In Depth: Why We Need The H-1B

Technology Staff Editor
Posted by in Technology

Many American IT pros won't want to hear this, but importing tech workers into the United States isn't just an economic necessity; it might be critical to saving their jobs. Congress is giving its most serious consideration in years to increasing the number of people who can work in the United States each year under H-1B visas. Two main proposals remain on the table: Leave the cap at 65,000, or raise it to 115,000. That's a difference of only 50,000 jobs in an economy that employs about 144 million people, yet advocates maintain that the country's technological leadership hangs in the balance.
Think the United States is the only place to work? Think again, Huang says. Photo by Eric Millette
Set the visa number too low, and tech-driven U.S. companies won't get the people they need (at least not at the salaries they and their shareholders increasingly demand), so they'll be more likely to relocate those positions abroad. Set the number too high, critics maintain, and U.S. IT organizations will become glorified sweat shops, driving down salaries for all tech pros and discouraging young Americans from entering the field. The U.S. Citizenship and Immigration Services already has enough applications for the 65,000 H-1B visas it will issue for the fiscal year that starts Oct. 1--the fourth straight fiscal year the cap will be reached. And with the U.S. tech unemployment rate hovering around 3%, near its record low, and tech employment above 3.4 million, near its all-time high, expect H-1B visa demand to far exceed supply unless the cap is raised. For those U.S. employers turned away, offshoring the work to India, China, and other counties remains an attractive option, despite recent salary inflation in those countries. There's no arguing with the economics. The H-1B cap has been moved three times since it was first set at 65,000 in 1992: up to 115,000 in 1999, up to 195,000 in 2001, and down to 65,000 in 2004. History suggests the demand for such visas isn't insatiable--the 195,000 cap was never hit, even in the boom of 2001, when companies snatched 163,600. In 2003, when U.S. IT employment bottomed out amid widespread cost-cutting, companies grabbed 78,000 H-1B visas, leaving 117,000 on the table.
There isn't an exact count of how many of the country's 3.6 million available tech workers are on H-1Bs. The visas can go to any industry, but IT companies are by far the biggest users. According to the National Foundation for American Policy, a nonprofit that advocates raising the cap, as many as 450,000 H-1B visa holders across industries may be in the United States waiting for green cards. While the immediate point of debate is 65,000 versus 115,000, some proposals go further. One would raise the cap annually by 20% if the previous year's quota is met, and another would simplify the green-card process, making it easier for temporary foreign workers to work permanently in the United States. While some argue passionately that these additional H-1B workers will only take jobs away from American tech workers, the opposing view is that the increase will actually create jobs. Smart foreign-born overachievers allowed to work--and perhaps stay--in the United States could help provide new ideas and expertise to drive technology innovation in this country, creating more jobs for the future. Those new jobs might require different skills than are needed today, but that's just the point: Technology is evolving, and the U.S. workforce needs to make sure it can keep up with changing demands.

The biggest long-term risk is that the United States will grow dependent on imported engineering and other tech talent while not grooming its own. That's a trend well on its way. The country isn't cranking out enough of its own IT talent. U.S. universities in 2004 granted 44% of their master's degrees and 48% of their doctorates in computer science to foreign-born students here on visas, according to the National Science Foundation. That compares with 47% of computer science master's and 44% of doctorates awarded to students here on visas in 2001. Too many tech pros further along in their careers aren't updating their skills. It's not all their fault: Many companies would rather hire disposable H-1B holders with skills du jour than invest the time and money in enhancing the skills of current employees. Of the 5,456 IT staffers surveyed for InformationWeek Research's 2006 Salary Survey, only 42% say they receive further education or training, and only 30% receive tuition reimbursement. Of 4,969 IT managers surveyed, 43% receive further education and training and just 28% receive tuition reimbursement. 17 Lawyers Microsoft is among a number of tech companies intensely lobbying Washington to raise the H-1B cap. The company is one of the biggest volume employers of H-1B visa holders, according to the Center for Immigration Studies, and it has a staff of 17 lawyers working on visas and green cards for permanent residency. Microsoft is intent on hiring the cream of the crop regardless of nationality, says Jack Krumholtz, director of federal government affairs, who has testified before Congress about the issue. The competition among U.S. tech companies to hire workers with doctorates or master's degrees in computer science fields--whether they're U.S. citizens or foreign nationals--is intense, he says. Microsoft is eager to hire people with expertise in advanced search technology, speech and handwriting recognition, mobile products, and software who can make devices more intuitive and intelligent. Microsoft's competitors, including Google, also are going after that talent, which Krumholtz contends is scarce in the United States. With chairman Bill Gates mandating that 90% of Microsoft's development work be done in Redmond, Wash., the company must widen its search beyond U.S. citizens if it's to get the expertise it needs, Krumholtz says. "We've self-imposed an intellectual cap on ourselves," he says of the U.S. limit on H-1Bs. In the past, the United States was the place to work, but with opportunities growing in other countries, the best tech pros have more choices. "We compete fiercely for brainpower, so why are we turning away the smartest people?" Krumholtz asks. Hewlett-Packard also is pushing to raise the H-1B ceiling. Of HP's 54,000 U.S. employees, 1% to 1.5% are on H-1B visas, a number that's stayed constant even when more H-1B visas were available in the early 2000s, says Leslie Nicolett, HP's immigration policy manager. One common source for talented foreign nationals is U.S. universities. Foreign students earning advanced degrees can apply to remain in the States for a year after graduation to take jobs with U.S. employers, mostly for training. Tech companies often hire these students and then help them apply for H-1B visas. HP also sponsors H-1B workers who apply for permanent residency via green cards, Nicolett says. For HP, recruiting foreign students with advanced degrees helps the company build its bench strength. "We don't use the immigration process right away, but it gives us a safety net to convert these workers to H-1B," Nicolett says. "We use foreign talent in situations where we can't find talent in the U.S." That can include people with advanced degrees in engineering sciences and in chemistry to help develop printer inks. But Do They Pay A Fair Wage? It's the competition for talent, coupled with government regulation, that keeps wages for H-1B workers in line with what U.S. workers are paid, say proponents of the program. Workers with the visas can apply to change employers, so they aren't beholden to one employer. But making a change isn't easy or cheap; the worker must find another employer willing to take on the H-1B challenges.

