H-1Bs Earn More Than U.S. Counterparts? Not So Fast

Don Tennant

The contention of H-1B haters that the visa program is a conspiracy by government interests, big business and liberal media to import cheap labor is ignorant, distracting and tiresome. But a new report arguing that H-1B visa holders earn more than their U.S counterparts is equally distracting, and almost as ignorant.

 

The report, prepared by two professors at the University of Maryland's Robert H. Smith School of Business, challenges the commonly held understanding that if anything, H-1B visa holders tend to be paid below-market wages in violation of U.S. law. A May 21 article on eWEEK quoted this from the report:

"IT professionals without U.S. citizenship earn approximately 8.1% more than those with U.S. citizenship; IT professionals on an H-1B or other work visa earn approximately 7.9% more than those with U.S. citizenship; and IT professionals with a green card earn approximately 13.6% more than those with U.S. citizenship or work visa holders."
"The salary premiums for non-U.S. citizens and for those on work visas fluctuate in response to supply shocks created by the annual caps on new H-1B visas. Setting lower and fully utilized annual caps results in higher salary premiums for non-U.S. citizens and those with work visas."

The eWEEK article included a short Q&A with the report's authors, Professors Hank Lucas and Sunil Mithas, but didn't question their findings or provide a counter view. Fortunately, a May 20 article on CIO.com did.

 

According to the CIO.com piece, the University of Maryland report was based on data collected from online salary surveys conducted by InformationWeek and Hewitt Associates from 2000 to 2005. Check this out:

The Lucas-Mithas research deviates from the findings of other studies investigating the effect of temporary visa programs on the salaries of U.S. IT professionals. According to Lucas and Mithas, H-1B visa holders earned an average of $75,358 from 2000 to 2003, compared with the average U.S. citizen's salary of $66,836. (The InformationWeek survey did not ask about visa status in 2004 and 2005). But according to the U.S. Citizenship and Immigration Service (USCIS), the median salary for H-1B visa holders in computing professions during the 2000 to 2003 period was just over $50,000.
"It [seems] strange to me that the authors would depend on sampled data when we have the whole census of new H-1B recipients' salaries reported [by] the USCIS, at least in aggregate terms," says Ron Hira, associate professor of public policy at the Rochester Institute of Technology. "For computing occupations those data show low wages relative to Bureau of Labor Statistics wages for Americans. The median salary for new H-1Bs is comparable to the entry-level wages for freshly minted bachelors in computer science, as reported by the National Association of Colleges & Employers. So half the new H-1Bs are being paid at- or below entry-level wages."

Moreover, the CIO.com article pointed out that the report's findings were potentially flawed because of the self-selective nature of the data:

Hira suggests there may be a self-selection bias at play when using a sample population. The data Lucas and Mithas used comes from 50,000 IT professionals, including 809 temporary visa holders, who opted to participate in an online salary survey. The researchers say the overall sample and sample of non-U.S. citizen foreign-born IT professionals in their study is reasonably representative of the U.S. population.
While those numbers may line up, it's unlikely that H-1B or L-1 grantees who depend on their employers for their visas and who earn lower than average wages would participate in such a survey, says Hira. "The [Lucas-Mithas] report may be able to control for some additional factors that affect wages, but there is no doubting the USCIS characteristics data," says Hira. "It is a census, not a sample."

The professors are sticking to their guns, but come on. When you publish research that turns conventional wisdom on its head, you need to do a much better job of validating your data.

 


Lucas and Mithas got a lot of press as a result of their controversial report. That may be good for their careers in academia, where the pressure to maintain a high research profile is intense. But it's as if they went on a hunt for data to back a pre-ordained conclusion, and they settled for the best they could find. Their report is a disservice to the H-1B discussion.



Add Comment      Leave a comment on this blog post
May 24, 2010 3:34 AM jake_leone jake_leone  says:

Thanks for reporting on this. 

The 2 professors involved should have used the publicly available (and likely free) census information rather than what appears to be a very skewed survey when computing the average salary of H-1b recipients.

The story about this very flawed, erroneous survey, was picked up widely. 

I have to wonder how much payola was used to get the propaganda out to major news organization.

The proponents of unlimited immigration have much more money behind them.

Unbelievable that 2 university professors can be so stubborn when it was pointed out last year that their conclusion bears no relation to the complete census of all H-1b recipients.

