Jay Bookman

Opinion columnist and blogger with The Atlanta Journal-Constitution, specializing in foreign relations, environmental and technology-related issues

Abuse of H1-B visa program explains a lot about this economy

High-tech firms such as Google and Facebook have lobbied strenuously for increasing the number of H1-B visas that allow highly trained immigrants to be brought here for six-year stretches to fill so-called specialty positions that otherwise might be hard to fill.

I don't doubt that in some cases such visas are necessary and useful. I don't doubt that the U.S. economy generally benefits from an influx of well-educated, talented workers.

But I also don't doubt that the program can be and is being abused by companies seeking to maximize shareholder profit and minimize employee costs. In today's New York Times, for example, Julia Preston documents numerous cases in which H-1B immigrants have been brought in to directly replace American workers who were already doing that job.

" .... about 250 Disney (computer technology) employees were told in late October that they would be laid off. Many of their jobs were transferred to immigrants on temporary visas for highly skilled technical workers, who were brought in by an outsourcing firm based in India. Over the next three months, some Disney employees were required to train their replacements to do the jobs they had lost.

“I just couldn’t believe they could fly people in to sit at our desks and take over our jobs exactly,” said one former worker, an American in his 40s who remains unemployed since his last day at Disney on Jan. 30. “It was so humiliating to train somebody else to take over your job. I still can’t grasp it.”

.... “The first 30 days was all capturing what I did,” said the American in his 40s, who worked 10 years in his Disney job. “The next 30 days they worked side by side with me, and the last 30 days they took over my job completely.” To receive his severance bonus, he said, “I had to make sure they were doing my job correctly.”

In applying for the right to hire H1-B workers, a company must stipulate that the hiring "will not adversely affect the working conditions of workers similarly employed" by the company.  It's simply impossible to square that legal requirement with what has happened at Disney and elsewhere. But it also doesn't appear to matter.

The experience at Disney, Southern California Edison and other companies provide real-life examples of a phenomenon discussed in a major new research paper published last month. Authored by Kirk Doran of Notre Dame, Alexander Gelber of UC Berkeley and the National Bureau of Economic Research, and Adam Isen of the Treasury Department's Office of Tax Analysis, the study found no evidence that companies that had taken advantage of the H1-B program had increased scientific innovation or been issued a greater number of patents.

But according to the study, it did have other effects:

  • "New H-1Bs substantially and statistically significantly crowd out median employment of other workers." In other words, they displace American workers who would otherwise be doing those jobs.
  • "Consistent with the presumption that H-1Bs should increase firm profits, we find some degree of evidence that additional H-1B visas increase median profits." And how do H1-Bs allow companies to raise profits? Through greater innovation?
  • Not exactly. "We also find some evidence that H-1Bs decrease median payroll per employee, which may be related to the increase in profits."

If you want to understand how corporate after-tax profits are soaring to record levels, while the share of national income going to working people has fallen to record lows, the abuse of the H1-B visa program offers a window into that process. Its impact on the overall economy is pretty minor -- we're talking 85,000 new H1-B visas annually -- but it is only one of myriad ways in which that process plays out.

If you want to comprehend how income inequality continues to grow, with investors, hedge funds and CEOs getting richer while employees struggle to stay afloat, again, the H1-B visa program gives you a tiny glimpse at the changing power dynamics underlying that transformation.

And if you want to know why no one is doing anything about it, look even deeper at the role that corporate money and influence is allowed to play in American politics. Look at the political power held by Disney, and look at the political power held by the 250 displaced employees and their families. (The former Disney employees would not even agree to be identified by name out of fear of repercussions.)

If you were a politician in this system, where do the incentives lie? To whom are you going to be responsive, and who are you going to ignore?

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About the Author

Jay Bookman writes about government and politics, with an occasional foray into other aspects of life as time, space and opportunity allow.