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May 1998, Volume 5, Number 5

Congress: H-1Bs

H-1Bs. On April 2, 1998, the Senate Judiciary Committee approved, 12-6, a bill (S 1723) that would raise the visa ceiling from the current 65,000 annual limit to a maximum 115,000 for each of the next five years (95,000 H-1B visas would be available in FY98). The approved bill does not include layoff protections for US workers. For example, US employers do not now have to certify and would not be required by S1723, to certify that they did not lay off US workers to make room for the H-1Bs.

The Kennedy-Feinstein alternative bill, which would have raised the visa ceiling to 90,000 for three years, and reduced the duration of H-1B visas from six to three years, failed on a party-line vote, 8-10.

About 44 percent of the H-1B visas go to workers in computer-related fields, including programmers and engineers. Another 26 percent go to physical and occupational therapists.

Most employers fax a one-page form to the Labor Department which states that any H-1B workers employed will receive prevailing wages and benefits, and that there is not a strike in progress. Unless the form has obvious inaccuracies, the US Department of Labor must approve it within seven days. The employer then asks the INS to issue the H-1B visa. The INS certifies that the foreigner meets the minimum criteria--a bachelor's degree or equivalent work experience--and issues visas.

Many of the H-1B workers are foreign students graduating from US universities, and many remain with the employer who obtains an H-1B visa for them while that employer sponsors them for a green card, or permanent immigrant status. One immigration attorney noted that hiring an H-1B worker gives high-tech companies "a long-term employee," since the foreign worker is obliged to remain with the sponsoring employer to expedite the application for a green card.

Most newspaper reports expressed skepticism about the high-tech labor shortage. The New York Times on April 20, 1998 reported that the ten US companies that imported the most H-1B workers in FY97 were "body shops" who imported foreigners with the minimum BS degree for computer and software installation and maintenance. Mastech Systems Corp., for example, has 1,733 H-1B employees; H-1Bs were 80 percent of its work force. Tata Consultancy had 1,110 H-1Bs; Syntel, 675; and Computer People and Wipro, about 446 each. Intel, by contrast, has three percent or 2,000 employees hired with H-1B visas, and most of them have master's degrees or doctorates.

An exception to the general skepticism was a San Jose Mercury News editorial on April 5, 1998, which noted that there is less controversy over forecasts of future employment--demand--than of future US workers available--supply. It is hard to estimate supply because many of those employed in computer occupations were trained in other fields, while some of those trained in computer science are employed as managers or work in other occupations.

The US Department of Labor changed the way it calculates prevailing wages for temporary H-1B workers and for foreigners hired permanently as researchers by universities and federal research agencies. In a 1994 case, Hathaway Children's Services (91-INA-388), the Board of Alien Labor Certification Appeals held that prevailing wages should be calculated using wages from all workers employed in similar occupations, private and public.

Since universities and federal research labs typically pay lower wages than private firms, that calculation raised the wage universities had to offer to foreigners and US workers. The new DOL rules create exceptions for universities and federal research labs, requiring them to pay wages for similar persons employed by universities and federal research labs, with the rationale that their research is for the public good, rather than for profit.

Microsoft has 17,000 US employees, plus at least 5,000 temporary employees, including 1,500 who have worked for Microsoft for one year or more. Most temps work under renewable three-month contracts, earning higher hourly wages than regular employees, but having fewer benefits. At least one appeals court has held that Microsoft owes the temps compensation for the benefits that they did not receive because they were temps. The number of temps in the US economy has increased from 800,000 in 1986 to 2.5 million in 1997.

Under a 1986 tax law, most computer programmers cannot be independent contractors; they must be employees of a company such as Microsoft, or of a body shop such as Mastech Systems that sends them from job to job. A few programmers have tried to incorporate, but the IRS has aggressively audited companies using one-employee corporations created by programmers.

Foreign physical and occupational therapists are also admitted with H-1B visas, and there is some dispute over whether there is a shortage of therapists in the US. The percentage of newly certified occupational therapists who were foreign-trained rose from three percent in 1985 to more than 20 percent in 1995. Most projections expect a surplus of therapists; a result of an increase in new programs begun to remedy a shortage in the 1980s.

However, firms that are in the business of importing foreign therapists and placing them in US hospitals and nursing homes argue that there is a continuing need for foreign therapists. Some endorse a proposal to create a separate H-1C visa for therapists, thus making more H-1B visas available for programmers.

Permanent. The Wall Street Journal on April 23, 1998 described the motions that employers go through to satisfy labor certification; employers must prove that there are no US workers available before they can get permanent visas for the foreign workers they want to be cooks, diamond cutters or accountants. DOL officials say that labor certification is a sham. In most cases, the foreigner is already working for the US employer, and the US employer merely wants to convert the foreigner from temporary worker or illegal worker to permanent immigrant.

About 60 percent of 24,000 foreigners waiting for permanent immigrant visas on the basis that no US workers are available are temporary workers, usually H-1Bs. In the case of an Iranian H-1B working on computer systems for a New York bank, the bank agreed to sponsor him after four years as an H-1B. The application for a permanent visa, filed in October 1995, had not been acted on as of April 1998, with final action expected by September 1999.

The Wall Street Journal noted that many of the foreigners US employers seek to sponsor for the 140,000 immigrant visas available (for workers and their families) are to be found among the 350,000 foreign students who come to the US each year. Two-thirds of the foreign students are Asians. After graduation, foreign students are permitted to remain in the US one more year for "practical training."

DOL spent $51 million on labor certification activities in FY95, and $31 million on labor certification activities in FY97, helping to explain why the backlog has increased from 40,000 in 1995 to 104,000 in 1998. The wait between employer application and the granting of a visa for needed skilled workers is typically four years, so many employers use the H-1B visa as a stop gap until certification is completed.

Employers send ads for US workers to state labor offices, which must approve them before they are published. Americans who apply are referred by the labor office to the employer, but DOL has no authority to compel the employer to hire them. Employers are required to provide reasons for not hiring each US candidate they reject. If DOL does not accept the employer's reasons for rejecting the US worker, the employer can appeal to the Board of Alien Certification Appeals to obtain certification to hire the foreigner.

Many foreigners and their employers use labor certification to win immigrant visas, but the partnerships are often soon terminated: one-third of the foreigners awarded permanent work visas, the Labor Department has found, leave their US employers within a year.


David Cay Johnston, "How a Tax Law Helps Ensure Scarcity of Programmers," New York Times, April 27, 1998. Barry Newman, "Foreigners Seeking U.S. Work Visas Often Land in a Bureaucratic Hell," Wall Street Journal, April 23, 1998. Jeri Clausing, "Use of Visas by Technology Companies Is Under Fire," New York Times, April 20, 1998. Miranda Ewell, "Tech worker shortage: fact or fiction?," San Jose Mercury News, April 5, 1998.