Sunday, June 25, 2006

H-1b Hearings Serve Outsourcing Lobby -- NOT American Workers

More news showing how the rigged game of "globalization" benefits narrow privileged elites at the expense of American middle class workers. George Allen can run and hide from the "economic fairness" issue but here's more ammunition for critics like Jim Webb who want to speak out on behalf of the American middle class.

Dr. Norman Matloff's review of last Thursdays H-1b hearing is definitely not upbeat. He says the hearings serve the interests of the outsourcing/worker replacement lobbyists who will use the hearings to claim the H-1b law is not abused -- obscuring the fact that the law itself is so inherently abusive of American workers and is written to permit the outsourcing companies to readily replace American workers without difficulty.

Sun 6/25/2006 3:21 AM
To: H-1B/L-1/offshoring e-newsletter
Subject: congressional hearing misleading, harmful
This past Thursday, the House Judiciary Immigration Subcommittee held a hearing on the H-1B work visa program titled, "Is the Labor Department Doing Enough to Protect U.S. Workers?" Even though I am highly critical of the H-1B program, I had hoped that the hearing would NOT take place. Careful readers of this e-newsletter know why:

As I've explained many times, concerning the problem of employers paying H-1Bs below-market wages, there is almost nothing that the Dept. of Labor (DOL) can do to protect U.S. workers, because the basic problem is the loopholes in the law itself. The definition of the legally-required _prevailing_ wage allows figures which are well below market levels. In other words, the organizers of the hearing are fundamentally incorrect in their implicit theme that the problems of the H-1B program are due mainly to lack of aggressive enforcement of the law. It is basically a loophole problem, not an enforcement problem. So when the GAO report presented at this hearing says that the law is being obeyed 99.7% of the time, that's an irrelevant statement, because the law is so riddled with loopholes that it is useless.
So, the basic theme of the hearing was pointless in the first place.

But worse than that, it gave the industry lobbyists a major opportunity to strengthen their case. Yes, it will STRENGTHEN the industry lobbyists' case, though of course not legitimately; again careful readers of this e-newsletter know why:
As I explained above, the GAO report presented at this hearing and highlighted in the press reports is irrelevant. But it's even worse than irrelevant, because it is manna from heaven for the industry lobbyists. They can now say, "See, the critics of H-1B were screaming for nothing. Only 0.3% of the employers are abusing the system; 99.7% of the employers are playing by the rules." Again, that's completely misleading, because those rules themselves are the problem. But the industry lobbyists will claim vindication.

The saddest part of this is that a number of activist programmers who've worked to reform H-1B mistakenly think they've won a victory. The listservs and chat rooms of the activist programmers have been cackling with joy over the "victory" this hearing gave them, but they don't understand that the industry lobbyists, not they, are the victors. The industry lobbyists will send a one-sentence summary of the GAO report, with the figure 99.7% highlighted, to every office on Capitol Hill.
As I said (sorry to be so repetitive), that 99.7% figure is egregiously misleading, but Congress will happily accept it, as will the press.

Indeed, it is certainly possible that the industry lobbyists planned things this way. If I had been advising them and if I didn't have any scruples, I certainly would have suggested this as a sure-fire way to get the H-1B critics off Congress' back. It would be guaranteed to work, because the clerks at DOL are not supposed to approve an H-1B Labor Condition Application (LCA) if the wage to be paid (item C in the LCA form) is less than the officially defined prevailing wage (item E); it's a purely mechanical procedure. Sure, a clerk will miss it in a small number of cases, but the procedure guarantees that you'll have a success rate very near 100%. What a plan! The GAO announces a near-100% compliance rate, and so Congress can say, "It is now proved that H-1Bs are paid as much as Americans, so we can expand the program"--thereby completely sidestepping the real problems.

It's funny. If I tell someone that big corporations and some wealthy individuals pay rather little in taxes, he won't say that the IRS isn't enforcing the law well enough. He will readily understand that the problem is the gaping loopholes in the tax code, rather than weak enforcement. It's the same with H-1B--i.e. the problem is loopholes, not enforcement--but no matter how often Rob Sanchez and I repeat this simple fact in our respective e-newsletter, people just don't get it.

