The Flow and the Stock in the H-1B Field — a Disturbing Development

There is a deeply disturbing development in the H-1B field, one that has been all but hidden for years. And since this is a U.S. immigration policy story it is, as one might expect, convoluted.

The news relates to the concepts of stocks and flows, previously discussed in connection with the illegal alien population .In this case, a single corporation — without an ounce of participation by the government or any notice by the media — managed to increase the national stock of H-1B workers by 7,000 workers in a single year, and did so without tapping into the substantial inward flows of new H-1B aliens.

That firm is Cognizant Technology Solutions, one of the major Indian outsourcing (or staffing) companies. These firms essentially rent tech professionals to other corporations. Back in FY 2015 Cognizant figured out something that, thankfully, its major rivals so far have not.

The breakthrough or disaster (depending on your point of view) is that Cognizant found a way to expand a corporation's H-1B workforce (the stock) that was totally unrelated to the annual issuance (flows) of H-1B approvals.

These initial issuances come in three bunches, two of which are open to Cognizant and other corporations and are covered by ceilings of 20,000 for those potential workers with U.S. graduate degrees and 65,000 for other college grads. In addition to these set-asides, an unlimited number of other H-1Bs are awarded annually to universities, entities linked to universities, and to other non-profit and governmental employers.

Cognizant exploited a loophole in the existing H-1B program. The rule is that the initial visa is for three years, and that it can easily (if not automatically) be extended for another three years. Beyond that, visa extensions are available only to corporations that are in the process of seeking, or have succeeded in obtaining, green card approval for the H-1B worker involved.

Once a green card is awarded, a former H-1B worker becomes a free agent and can move around the labor market as easily as a citizen. Or, more narrowly, the worker is no longer indentured to his or her original H-1B employer, so many outsourcing companies avoid seeking green cards for their H-1Bs.

But Cognizant's executives noticed something else: Securing an approval for a green card does not mean that the green card will be issued any time soon. This is because of the heavy backlogs in the immigration categories usually used by H-1b visa holders, the second and third employment-based classes (EB-2 and EB-3). The current backlog for these visas for Indian nationals — and most H-1Bs are from India — is close to 10 years, according to the State Department Visa Bulletin.

So if an employer likes an H-1B worker, it can extend the first visa for an additional three years; then, toward the end of those six years, if the worker is still pleasing to the employer, the employer can start a 10-year worker-retention process by filing for a green card, knowing that the liberating event for the worker (actually receiving the green card) will not happen for a long time, perhaps 15 or 16 years from the date of initial employment.

Meanwhile the worker will be unlikely to seek another employer, given that his or her initial one has filed for a green card on a particular date, and that no other employer could provide one with an earlier filing date. (The worker is now permitted to switch employers, but would have to start the green card process from scratch.) The H-1B worker will have strong incentives to please his or her bosses during all those years.

So, as Professor Ron Hira of Howard University, the nation's top expert on the H-1B program, puts it: Suddenly we have a near-permanent temporary worker program.

All of this, of course, to the delight of the employers.

Let's look back at H-1B activity over the period FY 2014 through FY 2017, and see how two of the largest Indian outsourcing companies handled their H-1B applications, using government data as published by Myvisajobs.com.

One of the firms, Infosys, usually seeks the largest number of initial Labor Condition Applications (LCAs) nationally, which produces about one H-1B slot for every three filings (because the number of initial applications always exceeds the ceilings), while Cognizant usually files the largest number of green card applications. Each of the latter is usually accepted, but does not produce a card for close to 10 years. The excess of LCAs over the ceiling is resolved with a lottery; the excess of green card applications over available visas creates a (long) waiting list.

Both firms are based in India, and both, as we and Information Week reported earlier, blatantly discriminate against non-Indians when hiring H-1B workers, with Cognizant having a 99.5 percent Indian H-1B work force in 2015 and Infosys close behind with 98.1 percent. No federal agency has moved against this massive, obvious ethnic discrimination, but some private suits have been filed in federal courts; the first of the set was won by the employer.

These are the two firms' filings for FYs 2014 through 2017:

There are four quadrants in the table above, one for each company and type of workforce (new H-1B hires and green card applicants.) In three of them, dealing with initial H-1B applications for both, and with the Infosys green card process, the numbers move around from year to year, but always within a given order of magnitude.

Contrast those patterns to the one seen in the upper right-hand corner of the table, which shows how Cognizant handled its green card applications. In the year 2014 (and in prior years) Cognizant filed few such applications. Then in FY 2015 it moved up from 168 to 7,198, a startling 43-fold increase, as they must have scooped up all of their attractive H-1B workers and filed green card applications for them. In the following years the number of applications leveled off as they apparently sought green cards for the cohorts of these workers moving into the sixth year of employment.

The average salaries offered in FY 2017 by the two companies for the two different workforces are interesting:

Cognizant, which is apparently moving masses of H-1Bs into green card applicant status, paid the latter only a few thousand a year more than it paid its greenest new H-1B workers; Infosys, working only with a minority of its H-1B workers, paid their relatively few potential green card candidates much more handsomely. The salaries in the $70k-$90k range, of course, are well below prevailing wages.

The most troublesome element of all of this is the remarkable ability of a single employer to add large numbers to the already too-large pool of underpaid H-1B workers without any change in the law or regulations.

Other employers may follow this route, all the while saying that there is a shortage of Americans with these skills, which is nonsense, and demanding that the ceilings of 65,000 and 20,000 be raised. They will be urging a larger flow into the H-1B population while ignoring the lamentable growth in the stock pioneered by Cognizant.

Mea Culpa: I should have noticed this development years ago!