The H-1B program uses cheap foreign workers to replace American workers, and so it dramatically reduces payrolls in legislators’ districts, according to a comparison of two federal databases.
The reduced payroll does not go to the local restaurants, landlords, or various members of the local Chambers of Commerce. The funds do not get to local non-profits, county governments, or city halls. Instead, the diverted payroll is transferred from the politicians’ districts to the coastal investors who hire the cheap H-1Bs in place of Americans, according to U.S. and Indian financial reports.
The diverted payroll is important because the Senate is expected to vote September 19 on a bill — S.386 — that would reward Indian college-graduates if they agree to take jobs from American graduates, via the uncapped “Optional Practical Training” and H-1B visa programs.
Nationwide, roughly 800,000 foreign college-graduates — including about 600,000 Indians — are using the H-1B program to work jobs that were held by American college graduates. H-1Bs are cheap because many take the jobs in exchange for their employers’ promise to nominate them for a hugely valuable, taxpayer-funded green card.
For example, Senate Majority Leader Sen. Mitch McConnell’s state of Kentucky would lose at least $48 million per year if the 2,100 H-1B workers requested by companies in 2017 were paid the wages promised by the employers’ H-1B application documents.
The promised H-1B wage is recorded in the Labor Condition Application provided by H-1B importers to the Department of Labor. The Americans’ higher wages are recorded by the Bureau of Labor Statistics.
Bob Heath, a software expert in Florida, compared the two databases to reveal the payroll losses in this article. He collected the data while building his H1BFacts.com site, which shows the number of H-1Bs requested by employers in every political district around the nation. Much of his political-district data is also at SAITJ.org.
Kentucky’s estimated payroll loss of $48 million is the gap between the promised H-1B payrolls and the higher payrolls that would otherwise be paid to 2,100 median-skilled American graduates.
But if Kentucky’s H-1Bs are used to replace higher skilled — and better paid — American graduates, then Kentucky’s annual payroll loss from the 2017 request for H-1Bs would jump to $166 million.
For example, each H-1B “computer systems analyst” in Kentucky is promised a wage of just $60,528, on average, according to the LCA data. But American “computer system analysts” in Kentucky get paid around $70,700, according to the BLS used by Heath. So the population of 468 H-1B computer system analysts would reduce payroll in the state by roughly $550,000 per year.
However, Kentucky employers did not get all 468 H-1B computer systems analysts they requested.
Nationwide, companies asked for 200,000 H-1Bs, but the federal government only provides 85,000 new H-1Bs for companies each year. So the requested H-1Bs were allocated by lottery. The odds suggested that Kentucky only got 40 percent of the request for 2,100 H-Bs, or 840 new H-1Bs during 2017.
Kentucky’s lost payroll for the 2,100 H-1Bs in 2017 ranges from $16 million to $67 million.
But each visa worker is allowed to stay for at least six years.
So any calculation of Kentucky’s annual losses must include the cumulative losses from six year’s H-1B hiring. That calculation suggests that Kentucky loses anywhere from $100 million per year to $400 million per year because of its population of roughly 6,000 H-1Bs.
The chief sponsor of the legislation is Utah GOP Sen. Mike Lee. In 2017, employers in Salt Lake City asked for 4,500 H-1Bs. If 40 percent of the requests were approved, the 2017 H-1B inflow would reduce payroll in the city by at least $27 million per year, or $82 million per year if the H-1Bs are used to replace highly skilled workers in the city.
But six years’ of H-1B losses combine to spike Salt Lake City’s annual payroll loses to at least $160 million, or $500 million if jobs held by highly skilled workers are outsourced to the imported H-1Bs.
Lee’s bill is getting a vote on Thursday because Kentucky Sen. Rand Paul withdrew his objections.
Sen. Josh Hawley is a rising populist Senator from Missouri.
His state’s employers asked for 8,283 H-1B workers in 2017. That one-year of the population will cut annual payroll in the state by roughly $40 million each year or $130 million if the imported H-1B replace highly skilled Americans. When the combined loss of the resident population of H-1Bs is calculated, the H-1Bs cost the state roughly $240 million in lost payroll each year if the H-1Bs replace median Americans, or $800 million if the H-1Bs replace skilled Americans.
When combined, the three states of Kentucky, Utah, and Missouri lose from $500 million up to $1.7 billion in payroll each year.
Nationwide, if each H-1B is paid just $5,000 less than the American they replace, the program chops American payroll by $4 billion.
