Primer for Reporters Looking Into the H-1B Program

By John Miano, July 1, 2015

American media, I welcome you to the H-1B cesspool. After decades of neglect, I am happily surprised that Southern California Edison and Disney have drawn new attention to the H-1B program.

I do have one nit to pick. Many of you are referring to "loopholes" and "abuse". That is entirely incorrect. Disney and SCE show that the H-1B program is working as it designed to work. You need to start looking deeper.

H-1B Is Overly Complicated

The H-1B program provides an excellent illustration of why there is nothing on the planet that needs more regulation. H-1B is worthy of one, maybe two, but no more than three pages of statute. But, depending on how you format it, H-1B can be as much as 30 printed pages. All the excess length does is obscure the true operation of the program and allow abuse.

H-1B Is Designed to Hinder Enforcement

Congress has designed the H-1B program to allow it to be abused with impunity. Complexity is the means it has used to allow this abuse. For example, it would take one sentence to say "The Department of Labor has the authority to enforce the provisions of this section." Instead, the statutes go on at length specifying when and when not DoL can enforce the law.

Here's an illustration: The first step in the H-1B process is for the employer to file a labor condition application (LCA). That is where the employer certifies the prevailing wage, the wage to be paid to the H-1B worker, and to other labor protection provisions. Notice that the employer determines what the prevailing wage is.

And it gets even better. 8 U.S.C. § 1182(n)(1) requires the Department of Labor to approve all LCAs within seven days as long as the form is filled out correctly. The employer can put anything down on the LCA and know that it will be approved. 8 U.S.C. §1182(n)(2)(G)(v) prohibits the Department of Labor from going back and reviewing LCAs later. The whole LCA system is a meaningless paper shuffling exercise.

S.744 (so called "comprehensive immigration reform") devoted a page to reforming this restriction. It reworded the sentence so that — get this — the Department of Labor would have to approve all LCAs within 10 days as long as the form is filled out; an entire page devoted to doing absolutely nothing. No wonder the bill was over 1,000 pages long.

This demonstrates that Congress knows where the problems are in H-1B, but it is beholden to money interests that want to ensure that H-1B can be abused with impunity.

Another illustration of how H-1B hinders enforcement is that launching an investigation based on patterns of behavior requires the personal approval of the secretary of Labor.

H-1B Is Designed to Allow Employers to Pay Foreign Workers Extremely Low Wages

The first problem in the system is that the employer determines the prevailing wage and the employer can use nearly any source for that determination. Prior to 2005, employers used this combined with the restrictions on enforcement to pay H-1B workers low wages. However, in 2004 Congress explicitly changed the law to allow employers to pay H-1B workers absurdly low wages.

Pettifoggers will tell you that H-1B workers are required to be paid the higher of the prevailing wage or the wage paid to similar workers. And golly gee willikers, it says just that right at the top of 8 U.S.C. § 1101(n)(1). That's enough information for the willful ignorami writing the Wall Street Journal editorial page.

But scroll down to 8 U.S.C. § 1101(p)(4). There you will find that the Department of Labor is required to take an existing wage survey and divide it into four skill level prevailing wages. Notice there is no requirement that the employer pay the H-1B worker at his skill level. Even if there were such a requirement, it would be unenforceable because skill is a subjective measure.

Under this system, employers classify

  • 52 percent of H-1B workers at the lowest skill level, where they command a wage at the 17th percentile for the occupation and location.

  • 30 percent at the next lowest skill level, where they command a wage at the 34th percentile.

  • 12 percent at the next skill level, where they command the median (or actual prevailing wage).

  • 6 percent at the highest skill level, where they command a wage at the 67th percentile.

Notice that H-1B workers are "highly skilled" when industry wants more of them, but those very same workers become low-skilled when determining what they have to be paid.

Also notice that if the H-1B program excluded aliens paid less than the actual prevailing wage, the quota would not come close to being reached.

For example, in Silicon Valley the prevailing wage for a programmer is $93,891. However, an employer can legally pay an H-1B worker $57,179. An employer can save $36,000 a year by going H-1B. It is no wonder that H-1B workers are concentrated in high-wage locations of the country.