Mostly for this reason, opponents of raising the cap say abuse of the prevailing-wage rule is out of control. Companies that hire H-1B workers are only looking for one thing: cheap labor, says Marcus Courtney, president of WashTech/CWA, a union for high-tech workers. "There's no evidence of a tech shortage," he says. Today's low U.S. IT unemployment levels came about only because around 200,000 tech workers who lost jobs in the early 2000s dropped out of the IT workforce, so they are no longer counted in Department of Labor figures, Courtney argues. "Companies have dumped highly skilled workers," Courtney says. "This is wholesale worker replacement." The current quota of 65,000 H-1B visas, he maintains, should be enough to fill companies' needs. Courtney's right that the U.S. IT workforce has been put through a wringer as the marketplace changes. As just one example, there were about 160,000 fewer people employed as programmers for the 12 months ended in March compared with the same time in 2001. Those people left the IT workforce or found work in a new IT role, as the number of jobs for managers and software engineers rose. To put the blame on H-1B doesn't sound right. About the same number of people are employed in IT today as in 2001--more than 3.4 million. Yet there were far more H-1B visas issued back in 2001: 163,600, compared with 85,000 in 2006. This year's number includes 20,000 visas for U.S.-educated applicants that Congress exempted from the cap last year. The bigger problem is abuse of the H-1B holders who are working here. The U.S. government requires that employers of H-1B workers pay prevailing market wages based on Department of Labor schedules or market surveys. Those regulations have no teeth, Courtney says, companies are audited only when a complaint is filed, and many foreign workers are too afraid to protest. Even HP's Nicolett says that the threat of a government audit isn't enough to keep some shady employers from stretching the limits. A December report by the Center for Immigration Studies--which describes its vision as "pro-immigrant, low immigration"--found that loose definitions of prevailing wages and ambiguities in job titles, experience levels, and other factors let employers pay H-1B computer workers $13,000 less a year, on average, than U.S. citizens in the same states and occupations. Under current laws, the government can fine employers $1,000 to $35,000 for not complying with H-1B pay regulations, and it can impose other requirements, such as demanding payment of back wages. Employers guilty of violating H-1B rules also can be banned from using that or other immigration programs for up to a year. Even so, there are few documented cases of fines being levied against companies, says Susan Cohen, an attorney who manages the immigration sector of law firm Mintz Levin. There are other ways to stretch the law. Emily Huang, a database manager in the United States on an H-1B visa from Taiwan, likes working and living here and hopes her employer eventually will sponsor her for a green card. She says she has always been paid fairly, but a few of her friends who also have H-1B visas haven't been as lucky. "I have friends who work long hours with less benefits," Huang says. A software engineer she knows works until 10 or 11 every night while colleagues go home at 7. Many H-1B workers are hesitant to complain about their employers, afraid they'll lose their jobs or be forced to go back home. "H-1B means you have to have a strong work ethic, you need to prove your worth in an organization," Huang says. In Demand Conversely, H-1B visa holders with skills in high demand can earn more than what's considered the market norm. Juan Gutierrez, a senior programmer and analyst from Colombia, has been working for IT services firm Information Systems of Florida for about five years. He was recruited to work here when the company opened a development center in Colombia; he's one of the 50-employee company's four H-1B visa holders. The U.S. schedule of prevailing wages in his region calls for a programmer at level 4 to earn $68,000 a year. "But my company pays me a few thousand dollars more," says Gutierrez, who adds that his employer also has been supportive as he has waded through the frustrating green-card application process. "Yes, there are companies that exploit people, but those companies are at the far end of the curve," he says.

