Date: Mon, 28 Feb 2005 21:24:58 -0800 From: Norm Matloff To: Norm Matloff Subject: H-1B articles in Computerworld To: H-1B/L-1/offshoring e-newsletter Enclosed below are an article on H-1B salaries, together with a sidebar on foreign students in U.S. graduate programs in computer science. There is also a second sidebar, which I'll review in another message. Here are some comments on the enclosed two articles: A Computerworld analysis of wage data from approximately 290,000 H-1B applications filed with the U.S. Department of Labor shows that H-1B salaries declined across the board between the 2001 and 2003 federal fiscal years in a number of IT job categories. They include programming, systems analysis, networking, end-user support and quality assurance (see interactive database tool)... It's nice that CW set up this interactive tool, but it does not give data for specific companies. For that, see the Dept. of Labor data at the DOL site, http://archive.flcdatacenter.com/casesearch.asp or Rob Sanchez's site, www.zazona.com By the way, one should not read too much into the subsequent analysis, which shows H-1B wages falling while American workers' wages are going up. There could be a hundred different, conflicting explanations of this. "It has been a virtual nightmare dealing with a two-tier system," said David Nachman, an immigration attorney in Saddle River, N.J. "What we're seeing now is [that] finally the Department of Labor is coming to an understanding of what the real world is." I'm a bit surprised that the reporter here did not point out that the employers have a large variety of methods they are allowed to use to calculate prevailing wage. The old two-tier system was just one of many methods that employers and immigration attorneys could pick and choose from. So, if a two-tier structure did hurt them, they could simply turn to another method to get a lower wage. The reporter himself brought this up to me, and he was correct, so it's odd that he didn't mention it here. Maybe it was lost in the editing process. But Ron Hira, an assistant professor of public policy at the Rochester Institute of Technology in New York, said the four-tier system "will only push wages down ... for many of those workers that were probably in between the two [tiers]." Prof. Hira is correct, of course. The change to a four-tier system was put in to help the employers and immigration attorneys, not to protect U.S. workers as was claimed when the law was enacted last year. Hira should have added that in fact most H-1Bs are in that in-between area, due to the fact that most have fairly low levels of experience. Recall 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.) H-1B law does not require that employers give American workers hiring priority like the green card law does, but Stewart's comment does show that both laws are riddled with loopholes. The four-tier system just adds one more loophole. See the details on all this at http://heather.cs.ucdavis.edu/Archive/H1BChanges2004.txt Another change next month requires employers to pay 100% of a prevailing wage for new and extended H-1B petitions. That rate is now 95% of the prevailing wage. Also, the fees for an H-1B application, including the cost of accelerated processing, will rise from $185 to $3,185. Chicken feed, much less than the real savings in hiring H-1Bs. Not worth mentioning. In 2001, the most recent year for which figures are available, foreign students made up nearly 60% of graduate enrollments nationwide, according to the National Science Foundation. Borrelli said U.S. students aren't as interested in engineering and science studies as foreign students are. "We are not preparing our students out of high school to compete in the area of science and engineering very well," he said. This passage, and the overall theme of the article, is extremely disappointing. The implicit message is that we need to produce some many people with graduate degrees in these fields. We don't. We're not using the ones that we have. There are tons of people with Master's degrees and PhDs in these fields that cannot find technical work, and must resort to driving a bus or selling insurance for a living. See http://heather.cs.ucdavis.edu/Archive/ProposedMSPhDExemption.txt Now here is one of the frankest public statements I've seen from university administrators on this general topic (emphasis added): Most of the students enrolled in the New Jersey Institute of Technology's graduate program are foreign nationals. The Newark-based school has so far received 208 applications for admission in computer science master's degree programs next year, with about 165 of those applications from foreign students, said Stephen Seideman, dean of the school's college of computing science. THE FOREIGN STUDENTS "WILL DO EVERYTHING THEY CAN TO STAY HERE," he said. This dean is actually admitting that many faculty prefer to work with foreign students because of their docile, obedient attitude. Similarly, foreign students are happy to work for the very low wages paid by research assistantships. These are typically well under $20,000 per year, and often even those are difficult to get. Recall that our National Science Foundation actually planned it this way, noting that foreign students would be happy to work for low wages, since they are higher than what they would get in their home countries, and since they hope eventually to get major nonmonetary compensation in the form of a green card. Again, as Dr. Seidman says, the foreign students "will do everything they can to stay here." After they graduate and become H-1Bs, they are happy to serve as de facto indentured servants in that visa. (See Section V.A of my law journal article, at http://heather.cs.ucdavis.edu/MichJLawReform.pdf) At that point they will be even closer to their goal of a