Related Publications: Backgrounder
MARK KRIKORIAN: Good morning. My name is Mark Krikorian. I'm executive director for the Center for Immigration Studies, a think tank here in town that examines and critiques the impact of immigration on the United States.
We are hosting this panel today on H-1B visas, and released a report that John Miano, the author has prepared, partly because there really hasn't been a lot of quantitative analysis, or really any kind of rigorous analysis of this issue of H-1B visas, which are temporary supposedly temporary visas, non-immigrant visas for specialty occupations and that covers a lot of ground. But what really is relevant here is the issue of people working in the tech industry, computer programmers, software engineers being brought in, and then this visa often being used as a tryout immigration program or being used for purposes of outsourcing. We'll have comments on both of those aspects of it.
And even though what is in the news today is amnesty for Mexican illegal immigrants, to simplify it, nonetheless, this issue actually does have a good deal of bearing on the current debate. I mean, first of all, just in a practical sense, the bill being debated in the Senate actually has a significant increase in H-1B visas the H-1B visa cap.
But also the bill has . . . part of it is actually premised on the idea of skewing immigration, legal immigration, away from family connections and toward job skills. And a lot of that, frankly, is smoke and mirrors, and the substance of it in the bill is not what senators would have you believe or what they themselves believe. Nonetheless, the issue has been raised, and it's one that really needs to be addressed in discussing our immigration policy, and we hope this will illuminate some of those discussions.
The paper we're releasing is in the packets you have. And the author is John Miano. He'll be speaking first and presenting, summarizing his results. John is the founder of the programmer's guild, which is an advocacy group for programmers being replaced by foreign workers. He himself was in the software industry, has a law degree now, and is one of the more active people in the country on this issue.
We're going to have two respondents. One is Ron Hira, to my left, an assistant professor of public policy at the Rochester Institute of Technology focusing on engineering workforce issues, specifically these kind of issues, and innovation policies, on leave from his teaching job this year, and he is a research associate at the Economic Policy Institute, which is another think tank here in Washington. He is also an expert on outsourcing issues, and actually wrote a book is co-author of a book called outsourcing America.
And our final commentator will be Jessica Vaughan, a senior policy analyst at the Center for Immigration Studies, former visa officer in the Foreign Service Department, who has written a good deal on that generally on speaking of visa issues. She is going to talk some about how the plumbing of the H-1B system works, the mechanics of it, and maybe suggestions on how that might be fixed. After that, we'll have some Q&A, but we'll start with John. John?
JOHN MIANO: Thank you. The purpose of this research was to take a numerical look at what is going on in the H-1B program with regard to the computer industry, for computer workers in particular. What I wanted to do was see what do the numbers actually tell us about the H-1B program. And what I think we see is there is a big disconnect between what the politicians tell us about the H-1B program, what the lobbyists tell us about the H-1B program, even what some of the media tell us about the H-1B program, and what the H-1B program actually does.
One example we found out just last week is that we often hear that if employers can't get their H-1B workers in the United States, they are going to have to work offshore. And last week, there was a release of some of the actual visa data, [from] which we found that the largest chunk of H-1B visas are going to off-shoring, and the majority of visas for computer workers are going to off-shoring companies.
Another I think illustration of this disconnect was an editorial in the Washington Post, rather hysterical in tone, and it this was two weeks ago it stated that as a result of this, as a result of the H-1B quota, the tens of thousands of H-1 rejects will constitute some of the world's best and brightest. But I think when we actually look at the actual data, and see what is actually going on in the H-1B visa program, we see something entirely different.
Now, let me tell you some of the goals that I had in doing this study. I think that we have all seen a lot of studies done to try to influence public policy; that they have results that seem to be pulled out of thin air.
So one of the things I wanted to do in this study was to take a scientific approach to it. And by that I mean that I have taken data that is available to anyone out here. I have documented the procedures that I have used in the study, and I believe that anyone here can go and take the data that I have to take the data that I used, use the procedures that I used, and get the same results that I got. And in fact, I know that several people have actually done that with the previous study, and to my knowledge, no one has come up with anything significantly different. And in fact, one trade publication did the same procedure except using engineers rather than computer workers and came out with roughly the same results.
And the other goal that I had with this study was to be conservative, that I when I did the study, I took every turn possible that would try to minimize the H-1B U.S. wage difference. So I didn't want to I wanted to be sure that nothing here would be inflated.
Now, the actual mechanism of doing this study is fairly simple. And what it involves is the merging of two databases, and in the computer industry, we call that joining two databases. One database, it's out here, is called the OES database. And OES stands for Occupational Employment Statistics, and this database is maintained by the Bureau of Labor Statistics. And the OES database has wages for U.S. workers broken down by occupation and location, and they also give the average wage, the median wage, and they break down wages by percentile ranges. And this gives us a baseline for what U.S. workers are earning.
The other database, on the other side, is the LCA database or Labor Condition Application database, and this is maintained by the Department of Labor, and this database contains records that are submissions employers make as part of the H-1B application process where, among other things, the employer certifies the prevailing wage. They declare what the prevailing wage is. They specify what the job is, where the worker is going to be, and what at least what they are going to pay the worker. And there is additional data, but that is what is really used in this study.
