Georgia businesses lose hundreds of millions in sales each year because employers are replacing middle class Georgians with cheap H-1B workers, according to a review of federal data.
The data shows U.S. companies asked for 20,000 H-1B workers in 15 career tracks during 2017, and likely received 8,000 of the requested lower-wage workers.
Robert Heath, a programmer in Boynton Beach, Florida, compared the pay promised for the 8,000 imported H-1Bs to the higher pay which is already being earned by Americans who are working in those careers in Atlanta.
The promised pay is described in the “Labor Condition Application” document filed by H-1B employers at the Department of Labor. The Americans’ pay is tracked by the Bureau of Labor Standards.
The comparison showed that promised wages for the 8,000 H-1Bs are far below the wages paid to Americans with average skills.
The LCA-to-BLS payroll gap amounted to $355 million per year, said Heath, who runs H1Bfacts.com.
But only 40 percent of the visa requests get an H-1B worker for the employers, so the estimated payroll gap drops to $140 million.
But the H-1B program allows employers to keep their H-1B workers for six years. So the six-year payroll gap for the 8,000 workers imported in 2017 balloons to almost $840 million.
Advocates for the H-1B program say it is needed to fill “highly skilled” jobs because not enough Americans have the required skills.
Opponents say education data and the slow growth of graduates’ salaries nationwide show there is no shortage of skilled Americans, and that skilled Americans are losing job opportunities and salaries to imported visa-workers. Americans lose the jobs because executives and recruiters in the overlapping networks of subcontracting firms have their own financial incentives to hire visa workers for jobs instead of American graduates, say critics.
If the 8,000 H-1Bs are supposed to get jobs that would be otherwise be sought by highly skilled and highly paid Americans, then Georgia’s annual payroll gap jumps to $470 million, according to Heath’s analysis of the federal data.
Over six years, the payroll gap from these 8,000 workers would take $2.8 billion from spending by high skilled Americans on Georgia retailers and restaurants, apartment rentals and furniture sellers, auto dealers and gas stations — and also from the state and local tax collectors who fund schools and road construction.
If the total loss is only $300 million per year, the outsourcing slices half a percent from the state’s total economy.
That payroll loss an unwanted problem for Georgia politicians, including Sen. David Perdue.
Perdue is now blocking a bill by Utah GOP Sen. Mike Lee that could dramatically increase the payroll loss caused by the cheap visa-workers imported into the United States. The bill should be delayed until legislators can study the impact more, Perdue said.
Lee’s bill would remove the “country caps” on the award of green cards. Those caps now limit the ability of allied U.S. and Indian firms to recruit Indian graduates for jobs currently held by American graduates. Lee’s bill would give the CEOs up to 140,00o green cards each year which they can grant as no-cost deferred bonus payments to the Indians who accept low wages in the American jobs.
The left-wing West Coast investors who formed the FWD.us lobbying group are signaling their opposition to Perdue’s pro-American position, via their Georgia representative:
Georgia's tech economy thrives with immigrants. If we are to remain the #1 state in which to do business and keep Atlanta the technology capital of the east coast maybe @sendavidperdue should rethink his passions for cutting legal immigration by 50% #gapol https://t.co/LQDs4odHsG
— Sam Aguilar (@SamAguilarATL) September 24, 2019
Mark Zuckerberg, the main funder for FWD.us, is pushing the S.386 bill. He met with Sen. Lee on September 19 — the day when Perdue blocked his green card giveaway bill.
Other states are also losing payroll because of imported, lower-wage H-1B workers. Heath’s data suggests that three states of Kentucky, Utah, and Missouri lose from $500 million up to $1.7 billion in payroll each year. Nationwide, if each of the roughly 800,000 resident H-1Bs is paid just $5,000 less than the Americans they replace, the program chops payroll by $4 billion.
Heath says his data understates the economic loss to Georgia businesses in the local Chambers of Commerce, to retail and real-estate rents, and to the tax receipts earned by state and local governments.
