Case in Point!

I often speak here of “the Intels and the Infosyses,” the former meaning mainstream tech firms (large or small) and the latter referring to the largely Indian and Indian-American rent-a-programmer firms. I always write in dismay of the unwarranted focus on the Infosyses in discussions of the H-1B visa program, because (a) the Intels are just as abusive as the Infosyses and (b) I have feared that any reform on H-1B will actually result in a net INCREASE in the number of foreign tech workers in the U.S. , by instituting a Staple a Green Card program. (And by the way, I am just as fearful in (b) today as in the past, as Donald Trump indicated several times during the election campaign that he supports Staple.)

For these reasons, I usually avoid commenting here on articles involving the Infosyses. But this one compels my, and your, attention, as it vividly illustrates some points I’ve been hammering away at for years.

The gist of the article is that Infosys, worried that the Trump administration will tighten up on H-1B policy, is preparing to increase hiring of American “freshers” — Indian English for new grads — to make up for a possible shortfall in foreign workers. There are two major implications of this.

First, it is a perfect illustration of my frequent comment that the standard threat of tech industry lobbyists — “If we can’t get H-1Bs, we will have to move the work offshore!” — is for the most part empty. The industry claim that reducing H-1B will not result in more jobs for Americans is false, as Infosys’ own comments in the article show.

Second, there is of course the age issue. One of my most frequent points in this blog and elsewhere has been that H-1B is largely about AGE: Younger workers are cheaper, so H-1B expands the young labor pool, enabling employers to hire young H-1Bs in lieu of older (age 35+) Americans. And, young H-1Bs are even cheaper than young Americans. But the major savings comes from the age aspect.

I like this article especially because I have struggled to get folks, even the critics of H-1B, to grasp the fundamental role age plays in H-1B, including with the Infosyses, in fact particularly for that segment of the H-1B employer space.

I have seen so many times, in the press and in statements by critics of H-1B, that the reason the Infosyses can hire H-1Bs on the cheap is due to loopholes relating to the Infosyses. While it is certainly true that the law on H-1B and employer-sponsored green cards is chock full of loopholes, it is NOT true that there a special cheap-labor loophole for the Infosyses.

EVERY employer of H-1Bs, both among Intels and Infosyses, is required to pay at least the legal wage floor, the prevailing wage. That wage floor is too low, generally well below market value for the given worker, but both the Intels and Infosyses are subject to the SAME prevailing wage requirement.

Don’t be confused by the fact that the Infosyses must pay H-1Bs at least $65K per year. They are still subject to the prevailing wage requirement, generally much higher than $65K and the SAME as for the Intels.

That doesn’t mean that the Infosyses don’t use the H-1B program for cheap labor. They do! But they use it in the same way the Intels do, which is to use the program to expand the pool of YOUNG workers. And the article cited here shows Infosys itself showing that.

 

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14 thoughts on “Case in Point!

  1. Norm, could you quantify the main effects and interaction effects of age, H-1b, and [company-sponsored H1-B vs. bodyshop-sponsored H-1Bs] in salaries in comparable jobs from your past studies? Is there a nonnegligible three-factor interaction effect?

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    • Irrelevant question, sorry. The ONLY relevant question is, would a given change in policy result in more jobs being available to Americans? It doesn’t matter whether you regard the Infosyses as even slimier than the Intels. The question is, would a policy that is intended to reward the Intels and punish the Infosyses result in more jobs available to Americans? For most of the proposals made so far, the answer is NO.

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      • Given the number of individuals who will come to the US for a masters degree and stapled GC, the oversupply of STEM workers would grow. All of this time the government will encourage American students pursue STEM degrees when there is little hope of employment. Even government jobs will not be safe.

        The only good part of this is the new GC holders will be subject to the same age discrimination that Americans experience and will jhoin the unemployment lines. Of course, they can always return to their home country while Americans have few options to go elsewhere.

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      • Staple might lead to a huge increase of international students over the age of 40 attending grad school for the purpose of obtaining a Green Card (I am assuming that one does not need to be employed to get the Green Card). Will universities be hesitant to accept older students? How will companies react?

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  2. I’m not sure what the source of that article is but I didn’t read that they were going to hire american college graduates, just that they were going to hire graduates from american colleges. I suspect this will still mostly be foreign students that will work under the OPT program.

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  3. You may be quoting the article out of context. For reference; here’s the complete quote: “We have to accelerate hiring of locals if they are available, and start recruiting freshers from universities there”. Please note that “recruiting freshers” is only one aspect of their recruitment strategy as the statement clearly indicates. Also, the article clarifies that this represents “a shift from the traditional model of recruiting mainly experienced people in the U.S.” It appears that Infosys expects that their traditional model will no longer be sufficient to staff their projects and that they will be forced to recruit new grads to supplement their staffing shortages.

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    • You may be right, but it’s really hard to say. My interpretation of the language is that although the number of Americans (“locals”) they have been hiring has been small and mainly for nontechnical people (sales, marketing etc.), they will now have to hiring American techies, who will have to be young in order to keep costs low like the H-1Bs have done.

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  4. The way to remove the incentive for US based employers to hire OPT and CPT workers is to base FICA taxes on the employer’s payroll rather than individual employees income.

    We do NOT want to include OPT and other temporary guest workers in the Social Security program. Forty quarters of work credit for benefits is too low for the current workforce. Given proposals to delay full retirement age to 70, One should need more than 10 years of work credits out if a potential work career of over 50 years to qualify for disability and retirement benefits. (Discussions of working the minimum required time to qualify for benefits and then claiming disability before returning to their home country discussions have been on forums for many years.)

    Even the 35 year income averaging does not help given that the benefits are not evenly proportional to income but are weighted to give low income workers a greater return. A high income, short term worker can receive a similar or greater benefit than a long time, low income worker.

    Social Security reform is needed. Adding the employer component of payroll taxes for now exempt guest workers would address two problems – encouraging the employment of those now exempt employees and increasing the deposits to the Social Security and Medicare trust funds.

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