When a pettifogger tells you that employers do not use H-1B for cheap labor because the visa cost is so great, compare those costs to the $20,000-plus a year the employer can save on wages.

Also, when an employer tells you that they had to hire H-1B workers because they could not find Americans, try looking up their labor condition applications and compare the wage they claim to be paying to the actual prevailing wage.

The key point is that Congress has affirmatively acted to ensure that employers can pay H-1B workers ridiculously low wages.

H-1B Is Designed to Allow Employers to Replace Americans with Cheap Foreign Workers

Replacing Americans with H-1B workers has been going on at least since 1994.

In 1998, Congress responded explicitly by making it legal for employers to replace Americans with H-1B workers. Under the current law an employer may replace an American with an H-1B worker unless:

  1. The H-1B worker is paid less than $60,000; and

  2. The H-1B worker does not have a graduate degree; and

  3. The employer has more than 15 percent of its total employees on H-1B visas earning less than $60,000 and not having graduate degrees; and

  4. The replacement takes place within 90 days of making the visa petition.

You have to navigate through two levels of misdirection in the code to piece all this together. Congress went to a lot of effort to ensure employers can replace Americans and to hide that fact from the casual reader of the code.

Most visa petitions are filed in April for visas starting with the federal fiscal year in October, so these provisions protect no one. Congress has gone through a lot of effort to ensure that employers can replace Americans.

One of the most hilarious scenes at the Senate hearing on H-1B in March was when Sen. Orrin Hatch (R-Utah) proposed addressing this issue by increasing the $60,000 to $95,000. In other words, do nothing. Senators like Hatch are so subservient to their industry masters that they cannot bring themselves to ban replacing Americans with foreign workers.

The H-1B program is designed to give the shaft to both Americans and H-1B workers. The same bill authorized employers to include charges for "liquidated damages" in employment agreements, to be paid if an H-1B worker quits. An H-1B worker can end up having to pay his employer $10,000 or more if he wants to change jobs.

Congress Is Now Incapable of Symbolic Reform

As shown above, industry, academia, and pettifogger lobbyists have had total control over the text of H-1B. So-called comprehensive immigration reform had some largely symbolic changes to H-1B requiring more recruitment of Americans when it was released. Even those were stripped from the bill under the Hatch amendment.

Why would industry fight to remove symbolic provisions? To send a clear message to opponents: "We own Sen. Hatch and most of the committee. They will dance to whatever tune we tell them to."

The H-1B program was created 25 years ago. Since then, Congress has expanded the program and made it easier to abuse. In all that time, Congress has done nothing, zero, zip, nada to address abuse.

Only One Thing Is Not Working Right in H-1B

There is only one thing about the H-1B visa program that is not working by design: You in the media are now reporting on Americans being replaced by cheap labor on H-1B visas.

You are not supposed to report on this politically incorrect subject. You are supposed to be reporting that "Foreign workers do not displace Americans; they create jobs." You are supposed to limit your coverage to lobbyist plant stories about individuals who were not able to get an H-1B visa.

H-1B Is a Microcosm of All That Is Wrong in Washington

Why does banking reform not reform banking? Why does campaign finance reform not reform campaign finance? Why does comprehensive immigration reform not reform immigration? The answer is that lobbyists now write these bills.

H-1B provides a simple example of how lobbyists do the bill writing. While it is overly long and convoluted, it is a manageable piece of legislation to understand completely (and there are a few reporters who have taken the time to understand H-1B completely). Once you learn how H-1B has been subverted, you can comprehend how larger, even bigger money bills, such as banking reform get subverted as well.

It's Time to Dig Deeper

So there, members of the press, you have the basic function of the H-1B program. Now do your job. Find out why! If you do, you are going to find names like Abramoff popping up. It is all about money.

One More Thing

If you want to learn the dirt on H-1B, Michelle Malkin and I have a book on the subject coming out later this year.

It is sure to make pettifoggers and industry lobbyists uncomfortable.