December 4, 2004 (later updated)

Here is my analysis of H-1B portion of the pending legislation on H-1B/L-1.
(This is the omnibus appropriations bill, H.R. 4818, already passed by the
House and Senate, and pending the president's signature as of the first
writing of this document.  The president later signed the bill.)  See
http://heather.cs.ucdavis.edu/Archive/L1Changes2004.txt for my analysis of the
L-1 portion of the bill.

As I have indicated before, I consider the bill's MS/PhD provision
unwarranted, and I do not find any of the so-called worker "protections" to be
of any real value.  In other words, the entire bill is a loser.

To aid those who wish to see an analysis of a particular aspect of the bill,
here is a "table of contents":

   * New H-1B Exemption Category (holders of MS/PhDs from U.S. universities)

   * Stepped-up H-1B Enforcement Powers

   * Changes in H-1B Prevailing-Wage Requirements

   * Reinstatement of the H-1B-Dependent Employer Rule

If you want to go directly to one of these topics, do a "find" in your Web
browser for the given title.  In Internet Explorer, click on Edit then on
Find.  (By the way, have you tried the open-source browser, Firefox?
See www.mozilla.org)

* New H-1B Exemption Category (holders of MS/PhDs from U.S. universities)

This is a complex topic.  The exemption is unwarranted; see my previous
postings on this, e.g.

http://heather.cs.ucdavis.edu/Archive/ProposedMSPhDExemption.txt

* Stepped-up H-1B Enforcement Powers

Putting in more provisions for enforcement has always been a good way to
DISTRACT ATTENTION from the real H-1B issues.

As I've said many times, enforcement is NOT the main issue with H-1B; the main
issue is the LOOPHOLES.  Most big firms underpay H-1Bs in full compliance with
the law, because of the huge gaping loopholes.  The loopholes are so pervasive
and intricate that immigration attorney Joel Stewart has boasted, concerning
the green card process that many H-1Bs undergo and which also has a
prevailing-wage requirement, "Employers who favor aliens have an arsenal of
legal means to reject all U.S. workers who apply.''  (Joel Stewart,
"Legal Rejection of U.S. Workers," Immigration Daily, April 24,
2000.)

For a detailed analysis of the H-1B loopholes, see Section VII.A (pp.88ff.) of
my law journal article, at http://heather.cs.ucdavis.edu/MichJLawReform.pdf
Also see the excellent case study, "How to Underpay H-1B Workers," Programmers
Guild Web site,
http://www.programmersguild.org/archives/howtounderpay.htm

So, STEPPED-UP ENFORCEMENT IS USELESS.  GIVEN THE HUGE, GAPING LOOPHOLES,
THERE IS NOTHING TO ENFORCE.

* Changes in H-1B Prevailing-Wage Requirements

One of the "reforms" would change the number of levels of experience used in
one common method for prevailing-wage calculation from two to four.  This
change was heralded as a victory for American workers.  The IEEE-USA, for
example, heralded this "reform" as "a meaningful prevailing wage requirement 
designed to ensure that H-1B workers receive the same pay as American workers" 
("L-1 and H-1B Visa Provisions in the FY2005 Budget Bill," IEEE-USA press 
release, Nov. 22, 2004, www.ieeeusa.org/policy/features/h-1b-update.asp).

Well, IEEE-USA got it flat out wrong.  This "reform" is designed to make it
EASIER for employers hire foreign workers, not harder.  In fact, the
immigration attorneys have been SEEKING this "reform" for years.

I have written before on this topic, in discussing my interview with
immigration attorney Donna Fujioka of Oakland, California, March 5, 1998.  The
reason the immigration attorneys welcome this change is that it means that
they won't have to set a Level II salary for a worker who is just slightly
above the current Level I for years of experience.  

This was elaborated on in a 2002 tutorial on prevailing-wage determination
by immigration attorney George Lester in the publication Immigration Daily 
(http://www.ilw.com/lawyers/articles/2002,1021-lester.shtm).  Any serious
student of H-1B should read the article in its entirety, but here are some
excerpts regarding the immigration attorneys' complaint that the two-level
system for prevailing-wage calculation is too coarse (all-caps emphasis added):

   The final variable to establish under G.A.L. No. 2-98 is the skill level of
   the job. The SESA will make this determination based on the employer's
   description of the job duties and the stated position requirements. There
   are only two levels used in the OES system, "beginning" (Level I) and
   "fully competent" (Level II)...

   Thus, THE EMPLOYER SHOULD PAY CAREFUL ATTENTION IN PREPARING THE JOB
   DESCRIPTION to the level of independent responsibility and judgment, level
   of supervision, and nature of skills required. STRATEGIC DRAFTING OF THE
   JOB DESCRIPTION IS NECESSARY IF THE EMPLOYER WISHES TO CONVEY THAT A JOB IS
   ENTRY LEVEL, AND OBTAIN A LEVEL I PREVAILING WAGE DESIGNATION. The
   description should include terms such as "use basic understanding of . . .
   ," "perform range of moderately complex assignments in . . . ," "work under
   supervision of manager. . . ," etc. 

