H-1B Audits Won't Solve the Issue of Lower Wages

By Norm Matloff
Thursday, August 27, 2009, 11:04 AM

Immigration officials have begun auditing firms that hire H-1B and L-1 visa holders to ensure that the person holding the visa and the company that applied for the visa match (among other things). But the audits won't solve the bigger issue of paying those H-1B visa holders lower-than-market wages.

(Read the article from Computer World) http://www.computerworld.com/s/article/ ... taxonomyId

Once again, folks, it is LEGAL to pay H-1Bs below-market wages. Yes, they must pay something called the "prevailing wage," but the legal definition of that term is full of major loopholes, which are exploited by employers, including the large, mainstream firms. So, while it's true, that some employers do break the law, most find no need to do so, as they can use the H-1B visa for cheap labor while complying fully with the law.

Therefore, audits cannot fix the H-1B cheap labor problem. Nor can they fix the loophole referred to by Professor Hira in his remark about circumventing the U.S. labor market--there is no legal requirement that employers try to fill jobs with U.S. citizens and permanent residents before resorting to hiring H-1Bs, and thus THERE IS NOTHING TO AUDIT in this regard. (I thus don't see Ron's point, and suspect he's been misquoted.)

So, why engage in these audits, especially in such a high-profile manner as we see in the enclosed article? There are two possible answers: (a) DOL is naive, and truly wants to fix the perceived problem, or (b) DOL is grandstanding, trying to deflect attention away from the real issue, the loopholes. I've pointed out before that the industry lobbyists love to see highly-publiczed raids on bodyshops, precisely because of (b), and since both major parties are beholden to the tech industry on the issue due to campaign contributions (prominent Republicans have admitted this publicly, and of course it's true for the Democrats too), I must say that (b) may well be the cause for the sudden audit blitz. On the other hand, as a longtime admirer of DOL chief Hilda Solis, I hope the cause is instead (a). If it is (a), it's still sad that she is so uninformed, given her vow at her confirmation hearing to address the H-1B issue.

Again, fraud is NOT the main problem. Yes, there was a study that found a 21 percent noncompliance rate, but as the article mentions, many of the "violations" were merely technical. Even most of the ones violating prevailing wage requirements probably involved only a small dollar amount; in cases in which a DOL audit on prevailing wage resulting in the department ordering employers to give workers back pay, the typical payment has been about $2,000 per worker. These violations are probably not deliberate. By contrast, making use of the loopholes can save the employer ten times that amount, or more.

The excellent Durbin/Grassley bill would, if enacted intact, plug the loopholes. However, if the bill ever does somehow pass, I believe the loophole-plugging portions would be removed, leaving only some provisions to beef up enforcement, for the most part useless.

Norm Matloff is a Professor of Computer Science at the University of California at Davis. He writes an e-newsletter on the H-1B work visa, offshoring and related issues. We repost his writings here with his permission. To directly subscribe to his e-newsletter, contact him at matloff@cs.ucdavis.edu.

http://www.numbersusa.com/content/nusab ... tid=254574