How Employers Game H-1B for Cheap Labor

By John Miano, February 21, 2017

The Dallas Morning News provides a good example of how employers game the H-1B program for cheap foreign labor. The authors wrote:

But critics of the visa program point to examples of how IT consulting firms use the visas to find cheaper labor: Outsourcing firms

The reality is the Dallas Morning News provided a typical example of how companies other than "outsourcing firms" use H-1B for cheap labor but the newspaper missed the significance of what they had.

According to the article:

But numerous smaller tech companies use the H-1B visas, too. At Dallas-based Axxess Technology Solutions, H-1B holders make up about 10 to 15 percent of the company's 250-person staff, said Melody Lenox, vice president of operations. The company develops software used by more than 2,000 home health agencies.

...

Axxess has hired H-1B holders from about 20 countries, including India, China and the Philippines, Lenox said. Every year, she said, it's had employees that it has wanted to hire who did not get picked in the lottery.

Lenox said none of the company's H-1B holders wanted to be interviewed because they're concerned about changes to the visa program and how they're perceived.

Let's do the follow up on Axxess. Going to the 2016 H-1B disclosure data one finds 13 labor condition applications for "AXXESS CONSULT INC.", which happens to have the same the same telephone number and address as "Axxess Technology Solutions."

All 13 applications have the same job code making it easy to look up the prevailing wage for Dallas in the Foreign Labor Certification Data Center Online Library, where we find the average salary for this job is $101,566.

  • Area Code: 19124
  • Area Title: Dallas-Plano-Irving, TX Metropolitan Division
  • GeoLevel: 1
  • OES/SOC Code: 15-1132
  • OES/SOC Title: Software Developers, Applications
  • Level 1 Wage: $33.09 hour - $68,827 year
  • Level 2 Wage: $40.96 hour - $85,197 year
  • Level 3 Wage: $48.83 hour - $101,566 year
  • Level 4 Wage: $56.70 hour - $117,936 year
  • Mean Wage (H-2B): $48.83 hour - $101,566 year

The average wage that Axxess would have to pay on the open job market for these workers would is $101,566. Yet the average wage for these 13 positions is just $79,644.54. Only one of the 13 positions is for slightly more ($105,000.00) than the average wage for occupation in the Dallas area. By going H-1B, Axxess saves $21,921.46 a year per worker.

This is all legal thanks to Congress and its four-tier, skill-based "prevailing wage" system. Axxess has classified seven of the 13 workers at the lowest skill level where the "prevailing wage" is the 17th percentile and the other six at the next skill level where the prevailing wage is the 34th percentile. By classifying these aliens as low-skilled, Access saves a bundle.

But Axxess told the Dallas Morning News: "Our goal is to hire the best of the best."

Putting Axxess's claim in the Dallas Morning News side-by-side with their H-1B labor condition applications gives two alternatives. If we take Axxess's word that the workers represented on the LCA are the "best of the best" then the company deviated from the truth on their submissions to the government. If Axxess told the truth on the LCAs that these are workers whose skill is not sufficient to command the average wage, then it told a whopper to the Dallas Morning News about their H-1B hiring.

Either way Axxess makes out like a bandit by using H-1B to hire foreign workers on the cheap.

Axxess whined to the Dallas Morning news that:

[T]he company posted jobs on its website and job boards and reached out to Texas universities but struggled to find enough candidates with needed skills, like fluency in advanced programming languages.

Duh! When your company is looking for "advanced" skills but pays substantially less than average ($21,000 a year), of course you are going to struggle to find people.

The Dallas Morning News needed to include companies like Axxess among those that use H-1B for cheap labor.