Do Visas Hurt U.S. Workers? —Thousands of Skiulled Professionals From Overseas Work For Less Money In Positions Americans Want, Critics Say

Do visas hurt U.S. workers?

Thousands of skilled professionals from overseas work for less money in positions Americans want, critics say.

Sarah Ryley / The Detroit News

This year, thousands of people from around the world will come to Metro Detroit through the federal government's skilled worker visa program. Many are among the best in their fields, and will develop software used for automotive design, handle the financials of Fortune 500 companies or work in hospitals doing everything from saving lives to coaching children through surgery.

Others will take jobs at Michigan and India-based technical firms and earn three-quarters of the market wage for their profession. Critics of the program say these workers will take jobs away from Americans, during a time when thousands of computer professionals are submitting resumes to the talent bank run by the Michigan Works! jobs agency.

As Congress considers increasing the annual cap of 85,000 visas for skilled workers, called H-1B visas, critics are citing recent studies that highlight the program's abuses, particularly in computer-related professions.

More troubling to some is what the government does not know — such as how many visa holders are in the country at any given time, where many of them ultimately end up working, or if the company applying for H-1B visas is really making an effort to hire Americans first, which the law requires.

The debate highlights a much broader dilemma, during a time when “outsourcing” has changed from a dirty word to a necessary business model: Should American companies have unbridled access to the worldwide talent pool and let that talent dictate the market wage or should the federal government place careful restrictions on immigration to protect the jobs of Americans.

“At this point, we have no idea how many people are in this country on an H-1B visa,” said Sigurd Nilsen, director of a recent Government Accountability Office study that pointed out the lack of oversight in the program.

While firms are legally required to pay visa holders the prevailing wage, Nilsen said, it often turns out to be less than U.S. workers in the same state and profession expect. “Green cards and experienced workers can't compete on the open market fairly, it puts American workers at risk.”

Outsourcing firms are not required to disclose their clients, and the clients often insist upon that, said Peter McLaughlin, public relations manager for Indian IT giant Infosys.

“The companies are worried about the public backlash. They don't want their workers to think they're going to be potentially offshored, and they don't want their customers finding out,” said Ron Hira, a Rochester Institute of Technology professor.

Supporters of increasing the H-1B visa cap say the workers fill a need that will continue to grow, in a new era where even small businesses are IT-dependant.

“In the past five years, (IT outsourcing) has gone from a virtually unknown industry to where it's considered a bellwether industry in India. And there's still more IT jobs unfilled in the U.S. than at the height of the tech boom,” McLaughlin said.

Contract hires proliferate

Gena Alexander wishes she could land one of those unfilled jobs. An unemployed systems analyst in Oak Park with a degree from the University of Michigan and 10 years of experience in her field, Alexander has been looking for a job since the small firm she was working for hit tough times six months ago and laid her off six months ago. Once earning $75,000 a year, she now gets $362 a week in unemployment.

She said it's tough for her to find a job because most computer-related work is done through outsourcing firms, which tend to favor lower-paid H-1B workers.

“A lot of companies aren't doing the direct hiring anymore, they're doing things through contract,” she said.

Health care costs, pensions and long-term employee liability are reasons major corporations are moving toward outsourcing, said Jack O'Reilly, executive director for the Southeast Michigan Community Alliance, which operates One Stop/Michigan Works! employment training centers in Wayne and Monroe counties.

While Alexander wonders if the H-1B program is hurting her chances to find work, Hovhannes Sadoyan, an Armenian H-1B visa holder with an impressive four-page resume, said the program has been good for him, and he thinks for America, too.

Sadoyan developed programs for DaimlerChrysler and U-M Dearborn while earning his master's degree there. He is now part of a 15-member team working on a 3-D design application for one of the world's leading automotive design software firms.

He says he earns $65,000, a good wage for a 2005 graduate, and is treated well by his company. But he knows others who are here on H-1B visas who work for outsourcing firms and aren't treated as fairly.

“I stay away from those companies; they take part of your pay.”

But the program overall is a positive, he said, because it lets talented people like himself reach their full potential. “There's a future here for those who have talent and are capable of bringing new things into this world.”

Hiring right talent?

Robert Herta, a spokesman for General Motors Corp., agrees: “We're not doing this for the cost savings; we're doing this to expand our talent pool.”

The company applied to fill 144 jobs in Michigan with H-1B visas last year, ranging from two financial analysts earning $48,000 a year to a senior administrator earning $130,500 a year.

Expanding the talent pool through the H-1B program also is important to the IT industry, said Mike McCabe, director of communications for Tata Incorporated USA. Tata is one of India's largest IT outsourcing and offshoring firms with a specialized automotive center in Troy.

“Our position on talent in general is that we're a global economy. Talent is located around the globe, and the market, as with anything, should dictate how that talent is obtained.”

McCabe said Tata plans to respond to client demands by adding 1,000 new local hires in the United States over the next year. He says it's not about hiring the more inexpensive talent, “it's about hiring the right talent.”

Demand is high

Information about which companies get H-1B visas and how many is hard to come by. The Department of Homeland Security does not release that information, but it did provide The Detroit News with a list of the top 10 recipients of visas this year — all were technical outsourcing firms, and received 10,698 of the 85,000 new visas granted.

While it's unclear how many visas were granted to Michigan companies, the growing demand for them is evident in the number of requests. The U.S. Department of Labor approved petitions to fill 53,799 jobs with H-1B visas in 2005, up from 27,651 in 2003. Roughly half of those petitions indicated that the actual worksite would be in another state.

