back to article Foreign IT pros in USA get paid more than Americans - study

Foreign IT professionals working in the States on H-1B visas don't cause a reduction in pay for Americans, according to a new study - because they actually get paid more than US citizens with similar qualifications, not less. According to a survey of "more than 50,000 IT professionals in the United States" analysed by Sunil …

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Silver badge
Unhappy

Compensation?

I know work is a pain in the arse, but calling salary 'compensation' really makes it more painful...

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Anonymous Coward

Things must have changed...

I was on $20,000 less than my US counterparts when on a H-1B I would never have found out if I hadn't got friendly with the admin ladies.

..I didn't want to live in America anyway.

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FAIL

There are lies, damn lies and statitstics

I'd argue that the study is flawed.

As an IT professional in the States, I can say that from personal experience, that the study is bunk. How did they compare IT professionals to determine that they were paid a premium over 'similarly skilled' US workers?

I can think of several things as to how they made a 'paper' study and not actual skills and expertise.

I know many foreign IT workers who have 'exaggerated' their skills so while they look good on paper, they are pretty much worthless.

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Unhappy

its true

Well for the company I work for it certainly is. I have never seen so many high-end vehicles in our parking lot and pretty much all of them are being driven by contractors from India.

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Contractors with high-end cars

Mostly that's because there's very little for them otherwise to spend US wages on. There's no point in spending money on real estate, no point in buying lots of furniture or renting a large flat to keep it all in, saving for retirement to Bangalore requires very different levels of cash than saving to retire to St. Augustine, many H1-B contractors have no spouse, no dependents, and if they're sending money "back home" to anyone, it's supplemental support (not primary) of parents or siblings' families. A flashy car can easily be sold when it's time to move on. It is, after all, only one thing, and if it's particularly loved, shipping it to India is legal and not horribly expensive.

One sees the same buying habits in military personnel. And you can't tell me that PFC Smith is overpaid. She just doesn't have much else to spend money on.

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H1-B is flawed

The H1-B is an extremely flawed program and all of my anecdotal evidence says that they aren't paid equally to citizens and push down wages. I don't want guest workers in my country. The good ones learn a lot and take their knowledge back to their home countries. The bad ones serve almost as indentured servants (you can't easily quit as an H1-B) and raise resentments towards "foreigners".

We should get people with excellent skills who want to move the USA and make a permanent commitment to our country. Let's make reforms that give preference to those with skills we need and make it easier for them to get green cards and get on the path to citizenship. If a company wants to pay to help some of these skillful people come over, great. However, there is nothing stopping them from leaving the company that brought them over the day after they arrive, so they better make sure the pay and benefits are commensurate with market rates. I'm happy to compete with global talent on an equal basis - it makes us all better.

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Flame

You missed the BIGGEST Flaw

USA immigration system follows the Shariah law - the wife should sit in the house be dressed in a Burka and never show her face outside the door.

Neither H1B, nor P1 visas allow for spouses to work. The spouse should look after the kids, period. This automatically limits both H1B and P1 to people from countries with similarly talebanic laws and similarly talebanic understanding of where the wife's place in the house is. Not that L1 is any better. You have to show the immigration authorities 5 pictures of your wedding so they approve the quality of your wedding ceremony and artefacts which demonstrate that your spouse has truly and fully surrendered her individuality and all of her human rights. Spouses having own bank accounts? Own finances? Own liabilities? Screw that - you are not compliant to the puritanotalebanic understandings and marched straight through the door.

There is no way in hell I am going to even raise the prospect of going to the USA in my house. My wife is a skilled professional same as me. Telling her that she is to take a 5 year career break to be a Burka babe (H1B) or even 2 years (L1) is pretty much equivalent to asking for a divorce.

That is by the way the reason why the majority of workforce brought on H1B and L1 does not come from Europe, Japan or other parts of the world which are as advanced in engineering and science as USA. It comes from other places...

By the way USA is unique on this one. In most other places you at least get an automatic work permit and Australia even gives you extra points for taking another skilled worker in the forms of a spouse with you. But I guess they were not founded by talebans, sorry puritans.

