My past 2 blogs have focused on iconic U.S. companies like Walt Disney and Alaska Airlines, utilizing the strategy of firing American tech workers and then replacing them with contract workers or immigrants with the H-1B visas at significant lower wages.
But these two organizations are not alone in having resorted to these business tactics. In her 6/3/15 NY Times article, “Pink Slips at Disney. But First, Training Foreign Replacements,” Julia Preston discusses the issue of the H-1B program at length. The following are some excerpts:
“According to federal guidelines, the visas are intended for foreigners with advanced science or computer skills to fill discrete positions when American workers with those skills cannot be found. Their use, the guidelines say, should not “adversely affect the wages and working conditions” of Americans. Because of legal loopholes, however, in practice, companies do not have to recruit American workers first or guarantee that Americans will not be displaced.”
“Too often, critics say, the visas are being used to bring in immigrants to do the work of Americans for less money, with laid-off American workers having to train their replacements.”
“Many American companies use H-1B visas to bring in small numbers of foreigners for openings demanding specialized skills, according to official reports. But for years, most top recipients of the visas have been outsourcing or consulting firms based in India, or their American subsidiaries, which import workers for large contracts to take over entire in-house technology units — and to cut costs. The immigrants are employees of the outsourcing companies.
“In 2013, those firms — including Infosys, Tata Consultancy Services and HCL America, the company hired by Disney — were six of the top 10 companies granted H-1Bs, with each one receiving more than 1,000 visas.”
“Last year, Southern California Edison began 540 technology layoffs while hiring two Indian outsourcing firms for much of the work. Three Americans who had lost jobs told Senate lawmakers that many of those being laid off had to teach immigrants to perform their functions.”
“In a statement, the utility said the layoffs were “a difficult business decision,” part of a plan “to focus on making significant, strategic changes that can benefit our customers.” It noted that some workers hired by the outsourcing firms were Americans.”
“Fossil, a fashion watchmaker, said it would lay off more than 100 technology employees in Texas this year, transferring the work to Infosys. The company is planning “knowledge sharing” between the laid-off employees and about 25 new Infosys workers, including immigrants, who will take jobs in Dallas. Fossil is outsourcing tech services “to be more current and nimble” and “reduce costs when possible,” it said in a statement.”
“Among 350 tech workers laid off in 2013 after a merger at Northeast Utilities, an East Coast power company, many had trained H-1B immigrants to do their jobs, several of those workers reported confidentially to lawmakers. They said that as part of their severance packages, they had to sign agreements not to criticize the company publicly.”
“The H-1B visa program has created a highly lucrative business model of bringing in cheaper workers to substitute for Americans,” said Ronil Hira, a professor of public policy at Howard University who studies visa programs and has testified before Congress about H-1B visas.
“H-1B immigrants work for less than American tech workers, Professor Hira said at a hearing in March of the Senate Judiciary Committee, because of weaknesses in wage regulations. The savings have been 25 percent to 49 percent in recent cases, he told lawmakers.”‘
Julia Preston refered to the Howard University Professor Ronil Hira, an expert in the subject of H-1B visas, in her 6/3/15 NY Times article. She mentioned that he testified about this immigration program before a U.S. Senate Committee hearing. Here are some excerpts from his testimony:
“The Intent of Our Immigration Law is to Protect American Workers – Instead Our Guest-worker Programs Inflict Serious Harm on Them Congress and multiple Administrations have inadvertently created a highly lucrative business model of bringing in cheaper H-1B workers to substitute for Americans. There are mainframe-sized loopholes built into the H-1B program’s design – the statutory law, regulations, administrative law, and policy guidance – and a complete disinterest on the part of multiple Administrations in enforcing the current rules, however weak they may be. Some of these loopholes are intentional, some are not, but they all add up to a system that encourages employers to exploit the H-1B program for cheap labor. Given the extraordinarily high profits involved in using guest-workers instead of Americans, it should surprise no one that many employers are taking advantage of this business model and lobbying to expand it.”
“In explaining the H-1B program rules the U.S. Department of Labor states, “The Immigration & Nationality Act (INA) requires that the hiring of a foreign worker will not adversely affect the wages and working conditions of U.S. workers comparably employed.”
“The clear intent of the law (8 U.S. Code §1182), is that hiring foreign workers will not harm American workers. Yet the H-1B program is most definitely harming American workers, harming them badly, and on a large scale. Most of the H-1B program is now being used to import cheaper foreign guest-workers, replacing American workers, and undercutting their wages. So, contrary to intent of the INA, the use of the program is indeed “adversely affecting American workers’ wages and working conditions.” The scale of this damage is large and its effects long lasting, adversely impacting: the careers of hundreds of thousands of American workers; future generations of students; and, America’s future capacity to innovate. This is not just adversely affecting a few workers. The H-1B program is very large with approximately 120,000 new workers admitted annually. Once admitted those workers can remain in the U.S. up to six years. While no one knows exactly how many H-1Bs are currently in the country, analysts estimate the stock of H-1B workers at 600,000.”
