Trump Administration Makes Major H-1B Reform

In the 2016 election campaign, Donald Trump promised to reform the H-1B work visa program. That should have been the least controversial of his plans, as the visa has long been recognized by both major parties as having major problems. Almost all the major candidates in 2016 — Trump, Cruz, Rubio, Clinton and Sanders — were critical of the program.

However, very little reform had come until this week. Trump did issue various executive orders, but as I’ve written here, they haven’t addressed the major problems. But yesterday, the administration announced a new policy, one that in my view is the first genuine reform of the visa in its 30-year history.

The H-1B statute (as well as the one for employer-sponsored green cards), imposes wage floors on employers who hire the visa workers. The new policy substantially raises these prevailing wage levels. To understand the implications of the change, one must first look at how prevailing wage works, and at its relation to the “Infosyses vs. Intels” metaphor I often use in these discussions.

There are four prevailing wage levels. Though they are described in terms of experience and expertise, they are actually pegged to different points in a wage distribution. Under the old policy, the Level I prevailing wage was set to the 17th percentile of the wages of all workers in a given occupation and a given region. These will now increase to the 45th and 62nd percentiles, respectively. (There are relatively few visas awarded at Levels 3 and 4, so I’ll limit my discussion here to Levels 1 and 2).

I mention the “Infosyses” and “Intels” in almost everything I write about H-1B, and consider it central to the entire issue. It’s the source of much confusion among (read “deliberate obfuscation by”) some of the players.

By “Infosyses” I mean the firms, mainly India-based, that hire H-1Bs and then “rent” them to US firms. The “Intels” are the employers who hire H-1Bs directly, typically foreign students studying at US universities. Note that the Intels are not just the big household name firms, just any company hiring H-1Bs from US campuses.

The Infosyses tend to hire at Level 1, while the Intels’ H-1Bs are typically at Level 2; the latter stems from the fact that the Intels typically hire at the Master’s degree level, which the regulations say should be Level 2.

It is often claimed that the main abuser of the visa are the Infosyses, while the Intels use the program responsibly. It would be easy to come to that misconception by simply noting the fact that the Intels hire their H-1Bs at Level 2, a higher wage. But as noted, the Intels hire at the Master’s level, thus a higher-quality worker. They are still getting a bargain in hiring the foreign workers, relative to US citizens and permanent residents of that quality; I’ll return to this point momentarily.

The DoL report explaining the move on prevailing wage is quite good. Frankly, I was prepared to see poor reasoning and not much detail, but the DoL looked at the issues in very fine, incisive detail, definitely one of the most carefully-reasoned government reports I’ve ever read. Whether you agree with their conclusions or not, the report is very carefully reasoned, and it’s clearly the result of a ton of time spent.

Will it help? Will more US tech workers be employed as a result of this move? The reason I use such phrasing is that many proposals to fix H-1B seemingly would be useful if implemented but in reality would not move the needle in terms of employment of Americans. Even shutting down the Infosyses entirely would have very little effect, as the employers would still want to save on labor costs, and have alternate ways to do so, as I’ve written before.

At any rate, yes, it would help, but more at Level 2 than Level 1, again due to the existence of alternatives in the case of Level 1. There really are no such alternatives at Level 2, so this new policy is big news.

However…another recurring theme in my writings on H-1B is that the visa is fundamentally about age. Younger workers are cheaper than older ones, and most H-1Bs are young. Though it is also true that young H-1Bs are cheaper than young Americans, the biggest wage savings arise from the age factor.

As noted above, the four-tier prevailing wage system is supposed to be a proxy for amount of experience, thus in turn a proxy for age. In other words, the prevailing wage core of H-1B is actually a government enabler for age discrimination, not to mention discrimination against US workers. Thus the new policy, which by statute must retain that age-related structure, does not solve the H-1B issue, though it’s a much-appreciated first step.

Another flaw is that the new policy does not account for the level of talent of a foreign worker. Take a company like Google. They hire only “the best and the brightest” — so they should pay more. But the prevailing wage structure cannot take talent into account, so Google can pay what in essence is “average” salary (at the given experience level) for much-better-than-average talent.

In that sense, Table 2 in the DoL report is misleading in saying that most of Google’s H-1Bs make more than prevailing wage. It was misleading to begin with, as those figures are based on the old prevailing wage, which the DoL found was substantially too low. But in addition, the table doesn’t take into account that Google workers, domestic or foreign, are of top quality.

Bottom line, data like that in Table 2 does NOT imply that Google is paying its H-1Bs fairly. The foreign workers could be making less than comparable Americans and yet still be making more than prevailing wage.

This is similar to a finding in the 2003 employer survey conducted by the Government Accountability Office that “Some employers said that they hired H-1B workers in part because these workers would often accept lower salaries than similarly qualified U.S. workers; however, these employers said they never paid H-1B workers less than the required wage.”

Another important point is that one must consider wage raises given subsequent to hire. The Intels typically sponsor their H-1Bs for green cards, essentially rendering them immobile. Employers love that their H-1Bs can’t jump ship to another firm, and Google stated in a meeting with several of us researchers that this is a key reason to hire H-1Bs. Among other things, immobility means the H-1Bs are in no position to demand big raises (also noted in the employer survey conducted by the National Research Council, commissioned by Congress), thus yet another way employers save money.

