Thursday, February 12, 2009

H1B Visa – It is Skilled Job Visa and Not Cheap Labor Visa

US senate recently has imposed strict conditions on all American companies that receive federal bailout money on hiring H1B visa holders. The stricter conditions have almost made it impossible to hire H1B visa holder in any such American company. This was what the independent senator from Vermont, Bernie Sanders had to say “The very least we can do is to make sure that banks receiving a taxpayer bailout are not allowed to import "cheaper labor" from overseas while they are laying off American workers”.
See the words “Cheap labor”. Isn’t H1B visa a skilled job visa? How can it be Cheap labor visa? Either the senator is making such a statement for political gain or due to total ignorance? How can HIB visa be a cheap labor visa when the company that hires a H1B visa holder ends up paying more than what it has to pay for an American worker in the same position?
Let us see the filing process of H1B visa. Once an American employer decides to hire a non American in a H1B visa, prior to filing the H1B petition with USCIS, the employer must file a Labor Condition Application (LCA) with the Department of Labor. Among other things the employer has to affirm in the LCA that the wage offered to the applicant is AT LEAST AS HIGH AS THAT PAID BY THE EMPLOYER FOR THE SAME TYPE OF JOB, and the number EQUALS OR EXCEEDS the prevailing wage for that job in the same geographical area. What does that mean? If an American was doing a job X and was paid $Y, the H1B visa holder should also be paid $Y and that amount should be equal to or exceed the prevailing wage for that job in that geographical area. So any law abiding company cannot pay “cheap” salary and get the services of a H1B visa holder.
In addition if an employer decides to hire an employee in H1B, the employer has to pay for his/her visa application, immigration lawyer fees etc that will run into thousands. If you add all these, hiring an American in place of a H1B visa holder is less expensive and less time consuming for the company. Still American companies hire H1B visa holders. Why?
To answer this question let me take you to a graduate class in any University in US. More than 80% of the students in those classes will be non-Americans. Go to any Computer Science or Electrical Engineering classes and you may be extremely lucky if you can find an American in that class. Bottom Line – Americans will high skill sets are almost an extinct species and American companies are forced to hire skilled people by sponsoring H1B visas.
Now what will happen if politics takes an upper hand and makes H1B visa rules stricter? The US is going to lose big time and countries like India and China are going to gain big time. Let us see how it is?
Suppose it becomes difficult to get H1B visas. The majority of the H1B visa holders, who pump majority of their salaries back to US economy will find it tough to get a job and go back to their motherland. The skilled people have gone back and the US employers cannot find enough “qualified” Americans to fill the skilled jobs even though there are lot of “unqualified, unemployed” Americans. In the mean time there will be thousands of qualified skill people in India who cannot be brought to US because of visa restrictions. What will the American company do? Outsource the work to India. What does that translate to? America’s loss is India’s gain.
Thomas L Friedman, the author of “World is Flat” wrote a nice article “The Open-Door Bailout”, about the ill effects of stricter H1B visa rules. Let me conclude by quoting him.
 “In an age when attracting the first-round intellectual draft choices from around the world is the most important competitive advantage a knowledge economy can have, why would we add barriers against such brainpower — anywhere? That’s called “Old Europe.” That’s spelled: S-T-U-P-I-D.

Related Posts:
Graduate Students in US – How to Survive Recession:
H1B Visa Restrictions in Stimulus Package – What Exactly Does it Mean?

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Anonymous Anonymous said...

This are fucking lies. The H1B visa is only used by Companies to cut wages and hire cheap people.

February 12, 2009 5:51 AM  
Anonymous Anonymous said...

I really don't have the time to go into a long winded explanation, but you don't really grasp how business works and how the economy is manipulated. Let me just say there are a million loopholes employers use to exploit visa programs to get the people they want, at the price they want. I've seen it first hand. The IT market has been deliberately swamped with workers, either using backdoor immigration through ICT courses, outsourcing, Visas or even hyping employment prospects, in order to produce a deflationary affect on workers salaries.