   THE OES SYSTEM HAS BEEN WIDELY CRITICIZED BY EMPLOYERS for two major
   perceived flaws. First, allocating wage data between only the two skill
   levels of "beginning" and "fully competent" fails to reflect the normal
   progression of skills advancement and pay increases in the professional
   workplace...

   In practice, the OES Level I wages are generally perceived to be fair,
   where the experience and skill that level purports to reflect is discrete
   and easily defined. LEVEL II WAGES, HOWEVER, ARE PERCEIVED AS UNFAIR AND
   INACCURATE FOR MANY MID-LEVEL POSITIONS, WHERE THE LEVEL THEY PURPORT TO
   REFLECT COMBINES DATA FOR EVERYONE HAVING MORE THAN A BACHELOR'S DEGREE
   PLUS APPROXIMATELY TWO YEARS' EXPERIENCE, up to persons operating at the
   most senior levels in a profession who have advanced academic
   qualifications and ten, twenty, or more years of experience. The actual
   numbers bear this out: LEVEL II WAGES REPORTED BY THE SYSTEM AVERAGE 60% OR
   MORE HIGHER THAN LEVEL I. It is not realistic to expect that within two to
   three years of starting in an occupation after college the average worker
   receives pay increases of 60%, yet the OES data suggests that the employer
   must indeed pay such amounts. CONSEQUENTLY, EMPLOYERS PREPARING AN LCA FOR
   A MID-LEVEL POSITION MUST GENERALLY RELY ON ANOTHER SOURCE TO ESTABLISH THE
   PREVAILING WAGE.

In other words, suppose for example the job requires three years of
experience.  Then it would fall into Level II, with a 60% higher prevailing
wage, even though three years is just beyond the generally used two-year limit
for Level I.  You can thus see why, in the words of the immigration attorney
above, "The [two-level] system has been widely criticized by employers"!  And
thus you can see why immigration attorney Paul Parsons, writing in Immigration
Daily on Dec. 16, 2004 (www.ilw.com/lawyers/articles/2004,1216-parsons.shtm)
called the four-level provision of the legislation "an improvement."

Again, the attorneys had other ways around this "problem."  As noted, the
two-level method is only one of various methods the attorneys have at their
disposal.  Immigration attorney Lester, in the quote above, recommends
either "strategic drafting of the job description" to make it fit Level I, or
simply "rely[ing] on another source to establish the prevailing wage"; there
are many sources available.

Thus, while the two-level system probably was overly coarse, the immigration
attorneys had various other ways to circumvent it, and in any case the main
point I am making here is that what the industry lobbyists have succeeded in
doing here is falsely making it look like Congress is ameliorating the effect
of expanding the H-1B program by throwing in a "reform" friendly to U.S.
citizens and permanent residents but which actually is intended to FAVOR the
hiring of H-1Bs.  The industry lobbyists have hereby reached new levels of
clever deceit.

Another "reform" changes the prevailing-wage rule from requiring
employers to pay 95% of prevailing wage to now pay 100%.  Obviously,
that is not a change of any consequence, since that 5% discrepancy is
much smaller than the actual amount employers typically underpay their
H-1Bs.  

While we're on the subject of the 95% rule, though, I'd like to point
out that it does illustrate that it's not just the small companies who
exploit the loopholes in H-1B law.  It's the big companies too.  See for
example the wages claimed by Intel in their H-1B filings at the Dept. of
Labor Web site; you'll see that a number of the figures are not even
amounts, which seems bizarre until you divide them by 0.95--and get nice
round numbers.  So you can see that Intel exploits the H-1B loopholes
too, even the penny ante ones like this.  This is hugely important,
because you often see implicit or explicit claims that the Intels and
the Microsofts are the innocent parties, with the true villains being
that Tatas and Wipros.  Such claims are false, which should surprise no
one, just as it surprises no one when they hear that big corporations
make full use of every tax loophole they can find.  

* Reinstatement of the H-1B-Dependent Employer Rule

It is often claimed that H-1B requires employers to give hiring priority to
American workers over H-1Bs.  That is not true, and has never been true, for
the vast majority of employers.  During 1998-2003, there was one very minor
exception to this, in the form of the "H-1B-dependent employer" category.
During that time, employers in that category were required to give hiring
priority to Americans, and were not allowed to lay off U.S. workers after
hiring H-1Bs.  The new law reinstates this category.  HOWEVER, IT IS OF
BASICALLY NO CONSEQUENCE, AS IT APPLIES TO ONLY 50 OUT OF 50,000 H-1B
EMPLOYERS.  (See Immigration attorney Jose' Latour's electronic newsletter,
January 6, 2001, http://www.usvisanews.com/articles/memo1192.shtml
See also the original statement by the Dept. of Labor in the Federal
Register, December 20, 2000, Volume 65, Number 245, page 80112.)