green card, and once again "will do everything they can to stay here," enabling the employers to underpay them. (See all of Section V above.) It's absolutely amazing that the dean admitted this in public. The two articles, plus a chart, follow below. Norm http://www.computerworld.com/printthis/2005/0,4814,100059,00.html The H-1B Equation Salary data shows split with wages of U.S. workers News Story by Patrick Thibodeau FEBRUARY 28, 2005 (COMPUTERWORLD) - Next week, the U.S. government will begin accepting H-1B applications from companies that want to take advantage of an increase in the fiscal 2005 visa cap to hire foreign workers who have advanced degrees from U.S. universities. Up to 20,000 new H-1B visa slots are becoming available. Opponents of the cap increase say the graduates being hired will take jobs from U.S. workers, including IT staffers. Supporters argue that foreign workers are important to the country's economic health. At the core of the debate lies a question that's likely to re-emerge as the application process begins again: Do H-1B visa holders help or hurt the U.S. workforce? A Computerworld analysis of wage data from approximately 290,000 H-1B applications filed with the U.S. Department of Labor shows that H-1B salaries declined across the board between the 2001 and 2003 federal fiscal years in a number of IT job categories. They include programming, systems analysis, networking, end-user support and quality assurance (see interactive database tool). The wage decline mirrored what was happening to the pay of U.S. IT workersat least until 2003, when the salary trends diverged, according to research firm Foote Partners LLC. The government's Labor Condition Application database provides data only on new H-1B visa applicants and visa holders seeking a change of status. In addition, the Labor Department lumps the information into job categories that don't easily match with jobs in the private sector. Moreover, the government doesn't track visa holders and doesn't know the rate at which H-1B visa holders lost jobs in proportion to U.S. workers. But David Foote, president and chief research officer at Foote Partners, said there was a split in 2003: The salaries of U.S. workers increased, while H-1B wages continued downward. That finding comes from comparing the H-1B data compiled by Computerworld and processed by Eastland Data Systems Inc. with salary information that New Canaan, Conn.-based Foote Partners collected through surveys of about 46,000 private-sector and government IT professionals. In the category covering data communications and networking jobs, for instance, U.S. salaries rose 6.2% in fiscal 2003, Foote said. H-1B salaries declined 2% during that period, according to the Labor Department data. Foote said U.S. salaries in other IT job categories grew at rates ranging from 1.5% to more than 6%, while H-1B salaries saw declines of 1% to 5%. In 2003, "the economic recovery began in earnest," Foote said. Salaries for U.S. workers increased because companies were trying to hold on to IT staffers who hadn't been laid off during the technology spending downturn, he noted. Meanwhile, offshore outsourcing increased, as did the use of contract companies that rely on H-1B visa workers. Because clients didn't want contract-labor costs to eat into their offshore savings, contractors had to be competitive, according to Foote. "If they can't convince the client of theirs to pay more for the talent, then they just have to get the talent cheaper," he said. The fight over H-1B visas ultimately revolves around the opinions and experiences of IT managers and workers. Jesus Arriaga, CIO at Keystone Automotive Industries Inc., an auto parts distributor in Pomona, Calif., is among those questioning the need for more H-1B visas. In prior jobs in California in the late 1990s, he worked at companies that used H-1B workers, who were typically paid less than their U.S. counterparts. "It's just like offshoring," he said. "You're probably going to get similar skills at a lesser cost." Nonetheless, Arriaga said that at Keystone, he's more interested in hiring U.S. workers, "especially when you have colleagues that have not found work." When U.S. workers "get bypassed because other foreign workers are coming in and taking their jobs, I don't think that's right," he said. Russell Lewis, CIO at GFI Group Inc., a New York-based financial services firm, has hired H-1B workers as full-time employees and has sponsored them for permanent residency green cards. Lewis said that his goal is to hire the best person for a particular job and that he has seen no savings in hiring H-1B workers full time. "By saying, 'Well, the H-1B workers bring a cheaper labor force to the U.S.,' typically, our experience is that it doesn't do that," Lewis said. Some H-1B workers attribute wage problems to IT contractors sometimes called "body shops." A Labor Department employee who works in the H-1B program and asked that his name be withheld said most complaints concern contractors who either paid H-1B employees below the prevailing wage or "benched" them, meaning they weren't paid between contracts. Rajiv Dabhadkar, a former H-1B visa holder and IT programmer who returned to India last year, said he was always paid below prevailing wage levels by contractors. In addition, he once found out that he wasn't receiving medical insurance even though there was a paycheck deduction for the benefit. "I've been really hurt by the visa system," said Dabhadkar, who formed a group in Mumbai, India, called NoStops.Org that provides call center support to H-1B and other tech workers. The 20,000 additional H-1B visas will become available on March 8. Other changes to the H-1B program will also go into effect in the next few weeks, including a revamping of the government-mandated two-tiered