H-1B bill advances in House -- as does anxiety about it

The House Judiciary Committee is set to vote on $100,000 wage minimum for H-1B-dependent firms

The U.S. House Judiciary Committee on Wednesday will vote on H-1B legislation aimed at closing a loophole that has made it inexpensive to replace U.S. workers with visa holders.

But the bill, introduced by Rep. Darrell Issa (R-Calif.), and Scott Peters (D-Calif.), is worrisome, as well. It may do little to protect U.S. workers from displacement, say critics, who fear the legislation -- if approved -- could be used as a cudgel against more comprehensive H-1B reforms.

The “Protect and Grow American Jobs Act,” (HR 5801) is intended to tighten, but not eliminate, a 1998 loophole in the law.

Technically, H-1B “dependent” firms -- those employing 15% or more visa workers -- are prohibited from displacing U.S. employees. They are also required to make a “good faith” effort to hire a U.S. worker before taking on a visa worker. But these U.S. worker protections were also made toothless by law.

The law exempted firms from displacing U.S. workers as long as the H-1B visa holder is paid at least $60,000 or holds a master’s degree. This wage minimum was never adjusted for inflation and has not changed in 18 years.

Issa’s bill raises the salary minimum to $100,000, and includes an inflation adjustment. And it eliminates the master’s degree exemption all together.

If the House Judiciary Committee backs the bill, adoption by the full House is uncertain. Lawmakers have little time to bring it to a vote, although it could be attached as a rider to a larger bill. It will likely face opposition from H-1B reformers in the Senate for not going far enough.

“This bill does nothing to fix the fundamental flaws of the H-1B,” said Ron Hira, associate professor of public policy at Howard University. “Employers will continue to hire H-1B guest workers because they are cheaper and indentured."

The legislation “may make some outsourcers do a little more paperwork, but it won't change their business behavior,” said Hira. “The H-1B program will continue to fuel offshoring and employers will continue to hire cheaper H-1Bs instead of U.S. workers.”

In many areas of the U.S., particularly tech hotspots, even a $100,000 wage minimum would do little.

For instance, the University of Southern California, at its San Francisco campus, is planning a lay off some 80 workers. It has hired India-based HCL, an H-1B-dependent firm, which may bring in H-1B workers, similar to what happened at Disney.

The mean prevailing wage for computer system analysts in San Francisco is $115,000.

The intent behind raising H-1B wages is to discourage firms from moving jobs offshore. Industry experts say outsourcers will adapt.

Increasing the minimum wage rate on dependent firms -- mostly India-based IT services -- will make it more difficult for them to utilize the H-1B visa, said David Rutchik, executive managing director at Pace Harmon, a management consulting firm. But Rutchik said these firms are already making changes because of visa restrictions today.

“They are hiring more U.S.-based employees for onsite U.S. work, and at the same time are pushing their delivery models to be more and more offshore-based,” said Rutchik. "This bill, should it come into law, will drive more behavior in this direction."

The changes place "an incremental burden on India-based firms that their competitors, which also utilize a good deal of offshore labor, don’t have to suffer,” said Rutchik.

The law will result in more U.S.-based hiring, “but mostly it will drive more remote support from offshore locations,” he said.

H-1B-dependent firms include such giants as Infosys, Tata Consultancy Services and Cognizant. Non-dependent firms include IBM and Accenture. The non-dependent companies also run extensive offshore operations -- they just have more U.S.-based employees.

Issa’s legislation has the support of Compete America, an industry group that has advocated for years for increasing the H-1B cap. That’s seen as a red flag. Critics worry that the Issa bill may be used to thwart broader H-1B reforms.

If comprehensive immigration reform returns to Congress, there will be a new push to raise the H-1B cap. Industry groups will likely argue that the Issa bill -- if it passes -- delivers all the reform that’s needed. But a dependent-specific rule change won’t impact the hiring of H-1B workers by U.S. firms.

Employers, say critics, will hire H-1B workers because they are relatively inexpensive, young and indentured labor, and a rise in the visa cap will be to the disadvantage of older and higher-paid tech workers. The visa is applied for by the employer, and the loss of a job can mean deportation.

John Miano, a computer programmer who became an attorney and co-author of the recent book on the visa, Sold Out, says the Issa bill still includes loopholes. In a recent blog post for the Center for Immigration Studies, Miano said that the replacement protection for U.S. workers only applies if it takes place within 90 days of making the visa petition. That loophole isn’t addressed in Issa’s bill.

The law is a tangle, said Miano. “It would be simple to replace this tangle with a single sentence that bans replacing Americans with H-1B workers,” he wrote.

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