H-1B Reform Proposal — a Great Start or a Cruel Ruse?

For some time now, various people and organizations have been proposing a simple, effective solution to abuse of the H-1B work visa: Dole them out according to offered salary, highest first. When the visa cap is hit, we stop issuing visas. Reportedly it is under serious consideration by the incoming Trump administration. I myself support this idea. It would not be a full solution, but would be a great start if properly implemented, though of almost no value if badly implemented, a point I will come back to below.

The proposal is appealing for a number of reasons. It is a clean, market-based approach, trivial to implement and would seem to directly benefit the U.S. economy and society: Assuming that the higher-paid workers have more value to add, this proposal is very attractive.

And unlike related executive actions by George W. Bush and Barack Obama that usurped Congress’ legislative authority, this proposal is clearly within the rights of the executive branch to write regulations; the H-1B statute says nothing about the order in which visas are issued, so the executive branch can set that order as it pleases.

And lo and behold, the proposal has wide support, ranging from strong critics of foreign worker programs to supporters of such programs, notably Rep. Zoe Lofgren of Silicon Valley and the IEEE-USA engineering organization.

Well, wait a minute. The fact that Lofgren and the IEEE-USA support the highest-salary-first idea ought to raise some suspicion. As I have pointed out before, the claimed benefit of the policy may be illusory if it is implemented in the manner advocated by Lofgren.

H-1B and green card law require employers to pay the foreign worker something called the prevailing wage, which is the average salary for a given occupation in a given geographical region, and at a given level of experience. Concerning the latter, four levels of experience — proxies for age — are defined. There lies the problem — would a highest-salary-first policy rank wages overall, without regard to experience level, or would the ranking be done separately within each level?

Lofgren has already proposed that the ranking be within-level. If that is the policy that is adopted, we are for the most part BACK TO SQUARE ONE.

How so? As I have often stated — yes, yes, often harped on — the core of H-1B is AGE. Younger workers are cheaper than older ones (age 35+). Employers, both Intels and Infosyses, love H-1B because it expands the pool of younger, thus cheaper, workers to choose from. The vast majority of H-1Bs are classified as Level I or II, and they are hired instead of Americans, or to replace Americans, who are at Level III or IV.

In a case given wide publicity, Walt Disney company replaced OLDER American IT personnel by YOUNGER foreign workers. Sorry for the all-caps format here, but the age issue is almost never mentioned in discussions of the Disney scandal, and yet it was the central issue, the main way Disney saved money by hiring the foreigners.

But it is not just Disney; it is basically all of the mainstream U.S. tech world. I’ve shown before, for instance, job ads by firms such as Intel and Facebook that specify new or recent graduates (NCGs and RCGs, in HR parlance). They ignore the older American applicants and then hire H-1Bs, claiming a “shortage” of applicants.

Note especially the invention of rather bizarre job titles, such as HP’s concocting the title Associate Software Engineer. Indeed, it was clear from the rest of that HP job ad that it was targeting cheap foreign nationals.

The point is this: Even salaries that are well above average in Level I would be much lower than what established Americans make. Disney would still replace Americans by cheaper H-1Bs, and HP would still aim its “creative” job titles at hiring foreigners rather than Americans.

So, if the Trump administration caves to the lobbyists and defines its highest-salary-first policy to mean highest within prevailing wage level, it will be fraudulent “reform.” It will look good, but for the most part just continue the current tragic situation, in which employers employ foreign nationals in preference to equally-qualified Americans. To be sure, it would help a little at the margin, but it will be end of H-1B “reform.”

If the motivation for highest-salary-first is truly that a high wage means a high contribution to the American economy, then the ranking should be done overall, not within experience levels.