And so what you do is you match up, for each record in the Labor Certification database, you find the corresponding record in the OES database, and then with the database system, it's fairly easy to run queries and analyze how wages in the H-1B program compare to U.S. wages.
Now, due to the time limits here, I can't go into all of the results in the study, so I just selected a few I would like to highlight. The first one I would like to talk about is prevailing wage claims. In the H-1B program, employers are required to pay at least the prevailing wage. In some cases, they have to pay higher, but they have to pay at least a prevailing wage. The problem is that in the H-1B program, the employer gets to determine what the prevailing wage is. The employer can use nearly any source to determine the prevailing wage. And when the employer submits the prevailing wage claim as part of the labor certification, the law specifically limits the approval process to checking the form is filled out correctly. So there is no content examination.
And what I found, comparing the labor certifications to actual U.S. median wages is that for the same occupation location, prevailing wage claims were about $16,000 less than the median U.S. wage. And this is broken down record by record then summed up using a computer. What I think this tells us is that what employers are claiming is the prevailing wage in the H-1B program has no relationship whatsoever to what U.S. workers actually earn.
Now, the next result I would like to share with you was an analysis of H-1B wages. And I'll go into a little bit more detail here. And it's shown in this chart to my right, your left. And what I did here was break down break down workers into six different groups, H-1B workers. And these groups correspond to the percentile ranges reported by the Bureau of Labor Statistics.
So at the far left of the chart for you, that is the the pair of columns there represent the bottom 10 percent of U.S. workers in earnings in the computer industry. And then if you move up, the next group is the next 15 percent. And these white bars represent the percentage of U.S. workers in these ranges. And if you'll notice that the height of the white bar is the same as the width at the bottom and the reason I have the white bars there is strictly for comparison because the ranges reported by the Bureau of Labor statistics vary.
And what you can see, the far left is that where 10 percent of U.S. workers earn, we find that 11 percent of H-1B workers are in that range, roughly the same. But then when we move up to the next 15 percent, we find that 40 percent of H-1B workers are in that range. So combined, we have 51 percent of the H-1B workers reported having wages in the bottom 25th percentile of U.S. wages.
And then we move up, with the three columns there, you can see that 84 percent of wages reported for H-1B workers were reported for H-1B workers were below the median U.S. wage for the same occupation and location for computer workers. And then, notice, as we get up to the higher ranges where the highly skilled workers tend to be, and certainly when I was in the computer industry, this is the type of range earnings that I was making, that the number . . . the percent of H-1B workers dwindle, so very few are up here. And over all, the average age for H-1B workers was about $12,000 a year below what U.S. workers for the same occupation and location made.
Now, the next result and this is the last major one I am going to show in the study is new to this particular study, and was . . . actually the results were quite surprising to me when I did it, when the numbers popped out. And this deals with the issue of skills for H-1B workers. Starting in 2004, Congress changed the law to allow employers to make skill-based prevailing wage claims. Prior to 2004, prevailing wage claims are supposed to be based upon the median wage overall for the occupation and location. In 2004, Congress directed the Bureau of Labor Statistics to come up with four skill levels, and to find a prevailing wage for each. And then employers can then incorporate the worker's skill into the prevailing wage calculation.
So what I did is matched up the labor certifications that appear to be using this mechanism and identified which skill level they corresponded to. And this is about one . . . this represents about a quarter of all of the labor certifications for computer workers where you could be identified using this mechanism, and found that the majority of workers, 56 percent, were being classified at the lowest skill level. And as you see, the next skill level is at 31 percent. And I've noticed that those two skill levels, the prevailing wage is below the median U.S. wage. And then as you move up the charts at the higher skill levels, then the percentage of H-1B skill workers dwindles.
So what I think we're seeing here is that while, like the Washington Post was telling us, that the quota was keeping out the world's best and brightest, we have seen no sign in the wage data or what the employers are classifying the skills of these workers, that this is a program being used for the world's best and brightest.
And I would like to conclude here with some figures that I came across while doing this study but are not actually part of the study. And the big debate with H-1B programs right now is the quota, how big we should make, right, the program. And in most of the legislation, what they're trying to do is make the quota irrelevant by excluding as many people possible from the quota.
But from 2000 to 2005 and this is the latest data available the United States gained about 330,000 computer jobs. So after a little dip, after substantial dip and a gain, we now have about 330,000 more people employed as computer workers in the United States than we did in 1999. And during this same time period, we granted H-1B visas, new H-1B visas, to 330,000 workers. So we have approved enough H-1B visas for computer workers to fill every last computing job created in that time period. And even just in the last year available, 2005 about 20,000 computer jobs were created, yet we granted 47,000 H-1B visas for computer workers.
Now, things were even worse in the engineering fields. And I think it's particularly ironic that one of the justifications being used for the H-1B program is some dubious studies claiming huge numbers of engineers being produced in China and India. But in this same time period, the United States has lost 120,000 engineering jobs. So we are down have fewer engineering workers now than we did in 2000 yet we continue to important H-1B workers. So about 90,000 H-1B workers compared to a loss of 120,000 jobs.
So quite simply, the numbers here simply don't add up. I mean, how do we add more H-1B workers when we already are adding more than we need to fill these jobs? And I think these . . . raise the question of where are all of these workers going because they are obviously not taking every single computer job.
