Propaganda Vs Reality on H1B Visas

One of the most regrettable remarks President George W. Bush ever uttered was the one about there being jobs that Americans just won’t do. It’s become a canard, a liberal talking point, and the gravamen by which technological firms now perpetrate a certain degree of fraud on the market place. By substituting H1B Visa Holders for native born American workers, technological forms can conflate the skill of their workforce while paying them less in salary than they would a native citizen.

These firms often engage in work that is hard to measure and even more difficult to estimate the cost and schedule ramifications for prior to the completion of the job. A major source of information to someone hoping to accurately price involves the experience and skill level of the technical work force hired to perform the work. The better the workforce looks on paper, the more a technological firm can charge for their services. Often, H1B visa holders look excellent on paper; while commanding a lower salary and possessing diminished job skills compared to native born programmers, analysts and mathematicians.

President Bush’s inopportune remarks become part and parcel of the propaganda that contractors put out to justify this continued practice. Here The Washington Post serves as their Mouth of Sauron.

With so many U.S.-born college graduates and technical workers looking for jobs, critics ask, why does the number of H-1B visa applications keep growing?

"It's because we have absolutely no choice," said Higgs, chief executive of Development Design Group, located in a sleek, remodeled brewery. "Some people think this is just about bringing in cheap labor, but it's not. We offer the same salaries and perks whether you're from Baltimore or Bangladesh . . . but we simply cannot find enough qualified U.S.-born staff to fuel our growth."

John Miano, of the Center for Immigration Studies, studied what occurred when actual raters evaluated the skill levels of high-technology workers brought to the United States on H1B visas. The results will never match what these technological firms advertise their skill sets to be. What Miano found out follows below.

Very few H-1B workers are "highly-skilled." Employers who used the Department of Labor’s skill-based prevailing wage system classified most workers (56 percent) as being at the lowest skill level (Level I) as did most State Employment Security Agency (SESA) wage determinations (57 percent). This suggests that most H-1B computer workers are low-skilled workers who make no special contribution to the American economy, or that employers are deliberately understating workers’ skills in order to justify paying them lower salaries.

However, when these contractors estimate how much their work will cost the Department of Defense, we are not told these things. Source Selection Evaluation Boards generally don’t ask what proportion of a contractor’s work force is here on an H1B. This sort of chicanery allows them to bid one level of technological maturity to the government while seeking contracts, while fielding and paying a much cheaper and less skilled workforce. Miano’s analysis continues.

According to the applications filed in 2005, it appears that employers may be significantly understating what U.S. computer workers are earning in order to justify paying low wages to H-1B guest workers in those occupations. In FY 2005, H-1B employer prevailing wage claims averaged $16,000 below the median wage for U.S. computer workers in the same location and occupation.

This allows contractors to establish a differential between the labor charges estimated by the government and programmed into the Program Objective Memorandums of defense activities and what the contractor is forced to pay out. This extra cash can serve as a management reserve to prevent the contractor from suffering after they’ve stiffed the government. It can also be used to justify claims that the contractor has superlative labor efficiency, and should be paid a bonus.

This works because government regulatory agencies that estimate how much these projects should cost work against a steep information asymmetry. Estimators are infrequently allowed in the room with contract proposals and are never allowed to take notes or activate recording devices. The estimators use estimates of analogous systems or parametric modeling to make up this information stagger.

Parametric models such as SEER-SEM and Price-H use parameters describing the skill of personnel involved to determine how long a major coding project should require. When these models are fed the same bogus parameters that the companies put on their proposals, they return bogus data, which biases the cost estimate to overstate actual labor costs per employee and understate the time required to complete the work.

The end results of this charade are that people that work in technological fields are undercompensated for their abilities. Employers that hire these firms receive a less satisfactory level of service than they initially anticipated after reading the firms’ initial bids. People that estimate and track the costs of this sort of technical effort are less able to properly estimate and budget for the projects successfully.

This means that a greater number of these major automation efforts fail because the resourcing agencies did not have a proper estimate of the time and money required to do the job when the estimates were made and the budgets built. H1B Visa fraud has lowered the ability of American firms and The United States government to adequately employ and utilize technology in an optimal way.

N.B. John Miano’s CIS numerical data can be found here.