The Senate vote on the S.386 outsourcing bill will be held September 19 under “unanimous consent” rules which allow any single Senator – Democrat or Republic to block the bill.
Immigration Voice, a well-funded group that is working with investors to pass the S.386 the bill, thanked its supporters in the Senate:
On behalf of a grateful community, we would like to relay our gratitude to Senator Lee and Senator Harris, along with Senator Kevin Cramer, Senator Jerry Moran, Senator Roy Blunt, Senator Chuck Grassley, Senator Tom Cotton U.S. Senator Susan Collins, Senator Tom Carper, Senator Ron Wyden, Senator Maria Cantwell, Senator Cory Gardner, Senator Tammy Baldwin, Senator Jeff Merkley, Senator Michael Bennet, Senator Kyrsten Sinema, Senator Rob Portman, Senator Roger Wicker, Senator James Lankford, Senator Tammy Duckworth, Senator Mike Crapo, U.S. Senator Martha McSally, Senator Mike Braun, Senator John Hoeven, Amy Klobuchar, U.S. Senator Chris Coons, Senator Jim Risch, Senator Doug Jones, Senator Mark Warner, Senator Todd Young, Senator Mitt Romney, John Cornyn, Senator Joni Ernst, Lisa Murkowski, U.S. Senator Tina Smith, and Senator Catherine Cortez Masto.
Where does the diverted payroll go?
It goes to the investors in the companies which outsource the Americans’ jobs to cheaper H-1B workers, and it goes to the investors in companies which provide the H-1B workers.
For example, Walmart is boosting its stock value by outsourcing 569 finance and accounting jobs in North Carolina to cheaper H-1B workers from India. If the company saves $10,000 per employee, Walmart will save $5.7 million per year.
On Wall Street, Walmart’s price to earnings rate is 25 to one, so the $5.7 million in payroll savings will boost its stockholders’ value by $142 million.
Walmart picked an American company, Genpact, to supply the Indian workers. The company is a spin-off of General Electric, and it prospers by providing Indian H-1B workers to many companies in the United States. For example, the company asked for 271 H-1Bs in 2018, 410 H-1Bs in 2017, and 307 H-1Bs in 2016.
Genpact’s H-1Bs work on the U.S. side of the vast and growing U.S.-India Outsourcing Economy, now worth roughly $78 billion per year. Part of their job is to funnel additional work back into India. For example, Genpact may only need to use 100 H-1Bs in North Carolina to help steer the work of the 569 fired American finance experts back to large teams of low-wage Indian graduates in India.
The investors are mostly based on the coasts, so their wealth is helping to spike wages and real-estate values in New York and California — while the reduced payroll in Kentucky, Utah, Missouri reduces business and real-estate values in the heartland states.
Heath says his data likely understates the losses.
For example, many H-1B workers report they are paid less than the promised wages in the LCA document provided to the Department of Labor.
Many H-1Bs stay longer than six years. Federal data shows that roughly 350,000 H-1Bs are staying past their six-year expiration because their employers nominated them for green cards.
Starting in 2015, President Barack Obama provided 100,000 work-permits to the wives of long–term H-1B workers. ThisH4EAD work permits are not part of the calculation, said Heath, even though “it is just a way to get two H-1B visas for the price of one.”
Also, Heath says his calculations do not include the foreign workers with “Optional Practical Training” work permits. In 2017, more than 500,000 foreign students and graduates — including 89,000 with technology degrees — got OPT work permits. These foreigners want to work in the United States, and many hope to graduate into the H-1B program, so their employers often pay them sweatshop wages.
Heath’s database also excludes workers who are imported by the L-1, TN, and J-1 visa programs.
Many of the H-1B workers also try to send money home to their relatives instead of spending it in the United States.
Some of the H-1B workers stay in the United States once they lose their visas, as illegal migrants, so helping to reduce Americans’ salaries.
Backers of the H-1B program offer a different image.
The advocates argue that the H-1B program provides companies with highly skilled workers when they cannot find skilled Americans.
But that claim is nearly always untrue, Heath said, because the LCA data shows that the vast majority of H-1B workers are paid at the lowest of four skill levels allowed by federal agencies — equivalent to the skill level of a fresh U.S. college graduate.
Each your roughly 800,000 Americans graduate from college with skilled degrees in healthcare, business, architecture, engineering, match, software or science.
“Our economy is not big enough for the all the cheap labor coming out of India,” said Heath.