Microsoft, Oracle, and Google demand that H-1b remain a source of cheap labor

Microsoft, Oracle, and Google are lobbying the Senate for an increase in the H-1b visa quota, arguing that they have thousands of job openings that they cannot fill with Americans. But is that the true motive?

The DOL prevailing is split into four levels, with level one being about the 17th percentile of what average Americans are paid for the same job classifications. Currently most H-1b use the level one wage. Senator Durbin sponsored an amendment whereby only 30% of the H-1b at any company could be paid at level one. (The remainder could be paid at level two - which would still be below average.)

Oracle's vice president Robert Hoffman, who speaks for CompeteAmerica, opposes the amendment. "Thirty percent is an artificial barrier," said Hoffman.

Why does Hoffman oppose the amendment? Here are the DOL wages for Computer Programmer in Los Angeles:

• Level 1 Wage: $21.59 hour - $44,907 year
• Level 2 Wage: $27.88 hour - $57,990 year
• Level 3 Wage: $34.18 hour - $71,094 year
• Level 4 Wage: $40.47 hour - $84,178 year

The wage for an average-skilled American computer programmer in Los Angeles is over $64,000 per year. Yet Oracle objects to having to pay their H-1b workers more than $44,907.

How do we know that Microsoft, Oracle, and Google do not need H-1b due to a labor shortage?

According to the Wall Street Journal, Microsoft received résumés from about 100,000 graduating students in 2004, screened 15,000 of them, interviewed 3,500, and hired 1,000. Microsoft receives about 60,000 résumés a month for its 2,000 open positions.

Working at Google is among the top choices of U.S. graduates, flooding Google with 1300 resumes per DAY.

Oracle opposes $1200 annual H-1b fee to provide $15,000 scholarships to American engineering students

As reported by the New York Times on May 27, 2007:

Senator Bernard Sanders, independent of Vermont, won adoption of an amendment that would increase the fee charged to employers for such a visa, known as an H-1B, to $5,000, from $1,500. The money would be used to finance scholarships for American citizens studying engineering, mathematics, computer science or health care.

Robert P. Hoffman, a vice president of Oracle, said the higher fees represented “an onerous tax increase on America’s most innovative companies.”

This “onerous” fee is less than a $1200 annual increase in the current H-1b fee ($600 foremployers with less than 25 employees). But it could substantially improve America’s competitiveness. Many American students must compromise their studies by working part time, while foreign students are free to devote 100% of their time in study groups. Others never reach their potential due to the financial realities of attending college today. So instead universities fill these slots with foreign students.

Compete America, headed by Hoffman, claims that “too few American students are seeking degrees in science, engineering and mathematics.” (Public Policy Institute of California recently made a similar claim.) But rather than support a $15,000 annual scholarship so that Americans can attend American universities, Hoffman proposes that “the H-1B and green card programs should exempt foreign-born Masters and PhD graduates of U.S. universities from arbitrary visa caps."

(The Programmers Guild refutes that there is any shortage of Americans students, citing declining salaries and tech workers over age 40 unable to find jobs. A recent Duke University study reached the same conclusion: "we did not find any indication of a shortage of engineers in the United States.")

America has made Larry Ellison one of the richest men in the world, with a net worth of $20 billion. He owns several yachts, including the 4th largest in the world valued at $200 million. He owns several aircraft, and lives in $20 million estate. (See Ellison’s home in this Google Earth Link here.)

In a May 24th press release Compete America claims: “Our companies are committed to advancing math and science education over the long term, as our future competitiveness depends on it,” but the press release bemoans that this $1200 fee “could make the H-1B program cost-prohibitive, especially for smaller businesses.”

Oracle has about 1850 H-1b on staff. Thus the annual cost to Oracle would be slightly over $2 million, providing $15,000 scholarships for 143 American students. So which is more harmful to Oracle’s global competitiveness – a nominal increase in the H-1b fee, or Ellison’s extravagant lifestyle?

As spokesman for Compete America, Hoffman also represents the opposition to these scholarships by: Google, Hewlett-Packard, Intel Corporation, Microsoft Corporation, and Sun Microsystems. All of these U.S. companies prefer to spend millions lobbying for more H-1b rather than part with $1200 to assist American students.

Oracle’s objections do not stop at the scholarship. Oracle also objects that H-1b reforms would limit their ability to displace qualified Americans with H-1b workers, and to lay off Americans while retaining H-1b workers. Hoffman says such provisions "are a huge requirement that might violate international trade laws." Industry also deems the new H-1b requirement to attest to having made a good faith effort to hire an American as overbearing.

Only a handful of companies applied for more than 500 H-1b workers in 2006. Those are predominately huge corporations for which the scholarship fee would be insignificant.

The top users of H-1b are Indian consulting firms that admit to underpaying their H-1b workers: "Our wage per employee is 20-25 per cent less than US wages for a similar employee," boasts Tata Consultancy Services (TCS) vice president Phiroz Vandrevala. The $1200 fee does not begin to offset this underpayment advantage, and the Durbin/Grassley bill would address this wage underpayment - which is currently perfectly legal under H-1b statutes.

This highlights the flaw in the current prevailing wage provision, and the Programmers Guild calls on Congress to include the prevailing wage provision of the Durbin/Grassley bill.