Prediction: H1B Visa Threatens Domestic Tech Sector
“The New Republic made an interesting connection between all these unpaid taxes and nonstop lobbying for cheaper, indentured H1-B tech workers. This is the same thing manufacturing companies successfully lobbied for in the 80’s. In the short term, they lowered costs. In the long term, they wiped out domestic jobs and hobbled consumer purchasing power for their own products. It’s the business version of self-mutilation.
Flooding the tech labor market with cheaper foreign talent might help with short-term staffing, but ultimately it will lower all tech wages. Why invest in domestic education when you can go to India’s 24/7 Brain Mart for a quick fix? Add to that tax gamesmanship and our focus on bombs not brains. It’s a formula for losing tech while it’s still here. Very shortsighted.“
And I favor immigration — but not at the expense of long-term competitiveness.
Prescription: Domestic Jobs Strategy
A domestic competitiveness strategy…This is where a framework of immigration strategy and domestic education should be created
Since writing this in 2013, companies like Disney, replaced domestic workers with cheaper H1B hires. While the The Trump Administration has not articulated a strategy for developing domestic workers, they have made it much more difficult to import workers by requesting evidence that no comparable domestic talent exists.
- There was a 41% increase in denials between the 3rd and 4th quarter — from 15.9% in Q3 to 22.4% Q4.
- In Q3 2017, 23% of completed cases required “requests for evidence” (RFE). That number jumped to 69% in the Q4.
- The last quarter under the Obama administration (Q1 2017) only had RFE for 17% of cases, compared to the 69% at the end of Trump’s first fiscal year.
- Indian H-1B applicants saw even stricter scrutiny in the last quarter, with 72% of their applications requiring additional evidence in Q4, compared to 61% of other nationalities.
“Two former IT workers at Disney have sued, saying that Disney broke the law when it hired cheaper foreign replacements, then fired its current IT department. Disney IT employees were told they would be kept on for 90 days in order to train their replacements, who were H-1B visa holders, according to the complaints. The workers were told “if they did not stay and train they would not get a bonus and severance, which most employees reluctantly accepted.”
The Replacements 2017
“She announced that they were going to outsource all of IT infrastructure and development to two companies, Infosys and Tata,” recalled Diangelo. Temporary workers in the US on H-1B visas would arrive, and the Eversource employees would need to train their replacements. “She was saying that they needed to bring over global workers, global workers were more adaptable, [and] can adapt to change a lot faster than Americans can.” Left unsaid was that the new workers would reportedly be getting less than half the salary of those they were replacing, and few if any health and retirement benefits.”
“In San Francisco, companies will pay six-figure salaries to entry-level tech workers from all over the world. So this might come as a surprise: A public university there is laying off some of its own IT staff and sending their jobs to a contractor with headquarters in India.”
It’s not just foreign threats, it’s domestic ones! In Amazon’s “search” for its new HQ (that many speculate was a ruse to maximize concessions from the places they were going to choose anyway), the tech talent gap was exposed. Cities that bid never really had a shot because they are badly lagging in tech talent. They will continue to lose jobs of the future, unless they catch up.
This Dallas case study is the perfect illustration of America’s underinvestment in domestic tech talent:
Amazon figures to receive billions in incentives to plant offices in the Washington, D.C., and New York City areas, but the company said a key factor in its decision was also those cities’ deep STEM — science, technology, engineering and mathematics — talent pools.
“The Amazon proposal was a bit of a complete shock to the system in terms of its scale and its need,” Owusu said. “We didn’t have 50,000 computer scientists sitting around. That’s certainly something we continue to focus on.”