And the final point I would like to leave with you here with this is that I think what we see with the data is we need to change the H-1B program to limit [it] to people who are actually highly skilled. I notice that if we limit it to people limited the H-1B program to people employers claimed were highly skilled or people who were highly skilled according to what their wages are being the wages being paid, we wouldn't be coming even close to using up the annual H-1B quotas.
Thank you, and I'll return it to Mark.
MR. KRIKORIAN: Okay, thank you, John. Ron?
RON HIRA: Thanks, Mark, for inviting me to speak here. Let me preface my remarks by saying that I'm generally in favor of increasing high-skill immigration, but how we do that really does matter and much of the discussion that we are having today is about how we do it. How do we actually bring and encourage the best and brightest from abroad to come and choose to live here?
This is obviously a timely paper considering that high-skill immigration is being debated right now in the Senate. And the H-1B program is one piece of our high-skilled immigration system, and it's been, for better or worse, the center of public attention within the high-skilled immigration debate. And I think for worse in some ways.
And then this paper is particularly important because at least the my understanding of the Senate compromise bill that is being date S.1348, is that the prevailing wage regulation has not been fixed, and this paper goes to the heart of one of the major flaws within the H-1B program, which is that the prevailing wage does not equal the market wage. The goal of having a prevailing wage is to ensure that foreign guest workers are paid what an equivalent U.S. worker would get, i.e., a market wage. And it's pretty clear from this data, as well as other data that in fact that prevailing wage is not a market wage, and that is what needs to be fixed in the bills or in any kind of legislation.
But let me take a step back and say that I think that the stakes are really pretty high here. This isn't just about the H-1B program; this is really about fundamental changes in the structure and health of the science and engineering labor market. Science and engineering is really the key to economic growth, and not only economic growth but to our military superiority. And a healthy science and engineering labor market is key to our science and engineering enterprise in the U.S.
One of the problems with this high-skilled immigration debate is that it has really been done with very little analysis. This paper is actually an exception to that. John has done an excellent job being rigorous and being conservative and being transparent is very important, about his methods, and it does provide us new information on the H-1B [program]. My takeaway from this paper is that basically the LCA process, that is the process of determining prevailing wages, with the goal of having guest workers be paid a market wage, is basically a complete failure. And why is that important that it fails? Well, it's important because this is the primary safeguard to ensure that the H-1B program is not exploited, that the foreign guest workers are paid market wages, and that you don't do damage to the health of the science and engineering labor market in the U.S. So it's critically important that this gets fixed.
And this isn't just John's conclusion; this is a conclusion of government report after government report. One inspector general has called the LCA process no more than a rubber stamp, the process being perfunctory, and so on and so forth. These are the kinds of phrases that are used to describe it. And remember, this is the primary safeguard . . . mechanism that we have got.
Now, some of them are going to attack John's paper because by saying that the data are imperfect, and therefore you can't draw the conclusions that John does. I think this is a hollow argument, though, and it's a hollow argument for three reasons. First, the data or the findings are corroborated by USCIS petition data. That is the better data that people point to. If you look at the median wage in FY05, this is USCIS petition data. This is the better data. The median wage is $50,000, which is very close to what John finds in his paper. And by the way, that $50,000 for computer professionals is below the entry-level wage for a freshly minted bachelor's degree in computer science.
Second, I think it's a hollow argument because these same interest groups that have been arguing that this is imperfect data are the same ones that are preventing full disclosure. They are also arguing that we don't need additional information about it.
Third, we have already got a trial run of how good the LCA data is. We looked at I did some research, and you have got a paper in the package, looking at the top requesters . . . top-requesting employers in the LCA database. And what I did was compile the top 20 employers who are requesting H-1Bs based on the LCA data.
What we found was that offshore outsourcing firms were actually the leading employers; they were the leading users of the H-1B, which is completely antithetical to the arguments and rationale given for the H-1B expansion, which is to prevent outsourcing from happening. In fact, the companies that are outsourcing the most are the heaviest users of the H-1B. One would then draw the conclusion then in fact it's speeding up the process of outsourcing jobs.
Well, since that data was released, that paper was released, we actually have actual petition data that has been released by the USCIS and then also by Stewart Anderson yesterday at a press conference.
That data corroborates and validates the findings from the LCA that in fact the leading employers on the petitions are in fact offshore outsourcing firms.
Now let me take a step back and talk about what I think are the three major flaws in the H-1B program. The first is that there is no labor-market test. So contrary to what most people believe, including politicians who have said this publicly, and newspapers get wrong over and over again, employers do not have to look for U.S. workers first before they hire an H-1B, and in fact could displace a U.S. worker with an H-1B worker.
This is a very widely held misconception in fact. The New York Times made this mistake a month ago. The L.A. Times has made this mistake. The Wall Street Journal has made this mistake. And the New York Daily News actually wrote an editorial talking about H-1B expansion promoting H-1B expansion and [using] this as a rationale that there is a labor-market test that they have to look for American workers first.
Well, lo and behold, that was false, right, so they are writing editorials based on this. So we need to get that labor-market test. I mean, my takeaway from that is that most people think that makes sense, right, that the employers should look for U.S. workers first.