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Boffin

Anecdotal Evidence

I've seen this twice now. Anecdotal evidence is no evidence at all. It is very nearly always flawed by basic human traits which I will leave you to research on your own.

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Welcome

H-1B workers are the same ..

There are good IT people and there are worthless gits some of each have H1-B and some are native born.

"There is no such thing as job security, only skill secruity"

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Thumb Down

Guess,

it is time to emigrate to India, find a job and then be contracted out back to Blighty.

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It begs the question

Why do companies even want to pay a premium for foreign workers if an equivalent American worker can be found for less money?

Surely the free market would cause the pay to equalise, if not having the H1-B applicant paid slightly less because of increased costs associated with sponsership of the H1-B applicant.

Who knows, maybe the premium has something to do with the the fact that the H1-B applicant can't afford to lose his job because it would mean deportation?

Either the study is wrong and they aren't comparing like for like skills, or it's proof that American companies favour H1-B applicants over American employees so much that they are willing to pay more for their employment, for whatever reason, which is just another way of saying it depresses the wages for American employees.

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Logical

"Either the study is wrong and they aren't comparing like for like skills, or it's proof that American companies favour H1-B applicants over American employees so much that they are willing to pay more for their employment, for whatever reason, which is just another way of saying it depresses the wages for American employees."

You are right, it's either one or the other.

I think there is one way H1Bs may be intrinsically superior to their domestic counterparts. They have the natural ability to understand each other without strong foreign accents getting in the way. This could be a significant factor for any company that has decided to go the offshoring route.

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Silver badge
Badgers

You're not a Yank, are ya?

Only an American could possibly understand the American Corporate mindset. For those of you from out-of-town, here's a quick primer:

Corporate CEO says, we need to cut costs, but we also need to get out these 3 projects by the day before yesterday. IT Director, Make it so!

IT Director says, Geez, How am I gonna do these two contradictory things at the same time??? HEY!! I know. We'll bring in a bunch of H1-Bs. CEO, That's what we'll do! IT Manager(s), Make it so!

IT Managers, grumbling to themselves because of the load of extra paperwork needed to get H1-Bs hired has added to their workload without giving them any extra time, do some poking around and discover: Hey! given all the overhead of getting someone from overseas, and depressed market domestically, we can hire some rather good junior or mid-level American workers to do this job, and dispense with all this PITA paperwork. The net cost to the company would be about the same or possibly even less. And I can get these guys in tomorrow! IT director, what do you say?

IT Director begins to sweat. No, I told the CEO that this is what we're gonna do, so therefore this is WHAT WE'RE GONNA DO! So, Make is so, and stop showing initiative. This is my JOB, dammit!

IT Managers, after more grumbling, take time to fill out all the paperwork, then spend more time trying to do interviews over the phone with a 12 hour lag to some Overseas Headhunter, then wait while all the visas and other red, white, and blue tape is dispensed with, and viola! New H1-Bs appears on the dock, ready for work. However the project is already 3 to 6 months late, and Mr. Overseas Headhunter, knowing that IT Manager is in a bind, has slowly but surely jacked up the price to help line his pockets (he's on commission, you see...).

So, to catch up, IT Manager has Hi-B-guy work all kinds of hours, for which H1-B guy is paid handsomely in overtime....

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don't

mistake end salary for the cost of employment, certainly in the UK, there is a lot that a company has to pay for an employee aside from their wage.

a company, generally doesn't have to pay this for contractors, and so can pay them more, but overall have a lower outlay. Coupled with the, we can fire you at any moment without a payout, mindset. It makes it an attractive prospect for them.

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bad logic

Just because H1B holders get paid more than locals (if that is indeed true) doesn't mean the locals wouldn't be paid more if the H1B people weren't in the employee pool.

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Alert

what ??????????????

You never saw that video from the programmers guild that showed a lawyer how to hire non americans.

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FAIL

Stupid report.

My mothers friend was from India.

He came here many years ago on H1B -VISA then after so many years living here he finally became an American citizen and got his job converted to full time.

