90 Miles From Tyranny : About 40% of H-1B Jobs Give Employers a Tidy $40,000/Year Discount

Saturday, January 19, 2019

About 40% of H-1B Jobs Give Employers a Tidy $40,000/Year Discount

A recently released report on the H-1B program (for skilled nonimmigrant workers) indicates that in at least 40 percent of the jobs the employer gets a full-time (alien) worker for a $40,000 a year discount from actual prevailing wages.

No wonder many employers use this program and shoulder aside citizen and green-card workers! My sense is that between half a million and a full million resident college grads have lost decent jobs to alien workers as a result of H-1B.

The comprehensive and damning report, "Reforming US' High-Skilled Guestworker Program", is by one of America's leading experts on the H-1B program, Professor Ron Hira of Howard University, and Bharath Gopalaswamy, director of the Atlantic Council's South Asia Center. It was published by the Atlantic Council, a distinguished Washington think tank whose chairman is Jon Huntsman Jr., the former GOP governor of Utah, and currently our ambassador to Russia.

The 14-page document carefully describes the complex inner workings of the H-1B program and its impact on U.S. workers. The best of many such articles I have read on the subject over the years, it highlights these points:
  • Most H-1B employers do not have to make any effort to recruit U.S. workers before they are eligible to use the program;
  • Most of the H-1 B workers have, at best, average credentials and most are doing run-of-the mill work;
  • The program design itself is deeply flawed, and it is important to address that issue rather than overemphasizing the behavior of certain "bad actors" within the program; and
  • The program needs an assertive, well-designed enforcement program rather than just responding to individual complaints.
Perhaps the strongest part of the article is its analysis of the weak, complex, and (to many) the easy-to-misunderstand wage regulations set by the U.S. Department of Labor. In a context of actual wages paid in the industry in question, the Department sets four wage levels for H-1B hiring purposes:

Wage LevelWage Percentile
117th
233rd
3Median (i.e., 50th)
466th

The employer then chooses which level to pay the specific alien worker. Level One is for entry workers, while Level Four is for supervisors, with gradations in between.

Were the system to be fair to both aliens and competing U.S. workers, the pay choices of the employers would be about 25 percent in each of the levels. This does not happen.

Instead, in 2017 employers used wage Level One for 41 percent of the jobs, and Level Two for 37 percent, leaving only 12 percent of the jobs at the average wage or above. It is in wage Level One that employers are getting the $40,000 a year discount mentioned earlier. The discount for wage Level Two is about $20,000 a year.

Hira comes to these comparisons (on page 10 of his article) by quoting the Labor Department’s own statistics (from the Office of Foreign Labor Certification) which show, for 2017, that the Level One wage for computer systems analysts in the San Jose-Sunnyvale-Santa Clara MSA was $76,918, while the mean wage in the same occupation was $116,522 per year, a difference of $39,604 per year.

Employers and their lobbyists talk about the program as being designed to bring America the "best and the brightest" of the...

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