“There are hundreds of thousands of additional guest-workers admitted on L-1 and OPT visas, and they too are harming the job prospects of American workers. Because Congress never expected workers to be potential competition to American workers those programs have virtually no rules to protect American workers. That expectation was incorrect. As with the H-1B program, these guest-worker visa programs are now being used too to replace and undercut American workers.”
“Congress needs to significantly overhaul these programs to protect American workers in order to meet the intent of the INA. And the Executive Branch needs to use its full authority to investigate and stamp out any violations that are occurring. Further, it needs to propose and promulgate new regulations and policy guidance to ensure compliance with its own statements about the INA. Current protections in the H-1B program are seriously flawed.
“Skilled guest-worker programs can serve important purposes: bringing in workers with unique or specialized skills; serving as a bridge to employment-based permanent immigration for specialized workers; and, offering practical training for foreign students. But those positive uses have been overwhelmed by the use of these programs for cheaper labor.”
“Southern California Edison Case Exposes Major Flaws in Protections for American Workers The recent case of Southern California Edison (SCE) illustrates the most flagrant abuses of the H-1B program and exposes the flaws in the protections for American workers. As reported by ComputerWorld and the Los Angeles Times, SCE is replacing its American workers with H-1B workers hired by outsourcers Tata and Infosys. To add insult to injury, SCE forced its American workers to train their H-1B replacements as a condition of receiving their severance packages. There could not be a clearer case of the H-1B program being used to harm American worker’s wages and working conditions.”
“There are widespread myths about the protections for American workers and how the program works in practice.”
“Myth (H-1B): Employers must prove there are no qualified American workers before hiring an H-1B.”
Reality: “There are no requirements to demonstrate a shortage of Americans prior to hiring an H- 1B. Employers do not need to recruit American workers for a job filled by an H-1B. In fact, a job can, and often is, earmarked for an H-1B worker. The SCE case demolishes the myth of H-1Bs only being hired when no American worker can be found – American workers were already doing the job and being replaced by H-1Bs. In the words of one SCE worker, “there wasn’t a single job being taken over by foreign workers that wasn’t already being done by an American.” Obviously there is no shortage of Americans in this case. In fact, the American SCE workers were not considered for the position with SCE’s contractors Tata and Infosys. And of course there was no shortage in the case of Cargill, Disney, Northeast Utilities, and Harley-Davidson.”
“Solution: “Prior to hiring an H-1B, all employers should be required to actively recruit American workers and required to hire qualified American applicants. Explicitly ban all displacement of American workers by all employers. This would ensure that the H-1B program is being used as it is intended, to complement the American labor force. The technology industry has claimed that there is a dire systemic shortage of American workers and their jobs are going unfilled. If this is true then it should be effortless for them to meet these recruitment and hiring requirements.”
Myth: H-1B workers cannot be cheaper than Americans because employers must pay the “prevailing wage.”
Reality: Congress’ intent of requiring that a legally defined “prevailing wage” be paid to H-1B workers was to ensure that H-1B workers were not pushing down the wages of American workers. To fulfill that, H-1B wages are supposed to be set at least at the market rate.
But most H-1Bs are paid below that market wage, and they are hired because they are cheaper than American workers. And this is perfectly legal. Why? Because the “prevailing wage” rules, in statute and regulations, are poorly designed and written. Employers can easily hire an H-1B worker at wages far below what an American worker is paid. Simply put, the H-1B program has become a cheap labor program. While it is well known in the industry that the cost savings of hiring an H-1B over an American are approximately 25%, SCE provides us with the most definitive case study to examine the cost savings. We can make a clear apples-to-apples comparison of wages because the H-1B workers are taking over the exact same jobs currently performed by American workers.”
1. “SCE published a compensation study that showed its IT workers were paid an average of $110,466 per year. We know Tata and Infosys pays its new H-1B workers on average $65,565 & $70,882 respectively.”
2. “Therefore, the cost savings are approximately $40,000 per worker per year, which is a wage savings of about 43%. Multiply that by the 500 workers being replaced and there’s a windfall of $20 million each and every year by replacing American workers with H-1Bs. SCE was very explicit about its motivations.”
[PDF]Hira Testimony – Senate Judiciary Committee – U.S. Senate http://www.judiciary.senate.gov…United States Senate Committee on the JudiciaryMar 17, 2015 – Testimony Given By. Ronil Hira, Ph.D., P.E.,. Associate Professor of Public Policy. Howard University, Washington DC.