February 12, 2009 6:21 AM  
Anonymous Anonymous said...

This is absolutely true! I know one such company in India that has doubled its US clientèle by merely hiring skilled people who returned from the US. They are in fact boldly advertising their staff strength and qualification to US companies right now.

February 12, 2009 7:17 AM  
Anonymous Anonymous said...

No one I know is making anywhere the normal wage when they are on the H1B. It is a poor excuse of a program that allows companies like Microsoft to hire thousands of foreigners while Americans witht he same skill set have to wade through thousands of applicants just to get a shot at the same job.

Your comment that it will backfire on the US....I dont think so. Eventually employers will have to pay Americans for the job rather than farming it out to China and India.

February 12, 2009 10:22 AM  
Anonymous Anonymous said...

The problem with H1B is that it's abused. We had a *mega* talented researcher that we wanted to bring in from Europe. We got shot down because outsourcing companies had snapped up all the visas to use on cheap(er) coders for American cubicle farms. H1B needs to stay, but it has to be fixed first.

February 12, 2009 12:51 PM  
Anonymous Anonymous said...

You can't be serious. I know many Indian friends who are working in US for peanut salaries.

February 12, 2009 4:30 PM  
Blogger Brijesh Nair said...

A law abiding company can never do it

Anon @ 11.21 PM
Yes I agree there are lots of loopholes and one of the loopholes is hiring contract workers in IT market. If you are working in a good company and is a full time employee with the company it is no longer cheap labor for the company.

Anon @ 12:17 PM
I believe this trend is going to increase in the coming days.

Anon @ 3.22 AM
Do you have proof that H1B employees in Microsoft are paid less than their American counterparts?

Anon @ 5:51 AM,
I agree with you that H1B visa needs to be fixed. There is lot of abuse of the system most common one being working as a contractor in H1B visa.

Anon @ 9:30 AM
I know lot of my Indian friends in H1B visa who are paid same salary as his/her American counter part and working in US.

February 13, 2009 1:00 AM  
Anonymous Anonymous said...

Made in America by Americans = Americans can't afford to buy or quality is crap.

Insurance companies and corporate greed will see the end of the American economy one day.

February 13, 2009 6:19 AM  
Blogger Karthikeyan said...

its amusing to see not even one commenting on H1 shown their identity.

Anyways, as Brijesh has replied, there are loopholes which need to be closed. But bashing H1B holders for the incompetence of the congress and outright greed (in cases where it is abused) of the corporations is ridiculous.

But there is a lot of anger due to the botched up Iraq war, the ruining of the economy by wall st types and the same banks getting bailed out with trillions all the while not even a single one has been held accountable. And each time, though the majority was against it, the political crowd in DC did what it wanted. Even now not a single Bank CEO or executive has been indicted for creating biggest economic collapse since 1930s. So much for the world's best democracy! Anyways, its easier for the politicians to channel this anger and helplessness of the citizenry from themselves (and their wall st friends) to those foreigners with H1B because they are the "reason" for the job loss.

Blame the foreigner for all the ills. One of the oldest tricks in history, but works each time. Sad yet true..

February 14, 2009 1:38 AM  
Anonymous Anonymous said...

I am not clear how the new H1 B rule is going to create employment
for americans. Very few companies currently sponsor H1 visas with the exception of Microsoft, Intel etc. 8-9 yrs ago many companies sponsored H1 B, when the economy was good. Most of these companies outsource work to india and the labor is supplied by indian companies like wipro, TCS etc and other body shops that bring these IT professionals on their L1 visas or H1 visas. The bailout financial companies seldom directly sponsor H1 visas. Therefore, this law is not going to affect them in any big way and is infact a blessing in disguise for them. After taking the stimulus package they would just offshore more work to india. The law should actually curb outsourcing of IT and manufacturing to other countries. This is the only way IT and manufacturing jobs could create employment for americans.

February 17, 2009 6:29 PM  
Blogger Domestic Avalanche said...

Well… there is indeed some misuse of the system.