prevailing wage system under which visa holders are paid. H-1B workers are supposed to be paid a prevailing wage, based on state, federal or private-survey employment data. Most companies use federal or state salary data, according to immigration attorneys, who said the current system doesn't give employers much flexibility, often forcing them to pay a wage that is higher than an employee's skills and training warrant. On March 8, the law will be changed to allow four tiers of pay in each prevailing wage category, enabling companies to pay H-1B visa holders something between the top and bottom levels of the prevailing wage scale. "It has been a virtual nightmare dealing with a two-tier system," said David Nachman, an immigration attorney in Saddle River, N.J. "What we're seeing now is [that] finally the Department of Labor is coming to an understanding of what the real world is." But Ron Hira, an assistant professor of public policy at the Rochester Institute of Technology in New York, said the four-tier system "will only push wages down ... for many of those workers that were probably in between the two [tiers]." Another change next month requires employers to pay 100% of a prevailing wage for new and extended H-1B petitions. That rate is now 95% of the prevailing wage. Also, the fees for an H-1B application, including the cost of accelerated processing, will rise from $185 to $3,185. Frida Glucoft, a partner at Mitchell Silberberg & Knupp LLP in Los Angeles and chair of the law firm's immigration department, said the prevailing wage and application fee increases will likely discourage some companies from hiring H-1B workers. Still, Glucoft expects the 20,000 new visas approved by Congress last fall to be gone in a week. IT WAGE DATA 2001-2003 JOB CODE FY 2001 AVERAGE H-1B FY 2002 AVERAGE H-1B FY 2003 AVERAGE H-1B % CHANGE 01-02 H-1B % CHANGE 01-02 U.S. IT % CHANGE 02-03 H-1B % CHANGE 02-03 U.S. IT 030 $60,357 $60,554 $59,701 -2.8% -1% +1.8% 031 $60,234 $57,041 $56,136 -5% -7% -2% +6.2% 032 $53,024 $48,062 $46,882 -9% -7% -2% +4% 033 $58,933 $54,415 $51,947 -8% +0.8% -5% +1.8% 039 $66,763 $64,883 $64,247 -3% -3.4% -1% +1.5% NOTES: The H-1B data includes information only on new visa applicants. It doesnt include wage information on all H-1B visa workers in the U.S. at that time. The U.S. IT data comes from Foote Partners LLC in New Canaan, Conn., which matched its own salary survey data on about 46,000 IT professionals against the government data. JOB CODE GUIDE 030: Software engineer, computer programmer, programmer analyst, engineer and scientific programmer, systems programmer, chief computer programmer, ystems analyst 031: Network control operators supervisor, data communications analyst, network control operator 032: User support analyst supervisor, user support analyst 033: Computer security coordinator, data recovery planner, technical support specialist, computer systems hardware analyst, quality assurance analyst, computer security specialist 039: Database administrator, database design analyst, microcomputer support specialist http://www.computerworld.com/governmenttopics/government/story/0,10801,100057,00.html?from=story_package Sidebar: Foreign Students Fill Computer Science Graduate Programs News Story by Patrick Thibodeau FEBRUARY 28, 2005 (COMPUTERWORLD) An argument cited by H-1B supporters for raising the visa cap stems from the high number of foreign students -- especially from China and India -- who come to the U.S. to study. Foreign student enrollments account for about 70% of the masters and Ph.D. computer science students at Texas Tech University, according to John Borrelli, dean of the graduate school at the 28,000-student university in Lubbock. Last year, the number of foreign students who applied for graduate admissions was more than three times the number of U.S. residents who did so, Borrelli said. In 2001, the most recent year for which figures are available, foreign students made up nearly 60% of graduate enrollments nationwide, according to the National Science Foundation. Borrelli said U.S. students aren't as interested in engineering and science studies as foreign students are. "We are not preparing our students out of high school to compete in the area of science and engineering very well," he said. Most of the students enrolled in the New Jersey Institute of Technology's graduate program are foreign nationals. The Newark-based school has so far received 208 applications for admission in computer science master's degree programs next year, with about 165 of those applications from foreign students, said Stephen Seideman, dean of the school's college of computing science. The foreign students "will do everything they can to stay here," he said. Typically, foreign graduates of U.S. universities get a one-year training visa after graduation and then seek an H-1B visa. Rock Regan, former CIO for the state of Connecticut, said state agencies typically don't hire H-1B visa holders because of political concerns. But Regan thinks U.S. schools are "not putting out the number of qualified workers that the industry needs." Despite the addition of 20,000 more visas for the current fiscal year, the H-1B cap is still less than half of its 195,000-visa peak. Regan suspects that the reduced number of visas will encourage offshore outsourcing of IT jobs. Offshoring "will become more of a reality if people can't get the talent here in the U.S.," he said. Opponents see any increase in the number of visas as having an impact on the prospects of U.S. students. Norman Matloff, professor of computer science at the University of California, Davis, and a longtime critic of the H-1B visa program, said it's largely a matter of supply and demand. The more H-1B workers there are, the less opportunity there is for his students, Matloff said.