Some press reports quote industry officials as threatening to sue to block the new policy, on administrative law grounds. I won’t speculate on their chances for success, but hope this new prevailing wage policy, uh, prevails. 🙂 It’s a very solid, well-justified change, 30 years overdue. My hat is off to DoL.

110 thoughts on “Trump Administration Makes Major H-1B Reform

  1. “My hat is off to DoL.”

    And not to Trump who sets the general policy? He waffled at times – as would any politician bombarded by industry misinformation – but in the end has kept at least some of his pre-election commitment to restrain H1B. That’s likely more than anyone else, in either party, would have done, Trump’s flaws notwithstanding.

    “Some press reports quote industry officials as threatening to sue to block the new policy, on administrative law grounds.”

    You might also credit Trump for correctly characterizing some of his opponents as “enemies of the people”. In this case, he’d certainly be right – the industry is already “girding its loins” to obstruct change:
    https://www.forbes.com/sites/stuartanderson/2020/10/07/trump-administration-issues-two-new-rules-to-restrict-h-1b-visas

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  2. “Will it help? Will more US tech workers be employed as a result of this move? The reason I use such phrasing is that many proposals to fix H-1B seemingly would be useful if implemented but in reality would not move the needle in terms of employment of Americans. Even shutting down the Infosyses entirely would have very little effect, as the employers would still want to save on labor costs, and have alternate ways to do so, as I’ve written before.”

    So what is your point ? If its not going to increase local hiring, we are going to lose tax revenue. Several of the FAANG companies are already relocating staff to Canada and I know few in my circles who took their jobs with them.

    All the best to America where the candle will be burnt at both ends, i.e no foreign students , no tax revenue, over the long run other countries gain, in terms of human capital.

    Esteemed researcher Vivek Wadhwa said immigration is as free a lunch America can get.

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    • Again, most tech jobs can’t be offshored. If they could, they would be already, as the labor is even cheaper than H-1Bs.

      “Esteemed researcher”???? Are you actually Vivek, hiding behind that “USA Patriot” name? 🙂

      Liked by 1 person

    • The free lunch is for universities and industry, not the public.
      Do tell how the public benefited from this $1.21 an hour worker. https://www.mercurynews.com/2014/10/22/workers-paid-1-21-an-hour-to-install-fremont-tech-companys-computers/
      The Mr, with a bachelors, given a “scholarship” by Wayne State for a masters, worked for $5 an hour for them as a campus-captive research assistant, which they billed out for between $210 and $420 an hour. I’d say his “scholarship” was quite profitable for Wayne St. And he’d be the first to tell someone his job knowledge is nothing special.
      Foreign students not only drive up tuition, as the monied around the world vie for the seats, those coming who can barely afford it are eligible for public assistance, as are H1s and L1s.
      Given the vast majority are paid less than median wage _for_ _their_ _profession_, the net effect of this totally unnecessary imported glut is to drive wages down for all. Let alone the effect of supplanting US workers entirely.

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  3. There are going to be huge unintended consequences of this move, including increased / quick offshoring to nearby countries like Canada and Costa Rica.

    Already Infosyses are moving large number of talent to Canada.

    In the end labor is fixed cost and is the easiest to tweak to improve margins.

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    • The big picture i see-is the H-1b workers that make lower wages can qualify for assistance from Gov’t while remitting Billions each year back to India. The same as done in Mexico. How long will it take till our Money is all gone to these countries permanently? The Government has already questioned about “where has all our money gone”? Where are we headed? If they move to another country, that country will have to deal with it!

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  4. Actually, H-1Bs can change firms. The new employer needs to file the paperwork for the new position. Individuals often change companies based on the date the petition is received for processing. Of course, there is the possibility that the new petition will not be approved. The original employer is supposed to notify that the worker is no longer employed (either voluntarily or involuntarily- layoff or firing); the worker has time to locate another employer while remaining legally in the US. Once the employee has been in H-1B status, he can use that initial filing to work for other employers until the 6 years of stay has been utilized; there is no requirement that the use must be within a limited time period. Many come back many years later to use the remaining H-1B time. Being in the green card line allows the employee to have additional years of authorized work; in certain instances, the spouse is also granted H-4 work authorization.

    A person in the green card queue can even retain the priority date of the original approval on a new petition filing once the approval is more than 180 days old. A green card filing does not need to be revoked by the employer if the employee leaves the company; the employee does need to return to work for the filing company in order to receive the employment based residency. Frequently, subsequent employers file for the employee’s green card as well.

    A law firm sponsored forum popular with South Asian guest workers and permanent residents discuss these issues in great detail. At this time, this forum has a post offering fraudulent documents for sale. ( Buy TOEFL, IELTS, ESOL, WTF, CELTA/DELTA & all English Language Certificates. Buy Passport, Diplomatic Passport, ID Card, Drivers license, Social Security Number(SSN). We deal and specialize in helping you to get registered and authentic Documents … Also, we can provide you with Original and registered Passport, Id Card, Drivers Licence [sic] and more … ) ICE has been notified, but nothing has been done to remove the posting.

    The arrogance of some of the posters is stomach turning! Entitled US citizen young people are amateurs compared to some of these guests in the US. While this is not the case in all instances, it is offensive when it occurs.

