This year's H-1B visa lottery jammed full in just six days

American IT workers bend over and prepare to get screwed

Analysis The US Citizenship and Immigration Services (USCIS) reports that all of this year's 65,000 H-1B visa applications have now been applied for, as well as 20,000 extra applications for skilled workers – less than a week into the process.

"USCIS will use a computer-generated process, also known as the lottery, to randomly select the petitions needed to meet the caps of 65,000 visas for the general category and 20,000 for the advanced degree exemption," it said.

"USCIS will first randomly select petitions for the advanced degree exemption. All unselected advanced degree petitions will become part of the random selection process for the 65,000 general cap. The agency will reject and return filing fees for all unselected cap-subject petitions that are not duplicate filings."

US companies are big fans of the H-1B process, which was designed to allow them to bring in overseas workers to fill up skills gaps in the local labor market. Critics say it's a ruse to bring in cheap workers for exploitation, and last year's figures seem to bear that out.

The USCIS allows H-1B applications for four skill levels – four being the highest rating for foreign rocket scientists and the like down to level one recruits, described as "employees who have only a basic understanding of the occupation."

Last year, level one staff accounted for 41 per cent of approved H-1B visa recipients, and another 40 per cent were barely more-skilled level two staff. Level one staff wages are typically 40 per cent lower than US workers' wages, and level two 20 per cent lower.

In congressional testimony last week Ron Hira, associate professor of public policy at Howard University and a child of Indian immigrants, told the government that the H-1B system is being widely abused by companies, particularly IT outsourcing firms – to save wage costs and get a compliant workforce.

"Every CEO in every company sees the business opportunity: Will I earn higher profits by replacing my American staff with cheaper H-1B workers? The answer is an obvious yes," he said.

"So we shouldn't be surprised when CEOs everywhere are replacing their American staff with cheaper H-1B workers. The CEOs are not villains. They are simply acting rationally to the opportunities that government is handing them."

Follow the money

He cited the recent case of Disney IT staff, who were sacked and forced to train their replacements, who were brought in by Cognizant and HCL. The foreign staff were paid around $65,000 a year, compared to $100,000 per year for Disney's American staff.

IT services firms that are H-1B dependent – those who employ more than 15 per cent of staff on the visas – typically enjoy net profit margins of 20-25 per cent, compared to 6-8 per cent for those that employ American workers.

The situation is even worse with L-1 guest worker visas, since firms can hire foreign workers and not pay US national wage scales. In 2014, US print technology firm Electronics For Imaging admitted paying L-1 staff $1.21 an hour and working them for more than 120 hours a week.

He also pointed out that not only can US companies pay IT staff less if they employ foreign workers, but they also have a tremendous hold over their staff. Employers hold the H-1B visa, and if they dismiss troublesome staff, the immigrants have 14 days to leave the country.

If the stated purpose of the H-1B visa scheme was to attract and retain much-needed talent, you'd think that employers would be applying for green cards for their staff to keep them in the country once the six-year extended H-1B visa expires. But the statistics don't bear this out.

In 2014, Indian outsourcing firm Wipro employed more than 3,000 H-1B workers, but applied for no green cards for staff and shipped them home when their visas expired. US outsourcing company Cognizant applied for just 54 green cards, out of 4,293 H-1B staff.

Nor does the argument that H-1B staff are highly skilled graduates hold much water. Intel is better than anyone else at this – more than half of its H-1B staff hold advanced degrees from US universities – but that drops to around 20 per cent with Google and Microsoft.

Despite this, tech firms continue to insist that the H-1B scheme is vital to their "skills gap." If there was such a thing, you'd expect wages to rise to meet demand, but average IT staff wages have been flat for the last 14 years.

Politicians waking up to the problem

Congress has been slow to act on years of reported abuse of the H-1B systems, but now they are finally noticing something is rotten in the state of Denmark.

When Connecticut firm Eversource Energy fired 200 of its IT staff and hired outsourced H-1B workers at the start of this year, Senator Richard Blumenthal (D-CT) fired off an angry letter to the US Attorney General about the case.

"Eversource seems to be just the latest example of American companies abusing nonimmigrant worker visa programs and harming American workers by outsourcing jobs," he said.

"Such apparent abuses are the reason I have helped lead the fight to reform the H-1B and L-1B programs by co-sponsoring bipartisan legislation that would prohibit companies from replacing American workers with nonimmigrant visa holders."

In the meantime, the US is in an election season and the presidential candidates are split on the matter. Donald Trump wants to drop the scheme altogether as part of his anti-immigration push, whereas rival Ted Cruz wants a three-month suspension of the H-1B program while a review is undertaken.

On the Democratic side, Hillary Clinton is a big supporter of the H-1B program and wants to increase the number of visas allowed. Bernie Sanders wants the system reformed so that workers employed under the scheme are paid the same as American workers to ensure fair price competition.

But whoever gets elected will still have to enact change through Congress, and with massive amounts of lobbying dollars being fed into the legislature by tech firms, don't expect change soon.

In the meantime, more American IT staff can expect to be out of a job as this year's tranche of overseas workers comes to America. ®