And WHY don't they get it? I believe that the answer is that people tend to naively trust Congress. No matter how much they hear about corruption, they still assume that Congress would not be THAT corrupt as to enact laws which allow employers to bring in cheap labor to replace U.S. citizens and permanent residents. And yet that is exactly what Congress has done. And it is indeed due to corruption, the campaign contributions by the industry lobbyists. Amazingly, some members of Congress have even publicly admitted it (see

And GAO should know better. In their 2003 report, they said, "Some employers said that they hired H-1B workers in part because these workers would often accept lower salaries than similarly qualified U.S. workers; however, these employers said they never paid H-1B workers less than the required wage." Get it? They paid H-1Bs less than Americans but not less than the prevailing wage. In other words, the prevailing wage is not the market wage, again due to huge loopholes. Yet the GAO testimony this week mentions nothing about this absolutely key finding that they had made earlier.

I'm not saying this is deliberate deception on the GAO's part. The GAO does have a reputation
for impartiality, though there was some evidence of some political pressure by the industry in the 2003 study, I doubt that that was at work here. Instead, it was just sloppiness.
The clearest, most succinct illustration of the loopholes in the prevailing wage law remains How to Underpay H-1B Workers [...]by John Miano, founder of the Programmers Guild and one of the four witnesses in the hearing. I highly recommend it. It shows how an employer can pay an H-1B $39,000 for a job that Americans normally get paid $70-90,000 for--yet be in full compliance of the law.
Note once again that it is not just the small firms that underpay the H-1Bs. The above Web page is for Bank of America workers, and my analysis of Intel's saving money by hiring H-1Bs is at

I'm enclosing two articles on the hearing, plus John Miano's own notes.
Miano has done outstanding work on the wage issue, but the scope of this hearing served to totally obscure that work. He did mention in his testimony that a major problem was loopholes in the legal definition of prevailing wage, but this was clearly lost on the press: Neither of the two articles below, nor the Dobbs show, mentioned it. The GAO report, sadly, eclipsed Miano's testimony.

I should point out that even though it is perfectly legal to pay an H-1B below market wages, and it is perfectly legal to hire an H-1B without making any attempt to recruit U.S. citizen/permanent resident workers, it is NOT legal to say you prefer or even insist on H-1B applicants.

Miano and the Guild recently filed a complaint in the Dept. of Justice on this, and it will be interesting to see how that plays out. But for the most part, as I said, the problem with H-1B is loopholes, not lack of enforcement.

One interesting part of Miano's notes is the point about Rep. Jackson-Lee (D-Texas). She has been one of the staunchest supports of the industry's view on H-1B in the House, but I must say that she has outdone herself here. As I have been saying throughout this posting, giving the DOL more enforcement powers would have almost no value, but Jackson-Lee does not want to throw American workers even that tiny bone.

Amazing. Lee would seem to have a number of reasons to back the industry on H-1B: she reportedly had strong ties to Enron; her predecessor had made enemies of Enron and the business community by opposing NAFTA; and her husband is a high-ranking administrator at the University of Houston (academia is a huge source of support for H-1B).

By the way, though she is African-American and she portrays herself as a fighter in support of black people, she has refused the entreaties of black leaders who point out to her that black engineers are being harmed by the H-1B program.

You can access the hearing testimony, including a video, at


Articles mentioned by Norm:

Thousands Of H-1B Workers Are Underpaid, GAO Says: But the 3,229 petitions cited represent a miniscule percentage of all H-1B applications.

Some H-1B workers underpaid, federal auditors say

partial transcript from Lou Dobbs show:

...Even more bizarre, in 1996, the Department of Labor found that the guest-worker visa programs, quote, do not protect U.S. workers' jobs or wages. Ten years later and Congress has done nothing. That inaction has emboldened employers seeking only to hire only H1-B workers to the exclusion of American workers. As members of the House Judiciary Committee learned on Thursday.