The second, which is what John got into, the second flaw is that this prevailing wage is not really a market wage, and the third is that there is virtually no oversight in the program. I won't go into details there.
I think all of these flaws really need to be fixed. The Senate bill that is being discussed right now only fixes part of the flaws; I don't think they fix all of them, and certainly don't fix this prevailing wage loophole.
So let me close the loop back to why this is important in terms of the science and engineering labor market. There is a sizeable share not everybody, but there is a sizeable share of people in IT occupations, in particular, but also in engineering occupations who believe that the H-1B programs is a scam, that it's a way for employers to bring in lower-cost labor. They may be right, they may be wrong, but the perception is out there.
And that is very important because, if we really do want to encourage people to go into these professions, their the best ambassadors to that future pipeline, to those students, are the people who are working in those professions. If they feel like the H-1B program and the government is working against their own profession, what are they going to tell their sons and daughters, their nieces and nephews, their friends and family should you study these professions, should you study these things in college?
And so maybe the industry lobbyists are right; maybe this is not a cheap labor program. Maybe it's working and these are, you know, we really need these folks and so on. And I think some of that is true. It's partial truth, but some of it I think is false. Regardless, what we really need is full disclosure, and let's let the chips fall where they may. So thank you.
MR. KRIKORIAN: Thank you, Ron. And now Jessica.
JESSICA VAUGHAN: Thank you. And thank you, John, for taking on this program, and for doing the work to go through the database, the actual information of what is happening in the program to enable us to get past the industry claims that have dominated the discussion at this point and to enable us to look at what is actually happening and start to get a handle on how this affects people who work in this industry and the industry as a whole, and the future of the industry.
The H-1B program was created or I should say, the H visa program was created many years ago, and I issued my fair share of H visas when I was a consular officer in Trinidad. Back then, most of the ones I issued went to Calypso singers who certainly had unique skills to bring to this country, but they were there was something different about them. One was that they did have unique skills, but also, they weren't planning to move to the United States permanently.
The program really has changed significantly over the years. And not only are we getting more H workers and H-1B workers in particular, but also we are no longer for the most part getting workers with unique skills or something new to bring to this country, but more often we are seeing that countries are using the program to actually substitute H-1B workers for American workers in certain professions, in particular.
And as the other speakers have alluded to, there are certain niche industries that have figured out how to use the program in a way that provides them with, in effect, a subsidy to their business that allows them to attract business away from American companies that aren't relying on foreign workers in this way to lower their labor costs.
The result is that not only are we seeing some higher unemployment and downward pressure on wages of American computer Americans in the IT industry specifically, but the other phenomenon that I find a little bit troubling is that, because these types of companies are scooping up so many of these visas that are limited numerically, many of what I would call unobjectionable users of the program are getting closed out of the process.
The program was really not set up to meet a shortage of workers; it was simply set up to allow American employers to hire somebody from another country on a temporary basis if they found someone that they wanted to hirer; it was never intended to be used in huge numbers like this or, you know, to meet labor shortages. And part of the reason is, I think, that a lot of economists would agree that having a guest worker program is not necessary the best way to address a worker shortage over the long term, certainly, that we want to look at pipeline issues and so on.
And I also wanted to add that the latest statistics that we have from USCIS, the government agency that administers the program, at least the petition part, in addition to the Labor Department and the State Department we don't have very recent statistics from them but the last that I could find from 2005 also confirms John's research in terms of what is happening. Something like 65 percent of the approved applications in 2005 were for people who were aged 25 to 34.
And I think it's . . . most of us know that there aren't many people who actually peak professionally at that age unless you're a professional athlete or maybe a woman in a childbearing years or something like that that clearly these are young workers and they are not the best and the brightest and they are not particularly well-skilled yet. Forty-five of percent of them that year had only a bachelor's degree, and while that is great, but, it's, again, certainly no indication that these are workers that have anything unique to bring to our economy.
How does the law let this happen? At some point, the H-1B program was changed a little bit so that people like, people like performers and athletes and entertainers were moved out of that category to make room for more professional workers, and that is about the time that the prevailing wage requirement was put into the law. But it was done in away, as others have mentioned, that relies on an employer's promise that they are going to pay this worker the same as they would pay an American worker, which would make it . . . would provide very little incentive for that employer to use this as a substitution for U.S. workers.
Well, I can't think of many other government programs that are run on the basis of somebody's promise about how they are going to adhere to the rules. And as the fellow who used to run the LCA program over at the Labor Department told me, he said, these applications moved through our agency, in his words, like a knife through butter.
And not only do they simply to make sure that the application is filled out completely, there is one additional thing they do, John, he told me, that they make sure that there is a check attached to the application, and that is pretty much all they look for. There is no attempt made to verify the claims on these applications. And John found, by going through these claims one by one, that there are many of them that are clearly bogus, and cases where people are simply, you know, making much of an attempt to hide the fact that they are using a depressed prevailing wage on their application.
So there really does need to be much more oversight. It's not all that difficult to think about how you might do that. Simple random auditing of some of these applications I think would go a long way toward restoring some integrity to that part of it.