    The more you know about the H-1B and other guest worker programs, the worse it gets.

    As for a chuckle: A recent federal case filing against a university researcher for IP property theft has us paying for an interpreter for the defendant. Per this person’s CV, he received a PhD from Princeton in 1999 and has worked in the US since that time at a major university. Another foreign born university researcher (in the US for 20+ years) charged with wire fraud has been listed on some university documents as a US citizen (so he would have had to satisfy the naturalization process regarding US laws) is now claiming he did not understand his Miranda rights when questioned about his activities by federal agents. The Department of Justice news is worth following as is learning to use PACER if you are interested in following the legal processing of abuses of the guest worker programs both by the employers and the employees.

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    • No H-1B can simply quit a job and get hired across the street in a new job. There are various degrees of mobility, and as I’ve said, the green card sponsorees are essentially stuck. Even if retaining their priority data, they risk having the new petition denied, in which case they are totally out. Immigrant Voice, a group of green card sponsorees that lobbies for dispanding of country quotas, has said this many times, including in congressonal testimony.

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      • A new green card sponsor can meet the requirements for a new petition, but the employee can retain the original priority date if certain conditions are met. Not all employers are willing to sponsor green cards and not all petitions for people holding approvals already are approved for a new position. A sponsoring employer is not required to cancel green card sponsorship if an individual is no longer employed (unlike H-1B sponsors who must). A person can always go back to the original sponsor if the requirements for activating the green card can still be met (a basic one is that the employer is still in business); after a brief time they can then join another employer. I wonder how many of these are paid for illegally “under the table”.

        Since the ability to meet the requirements for approval vary due to the employment climate at any given time, once one is approved, it is safest to stay put, but it is possible to change employers.

        What I find frustrating is that a green card is supposedly for positions for which no qualified and willing US citizen or permanent resident can be found yet individuals can relocate for work outside the US and not be working in the sponsored position yet can still get the green card when their priority date is reached. It seems like the employee was not really necessary for a US based position. The fact they are no longer needed is not a consideration once they are in the approved queue.

        Our policies are very lax in requiring that guest worker is really needed. There are tens – if not hundreds – of thousands of man years available to be used by individuals not now working in the US. H-1B should be use it or lose it. Show up for work on the date one is approved to begin work and work continuously or the approval should be cancelled and the worker should have to go back through the lottery. The more you know, the worse it really is.

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          • There is always the pay for a green card schemes. There are reports of people returning to their original filer in order to activate the card and leaving shortly thereafter.

            What is also illogical is that people no longer working in the US can get a green card to return. If they were not necessary to the employer prior to the time the priority date was reached in the queue, why should a green card be granted for a worker essential to the US industry.

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    • If you mention cases – with chuckle or not – please give more, proper details.
      Now it sounds like a lot of hear-say.
      I also fail to see what IP theft at a university has to do with abuses (real or imagined) in the temporary worker program.

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      • Many of these people came to the US as guest workers. While some have naturalized, others are only green card holders despite being in the US over 20 years. Others are still H-1Bs or J-1s.

        Not hearsay – look at the justice.gov news for filings for Texas A&M and Microchem Solutions for the names. Another researcher has a 60+ charge indictment. There are others listed in the news feed. Go to PACER to pull up files and start reading documents. You will be horrified at the abuses reported.

        It is complex finding the paper trail of suspected IP property theft of US funded research. My roadmap for one individual (each case is somewhat unique) is 13 pages long with 130+ pages (of thousands in my files) of sample documents.

        Many things are only possible for state universities where the state has transparency laws.Then do state FOIA equivalents for the travel, reimbursement, no cost extension applications at the university level where the grant has been closed out. Look at companies owned by university researchers; look for payments to the company for research similar to that the researcher/owner being funded by agency (state and federal) grants. The finagling of funds can be hard to follow as there are frequently many simultaneously active grants. Look at the RFPs to see if extended foreign based research travel is allowed. Look at the affiliations of the co-authors of the publications and the funding support acknowledgements.

        Be sure to look at state grants; I found a couple using funds awarded for cancer research in the state paying for summer long “research” at a foreign institution in her hometown(listed in another itinerary from previous travel).

        Look for full time US university faculty holding full faculty positions at foreign universities, Look then at travel records for time spent at the location of their foreign affiliation.

        This is just a short course in what I have learned looking for wasteful spending at my state’s universities. I expected to find minimal abusive spending, but I found nearly 2 million for just 5 faculty members over time. More troubling I stumbled on far more than just spending issues. Any, yes, some changes have been made based on my communications about my concerns; IMO, much more needs to be done to deal with the senior faculty who abuse their status to their personal – and their family’s – benefit.

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  5. Dr. Matloff, is your assertion that if we had an America First hiring policy, and, say, reduced H1B Visas by 75%, most or all of those jobs would be off shored?

    I saw a graphic on twitter, wished I saved it, showing the huge migration of techies going from predominantly American, to H1Bs from China & India.

    A small tech owner told me an average coder in San Francisco makes $160,000 per year. Does that sound right? (I know, typically long hours.)

    Another lure of the H1B indentured immigrant techie, is they often don’t know their legal rights, and / or are fearful to assert their rights. I worked with developers, non managers, no stock options, who worked a minimum of 6 days, and often 6.5 days per week. And the sponsoring company could delay sending in paperwork, etc., to purposefully delay the process.

