New Report Indicates National Visa Programs are Being Misused

Skilled work visas are actually a source for cheap foreign labor

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A. Sue Weisler

Ron Hira

Despite claims from employers that they use skilled guest worker visa programs to attract talented foreign workers and help them remain permanently in the United States, new evidence shows the visa programs to be mainly a means to help outsource U.S. jobs or recruit cheap temporary labor.

A new Economic Policy Institute report authored by Ron Hira, associate professor of public policy at Rochester Institute of Technology, examines the 20 U.S. employers receiving the most H-1B skilled worker visas and estimates that, on average, these employers apply for permanent residence status on behalf of just 13 percent of their H-1B workers.

The report, “Path to Skilled Permanent Immigrants or Cheap Temporary Labor,” also examines the 20 employers receiving the most L-1 worker visas and estimates that, on average, they apply for permanent residency on behalf of just 7 percent of these workers. (In both visa programs, it is generally the sponsoring employer—not the worker—who is permitted to file for permanent residency on behalf of the worker.)

“Proponents of expanding these visa programs argue that it’s in our national interest to attract the best and brightest workers from around the world and to keep them here permanently,” says Hira. “But these employers are saying one thing and doing quite another. They are spinning these workers through a revolving door in order to drive down wages and help send more jobs overseas.”

For example, according to U.S. Department of Labor records, Tata Consultancy Services, ranking 4th in H-1B use in 2008, applied for permanent residence for none of the workers it brought to the U.S. on H-1B visas. IBM India, ranking 10th in H-1B use and 14th in L-1 use in 2008, applied for permanent residence for none of its H-1B or L-1 workers.

Hira argues that in some cases, foreign workers are brought to the United States for job training by American workers. After the training, foreign workers return home and do the same work for less pay, while the American workers may be laid off. In other cases, foreign workers are brought to the country temporarily to coordinate operations between the U.S. and workers in their home countries often because they can be hired to do the job more cheaply.

“It is quite likely that a sizeable share, perhaps even a majority of L-1 visas, are being used to send work previously performed in America to low cost countries,” he adds.

The report found different uses of the visa programs depending on employers’ business models. Businesses with a significant offshore presence in low-cost countries and those with a more modest offshore presence rely on the visa programs primarily for temporary labor, while those with a “traditional” business model (with most operations still in the U.S.) are more likely to sponsor temporary workers for permanent U.S. residence.

The report calls for reforms to the visa programs to ensure that they benefit U.S. and foreign workers and the U.S. economy overall.

“When skilled foreign workers are needed we should rely primarily on permanent immigration to supply them,” Hira notes.

Background on the H-1B and L-1 Programs: The H-1B is a three year, non-immigrant visa created under the Immigration and Nationality Act, which can be renewed once for an additional three years. The visa provides employers with the opportunity to temporarily employ foreign workers who possess a bachelor’s degree. Employers must sponsor applications for permanent residence for their workers. The L-1 visa is a non-immigrant visa that allows for intra-company transfers within multinational corporations. Unlike the H-1B, L-1 workers must only possess specialized knowledge regarding the general company operations; no higher educational degree is necessary.