Really, the only thing that I think has kept the program from completely exploding out of control is the fact that there is a cap, at least a nominal cap, on the number of H-1Bs that can be issued in any given year. It's not a complete cap; the cap only applies to certain kinds of applications. And almost half of the visas that are granted actually go to applications that are not part of the cap. These are for people working in higher education, for non-profit research organizations or government research organizations. So all of those are outside of the cap of 65,000. There are also an extra 20,000 visas that are given for people with advanced degrees.
So there are ways we get around the cap that the annual issuances right now are running at about 117,000 a year total, and that is a cap of 65,000. So the cap is really a useful tool, and I would argue just as important as the prevailing wage provision in the law. It's low-tech; it doesn't take much to administer. Somebody just needs to count the visas. But it is something that is pretty clean.
The downside of having the cap is that it doesn't provide us with any way to discriminate among applications, if you will. It doesn't provide a mechanism for picking out the people within the applicant pool who actually are the best and the brightest. And some people have started to argue that, look, if we are going to have a cap, and there are some people within the industry are starting to concede that a cap makes some sense if we want to have some control over the program and in some ways makes more sense than having bureaucrats make decisions about applications or putting in hurdles for employers to have to undergo a labor-market test, solutions like that. But if you're going to have a cap, why not within that cap find a way to pick off the people who really are the best and the brightest.
And one way to do that would be to have a point system in place whereby those applications out of the applicant pool, you're going to skim off the ones who, say, have the . . . are being paid the highest wages or perhaps fulfilling what people might agree on is a genuine labor shortage in some industry, if we decide that that is the way to do it but to find some way to avoid having all of these visas go to the people who get in the door first and scoop up the most of them.
Another proposal that is out there that I think has a lot of merit would be to impose some kind of a cap on the number of visas that can go to any one employer. So you don't have just a handful of companies not monopolizing is really not fair to say, but taking more than what might be considered their fair share of the visas so that visas will still be available for people who, say, want to hire a genuinely well-qualified geologist from Australia or Saudi Arabia or wherever, or perhaps a highly skilled civil engineer from Ireland or wherever, and that they actually have some shot at getting that person here and not having to go through this big to-do every year right after the season opens on H-1B visas.
So there are a number of things I think that can be done to tweak the program to make sure that it is not disadvantaging workers in one particular industry, like the computer industry.
The other thing that I think policymakers need to take a look at is the fact that the visa really is not a temporary visa; it is the first step toward a green card both for the people who are applying for the visas and their employers as well. The reality is that a very large share of people who are coming in as temporary workers are staying permanently. The Department of Homeland Security doesn't let us know how many of those people are adjusting each year. The last time they actually released a number, it was something like 85,000 people a year were adjusting status; that means getting a green card after having been here on a temporary worker visa. And that is a pretty significant number.
In my view, six years is just too long a time period to allow someone to be here as a temporary worker. It is really outside the international norm for these kinds of visas. Most countries, when they allow temporary workers, do it for four or five years at the most. So six years is pretty generous.
We also have a provision in the law that allows . . . you know, we don't even make any pretext of expecting applicants for these visas to pretend that they are coming here as a temporary worker. There is a loophole in the law that says you don't even have to keep your house in your home country or lie to us and pretend that you're actually going to go back to your country. We know that you're probably going to say and so we're not going to make you jump through any hoops. And I think that needs to be reconsidered as well, and that is another easy fix in the immigration law to . . . that, if we're going to call these temporary visas, they really ought to be temporary, and we ought to expect people to come into it with that understanding from the very beginning.
And I just want to add one thought to Ron's comments about the importance of this program to the future of the technology professions in the United States, and just add that it is clear that this phenomenon over the last decade, and the presence we don't know exactly for sure; it's probably around half-a-million to 600,000 H-1B workers in this country is most definitely affecting people's choices of college courses of study and the professions that they choose. And there are reports already that a significant there is a noticeable drop in the number of not just Americans who are applying to technology programs, applying to study at American universities, but specifically women and minorities in these fields.
I mean, it's not just that there has been salary-depressing effect or a loss of job opportunities for women. But also, there has been a noticeable change in the quality of the employment experience itself. For example, I have a friend where I live in Massachusetts who works she is a software engineer, and she works for one of the big software companies that is up in our area that is in fact a big H-1B user. And here is a woman in her 40s. She has kids. She is working on a team with four other engineers who are all young, single men from different countries around the world who are here by themselves, and all they do is work.
And she is under terrific pressure. She said not only has she noticed the salary is going down with the other engineers employed by the company but there is terrific pressure on her to put in the same kind of hours, in the same way as these guys who are here without their families, single, and working all of the time. And she said it's she's considering leaving and she knows many other women in the field who are also considering leaving for that reason, because it's hard for them to make the 7-a.m. conference calls with the folks back in Bangalore. It's hard for her to, you know, she takes home work and works every night from home because she can't stay in the office because she has three kids.
So these are all sort of intangible ways that our increased use of this program is dampening the interests of Americans and taking up these professions. And I think that has pretty ominous . . . could have pretty ominous consequences for our competitiveness in the future. So I'll be pleased to take your questions or comments.
MR. KRIKORIAN: Thank you, Jessica. Questions from anybody? We have to have provoked somebody. (Laughter.) John, did you have any did you want to follow up on anything. Oh, go ahead. Did you want to follow up on anything that Ron or Jessica had said?
