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H-1B Visas Put U.S. Financial IT Jobs at Risk

The foreign job threat for American technology workers isn't limited to work that can be sent abroad. Companies are using skilled workers brought in under the H-1B visa program to replace American staff with foreign workers who are paid substantially less - nearly $13,000 a year less on average according to a recent study.

The visas are designed to allow professionals from other countries to work in the U.S. for one to three years.

Case Study

Citigroup, for example, uses H-1B programmers on larger projects. The bank often pairs a relatively small team in the U.S. with a larger team at financial services software firm Polaris in Chennai, India.

Pramod Achanta, vice president at Polaris, says, "We bring in H-1B [visa holders] only when we have a fairly long outsourcing project." The most common H-1B workers Achanta uses are Java and .NET programmers. In a large project, Polaris might have 100 programmers working for Citigroup, with 10 to 20 in the U.S. gathering information and then doing user testing, with the remaining group in India writing the code.

Most of the H-1B programmers Polaris brings in are located in the tri-state area, since Polaris focuses on financial services, with some in California and a few in Florida, where several financial firms have located back office operations.

Pay Disparity

John Miano, a member of the Programmers Guild, compared pay scales from the Bureau of Labor Statistics to H-1B reports from the Department of Labor's (DOL) disclosure Web site. He found that foreign workers in computer programming had a mean salary of $52,312 while American residents were paid $65,003. In California the spread was even wider - $73,960 to $53,387, or $20,573.

The study found that across the board the salary spreads were large. Computer scientists were paid an average of $90,146 if they were American residents and only $78,169 on average under the H-1B program. Systems administrators saw a variation of $17,478.

Plans to add another 30,000 H-1B visas passed the Senate in a budget bill but got dropped in conference December 19, to the disappointment of high-tech and manufacturing firms. The legislation would have increased the number of H-1B visas to 95,000, according to Ira Mehlman, spokesman for the Federation for American Immigration Reform (FAIR).

FAIR cites a report on Bank of America which outsourced its HR to a company called Exult, which in turn outsourced its computer programming to two sub-contractors who use H-1B workers. The Bank of America employees, who had been earning $70,000 to $90,000, were required to train their replacements as a condition of collecting a severance package. The H-1B employees were paid less than $40,000 a year.

Protectionism Vs. Profits?

The high tech industry accounts for about 60% of the H-1B visas. Congress capped the six-year H-1B visas at 65,000 per year in 2004, and that cap has already been reached for the 2006 fiscal year that began Oct. 1. House and Senate negotiators also dropped a plan to increase fees on the L-1 visas, which companies use to transfer workers they already employ in foreign countries to the U.S..

The Programmers Guild opposes the non-resident visa programs but so far has not been successful in persuading Congress to impose tighter limits. It says that while the U.S. lost about 500,000 tech jobs between 2000 and 2003, Congress admitted about 500,000 foreign tech workers on nonimmigrant visas: L-1 and H-1B - resulting in the displacement of over one million American workers.

"These visas provide no protection to U.S. workers, as employers are not required to consider U.S. applicants as a condition of obtaining H-1B visas," the Guild says. "Even with record unemployment and new graduates unable to find work, Congress continues to flood the job market."

But Sandy Boyd, a vice president at the National Association of Manufacturers, says that in a global economy the work is going to get done somewhere. "The question is not whether the work is going to get done, it's where is the work going to get done," he says. "We've missed a real opportunity by not ensuring the work would be done here."

Programmers contend that the H-1B visas are used to drive down salaries and replace American workers' high-paid jobs.

Crying Foul

FAIR says that the H-1B safeguards to prevent employers from firing American workers and replacing them with foreign workers at much lower pay are widely ignored. "At a time of high unemployment, the high tech industry is flooding the labor market by importing workers who are willing to work more cheaply than American high tech workers," says Mehlman.

Since visa holders can remain for six years with renewals, estimates are that more than 700,000 are working in the U.S..

Technically, individual workers have recourse under the legislation, explains Mehlman, but practically, companies have far greater resources. "More often than not the worker is left out in the cold. The high tech companies are a powerful lobbying force and they want access to as many workers at the lowest possible price. We are hollowing out the middle class here. Jobs that can be sent overseas are sent overseas, and if you can't send them overseas you bring the jobs in."

Employers have to file an application with the DOL stating that prevailing wages and working conditions will be met, and then the DOL issues a labor certification. A programmer who tested the department's rules submitted an application to hire professionals at $5 an hour, far below prevailing wages. He received approval from the department in six days.

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AUTHORAnonymous Insider Comment
  • Ia
    Ian
    23 January 2006

    Dear Editor: It frustrates me when I read articles by narrow minded Americans who complain that their jobs are being taken away by foreign workers. One side of the equation is obviously the money side, but the other side of the equation to bringing in foreign workers is work ethic. Workers abroad have a completely different work ethic to those in American society. Foreigners achieve goals and targets faster than their American equivalents because they work smarter, not longer. The foreigners are not afraid to get their hands dirty or rattle cages to get the job done and they have the etiquette to this without being confrontational. Foreign workers should be given more credit for improving business practices than just being accused of taking away a job.

  • Ia
    Ian
    20 January 2006

    How about a story on all the high paying jobs that are being created in America by 'insourcing' for a change. We may be outsourcing mid-level jobs, but we're also insourcing billions in investment and new jobs generated by foreign firms. Touting protectionism only hurts us in the long run.

  • Ia
    Ian
    20 January 2006

    Many very smart, educated, hard-working students come to the United States to study each year from other countries and get their Masters degrees in business, technology and other important sectors. Since the number of H1-B visas has been reduced, these students are forced to return to their countries after graduation because they cannot find work here. We are letting some of our greatest minds go. It's really our loss. The United States will fall behind economically because of this reduction in a very important and innovative part of our work force.

  • Ia
    Ian
    20 January 2006

    This is certainly what can be expected. The global economy demands competitive costs which for high tech industries are largely salaries. By our practice of free trade the American leadership in this area has been overtaken by China. As long as our elected officials remain more responsive to big business rather then the American taxpayer public this will continue and grow. Perhaps the Congressional elections will send a message to Washington.

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