JOHN MIANO, PROGRAMMER'S GUILD: In the past six weeks I found over 1,500 ads requesting H1-B workers only from 350 employers. There are now Web sites that are virtual visa bazaars. Companies don't advertise jobs. They advertise visas.
TUCKER: Other panelists told the elected representatives that fixing the problem is simple and crucial.

ANA AVENDANO, AFL-CIO: The best thing we can do is to protect U.S.
working standards so that workers can earn a decent wage, work in dignity under decent conditions and not continue to foster systems like the H1-B program that simply provide employers with a steady supply of exploitable workers.

TUCKER: But instead of fixing the problems, Congress is ready to expand the program in the name of immigration reform...

John Miano's observations on the hearing.
1. The DoL's treatment of "obvious errors and omissions". The GAO report pointed out a number of cases where there were obvious errors but the DoL's automated process approved the LCA anyaway.
The GAO pointed out that DoL approved LCAs with:
o Promised wages less than the claimed prevailing wage. (What most of the media has latched on to.) o Bad EINs.
They could just have well pointed out
o Obvious errors in salaries (e.g. Programmer salary listed as $454,000,000 a year) o Errors in job classifications (e.g. classifying Dentists under job code 030 -- computer programming) o Speling erors that corrupt the data (e.g "New Yrok"_
2. The DoL has just started to audit previous "willful violators" within the past month.
3. In short, these two issues are areas where the DoL could do more but has not. However, this is trivial. So what if 4,000 more LCAs since 2002 had been rejected if the DoL's computer program did some more validation? Still that means 99% of the LCAs are approved. Yes, they could do more validation; it wouldn't take much effort; but it wouldn't change much either.
If the DoL changes it computer program, this is what happens:
a. Employer submits LCA with wage of $40,000 and prevailing wage of $50,000.
b. DoL, following the GAO recommendations, rejects it.
c. Employer resubmits the LCA with the wage of $40,000 but puts down the prevailing wage is $25,000.
d. The DoL has to approve the LCA.
This doesn't change anything.
2. Jackson-Lee (the only D who showed up) was trying to make the point that if the DoL is not doing everything in its power already there was no need to increase its powers.
3. Most of the Congressmen on the committee have no idea that the statute limits the power of DoL to investigate. Nor do they understand why dance instructors can get H-1B visas.
4. The GAO report noted that the DoL now investigates complaints. However, as my testimony pointed out, they do not seem eager to do so. My submission of 130 job ads from one company stating "H-1B Workers Only" or "H-1B workers preferred" to support an allegation of failing to recruit U.S. workers in good faith was rejected as being "insufficient evidence" of a violation.
5. Most telling quote in the report: "Labor uses education as the primary method of promoting employer compliance with the H-1B program."
6. The report notes that few discrimination complaints filed with the Justice Department found violations. These are the types of complaints I am filing right now. I will say that I have submitted a number of them in the past and only did not result in a settlement. (Funny how you can't remember the number of successes but know the number of failures. Also makes me wonder if the six successes were all mine.)
I wish we had more details here to know the nature of the complaints.
I suspect that many of the unsuccessful complaints are filed by people who are fired and replaced by H-1B workers. They say to themselves, "How could this possibly happen in America." So they file a complaint.
Unfortunately, such firings are usually perfectly legal and there is nothing the DoJ can do. I suspect that is the reason for the low success rate on this path.
One casually reading the report might get the impression that most complaints are filed by disgruntled U.S. workers who blame their job loss on H-1B.
FWIW....I have over 300 of these same types of complaints in the pipeline and I expect to succeed in nearly all of them. There may be a few that the situation will be as the employer always claims, "I really hire Americans but we got a new person in HR and she created this ad from ads she saw...." and that turns out to be exactly what happened. (Yeh, right.)
The report notes that none of these cases actually went to trial. That is my experience as well. All of our successes came from settlements before trial. I doubt any of the 300 here will go to trial either.
7. The bottom line is the GAO recommends:
a. Removing the restrictions on enforcement.
b. Have USCIS share its data.
Both of these are in my H-1B study and in my testimony.


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