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    • Most tech jobs cannot easily be offshored. If they could, US firms wouldn’t bother with H-1Bs, as offshore labor is even cheaper.

      You can check salaries by occupation and region in the DoL’s OES database. That 160K figure for SF, say for someone with 7-8 years of experience, sounds plausible. Note that that is after a lot of filtering.

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      • True in general, but companies have probably learned a few tricks here and there from COVID-19 “work from home” that will end up leading to some increase in offshoring or near-shoring nevertheless.

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          • lol, once they find out that work-from-home can cut costs substantially it will automatically become a good idea.

            Silicon Valley doesn’t care about ANYTHING other than cheap labor these days. None of the things the big tech companies do these days is of particularly high quality, and none of the people they employ (especially visa holders) is of a particularly high intellectual caliber. Not even the Apple products – Samsung does equally well with much cheaper engineers in Asia.

            Sure, an Indian off site in India isn’t anywhere as good as an American on site in terms of productivity, maybe only 1/10 as good, but the point is this creature costs 1/100 as much. So hire 10 Indians in India to get the productivity but still cut the cost by a factor of 10…

            There used to be other, more material obstacles – it used to be the case 10 years ago that India had lousy internet connectivity, which limited outsourcing, but that is no longer an issue, at least in the big cities there…

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          • Yahoo, pre-pandemic, found the short fall of work from home, being that some are not working. I ran into that, even when companies allowed a single “work from home” day.
            As a worker, I avoided it. Because a lot of workplace information transfer happens just from being physically within earshot.

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    • “A small tech owner told me an average coder in San Francisco makes $160,000 per year. ”
      A whole lot of misuse of “average” is floating around on the topic. H1s are doctors and VPs and etc., and their salaries are rolled into “average” H1 salaries when profession and location vary wildly.
      Senator Issa said the majority of H1s are paid $60K or less.
      Another variant of spin using “average”, H1s are paid more than “the average American”. Well if you’re going to roll in people working at McDonalds, Walmart, etc., then “average” is irrelevant.
      “don’t know their legal rights, and/or are fearful”, “minimum of 6 days, [etc.]”
      Most aren’t here for a paycheck, they’re here for a green card.
      “the sponsoring company could ”
      ??? a) Are you presuming a company must sponsor? and b) Yes, many hang out a green card carrot to string them along. “Temporary”, they’re throwing the dice, by choice, and we’ve predatory companies taking it to the limit: OPT, to H1, to ……GC application. Aka indenture.
      I see no reason an employer should be granted ownership of green card allocation.
      Job market study, EB lottery to qualified who apply.

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  6. To use your own words, most people working for Google are, well, “ordinary people doing ordinary work”. Not the “best and the brightest”. The salaries (visa’d or otherwise) are higher only because of the inflated brand value, and the expensive location, not because the people are truly high quality. There is nothing innovative, in my opinion, about programming a neural net (which is anyway just some automated curve-fitting) to estimate some travel times on Google Maps. Companies in China and India do similar things.

    Big Tech is, in general, overrated. It is not terribly innovative, and certainly isn’t full of geniuses. Its more like companies like Google move forward by combining the efforts of large numbers of above-average people, each working on a small part of a problem that is not even that hard in my opinion.

    Only true, one-of-a-kind geniuses with unforeseen intuition should be given immigration benefits. These people are extremely rare.

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    • So non-immigrant workers can only come to the US when they are certified, one-of-a-kind geniuses ?

      Then again: what about the 650 – 700.000 PERMANENT immigrants who arrive every year based on family reunion ? No requirements for those categories, not even command of the English language, work experience, education.
      Furthermore for spouses and parents, there is no limit to the number of visas that can be issued in a year. Spouses can naturalize after three years, parents and other family sponsored green card recipients after five years. That makes them also eligible to sponsor family members for immigration.
      Do you really think those people will not take jobs ?

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      • Oh and I forgot to add, the parents and spouses should be banned too. Only minor children who have no other potential caregiver should be allowed to immigrate based on family relations.

        The public charge rule is a first step towards this. It is too weak though and needs to be SUBSTANTIALLY strengthened.

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    • Exceptional merit is the O visa.
      H1’s purpose was told to
      – the UN as going to a foreign business, who couldn’t find local expertise when doing business in other countries.
      – the US public for “skills shortage”, for which no job market study has _ever_ been done.
      Illegal and visa’d labor glut import looks to be for instantiating wage suppression, and worker indenture.

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  7. I’m a little confused, perhaps owing to a misunderstanding I may have.

    I thought that level 4 was at the 67% (i.e., the upper 1/3rd of wages). So, if that’s true, then the new level 2 (now at 62%) is almost the same as level 4.

    That seems like a rather narrow range. Is that what it is now?

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    • Old wage levels (1, 2, 3, 4) percentiles = 17th, 34th, 50th, 67th
      New wage levels (1, 2, 3, 4) percentiles = 45th, 62nd, 78th, 95th

      I decided to post this, just in case anyone finds this info useful.

      It came from the “DOL report” to which Norm linked in his blog post. See pages 15 (of 150) and 119 (of 150).

      These new wage levels seem like big changes for levels 3 and 4 too.