Federal agencies, including the U.S. Citizenship and Immigration Services, hide much of the data, said Heath. Also, he did not calculate the payroll loss for all visa workers in Georgia because, “it would have taken me a month to do it … I am trying to get an order of magnitude approximation.”
The analysis covers 20,000 of the 35,000 H-1B visa requests submitted in 2017, he said. He roughly 15,000 visa requests from many small-scale career tracks, he said. This focus excluded roughly 6,000 H-1B workers who were moved into Georgia’s jobs in 2017, he said.
Companies use the H-1B rules to sideline skilled Americans — often by hiring H-1Bs who are so untrained they must be trained by the Americans who are being fired.
The LCA data shows that 63 percent of the 20,000 visa requests in Georgia were for workers assigned to the lowest of four skill categories, Heath said. Only 17 percent of the requests declared they were seeking workers with skill levels of 3 or 4, he said. The requests said that 63 percent were for levels 1 and 2, marked for “Entry Level” and “Qualified” graduates.
The result is that 62 percent of the request workers were promised salaries of below $80,000. Another 22 percent were promised wages between $80,000 and $100,000, leaving just 16 percent with promised wages above $100,000.
The data is available at SAITJ.org, which also links to H-1B data in the other states and every House district.
Heath said his estimate is also understated because he cannot track the money diverted by fraud and corruption in the visa-worker programs.
More than two-thirds of the imported H-1B workers are from India. Their payroll can be less than the promised payroll because some Indian managers refuse to pay them while they are unemployed or “benched” for weeks or months until the U.S.-based Indian recruiters slot them into new jobs ahead of Americans. Also, many H-1B workers are forced to pay under-the-table payment to their employers because they prefer to work in the United States than back home in India. This month, an Indian company owner was sentenced to seven years in jail for at least 250 cases of H-1B fraud, according to a September 23 article in the Seattle Times:
Pradyumna Kumar Samal, the former CEO of two companies, Divensi and Azimetry, which supplied workers to tech companies including Microsoft and Amazon, used fraudulent and forged documents to get H-1B visas, according to his plea agreement. The documents made it appear the workers had jobs to go to, when in fact they did not.
…
Workers brought to the U.S. by Samal paid a partially refundable “security deposit” of as much as $5,000 regardless of whether they ever got paying jobs, according to the U.S. Attorney’s Office in Seattle.
…
Samal got visas for workers before having job offers in order to have a pool of talent at the ready, according to court documents. It was a “short cut,” Samal said in a letter to the judge, one aimed at growing his business.
Also, H-1B workers are migrants, and many send some of their wages back to their homes, including to their extended families in India.
Indian-run companies also import many additional visa workers who are allowed to work under the B1, L-1, H4EAD, or Optional Practical Training programs.
Workers imported via the B-1 program received Indian wages, while L-1 workers can be paid at state-set minimum wages. Many of the OPT workers are kept in sweatshops, and accept low wages in the hope of getting promoted into the H-1B program so they can get green cards.
More than 800,000 Indian graduates work in the U.S. white-collar jobs sought by U.S. graduates. The Indians also transfer the work performed by at least two million additional white-collar Americans back to the Indians’ parent companies in India.
The payroll loss is important because Lee’s pending bill could dramatically swell the number of Indians working in U.S. jobs.
The bill — S.386 — that would reward Indian college-graduates with more green cards if they agree to take jobs from American graduates, via the uncapped OPT, B1, L-1, H4EAD, and H-1B visa programs.
Current “country caps” allow Indians CEOs to provide roughly 20,000 green-cards per year to their Indian workers and family members, instead of salaries.
But the S.386 bill, being pushed by GOP Utah Sen. Mike Lee, would allow Indian CEOs to recruit even more Indian graduates for U.S. jobs because it would enable the Indian — and U.S. CEOs — to offer up to 140,000 green-cards to Indian workers and family members each year.
India’s population is huge, so there are millions of Indians who could rationally take U.S jobs at low wages to compete for the CEOs’ bonus of 100,000 green cards per year.
