Another Highly Misleading Aspect of H.R. 170

In my post yesterday, I should have mentioned another crucial point about the $60,000 threshhold.

As I explained yesterday, this bar only applies to the issue of the extra “hoops” that H-1B dependent employers must jump through. Currently, in order to be exempt from these hoops, an employer must pay at least $60K. This number was set way back in 1998, and the authors of H.R. 170 make a big point of noting that the figure was not indexed for inflation. H.R. 170 would modernize the figure to at least $90,000, and have it updated for inflation in future years.

This is highly misleading. It is NOT the case that under current law, an employer who wants to avoid the hoops can typically get away with paying an H-1B worker only $60K. The reason is that the employer is still subject to the prevailing wage requirement. Prevailing wage is a lowball figure to begin with, actually the worst aspect of the statute and regs, but still, it’s much higher than $60K. In 2014, for example, the national mean salary for H-1Bs in the computer fields was $83,000.

In discussions of H.R. 170 and earlier proposals, it has become common for the authors to refer to that $60K figure as a “loophole.” But again, that is very misleading, for the above reason.

The REAL loophole is the four-tiered prevailing wage system. As I have emphasized so strongly over the years, the core problem with H-1B is that it allows employers to hire younger, thus cheaper, H-1Bs instead of older, thus more expensive, U.S. citizens and permanent residents. The four-tired system, with its tiers based on experience level, a proxy for age, is the enabler of that core problem.

H.R. 170 does replace the four-tiered system by a single tier in the case of H-1B dependent employers if they place workers at the sites of clients. Fine, but as I explained yesterday, in the end it will still be business as usual, with employers having a number of workarounds at their disposal.

Please note again: The value of an H-1B reform bill can ONLY be defined by its ultimate impact on American workers. Feel Good bills that claim to “at least solve part of the problem” but actually have no impact are worthless.

If the authors of the bill want to live up to their claims to protect American workers, they need to replace the four-tiered system entirely. The bill could be extremely short (“Fits on a postcard”), simply saying that all H-1B workers must be paid at least the 50th percentile (DPE has proposed the 75th percentile, much better) of wages in the given occupation and region.

The other approach, which has been mentioned by many, would be to dole out the visas in order of offered salary, highest first. Simple, and something that could be legitimately done by executive order. Actually, I would prefer that it be ranking by scaled salary, i.e. ratio of salary to median for the occupation and region, so that the computer fields don’t have unfair access to the visas.

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12 thoughts on “Another Highly Misleading Aspect of H.R. 170

  1. I have several nominees for “core problem” or “worst aspect” of the H-1B program. The prevailing wage and incentive to hire younger employees are on my list. At the top of my list is that H-1B workers have no bargaining power in the labor market. If they were able to act in their own interests, we wouldn’t need prevailing wage rules.

    Making H-1B workers dependent and precarious is also an immediate problem for US workers. Employers lay off US workers and replace them with H-1B workers because the H-1B worker is precarious and lacks bargaining power.

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    • Sorry, but no. No.

      First, a technical point: Due to changes in the law back in 2004, the H-1B is fairly portable. It is easy for a new employer to transfer the visa. Instead, the de facto indentured servant status of the foreign tech workers comes mainly from the green card process; changing employers would mean starting from scratch, unthinkable in view of the years-long process, much more than 6 years in many cases.

      But much more importantly, even if the foreign workers were to have seamless portability, they still would be YOUNG. That is the OVERRIDING issue. I’ve been saying this for 20+ years, and NO ONE gets it. What is especially bizarre is that even the critics of H-1B simply DO NOT GET IT.

      If even the critics of H-1B don’t understand the central role of age, genuine reform is impossible.

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      • I realized just now that I should have given Stan a slightly more nuanced reply.

        There is of course no question that many employers love the de facto indentured servitude nature of the green card process. I’ve written about this many times, notably about the fact that Google actually volunteered the information that they like to keep their foreign workers in chains.

