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Evidence That H-1B Holders Don't Replace US Workers
Okian Warrior writes: In response to Donald Trump's allegations that H1B visas drive Americans out of jobs, The Huffington Post points to this study which refutes that claim. From the study: "But the data show that over the last decade, as businesses have requested more H-1Bs, they also expanded jobs for Americans." This seems to fly in the face of reason, consensus opinion, and numerous anecdotal reports. Is this report accurate? Have we been concerned over nothing these past few years? Remember, this is about aggregates, rather than whether some specific job has been replaced.
I have a bunch of H-1B workers (All Indian) at my place of employment, so yeah, they DO replace American workers.
Always consider the source. This "study" is totally biased and funded by the libertarian--regulation hating Koch Brothers and their CATO institute. This is false and not true.
What the H1B provides is a means for an employee to *NOT* participate in relocation. By offering H1B positions, companies do not actively recruit people from other areas, assist in relocation, the alternative is to open more branch offices in other locations near the groups of people. Instead, they offer the H1B because (1) the cost of that worker is less, and (2) they do not need to provide relocation. Lastly, most H1B workers want a green card. The problem is once the worker starts the green card process they are sort of an indentured servant to the sponsoring company. They cannot quit, they cannot threaten to leave otherwise they loose the green card. This process lasts from 3 to 6 years. If the H1B worker had job mobility as a normal american does, the H1B worker would recognize the low pay, demand higher pay, or move on to another job in the USA leaving the low paying company with a hole. This job mobility (or non-mobility) by the H1B worker solves or causes the problem. I know this, I have been involved with these types of decisions, or watched these types of decisions occur right before me over the last 30+ years writing software.
Also, remember that part of the fight is about _expanding_ the pool of H1-Bs. From the pov of the employers, if current levels of H1Bs mean they aren't getting cheaper labor, then clearly they don't have enough H1-Bs. The study doesn't project what would happen if the number were increased substantially.
This is BS. The author of TFA is using the third type of lie, statistics, to suggest that H-1Bs aren't having a negative affect, by setting up a strawman argument. Sure, H-1Bs may not increase unemployment, IN AGGREGATE. But that's as easy as saying, "Well, Initech replaced 50 American coders with H-1Bs, but there's a new McDonalds open down the road that hired 60 people at minimum wage, so unemployment is down!"
There was no mention of salaries, benefits, much less anything specific to particular fields, not even "IT." At most he made an argument that "STEM grads are less likely to be unemployed" but that means nothing, because that can still be true even if they're not being given the opportunities they should.
This is just a rewording of the old saw that illegal immigrants are doing the jobs that Americans won't do -- at salaries that are too low. If the flow of H1-Bs dried up, then wages would rise as the American tech workers would become more valuable. As wages rose, then becoming a tech worker would be viewed more favorably.
With the same evidence, Huff Po could have argued that H1-Bs are depressing wages for American tech workers.
This just means there's more demand for skilled workers than h1b's and native talent pool combined.
It means there's more demand for CHEAPER skilled workers than the native talent pool has.
I've heard stories from a technical director at a major American firm where they'd reject PHDs simply because they were worried they'd leave for higher paying jobs elsewhere. Their opinion was "why employ someone who wants more in terms of benefits, vacation, pay, etc when we can bring in someone who is completely under our control, easily replaceable/dismissable as needed, and cheaper". Control is the real crux of it - these workers are completely at the whim of the company because once the company is done with them they can't seek another job they must return home. That lets them abuse the crap out of them and if they complain they get sent home and someone else is brought in to take their place.
Economics 101.
Supply and Demand: If Demand stays constant and supply goes up, cost for services go down.
So during the late 1990's we had a High Demand for Tech, and at the current supply, tech workers were getting exceptional pay and benefits. Then during the Clinton Administration they opened the H1B1 for tech workers, because they saw this as a permanent increase in demand, and wouldn't meet supply in the near future.
