H1-B Visas: The Key to Cheap Labor in Tech

The United States' H1-B visa program was conceived of as a sensible means for allowing in skilled workers who had attributes American employers claimed the couldn't find in the workplace. 

From its earliest days there were concerns that it would be abused by  employers more interested in cheap labor than in finding skilled US workers.

And given the ability of companies in prominent exporting nations like Germany, Japan and China to train their workforces, questions were raised about why US companies were so reluctant to invest in skills enhancement programs.

The answer was invariably 'competitiveness:' other countries pay less so can afford to train. But the real issue was that the financialization of the economy put a premium on cutting the denominator in the return on investment equation, and that almost always means cutting costs associated with people.

In light of the revelations about collusion between companies in Silicon Valley in order to keep wages down - efforts apparently initiated by Steve Jobs -  additional evidence has emerged detailing how companies are violating the spirit and the letter of the H1-B visa program. Claims that US workers with the relevant skills can not be located have been repeatedly revealed to be false. Despite its prominence, tech industry wages outside of a few Silicon Valley companies remain middling and stagnant. Importing workers from low wage countries may be part of the reason. JL

Wolf Richter comments in Naked Capitalism:

Laying off workers and outsourcing functions at the IT department was part of its ongoing effort to act cost-effectively by bringing in cheaper H1-B visa holders from India.
In April, 2014, it emerged that Southern California Edison, a utility with about 14,000 employees at the time, was planning another round of layoffs. Most of them would be in its Information Technology Department, which had 1,800 employees and 1,500 contract workers. SCE admitted to the plan but told the LA Times that it hadn’t finalized the number. State Senator Alex Padilla then told the paper that as many as 500 employees and 500 contractors would be let go.
Laying off workers and outsourcing some functions was part of its “ongoing efforts to act as cost effectively and prudently as possible in operations for its customers.” These efforts at the IT department would “enable an increase in quality, speed and capabilities while lowering costs,” SCE explained. “By better leveraging the knowledge, skills and expertise of industry vendors, SCE will adopt a proven business strategy commonly and successfully used by other top U.S. companies.”
Namely laying off American employees and bringing in cheaper H1-B visa holders from India.
IT workers in the process of getting axed often sign severance agreements that contain non-disparagement and confidentiality clauses that bar them from discussing the situation in public. Plus there are fears that if they discussed the situation publicly, they might be blacklisted and not find another job. But now some of these affected SCE employees have talked to Computerworld.
SCE confirmed having hired Infosys, in Bangalore, and Tata Consultancy Services in Mumbai, two of the largest users of H-1B visas, to provide the H1-B workers.
“They are bringing in people with a couple of years’ experience to replace us, and then we have to train them,” one longtime IT worker told Computerworld. “It’s demoralizing, and in a way I kind of felt betrayed by the company.”
The H-1B program “was supposed to be for projects and jobs that American workers could not fill,” another worker said. “But we’re doing our job. It’s not like they are bringing in these guys for new positions that nobody can fill,” he said. “Not one of these jobs being filled by India was a job that an Edison employee wasn’t already performing.”
Some of the affected SCE employees have been training their replacements either at the office when the Indian workers are already here or via Web sessions with people in India. And these Indian tech workers didn’t have the skill levels of the American people they’d be replacing, the sources told Computerworld.
Ron Hira, a public policy professor at Howard University, and a researcher on offshore outsourcing, called it “one more case, in a long line of them, of injustice where American workers are being replaced by H-1Bs”:

Adding to the injustice, American workers are being forced to do “knowledge transfer,” an ugly euphemism for being forced to train their foreign replacements. Americans should be outraged that most of our politicians have sat idly by while outsourcing firms have hijacked the guest worker programs.
The majority of the H-1B program is now being used to replace Americans and facilitate the offshoring of high wage jobs.”

On the surface, it shouldn’t be this way. To obtain H-1B approval from the Department of Labor, the company has to “attest” to a whole laundry list of things (PDF), including: “Working Conditions: The employer attests that H-1B, H-1B1 or E-3 foreign workers in the named occupation will not adversely affect the working conditions of workers similarly employed.”
“The SCE case is clearly one where the hiring of the H-1B is adversely affecting the wages and working conditions of American workers,” Hira said. “There isn’t a clearer cut case of adverse impacts – the American worker is losing his job to an H-1B.”
There are other issues as well, Computerworld notes: H1-B workers are mostly “under 35 years of age, according to government data, and the SCE workers interviewed said many older workers were being laid off.”
This has been happening in all kinds of tech companies and IT departments, and it has been happening for years, though it has largely been kept quiet by restrictive severance agreements. Another element in the great mystery of why wages in the US have been losing ground.
What has sort of kept a lid on it is the limited number of H1-B visas given out each year, though companies have been clamoring for more. Just how much corporate demand is there?
US Citizenship and Immigration Services opened the lottery for H1-B visas for fiscal year 2015 on April 1, 2014. On April 7, it reported that it had already reached the statutory cap of 65,000 visa petitions for the general category and 20,000 under the advanced degree exemption. But tech companies have been lobbying in Washington to get this raised. Because the Holy Grail in business is cheaper labor. And bringing in cheaper labor puts downward pressure on wages for everyone else.