MR. MIANO: I'll just take the questions.
MR. KRIKORIAN: Okay, go ahead. Yes, sir.
Q: I have a question back here. Yesterday proponents of (off mike) were criticizing the Senate bill because language from the Durbin-Grassley Bill, H.R.B. Reform Bill is in the Senate bipartisan compromise. And they said the problem is that what that language will do is subject all companies who higher H-1Bs to the same labor market tests that only companies only rogue companies now are subject to rogue is my term, but anyway, and yet that seems to bet he opposite of what you're saying. You're saying there is no test at all. I mean, it is thought that you and this other group will have a problem with that.
MR. HIRA: Well, let me clarify. I probably didn't speak properly. Right now, what we have right now not what is being proposed in the bill, but what we have right now is there is a labor-market test for what are so-called H-1B-dependent companies. So these are companies that have 15 percent or more of their workforce in the U.S. is on an H-1B. And so what they have to do is do additional attestations. So they have to say, we went out, we made a good-faith effort to recruit U.S. workers and try to hire them for these positions, and that is before they even file an LSA that they have to attest that they have done this, that they haven't displaced U.S. workers, and that there is not secondary displacement also, so like in a client firm.
And this is very important in the IT services area, which are heavy users, because a lot of what happens is what is called outsourcing of a whole department or division. So let's say a big financial bank wants to outsource its IT department. An H-1B-dependent company coming in, taking over that department not only can't displace its own U.S. workers, but it can't displace the workers that are in that client firm.
So there is a labor-market test for H-1B-dependent firms. It's a small number of firms, but they are heavy users of the H-1B program, which leads me to believe that that actually doesn't work, and the reason it doesn't work is because there is no compliance and oversight of that. There are no random audits, for example, that Jessica mentioned.
Now, what is in the Senate bill I think is a good step forward, which is extending that labor-market test to all firms, which make sense; that is what most people think. Most of the politicians who write to their constituents believe that that actually exists right now, extending to all firms. I don't know why you would object to those particular provisions, and secondly, also adding random audit. So I think the Durbin-Grassley bill, as well as my understanding of what is going to be in this Senate bill is a step forward on the labor-market test. It doesn't fix everything; it fixes that.
MR. MIANO: I would like to add something, though, that even under the current law, there is no . . . that proven requirement is completely empty anyway. I will give you an example that I came across on behalf of the Programmers Guild, I filed a complaint with the Department of Labor against one of the top users of H-1B visas for failing to recruit U.S. workers. And as evidence of that, I provided the Department of Labor with 135 advertisements that the company had put out saying H-1B workers only could apply for these jobs, specifically excluding American workers, which I think that everyone here would say is does not constitute recruiting U.S. workers in good faith (laughter) as required by law.
The Department of Labor responded to that by saying it was insufficient evidence of a violation, and so there is no enforcement whatsoever going on as far as these requirements anyway.
MR. HIRA: And that is why you need both of those together. You need to extend the labor-market test and have some compliance and oversight.
MR. KRIKORIAN: Yes, sir. No, you.
Q: Yes, Ron, you mentioned about the offshoring of jobs or outsourcing of jobs. We in our organization for six years now have been saying, you bring in visa workers to enforce, to train their . . . by the American worker. They get laid off and the jobs are all offshore. We've been saying this for six year; I've known it first hand. Many of our members in our organization (off mike) first hand, and it does go hand in hand. They are saying that we need more visa workers, otherwise, we're going to offshore the job, like you said
We're working with members of Congress, those (off mike) and Bill Pascrell, and we expect the bill (off mike) which will include no third-party placements.
MR. KRIKORIAN: Ron, could you tell us a little what is that third-party placement issue, that job body shop thing?
MR. HIRA: Well, let me take actually the broader issue because the outplacement clause is in there. I'm not sure I understand what the practical implications of what has been proposed will be on the outplacement specifically. I have looked at and I just don't I'm not sure what is going to happen.
Well, let me say that I think this idea that if you can't fill a position or you claim that you can't fill a position, and therefore the company has to offshore that position, right, the sort of threats that industry has made in terms of its comments, I think is a really a very naive view of how labor markets work and how companies hire. What do you do if you can't fill a position? We'll, you raise the wages, right. You try to split up the work amongst multiple people. You internally train people to upskill them. There are lots of things that you would do before offshoring. And in fact, nothing is stopping anybody, any of these companies from offshoring their work; in fact, they are trying to offshore as much as possible. Why? Because they get a better margin out of it; it's a better deal for them, and we're seeing this in a very significant way in terms of the numbers.
So I think this is kind of a false argument made that all of the jobs, if they are not allowed to have H-1Bs, that they are going to offshore all of the work. They are in fact trying to offshore as much work as possible as it is. The reason they can't offshore the work is perhaps they need to have that job done here where there is face-to-face contact and you need physical presence in the U.S.
MR. KRIKORIAN: Yes.
Q: Two issues. One, first of all, thank you for making visible something that often is not across Congress. Have you looked into the issue of age discrimination? You know, companies say that you can find workers, why it is that in the sort of normal job trajectory of the professional, you become 40 and you vanish like a sci-fi movie. People know this anecdotally, but I have never really seen any data that looks at it. Why is it that people that are highly skilled suddenly discover job problems when they are 40 and their health expenses start going up? Is there a way to bring that into this discussion? And I have a follow up.
