H-1Bs are not displacing American Workers
March 25, 2015
Congress is at an impasse on the question of how to fix our often dysfunction–and never ideal–immigration system. There has been debate, and bipartisan solutions have been put forth, but none of this has resulted in any actual reforms. The last time the immigration system was updated was 1990. Since then, the partisan divide–and political distrust–has been on an upward trend. As needed as it is, immigration reform seems to just be too great of a political risk for too little reward. Even comparatively small reforms, such as increasing the H-1B cap (which technically isn’t an immigration issue), cannot escape controversy any longer. We have argued in another article that the cap, which demand exceeds threefold, should be raised as soon as possible. However, others are beginning to make it known that they do not share this view.
Some of the biggest supporters of raising the cap are tech industry giants who say that doing so will increase their global competitiveness. At least a plurality of H-1Bs go into the IT field. Nonetheless, there has been an increasing prevalence in the tech community of the view that the current H-1B system harms American workers and is bad for the country. Several technology publications have claimed that the H-1B system’s built-in protections for the American worker are simply not working. They are referring to the Labor Certification process, the effect of which is to ensure that no H-1B worker is taking a job that Americans are actively seeking–or working for less than the “prevailing wage” for that job. (The prevailing wage can be thought of as the “going rate” or fair pay for the job, when all things are considered. The U.S. Department of Labor calculates this amount.) The issue is that H-1B workers are increasingly getting IT jobs, while the apparent threat of layoffs among American IT workers is also on the rise.
Technology publications, and recently conservative media, have pointed out that H-1B workers are in some instances replacing American staff, being paid less to do the same work. Critics believe that this is (or at least ought to count as) a violation of Labor Certification requirements. There are several problems with this view. To begin with, nothing in the regulations say that H-1Bs cannot replace American workers. There are only two (major) types of violation. The first is when there is an equally or better qualified candidate seeking a job that is instead given to an H-1B, and the second is when an H-1B works for less than the assigned prevailing wage.
Admittedly, replacing a great deal of American workers in order to hire H-1Bs to cut costs does sound like something the Labor Certification process should prevent. But there is a key fact that the critics are apparently ignoring. It is not necessarily implied that two people are in the same employer or occupation even if they perform some of the same exact tasks. This argument against raising the visa cap fails to consider that the foreign aspect of the replacement workers might not be what caused the layoffs. There may be an appearance of American workers being displaced due to the presence of foreign ones, but this characterization is incomplete at best and misleading at worst.
There is a growing trend in employment that is especially prevalent in the tech industry; a trend towards the use of staffing agencies instead of hiring in-house staff. The amount of companies reporting that they intend to hire temporary workers has jumped over 15% in the past decade, almost reaching 50% of all employers, according to USA Today. Further, the analytics company WANTED Technologies found that 70% of “high volume” positions for staffing agencies are in the IT field. It just so happens that many H-1B workers want to come to the U.S. to fill this demand for temporary work. After all, they are well suited for such work, given the temporary nature of their visas.
Not all companies need permanent IT staff. In fact, with the huge advancements over the past decade, much more can be done with less people. Large projects may come up from time to time, so it is economical to keep only a skeleton staff permanently while importing temp labor when it is needed. This allows companies to maximize efficiency while the temp workers can maximize their employability (by being moved around by the staffing agency that directly employs them). It should be easy to see that it is a mistake to blame the H-1B program for this.
A major case recently highlighted in tech and conservative media as being a prime example of the H-1B harming American workers is based on this very mistake. (We have covered the issue in a separate article.) While it could be true that some companies are able to circumvent Labor Certification protections, our firm’s experience is that these fears are not well founded. Even if Congress refuses to raise the H-1B visa cap, we predict that there will still be a process of firing and rehiring in the tech field as companies try to do more with even less. Instead, workers that could be bolstering American tech dominance here would be working to undermine it abroad. This cannot be good for the job security of most American tech workers.