H-1B: It is NOT a Matter of Degree

As any reader should know, I consider the biggest obstacle — indeed a danger — to genuine reform of the H-1B work visa program (other than lack of political will) is what I call the Intels Good, Infosyses Bad (IGIB) myth. The presumption there is that the Indian firms such as Infosys who hire H-1Bs and “rent” them to U.S. employers are the main abusers of the visa program, while those who hire H-1Bs directly, say Intel, use the program responsibly. Actually, any legislation based on IGIB will be based on a false premise, and will likely make things worse, not better.

The latest attempt to justify IGIB is an article in today’s Quartz, which shows that the (a) Intels tend to pay more than do the Infosyses and (b) the Intel H-1Bs tend to have master’s degrees while the Infosys ones have only a bachelor’s. Both (a) and (b) are true but highly misleading, as I will explain later in this post. (The data source is USCIS.)

I have explained why IGIB is a myth many times, such as in my Huffington Post op-ed:

A popular tack taken by industry lobbyists and their congressional allies is to blame Indian firms that hire H-1Bs and “rent” them out to mainstream companies. This is pure scapegoating and a veiled appeal to xenophobia. It’s an attempt by Silicon Valley firms to distract attention from their own abuses of the system. The data show that the Silicon Valley firms do indeed underpay their H-1Bs, and individual examples of abuse by household-name firms are disturbing, to say the least.

Cisco, for instance, was exposed as routing job applications from American engineers to an immigration law office, rather than to engineering managers, apparently to gather evidence that no qualified Americans were available for the job taken by a foreign worker. The immigration lawyer was deciding who was “qualified.” A former manager at Oracle accused the firm of justifying underpayment of an H-1B by saying, “It’s good money for an Indian.”

Promoters of IGIB make a point of the fact that the Intels tend to sponsor their foreign workers for green cards. This again is correct, but it actually is the reason that the Intels’ abuse of H-1B is even worse than that of the Infosyses. Green card sponsorship gives the Intels a huge incentive to give foreign workers preference over Americans in the hiring process. Again, from my HuffPo piece:

…sponsorship renders the workers de facto indentured servants…

This immobility is of huge value to many employers, as it means that a foreign worker can’t leave them in the lurch in the midst of an urgent project. In a 2012 meeting between Google and several researchers, including myself, the firm explained the advantage of hiring foreign workers: the company can’t prevent the departure of Americans, but the foreign workers are stuck. David Swaim, an immigration lawyer who designed Texas Instruments’ immigration policy and is now in private practice, overtly urges employers to hire foreign students instead of Americans.

Now returning to the Quartz article, its point that the Intels pay more than the Infosyses is accurate but obfuscates the issue, by misleadingly giving the impression that the Intels are not underpaying their foreign workers. The problem with that thinking is that the Intels are hiring a higher class of worker. As Quartz notes, the Intels’ H-1Bs tend to have a master’s degree, but it is not just that; it is an American master’s, not an Indian bachelor’s from a three-year program, a huge difference. Thus the Intels do indeed pay more, because they are hiring better-quality people. But they are still underpaying for the level of workers they are hiring. So the Intels/Infosyses pay disparity does NOT imply that the Intels are acting responsibly. As I’ve written before, it’s like buying a car: If you have a chance to buy a car at a 20% discount, it doesn’t matter whether you are buying a Corolla or a Camry; you’re getting a bargain either way.

There is also the vital point that both the Intels and the Infosyses hire mainly YOUNG foreign workers, to the major detriment of Americans over age 35.

You might ask, “Isn’t it better to hire people with master’s degrees? Doesn’t that justify IGIB?” This is the implicit message that the Intels give Congress and the press. Let’s take a close look at this.

One can immediately see big problems with that claim. First, if master’s degrees were so important, why do the Intels routinely reject qualified Americans at the master’s level, without even a phone call? Why don’t the Intels subsidize part-time master’s work for their employees, a perk that was standard in the past? The industry’s actions simply don’t live up to their words here.

And what is so magical about a master’s degree anyway? There is no standard MSCS curriculum, and a strong bachelor’s program will always beat a mediocre master’s. Indeed, in my EPI paper, I showed that Americans with a bachelor’s degree are on average stronger than foreign workers with a U.S. master’s. And of course, Bill Gates, Steve Jobs, Mark Zuckerberg, Larry Ellison and so on never even finished their bachelor’s work.

American students know that a bachelor’s is enough, and many see no point to going further. On top of that, they are typically burdened with student loans to repay. So why forego two years of industry-level salary to pursue a master’s, even with a graduate assistantship?

