WOOF! Newsletter

May 31, 2016

H-1B Visa Fraud, Abuse and Government Corruption: Highlights from "Sold Out"

"Sold Out" lays bare the true extent of government-corporate collusion on H-1B visa fraud. It goes further than even we knew. American IT workers face a growing threat to their livelihoods and futures. Read the details for yourself, right here in WOOF!.

Sold Out Names the Bureaucrats and Billionaire Corporate Insiders Damaging the U.S. IT Workforce with Corrupt Visa Programs and Foreign Labor

For the past two years, we’ve discussed the impact of IT offshoring in our “Reshoring News” segment. Still, we didn’t know how bad it was until we read Sold Out: How High-Tech Billionaires and Bipartisan Beltway Crapweasels Are Screwing America’s Best and Brightest Workers, by Michelle Malkin and John Miano.

The book is an exhaustive 432-page treatise (95 of which are sources!) on the damage done to America’s IT workforce by corrupt bureaucrats, Big Tech billionaires, and a flood of exploited (and often under-skilled) foreign workers.

This month’s “WOOF!” presents some of the highlights from Sold Out.

What Sold Out Talks About

In a nutshell, Sold Out exposes the massive fraud going on in the IT offshoring industry.

Big Tech and government officials have perpetuated the narrative that importing IT workers from overseas on H-1B (and other worker) visas is the only way to get enough tech talent to meet corporate demand.  They’ve claimed for decades that we have a STEM (science/technology/engineering/math) worker crisis in the U.S. [page 38]

In reality, the “STEM crisis” dates back to World War II and gets regularly re-manufactured by self-interested parties.  Most recently in 2015, the Senate heard pro-H-1B arguments from groups including:  American Immigration Lawyers Association, the Council for Global Immigration, FWD.US (Mark Zuckerberg’s lobbying brainchild), “open borders” proponents, TechNet (Silicon Valley lobbying group), and oddly, the U.S. Chamber of Commerce.  [page 38-39] 

Sold Out debunks the STEM shortage with three pages of statistics.  For example:

  • "only one-third of native-born Americans with an undergraduate STEM degree holding a job actually work in a STEM occupation.”  [page 42]
  • As of winter 2015, half a million American tech professionals work in non-technology occupations.  [page 42] 
  • Each year there are approximately 120,000 new U.S. IT jobs requiring a college degree to fill.  [page 294]
  • The American STEM workforce suffers from high unemployment, while 40% of male college grads and 29% of female college grads earn STEM degrees each year.

Those pushing the “STEM Crisis” are pushing myths.  Sold Out disproves the 6 biggest myths.  Our 3 favorites are:

Myth #1:  Employers have to show they cannot find qualified American workers before hiring foreign guest workers on H-1B visas.  This applies only to “H-1B dependent” employers (meaning 15% or more workers being foreign nationals), like Facebook.  How do they satisfy this requirement?  They check a box on a form.  No proof of any kind is required.  [page 50]

Myth #2:  U.S. companies cannot function without an unlimited injection of the most “highly skilled” and “highly educated” H-1B foreign workers, who offer intellectual capital and entrepreneurial energy American workers can’t match.  The majority of H-1Bs are classified by their employers as “beginning level.”  In 2013, 45% of H-1B visa holders had only a bachelor’s degree.  The majority of H-1Bs granted go to major offshoring firms from India (Tata, Wipro, Infosys), who receive very few patents.  [pages 62-64]

Myth #3:  H-1B doesn’t take American jobs.  H-1B creates jobs.  Politicians and Big Tech companies in Silicon Valley refer to "studies" that claim 2-7.5 native jobs are created for each H-1B.  If that were true, the H-1B program would be responsible for all U.S. job creation between 2001-2013!  [pages 67-68]

What’s the real barrier to jobs for U.S. IT workers?  U.S. wages.  Major corporations don’t want to pay them.  Why would they, when they can get an H-1B for much less?

For instance, a Level 3 Computer Systems Analyst is paid $90,792/year in Alameda County (average).  Businesses can get away with paying an H-1B a Level 1 wage for the same job - $60,029/year.  Saving them 33%!  [From the Foreign Labor Certification Data Center.]

Grim Reality – Train Your Replacement or Lose Your Severance

Based on visa approvals over 3 years, Sold Out concludes there are approximately 650,000 H-1B workers legally in the U.S. [page 13]. How many of those H-1Bs displaced American workers? Too many...and they have to suffer even more indignity.