The green cards are immensely valuable to Indians because they would allow the Indians –plus their immediate and extended families, and all of their descendants — to leave caste-ridden, poor India to become U.S. citizens.
Indian CEOs already violate visa rules to import cheap workers for competitive advantage.
On September 19, the Department of Homeland Security described large-scale visa B1 and H-1B fraud by Indian managers at a prestigious Indian company in Chicago, Mu Sigma:
Mu Sigma – a large, advanced analytics service provider headquartered in Chicago, Illinois, with its main delivery center in Bangalore, India – was illegally circumventing U.S. government H-1B visa regulations by actively employing B1 visitor visa holders under contract within the U.S. In addition, the company’s invitation letters for the B1 visa holders misrepresented the nature of the B1 visitors’ intended business. Furthermore, company officials illegally instructed potential B1 business visitors and company handlers how to avoid detection by U.S. authorities.
….
Mu Sigma B1 visa holders who were illegally working in the United States were also paid in India at India-based wages, which are substantially lower than their U.S. counterparts. This unlawful employment tactic greatly increased Mu Sigma’s profit margins and the company’s ability to provide low bids for end-user contracts.
…
This investigation identified about 400 potential B1 visa violators, and more than 300 instances of illegal visa bond contracts, during the defined five-year statute of limitations. Investigating special agents also identified nine Mu Sigma executives and managers who actively participated in these schemes.
A growing number of lawsuits allege that fraud and anti-American discrimination are endemic throughout the Indian economy within the United States. “Based on your time in the U.S., you have basically defrauded everyone you could defraud,” the judge told the Indian CEO as he sentenced him to seven years in jail.
A 2018 survey even reported widespread caste-related discrimination by Indian elites against Indians in the United States, according to an NPR report:
This survey provides data for what many in the community already know: any time there’s a dominant population of South Asians — whether they’re living in Silicon Valley or New Jersey, or working at an office or a restaurant — caste biases emerge. It could be anything from refusing to date or marry someone from a lower caste, to being on the receiving end of a casteist slur, to being made to sit separately because of your perceived “untouchability.”
“We have people who responded who were in the assembly lines for a Campbell soup factory in Central Valley, as well as people who work for Google, Facebook and the other big tech companies,” Soundararajan said, naming workplaces that employ large numbers of South Asians.
Fraud and discrimination is the norm among major Indian-run companies in the United States, say critics:
But where does the diverted Georgia payroll go?
Most of the gains are sent from Georgia to Wall Street investors in New York and California.
For example, Walmart is boosting its stock value by outsourcing 569 finance and accounting jobs in North Carolina to cheaper H-1B workers from India. If the company saves $10,000 per employee, Walmart will save $5.7 million per year. On Wall Street, Walmart’s price to earnings rate is 25 to one, so the $5.7 million in payroll savings will boost its stockholders’ value by $142 million.
Walmart picked an American company, Genpact, to supply the Indian workers. The company is a spin-off of General Electric, and it prospers by providing Indian H-1B workers to many companies in the United States. For example, the company asked for 271 H-1Bs in 2018, 410 H-1Bs in 2017, and 307 H-1Bs in 2016.
Genpact’s H-1Bs work on the U.S. side of the vast and growing U.S.-India Outsourcing Economy, now worth roughly $78 billion per year. Part of the H-1Bs’ job is to funnel additional work back into India. For example, Genpact may only need to use 100 H-1Bs in North Carolina to help steer the work of the 569 fired American finance experts back to large teams of low-wage Indian graduates in India.
Genpact’s $3.3 billion in revenue is enough to generate $7.5 billion in stock value for its investors, which include Bain Capital, Blackrock, and Charles Schwab Investment Management.
The investors are mostly based on the coasts, so their wealth is helping to spike wages and real-estate values in New York and California — while the reduced payroll in Georgia, Kentucky, Utah, Missouri reduces business income and drops real-estate values in the heartland states.