      Would these new wage levels apply, when guest workers renew their visas?

      Liked by 1 person

  8. “the table doesn’t take into account that Google workers, domestic or foreign, are of top quality.”
    I’ve no idea where this assumption is coming from.
    Silicon Valley’s top tech also use body shop labor, and that includes Google. And Google employees protested their contractors should be getting at least … $15 an hour.
    Furthermore, Google interviewers, according to their own HR, have “unconscious bias”, willing to only consider candidate applicants who’re male, young, and white or Asian. That eliminates a whole lot of “top quality” workers who don’t fit those discriminators.

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  9. Time to bring out Occam’s razor. I first came across the phrase, “Occam’s razor”, a while back. Looked it up. It means the simpler explanation is more likely to be correct. Below is the simple explanation.

    Most workers are grossly overpaid. For example, the owner of a small company was going to outsource engineering work to The Philippines. He felt bad about it but could not afford to pay the going rate for engineers. He tried something crazy. He was able to hire engineers for $30K per year in the US.

    How much a certain job pays has more to do with some social hierarchy structure based on race, gender, age, perceived prestige, etc., then with supply and demand theory. Consider a game show host or college football coach making millions per year.

    It’s accurate to say that guest workers are given the opportunity to work for less. A US STEM worker will probably not get hire even if she is willing to work for less than the H-1B. The social hierarchy structure is more powerful. This is the simple reason why H-1Bs are in high demand and why they are paid less.

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    • Your overview doesn’t take into account multitudes of variables.
      -Silicon Valley apartment goes for $45K a year.
      -Social hierarchy? Supply/demand? College tuition/student loans & local cost of living.

      They are paid less because many a body shop puts them up in gang housing, some cobble together gang housing (4 to 8 in an apartment), some bid on work and outsource the actual work to India pocketing much of the local wage.

      Your information is speculative, when there’s much written on the transition of our economy in the 1970s, including why it occurred: resentment over having to compete for labor.

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    • An employer that can’t compete for labor doesn’t equate to “Most workers are grossly overpaid.” It means they’ve a defective business model, and by the theory of Why Capitalism Is Beneficial To Society, should close their doors.
      It’s accurate to say that guest workers is a subversion of local labor market competition. While still retaining control over local service and product market. It kills the fiscal circulatory system, Living Wage that feeds, that supports Thriving Product And Services Market.
      Creating a race to the bottom.

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    • “Consider a game show host or college football coach making millions per year. ”
      That compensation is due to their being considered extraordinary talent, or audience draw, and the money that brings in.
      Years back, Barbara Walters was asked if she thought she was overpaid. “For what I do, yes. For how much they make off of me, no.”

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  10. Does this hopefully mean that the various EAD programs (OPT, H4, L2 and J2) used for employing foreigners in STEM will also be ended? Or, will they be left open as “safety valves”, along with outsourcing, to allow for the continued hiring of cheap labor at what were formerly Levels 1 and 2?

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      • Well, the EAD programs are sort of mini “staples”. The spousal ones allow for the same labor market rights as green card as long as the primary visa holder maintains status. The OPT also allows for nearly the same labor market rights as a green card for 3 years, during which time the foreign student/graduate can usually get a green card if they are from a non-backlogged country. Most Iranians do, for instance.

        So “staple” already exists, for non-Indians/Chinese. While the quality of non-Indians is indeed a little higher, most are still far from the “best and the brightest” by any means. Even Indians and Chinese have some of the benefits of staple as I said above.

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  11. Hats should be off to US Tech Workers who sent the reform guidelines to DOL from the work that Ron Hira has done. They have done more to push the H-1B abuse issue more than any other group that works on immigration.

    Liked by 1 person

    • Similar, for Sara Blackwell.
      Many have testified to Senate Judiciary Hearing on this topic, and the only two who acknowledge the abuse as bad are Durbin and Grassley.

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      • Durbin is the same as IEEE-USA, no friend of the US tech worker. Grassley used to be very good, but he was convinced by other non-friends of the US tech worker that the main problem is the Infosyses.

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        • While IEEE-USA is no friend the dozens of other engineering societies ASCE, NSPE, NAE, NCSEA, AIChE, SWE, ASME, ASHRAE, etc etc etc are indifferent Then we have http://www.acec.org as a big big supporter of more H-1B’s. Haven’t heard much form the National Society of Black Engineers lately who in the past have been critical of the hiring practices of SILICON VALLEY

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        • And it’s not just Durbin and Grassley who’ve done an about face. Given the concerted timing in shift in consensus, approx 2015ish, there’s more than they’re telling us.
          Between that, and a lot of other hardball occurring, I sense there’s a lot of international “trade” interests shoving this football, the US job market, around.

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  12. There’s already a lawsuit filed by ITServe against the DOL wage changes. Do you think this was a deliberate political ploy by the Trump admin to make it seem like they tried doing something knowing it would be challenged by the courts and ultimately fail?

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  13. Hopefully this causes foreign student enrollment to crash by an order of magnitude. This country has had enough of F-1s. If they don’t have a path to stay after OPT, they will not come in the first place. Buy American, Hire American, and EDUCATE American.

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    • “If they don’t have a path to stay after OPT”
      Given the justification of OPT is “to get experience before leaving”, I see no justification for any stay after completing, with the exception of humanitarian relief (such as asylum, if war broke out in their country, after they came here).

