Wage Theft – The Usual Suspects

Founder’s Corner

Dear All:

Last week, the Economic Policy Institute (EPI) released a damning report that HCL Technologies, one of the largest Indian IT outsourcing firms, “appears to be stealing at least $95 million per year in wages from its H-1B employees.”

HCL Technologies is the same company that placed H-1B workers at Disney, leading to U.S. tech worker layoffs.  Those laid-off tech workers then had to train their foreign replacements in order to collect their severance package.   

Co-author of the report, Professor Ron Hira of Howard University, brought forth and exposed the wage theft claim from an internal document released as part of a whistleblower case against HCL. 

“This action concerns HCL’s egregious and widespread fraud against the United States in applying for and securing work visas. HCL engages in visa fraud so that it can import and employ cheap labor (primarily from India) in the U.S. and avoid having to employ higher-priced Americans,” the lawsuit said.

For Indian consulting firms like Tata Consultancy Services, WiPro, and Infosys, low costs are the success drivers.  Their margins are highly correlated and sensitive to changes in U.S. wage rates so much so that according to HDFC Securities “a 1% increase in U.S. onsite wages translates into a -29 basis points (bps)” hit.

Besides the $95 million in wage theft, the report alleges that “victims include not only the H-1B workers but also the U.S. workers who are either displaced or whose wages and working conditions degrade when employers are allowed to underpay skilled migrant workers with impunity.”

And it makes clear that the U.S. Department of Labor (DOL) shares culpability because they do nothing to pursue investigations against companies, like HCL, who take advantage of loopholes in the H-1B visa program.

“In particular, DOL props up the abusive outsourcing business model by treating contractor hires differently than direct hires when enforcing the wage and other provisions in the H-1B statute that are supposed to protect H-1B and U.S. workers. This outsourcing loophole allows firms like HCL and big tech companies that use outsourcing firms to get around those provisions, which leads to greater fissuring of the tech labor market.”

As our good friend John Miano likes to say, “the H-1B program is designed to displace Americans with cheap foreign workers. When HCL uses the system to accomplish what the H-1B is intended to do, that is not abuse of H-1B. It is the H-1B program itself that is abusive.”

The report calls on both the DOL and Department of Homeland Security (DHS) to act against companies engaged in H-1B worker wage theft and to pursue reforms to the prevailing wage rules and visa selection process. 

The tragedy in all this is that rule changes proposed by the Trump administration in their final days would have effectively stymied the more harmful effects of the H-1B visa program.

RULE

ACTION By BIDEN ADMINISTRATION

H-1B Specialty Occupation/Employer-Employee Relationship Rule that targets outsourcing companies

BLOCKED

Wage Level Increase Rule

BLOCKED

H-1B Lottery Wage Selection Rule

BLOCKED

Those proposed rule changes have been blocked by the well-greased and highly functioning bureaucracy of the current administration and the DHS, time and time again, has buckled under court challenges to employment visas. Moreover, Secretary of Labor, Marty Walsh appears to be either entirely clueless to the harm employment visa programs pose or supports the displacement of American workers.

Given that Biden’s Chief of Staff Ron Klain is a former lobbyist for TechNet it might be the latter. TechNet is addicted to the notion that America suffers from a talent shortage, something which couldn’t be further from the truth.  

While things look bleak for U.S. tech workers, the EPI report is helpful. It provides the intellectual ammunition we need to continue fighting. We can now state with confidence that the propagandists who’ve claimed the H-1B visa program doesn’t hurt American workers are, in fact, liars!

Additionally, the American Tech Workforce Act introduced by Republican Study Committee Chairman Jim Banks (IN-03) is also a boon to our cause.  It curtails the excesses of the H-1B visa program and calls for the elimination of the Optional Practical Training program (OPT). OPT elimination is something Congressman Paul Gosar (AZ-04) has introduced legislation in support of in the past. 

In closing, as I was writing this week’s Corner I received news that the Senate Parliamentarian rejected the immigration provision inserted in the Build Back Better Act. So, there will be no parole for 6.5 million people. She did not rule on the Green Card recapture, and the diversity lottery visa recapture provisions. But their inclusion is unlikely in the BBB because members of the Squad would be pilloried voting for a bill that mostly favors only Big Tech. For those who’ve been suffering from bad immigration policy, growing inflation and the best Congress money can buy, it’s Christmas a little early. 

If you noticed that this week’s newsletter looks a bit different, it is because we have brought our emailing services in-house which is part of an ongoing process to lower our reliance on third party providers. If something doesn’t look right, please reply back and let us know what the issue is so we can improve this deliverable going forward.”

In solidarity,

Kevin Lynn
Founder
U.S. Tech Workers
 

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H-1B Is Designed To Displace American Workers Read More

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New Evidence Of Widespread Wage Theft In The H-1B Visa Program Read More