Is Your Job On the Line? What the H1-B Visa Means to American Workers

Business.com / HR Solutions / Last Modified: February 22, 2017

Large corporations like as Disney are using the H1-B Visa to replace American employees with foreign workers. Could your job be at risk?

The theory behind the H1-B Visas is to allow companies to hire non-immigrant foreigners to fill positions that no American can fill. We're a global economy, and I support the theory behind it. There are certainly times when there aren't people in the United States that can do the work.

However, lately it seems the news is full of stories of Americans (and permanent residents) that are getting laid off and being required to train their replacements who have H1-B Visas.

On the surface, it seems like this situation is a blatant violation of the intention of the H1-B Visa problem. Under the surface, it also appears to be a violation. If you're an IT worker, you should be worried. Here's why:

Disney, rather publicly, announced they were laying off 250 IT employees due to a reorganization. While such things are not uncommon, in this case, to receive severance, the employees had to stay long enough to train their Indian replacements.

That's not unusual either--it's often cheaper to hire people in India. But the problem here was that these Indian employees were coming to the US on these temporary Visas.

Disney announced and then rescinded their plans for second, similar layoff. The question is, if you already have someone sitting in a seat that can do the job well enough to train the replacement, how can you argue that you needed to look to foreign non-residents to do the work?

Related Article: American Dreaming: Choosing the Right Employment-Based Green Card

Underemployment (a combination of unemployment plus people who are employed part-time but are looking for full-time jobs) was at 14.5 percent in August. Certainly some of those people could fill the vacancies. For example, the people just laid off by Disney.

The government allows 85,000 H1-B visas each year, and businesses lobby for more. What's the advantage of an H1-B visa holder? Well, for one, they can't quit. Okay, that's not entirely true. They can quit, but if they quit (or are fired), they have to move back to their home country. 

What does this mean in practical terms? Well, if you're not available to other companies, you're easy to underpay and treat poorly. Federal law, of course, prohibits this, but that doesn't mean it doesn't happen.

For instance, in 2014 Southern Edison, in California, replaced IT workers who were earning over $100k per year with visa holders earning considerably less--between $65,000 and $75,000. Now, while these are respectable salaries, they clearly weren't market rate.

Pfizer, pharmaceuticals did an outsourcing to India with an H1-B visa twist. They brought in workers from India, made their current employees train them, and then moved the operation to India.

Pfizer could have done this without the H1-B period--but it would have been more difficult. Again, clearly an example of where there were sufficient people available to do the job. 

Republican Presidential Candidate, Carly Fiorina, who herself championed the H1-B Visa program ten years ago, now says the program is being abused.

She said, ”It’s become an issue, where people are using it as almost an industry. It’s become an issue where it appears that some companies that are abusing that program and asking American workers to train H1B visa replacements so they can lower wages. That’s a terrible thing. I would never defend that. And so, for those companies that are abusing that program, shame on them."

It's not just that H1-B visa holders get paid lower wages, they keep everyone's wages down. You hear a lot about the STEM (science, technology, engineering, and mathematics) shortage, but if there were a true shortage, you'd see STEM wages rising rapidly.

Rising wages is what happen when companies have to compete for a few workers. Instead, you don't see a rise in STEM wages. They are pretty flat.

Related Article: We Can Do It: Paving a Path for Women in STEM Fields

Companies don't, of course, have unlimited funds, and it's not easy to get a large amount of H1-B workers on board. Your fees and legal costs can run to thousands of dollars per employee, but if you can save $30,000 a year on salary, it's well worth it.

It may not be worth it for the employee, however. While a $65,000 salary for a Senior IT Analyst in the US is more than a similarly situated employee in Bangalore would earn the equivalent of $14,000 USD, according to Glassdoor.

You can see the appeal to moving to the US. However, that employee is bound to the employer who sponsored the visa. He can't move to a new company because he wants to and if the company decides to terminate an H1-B visa holder, he has to return home rather quickly.

Officially, you must go on your last day of work, although the consensus is you have ten days to get your stuff together and get out. It encourages H1-B visa workers to keep their heads down, not rock the boat, and not to go looking for new jobs. (A new company would have to take over the visa sponsorship, and that's difficult to find.)

You can, technically, apply for permanent residency status while on an H1-B visa, but you'll probably have to hire an employment lawyer, making it an expensive process.

While, overall, it makes sense to have a program to bring in workers where we have shortages, the abuse of the program is too easy and too common. Employees should be a bit worried if their company starts talking about a talent shortage. It may turn out that their current talent is let go in favor of H1-B visa holders.

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