However after Y2k settled down and a new infrastructure was setup demand settled (The tech bubble pop), however there is now a glut of tech workers, and H1B1 and the new infrastructures allowed for outsourced IT services. Thus so many tech workers, caused the salaries of tech workers to plummet.
Now technology demand is going up as the Y2k infrastructure is approaching 20 years old. So IT worker salaries are on the rise.... H1B1 increases will cause a drop in salaries, so many tech workers will leave work, as the lower salaries will not be acceptable.
However if a company is trying to stay competitive, and they find if they layoff their local workforce, and hire H1B1 for half the price, then they can make up for the cost of high turnover.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.
Check this action out: 13 million jobs added, yet from the same article:
So, the actual unemployment rate (the labor force participation rate) was unchanged in spite of thirteen million new jobs, and the number of people who need full-time work to support themselves but are only working part-time is also unchanged, meaning that the number of Americans with unmet needs was unchanged.
How can there be 13M new jobs yet Americans' status hasn't improved?
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
It means there's more demand for CHEAPER skilled workers than the native talent pool has.
There is ALWAYS demand for less expensive labor. Sometimes it isn't available. Sometimes companies engage in measures to reduce labor costs. Importing cheaper labor is fundamentally no different than offshoring the work. The basic goal is the same - to reduce labor costs. I run a manufacturing company and we do all our work domestically and pay as much as we can but our competition does a lot of their work in Central America or China so we really cannot compete on jobs with a high labor content unless there are special requirements like engineering help or just in time delivery. We simply cannot pay much more than we do and remain competitive.
Some companies are obviously engaged in some shady tactics to keep labor costs down. The tactics may be reprehensible but the fact that they are trying to contain labor costs should surprise no one. In a competitive market companies HAVE to try to do that. It's particularly galling though when the company has huge profit margins like Microsoft or Facebook does. A low margin manufacturing company might go out of business if they don't keep a tight lid on labor costs. A hugely profitable tech company has no such excuse.
I've heard stories from a technical director at a major American firm where they'd reject PHDs simply because they were worried they'd leave for higher paying jobs elsewhere.
It's not just PHDs. I have a pair of masters degrees and I've been told point-blank during interviews that they were afraid I would get bored and leave or seek higher paying work. It's incredibly short sighted but it happens pretty routinely.
It is a very simple thing -- even though H-1Bs were meant to be hired on as true experts, the program is being used the same way businesses in the early 1900s hired scabs when unions were striking, or hired Chinese labor in large quantities to build railroads... only thing that stopped that was Americans threatening to burn down factories.
We saw the same shit back in the 1990s. Japan was good, US workers were lazy.
Now, it is the same thing with so many games used for companies to say they "need" a H-1B:
1: They have a position for a Linux person with RedHat certs, then demand a CCIE. Usually nobody has both, so they get their $18,000/year junior admin who is an indentured servent.
2: They demand shit like 5+ years of Swift mandatory or 2 years of Windows Server 2016. Of course, nobody is going to have that, so the business gets their bottom of the barrel H-1B dev which gets replaced every 90 days.
3: There is the scream of PHBs, "Lets call Tata/Infosys... they fix everything". What results is not pretty.
I've seen this in IT since the 2000s, when the PHBs tried to offshore entire IT management to Bangalore, then realized that they needed big-ass network pipes for that, so decided to import the cheap labor.
As for quality, I've know managers who are used to flipping people every 90 days, and are used to nothing getting done, and just assuming the low code quality is the norm.
But the data show that over the last decade, as businesses have requested more H-1Bs, they also expanded jobs for Americans.
So if this is the "refutation" that H-1B holders replace American workers, I would say this is insufficient proof. It could be that in businesses that are expanding, you see more of both H-1Bs and jobs for Americans, simply because there are more jobs in total.
Like if I'm running a business and I need to hire 2 new programmers for an American office, and I can hire one H-1B worker at a much cheaper price, maybe I hire the H-1B worker and 1 American workers rather than 2 new American workers. In that case, it's true that the H-1B worker is taking a job that would have gone to an American, and also true that as I'm requesting more H-1B, I'm hiring more Americans. Of course, this is a simplified example.
