H1-B Visa Program Creates Caste System for Silicon Valley

After years in the economic wilderness following the 2001 dot-com crash, designers, artists, webmasters, and all sorts of multimedia, networking, and software experts are finding jobs in San Francisco again. Thank the boom in social media, mobile apps, and digital advertising.

But thousands of those jobs will be unavailable to San Franciscans.

The posts are slated for foreigners participating in the H1-B nonimmigrant visa program, meant for companies needing highly skilled workers who can't be found here.

Last year, San Francisco companies filed 1,827 such applications. This year they filed 2,243, according to the website MyVisaJobs, which aggregates federal data. This is part of a nationwide trend in which firms have rushed to fill jobs with H1-Bs, named for the portion of the immigration code that gives special three-year visas for skilled workers.

Bay Area CEOs say imported experts are key to Silicon Valley success. In the program, foreign workers are employed by the sponsoring company for up to six years. During that time, the H1-B holders may start the long process of applying for permanent-resident green cards.

Critics say the program is a mild form of indentured servitude. They insist that what employers really seek are compliant workers who won't complain about unfair treatment for fear of being deported.

The fact is both groups are right: The H1-B program depresses wages for certain U.S. workers. It's rife with fraud and abuse. H1-B workers are vulnerable to discrimination, isolation, and exploitation. But the program is a necessary evil because skilled and enterprising new immigrants are exactly what the Bay Area economy needs.

The dirty truth is that H1-B is a twisted way to achieve that goal. It exists in its current form solely to cater to the emotional needs of America's dysfunctional immigration debate.


Kathy Mount, human resources director for the city of South San Francisco, is in a position typical of some H1-B employers. A few years ago, when the job market was tighter, the city hired a talented senior planner who happened to have been born overseas. To retain his skills and institutional memory, the city has re-upped as an H1-B visa sponsor.

"This particular planner took the eligibility test, came out number one, and was hired as a result of that," she says.

And why not?

Indeed, during a few hours poring over U.S. Citizenship and Immigration Services records showing San Francisco H1-B applications, I found plenty of perfectly legitimate scenarios for importing foreign workers. A local company called Crunchyroll specializes in streaming Japanese anime videos. It seeks a graphic designer and artist — presumably one conversant in the idiosyncratic form of Japanese cartooning.

Still, some participating companies seem touchy about HI-B's public perception. AKQA is a multinational interactive marketing firm with offices in Singapore, clients in Germany, and subcontractors in Australia. It is looking to fill 18 positions in its San Francisco and New York offices, including art director and creative developer.

But when asked about this presumably felicitous expansion, PR director Stephanie Young said via e-mail: "AKQA is going to bow out of this story participation, if that's alright."

A marketing firm bowing out of free publicity? Why so shy?

A possible clue: The H1-B program's deservedly bad reputation.

A 2008 Department of Homeland Security audit determined that one in five H1-B visas were obtained through fraud or as a result of technical violations. A 2003 University of Michigan Journal of Law Reform study declared that U.S. CEOs' claim of a tech labor shortage was bogus. H1-Bs were merely a cheap labor pool, and many companies exploited the program as a way to replace older and thus less desirable U.S. employees. Another study showed that H1-B workers weren't even particularly highly skilled; they were merely compliant and cheap. "This is all about whether Microsoft can hire an engineer for $30,000 per year instead of $80,000 per year," says David Bacon, author of the book Illegal People: How Globalization Creates Migration and Criminalizes Immigrants. "H1-B status is just a way of getting a cheap worker."

The program distorts the labor market in other pernicious ways. It's cumbersome for H1-B workers to change employers without being deported. So we have a Silicon Valley caste system where H1-Bs have a reputation for working hard and keeping their mouths shut. Some support families back home. Many go into debt to pay immigration brokers in hopes of one day getting green cards and reuniting their families here. Some employers know they won't sacrifice all that by declining to work unpaid weekends. Even elite H1-Bs are at a disadvantage: The most talented ones can't easily move to better jobs, because their visas are linked to particular employers. That is a boon for companies not wanting to reward performance.

Eventually, these miserly standards trickle down to the rest of us.

There happens to be a cure-all: Give green cards to any skilled foreigners who ask for them. They could then demand fair treatment without fear of deportation. Employers would be compelled to provide market-rate wages and equal-rights treatment to immigrants. This freedom of speech, movement, and bargaining power would raise standards for everyone. Everyone would win, except for exploitative bosses.

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17 comments
graphic designers australia
graphic designers australia

Great Blog I am digging this. You answered some questions I had on this topic. Ill tell my friends about this blog. Thanks!

buyapolitician
buyapolitician

The H1-B program has other deleterious effects: it causes U.S. companies to be less inclined to hire the disabled; it's a disincentive to those who might become engineers; and it eventually leads to exported technology and unintended technology transfer.

