The US economy has consistently shown signs that the STEM jobs are gradually increasing but the shortage of highly skilled people is making sustenance difficult
The best re-employment strategy is to help train workers to make them as skilled as possible
Outsourcing today is treated like just another way of recruitment and is an accepted form of doing business for American companies. However, of late, H-1Bs have gained more political attention in America in view of the tech companies vehemently vouching for increasing the cap on H1B visas and influence the federal government (visa lobbying). So where did it all start? It was the Walt Disney layoff shocker in the US that triggered the entire H-1B visa play – the American employees being laid off and asked to train their foreign replacements (the much envied H-1B visa holders).
It is not a secret that the tech companies in America actually influence the way the federal government looks at granting visas and green cards to immigrants. Green cards and immigrant visas are seen as economic engines of the country. Even Facebook, Microsoft and other technology giants have validated the need for increase in H1B visas and also assert that “there are not enough Americans with the skills they need.” So it is basically both —a tightrope on which the US is walking on — lack of skills on the one hand and a cost arbitrage on the other.
However, it is imperative to probe and delve into the environment that is built around the whole H-1B visa chronicles and answer questions that instigate responses to, “are tech companies drawing from the H1-B talent pool as the last resort for filling in the skill gap?” or if the “H-1B visa holders are actually being hired as a cost saving measure?”
Asia in particular assimilates a good share of young and working-age population, also the most mobile, which results in immig-ration flow to other countries. India’s investment in education transgresses other counterparts in domains like technology skilling, which has given rise to skilled professionals who are seeking higher purchasing powers, better social statures and opportunities of self-expression, better enterprising prospects and dynamic ave-nues for professional growth.
The Indian immigrant population in the United States is estimated to be the second largest, the first being Mexico. Apart from India being the second-largest country (first being China) to send students for hig-her education to the US, Indian citizens are considered to be the topmost recipients of the ‘high-skilled’ H-1B visas. It is estimated that in 2014, Indian citizens accounted for 70% of the three lac H-1B visa petitions for initial and continuing employment by the US Citizenship and Immigration Services.
US job-skill mismatch
Given the demands of the expanding job market and the specialized skill-sets required for it, skilling has become a major issue for the US. There is an unequivocal gap in the skill-sets that employers want and the actual skills of the workers in the US labor market.Shortage of workers with such skill-sets has been sabotaging U.S. competitiveness and causing firms to emp-loy trained and skilled workers from other countries since the recession.
According to the Manufacturing Ins-titute and Deloitte Skills Gap study, there are two major contributing factors to the widening gap – baby boomer retirements and economic expansion. An estimated 2.7 million jobs are likely to be needed as a result of retirements of the existing workforce, while 7,00,000 jobs are likely to be created due to natural business growth. In addition to retirements and economic expansion, other factors contribute to the shortage of skilled workforce, including loss of embedded knowledge due to move-ment of experienced workers, a negative image of the manufacturing industry among younger generations, lack of STEM (science, technology, engineering and mathematics) skills among workers, and a gradual decline of technical education programs in public high schools.
The Deloitte Study also states that nearly half of the US manufacturing com-panies surveyed would consider reshoring at least part of their operations by 2020. Reasons for considering reshoring include favorable local logistics and supply chains, diminishing cost structure differential, and increase in domestic demand. The US economy has consistently shown signs that the STEM (science, technology, engineering, and math) jobs are gradually increasing but the shor-tage of highly skilled people is making sustenance difficult. “The US needs to move on to the business of fixing its highly skilled immigration system before it loses most of the top foreign professional and job creators that make America’s fastestgrowing industries competitive” according to Compete America, a business backed organization. According to the Citizenship and Immigration Services, companies are looking to employ foreign workers in highly specialized positions as they mostly cannot be filled by Americans.
Asserting the need for the middle-level skill proficiency, even the US Vice President Joe Biden in an event at the National Press Club stated that “The best re-employment strategy is to help train workers to make them as skilled as possible.” “Six out of 10 jobs by the end of the decade are going to require an education beyond high school. It might be a two- or four-year degree, or a 12-or 18-week certificate, but there are millions of good-paying jobs out there in health care, advanced manufacturing, IT, clean energy.”
The Real Picture
H-1B visa program is used by businesses to provide employment to foreign workers in occupations that require enhanced knowledge or specialty but is not limited to positions related to information technology, scientists, engineers, or computer programmers.
However, the H1-B visa program has been criticized for being used for bringing in immigrants to do the work of Americans for less money, with laid-off American workers having to train their replacements, according to the New York Times. Overall, it is estimated that more than five lac jobs remain vacant in the US and the American IT industry is in favor of raising the cap on H1-B visas so that skilled people can work for top organizations in America and that the economic engine can be fuelled by the brightest minds from all over the world.
H-1B program is also notorious for stag-nancy. Although a fair market wage is to be paid to the H-1B visa holders also known as the “prevailing wage,” this is not consis-tently followed, according to San Francisco attorney Daniel Hutchinson. Hutchinson states that, “We’re seeing companies that say that they’re paying someone $50,000 or whatever, but they’re actually making the employees pay for themselves to come to the U.S., travel expenses, living expenses.” The fact is corroborated by Ronil Hira, a profes-sor of public policy at Howard University who studies visa programs and has testified before Congress about H-1B visas, by saying that “H1B visa programs have created a highly lucrative business model of brin-ging in cheaper H-1B workers to substitute for Americans.” American companies are known for bringing in immigrants for positi-ons requiring specialized skills to cut costs.
Intertwined to this is the question of wage. The employer that sponsors H-1B visa holder has to file a petition, known as a Labor Condition Application (LCA) on behalf of the foreign national. A primary component of this is to ensure that the foreign national receives a ‘prevailing wage’, which is the income that is gua-ranteed to either meet or exceed the same dollar amount paid to an American worker. However, according to the Economic Policy Institute, almost 80% of the H-1B visa holders are paid less than the average American worker.
What’s at play?
The US Congress has set a cap on the H-1B visa category which is estimated to be 65, 000 each fiscal year. The H-1B program was established to permit companies to fill gaps in their workforce with specialized employees they cannot find in the United States. However, the law presents ambigu-ity and there is a clear exploitation of the workers by the outsourcing firms. From contracting-out or body shopping workers on H-1B visas, back-door immigration, offs-horing, lack of employer monitoring and depress wages, there are other abuses of the H-1B visa program. It is not surprising that companies like Infosys and TCS are being probed for visa violations. The latest edit in the picture is that with American employees hooting over the issue, Disney lay-offs have been reversed. But coming back to the same question — what is it really? Filling the skill gap and cost arbitrage? One cannot deny the fact that for fulfilling one’s own needs, one either builds one’s ability or finds someone else with that ability to work. It is about the results. And the US is simply doing that.
However still, taking the Indian perspective, what’s in for the Indian immigrant—employment opportunities or low wages (if cocompared to the American co-worker)?