H-1B – Designed for Cheap Labor

I recently walked through the H-1B statutes to show how Congress has affirmatively designed the H-1B visas to make it legal to replace Americans.

Let me now do the same to show how Congress has made it legal to pay H-1B workers low wages, the second half of Congress’s design of the H-1B program.

As shown previously, the H-1B statutes are overly long and deliberately deceptive. When you read them, you have to read very carefully. The first step in getting an H-1B visa is to file a Labor Condition Application (LCA) with the Department of Labor. In the LCA the employer certifies – and that is the operative verb – the prevailing wage, the wage paid to the employee, and that the employer is conforming other labor-related requirements.

If you go to the top of the section on LCAs at 8 U.S.C. § 1182(n)(1) you find regarding H-1B wages.

(1) No alien may be admitted or provided status as an H–1B nonimmigrant in an occupational classification unless the employer has filed with the Secretary of Labor an application stating the following:

(A) The employer—

(i) is offering and will offer during the period of authorized employment to aliens admitted or provided status as an H–1B nonimmigrant wages that are at least—

(I) the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question, or

(II) the prevailing wage level for the occupational classification in the area of employment, whichever is greater, based on the best information available as of the time of filing the application, 

A cursory reading of this provision suggests that H-1B workers must be paid the higher of the prevailing wage in the occupation or the wage paid to similar workers. The H-1B minimum wage is then the prevailing wage for the occupation and location. Stock analysts treat low H-1B wages matter-of-factly: “Indian IT players have had an offsite-onsite employee ratio of 80:20. Employees with H-1B visas have been at the core of their strategy, given that they cost nearly 20% cheaper than US-based employees”.

Yet every study with an iota of integrity that has looked at the H-1B wage data has found that H-1B wages are overall much less than the actual prevailing wage for the occupation and location.

The key phrase overlooked is “unless the employer has filed with the Secretary of Labor an application stating…”. The statute does not say H-1B workers may not be admitted unless they are paid at least the prevailing wage. The statute says H-1Bs may not be admitted unless the employer says they will be paid the prevailing wage. The wages requirement relies on a “trust me” system. The House report on the Immigration Act of 1990 that created H-1B rationalized this system:

The Department of Labor’s role is transformed from that of a procesing [sic] instrument to a complaint-driven investigative and adjudicative agency, one which can serve as a labor resource for employers and workers alike. [H.R. Rep. 101-723, p. 68.]

Adding to the absurdity, the Department of Labor has no link between a worker and a Labor Condition Application. In some cases, the LCA states whether the H-1B nonimmigrant has a graduate degree. Yet there is no worker associated with the LCA to verify this.

Yet that is not a problem because Congress added this provision near the end of the subsection:

The Secretary of Labor shall review such an application only for completeness and obvious inaccuracies. Unless the Secretary finds that the application is incomplete or obviously inaccurate, the Secretary shall provide the certification described in section 1101(a)(15)(H)(i)(b) of this title within 7 days of the date of the filing of the application.

This provision has been interpreted as meaning the Department of Labor can only check that the LCA form has been filled out correctly. Consequently, nearly all LCAs are approved.

Moving down to 8 U.S.C. § 1182(n)(2)(C)(ii), one finds:

(ii) If the Secretary finds, after notice and opportunity for a hearing, a willful failure to meet a condition of paragraph (1), a willful misrepresentation of material fact in an application, or a violation of clause (iv)—

(I) the Secretary shall notify the Attorney General of such finding and may, in addition, impose such other administrative remedies (including civil monetary penalties in an amount not to exceed $5,000 per violation) as the Secretary determines to be appropriate; and

(II) the Attorney General shall not approve petitions filed with respect to that employer under section 1154 or 1184(c) of this title during a period of at least 2 years for aliens to be employed by the employer.

So an alien can be admitted on an H-1B visas with a totally bogus LCA but the employer can be fined for filing a bogus LCA. If that be the case and nearly all LCAs have bogus prevailing wage claims, why are so few companies sanctioned?

You have to catch them first.

The Department of Labor maintains prevailing wage data. A simple computer program could scan every LCA filed within a year, compare the claimed prevailing wage to the actual prevailing wage, and flag those LCAs that have low values.

But if you read down to 8 U.S.C. § 1182(n)(2)(G)(v) you find that Congress prohibits the Department of Labor from reviewing the content of LCAs.

The Department of Labor plays no meaningful role in the H-1B approval process. (See, for instance, p. 25 in this DOL IG report.) It is just a dancer in Congress’s H-1B Kabuki theater production whose role is to give the false appearance that there are protections for American workers in the H-1B program.

After the LCA is rubber-stamped by the Department of Labor, the employer files a visa petition with USCIS where that agency ostensibly verifies the information submitted by the employer. At that point USCIS has the name of the worker and the actual wage to be paid to go with the LCA. You might think that USCIS would notice an extremely low wage and prevailing wage, alert the Department of Labor, which would then investigate. But you’d be wrong – 8 U.S.C. § 1182(n)(2)(G)(v) also prohibits that.

When you read the H-1B statutes in detail you find that Congress went to a lot of trouble to design H-1B to allow employers to pay foreign workers extremely low wages. The low wages for H-1B workers are not an accident; they reflect Congress’s intent that employers should be able use H-1B to import low-wage workers – and that goes hand-in-with Congress’s intent that employers should be able to use H-1B to replace American workers.