Then his employer came to him and told him to train 5 other people from India and they would replce him and he would get very substantial bonus when they will let him go.

so he refused and he was fired.

This happend in Virginia and his situation has been in an article in the Washington Post.

Yep..... No matter how hard you succeed in american life Many companies here will still just want to chew you up and spit you out no matter your race. Once you become American you become worthless in the eyes of american employers.

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FAIL

Despite Lucas' impressive credentials...

his logic is severely faulty.

"The two business profs say that the cap on numbers of H-1B visas causes "supply shocks" in the US IT employment market, with lower, fully-utilised caps pushing up the premium paid by employers for foreign workers."

H-1B visas allowing foreign workers with the same abilities to work in the US at all is what causes the supply shock. Eliminate the H-1B visa and Americans will be able to work in their own country at wages previously given to foreigners. The H-1B visa is itself a distortion of the domestic labor market.

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Silver badge

@bad logic

True - same argument for unionizing/registered profession.

If there were only 1000 new programmers a year allowed to qualify in the US then salaries would rise above doctor's. Alternatively companies would just move their work overseas.

The dev team for our US/UK company is in Vancouver - because it's easier for both Brits and Americans to work in Canada, than it is for Brits->US or Americans->UK.

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Bronze badge

Don't know

The press often writes as if there were one computer industry, and as if the Ph.D. designing microprocessors at Cypress Semiconductor were doing the same work as the B.A. coding PHP. In this way the H-1B for the kid bashing out reports for an ERP consultant is somehow justified by the scarcity of high-end wizards for Intel or Google. Now I've met some clever enough kids doing the report bashing, but they did not inspire awe.

In fairness to the professors, I haven't read their report and can't say whether they've done this conflation.

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FAIL

Not sure I buy the results

As a H1B worker, I was moved over to the US on an ex-pat package primarily because I had top end skills, well above the average for someone of my experience and education. When you are going through the hassle of getting a worker a H1B, you usually do so for a reason, and quite often that reason is worth a bit more money. No surprise there really.

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Re. contractors splashing the cash

My experience has been that (some) short term contractors will happily sign up for massive mortgages or rent agreements, loans and leases, and enjoy the high life without ever paying off a penny, any more than they pay any form of taxes.

They know fine well - because their friends and relatives already do it - that it takes so long to repossess or lien anything in this scrounger's paradise that they'll be gone before the hammer falls. And if they wake up one day and their lease Merc is gone? Heck, just lease a bigger one! Change the spelling of your name a bit, swap addresses with your cousin: there are still plenty of lenders' agents out there on commission, and it's not THEIR money they're lending out.

Here endeth the rant, but not the scam.

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Pint

What goes around, comes around

Not actually worked in the US - but I have worked with US managment in the past. They chose to outsource the work, because they thought it would be cheaper (probably because they were told this by a consultant). About 150 really good people were canned.

HR spent a lot of time and money on producing comparisons on wages - all to no avail. Even when they were presented with the final wage bill for the year, they still assured everyone that they had saved money.

The year after, 3 of the managment team got promoted to the International board for their "oustanding work". 2 years later they were fired, taking the fall for a decision by the chairman. Oh how I laughed....

Schaden who?

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FAIL

how contrary

To what has been reported for years in the US. Past sturdies have all found that H1B was used to drive down wages and that H1B holders were for the most part almost like slaves to whoever brought them over. If foreign workers were anything but a way to undercut the normal US worker and decrease costs, you wouldn't see so much work moved offshore and companies like MS (who probably paid for this "study") so eager to increase the H1B ranks.

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Alert

H1-B Visas = Indentured labour

You are a second class citizen in the US until you can manage to scrape together $5000 to apply for a Green Card at some scumbag lawyer, and if you can get your employer to 'sponsor' you for the Green Card for 5 years - whatever the hell that means to the US authorities. To your employer, it means one thing for sure: you are stupid enough to hang around for a less-than-parity salary.

