How the H1-B Program Actively Discourages Companies from Investing in US Worker Training and Development

ByPrimary Researcher

Executive Summary

  • With the large numbers of works available through the H1-B program, US companies have less incentive to train US workers.
  • This article explains why this is the case.

Introduction

The investment by US companies into training their employees has dramatically declined in the past few decades. Increasingly, companies expect all of the skills they want to be resident within a new employee, with little to no training. And with the H1-B program, they have even less of an incentive to provide any training in the IT area.

An Incentive Against US Worker Development

A study published by Daniel Costa and Ron Hira in the Economic Policy Institute titled H-1B visas and prevailing wage levels found the following.

..employers could develop the workers they need to fill these positions through training, since the positions are routine and require only modest skill levels. Instead, employers have all but disinvested in workforce training, in part because of the disincentives created by ready access to lower-paid H-1B workers. (emphasis added)

By setting two of the H-1B prevailing wage levels so low relative to the median and not requiring that firms pay at least market wages to H-1B workers, DOL incentivizes firms to earn extraordinary profits by legally hiring much-lower-paid H-1B workers instead of workers earning the local median wage. The fact that firms earn those profits through poorly crafted wage rules and by underpaying H-1B workers—instead of by offering a better or more innovative product or service—means DOL has in effect made wage arbitrage a feature of the H-1B program. And as the wage-level data in this report show, nearly all H-1B employers are exploiting these H-1B wage rules in order to pay below-median wages. The top 30 employers capture a large and disproportionate share of the visas. These firms are not using the H-1B program sparingly to hire truly specialized workers and they are not using it only when U.S. workers are unavailable. Some are using the program as a substitute for workforce development.

This topic is never discussed in the IT media. Furthermore, the H1-B program has been abused for roughly 30 years at this point. Why does the US need to bring over an extremely large number of foreign workers continually?

Notice the following quotation.

In fiscal 2018, 70% of approved H-1B petitions were for workers 30 years of age and older—a significant indicator that those workers already possess at least six to eight years of experience.

Why aren’t US citizens sufficiently trained at this stage in their careers through their experience in the workforce?

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Conclusion

Companies make claims about needing the H1-B program for skills. However, as we cover in the article Is There Actually an IT Skills Shortage That Necessitates H1-B Visas?, and the article How the Pay Level of H1-B Visa Workers Contradicts Industry’s High Skills Arguments, this claim can be proven to be untrue. Increasingly, companies do not expect to have to train their workers but expect workers to have any skill that the company needs at any time, with no investment in the worker by the company. This is a vast departure from the employer-worker relationship.

References

*https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/