Thanks to reporting from The New York Times, The Los Angeles Times and Computerworld, the American public is getting a glimpse of the H-1B's primary purpose. Recent, egregious examples took place at Disney and Southern California Edison (SCE) — two companies that earned billions in profits last year — where hundreds of information technology workers were laid off and replaced with H-1Bs. But first, the U.S. employees were required to train the H-1B workers who would soon be sitting at their desks, doing their jobs.
H-1B rules allow employers to displace and replace U.S. workers with foreign tech workers. The only restriction applies to companies where more than 15 percent of the workforce are H-1Bs: They are permitted to replace U.S. workers only if the H-1B holds a master's degree or is paid over $60,000. Hatch recently suggested increasing this displacement exemption to $95,000, rather than prohibiting displacement altogether. Hatch's proposal falls short, because companies will still be allowed to replace workers, as well as vastly underpay H-1Bs compared to U.S. workers in the same occupation and geographic region.
While employers must pay H-1B workers the legally defined local "prevailing wage" — a rule intended to prevent undermining U.S. wage standards — employers have the option of paying the Level 1 "entry-level" wage, or the Level 2 wage, both of which are well below the average wage local employers pay for workers in similar jobs. In theory, the wage level must correspond to the H-1B worker's education and experience, but in practice, the employer gets to choose, and the government isn't checking. Unsurprisingly, the Government Accountability Office reported that 83 percent of H-1Bs are certified to be paid below-average wages (Level 1 or 2).
How do corporations benefit from this? Major savings: Many of the workers laid off at Disney and SCE earned $100,000 a year or more. Government data indicate the H-1B workers replacing them earn around $60,000.
The companies that usually do the actual replacement — offshore outsourcing firms like HCL, Infosys and Tata — are the top recipients of H-1B visas, and get about half the allotted visas every year. Their business model is based on replacing U.S. workers and shifting jobs overseas. Their clients that replaced U.S. employees with guest workers include companies like Fossil, Pfizer, Northeast Utilities, Harley Davidson and Cargill.
Instead of expanding the H-1B program, Hatch should work to fix it, to prevent the kinds of abuses that occurred at Disney. The law should be changed so that it's illegal to replace U.S. workers with H-1Bs. Employers should be required to recruit and hire qualified U.S. workers before hiring an H-1B, and be required to pay their H-1B workers no less than the true local average wage for the jobs they fill. Requiring a higher wage would be even better, because it would ensure that employers use the H-1B only when they can't find local talent, and to hire highly skilled individuals that complement and add value to the workforce, rather than as a way to cut labor costs.
Daniel Costa is the director of immigration law and policy research at the Economic Policy Institute.