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  14. I think we are being setup with Indentured Servitude Theory. There is a hidden agenda (STAPLE) as demonstrated by a recent IEEE-USA news release. IEEE-USA supports the DOL’s actions. IEEE-USA also supports STAPLE as described below.

    “Temporary visas are far too often misused, harming our country by replacing American workers and taking advantage of easily exploited temporary workers. Innovative immigrants should be welcomed into our economy, but as full American citizens, not just short-term laborers.”

    “IEEE-USA believes that the United States needs a high-skill visa system that allows international students who earn advanced STEM degrees in this country to get a green card, and thereby a clear path to citizenship, within one year of graduating.”

    How absurd! Guest students with a US degree need to be protected from exploitation but guest workers without a US degree do not need protection from exploitation!

    IEEE-USA should have given the same explanation that Bill gives. It is dumb for the USA to train STEM workers and then kick them out of the country and have them being hired by our competitors.

    STAPLE will lead to a huge revenue stream for universities and immigration lawyers.

    STAPLE will lead to international students being exploited by US universities in the form of possible higher tuition and lower pay (RA or TA jobs). Note that the original STAPLE act is only for PhD graduates.

    There’s more to work than money. Some workers would prefer to work in nice SV for Google or Facebook than to work for an extra $20k/year for some no-name iffy startup company in low-cost freezing Podunk, Minnesota.

    If Indentured Servitude Theory is accurate then how can the large body shops stay in business? The body shops have lower pay and a lower rate of green card sponsorship.

    Indentured Servitude Theory is overrated and is being used to pass STAPLE.

    Like

    • I explained many times that, starting in 2000, IEEE-USA has been no friend of the US tech worker.

      Their support of Staple is awful, but keep in mind, it is a natural consequence of the refusal of H-1B critics to recognize that the core issue with H-1B is AGE.

      Like

  15. I’m going to take a different take on this.

    Norm, have you ever heard any discussion about reimaging the IT profession?

    A couple ideas I’ve bounced around are:

    1. IT salaries increase until about 40 – 45 years of age or 20-25 years of experience.
    2. Workers above 40-45 would not receive future raises but instead get:
    a. Job security
    b. Better health care
    c. More time off
    d. Other benefits
    3. Citizens favored for Local/State/Federal government jobs
    4. Youth/H-1Bs favored for corporate jobs
    5. IT workers given advise on how to pay off their homes early
    a. Housing costs are the biggest expense for most folks
    b. Would ease finance in retirement

    Like

  16. Prof. Matloff,

    How do you refute this argument when people (mostly Conservatives) share stats showing that Indians are the most dominant group that get paid the highest salaries in America and that we should encourage more immigration of their kind into America?

    I keep responding by saying what’s the use of comparing salaries if they are taking our jobs and displacing us?

    Like

    • Object to the premise. I think all kinds should have a shot at immigration to the US. How many is a different question, but to me “what kinds” is wrong.

      Like

      • One can satisfy both the conservative restrictionists and the liberal restrictionists by

        1) Allowing all kinds some nonzero of the immigration pie.
        2) Scaling the size of the pie itself to zero.

        As we all know, 0/0 can be anything. 😉

        Like

        • It’s this simple: job market test. If actual genuine shortage, allocate EB to that/those professions, and lottery to the qualified applicants.
          If the claim is short term shortage, then short term (TRULY temporary) visa, and let the companies do what they used to: inform local colleges of their needs. 2 years for the companies to resolve it’s own “shortage”.
          It gets rid of employer indenture visas.

          Like

    • Sorry to butt in Joan, but being as your question’s on a public chat board,
      – “that get paid the highest salaries in America”, is an apples and oranges comparison. They are coming disproportionately into Tech and Med, which is not comparable to all wage rates of all Americans.
      – second, as for comparing Indian to other immigrant groups, again, Indian have dominated the higher paying visa’d professions, blocking not only Americans, but other foreign workers.
      “…Oracle’s pattern and practice of hiring discrimination against qualified White, Hispanic
      and African American applicants in favor of Asian applicants, particularly Asian Indian…”

      Click to access OFCCP20170071.pdf


      While what the news articles have published is solely “discrimination in pay, against women and minorities”, leaving out discrimination in hiring, against anyone who isn’t Indian.
      For example, http://time.com/5510289/oracle-underpayed-women-minorities/

      Like

  17. I am not Vivek Wadhwa hiding here. But based on history, the American capitalistic story was always built on the back of cheap labor. It was the slaves in the plantations earlier, then the chinese railroad workers, and now in the digital age, the H1B code coolies.

    Good luck to us trying to keep the capitalistic machine afloat without cheap labor. Cheap labor is what feeds this whole machinery imho.

    And to my amazement, none of the H1B critics have ever run a business themselves.

    Like

    • Actually, a significant group of H-1B critics early on was small US IT service contracting firms, who saw their rates undercut by the firms using H-1Bs. But we’re not talking about, say, the clothing industry, with paper-thin profit margins. The “Intels” certainly could afford to pay decent rates.

      Like

    • Usapatriot, what makes you think H1-B critics have not run businesses, and what part of your background makes you so certain of such a claim?