        However, that is dwarfed by the age issue. If Google were forced to pay their young, new graduate foreign workers the same as they pay Americans having 10-15 years of experience, they simply would not hire many foreign workers in the first place, chains or no chains.

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        • Liberals have been trying to link guest workers, high levels of immigration and illegal immigration to the heroic labor struggles of the 40’s,50’s and 60’s that created the middle class.
          When they realized that this could never be effectively done they turned to identity politics as a ready made replacement whose flames just needed to be fanned to set the fire of racism and gender aglow once again.
          All the while they knew that they were creating a state services dependent class of highly burdened labor for cheap labor conservatives to take advantage of to realize their twisted Ayn Rand hallucinations.
          The perfect synergy of effort?
          I fear that politicians,economists and most people who think this a viable form of labor arbitrage need to study regressive hollowing algorithms and the life spans of companies,cities and states.
          Meanwhile Norm, you don’t need to nuance anything
          If all we can do is yell “ice berg right ahead” then so be it.
          Until the ship starts to turn we have no choice.

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        • If software companies were forced to hire young people at the same wages as they would have to pay experienced people, maybe more of the experienced people would get hired instead of being forced out of the industry, and we would get better software instead of the common junk that would have gotten me kicked out of Programming 101 in college 35-40 years ago.

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        • There should be a premium associated with hiring a guest worker. This should cover all the costs of processing the applications, visa stampings and benefits to their dependents once they are in the US like the costs of educating their children. The taxes on a guest worker in no way covers all of the benefits s/he and the family receives courtesy of the US taxpayers.

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        • There is another “hidden” reason why employers like to hire the young.

          Many large companies are self-insured for health care, BUT, there are a great many who bargain with the major health insurers each year for getting the next year’s rates. One of the key factors an insurer looks at for group coverage is the average (or perhaps median) age of the workforce to be covered. Having a few old CEO’s at the top doesn’t affect the bottom line; having a large number of middle-aged workers would be a huge cost factor. If a company can do what GE’s Jack Welch said, “We’re going to get young again!”, then they can keep their health care costs down. Also, age is a factor in absenteeism, maternity leave, etc.

          Finally, I suspect having a heavily outsourced workforce allows large companies to push off health care overhead onto the contracting agent companies, who of course have no incentive to provide coverage anyway. I believe the ACA only requires companies to cover employees, not contractors.

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        • The faster the means of communication, the less nuance is present. Twitter, for example, is probably the least nuanced means of mass communication in human history. Even public speeches are usually well-rehearsed; e-mails are spur of the moment; Twitter is instant backlash.

          Funny how the more complicated things become, the less pensive and polite human interactions are becoming — just the opposite of what’s needed.

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  2. Academic research, often ignored, utilizes H1-b without quotas, wage requirements and has been destroyed by this work visa. Having worked in the field successfully for 40 years, I never was paid above 54k salary because of H1-b competitive lowering of wages. Medical research, often farmed out to academia for publications, requires truthful interpretations of truthful data. Can people whose presence and possible family’s future depends on pleasing an employer provide anything but data that employer wants? You be the judge. In the meantime look at what drugs like Cipro have done.

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    • There are even some research papers showing that positive results for drugs licensed 10 to 20 years ago, cannot be repeated in the lab today. One of the methods of getting a positive correlation between a drug and a successful treatment result, is to run the tests hundreds of times, and pick out the 5 or 10 that are beneficial to the desired results, then discard the rest of the tests. It’s like weighing yourself every morning and (since there are daily fluctuations) reporting to your doctor only the 5 lowest days of the month as your “observed weight”. To run a great many tests and not be concerned about complaints of discarded results… Well, you said it. Get compliant workers.

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  3. The situation in academic research is far worse than just the depression of wages. It is the transfer of intellectual property to foreign institutions, companies, and governments that harms more than just the individual US workers.

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