Nearshore Americas

Prestigious US Tech Firms are Underpaying H1B Visa Holders

A Washington-based think tank has leveled serious allegations against top tier US technology companies, charging that they are systematically underpaying H1B visa holders.

The Economic Policy Institute (EPI), makes the accusations against Google, Microsoft, Apple, Uber, Amazon, Qualcomm, IBM, and even retailing chain Walmart. In its analysis of data obtained from various government agencies – including the Department of Labor (DOL) and the US Citizenship and Immigration Services (USCIS) – the think tank finds fault in assigning wage levels when getting approval for visas.

As a result, today, some US companies are saving up to US$41,000 annually per H1B worker. “Employers hiring at Level 1 receive a discount of 36%, or $41,746, versus paying the median wage […] and those hiring at Level 2 receive a discount of 18%, or $20,863,” says the report.

  • Amazon and Microsoft each had three-fourths or more of their H-1B positions assigned as Level 1 or Level 2.
  • Walmart and Uber had roughly half of their H-1B positions assigned as Level 1 or Level 2.
  • IBM had three-fifths of its H-1B positions assigned as Level 1 or Level 2.
  • Qualcomm and Salesforce had two-fifths of their H-1B positions assigned as Level 1 or Level 2.
  • Google had over one-half assigned as Level 2.
  • Apple had one-third of its H-1B positions assigned as Level 2.

Interestingly, the think tank admits that paying below the median wage does not breach the H1B visa rules, yet goes on to argue that the Labor Department should have used its power to change the system.

In fiscal 2019, nearly 60% of H1B positions certified by DOL had been assigned wage levels well below the local median wage, the added.

The analysis adds a new twist to the seemingly never-ending outcry over the visa program, which is designed to allow US businesses, particularly Silicon Valley-based technology developers and service providers, to source high-skilled talent from around the globe.

As many as 53,000 American companies are using the visa program, meaning immigrant workers have been successful in easing the skill gap in some ways. As of December 2019, there were more than 500,000 foreigners with an H1B visa in the United States.

Corporate Giants Underpaying H1B Visa Holders

The Institute, which has been known for pro-union viewpoints, appears to target large American firms employing immigrant workers.

In 2019, as many as 53,377 US employers got approval for hiring professionals on an H1B visa, but a vast majority of them have fewer foreign workers on their payroll.

But around 30 large firms won a lion share of these visas, accounting for more than a quarter, or one in four, of all H1B petitions, approved last year.

Source: Economic Policy Institute (EPI)

Most of these tech giants, according to the report, do not hire H1B workers directly; instead, they use an outsourcing business model to capitalize on their skills.

“They rely on the H1B program to build and expand their business, which sometimes includes sending US jobs overseas,” the think tank alleged in a press release.

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“In some cases, the work is later moved abroad to the H1B worker’s country of origin once the worker has become proficient enough in the job to perform it remotely from abroad.”

H1B visas have been the subject of controversy in several times during the current US administration. Recently, it was clarified that President Donald Trump’s executive order on immigration does not suspend H1B visa processing, as it was though. However, work visa-holders may have to assure that they are not displacing American workers.

The executive order would also deny entry for people seeking most types of work visas for at least 90 days. Academics and business analysts, like professors Erik Brynjolfsson and Andrew McAfee, from the MIT, warned that barriers to foreign talent might hinder America’s capabilities in areas like AI and machine learning.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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