      Like

      • @Tony, refute my argument that the capitalistic system has run on cheap labor for ever. Neither @prof.Matloff nor you have refuted it.

        Show me 10 H1B critics, who have run vast and successful businesses, I am not holding my breath. I change perspectives when I get new information.

        The sole way of losing in the digital age is, “I am so and so, hence I deserve this job”.

        I speak as a person who is successfully running an information security company with their own security product, and genuinely know how margins work, especially in the IT industry.

        While I do empathise with people who have been replace, and ageism etc, my take is this is the reality of the system we are all so proud of, and any system is going to have winners \ losers.

        Like

        • If everyone (companies) is playing by the same rules then no one has an advantage other than the value of their product.

          I am reminded of the senior design project showcase I helped evaluate many years ago. The groups presented a project to meet specific specs complete with financials, documentation, and advertising. The guest evaluators were “buyers” for different sectors – military, industrial, consumer, … The consumer buyer was looking for an attractive, with great advertising and users guide, cheap product while the military buyer was looking for ruggidized (they were actually tested by dropping the projects) when cost was no object. All teams had access to the same parts and resource limits; it was how they chose to use them. The students picked their target market and apportioned their resources to that market. The student presentations were terrific!

          If there are the same limitations on a resource – in this case cheap guest workers, companies would have no advantage on that basis. That would actually end up with companies hiring more experienced people to get the product to market faster than the company hiring less qualified/experienced people trailing behind or hiring more people to be competitive and losing the cheap labor cost advantage.

          Liked by 1 person

        • Usapatriot, you have changed your argument. You originally claimed that “to your astonishment, no H1-B critics have run a business.” That argument is not true.

          As for your argument that “the capitalistic system has run on cheap labor for ever,” there are five points to be made.

          First, the most prosperous economies are those that prevent exploitation of labor, and thus ensure business benefits flow to all sectors. This helps ensure all future workers receive at least a basic education and have access to at least basic health care. This ultimately benefits business.

          Second, America had a war to stop slavery, and has thrived for 160 years without it, so your argument that capitalism was built on slavery is ridiculous.

          Third, you are implicitly agreeing with H1-B critics when you point out that the role of H1-B is to provide cheap workers. However where H1-B critics point out this involves corporate deceit, and ultimately betrays the principles of a strong economy, you praise it, which you are perfectly entitled to do.

          Fourth, employment rules force businesses to compete on innovation and service rather than pay, and this creates a strong economy. It also helps innovative businesses.

          Fifth, the fact that owners of large businesses like something is no measure of its value. Large business owners would also like to be able to pollute rivers and scrimp on car and air safety, but well-run economies stop them. Many practices of digital companies are now being examined by government, as you probably know.

          As you point out, there will always be winners and losers, but we can still shape policy for better outcomes for everyone. I wish you well with your business.

          Like

    • Henry Ford built an amazingly successful business, and did the opposite, raised the wages of his employees, which boosted his sales. Much of the 20th century in the US ran on rising wages, and made extraordinary strides in product development.
      Is that due to rising wages? Well, according to the theories of capitalism, they are inextricably linked. The justification for capitalism, is that everyone benefits when there is competition, because the ineffective businesses die and that includes from inability to compete for labor. That labor would be directed to the highest paying most profitable businesses, presuming profitable due to consumer choice.
      Importing a labor glut throws that right out the window. And has led to frivolous businesses, like nail salons, and bottom of the barrel petty waged “gig” based services, like Uber.
      Furthermore, big picture, it bleeds the economy of its circulatory system medium, cash. Billions leave the economy in remittances, and billions are hoovered from the immobiized non-competitive low waged. Along with another $39B in wage theft because, where are they going to leave for?, and what are they going to do about it, when glut leaves this their only job option?
      Overall effect, race to the bottom, for the entire economy.
      Even on the most basic level of understanding, of contrast, if cheap labor made economies run like buzzsaws, China and India would’ve been running the planet, well before West’s capital infusion.

      Like

  18. Norm,

    Some people tell me that simply raising the prevailing wage rates will not have any significant impact as everyone is hoping it might. American workers who were displaced from their jobs and had to train their H-1B replacements tell me that outsourcing companies like Infosys and Tata will simply charge their clients more money. They tell me that the biggest reason why corporations prefer H-1B workers over Americans (especially Silicon Valley) is because they can get compliant indentured workers. People I have spoken to in major tech companies tell me that they pay their H-1Bs comparably the same as they do with the American workers. They do add that managers love the H-1Bs because they can overwork them and know they have no where else to run to. That includes OPTs because with OPTs they know those “students” will want eventual H-1B sponsorship so they will not run away either even though their OPT allows them to transfer employers without paperwork. OPTs try to build loyalty with their employers in hopes of getting sponsorship for an H-1B. Quite an indentured scam of a system, eh?

    Liked by 1 person

    • I’ve written quite extensively about the de facto indentured servitude issue, and have emphasized that it is a major point, as important was wages. As to the outsourcing firms, my post explicitly stated that I don’t think the change will impact them much.

      Liked by 1 person

  19. I would have bought into your “not all tech jobs can be off-shored” argument if we didn’t have a pandemic. The pandemic has resulted in most people working in tech now working remotely. Techies are moving out of Silicon Valley in droves and moving to low cost low tax areas like Texas, yet working for their Silicon Valley employer remotely. Why would Tech companies not seek cheaper labor out of the country then if everyone can now work from home?

