Needed Reform for the H-1B Work Visa: Major Points
University of California, Davis
May 7, 2003
1 The Program
H-1B is a temporary work visa program established in 1990.2 Employers are not required to recruit
Americans before resorting to hiring H-1Bs.3 Over the years, most computer-related employers of
H-1Bs have also sponsored them for green cards, thus attaining an
exploitative hold over the workers.
In 1998 and then again in 2000, computer-related employers demanded that
Congress increase the yearly cap on H-1Bs, from its original level of
65,000 to 115,000 in 1998 and 195,000 (plus new cap-exempt categories)
in 2000. The employers claimed to need these workers to remedy a
software labor shorage, citing industry-sponsored studies. However,
none of the numerous independent studies ever confirmed a
shortage.4 Prominent members of
Congress publicly admitted that they were forced to approve the H-1B
expansions because of industry campaign contributions.5
2 Direct Adverse Impacts of the H-1B Program on U.S. Workers
- By official data, currently more than 100,000 U.S.
programmers6 are unemployed. Many more are underemployed,
working in nonprofessional jobs such as bus driver, real estate
appraiser, and so on. The un- and underemployed easily total a half
million workers. Meanwhile 463,000 H-1Bs are employed in the
- Major companies are abusing the program:
- In 2002, Sun Microsystems admitted in court that it is
laying off Americans while retaining H-1Bs in the same jobs, and
that it does not give Americans priority over H-1Bs in
This directly contradicts their 1998 testimony to the U.S. Senate, in
which Sun repeatedly stated that they employ H-1Bs only as a last resort
when no qualified Americans are available.9
- A number of other major companies admit replacing American workers
by H-1Bs and L-1s-and forcing the laid-off Americans to train their
foreign replacements. These include Siemens,10
Bank of America/Exult,12 etc.
- The National Research Council report, commissioned by Congress,
pointed out that H-1Bs have an adverse impact on overall wage
- I am using the term American to mean U.S. citizens (native
or naturalized) and permanent residents. Green card holders/naturalized
citizens are just as adversely affected as natives are; both groups are
shunned by employers in favor of the exploitable H-1Bs.
3 Use of H-1Bs As Cheap, Compliant Labor
- Types of labor cost savings accrued by hiring H-1Bs:
- Type I: Employer pays H-1B less than Americans of the same
- Type II: Employer runs out of younger Americans to hire,
then hires younger H-1Bs, thus avoids hiring older-i.e. perceived
- Type III: Employer exploits the H-1Bs' de facto
indentured-servant status, forcing them to work extremely long hours.
- Type IV: H-1B worker population, by swelling overall U.S. labor
pool, suppresses wages.
- Plenty of hard data15
showing that Type I savings is rampant
- UCLA study; 33% pay gap.16
- Cornell University study; 10.4-29.6% pay gap.17
- UC Davis study; 15-20% pay gap.18
- Congressionally-commissioned NRC study; gap not
- H-1Bs are typically de facto indentured servants, thus
- Still immobile if sponsored for green card, in spite of
- The Immigrants Support Network (www.isn.org) said that the
H-1Bs are "...indentured servant[s]...modern day slave[s]."20
- See also the NRC report.
4 Prevailing-Wage Laws Are Virtually Meaningless
- Laws/regulations which require H-1Bs to be paid "prevailing
wage" are riddled with loopholes.21
- E.g., "hot" software skills, say XML, do not need to be
accounted for in calculating prevailing-wage level. Thus one can hire
an H-1B XML programmer, who would command a premium wage on the open market,
for the price of a generic programmer-all perfectly legal.
- See excellent Programmers Guild case study (Bank of
America), How to Underpay an
- Immigration attorney Joel Stewart boasted, concerning the green
card process, "Employers who favor aliens have an arsenal of legal
means to reject all U.S. workers who apply."23
- Prevailing-wage laws do nothing at all to address Type II salary
5 H-1B Dependency Restrictions Must Be Made Universal
- So-called "H-1B-dependent" employers must recruit Americans before
H-1Bs, cannot hire H-1Bs if they are laying off Americans, etc.
- But only 50 out of 50,000 H-1B employers are in the H-1B-dependent
category.24 One problem is that the 15% bar in the definition of
H-1B-dependent is quite high, since it does not exclude a firm's
nontechnical workers, e.g. secretaries, marketers, sales staff,
- A 2002 legal proceeding was brought against Sun Microsystems by a
U.S. worker who complained that he was laid off while Sun retained H-1Bs
in the same job category.25 Sun freely admitted to laying off Americans while retaining
H-1Bs in the same jobs, but pointed out that since it is not considered
an H-1B-dependent employer, it was free to take such action. As noted
earlier, this is in stark contrast to the assurance Sun gave in its U.S.
