You Can’t Fix It If You Don’t Understand It

Donald Trump named his Labor Secretary today, causing considerable consternation among those who hope that Trump will tighten up the H-1B work visa program. It would appear that nominee Puzder may be a big fan of H-1B and similar programs. I’ll come back to Puzder below, but even if he has the best of intentions to help American workers — which I will believe unless I see otherwise — the key point is that you can’t fix H-1B if you don’t understand it. And it IS a complex issue.

A case in point is Alexia Fernandez Campbell’s second piece on H-1B in less than a week, titled “There’s a Clear Way to Fix the H-1B Visa Program,” with subheadline “Closing a 1998 loophole would prevent companies from replacing American IT workers with foreign guest workers. Why hasn’t that been done yet?” Sadly, the entire premise of her piece is wrong.

Though I dismissed her earlier article as being paid for by a pro-immigration group, I must say that there her errors this week, though certainly egregious, are not her fault. She appears to have been fooled by a fast-talking lobbyist who took liberties in explaining this complex topic to her. Indeed, I learned today that another journalist, one whom I respect quite highly, was also taken in.

Many, I suppose most, readers of this blog have a specific interest in H-1B. Some are programmers and engineers, some are journalists, some are government policy people, some are immigration economists. If indeed you have a keen interest in H-1B, please pay close attention below. The vulnerability of the above two journalists to lobbyist obfuscation shows how easy it is to go wrong.  And going wrong leads to wrong policy!, even with good intentions.

Here is what Ms. Campbell says:

Ultimately, nothing happened with these investigations [of Disney and SCE, who replaced their American workers by H-1Bs supplied by H-1B-dependent employers such as HCL] because replacing American workers with H-1B workers is perfectly legal in many cases. That’s due to a loophole in the law that exempts certain companies from complying with the requirement not to displace an American worker when they petition for one of the 85,000 H-1B visas available each year…

[the 1998 revision of H-1B] allows those same H-1B reliant companies to ignore the requirements about protecting American jobs as long as they pay the foreign workers at least $60,000 a year, or hire a foreign worker with a master’s degree. …Considering the average IT worker in the United States makes far more than $60,000, that exemption makes it lucrative—and legal—for companies to displace American workers with cheaper H-1B workers.

Wrong, wrong, wrong. ALL employers of H-1Bs, whether they are H-1B-dependent or not, are required to pay the legally-defined prevailing wage. That wage is typically below what a free agent would command in the market, but as Campbell points out, even that lowball figure is typically well above $60,000. So the $60K figure is irrelevant.

Say the legal prevailing wage for a given occupation, region and experience level is $75K. Then ALL employers, including those designated as H-1B-dependent, MUST PAY AT LEAST $75K, not $60K. The H-1B-dependent employers do NOT have special permission to pay only $60K.

The author is also confused as to which employers are currently allowed to replace American workers with H-1Bs:

While some lawmakers have proposed raising the $60,000 threshold to $100,000 or more, this would still allow companies to replace American workers. Instead, some have suggested eradicating the salary exemption altogether, which would require H-1B employers to show that they are not replacing American workers, regardless of how much money they are paying the foreign workers. Eliminating this exemption would have bipartisan support…

The author seems to think that the non-H-1B-dependent employers are currently banned from replacing Americans by H-1Bs. That is totally false; no such statute.

The lobbyist who she quotes, and on whose statements she is clearly basing her entire article, is Bruce Morrison, who was involved in the original 1990 H-1B legislation. He has disseminated misleading information of the above nature before, e.g. in a letter to the editor in the New York Times.

Which brings me back to Trump and Puzder. Those who are upset about the latter being tapped for Labor are missing the point, which again is that even if Puzder tries to do right by American workers, he can be bamboozled by the slick lobbyists, who will offer deceptive “solutions” that in the end will INCREASE the number of foreign STEM workers added to our labor markets each year.

How can the lobbyists do this? It is quite easy. They simply blame the problem on the “Infosyses,” saying that the “Intels” use the H-1B program responsibly. This article does this, and indeed we have had an almost daily diet of such articles in the last few years. I’m told that Trump did so in his speech today, saying,

We will buy American and hire American…During the campaign, I also spent time with American workers who were laid off and forced to train the foreign workers brought in to replace them. We won’t let this happen anymore. Can you believe that? You get laid off, and then they won’t give you your severance pay unless you train the people that are replacing you. I mean that’s, that’s actually demeaning, maybe more than anything else.

Very nice, but the key word here is replace. Trump said “hire” but in the details it is clear that he really means “replace.” As I have explained before, the Infosyses use H-1Bs to REPLACE Americans but the Intels hire H-1Bs INSTEAD OF Americans.

Parsed carefully and with proper background, Morrison’s letter to the Times is consistent, though with a false premise. The background here is that Morrison is assuming Intels Good, Infosyses Bad. The $60K figure only was intended to apply only to the Infosyses, and due to inflation it no longer applies even to them. So, Morrison is saying we need to simply clamp down effectively on the Infosyses, and all is good.

And though I appreciate the author’s brief mention of the age aspect of H-1B, she misses the point that the four-tier experience structure in the rules for prevailing wage is the driving force behind that age issue. The law allows ALL employers of H-1Bs, not just the Infosyses, to hire young H-1Bs in lieu of older (35+) Americans.

So, unless there are people who have Trump’s ear and can explain that the Intels are just as culpable, what we will get in the end is legislation that punishes the Infosyses but REWARDS the Intels. The reward would be in the form of increasing the H-1B cap (for non-Infosyses) and/or implementing a Staple a Green Card program. Either way, we will get an INCREASE in the number of foreign workers added to STEM labor markets every year.

All because of a lack of understanding of the complexities of the H-1B issue, even by critics of the H-1B program.