    Like

  20. !meh ! @prof.matloff

    Your argument about tobacco companies falls flat, as cigarette packets state they are cancerous, and am sure CEOs keep it that way. Your argument has to be more cogent, and you are bringing up false equivalency here.

    Like

  21. @Tony

    While some of your arguments are cogent unfortunately businesses have long moved away from being a force for the greater societal good. I am young and hence I do not know how it was in the olden days.

    In Japan businesses are seen as family and employees retire in the same company, we do not have those ethos, for employers the lowest bidding employee wins, and for employees the highest bidding employer wins. So when we have a system that is totally predicated on maximization of profit, all of these unwanted effects are to be seen imho. Wall St literally runs quarter to quarter and Stock value is everything.

    There is only so much optimization that can be done before items like Labor which is a fixed cost, is tweaked with.

    @Prof.Matloff

    I did read that history sometime ago, and the reason I brought it up was, that when there was scientific research evident, they industry was forced to change their statement to congress subsequently. But I say its a false equivalency, what you mentioned about tobacco is concerning an individual’s health vs we are talking about employment opportunities here. So not an apples to apples comparison in terms of focus.

    Yes, techies are WFH, and major companies are not going to go back to office anytime soon including FB, MSFT, GOOG , AMZN etc. Only roles that need folks to be present in office would be in office. But it stills gives companies to hire great talent anywhere now imho.

    Like

    • The scientific evidence was already long known when those CEOs denied it.

      WFH does not work on team projects, which are typical in the software development world. One needs to be able to go to the next-door office/cubicle and ask, on the spur of the moment, “But what if we change this or that?”, “What does this error message mean?” etc. Mark my words; those firms will not continue WFH after the pandemic ends.

      Like

  22. @Prof.Matloff

    Unfortunately, No, companies are not going to go back to office. In my company we have seen similar if not better work results when folks are WFH.

    In fact we conducted a survey and 88% of the employees in my company want to continue WFH forever. Times are changing, and no disrespect , but one of the problems with older people is that they will not change their view regardless of times moving ahead. But I do understand your point.

    WFH \ Remote-Work is the future , please mark my words. MSFT already put in a policy for folks to move to wherever they want.

    I know several H1Bs in AMZN, who moved to Canada and took their jobs with them, i.e their position was not backfilled here in the US.

    This is one of the reasons I said, Capitalism runs on Profit, and investors are ruthless. Labor is fixed cost and easily tweakable from Q to Q.

    Do I like this system, absolutely not, but this is capitalism and survival of the fittest. Not Socialism.

    We cannot have all the benefits of Capitalism , and brush away the evils of it.

    Like

  23. @prof.Matloff

    Well we can term any cycle as a fad then ? We had mainframes, then client-server model, and now things are going back to mainframesque cloud for shared computing.

    Things change and move back and forth but some trends don’t totally reverse and WFH is one of them. Companies will save big on real estate and other costs. Once lot of real estate is done away with companies are not going to buy them back again.

    Like

  24. Thank you Dr. Matloff for your in-depth article.

    Regarding your comments:
    “Again, most tech jobs can’t be offshored. If they could, they would be already, as the labor is even cheaper than H-1Bs.”

    I would tend to disagree with this statement. I have been working in corporate IT consulting for ten years for an Infosys like consulting company in US primarily serving large domestic and international US corporations. I have gradually moved through the ranks of developer, administrator, team lead, technology lead, up to IT project manager. I am one of the few remaining white employees in our technology practice of thousands. Since President Trump took office, my Indian friends and colleagues have commented on how difficult it is now to receive a working visa to the US, but that has not stopped the firm from proceeding with the typical 80/20 staffing model for projects (80%offshore/20%onsite) (even before COVID). In fact, because of the H1B restrictions, some projects implemented 90% or more offshore. US developers tees up work for India, explain details during morning/evening handoff call, and in this way work can be executed on a 24 hour cycle. This model is also utilized by large US companies, as many have their own internal offshore delivery centers (though not as efficient as large consulting companies). So can you please explain your comment “most tech jobs can’t be offshored”? For technology jobs to really return to the US, I don’t believe H-1B restrictions or onshore penalties alone would be enough. Offshore penalties would need to be applied as well. Do you foresee such offshore penalties to be implemented successfully in the future for American companies?

    Like

      • If 100% offshore, it’s difficult but not impossible to use a follow the sun model (working 24 hours a day) completely based out of India. Working the graveyard shift months on end really gets to most people. It’s possible but you run a high risk of burnout and people leaving the company and worse damaging the company reputation. So what happens is 20% (or less now) of US folks focus on client interaction, work management, some actual work, and then handing off the bulk of the work back to the army of people back in India.

        Liked by 1 person

  25. Norm, was it you who once mentioned an incident about an immigration attorney who advertised “Hire International Students! They can’t leave!”
    Can you provide me with a link to that story?
    Thanks!

    Like

    • Yes, I’ve mentioned it many times, including to journalists who contact me (they’ve never cited it). The link was hiref-1students.com now taken down apparently. In anticipation, I did save a copy of the site, and can e-mail the copy to you if you wish.

      Like

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