Staffing firm Hudson employs about 80 H-1B tech workers for a range of jobs, including consultants with expertise in CRM, ERP, middleware, and Web development. It mostly hires H-1B workers already in the United States by applying for visa transfers, since the cap makes it difficult to obtain new H-1B workers from overseas, and processing fees and legal costs are expensive. Hudson looks for CRM deployment and other "domain knowledge," says Sonia Seth, director of recruitment for, a division of Hudson. Seth, an Indian national, has been in the country for six years with an H-1B visa and awaits her green card. Lower cost is one of the attractions of using H-1B workers, Seth says, especially for skills that are hard to find. "Finding experienced people is getting more difficult. You pay the price," she says. While an experienced American CRM consultant might fetch $110 per hour, a similarly experienced consultant with an H-1B visa is paid only $70 per hour, she says. But depending on experience level, Seth adds, some H-1B workers can be more expensive than their domestic counterparts. Whatever Happened to Training? While tech vendors may have difficulty finding specialized people with advanced degrees, many companies don't have to look outside the country for talent. There are plenty of people here, especially if a company is willing to train. Amanda Poor, manager of application development at a large multinational company, is looking to fill a junior Visual Basic developer position in her group, which has about dozen people. "A few years ago, I'd have to throw out 90% of the resumés we received," she says. Now, at least half of the resumés are from qualified applicants, and they run the gamut from mainframe pros looking for a change to recent grads from nearby Virginia Tech. "You try to bring in someone at a junior level and train them, and if they hang around three or four years, they become very valuable," Poor says. Not all IT managers think the way Poor does. One of the strongest arguments against raising the H-1B cap is that it gives companies an excuse not to develop and train their staff. IT pros, more so than most other professionals, must constantly develop their skills and often are expected to do it on their own dime and time. "There's age bias and great pressure to keep up IT skills," says Rick Flaviano, manager of information systems at Dofasco Tubular Products, a maker of steel tube products. "If you spend 20 years in accounting, you're supervaluable. Debits and credits haven't changed." Companies that hire H-1B workers should be required not only to recruit American workers first, but also to conduct training programs for their staffs to fill those openings, he says. In fact, when Congress raised the H-1B visa cap in 1998, it also raised the processing fees, creating a training fund for American workers. Companies have paid about $1 billion into that fund, which has financed National Science Foundation scholarships for about 40,000 students and training programs for more than 82,000 working professionals, the Department of Labor says. Rick Black, a senior systems analyst for utility company Scana, which employs a number of H-1B visa holders from India, lives on both sides of the issue. "By letting these workers into the U.S., they keep the money here, with lodging, transportation, living expenses," says Black, a 25-year IT veteran. "By increasing the number of visas, more of the money actually stays in the U.S., and it's better for the economy." But Black, who holds an MBA, also understands that it's critical for IT pros to constantly improve their skills. "My MBA has helped me to get different jobs and avoid being laid off," he says. "You can't stay put; you have to keep up." That could be part of the reason some unemployed IT workers still are finding it difficult to land jobs, he says. As the nation continues to debate immigration and visa issues, there's an unsettling reality bubbling below the surface that could impact U.S. tech competitiveness: Not every highly skilled techie overseas considers the United States the best place to work. "The tech industry is booming in Taiwan," says database manager Huang. "Most people there don't want to come to the U.S. because there are plenty of good opportunities in Taiwan." The upshot: If the United States doesn't make it easier to welcome brilliant minds into the country, while also making a more serious attempt to produce its own crop of new talent, then the next big harvest of technology innovation--and ultimately jobs--may be reaped elsewhere.
Continue to the sidebars: Profile: H-1B Worker Tells About Risks, Where An H-1B Visa Holder Comes From Matters and Profile: One H-1B Visa Holder's Quest For A Green Card


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  • Xiao C.
    Xiao C.

    As US citizenship with the current market wanted tech skills, but still on the market and without job. The US citizenship should prefer have job .

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