Now I'm not opposed to immigration. I do think there's value in welcoming the best and brightest, even understanding that on a small scale, they'll displace some workers. I'm just not sure what this thing actually proves.
Which country are you referring to? The US is definitely not in a recession.
these workers are completely at the whim of the company because once the company is done with them they can't seek another job they must return home. That lets them abuse the crap out of them and if they complain they get sent home and someone else is brought in to take their place.
That is incorrect. If the management thinks that they probably have not researched it properly. Once here on their H1-b can moe to any company willing to take over the H1-B.
When you cant win, ad hominem.
You mean...Disney didn't replace their US tech employees with H-1B Visa holders? So their US employees did not train their H-1B Visa replacements?
You mean...Microsoft didn't lay off 18,000 people and then lobby Congress to increase the number of H-1B Visas?
You mean...there isn't economic research that refutes that article's premise: "As longtime researchers of the STEM workforce and immigration who have separately done in-depth analyses on these issues, and having no self-interest in the outcomes of the legislative debate, we feel compelled to report that none of us has been able to find any credible evidence to support the IT industry’s assertions of labor shortages." http://www.epi.org/publication...
Sounds like a page out of the Philip Morris playbook: "cigarettes don't cause cancer" - "H-1B Visa holders don't displace American workers"
you realize there is only about 167m Americans of working age right? You mean that the unemployment rate is at 60%? Out of 318m people, 47.4% are not of the working age. http://quickfacts.census.gov/q...
When you cant win, ad hominem.
That is incorrect. If the management thinks that they probably have not researched it properly. Once here on their H1-b can moe to any company willing to take over the H1-B.
Actually, you are not fully correct either. Well, ostensibly you are correct, but here's what really happens:
* The vast majority of H1-B workers are tied to Infosys, Tata, Wipro or some other India-HQ'd company as their sponsor, which means if the worker complains, said worker is recalled to India and quickly replaced. Huge corps like Nike *love* this kind of arrangement (this is a real-world example - Nike is a huge customer of Infosys). This in turn gives the client corporation (e.g. Nike) full control over their charges while their charges are in the US - one complaint from the corporation, and Infosys/Tata/Wipro does all the dirty work for them and provides a replacement within literal days.
* the second part of your sentence, "...any company willing to take over the H1-B" is the condition that undoes the rule. Kindly tell me how many companies are willingly going to take on someone under those conditions? Doing so w/o a company like Infosys/Tata/etc means expense and paperwork...
QED, 'mano :)
Quo usque tandem abutere, Nimbus, patientia nostra?
No, it means the unemployment rate, as it was calculated during the Great Depression, is higher than it was for all but one year of Great Depression. http://www.shadowstats.com/alt...
At my place of employ, H-1B absolutely replace US tech employees. HR here is required to, on some regularity, advertise the H-1B jobs as "open" and entertain applications for the role. The reality of that is that HR advertises for tech skills that we don't even use ... for instance, about a year after starting for the company I noticed a job opening for a developer position that needed "VAX/VMS, Oracle, and Cobol experience" ... funny enough, I happened to know a guy who had over a decade of experience with all of those and thought he might like an opportunity. I asked HR what part of the company needed all of those skills, and HR became immediately evasive saying "we just advertise the positions we are told to." Cop out. Tech staff here is roughly 80% H-1B.
There is a fundamental difference.
There are differences but they are not fundamental ones. The goal is to keep labor costs low. The mechanics of how this happens is secondary. Sending production to another country does add some logistical overhead but they wouldn't bother if it didn't result in a net gain on labor costs. Importing H1Bs or other cheap labor has different logistical hassles but they wouldn't bother if it didn't result in a net gain on labor costs. You're getting bogged down in worrying about the logistics but missing the big picture in the process.