Senate testimony that it only employs H-1Bs as a last resort, i.e. if no
qualified Americans are available.
- Clearly, then, Congress should not only keep the H-1B cap at its
original level of 65,000, but it should also extend the H-1B-dependency
provisions to all H-1B employers.
6 "The Best and the Brightest"
- I have always strongly supported bringing in the "geniuses" from
around the world. But only a tiny percentage of H-1Bs fit this
- 99% of computer-related H-1Bs make less than $79,400 per year,
certainly not genius-level pay in a field in which the median salary for
all Software Application Engineers in 2001 was $70,210.26
- Of 54 recipients of the ACM System Software Award through 2001
(this is the award most closely associated with innovation in practice),
only two have been foreign-born.27
- Foreign computer science/engineering doctoral students in the
U.S., who often later become H-1Bs, have generally been of ordinary
quality, not "geniuses."28 The
foreign students are disproportionately enrolled in the academically
and their representation in the
ACM Dissertation Awards has been proportionally lower than their
- True international recognition, not merely the possession of a
doctorate or publications, should be the criterion for "best and
brightest." The current National Interest Waiver system works well,
though the related O visa might need updating.
- Industry lobbyists often cite a study extolling the
entrepreneurial activity of immigrants in Silicon
Valley.31 However, the study does not claim that immigrants are
more entrepreneurial than natives, and in fact the study data show that
the rate of immigrant entrepreneurship is less than immigrant
representation in the tech workforce. Similarly, immigrant-founded
companies have generally not made pathbreaking advances in
The industry statement that 40-50% of U.S. doctorates in computer
science are awarded to foreign students is accurate but misleading.
- The Ph.D. issue is a red herring in the H-1B debate. Only 1% of
computer-related H-1Bs have a doctorate.33
- A doctorate is not needed in this field. Even the big firms
such as Intel and Sun Microsystems hire very few of them.34
- Pursuing a Ph.D. is not financially attractive for domestic
students; a doctorate causes a net loss in lifetime career earnings in
8 My Proposal for Reform
Note: Meaningful, useful reform of the H-1B and other guest-worker
programs will presumably occur as a synthesis of a number of diverse
ideas. The reforms outlined here represent my own views, and are not
intended to negate proposals made the Programmers Guild and other labor
Reform must address the following points:
- Reform must remove the employers' ability to attain both Type I
and Type II salary savings.
- Guest workers must be allowed full mobility in the labor market,
during the entire time they are being sponsored for green cards.
- All employers must be covered, especially including the large firms.
- Not only H-1B, but also L-1 and other similar visas should be
- The guest worker and employer-sponsored green card processes must
be simplified and expedited, and bureaucracy must be greatly reduced or
- Reform of the H-1B program should NOT involve
establishment of training programs. We already have a surplus of
Americans with the needed skills; employers simply do not want to use
them, preferring the cheap labor of H-1Bs and other foreign workers.
U.S. firms are laying off Americans and replacing them with foreign
workers, in many cases with the "training program" being that the
Americans are forced to train their foreign replacements.
- In considering the viewpoints of interested parties, motivations
must be understood. While the motivations of labor organizations,
industry trade groups and so on are obvious, many people do not realize
the "hidden agenda" of some of the other entities involved. It should
be kept in mind that the National Science Foundation (NSF) and
universities, both of them highly active players in the H-1B lobbying
scene, have very severe biases in favor of an expansive H-1B
8.2 A Comprehensive Reform Proposal
This program would replace H-1B, L-1 and other guest-worker programs
used to import technical workers.37 However, for brevity I will simply use the term
Here is an outline of my proposal:
- To be eligible to an H-1B, the employer would be required to have
not have laid off Americans in similar jobs within the last 6 months,
and not employ H-1Bs in more than 15% of its technical
- An employer who wishes to hire an H-1B would be required to
advertise the job on a central Dept. of Labor (DOL) Web page for 30
days. If the employer did not hire an American during this period, the
employer would have automatic permission to hire the H-1B.
- The wage paid to an H-1B would be required to be at least the
national median for all workers in the field, including those with all
levels of experience.
- After hiring the H-1B, the employer would update the entry in the
database, stating the qualifications of the H-1B who was
- The visa would be valid for 3 years. During this time, the worker
could move from employer to employer at will, providing that each new
employer goes through the 30-day ad procedure on the DOL database.