MR. MIRANO: Well, the reason why it only, the reason why it only well, the reason why I haven't measured it is I don't know how to measure it yet. (Scattered laughter.) If I could find out some way of measuring it, I maybe could take that on. I think that is the sort of thing I would be interested in.
Q: Do you think it is a real problem?
MR. MIRANO: I think it's yeah, well it's a well-known problem. I think it's interesting that in the computer industry that you see they are filtering out they are filtering out older workers, they are filtering out women. They filter out minorities. And the only people they have got left are young workers and guest workers are considered the most desirable. And I think that the reason young white males and I think the reason is, if you fire a young white male, what is he going to sue you for, and if you fire a guest worker, he is on the boat back home. (Chuckles.)
Q: That is my follow-up question. One of the other aspects of this bill would switch from a system where the employer basically controls the H-1B visa. It's one where highly skilled workers can . . . or higher-skilled workers can come into the country. And I'm kind of (inaudible) pushback on that (off mike) what difference do you think it would make if computer workers, for example, could come in without being tied to the company that hires them?
MR. HIRA: Well, we already have some evidence of that, and they do have limited portability, what is called limited portability. That is an H-1B worker who is in a working for a for-profit company can move to another one and not count against the cap. And if you talk to H-1B workers, they will say the process isn't that hard. Now, there is a catch, and the catch is, if they are being sponsored for a green card, they are anchored to that employer.
So a lot of the ones who want to stay in the U.S. permanently are anchored to an employer, so that portability doesn't extend, but Lindsey Lowell, I think, from Georgetown [University] has done some research in this, and has at least the indications are that that portability actually helps bring up wages of those H-1Bs. So having more portability I think is probably a good thing not probably; is definitely a good thing, so that those workers have that full bargaining power and can then get closer to market wages.
MS. VAUGHAN: Yeah, I think that is a tricky issue, though, because we have to remember that while I agree that it's important that the workers themselves not face the possibility of exploitation or being taken advantage of as a result of their having guest-worker status, but we have to remember what is the purpose of the visa program to begin with. And it's not to give people in other countries the opportunity to come here and have a great time working in the United States for however long, or to improve their skills, or something like that. The purpose is to serve the needs of American employers in a way that does not have an adverse impact on U.S. workers.
And so I would be . . . I think we need to be careful to not make this into some kind of a . . . to have this be too employee-driven so that people can self-petition and come in on their own. You know, we need to make sure that American companies are able to meet legitimate either needs or wants in a way that doesn't allow them to substitute a lot of guest workers for U.S. workers. And part of that, I really do still believe that to have a program that is driven by employer petitions is very . . . a very important piece of this.
MR. KRIKORIAN: Yes, sir, in the back.
Q: Let me make sure I understand this right. If someone is earning an H-1B wage, do they have to be in the U.S. to be paid or is that part of the problem?
MS. VAUGHAN: Yes, they have to be in the U.S.; otherwise, they would come in on a different non-immigrant visa.
MR. KRIKORIAN: Yes, sir.
Q: I have two data questions, one for Jessica. You said 117,000, each one being visas that are issued every year?
MS. VAUGHAN: That is the figure from 2005 for new visas.
Q: New H-1B.
S. VAUGHAN: Yes.
Q: Now, if the
MS. VAUGHAN: That was petitions, actually; not visas.
MR. KRIKORIAN: Approved.
MS. VAUGHAN: Yeah, approved petitions.
Q: Approved petitions.
MS. VAUGHAN: Right.
Q: But that is what you're talking about when it comes to the 65,000 with the cap?
MS. VAUGHAN: Yes.
Q: I'm trying to figure out how you got 65,000 to (laughter).
MS. VAUGHAN: Well, a lot of people that is a good question because the cap is
Q: I know a thousand and 20,000 exemption (inaudible) where is the remaining 32,000?
MS. VAUGHAN: Right. Employers who are who are higher-ed or non-profit research organizations or government research organizations, there is no cap on those H-1B petitions. They are exempt from the cap.
MR. HIRA: Well, I can also give you a concrete example. For example, there is a lot of post-doctoral researchers in the life sciences who come and work at major universities. They would not be counted against the cap, but they would be counted in that 117,000.
MR. MIANO: I would like to add one thing, though. I think that there is a mis I think there is.
Q: They are not students? They are employees?
MR. MIANO: They are employees. I think there is some miscounting going on too. When I look at the numbers, it looks like the numbers, if you count the exempt visas come out to about more like about 102,000. I think that there is a . . . I suspect that there is a large number of over-issuing going as well.
MS. VAUGHAN: It's possible.
MR. KRIKORIAN: Yes, sir, in the back.
Q: I have two questions. The first is, one of you have mentioned the need for better data, if you could create your wish list, and what would you what do you actually need from the feds to be able to say definitely the H-1B is doing this.
MR. KRIKORIAN Right now there is an additional set of data that the Department of Labor not the, say, the United States Citizenship, USCIS, the United States Citizenship and Immigration Service, maintains actual visa data. And so that there will be one record for each visa application, whether it's approved or not. The limitation on the LCA data is that a single LCA can be used for multiple workers, and it's possible for an employer to submit an LCA without without actually filing a visa application.