GP meant Depression in both places it is used. GP did also leave out a clause that would clarify the meaning and tie it to the Great Recession though. Here's what (s)he is trying to say: "..the unemployment rate *now*, if calculated the same way it was calculated during the Great Depression (as opposed to how they've changed the calculation to make the numbers look better) is higher than it was for all but one year of the Great Depression." In other words, GP is claiming that the current REAL unemployment rate is a lot higher than what you hear in the news.
Three days from now?? Thats tomorrow!! ~Peter Griffin
The vast majority ... you mean 50,000 out of 160,000 ?
Yes, indian companies abuse the H1-B system and it's in great part their fault if there is a debate on H1-B. But no, the majority of H1-B workers are not "slaves".
The "top" H1-B list says it all : a lot of indian companies with low average salaries, and a long tail of legitimate companies trying to hire foreign talent.
Disclaimer : H1-B here.
Yes, this. ( sorry I was going to mod here, but I have to post, even though I signed into hypothesis annotations https://hypothes.is/stream and marked this article up all over ).
There is an *association* between H 1B and hiring because H 1B is granted in areas of relatively high demand for labor, and so total hiring is bound to increase in those areas. This doesn't mean H 1B is causing the hiring, it's merely that those who are hiring are hiring H 1B.
Also, companies put their budgets where it will solve their problems. They hire contractors to get more labor quick. This article says that H 1Bs are paid more than Americans so they can't be replacing them. THEY ARE. By keeping incentives low to be contractors, they are replacing would-be American contractors.
Also they prevent companies from being creative to fill positions by doing things like partnering with local educational institutions, running training programs, and helping financially with prospective employee's education.
...
From my understanding once the employee leaves infosys for another company then infosys does not have control anymore.
That's the thing - the H1-B would have to quit first (*if* another company is willing to take him on), which would be an escape. However, as noted, it is an added expense. Also, if the client company complains, the H1-B usually gets recalled to India for 'reassignment'. I cannot claim to know what happens after that, but unless that H1-B has a rare skill, I bet it isn't pretty. Note that this is technically illegal, but yet it's still there, as evidenced by the relationship between, say, Infosys and their client companies.
You claim it is a small part of the person's salary, but it still requires work from the new company's HR department, so unless they already have someone there set up to handle H1-B visas, they'll have to spend the time to do it (which in turn costs money) - and no, unlike your assertion, it is not a simple matter.
Quo usque tandem abutere, Nimbus, patientia nostra?
Ding ding ding, you got it in one.
This is also why every time some poor idiot pulls out the "($Unskilled_Profession) wants $15 an hour? I'm ($Skilled_Profession) and I don't even make that!" argument a Walmart heir's nipples tingle. Because the minimum wage being so low doesn't just hurt the working class, it artificially forces all wages down -- in short, your wage is supposed to be much higher too, but it isn't because they're getting away with paying Burger Flippers slave wages.
Depending on if you're checking increased productivity, inflation, or both, the Minimum wage in the US should be either $11 or $15 an hour, if not higher. Since it's still $7.25 that means that money went somewhere other than the workers of America who earned it.
Thus the question isn't "Does a burger flipper deserve as much as me," it's "Does a Walmart Heir deserve the $7 an hour extra they're not paying each of their workers?" (Spoiler alert: No.)
"...Remember, this is about aggregates, rather than whether some specific job has been replaced...." ...which means it's about lying.
The submitter/editor is specifically trying to contradict what you know otherwise to be true, and so had to remind you that the story's data need to be specifically interpreted to be true.
-Styopa
Of course there's demand for cheaper STEM workers. It's because we have an artificially created supply.
Perhaps you have never looked to see how the unemployment rate commonly cited is calculated? Those 100million (actually 94m) who have left the workforce are excluded from the pool when the unemployment rate is calculated. So yeas, if you were to include them we'd have something approaching a 40% unemployment rate.
> I've heard stories from a technical director at a major American firm where they'd reject PHDs
> simply because they were worried they'd leave for higher paying jobs elsewhere.