- If the worker were to stay employed in the tech field for all but
60 days during the 3-year period, the worker would be deemed as having
proved his/her value to the economy, and would automatically be granted
permanent-resident (i.e. green card) status.
- If on the other hand, the worker were to become unemployed for
more than 60 days, he/she would be required to leave the country within
- The law would explicitly state that employers must give hiring
priority to Americans. An employer would not be allowed to reject an
American job applicant in favor of an H-1B by saying the American is
overqualified, or by overspecifying skills requirements.
- A Commission on Technical Guest Workers, with regional branches,
would be established within the DOL. Any American who felt he had been
wrongly rejected for a position in favor of an H-1B would be able
to file a simple, convenient Web-based challenge. If the Commission
were to find in a challenger's favor, the employer would be required to
offer a similar position to the petitioner. Neither party would be
allowed to appeal a decision by the Commission.
- The normal yearly cap on guest workers would be set at 65,000.
The Commission on Technical Guest Workers would have the power to
increase that number by 20% in a given year if unusually rapid
economic expansion warranted it; larger increases would be left to
Note what is missing from this proposal-bureaucracy and delay. The
adjudication of the work visa and green card would be almost completely
automated, and should work in "real time." The system would eliminate
the need of large firms to maintain special Immigration Departments, and
small firms would find that their expenses for legal fees would be
reduced to a small fraction of their current level.
The safeguards in my proposal against Type I and Type II wage abuse by
employers take on different forms. I guard against Type I savings by
eliminating the indentured servitude problem which currently is the
major enabler of those savings. To guard against Type II savings, I
have the provision that the guest worker be paid at least the median for
the given profession, a requirement that the data show would be
effective in eliminating much of this kind of abuse of the H-1B program.
In addition, the system has recruitment and anti-layoff provisions, makes
the entire process transparent to American workers in a timely manner,
and establishes the Commission on Technical Guest Workers, which would
give them a clear, easy avenue through which they could file complaints.
The various safeguards-working in concert, which is key-would not be
foolproof but should provide reasonable worker protection while giving
access to foreign labor to sincere employers.
1Dr. Matloff is a professor of computer
science and a former software developer in industry. His bio is
available at http://heather.cs.ucdavis.edu/matloff.html.
replaced a similar program, H-1.
3Employers who are
legally designated as "H-1B-dependent" actually are subject to such a
restriction, but as explained later, only 0.1% of H-1B employers fall
into this category.
4See Section 4 of my updated congressional testimony,
2.3 of my updated congressional testimony.
6The term programmers includes software
engineers, system analysts and so on. The vast majority of high-tech
H-1Bs are programmers, as opposed, for example, to electrical engineers
and the like.
7N. Matloff, forthcoming academic paper.
8 Santiglia v. Sun Microsystems, U.S. Dept. of
Labor, Office of Administrative Law Judges, Case No.: No. 2003-LCA-2.
9Ken Alvares, Vice
President, Human Resources, Sun Microsystems, Testimony Before the
Committee on the Judiciary U.S. Senate Hearing on The High Tech Worker
Shortage and Immigration Policy, February 25, 1998
L1s Slip Past H-1B Curbs, eWeek, January 6, 2003
11Jennifer Bjorhus, U.S. Workers Taking H-1B
Issues to Court, San Jose Mercury News, September 26, 2002.
12See first Sarah Lunday and Rick
Rothacker, BofA to Send Tech Jobs Overseas, Charlotte NC
Observer, March 6, 2002. Then view important further details at the
Programmers Guild Web site,
shows that many of the newly-hired workers were H-1Bs, rather than
workers in India as reported by the Observer.
13National Research Council, Building a Workforce
for the Information Economy, National Academies Press, 2001.
14See the NRC report, and my updated
congressional testimony, for extensive analyses of the fact that older
workers in this field face major difficulties. Without access to the
H-1B labor pool, the employers would be forced to consider the older
15Contrary to the claims by
industry lobbyists that evidence of abuse is merely "anecdotal"
16Paul Ong and Evelyn Blumenthal,
Scientists and Engineers, in Darrell Hamamoto and Rodolfo Torres
(ed.), New American Destinies: A Reader in Contemporary Asian and
Papademetriou and Stephen Yale-Loehr, Balancing Interests:
Rethinking U.S. Selection of Skilled Immigrants, Carnegie Endowment
for International Peace, 1996.
18N. Matloff, updated
19National Research Council, Building a
Workforce for the Information Economy, National Academies Press, 2001.
