,763 $64,883 $64,247 -3% -3.4% -1% +1.5%
NOTES:
The H-1B data includes information only on new visa applicants. It
doesnt include wage information on all H-1B visa workers in the U.S.
at that time.
The U.S. IT data comes from Foote Partners LLC in New Canaan, Conn.,
which matched its own salary survey data on about 46,000 IT
professionals against the government data.
JOB CODE GUIDE
030: Software engineer, computer programmer, programmer analyst,
engineer and scientific programmer, systems programmer, chief computer
programmer, ystems analyst
031: Network control operators supervisor, data communications analyst,
network control operator
032: User support analyst supervisor, user support analyst
033: Computer security coordinator, data recovery planner, technical
support specialist, computer systems hardware analyst, quality
assurance analyst, computer security specialist
039: Database administrator, database design analyst, microcomputer
support specialist
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.computerworld.com/governmenttopics/government/story/0,10801,100057,00.html?from=story_package
Sidebar: Foreign Students Fill Computer Science Graduate Programs
News Story by Patrick Thibodeau
FEBRUARY 28, 2005 (COMPUTERWORLD) - An argument cited by H-1B
supporters for raising the visa cap stems from the high number of
foreign students -- especially from China and India -- who come to the
U.S. to study.
Foreign student enrollments account for about 70% of the masters and
Ph.D. computer science students at Texas Tech University, according to
John Borrelli, dean of the graduate school at the 28,000-student
university in Lubbock. Last year, the number of foreign students who
applied for graduate admissions was more than three times the number of
U.S. residents who did so, Borrelli said.
In 2001, the most recent year for which figures are available, foreign
students made up nearly 60% of graduate enrollments nationwide,
according to the National Science Foundation.
Borrelli said U.S. students aren't as interested in engineering and
science studies as foreign students are. "We are not preparing our
students out of high school to compete in the area of science and
engineering very well," he said.
Most of the students enrolled in the New Jersey Institute of
Technology's graduate program are foreign nationals. The Newark-based
school has so far received 208 applications for admission in computer
science master's degree programs next year, with about 165 of those
applications from foreign students, said Stephen Seideman, dean of the
school's college of computing science. The foreign students "will do
everything they can to stay here," he said.
Typically, foreign graduates of U.S. universities get a one-year
training visa after graduation and then seek an H-1B visa.
Rock Regan, former CIO for the state of Connecticut, said state
agencies typically don't hire H-1B visa holders because of political
concerns. But Regan thinks U.S. schools are "not putting out the number
of qualified workers that the industry needs."
Despite the addition of 20,000 more visas for the current fiscal year,
the H-1B cap is still less than half of its 195,000-visa peak. Regan
suspects that the reduced number of visas will encourage offshore
outsourcing of IT jobs. Offshoring "will become more of a reality if
people can't get the talent here in the U.S.," he said.
Opponents see any increase in the number of visas as having an impact
on the prospects of U.S. students. Norman Matloff, professor of
computer science at the University of California, Davis, and a longtime
critic of the H-1B visa program, said it's largely a matter of supply
and demand. The more H-1B workers there are, the less opportunity there
is for his students, Matloff said.
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