Date: Mon, 13 Oct 2008 13:45:46 -0700 From: Norm Matloff To: Norm Matloff Subject: fraud found in H-1B program--but not as important as you think To: H-1B/L-1/offshoring e-newsletter As is always the case when there are news stories, such as the one enclosed below, about fraud in the H-1B program, I've been flooded with e-mail messages from people who are elated that "the truth has come out." As always, my response to them is "Thanks for writing, but as I have stated repeatedly, the main issue in H-1B/employer-sponsored green cards is loopholes, not fraud. Indeed, the industry lobbyists love these news stories, because it diverts attention away from the real issue, the loopholes." No one ever seems to understand that last point. Yes, the industry lobbyists are HAPPY whenever articles on fraud appear, as it allows Congress to shift responsibility to executive branch, which then tightens up enforcement, while leaving the central problems untouched. Congress can then wash their hands of the matter. Granted, the 20% fraud/technical error rate found in the current audit is significant. But it's no worse than the 21% rate found by the State Dept. in 2000, and the similar results in the 1994 DOL audit. And as to the H-1B found working in a laundry, Bartle and Steele of the Philadelphia Inquirer found all kinds of incidents like this in their investigation (eventually published as a book) in the 1990s. More importantly, that 20% rate must be considered in context: (a) Whatever new regulations the executive branch imposes as a result of this audit, the employers can easily adapt. For example, the audit found that some employers were paying below the official prevailing wage because they had the worker pay his own H-1B fees, causing his actual pay to dip slightly below the legally required wage. This is nickel-and-dime stuff, folks. So, the employers will now pay the worker slightly higher wages --big deal. The employers will still be paying only the official prevailing wage, which is far below the real market wage, and it will be business as usual. Again, this is the loopholes at work, in this case in the legal definition of prevailing wage. Most employers who are using H-1Bs as cheap labor are doing so FULLY LEGALLY. So whatever the executive branch does now to address fraud and technical errors in H-1B applications, it will in most cases NOT cause the employers to switch from hiring H-1Bs to hiring Americans. (b) The true rate of abuse of the H-1B program is near 100%. (Note the distinction between "fraud" and "abuse.") Virtually all H-1B hires violate the spirit (though not the letter) of H-1B, which is to remedy labor shortages. In virtually all cases, the employer could hire a qualified American. The main exception is the hiring of "the best and the brightest," which as I've shown statistically in my CIS article and elsewhere, is the case only for a tiny percentage of H-1B hires. And this near-100% rate holds for nearly 100% of the employers, including the big-name firms (whom the USCIS report cites as being largely innocent). I don't know how to say this any more clearly or loudly, but once again, everyone: THE FRAUD ISSUE IS IRRELEVANT. It will be used by the industry lobbyists for their benefit, to prevent Congress from taking real action. This includes the excellent Durbin/Grassley bill; if the bill is addressed at all by Congress, the good, loophole-plugging, parts will be deleted, leaving only the parts dealing with fraud, which are of very little value. Norm http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9116758 Computerworld Widespread problems, fraud found in H-1B program U.S. study finds incidents of forged documents, fake degrees, 'shell' companies By Patrick Thibodeau October 9, 2008 (Computerworld) An internal report by the U.S. Citizenship and Immigration Services (USCIS) examining the H-1B visa program has found evidence of forged documents and fake degrees, and even "shell" companies giving addresses of fake locations. The USCIS report, released Wednesday by U.S. Sen. Chuck Grassley (R-Iowa), indicates that serious violations of the H-1B program by employers are so common that one in five visas are affected by either fraud or "technical violations." This means that potentially thousands of employers may be violating the rules, some willfully. Employers didn't pay prevailing wages in some cases and benched employees when there wasn't work, while some employees worked at jobs that differed from what the application claimed they would be doing. In one bizarre case, an H-1B holder was found "working in a laundromat doing laundry and maintaining washing machines," the report said. "This report validates the major flaws in the H-1B visa program," Grassley said in a statement. "It's unacceptable that these fraudulent activities are slipping through the cracks when there is so much legitimate demand for H-1B visas." The 15-page report summarizes findings and doesn't detail the employers who apply for the H-1B temporary work visas. Although the H-1B employers have been cited and fined from time to time for violations of the program, this broad examination is the first of its kind. "Until we make a conscious effort to close the loopholes, we're going to see continued abuse where people coming to this country on H-1B visas are working at laundromats," Grassley said. Investigators used a random sample of 246 cases drawn from a pool of nearly 100,000. Documents were reviewed and H-1B employers and workers were interviewed. The report's investigators discovered most of the problems during visits to work sites. Out of that number, 51 of the cases had problems. The report's authors wrote that their confidence in their findings is 95%, and that the results represent a "significant vulnerability." "USCIS is making procedural changes, which will be described in a forthcoming document," the report concluded. Ron Hira, an assistant professor of public policy at the Rochester Institute of Technology and co-author of Outsourcing America, said he was stunned by the size of the problem. "It is clear that oversight, including an auditing function, are desperately needed to clean up the corruption," Hira said. "But we shouldn't forget that the major problems with the H-1B program are caused by massive loopholes that allow firms to legally pay below-market wages and displace and undercut American workers. Those wouldn't show up in this investigation because they are entirely legal and wouldn't be considered fraudulent or a violation." Grassley and Sen. Dick Durbin (D-Ill.) have been ardent critics of the H-1B program, pushing for reforms and tougher enforcement. The tech industry wants an increase in the H-1B program, now capped at 85,000 annually, with 20,000 visas set aside for graduate degrees. But much of the lobbying for the increase came last spring, before the full weight of the current economic crisis. Congress has not taken action on that legislation, and efforts to increase the H-1B cap have so far failed as well.