Straight Talk (weekly television program produced by Santa Clara County
Democratic Club), June 10, 2000.
21It is thus useless to
complain to the Dept. of Labor, as DOL itself has pointed out. Thus the
industry lobbyists are incorrect in claiming that lack of complaints
must mean that abuse of H-1B is rare.
Legal Rejection of U.S. Workers, Immigration Daily, April
24See immigration attorney Jose' Latour's electronic
newsletter,http://www.usvisanews.com/memo1192.html, January 6,
25 Santiglia v. Sun Microsystems,
U.S. Dept. of Labor, Office of Administrative Law Judges, Case No.: No.
2003-LCA-2. Several other suits like this are now pending against Sun
of Labor Statistics, 2001 National Occupational Employment and Wage
Estimates, and statistical analysis of INS data in my forthcoming
27 See N. Matloff, forthcoming
academic paper. The ACM (the Association for Computing Machinery) is
the main computer science professional body.
28The former foreign doctoral students
comprise only a small fraction of all H-1Bs anyway; see below.
29 See David S. North,
Soothing the Establishment: The Impact of Foreign-Born Scientists and
Engineers on America, University Press of America, 1995. North found
that the lower-ranked U.S. engineering doctoral programs consisted
50.6% of foreign students, while the higher-ranked U.S. programs had
only a 37.2% foreign enrollment.
The PR hype on the quality of the H-1Bs was epitomized by a 60
Minutes television broadcast on January 12, 2003, amidst a PR campaign
by Indians and Indian-Americans called "Brand IIT." (See Big
Guns Come Together to Promote Brand IIT, Harihar Narayanswamy,
Times of India, December 26, 2002.) The goal was to publicize the
Indian Institute of Technology university system. The 60 Minutes
piece called IIT the best engineering school in the world, and portrayed
all the IIT graduates as geniuses. All of this was puff-piece
journalism, not a serious look at what actually is a genuine success
India should indeed take pride in IIT, and there have indeed been many
top IIT students who come to U.S. graduate schools (some later becoming
top university faculty). But it is certainly not the case that most, or
even many, IIT students are geniuses. And the institution itself is
merely good, not world-class. Its faculty have not produced the seminal
research papers, the patents, the standard-setting textbooks and so on
which are needed for world-class status. It suffices to point out that
it is the IIT graduates who come to the U.S. for advanced study, rather
than American students going to IIT.
30N. Matloff, forthcoming academic paper.
31AnnaLee Saxenian, Silicon Valley's New Immigrant
Entrepreneurs, Public Policy Institute of California. PPIC is in
funded by an industry-related source, William R. Hewlett, co-founder of
32Nor have native-founded companies generally done
so. Progress in the computer field is highly incremental, and virtually
no one individual or individual firm has been indispensable.
33Source: Private INS
data. See http://heather.cs.ucdavis.edu/itaa.html.
Matloff, forthcoming academic paper, for a detailed analysis. Note by
the way that many of the big names of the field, e.g. Microsoft founder
Bill Gates, Oracle founder Larry Ellison, Apple/Pixar founder Steve
Jobs, do not even have a Bachelor's degree, let alone a PhD.
35National Research Council, Building a Workforce
for the Information Economy, National Academies Press, 2001.
36The NSF has explicitly called for the importation of
foreign scientists and engineers in order to suppress Ph.D. salaries.
See Eric Weinstein, How and Why Government, Universities, and
Industry Create Domestic Labor Shortages of Scientists and High-Tech
Workers, NBER, Harvard University, 1998.
The universities have enormous incentives to toe the industry party line
concerning H-1B and industry claims of a software labor shortage. They
count on industry for large donations of equipment, research funds and
even the construction of entire buildings, and they are major users of
the H-1B program themselves. See an extensive analysis in my updated
37I am often asked about the
related issue of offshoring, i.e. shipping software development
work abroad. In spite of all the recent press coverage, offshoring only
comprises about 1% of U.S. software development work (other offshoring
work, such as call centers, is beyond the scope of my expertise and
interest), and I do not believe it will ever become more than, say, 5%
or so. It is simply too difficult to do software development by remote
control, no matter how good one's communications technology is. This,
for example, is why U.S. employers bring the H-1Bs here, rather than
simply offshoring the work. Note, by the way, that offshored projects
typically include an H-1B/L-1 component as well. See my forthcoming
paper for details.
38The employer would inform DOL as to the salary paid,
but need not put it in the database.
File translated from
On 7 May 2003, 14:04.