Unchecked expansion of the H-1B program won’t build better economy

When the Senate Judiciary Committee meets on Tuesday to hold a hearing on the effects of select temporary visa programs on America’s workers, it must look beyond the debate over who should or should not enter the country and recognize that unchecked expansion of guestworker programs is not the way to broad-based prosperity and expanded economic opportunity. There is a role for employment-based migration in the U.S. economy, but it is not as a tool for upending labor market standards.

The H-1B visa program, which the committee will discuss, proves instructive. This visa is intended for employers to use for hiring foreign workers in higher skilled jobs on a temporary basis when U.S. workers are not available.

{mosads}In a National Bureau of Economic Research working paper, economists from the University of Notre Dame, the University of California-Berkley, and the U.S. Department of Treasury found that “…on average H-1B workers at least partially replace other workers in the same firm, with estimates typically indicating substantial crowdout of other workers.”

To be clear, H-1B workers are not responsible for the loss of U.S. jobs or lowering of labor standards. That responsibility rests solely with employers who use the H-1B program’s inherently coercive conditions to drive down labor costs, even if that means replacing American workers.

H-1B workers (like virtually all workers on temporary employment visas) have no real way to influence even their own work standards.  Employers retain control over the visas. Speaking up about low pay, excessive hours, or other workplace abuse is very risky for H-1B workers – they can be fired and immediately lose the right to legally work in the United States. Many workers on temporary employment visas are often in debt to recruiters and other middlemen who charge significant fees to help arrange job opportunities. H-1B workers also cannot easily change jobs on their own; walking away is thus not a real option for them. And so they are left with no leverage to confront a low road employer.

Employers, however, gain a great deal from the H-1B program. Hiring H-1B workers can mean a workforce paid below the average local wage per occupation. It does not require sponsoring the workers for citizenship. And, by controlling the visas, there is little risk to employers that these workers can push for higher pay, speak up about long hours, or leave for a better job.

The current H-1B program can therefore create quite a competitive advantage for businesses that pump up their profits by bidding low on contracts while keeping down costs. But that competitive advantage can come at a real cost for workers, as has become all too clear at Walt Disney World and Southern California Edison. Approximately 500 IT professionals at each company recently lost their jobs after their employers decided to outsource their work to contractors with H-1B workforces.

Not surprisingly, nine of the 10 companies recently receiving the most H-1B petition approvals – including Infosys and Tata Consultancy Services, both hired by Southern California Edison, and HCL America, hired by Walt Disney World – are in the business of offshoring and outsourcing.

These companies’ business models illustrate why unchecked expansion of the H-1B program will likely exacerbate the fissuring of work. This term, coined by U.S. Department of Labor Wage and Hour Division Administrator Dr. David Weil, describes the reorganization of work through arrangements that allow a company to divest itself of employment responsibility for workers carrying out tasks primarily for its own benefit.

In doing so, a business can create contractual relationships with subordinate entities, like subcontractors, franchisees and even independent contractors, that perform specific functions previously done by the primary business’s own employees. Through these contracts, the primary business can dictate exacting standards and establish intricate monitoring and compliance systems to ensure the integrity and quality of the services rendered by their subordinate entities. The primary business thus reduces its labor costs and avoids responsibility under workplace laws for workers it effectively controls.

In the case of Southern California Edison, it will likely save as much as $40,000 to $45,000 per worker per year by contracting with Infosys and Tata. These firms are not being charitable. Southern California Edison is taking advantage of the fact that Infosys and Tata pays their H-1B workers, on average, below the local average wage for a computer systems analyst.   

For workers, fissured work often means downward pressure on wages, lowered standards, and less secure jobs. Just ask Southern California Edison’s IT workers, some of who might have planned for a career with the utility, but instead have spent their last days on the job training the H-1B workers employed by Infosys and Tata who will soon take over for them. 

If this country is to build an economy that works for all, Congress should be wary of expanding the H-1B program without meaningful worker protections – which is what is proposed in the recently re-introduced “I-Squared” Act. Doing so will further enhance the H-1B visa as a tool for employers to continue to get ahead at the expense of higher wages, family-supporting benefits, and good jobs.

Wasser is a senior policy analyst at Jobs With Justice, a union rights organization.