Employers who think this way will ultimately hire the employees they deserve.
Pay is not the only thing that attracts a person to a job (or keeps them there). A person leaves
for a *better* job, which may or may not mean it offers higher pay.
I've been through this on both sides, working for the outsourcer and the outsourcee (as a US citizen for US companies.) What I've seen happen in most instances of worker replacement is this -- CIO signs a huge outsourcing deal with Tata, Infosys, CSC, IBM, HP, Xerox, HCL or one of the other huge consulting companies. This company gets a fixed price per year to deliver the same services the customer's IT department delivered, and this price is usually significantly less than they previously paid for IT employees. (We'll ignore time and materials, change orders, rework, etc. etc. that push the price back up eventually.) Because the outsourcing company has to make a profit on the deal, their task is to provide the minimum service required to avoid contract cancellation, and drive the cheapest cost possible to make it happen. Usually, about 10% of the IT department remains with the company, mostly the business analysts, project managers and other touchy-feely roles that can't be easily done remotely. Some percentage is laid off immediately, and the balance transfers over to the outsourcer. Over time, these workers begin being replaced by H-1Bs or offshore labor because of cost pressures. H-1B labor is brought in to fill roles that absolutely can't be done from some call center environment, and the remaining ones (day to day administration, help desk, etc.) get sent offshore or into a sort of sweatshop "sysadmin farm." This is directly due to cost pressure, and service suffers because of it.
Companies might "create jobs" but they're generally not IT jobs in environments like this. I'm very lucky and now have a system architect level job that I've earned through years of experience in the trenches. What I worry about is that these low level jobs that new grads learn the ropes on are getting harder to find. As it is, I'm often in the position of just telling an offshore team what to do. I don't think arrangements like this are sustainable because you're not building up the next generation of techies to take the high level jobs later on.
I don't know what's taught in MBA school, but I guarantee a good portion of it is telling them that numbers on a spreadsheet are the only data that deserves any weight. I've seen IT outsourcing fail to produce the desired results far more often than it has succeeded. If your company does anything with IT beyond keeping the lights on, you'll be disappointed with an outsourcing arrangement -- but the numbers don't lie, at least in the short term.
Here's what I'd like to see happen: IT and dev workers should create a professional organization similar to the AMA, Screen Actors' Guild. It would have to be anything but a "union" because techies have this individualist streak that prevents them from wanting to associate with others in that way. This organization would do what the AMA does -- limit the number of new entrants, lobby for laws to be passed that favor its members, and ensure professional standards. Low level tech work would be on an apprenticeship basis, which would allow people to learn from experienced folks rather than the hodgepodge of self-teaching, vendor certification, etc. High level engineers/architects would be professionals, with responsibilities similar to actual, real PEs. I know most people think they're super-special and would never dare to compare themselves to their peers, let alone associate with them. But this is the best long-term solution -- it keeps tech a well-paying career, ensures that we can bribe Congressmen the same way businesses do, etc.
Like I've said before. If you are going to make an argument for H1B visas then it should be based on jobs where real apparent scarcity of talent has been shown to have driven up salaries. In other words, Doctors, Lawyers, CEOs.... professions with layer upon layer of protectionism. Once those salaries are down closer to a median income, then we can talk about needing to import a bunch of indentured servants who are clearly in-fact lowering the prevailing wages of middle income American families. And if you just want more people overall, then increase immigration quotas. We need immigration of people that want to come here, not hundreds of thousands of indentured servants like we are Saudi Arabia.
But no, the majority of H1-B workers are not "slaves".
Of course not, nowadays we call them "salaried employees" instead. Have you seen the 10th Edition of the Newspeak Dictionary?
How many days do they have once fired from a company to get someone to take it over?
30. In theory. In practice, nobody is really monitoring that closely. We have 10 million illegal Mexicans, so a handful of Indians bending the rules isn't a big concern.
Kindly tell me how many companies are willingly going to take on someone under those conditions?