Does Obama wonder why we have a jobless recovery? He should look to his dinner companions, like the head of Oracle. Doesn't Oracle have both an H1-B hiring policy and a policy of outsourcing tech jobs? It wouldn't be surprising. At one tech company I worked at, the H1-B were given hiring authority. Would they look at a U.S. citizen resume? Nah, bring some more H1-B, maybe a cousin.

At one point, Bill Gates was heard moaning about the lack of U.S. engineers on U.S. college campuses. Whether this was P.R., who knows. But gee whiz Bill, think your policy of hiring H1-B and outsourcing might have anything to do with U.S. students not being foolish enough to become engineers?

But really, it's no problem: let us eat cake!

Briansays
Briansays

its called skilled vs. unskilled laborits called a sense of entitlement in American 20-30 somethingsguess those art degrees from that expensive school in sf or you ba in liberal arts ain't gonna cut it

the result of lifestyle choicesthe consequences of your choices are yoursown themthat's ok starbucks in always looking

Abhinai Srivastava
Abhinai Srivastava

Everyone is entitled to have their own opinions. What they are not entitled to, however, is their own facts. Should be fun being a journalist though. Fetch some facts that support your storyline and conveniently ignore others. Makes for stories with sensational headlines and some good money from ads.

I have an H1B and worked for Microsoft for 6 years. I also knew several others with H1Bs who worked at Microsoft. From your article: ""This is all about whether Microsoft can hire an engineer for $30,000 per year instead of $80,000 per year," says David Bacon, author of the book Illegal People: "

Are you kidding me? Do you have any idea how much trouble Microsoft would get into if they did that. In all the times interviewing people, not once did I or anyone ever ask or cared about their visa status. There is simply too much money involved in the business to let go of a good candidate for mere $30-40k difference. Even a petty server cost us $200k and each person got as many as needed. Do you think we would have cared about $40k? A happy employee is worth a lot more than that. In any case I did not know a single H1B holder in Microsoft with salary less than $110k.

I can't however speak for body shops. Their business model is pimping people and there is a big scope for fraud and exploitation. Just don't drag big names with fictitious facts to give credibility to your story.

hibiki_2010
hibiki_2010

@Abhinai Srivastava Microsoft employs 35,000 H-1Bs from India. Oh wait, Microsoft is dying. Thanks a lot Indians. H-1B is just a wealth redistribution program from America to India for India's claimed perceived slights by the Brits 200 years ago. Don't try to con us, we know exactly why Microsoft illegally employs 35,000 H-1Bs when Title 8, Section 1182 INADMISSIBLE ALIENS says you are all illegal as long as Americans are out of work.


India's days of raping the US economy are over.

Wolfgang
Wolfgang

A server costs $200k? Give me a break, hardware doesn't cost that much and hasn't for decades! And I can go to Glassdoor and see many salaries of Microsoft employees far less than $100k, many of them H1-B holders no doubt.

I've been to Redmond a few times; its pretty obvious what's going on there. As a top CS grad, my resume didn't even get the 'time of day' from Microsoft's recruitment staff when I submitted it after graduation a decade ago.

hibiki_2010
hibiki_2010

@Wolfgang Indians will come up with any outrageous claim or con to deflect attention from their wholesale gutting of the US economy. In fact, it's usually the outrageousness of their claims that gives away their cons. LOL.

Wakjob Dunfor
Wakjob Dunfor

Companies ruined or almost ruined by Indian labor

Adaptec - Indian CEO Subramanian Sundaresh fired.AIG (signed outsourcing deal in 2007 in Europe with Accenture Indian frauds, collapsed in 2009)AirBus (Qantas plane plunged 650 feet injuring passengers when its computer system written by India disengaged the auto-pilot).Apple - R&D CLOSED in India in 2006.Australia's National Australia Bank (Outsourced jobs to India in 2007, nationwide ATM and account failure in late 2010).Bell Labs (Arun Netravalli took over, closed, turned into a shopping mall)Boeing Dreamliner ES software (written by HCL, banned by FAA)Bristol-Myers-Squibb (Trade Secrets and documents stolen in U.S. by Indian national guest worker)Caymas - Startup run by Indian CEO, French director of dev, Chinese tech lead. Closed after 5 years of sucking VC out of America.Circuit City - Outsourced all IT to Indian-run IBM and went bankrupt shortly thereafter.ComAir crew system run by 100% Indian IT workers caused the 12/25/05 U.S. airport shutdown when they used a short int instead of a long intDeloitte - 2010 - this Indian-packed consulting company is being sued under RICO fraud charges by Marin Country, California for a failed solution.Dell - call center (closed in India)Delta call centers (closed in India)Fannie Mae - Hired large numbers of Indians, had to be bailed out. Indian logic bomb creator found guilty.GM - Was booming in 2006, signed $300 million outsourcing deal with Wipro that same year, went bankrupt 3 years laterHSBC ATMs (software taken over by Indians, failed in 2006)Intel Whitefield processor project (cancelled, Indian staff canned)Lehman (Spectramind software bought by Wipro, ruined, trashed by Indian programmers)Medicare - Defrauded by Indian national doctor Arun Sharma & wife in the U.S.Microsoft - Employs over 35,000 H-1Bs. Stock used to be $100. Today it's lucky to be over $25. Not to mention that Vista thing.MIT Media Lab Asia (canceled)PeopleSoft (Taken over by Indians in 2000, collapsed).Polycom - Former senior executive Sunil Bhalla charged with insider trading.Qantas - See AirBus aboveQuark (Alukah Kamar CEO, fired, lost 60% of its customers to Adobe because Indian-written QuarkExpress 6 was a failure)Rolls Royce (Sent aircraft engine work to India in 2006, engines delayed for Boeing 787, and failed on at least 2 Quantas planes in 2010, cost Rolls $500m).SAP - Same as Deloitte above in 2010.Skype (Madhu Yarlagadda fired)State of Indiana $867 million FAILED IBM project, IBM being suedState of Texas failed IBM project.Sun Micro (Taken over by Indian and Chinese workers in 2001, collapsed, had to be sold off to Oracle).UK's NHS outsourced numerous jobs including health records to India in mid-2000 resulting in $26 billion over budget.United - call center (closed in India)Virgin Atlantic (software written in India caused cloud IT failure)World Bank (Indian fraudsters BANNED for 3 years because they stole data).

