The Ball Is in DOL’s Court, and an Age-Old Elephant in the Room

Back in April, a bipartisan group of U.S. senators sent a letter to several government agencies, asking them to investigate apparent abuses of the H-1B work visa program, in which the giant utility Southern California Edison reportedly laid off American IT workers, replacing them by foreign workers, and forcing the Americans to train their foreign replacements. At the time, I expressed doubt that the letter would have any benefit, and in any event, the main agency involved, the Department of Labor, refused to investigate.

But today Senators Durbin and Sessions announced that DOL has had a change of heart. Presumably this is because another case of much higher visibility than SCE has come to light: Disney.

This development is sure to thrill many critics of H-1B. Well, even I like it, but just because it will make for good theater. 🙂 Little or no good will come out of it, and indeed, it will likely make things even worse.

What will DOL say?  They will find, correctly, that SCE and Disney, and their IT outsourcer labor suppliers, did nothing illegal. These firms were almost certainly acting entirely within the law (or the law as it has been interpreted over the years, a point I’ll come back to below).

A reader asked me why I had not devoted a blog to the New York Times piece on the Disney case, linked to above. The reason is that article takes this same point of view that I complain about so much, the perception that the main abusers of H-1B are the IT outsourcing firms; the reporter repeated this in a radio discussion yesterday. Not the reporter’s fault, really, since this view has become Conventional Wisdom, and yes, I do harp on this issue. But as I’ve said, this perception is incorrect and will be used by Congress as reason to actually increase the H-1B cap (while making some mild restrictions on the IT oursourcing firms).

The reader’s point was that at least the Times is now giving H-1B prominent coverage. Actually, they did so in the late 1990s (after one false start in a very one-sided article), but later somehow didn’t pay much attention to the issue. This may be a result of the massive PR campaign by the industry, claiming a STEM labor shortage and portraying the H-1Bs as engineering geniuses.

The original letter from the Senate had requested DOL et al to suggest reforms in the law. It seems doubtful that such a response will be forthcoming from such an arriba immigracion administration (not that I don’t agree with that stance to some degree), but if there is one, it will be some mild proposal to tighten up on the IT outsourcing firms, letting the Intels and Googles go scot free, and indeed, giving Congress the green light to expand H-1B and even add new similar programs, such as for foreign students.

What will certainly NOT be addressed by the DOL is the “elephant in the room” — the AGE issue. Of course, this is the other issue that I harp on, but it is indisputable that age is at the core of H-1B abuse. This is how SCE and Disney save so much on wage costs in hiring — the foreign workers are much younger, thus much cheaper than the Americans they replaced. You might think this is illegal age discrimination, but on the contrary, such discrimination is actually codified in H-1B/green card law: The statute defines four experience levels, and the legal wage floors are defined relative to those levels. (And as I understand it, age discrimination laws in general do not forbid hiring a younger worker because he/she is cheaper.)

For reasons I’ve never understood, none of the major players interested in tightening up on H-1B — activists, researchers, sympathetic people on the Hill — want to touch the age issue. Again: If they won’t touch it, why should DOL?

It would be an easy fix, simply doing away with the experience-based wage levels, and would not have to explicitly cite the age issue. This simple change would go a long way toward reducing the abuse (again, including by the Intels and Googles). But sadly, no one wants to go that route.

There is one wrinkle, though, that I’ve seen brought up a few times recently, which concerns the statutory stipulation that “employment of the H–1B worker will not adversely affect the wages and working conditions of similarly employed U.S. workers.” Years ago I said, half jokingly, to a reporter that losing one’s job to an H-1B would be “the ultimate in adverse impacts on working conditions.” 🙂 But that obviously is not how the law has been interpreted. On the contrary, by disallowing the replacement of Americans by H-1Bs in the specific case of the formally defined group of H-1B dependent employers, Congress has implicitly (and as I understand it, legally) given approval of such replacement in all other situations.

I do admire those in the Senate for bringing up. As I said recently, so many of those in Congress who used to speak out against H-1B are now strangely silent (e.g. Stabenow, DeLauro, Pascrell). But my advice to those readers who strongly hope for proper reform of H-1B is, don’t pin your hopes on this investigation.