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7/1/2008
10:37 AM
Paul McDougall
Paul McDougall
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Why Tech Companies Really Hire H-1B Workers

The H-1B program puts American workers at a competitive disadvantage vis-à-vis the visa holders, but low-ball salaries aren't the reason. Or, at least, not the biggest reason.

The H-1B program puts American workers at a competitive disadvantage vis-à-vis the visa holders, but low-ball salaries aren't the reason. Or, at least, not the biggest reason.My colleague Alex Wolfe blogged yesterday about reforming the H-1B program to ensure that its wage parity rules are strictly enforced.

Alex argued that such a reform would eliminate the incentive for companies to bring in boatloads of cheap tech labor from India and other countries at the expense of U.S. programmers and engineers. As a result, Congress could eliminate the current cap on H-1Bs and leave the free market to determine how many foreign techies arrive on these shores each year.

That sounds like a reasonable proposal, but I'm not convinced that it's the wage issue that makes the H-1B program unfair to Americans.

The "prevailing wage" rules are difficult, though not impossible, for employers to skirt. In applying for permission to hire an H-1B worker, employers must state the job description, the salary, and provide to the government third-party evidence that the proposed wages are in line with industry standards.

The employer also must post a copy of the application at the job site, in a conspicuous area where it will be visible to anyone who wants to see it. If a company is low-balling H-1Bs, someone is going to spot it and blow the whistle -- there's enough disgruntled U.S. workers out there to make that a certainty.

Here, in my mind, is what's really wrong with the H-1B rules, and why they're unfair to both U.S. workers and the foreigners: An H-1B holder is, for all practical purposes, bound to the company that sponsored his or her visa.

Sure, they can switch jobs by applying for a new visa once here, but that's expensive, time consuming, and risky. And time spent on the current visa would count against the new H-1B. So for all intents and purposes, an H-1B worker is indentured to his employer for the life of the visa. That's up to six years if the one-time renewal option is exercised.

Who would you rather hire if you're an employer in a hotly competitive labor market like the tech industry? A highly skilled individual who might hang around for a year or so, acquiring even more skills at your expense, before bolting for more money elsewhere?

Or, a highly skilled worker who, once hired, has to stick around for at least six years?

Obvious, isn't it? In fact, the latter scenario is so appealing to tech companies that they might be willing to offer a higher salary up front to the H-1B worker, knowing that individual won't be going anywhere soon and won't be in a position to ask for a raise later on.

To make the H-1B program fair, Congress needs to make the visa specific to the individual worker, rather than the company. If H-1B workers have full job mobility once here, their appeal to tech vendors might decrease drastically.

Or not.

If there really is a shortage of tech workers, then demand for H-1Bs wouldn't change much. Then we can move to step 2 of Alex's proposal -- eliminate the numeric caps and let market forces take over, and may the best programmer win.

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