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Guestworker Programs, Reshoring, And Skilled Workers. The Impacts Upon American Workers

In March 2015, Ron Hira, a Research Associate and Associate Professor of Public Policy at Howard University, testified before the U.S. Senate Judiciary Committee hearing about immigration reforms needed to protect skilled American workers. That classification includes workers in various high-tech jobs. Mr. Hira testified:

"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... 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 guestworkers instead of Americans, it should surprise no one that many employers are taking advantage of this business model and lobbying to expand it... Myth: Employers must prove there are no qualified American workers before hiring an H-1B... Myth: H-1B workers cannot be cheaper than Americans because employers must pay the “prevailing wage”... Myth: Compliance with the program’s rules that protect American workers is robust..."

You may have believed those myths. Now you know otherwise. That abuse of the H-1B visa program may affect you, an employed family member, or somebody you know. How? Mr. Hira explained:

"... 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..."

Of course, the corporations claim that they can't find skilled American workers. Mr. Hira explained what's really happening and how it extends beyond H-1B visa recipients:

"Most of the H-1B program is now being used to import cheaper foreign guestworkers, replacing American workers, and undercutting their wages... There are hundreds of thousands of additional guestworkers admitted on L-1 and OPT visas, and they too are harming the job prospects of American workers. Because Congress never expected L-1 and OPT 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 guestworker visa programs are now being used too to replace and undercut American workers."

Sadly, government agencies also perpetuate the problem:

"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 workers’ wages and working conditions."

You may remember a similar incident at Disney where fired American workers were forced to train their foreign replacements before leaving. Pew Charitable Trusts reported about other alleged abuses:

"A computer programmer from India was promised a $46,500 salary in New York, plus tuition to study for a master’s degree. Instead, his annual pay averaged less than $13,000 and his degree was withheld when his employer failed to make the promised tuition payments. In California, veteran computer workers at a health care company say they were forced to train cheaper foreign replacements before being laid off, even though the replacements were hired under a program meant to fill critical jobs when employers can’t find qualified U.S. citizens or permanent residents who hold green cards to fill them."

I encourage you to visit the Pew Charitable trusts article, because it features an interactive map where you can discover the number H-1B workers in your state.

Some readers in denial may be thinking: I have a college degree, or I work in a high-tech job such as writing code for websites and mobile apps. It won't affect me. I'm immune.

Don't fool yourself. It will affect you. It probably already has. Former U.S. Labor Secretary and professor Robert Reich summarized the problem in a June 16 Facebook post (links added):

"... the [U.S.] Senate is considering a bill to raise the number of skilled foreign workers that can come to the U.S. on H-1B visas... It’s a bad idea. When Secretary of Labor, I was responsible for implementing the H-1B visa program – and again and again found high-tech companies claiming they needed skilled workers from abroad because they couldn’t find ...such workers in the U.S. -- when in reality they just didn’t want to pay higher wages to Americans with those same skills... A study released in April by the National Bureau of Economic Research found that H-1B visa recipients crowd out American workers, lowering wages and raising profits without increasing productivity. A 2013 analysis by the Economic Policy Institute found there are more than enough U.S.-born high-tech workers to fill jobs here, and that companies have been using foreign workers to cut costs, knowing they’re easy to intimidate because if they lose their jobs they have to leave the U.S."

You can read this study by researchers at the University of Notre Dame and University of California at Berkeley (Adobe PDF). They concluded:

"We find some evidence that additional H-1Bs lead to lower average employee wages while raising firm profits... we robustly find that new H-1Bs cause no significant increase in firm employment..."

Think about that. Firms pay less to other employees. So, even if you aren't replaced, you may be paid less or your annual wage increases are smaller. The savings went to the company's profits, and to senior executives rewarded for those savings via bonuses.

I have experienced the high-tech guest-worker situation. As a freelancer with a master's degree and plenty of experience, I work with a variety of digital agencies to produce websites for corporate clients. Several years ago, I subcontracted with an agency to work on a website redesign project. That project included a client company's internal website (called an "Intranet") to automate and streamline its human resources processes, forms, and performance reviews for both managers and employees. I was hired to perform the usability work and lead several focus-group sessions with the client company's employees and managers.

After meeting my project team members, I saw immediately the situation. Another person and I were the only two American workers on this project team. The rest of the team included workers from India to perform the project management, documentation, website development, quality assurance, and coding work. Plenty of my peers at other digital agencies, and some as freelancers, regularly perform all of these tasks. So, there's no shortage of qualified, experienced American workers.

During this three-month project, the foreign guest workers flew in from Mumbai as needed for their roles, and shared rooms in a rented home (cheaper than a hotel). When their role on the project was finished, they either returned to Mumbai or traveled to another U.S. location for their next project. The math probably went like this: the digital agency probably charged it's corporate client an average of about $120 per hour across all project team members. The digital agency paid me $90.00 per hour, paid the foreign workers maybe $40.00 per hour, and pocketed the difference. So, the agency's profits were $30.00 per hour for American workers like me, but a far higher $80.00 per hour with foreign workers.

This looked to me like a clear corporate choice aided by a willing digital agency. You'd never know it happened unless you worked directly on the project.

Multiply my experience by thousands of others and you get an idea of how vast the problem is. Corporations, politicians, and news media that defend this employment abuse may announce that thousands of jobs are returning to the USA (often called "reshoring"), but you now know what's really happening. Informed voters question announcements and demand to know if the returning jobs are pre-filled with foreign guest-workers while the employers don't bother looking to hire American workers. You now know more to contact your elected officials and demand that they explain what they are doing to protect American workers.

When returning jobs are pre-filled with guest workers, then there's really no benefit to USA citizens and plenty of downside: unemployment levels remain high, it is harder to find full-time work, and for workers over 55 years of age it can be impossible to find full-time work. You now know it's a pro-business free-for-all at the expense of middle-class and skilled workers.

What are your opinions of skilled guest workers? Of the H-1B visa program? Have you had to train foreign guest workers?

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