The H-1B Visa Program and its Impact on the Tech Job Market

Recently, the Senate Judiciary Committee has been looking at the H-1B visa program and its impact on the tech labor market. This visa program allows American firms to temporarily hire non-immigrant foreign workers without recruiting American workers beforehand, provided that the firm pays the immigrant workers $60,000 or more. This allows to increase profits by hiring less expensive labor, as foreign tech workers will often work for lower salaries; furthermore, the H-1B visa program provides extra workers in the times of a shortage.

While this visa program may allow firms to find the workers they need and maximize profits, many believe that it is too harmful to U.S. tech workers, and violates their rights. In recent Senate debates, many stated that Southern California Edison (SCE) fired 500 U.S. tech workers who were making $110,000 a year and replaced them with Indian workers who are paid $70,000. Furthermore, the firm made the replaced workers train the new workers. Along with SCE, Disney World, Cargill, Northeast Utilities, Harley Davidson, and many other large companies carry out this practice, according to witnesses. This practice leaves an estimated 40,000 U.S. tech workers jobless each year.

The chart below displays the distribution of salaries for H-1B workers. While some foreign H-1B workers are earning salaries on par or higher than the average U.S. tech worker, the majority make much less.

Screen Shot 2015-04-01 at 1.39.22 AM

One solution to this issue, as proposed by Utah Senator Orrin Hatch at recent senate debates, is to raise the minimum pay required to hire H-1B workers by choice instead of American workers from $60,000 to $95,000. This required salary increase would push firms to use the H-1B program for its intended use-to find workers when the supply is low, instead of simply choosing to outsource foreign workers for less expensive labor. Therefore, U.S. workers will be harmed much less by the outsourcing of labor, but firms will still be able to find the labor workers need. Furthermore, this salary increase would improve the well being of the current foreign H-1B tech workers in the U.S., and provide them with equal treatment to U.S. tech workers.

Among other questions debated at recent Senate meetings is whether or not to increase the quantity of H-1B visas available to foreign workers. By doing so, companies would be more easily able to hire less expensive labor from a much higher supply; however, there does not appear to be a shortage of U.S. tech workers. This change would have a great cost to the labor market for U.S. tech workers, putting even more of them out of work, and increasing unemployment and inequality.

Sources:

http://www.epi.org/blog/senate-committee-debates-whether-to-allow-h-1b-guestworkers-to-replace-u-s-it-workers/

http://techcrunch.com/2015/03/29/how-google-facebook-and-others-pay-their-h-1b-employees/#tmhmdj:ldRc

-Matt Reeves

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3 thoughts on “The H-1B Visa Program and its Impact on the Tech Job Market

  1. jacobmedina2016

    Very interesting read! It would be interesting research to see how much an H1-B visa costs (costs for a lawyer/filing and time costs for hiring foreign workers) then see how high required salaries must go to make the combined cost of sponsoring the visa and the employee’s salary not worth hiring foreign workers. If the required salary goes too high, will the United States lose an opportunity to gain the world’s most educated workers?

    Reply
  2. anthonycritelli

    This is an interesting article and really makes you think about outsourcing labor and the pros and cons of it. It may be cheaper for a company to do it, but domestic workers could be getting hurt in turn. I think finding the right balance of workers is important to keep it fair and make the most people happy as possible.

    Reply
  3. Victor Matheson

    The real key is whether there actually is significant unemployment among the displaced workers. If the American tech workers simply transition into another job rapidly, the costs seem relatively low on the worker side. Perhaps it might also work to allow these visas for regular job openings but not to replace laid off workers, but that would be tough to measure.

    Reply

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