To complete the Green Card process, you need to stay indentured for at least 5 years to your gracious US employer who so kindly brought you over to God's great US of Aaaay, before you can live like a normal Westerner again - get a mortgage, vote, change jobs, leave the country on holiday, etc. A disagreement with the employer during that period and he can have you deported in 10 working days - it happened to a friend of mine while I was working there, who got around this one by quickly driving over the Canadian border and returning on a tourist entry that same evening.

Some of my H1-B colleagues, who claimed to have Ph.D's in high-fuluted IT subjects from interesting universities in warmer climes, had absolutely no command of the English language and did not know their DOS from their WINDOWS. At best, they were indentured paddy-field workers who were only there to make my income look relatively better.

The scales dropped from my eyes and I very quickly returned to ol' Blighty.

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Not true.

"Foreign IT professionals working in the States on H-1B visas don't cause a reduction in pay for Americans, according to a new study - because they actually get paid more than US citizens with similar qualifications, not less."

The first statement fragment is blatantly false. Supply, demand, and price are parts of the natural equilibrium described by the law of supply and demand. One cannot affect one of the variables and not the others. Increasing supply faster than demand, which is stagnant, means that overall pay has gone down compared to what pay would be with no increase in supply.

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Flame

Taking the best jobs!

See! This study just proves the guest workers are taking the best-paying jobs and leaving the flotsam to us poor Americans! Throw them all out!

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Anonymous Coward

Not all H-1B workers are US employees

Not all H-1B visas are issued to people who work for a US company(*). I needed one whilst working in the US for a UK based company. Did I get paid more than the locals? Yes, plus car allowance, furniture allowance, medical cover and a nominal tax rate. It wasn't all good news though, I had to pay my own rent and I got a letter from the draft board asking in the event of a conflict which service would I like to join.

(*) I'm not 100% sure of this as I was paid from the New York offices of this company so technically I suppose they could have been considered my employer. However maybe this sort of situation should be taken into account when looking for reasons for pay differences.

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Troll

No more

Visas account for more than 1.5 mm jobs, outsourcing will account for more than 5 mm jobs.

The US cannot afford any more visa workers or unrestrained outsourcing.

If you hire abroad you should pay a tariff on the value of that labor.

In real unemployment is over 5% then no visas, we don't need you.

Then the US would be like most of the rest of the world.

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Nir
Boffin

Well, no fucking shit?

This is a REQUIREMENT to get an H1B visa; you HAVE to pay them more than the prevailing wage - this actually makes sense as it shows that the employer has a preference for that specific employee and is willing to pay for it. It's also designed to not have cases in which Indian IT people are just hired for half the prevailing wage and imported to San Jose.

See : http://www.dol.gov/compliance/guide/h1b.htm

"The INA sets forth certain prerequisites for employers wishing to employ H-1B, H-1B1, and E-3 nonimmigrant workers. To obtain H-1B or H-1B1 status approval, the employer must first file a Labor Condition Application (LCA), Form ETA 9035 or Form ETA 9035E, with the Department of Labor. The employer must state that it will:

* Pay the nonimmigrant workers at least the local prevailing wage or the employer's actual wage, whichever is higher; pay for non-productive time in certain circumstances; and offer benefits on the same basis as for U.S. workers; "

See also: http://www.workpermit.com/us/investor_h-1b.htm

Any US employer can sponsor an H1B petition, provided it has an IRS Tax Number, also known as an IRS Number or Tax ID Number. This number is needed for obtaining approval of the Labor Condition Application (LCA), which is an essential preliminary to the H1B petition itself. However, employers should take note that sponsoring an H1B petition involves them making a number of undertakings, enforceable by heavy civil and criminal penalties: These undertakings are:-

* To pay the H1B worker at least the higher of the wage paid to similar workers in the same company or the "prevailing wage" (usually determined by the relevant State Employment Services Agency) for the occupation in the area the worker will be employed;

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Anonymous Coward

Sounds reasonable to me

My experience working in the US (on an L1) was that the general professional and educational standard of US technical employees was low. There were good engineers but the average standard was poor, work rate and attitude was poor.