Texas Instruments (see point about Swaim above) is one of the leading firms lobbying Congress for more H-1Bs. In my report on TI’s 2011 testimony to Congress, I wrote that TI’s remarks put the lie to the industry claim that not enough Americans study engineering:

Texas Instruments V.P. for HR Darla Whitaker…essentially admitted that all that “Johnnie Can’t Do Math” stuff was just slick PR…Ms. Whitaker stated that TI has plenty of engineering applicants with Bachelor’s degrees, and thus does not hire foreign workers at that level. She stated TI does hire H-1Bs, and sponsors them for green cards, at the Master’s and PhD levels, where she says there is a shortage. This naturally led one of the congresspeople on the committee to ask Whitaker, why don’t the American engineering students go on to grad school? She replied that she supposed that the American students were anxious to get out and start making money.

TI is one of the firms that, in the pre-H-1B days, used to subsidize their American engineers for master’s study.

Senator Grassley once said that “No one should be fooled” by the slick industry PR propaganda about H-1B. As shown above, slick as it is, the propaganda can be seen through with a little thought. Yet sadly, Grassley too now supports IGIB, and so do even some major H-1B critics.

The latter say that solving part of the H-1B problem, by clamping down on the Infosyses, is better than no remedy at all. But the bottom line has to be, Will any given legislation help or hurt Americans in STEM?

The fact is that the bills based on IGIB would make things worse for Americans. Many of those bills would raise the H-1B cap (on the grounds that it eliminates the abusers). Many others would grant automatic green cards for the Intels’ hired foreign students; this would be a major catastrophe, exacerbating the age discrimination issue (students are young), and adding tens of thousands of STEM workers per year as permanent fixtures to the STEM labor market, to the general detriment of the U.S. citizens and permanent residents who are already here.

Significantly, no bill features the one type of foreign worker expansion in the interests of the nation: Facilitate the immigration of the true “best and brightest.”

“No one should be fooled,” indeed.

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14 thoughts on “H-1B: It is NOT a Matter of Degree

  1. Why are foreign students coming for Masters/Phds, and being hired for it? Because Masters/PhDs are exempt from the H1B cap.
    Why aren’t American students filling the Masters/PhD curriculum? Because there was and still is no demand for American Masters/PhDs. We currently have quite a glut of foreign Masters & PhDs, going for as cheap as $21 an hour, according to the OFLC 2016 approved H1B database, and Bachelors going for less than $8.
    “Facilitate the immigration of the true “best and brightest.””
    I’ve yet to find a definition of “best and brightest”, beyond what is defined in O1’s visa.

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    • MS/PhD students are NOT exempt from the cap. It is easier to get a green card with a grad degree,though, and for that matter easier to get a U.S. job with a grad degree,so the foreign workers like them.The employers like them because they are exploitable, and again, easier to justify for a green card.

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      • Well, yes, but 20,000 of them are exempt from the cap as you surely know, and it gives them an advantage over those with only a BS or “equivalent.”

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      • Sorry, you are right. 20K H1B reserved for Masters/PhD. Uncapped is hires for education/research/government/medical. I don’t know if it’s easier, because there is such a glut. But highly likely easier if they OPT.

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  2. MS/PhD students could be hired via the OPT program. This program has no numerical caps. Also, the OPT applications may be submitted year-round. Almost all H-1B applications are made in the first few days of April. Can not apply for a green card. Useful for remaining in the country until the H-1B lottery each April.

    Perhaps young Americans will have little choice but to renounce their US citizenship in order to have a decent chance at a job in the US via the guest worker program.

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  3. If you really want to see a bunch of cockroaches scramble, start advertising far and wide for “H1-B Immigration Lawyer Positions” — in other words, importing “Replacement Lawyers” because we just can’t find enough Americans to do that sort of thing.

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  4. Also you’re right, many H1bs from Infosys and TCS end up sub-contracting to MSFT, Cisco and even apple. These companies can show this as expense in their balance sheet and thereby save taxes. There is no data for this operation from any of these companies and we should demand this data. Indeed all the indian outsourcing companies started in first place by supplying bodies to american companies (including outsourcers like Unisys, that is now fully out of market), they then moved up the value chain and took on entire outsourcing contracts by themselves!

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  5. And every h1b from an Indian company and thousands of body shoppers that end up with an American company should be counted against the American company. One such example is Etouch systems that has upwards of 200 sub-contractors working for google!

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