“This is now standard practice in the technology industry.”
US tech companies, and other companies with large IT departments, are having conniptions about President Trump’s immigration policies, particularly the leaked draft of an executive order that includes references to reforming the H-1B visa program for foreign tech workers.
In light of the 85,000 foreign tech workers allowed to be brought into the US annually under the H-1B visa program – a limit tech companies have been clamoring to raise – here’s a stunning forecast by the Bureau of Labor Statistics:
Employment of computer and information technology occupations is projected to grow 12% from 2014 to 2024, faster than the average for all occupations. These occupations are expected to add about 488,500 new jobs, from about 3.9 million jobs to about 4.4 million jobs from 2014 to 2024, in part due to a greater emphasis on cloud computing, the collection and storage of big data, more everyday items becoming connected to the Internet in what is commonly referred to as the “Internet of things,” and the continued demand for mobile computing.
That’s exciting news. So 488,500 IT jobs are to be created over ten years, so about 44,850 a year on average, which means more jobs in good years and net job reductions in bad years. But over the same decade, 850,000 H-1B visa holders would come to the US to fill these 488,500 IT jobs…. You get the idea.
Now we’re in the good years. So more IT jobs are being created. Alas, many of them are going to be filled by the 85,000 foreign workers brought in every year with H-1B visas.
Slightly different numbers, same trend: Goldman Sachs estimated in a report cited by the New York Times that 900,000 to 1,000,000 H-1B visa holders are now working in the US, accounting for 13% of US tech jobs, based on Goldman’s numbers; or up to 25%, based on the estimates of IT jobs by the BLS.
The meme that there are half a million tech jobs in the US that somehow cannot be filled by American workers doesn’t hold water. Dean Baker, co-director of the Center for Economic and Policy Research in Washington, told the Times:
“I’m sure employers might not have as much choice as they would like, but if the shortage story were true, we’d see wages rising more rapidly than they are,” he said, adding that there’s substantial unemployment even among workers in STEM fields (science, technology, engineering and math).
In theory, US companies have to try to recruit Americans first. So they put job ads out there but don’t hire anyone and then claim that they cannot find an American with the skills needed to fill the job. This gives them carte-blanche to bring in cheaper H-1B workers.
Companies that don’t want to jump through those hoops can apply for a waiver of the recruit-Americans-first requirement and bring in H-1B workers as long as they pay them over $60,000 a year – which is not a lot for IT workers – and as long as they have a degree, even if it is from a diploma-mill in India.
Tech companies, including giants like Google and Microsoft, have been lobbying for increases in the annual quota of 85,000 H-1B visas, claiming that there are not enough Americans to fill those jobs. This is ironic for at least some firms: while Google has been adding to its workforce, Microsoft’s employment has dropped from a peak in 2014 of 128,000 to 114,000 last year, after rounds of huge layoffs, globally and in the US.
Other tech giants that are struggling with morose revenues have also been shedding employees in the US, rather than hiring, including Cisco and IBM [Big Shrink to “Hire” 25,000 in the US, as Layoffs Pile Up].
What is happening time and again is that tech companies or IT departments at non-tech companies are laying off Americans and replace them with H-1B workers, often requiring the to-be-laid-off Americans to train their foreign successors. This is proof that the verbiage about not being able find Americans to do those jobs is just a pretext.
Some of these abuses of the H-1B visa program have become tangled up in Congressional investigations, including this one:
Southern California Edison, a utility, decided to lay off people in its IT Department, which had 1,800 employees and 1,500 contract workers at the time. As is typically the case, the Americans, who had to train their replacement H-1B visa holders from India, had to sign severance agreements with confidentiality and non-disparagement clauses that bar them from discussing the situation in public.
The scandal spilled into the open in 2015 when some of these affected employees talked to Computerworld. SCE then confirmed having hired Infosys and Tata Consultancy Services in India, two of the largest users of H-1B visas, to provide the H1-B workers [In Search of Cheap Labor in Tech: Behind the H1-B Visa Scenes].
Or last year, Dell-EMC announced that it was seeking efficiencies that might save $1.7 billion, and so it would lay off 2,000 to 3,000 US workers after requesting 5,000 H-1B visas and Green Cards to import foreign workers.
This has been happening all over the place. The latest scandal involves the University of California, San Francisco, which has laid off 80 American workers in its IT department last year. Among them was Audrey Hatten-Milholin, who’d worked there for 17 years. The New York Times today:
Along with eight others, she filed a complaint in November with California’s Department of Fair Employment and Housing, charging that replacing her and others with “significantly younger, male” workers “who will then perform the work overseas” was discriminatory.
“We are at a disadvantage as Americans,” Hatten-Milholin told the Times. “They look at it like, where can we get it cheaper? And for U.C., it’s not here.”
Soon after the lay-off notices went out, there were “knowledge transfer sessions” with employees from HCL Technologies, an Indian tech services company. Among the laid-off employees was Jeff Tan, who’d worked there for 20 years. He had to train HCL employees on how to do his job. Some of the HCL employees he trained were still in India, handled via videoconference; others had been brought to the US on H-1B visas.
“I thought the purpose of H-1B visas was to give America a competitive edge, not help companies ship American jobs abroad,” Tan told the Times. “This is now standard practice in the technology industry.”
With these strategies, U.C.S.F. expects to save $30 million over five years. That’s why they did that.
So now “tech” companies and companies with IT departments are fretting that a reform of the H-1B visa program might put some additional limits on the cheap-labor gravy train. The leaked draft of the executive order (image) included references to reforming the H-1B visa program to “ensure that beneficiaries of the program are the best and the brightest.”
Few people would have difficulties seeing the benefits of truly great minds coming to the US to do their magic. But there are not many of them. Yet this is constantly trotted out by tech employers as the reason to propagate the abuses of the H-1B visa program.
But even desperately needed reforms of the H-1B program still would not stop the outsourcing of IT jobs to cheap-labor countries – which is “the endgame,” Sara Blackwell told the Times. She is a lawyer representing former employees of Disney, Abbott Labs, and other companies in discrimination claims concerning tech-job outsourcing. It’s just too hard for corporations to resist the lure of cheap labor.
But hubris in Silicon Valley knows no bounds. Read… There’s a Lot More at Stake in this IPO than Just Toxic Financials
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.