When U.S. IT workers are laid off in favor of cheaper foreign workers (or offshoring of entire departments), they’re often required to train their H-1B replacements, or lose their severance packages. Sadly, many of the laid off workers are middle-aged and unable to find another job in IT because of a bias against older IT workers.

Malkin and Miano cite an example of this age bias on Page 11: “At a tech conference in 2007 in which he advised companies not to hire workers over 30, baby-faced Facebook CEO Mark Zuckerberg infamously bragged: ‘Young people are just smarter.’”

Unfortunately, this isn’t the only side of the exploitation coin. Even the H-1B workers themselves suffer mistreatment.

Foreign Workers Exploited – Control over Their Working Life

How are H-1B and other temporary visa workers exploited? “One of the simplest ways the employer controls H-1B guest workers is through immigration status. The employer has total control over whether the H-1B guest worker has legal status to be in the United States.” [page 125]

Other ways include: Putting workers in overcrowded corporate “guest houses”; wages 10-50% below market [pages 60-61]; huge employment contract buyout terms; forcing the worker to lie to immigration officials about the purpose of their visits [page 135]; industry blacklisting for whistleblowers; etc.

How do these major corporations get away with such abuses? Sadly, the answer’s simple.  They have help.

The Damage Wrought by Government/Major Corporation Collusion

Malkin and Miano found hundreds of U.S. Government officials complicit in H-1B abuse. They also believe they know the reason why: money.

We all know how "things get done" in Washington. A major corporation (examples below) lobbies a politician. The politician accepts a “contribution” and takes action to change a law or grant an exemption. For H-1B fraud, it can take the form of worker visas, approving construction permits, or even “buying” American citizenship.

A few examples from the book:

  • In 1998, President Clinton announced he would veto legislation to expand the H-1B program. TechNet, a political action committee based in Silicon Valley and funded by corporations like Intuit and Hewlett-Packard, threw him a fundraiser. Two days before attending the fundraiser, Clinton reversed his veto threat.

  • An amendment to the recent “Gang of Eight” immigration bill removed a requirement for H-1B dependent firms to “attest” that they’d taken “good faith” measures to recruit Americans, before importing foreign workers. Who pushed for the amendment? Senator Orrin Hatch (R-UT). Who influenced Hatch (and benefited from the amendment)? Facebook.

  • Sold Out mentions FWD.US, too. The FWD.US group lobbies Congress on behalf of major tech corporations, wanting higher H-1B quotas and lessening of visa restrictions.  Did you know FWD.US registered as a charity, focused on “social welfare”? It's not a charity.  But the classification means it can engage in political activity without having to disclose donors' contribution amounts to the public. We do know their members include Brian Chesky (CEO of Airbnb), Max Levchin (cofounder of PayPal), and of course Mark Zuckerberg (CEO of Facebook)...but we don't know how much they give to their "cause."

The (Risky) State of IT in America Today

As you can imagine, this type of corruption has huge negative effects, as Sold Out clearly illustrates:

  1. The IT industry opens itself to security risks, when under-skilled workers leave computer systems vulnerable to attack by hackers or ransomware.
  2. Customer service suffers from language barriers, time zone differences, and slow response times.
  3. American workers who report visa abuse at their companies risk losing their jobs and becoming blacklisted by other corporations.
  4. America as a whole suffers from depressed wages, national security risks, and a weak IT backbone.

If there is no STEM shortage, and we’re faced with serious economic issues resulting from H-1B fraud, what does this mean for businesses?

Most American businesses don’t depend on H-1B workers. However, with the fraud so endemic, America's small IT service businesses have trouble paying fair IT wages with so many H-1B workers driving billing rates down.

What Should You Do?

First off, we highly recommend you read Sold Out for yourself. The information is damning, but the conclusion provides an inspiring list of recommendations for government and business alike.

Amazon link: Sold Out on Amazon.com

We also recommend our fellow businesses consider these action steps:

  1. When it comes to your IT, buy products & services Made in America. PlanetMagpie makes every effort to do this for all of our hardware, software, and services whenever possible.
  2. Vote! This is an election year. Your vote is important, so educate yourself. Which candidates want to keep the H-1B scam going, and which support the U.S. economy first and foremost?

Join us again next month, when we discuss in detail all the visas available to international students & workers. Both corrupt and legitimate.

What are your thoughts on the IT offshoring/H-1B situation? Please give us your feedback at woof@planetmagpie.com.