I was disturbed to read the following passage in Friday’s Wall Street Journal:
One complaint critics have against the program is that foreign employees allegedly work for less pay, pulling down American wages.
That may be true in some instances—the Economic Policy Institute, a Washington, D.C., think tank, says it has anecdotal evidence of this—but when they apply for the visas, employers agree to pay foreign employees the same wage as other workers with similar qualifications or the prevailing wage for the occupation, whichever is higher.
This is a settled issue, folks. H-1Bs are indeed cheaper. It’s not just anecdotal, but demonstrated in hard data. I’ll refer the hard core policy wonks among you to my Migration Letters paper for extensive details, but here is a quick excerpt:
An employer survey conducted by the GAO (GAO, 2003) found thatsome employers readily admitted to paying H-1Bs less than comparableAmericans, but noted that they were nevertheless paying the legally required wage, thereby illustrating that the latter is indeed below the market wage.
No fancy statistical methodology here, just the stark admission of employers that the pay their-H-1Bs less than comparable Americans. This echoes a previous employer survey, commissioned by Congress (though of course ignored by the latter), that found
…H-1B workers in jobs requiring lower levels of IT skill received lower wages, less senior job titles, smaller signing bonuses, and smaller pay and compensation increases than would be typical for the work they actually did.
So two employer surveys, one by the government and the other commissioned by the government, had employers actually ADMITTING to underpaying their H-1Bs. And the GAO quote shows that the employers admit that the prevailing wage, the legal wage floor for H-1Bs, is a joke. The data in the paper shows the underpayment statistically as well.
The above WSJ passage notes that the law requires that an employer pay an H-1B the higher of the prevailing wage and the actual wage, the latter legal term meaning the wage paid to Americans doing the same work at the firm. Requiring employers to pay at least the actual wage would seem to remedy the problem that the prevailing wage is a lowball, below-market figure. But of course the actual wage is just as loophole-riddled as the prevailing wage; again, see the paper for details. And at any rate, the data I present in the paper show that the vast majority of the H-1Bs are paid the prevailing wage, so the issue of the actual wage is moot.
“Anecdotal”? Read the paper, which establishes the underpayment six ways to Sunday.
And on top of all this is the issue that the law doesn’t even pretend to address: Employers hire younger, thus CHEAPER H-1Bs in lieu of the older, thus more expensive Americans.