Since the Department of Labor's approval is only a preliminary part of the process, the number of applications merely reflect companies' increasing interest in H-1B visas, particularly on the part of major outsourcing firms such as Michigan-based Syntel Inc. and Indian-based Infosys Technologies Ltd. Both lament in their annual SEC filings that the cap on visas is hindering their ability to increase profits.

The immigration legislation passed by the Senate in May would respond to that demand by raising the annual cap on H-1B visas from 85,000 to at least 135,000, and set it to increase by 20 percent each year that the cap is met. Sen. Debbie Stabenow, D-Mich., voted against the measure, saying it doesn't do enough to protect U.S. workers. Sen. Carl Levin, D-Mich., voted for it, but did not respond to requests for comment.

An H-1B visas increase is not expected to go over easily in the U.S. House of Representatives, which passed an immigration package last December that would step up border security and enforcement of immigration laws, but would not change any of the work visa programs. The House decided to have public hearings on the issue before trying to hammer out their differences with the Senate sometime this fall.

Controversy over pay

Besides disagreement over the number of H-1B visa holders, there's controversy, too, over how much those workers are paid. Critics say many IT companies hire H-1B workers simply so they can pay lower wages, which violates program regulations.

But the government isn't equipped to investigate such wrongdoing, according to a June 2006 Government Accountability Office report, which concluded that the Department of Labor doesn't have the capability to enforce immigration employment laws that would protect American workers by ensuring that H-1B visa holders are paid equal wages.

An analysis of the 960,000 applications for H-1B visas submitted to the Labor Department between 2002 and 2005 found nearly 4,500 that had wages listed below the prevailing wage for that profession or provided erroneous wage information.

Although the overall percentage is small, Nilsen points out that there is no cross-checking between the Department of Labor and the Department of Homeland Security, which ultimately grants the application, to ensure that the employees wage on the W-2 is the same as stated on the application, for example.

Since 1999, the department has issued 45 wage violations to companies in Michigan, amounting to $50,000 in fines and $2.8 million in back wages paid to 586 workers. U.S. Department of Labor spokesman Brad Mitchell says at least 90 percent of the violations issued nationally are to technical outsourcing firms, which make up roughly a third of the H-1B visa recipients nationally.

A 2005 Center for Immigration Studies report based on H-1B petitions that firms made to the Department of Labor found wages listed on those applications for jobs in Michigan averaged $15,269 less than the prevailing wage.

That proves that the H-1B program is frequently being abused by companies to hire cheap labor, not to recruit the world's best minds, contends Congressman Thaddeus McCotter, R-Livonia.

“I'm not going to expand a program that discriminates against American workers so that businesses can save a few bucks,” McCotter said.

You can reach Sarah Ryley at (313) 222-2536 or

Top applicants

Shown are the top 10 H-1B visas applicants for jobs in or originating in Michigan during fiscal year 2005. The number of workers the company actually received is likely a fraction of that amount.

1. Syntel Inc., Troy: Application represents 24,900 jobs. An IT outsourcing, offshoring and staffing firm, 79 percent of its 1,422 U.S. employees are on visas and receive wages $12,336 less than the industry average. Local clients include General Motors, Ford Motor Company and DaimlerChrysler Corp.

2. Infosys Technologies Ltd., Bangalore, India: 5,877 jobs. One of India's largest IT outsourcing firms, 87 percent of its 8,000 U.S. employees are here on visas and act as liaisons between clients and U.S. operations, offers H-1B wages $13,537 below industry average. Does not release client information.

3. Covansys Corp., Farmington Hills: 2,585 jobs. An IT staffing and outsourcing firm with 67 percent of its staff located in India, offers H-1B wages $9,760 below the industry average. Henry Ford Health System, Ford, Visteon Controls and GM are its largest local clients.

4. The Tata Group, Mumbai, India: 935 jobs. An outsourcing, offshoring and staffing firm with a specialized automotive center in Troy, offers H-1B wages $22,016 below industry average. One of its first U.S. jobs was archiving the crime database for the Detroit Police Department. Ford is one of its top local clients.

5. Wipro, Ltd., Bangalore, India: 610 jobs. An outsourcing firm with the majority of its U.S. workforce on visas earning wages $17,074 below industry average. Was one of six to receive a contract from General Motors this year.

6. University of Michigan, Ann Arbor: 451 jobs. Applications mainly for assistant and associate professors, assistant research scientists and research fellows.

7. Technosoft Corp., Southfield: 429 jobs. Primarily a staffing firm, offers H-1B wages $16,200 below industry average. Ford and DaimlerChrysler are its largest clients.

8. Insolexen, Novi: 355 jobs. Acquired by Ohio-based Perficient, a consulting and contracting firm that has Comerica as one of its local clients. Offers wages $26,288 below industry average.

9. Satyam Computer Services Ltd., Hyderabad, India: 341 jobs. A consulting, contracting and staffing firm that offers wages $15,235 below industry average.

10. Ved Software Services Inc., Farmington Hills: 315 jobs. An outsourcing and staffing firm that offers H1-B wages $23,984 below industry average. Amway Corp., DaimlerChrysler and Kelly Services are its largest local clients.

Sources: 2005 Labor Condition Application filings, company websites, 2005 and 2006 SEC filings, “The bottom of the pay scale: Wages for H-1B computer programmers,” published in 2005 by the Center for Immigration Studies.

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