However, many a time, it is not cheap labor, but a harder working labor at the same rate which poses a problem for many an American worker.

Conclusion is correct. Put more restrictions on H1, the companies will just send the job to India (or wherever else).

The loss is for the country itself since the capital is forever lost to another economy. If it were to be an H1 worker, he/she would pay taxes in the US, consume/spend in the US economy and thereby contribute to the GDP.

Sometimes, the protectionist measures bring about unintended results.

February 19, 2009 4:10 AM  
Anonymous Anonymous said...

Its strange. US collects visa fees, invites people to US and then says they cant be given jobs ? Why dont they just cancel the visas or stop giving them ?

H1B has a minimum wage requirement.. you cant pay peanuts and escape...

February 19, 2009 9:41 PM  
Anonymous Anonymous said...

The HIB Visa program is abused by employers! It needs to be fixed! The abuse is hurting America. This is not to blame all of the economy woes on the program but it is a time when abuse is exposed.

February 20, 2009 6:29 AM  
Anonymous NightStalker said...

i think that what you say may be correct (i dont know the details), but i believe that whatever Obama and his task force are saying is more towards employing Americans rather than giving away the same jobs to people from overseas countries. I believe that major chunk of these jobs goto Indians/Asians, its obviously a frustrating fact for the Obama administration. In this time of depression i wouldnt blame Obama and his team to think about his fellow Americans first and about the others later. For the "cheap labor" part i believe that it should not be taken too seriously, its probably the result of the frustrating low employment of americans due to the H1Bs.

February 20, 2009 9:25 AM  
Anonymous Anonymous said...

It seems that the Indian companies over exaggerate the abilities of their people. Granted this is business and they are trying to sell us a bill of goods that never really meets our expectations! American companies hire foreigners because they are much cheaper then their american counterparts, yes even if they have to pay legal fees to get them here. It's the long term benefits of the cheap labor that they are after.

American won't lose if these folks are not here, we have a very large pool of workers that can easily do what these foreign nationals do.

You state that India and China will gain if these so called experts and professionals are not hired by American companies. Look at India and China, they mass produce poorly manufactured goods, the vast majority of their populations are under educated and poor. Maybe it's about time most of these so called professionals help their own countries get out of the misery that is their society. Most of these so called professionals come here because they can't find comparable jobs in their own country and why? India and China are not as advanced as they would think. Walk the streets of Mumbai or any other city in India and you will truly see what india is like. The poverty and backwardness of it's people.

February 21, 2009 2:08 PM  
Anonymous Aranya said...

Read up this article and see if it makes sense to all those who put the blame on H1B’s - and it is for time to decide on whether the large pool of workers here can handle this or not. I think it will explain all your concerns about where the problem lies. It is definitely not with H1B holders, but with the lack of mathematics/science graduates & undergraduates here in the US.

Mr. Anonymous you might have seen ‘The Slum Dog Millionaire’ movie about Mumbai but don’t get too knowledgeable about India based on that movie and lecture to Indians about their own proud country. I would not even want to talk to people who are scared to even reveal their own identity. Shame on you!

February 27, 2009 4:23 PM  
Blogger Brijesh Nair said...

Anon 7:08 AM
You have no idea of the realities existing out here. American companies are hiring H1B’s because it is not cheap but they could not find qualified Americans for the same job. Before you talk about the Indian and Chinese society have you ever been to these countries?

Thanks for the reply. Very nice one. Hope Anonymous understands the folly of his argument.

February 27, 2009 4:36 PM  
Anonymous Anonymous said...

80% of them are not americans.That is only true for graduate studies/Masters.Compare the statistics of undergraduate/BS students in univ's in US u will hardly find any Indian or % of students on F1 visa are less than 5%.And who said all these work require a graduate degree.Compare the qualification of all employees working in these firms the % of MS degree hlders will be less,so degree hardly matters.

1) The truth is companies just require candidates with competent skills and therefore BS degree is more than enough.

