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H-1B: Ripe For Reform

20% of H-1B petitions granted last year went to just four firms, all outsourcers. That's just one of several proofs that the controversial visa program is hurting U.S. tech.
Even so, "companies such as York Solutions and thousands of other IT based companies would simply not exist was it not for the fact we had access to a pool of overseas based resources that were able to work on U.S. soil," Richard Walker, managing partner at IT service provider York Solutions, said via an email interview. He also raises the question of why American companies would hire workers from overseas if they could hire American talent.

There's no way thousands of IT-based companies exist solely because of the H-1B, but let's forgive Walker some hyperbole. He seems like a good guy; he's also chairman of a Minneapolis non-profit called Think IT, which develops U.S. IT talent through mentoring programs. I'm sure he would hire only Americans if he could.

But less trusting folks might note that one obvious potential reason to hire H-1B workers is that they are chained to their sponsoring company until they get a green card. Nor do H-1B workers have to be paid the same wage as comparable U.S. workers. An unscrupulous company, or one focused on the short-term numbers, might want to play labor arbitrage.

Here's another reason: not being a U.S. company, you want to staff up in America with people from your base of operations. For instance, an outsourcing firm. Those workers should get L-1B visas.

But outsourcers and companies with outsourcing units, such as IBM and Amazon.com, dominate the list of companies receiving H-1Bs. In fact, Farah Stockman made a strong case in the Boston Globe that the H-1B process has been "hijacked" by outsourcers.

Stockman found that 20% of H-1B petitions granted last year went to just four firms, all outsourcers. Her analysis is worth paying for. She reviews some examples of outsourcers abusing the H-1B system, both proven and alleged (that is, still in the courts). She talks to the congressman who crafted the 1990 Immigration Act that gave us the H-1B, who told her the visas should be replaced with automatic green cards to reduce the potential for abuse.

Not every H-1B recipient gets abused, displaces an American or goes to work at an outsourcer. But the H-1B is ripe for reform.

No matter what you think of the H-1B program, we don't outsource to innovate. We outsource to cut costs. Cut enough, and eventually we can't innovate without outsourcing, as has happened in vast parts of what used to be our manufacturing economy. (See Producing Prosperity: Why America Needs A Manufacturing Renaissance, by Gary P. Pisano and Willy Shih.) It can happen to our IT economy, too. True, reformers rarely get what they hope for. When Upton Sinclair wrote The Jungle, he wanted labor reform, and instead got the Pure Food and Drug Administration. He rued, "I aimed for the public's heart and by accident hit them in the stomach."

The H-1B isn't supposed to aim at our wallets, except by boosting our collective brainpower. That's gone off track. Let's make sure we change the H-1B so it's no longer the outsourcing visa, but the innovation visa.

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