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Foreign IT Pros Working In U.S. Earning More Than Americans

Researchers analyzed skills and pay data on more than 50,000 IT professionals who participated in InformationWeek salary surveys from 2000 to 2005.

While opponents of H-1B and L-1 visas have long argued that the temporary work programs encourage employers to hire cheap foreign labor, a new study says noncitizen IT professionals earn pay that's on average 5% to 9% higher than American workers with similar education levels and IT experience.

The report, "Does High-Skill Immigration Make Everyone Better Off? United States' Visa Policies And Compensation Of Information Technology Professionals," by two researchers at the University of Maryland, analyzed skills and pay data on more than 50,000 IT professionals who participated in InformationWeek salary surveys from 2000 to 2005.

The researchers -- Sunil Mithas, an assistant professor, and Henry Lucas, chair of the department of decision, operations, and information technologies at the Robert H. Smith School of Business, University of Maryland, College Park -- found that foreign IT professionals, including those with H-1B visas, L-1 visas, or green cards, reported pay that ranged between 5% and 9% higher than pay received by U.S. citizens with similar attributes, including educational degrees and IT experience.

"There was no downward pressure on the pay of U.S. citizens," said Mithas. The new research dispels findings of some other studies that assert H-1B and other foreign workers are paid less than American IT professionals. These other studied often use salary data from Labor Condition Applications, or LCAs, said Mithas. However, analysis of pay data from LCAs, which employers file with the U.S. Department of Labor, do not reflect differences in education, experience levels, and other factors among workers, said Mithas.

"There's no way to know whether those applications were approved, what the education levels were," he said.

For noncitizens, the biggest driver for pay premiums appears to be IT experience, while employers tend to reward U.S. citizens with pay premiums based on education level, said Lucas.

"Employers pay a premium not for education of non-U.S. citizens, but for their IT skills as reflected in their IT experience," Lucas said.

Mithas said it's likely that noncitizen IT professionals are paid premiums because of "intangible" attributes that employers seek that aren't as easily found among U.S. citizens, including exposure to various global and cultural experiences. "By hiring these people, it helps a company to deliver products and services for a global market, to make connections to those global markets," he said.

The research also found that among noncitizen IT professionals in the United States, those with permanent U.S. residency, or green cards, earn the highest premiums. Green card holders earn about 6.1% more than noncitizen IT professionals with H-1B or other work visas.

The pay premiums for IT professionals on work visas fluctuate in response to "supply shocks" created by the annual U.S. government caps on H-1B visas, said Mithas.

In general, lower and fully utilized caps result in higher pay premiums. For instance, the average salary premium for IT workers on work visas was 8.4% in 2000 when the H-1B cap was 115,000. However, the premium fell to 3.3% in 2001 when the H-1B cap went up to 195,000.

A similar pattern was observed for green card holders and noncitizens. The pay premium for noncitizens rose significantly to 17.5% in 2004 when the H-1B visa cap went down to 65,000, from a cap of 195,000 in 2003.

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