The foreign employees were all hand picked to transfer to the US so there was chasm between the general level of US and foreign workers in the same job.

Based on this I am not suprised that H1-B holders are paid more because they are on average better.

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FAIL

LOL!

As an American citizen, I could say the same for the Indians and Pakistanis I worked with for years. There were a handful of good engineers, but the rest were as you said "average standard was poor, work rate and attitude was poor."

As for the study itself, it covers the period from 2000 to 2005, so already the study is flawed.

It's 2010, and the landscape is entirely different then 5 years ago.

Arguing for more H1-B visas??? With 10% unemployment and 20% underemployment?

Anyone out there in favor of outsourcing academia lately? The US has outsourced everything else, so perhaps it is time for them to be put out of work as well.

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WTF?

HUH?

"The two profs contend that perceived damage to Americans' career and earnings prospects from the numbers of foreigners allowed so far cannot be real. "

Really? Because I know a lot of people who's careers are complete shit now as they haven't found IT work in about 2 years. But let me get this straight, they're (HB1 workers) getting paid the same as US citizens but are taking US citizen's jobs? HUH? Does that make sense to anyone out there?

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Gates Horns

Does this mean....

that the next time that Bill Gates starts popping off about how the U.S. needs to expand the H1B program, we should tell him "No, we won't let you break your fiduciary responsibility to MS shareholder by paying more for IT workers than the prevailing U.S. wage!"

If that's the case, then let me be the first to endorse the findings of this study.

My own experience (including being a manager hiring new employees) with the H1B program is that it does encourge modern-day serfdom. As I told one of my immigrant employees years ago "My theory is that the U.S. immigration system is some kind of test of loyalty. If you are willing to put up with what the INS (now ICE--Immigration and Customs Enforcement) puts you through, you must be really devoted to being an American."

Maintain the immigration quotas, decouple getting all guest and permanent resident visas from having an employer sponsor you, give immigrating spouses work visas, put in reasonable public assistance limits and skills assessments/points systems so people are not moving to the U.S. just to collect benefits--problem solved!!!

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Stop

future American job opportunities...

Farmer, bartender and prostitute.

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Indian Workers

The last two companies I worked for had a disproportionate number of Indian foreign workers.

I do not believe those companies couldn't find the resource in the UK.

Interestingly, I'm not suggesting this is representative, but one Indian colleague was on a very high salary, compared to a UK employee doing the same job (me!), and others, and even received a seperate salary back in India too!

He wasn't an employee of our company, he worked for a very known and large Indian outsourcing supplier.

I really don't think we need these people and it must be responsible for holding UK salaries of IT professionals down.

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It's the way the system works

In order for any employer in the US to be able to hire someone under H1B, they have to make a formal declaration that they have tried but been unable to find an American citizen to fill the post.

The reasons for not being able to find someone may vary, obviously. The employer may not be able to find any US citizen with the requisite set of niche skills, or the rate they're willing or able to pay is less than any US citizen is willing or able to accept.

Anecdotally, most H1Bs with whom I've worked in the last 15 years (I started life with a K1 visa) have been exploited to hell and back. Either they end up with a pittance because there are multiple middlemen taking a cut (definitely true of Indian H1Bs) or just as they are about to complete their sponsorship period, their employer finds a pretext to dump them and they have to return home (true for at least one senior IT specialist from the UK with whom I worked).

If H1B holders are being paid more - or less - than their citizen counterparts, then IMHO it's down to a market force driven by a demand that is only being satisfied by H1Bs because there are no suitable candidates otherwise. Take away the H1Bs and IMHO you'll drive more traffic to off-shoring.

The more off-shoring that occurs, the smaller the employment pool of suitably qualified or experienced US citizens will become until it evaporates, at which point there will be no going back - the US will be beholden to overseas service providers for the vast majority of businesses.

Companies' structures by then will probably be almost unrecognizable - hardly any staff based on mainland USA - and probably unable to sell much in their home market because there will be few consumers able to afford the product or service. It's not a bright future for all but a select few (who will probably be almost exclusively senior execs).

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