How to reduce H1B visa abuse

Jul 9th, 2015
How to reduce H1B visa abuse


Some of the most high profile and successful companies in the US are lobbying for an increase in the 65,000 quota of H1B visas each year. They claim that their ability to hire and therefore compete globally is being hurt. At the same time several reports point out to where Americans in IT and other jobs being laid off and asked to train their replacements- often foreign workers brought in on H1B visas that cost the clients and their staffing companies 20-30% less.The latter is an example of how the H1B visa is being misused by IT services companies in a labor arbitrage model.

The US has for long been a very desirable place to work precisely because it allowed the smartest people to move here using the H1B visas. The H1B visas are meant to allow companies to hire 'high skilled' people that are not readily available locally. Companies that ask the USCIS for permission to hire foreign workers on these visas are required to prove the following
1. That the person being brought in is high skilled- usually proven by way of a degree in Computer Science
2. That the company is having a hard time finding high skill developers locally- proven through jobs advertised but not filled
3. That the foreign worker is being paid a salary on par with what a local/US citizen is paid

The problem is that these requirements are loose and can be easily manipulated if the financial benefit is significant and the paperwork involved in sponsoring an H1B visa is not too difficult.

Paperwork for an H1B visa is pretty onerous right now, so the USCIS has somewhat succeeded in that only the most serious companies bother with sponsoring visas for candidates any more. However, some of these companies are also the most egregious in terms of abusing the H1B. and have the financial wherewithal, legal staff and incentive to persevere through this.

I believe the best way for the USCIS to solve this problem maybe by taking away the financial incentive of the abusers. Many of these abusers are IT services companies that require to staff large numbers of engineers working on relatively lower to mid level skills. In an effort to keep costs low and profits high and their ability to bring in workers from their offshore subsidiaries, they have the incentive, the wherewithal and the necessary resources readily available offshore. The below chart shows how the largest requestors of H1B visas also pay the lowest salaries.

For many of the IT services companies the average salaries across 1000s of such workers is between $65K-$100K. If a person earning less than the average of that salary range is really 'highly skilled' is debatable. Should the US give the highly sought after H1B visa to a brilliant engineer who's been working on cutting edge technologies in their home country and can earn a $150K/year salary from a US company vs. a Software Support Analyst brought to debug applications and replace a local support analyst through an IT services company on a $75K/year salary. It is fundamentally wrong and quite silly to put these 2 categories of people in the same H1B lottery. With a 50% chance of either one getting the H1B visa through the lottery, the US is rolling the dice on letting an employer like Disney save $20K/year in maintenance costs vs. bringing in someone with the potential to build the next Google and create thousands of jobs.

I'd propose the US just require a minimum salary requirement of $100K/year annual salary for anyone that wishes to sponsor an H1B visa. Follow the test like every employer or worker does. If someone is really that valuable - it should show in their salary. I'm pretty sure the 65,000 limit won't be hit. If however, this doesn't work, it could ration the visas based on salaries. Higher salaries- higher priority. The bar of people coming in will be higher, the H1B workers will be happier and abusers will start changing their behavior.

Below is a chart that shows just how big the discrepancy in salaries is between IT Services (Staffing) companies that provide contractors and consultants to the salaries that US companies themselves pay to high-skilled workers. $100K/year seems to be the benchmark separating the IT staffing companies from the US companies that seem to have the greatest real need.

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