Here in Silicon Valley, "stealing" H1Bs from other companies is a common occurrence. Hiring them away from a competitor is way easier than doing all the paperwork to bring them direct from India. My company has done some stealing, and we have also been stolen from.
Besides the rural population you already mentioned, there are another 350M middle class there, and yet another 350M there that are quite well off, have access to excellent schools thus becoming as "highly skilled" as a westerner.
Why people want to claim such easy to disprove bullshit is quite befuddling. No country has a good balance between rich, poor, and middle class. The 1/3rd of the population you claim exists and is "quite well off" simply does not! India is very similar to the US where the top .01% own most of the country and the top 10% own 90% of the wealth just like the US. There are more people in extreme poverty in India which makes them worse than the US.
Getting a degree does not make a good and productive worker in a foreign country. If it did, every company would have more Chinese workers than Indian workers because that is who the numbers have favored for decades. There is quite a bit to that discussion, more than I care to get into in this thread. Anyone that has dealt with development and support out of a foreign country knows exactly what I'm talking about.
Your personal anecdote with hiring does not change the fact that H1B workers are easily pressured into working far more than anyone should. Recent criminal actions against several companies for human rights violations in the SF Bay area should make that abundantly clear, and we only know about the few that were abused to a point where they turned in their sponsors. Of course a H1B worker is "hard working"! That is the point of people calling it a legal indentured servitude. For every one company that uses the system correctly there are at least as many that don't.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
So since the interview process takes 22 days on average now that means the person has 8 days to get an interview to remain legal.
I see two obvious errors in logic in this analysis.
1. Rising total employment of Americans does not mean that other Americans were not replaced by H1B holders. If there were no H1Bs, employment of Americans would have been even higher. What sloppy logic!
2. From the article: "If H-1Bs were primarily cheaper substitutes for American labor, the pace of H-1B requests...should rise when unemployment rises, as employers look to cut labor costs by laying off workers." In what universe does this logic make sense? If unemployment is higher, cheaper labor can be obtained by hiring more Americans since they are having a harder time finding a job. The actual results are completely consistent with H1Bs being a cheaper replacement for American workers.
"He took a duck in the face at 250 knots." -- William Gibson, Pattern Recognition
I'm not referring to people quitting or being poached. I'm referring to companies firing these workers.
If you're in any of the software development hotspots, this just isn't an issue. Companies understand the rush, and in general use "fast response" as a recruiting tactic.
Yup. I work in Silicon Valley, and we make job offers face-to-face at the end of the interview. Many candidates accept on the spot. Some sleep on it, and then call back and accept the next day.
There is NO evidence that a long drawn out hiring process results in better outcomes. While you are dragging your feet, the best candidates are accepting offers elsewhere, leaving you with the dregs that nobody else wants.
Top 10 is 71+K. Get rid of them, all of a sudden there's a whole lot fewer H1Bs in country. I'm sure if you go down the list, you'll find more in "consulting" roles. MS is #11, how many of their consultants are H1Bs vs the rest of the employees? By the time you get to companies with less than 50 H1Bs, I'm pretty sure you'll have wiped out the large majority of H1Bs. Having done consulting, no one does consulting for an average 70K a year in the manner these do. It's not worth it. I doubt most will have more than 2 years tenure if they were paid 100K.
Now to part 2 - H1Bs should be paid 20% above the going rate for the average US worker, plus a 10% tax straight to the gov (might as well fix our deficit with these highly skilled but not US workers while making US workers more attractive) or maybe have the entire 30% go straight to the debt or some other combination.
The cesspool just got a check and balance.
The author of the study bases his conclusions on the fact that H1B visa requests go opposite to the direction of unemployment. When unemployment goes up, H1B visa requests go down, and conversely. He then states that employers are therefore using H1B visa workers to grow, rather than to replace existing workers. My belief is that this is true, but that employers are using H1B workers to grow without paying higher salaries and benefits to attract more domestic workers. My belief is that this is one reason why IT salaries have stagnated over the past ten years.