I could post the whole list here but I don't want to crash any servers.

Wakjob Dunfor
Wakjob Dunfor

Silicon Valley success? CA is a total disaster. The place is full of FOR LEASE signs, there are no jobs and the state is going bankrupt. The only company booming is Apple and they hire mostly Americans. Oh wait.......

Dave Chapman
Dave Chapman

I would estimate that the fraud rate in the H1-B program is 80%. The various studies which show fraud rates between 20%-40% were designed to find obvious fraud: For example, the State Department gave their people a stack of H1-B applications, a telephone, and 20 minutes for each file. They found a fraud rate over 20%, BASED ON EDUCATION CREDENTIALS ALONE.

H1-B is the largest immigration fraud in American history. We currently have approximately 500,000 people working in the US under H1-B visas, and they are being underpaid by an average of $40,000 each. That's a $20 Billion per year direct subsidy to corporations like Microsoft and Cisco. In addition, the wages of the surviving American citizen workers have been suppressed. That is probably worth another $20 Billion per year.

There is a lot of money available for bribes. Congressmen have been bribed. Congresswomen have been bribed. Executive branch managers have been bribed. Newspaper reporters and editors have been bribed. Professors have been bribed.

Yes, there is a lot of money at stake here.

Wakjob Dunfor
Wakjob Dunfor

This all started in 2008 when India's IT lobby NASSCOM hired DC PR firm Hill & Knowlton to push "worker shortages" stories into US media. If that isn't bribery, then I don't know what is. Why is a FORIEGN POWER allowed to influence our media and thus our national policy? In Japan for example, they have laws that 5% max of the media can be controlled by foreigners. Not owned - controlled. That means editors, writers, reporters, everyone. This crap going on in the US HAS TO STOP. We are being manipulated by greedy 3rd world nations whose only goal is to rob us blind.

Federale
Federale

And how is California doing on its unemployment rate? Bad, very bad.

hibiki_2010
hibiki_2010

@Federale In 1998, when Americans ran Silicon Valley, the US economy was booming and there was no unemployment anywhere. That same year the floodgates opened and millions of 3rd worlders came flooding in. Americans have now been mostly excluded from CA and now it is collapsing. Asia is harvesting the fruits of Americans' labor in order to better their own countries through the New Veiled Communism called Globalization.

Fishfry
Fishfry

Everyone wins except for exploitive bosses? How about 40+ year old American-born tech workers who can't compete with H1-b's who work for half as much and save money by living in group apartments with other Ht-b's? Do you really think it's healthy to have an entire industry that employs only 20 year olds and H1-b's whose visa is held by the employer? There is a huge number of unemployed adult tech workers in the Bay area who have been driven out of the profession by the H1-b's. This is not healthy.

hibiki_2010
hibiki_2010

@Fishfry Biggest recession in 70 years, real unemployment around 20%. Yep, everybody sure wins. Except of course for the Americans who created the IT industry. They are the ones who are getting shafted. Must be incredible to have an entire pre-made industry just HANDED to you by another country.

Ali Alexander
Ali Alexander

You forgot to mention that the biggest users of H1-B are NOT American companies but INDIAN ones, such as Wipro and Tata, who use the program to bring in workers whom they then contract out. These workers are supposed to make contacts, learn US business methods, and take the business back to India with them.

hibiki_2010
hibiki_2010

@Ali Alexander"Infosys senior level meetings : We will dump 6 million Indians in US and capture their entire IT market and no American will ever come to know about this. We will throw these Americans out of their own country. They don't know what we are doing over here."

 
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