2) Also you compare the number of Indians doing PHD to americans, in that case also the percentage will be less.The final word americans don't require MS to get in to tech jobs.For jobs requiring more advanced skills they jump directly from BS to PHD in that case u dn't require an MS.

3) I read your post regarding salaries. never salaries are in terms with an american citizens,may be microsoft or google is paying equal.But consider the whole bunch who goes to work in onsite projects through infosys,tcs etc(they r on H1B too).Compare their salaries, how much they are paid on onsite projects( if you want statistics, i can provide) working for all these clients (finan firms,insu& banking sector), eg-liberty mutual, First Farmers to name few and comapre it with salaries of US citizens employed there.I can assure you that there is a huge difference.That is this whole outsourcing business is about, that is where these firms earn billon bucks profit.

February 28, 2009 11:38 AM  
Anonymous Anonymous said...

This is 100% obsolute truth. If we think on the angle of success of a product/company, we would understand the truth. What he says is exactly right. Do you know how many companies in india have started a seperate section in their career site as "Return to India Policy"? Its easy to get back a job in india for them. The loss is over here loosing skilled people. One point as he says here we should agree is Double degree/ Masters degree (Specially in Computers) is very very common in 80% of the indians. Non IT related skills are more here in US.

March 26, 2009 3:21 PM  
Anonymous Anonymous said...

This is like a breath of fresh air. Maybe it will send the H1b indians back to their own country, where they can fix the leaky sewers.

Man, my favorite movie is slum dog because it shows how most ppl in india live. No house, no running water, no sewer. The country is a freekin sewer. Ohhh, but they all know VB and Oracle.

July 10, 2009 4:08 AM  
Blogger sivagoud said...

Hi all... Let us not fight... for useless things.. Lets be mature and think positively.. It is a loss of every one if USA is not inviting techies from abroad its not just loss for them.. its loss for everyone involved in this cycle. Do not blame each other.. Americans are trying their best to save the fellow country men. There are always two sides of a coin. If it is good for one then it is bad for others. Let us hope the world would come out of this situation as soon as possible and people are allowed to work any where according to their skills and desires. Let us all be happy and hope that many jobs are created. Be happy.. enjoy .. Live and let live... siva

July 15, 2009 2:36 PM  
Anonymous Anonymous said...

H-1B Visa is misused by bodyshoppers. Cat is now out of bag. Media in US noticed. Most bodyshopping companies cheat. Why this is NOT mentioned in above article? Most Indians related to IT know this. People like me will always expose these thieves. These body shoppers do not pay even salary. For them there is no law. American economy suffered badly because of these visas as over supply of workers undercut wages. American lost jobs and purchasing power. This affected world economy.

February 16, 2010 1:58 AM  
Anonymous Anonymous said...

I'm a former Indian H1B and currently a green card holder. Here is the reality of how the visas are used:

1. body shops get foreign workers on some low level position like system analyst. The market wages (LCA) for that varies between 45,000 to 55,000 depending on the state.
2. The big indian consultancy firms do something like that except that they do also take higher positions like Software Engineer, Senior Software Engineer, Senior Systems Analyst, Project Manager etc and the minimum wages depending on the position could be between 55,000 to 75,000 to 85,000 at most.
3. The American companies like Microsoft, Yahoo, Google etc are a lot more honest in that they get people with the right qualifications and experience on senior level positions and pay far higher salaries than the LCA (100,000+). Some are hired after completing masters in the united states. Their salaries are comparable to their American counterparts in these companies.

What the federal government should do is curtail on #1 and #2. They should be liberal with the likes of Microsoft, Google and Yahoo.

The writer of this article has only written from one perspective - that of an H1-B in #3.

H1-bs in category #1 and #2 are questionable and need to be scrutinized more because most of the abuse comes in these two categories.

January 08, 2012 10:44 PM  
Anonymous Anonymous said...

H1B visa's are hurting our economy and leaving US citizens unemployed. Companies see H1B's as a source of cheap labor and pay H1B's much less than US citizens. I have seen many US citizens let go after they train their replacement.

January 19, 2012 2:03 AM  

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