So there are about 300,000 LCAs, and we see, you know, 117,000 visas. And then the LCAs cover about 700,000 workers, up to 700,000 workers. So there is in the United States Citizenship and Immigration Service a database of information which they have refused to release to apparently to anyone except for to supporters of the H-1B program. Apparently if you support the H-1B program, they will give you the data. If you're more critical, they . . . you will not.
I am aware of people who have had FOIA requests for this data for years and not been able to get it. I have asked for this data well over a year ago and have not been able to get it. The response I have gotten from USCS is they can't find it. That doesn't
MR. KRIKORIAN: Stewart Anderson got it.
MS. VAUGHAN: Right, he found it.
MR. MIANO: Yes, but he got it within a . . . apparently got it within a week.
Q: If I can just follow up (off mike). The data about advance-degree graduates, I think I haven't heard anybody criticize that. And like information security, like, half the graduates on foreign nationals. What is wrong then with set aside the 20,000 set aside for the for advance-degree holders. I mean, if the enrollments are already in that direction and have been in that direction for some time, what is wrong with creating a set-aside?
MR. MIANO: Well, let me first start at a policy question. You know, first of all, do we want to make university admissions departments the gatekeepers of immigration policy? And I mean, I don't think, I think the answer to that is no if you look at that. The second flaw is that I mean, I assume that wherever you live, there is some school nearby where the kids who don't get very good SAT scores. And just because someone goes and gets a Master's degree in basket weaving from that school, should they now be on the fast track to immigration to the U.S.?
So I think the whole idea of making universities the gatekeepers to immigration is a scary one and very bad policy.
MR. HIRA: You know, I think it's a more complicated issue. I actually think that we can absorb more higher-skilled workers, and the way to do that, though, is through the green card program, and that way, you really have a level playing field. In terms of the actual data on the H-1B H-1Bs issued, a lot of the advanced degree are really MBAs. If you look at the share of professional degrees, it's gone up quite significantly in terms of the petition data.
And so the question is, do we have a shortage of MBAs (laughter) you know, in the working world. And so, where does it stop and where do you draw those lines? But these are good questions, and I'm not saying that we do or don't have as shortage of MBAs or that we should make policy, but we should be clear about how and why we're making those and drawing those lines. And these are ultimately normative judgments that we have to make. And my normative judgment probably is different than many of the folks here.
On the second row. Going at it. Going crazy.
MR. KRIKORIAN: You had your hand up first, yes.
Q: Well, I wanted to both ask a question and provide information, which is with the H-1B space. Number one, with the transfer affordability, actually what they find is when they are in this country, they find them, like, on a treadmill of constantly going from one visa-sponsoring company to another. They have cyclical unemployments between these periods. And as they are here with higher more qualifications, they actually get placed less, less often. I think it's not insignificant that the new visas . . . yeah, the new visas are more than half entry level.
Also, you know, we have tons of these H-1B-only want ads that say entry level, or they will say like this, H-1B transfer. So what I'm saying is that one issue that we have yet to look at is the significant level of H-1B unemployment and how we have an IT workforce that is essentially segregated between free and indentured, and then how that plays out.
MR. MIANO: Well, I certainly well, we'll just say that since I go through a lot of the H-1B ads, I would say that that certainly is, there certainly is a lot of that going on that used . . . that there are a lot of employers advertising for H-1B transfers, but they are looking only to hire people who are H-1B transfers so that they and the problem is you can't really tell how big that is. Another thing you will learn is that a lot of these H-1B workers are not in the job-shop industry, do not get paid when they don't actually have assignment. Although the practice is illegal, it goes on. Companies even advertise we just saw an advertisement this weekend where a company was advertising that if your pay is this much, if you're working, and it was $1200 a week if you're not working. And that is illegal but they put these ads out because they know there is no enforcement of the law taking place.
Another thing that I found, a little bit unusual is that complaints were filed against companies; a lot of companies are getting H-1B visas for workers and they are just sitting in India or overseas, that the company doesn't even have work for them. And we're finding is what the employees are doing is they are charging the workers a fee to take the job and they use this fee to make the H-1B application. And then when they hunt, when they actually get a job for them, then they bring them into the United States. The problem is I'll tell you these are anecdotal; I see them, but I can't tell you how widespread the practice is.
MR. KRIKORIAN: One more question and then answer
Q: Doesn't the Department of Labor have a regulation, a proposed regulation to deal with the to tighten up the labor-market test.
MS. VAUGHAN: I haven't seen one to tighten up the labor-market test. There maybe one on allowing them to do a little bit more in the way of oversight. And they have received some funding to specifically look at fraud in the program. But I haven't seen anything on labor-market tests.
MR. MIANO: I haven't seen anything.
MR. KRIKORIAN: Okay, I can't speak for . . . I think the guests will be here, speakers will be here to be accosted afterwards, but let's wrap this up now. I appreciate everybody coming. The report, as well as John's earlier report and Ron's report from EPI are all online. You have them in your folders as well. And I appreciate your all coming and thanks for being here this morning. Thanks.