What was the error factor of their survey (must be -25%), the census data proves they are looking like complete fools.

These 2 professors (if you can call them that) should just go and get the complete public record of how much H-1b recipients are paid (at zero cost), instead of wasting University (probably a lot of public funds) and the report (rather the paper it was printed on) has only one use far as I can tell, and it ain't pretty.

Reply
May 24, 2010 3:54 AM BB BB  says:

Norm Matloff has also debunked this study. See details at: http://heather.cs.ucdavis.edu/Archive/MithasLucasPublished.txt

"There are severe, fundamental problems in Mitha and Lucas' data  source, which invalidate the entire analysis."

"One striking illustration of the non representativeness of the data used by Mithas and Lucas is in their TotalExperience variable. In their data set, the average H-1B worker has 11.23 years of experience! This of course is totally at odds with the USCIS and DOL data. Computer-related H-1Bs have a median age of 27.4; 52% have less than 2 years of experience, and another 41% have 2-5 years.

Another illustration: The H-1Bs in their sample had mean wages of

$79,000. But the median for H-1Bs in computer-related occupations is

about $60,000 (in 2003, the middle of ML's data period), according to

the U.S. Citizen and Immigration Services (the former INS), far short of ML's $79,087. Even the 75th percentile in USCIS was only $72,815.

CLEARLY, THE H-1BS IN THE MITHAS/LUCAS SAMPLE WERE NOT EVEN CLOSE TO

REPRESENTATIVE.

It should be noted that although Mithas and Lucas repeatedly say that their data measures skill sets, it definitely does not. What they are actually referring to is the number of years of IT experience."

Reply
May 24, 2010 6:54 AM Blue Blue  says:

Internet polling and polls that require someone to go out of their way and volunteer to participate cannot be trusted.  This is taught in basic applied statistics courses; any honest or legitimate researcher knows this.  For example, if Drudgereport.com had a poll showing 97% of Americans were going to vote McCain would you have believed it? Of course not.   But it doesn't surprise me that this study gained traction, it's all about misinformation when it comes to the H1b program.

Reply
May 24, 2010 7:43 AM hilliard hilliard  says:

"equally distracting, and almost as ignorant".

Yes, thank you for pointing out the silliness of this study... but how do you come to the conclusion that it is ignorance fueling these professors' biased work? Others might come to the conclusion that it is very deliberate. Consider one of the two participants:

http://terpconnect.umd.edu/~smithas

"Sunil is an assistant professor at the Robert H. Smith School of Business at University of Maryland in the Decision, Operations and Information Technologies Department."

"he worked for about ten years in engineering, marketing and general management positions with Tata steel and Tata Ryerson."

This is the same Tata that owns Tata Consultancy Services or TCS: the fourth largest H-1B visa recipient in 2008:

http://www.computerworld.com/s/article/9128436/List_of_H_1B_visa_employers_for_2008

This is the same Tata Consultancy Services whose vice president - Phiroz Vandrevala - admitted that his company has a competitive advantage because of its extensive use of foreign workers in the United States on H-1B and L-1 visas:

"Our wage per employee is 20-25 per cent less than US wages for a similar employee," Vandrevala said.

http://www.hindustantimes.com/News-Feed/nm16/H-1B-visa-holders-paid-less-in-US/Article1-147259.aspx

No one would question Professor Mithas' intelligence: it's a question of bias. Because of his background and connections, he can be expected to have a bias as would a lobbyist for expanding the H-1B visa program. I brought this up to another business publication blogger just after I directed him to two studies published by the Center for Immigration Studies (which calls itself a "pro-immigrant, low-immigration think-tank"): these studies used government data and showed basically the opposite of the Lucas/Mithas study over the same time period (there have been academic studies showing the opposite too: http://www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomy Name=government&articleId=9131729 ). Typical of the political-correctness-gone-berserk of the average media columnist, this blogger tossed out the CIS study ("they have an axe to grind") and then refused to believe that an Indian immigrant ex-10-year-Tata-management employee now working at a U.S business college could possibly have an inherent bias!

The contention of H-1B haters that the visa program is a conspiracy by government interests, big business and liberal media to import cheap labor is largely correct, well-supported and well understood even by many of the program's advocates.

Reply
May 24, 2010 7:46 AM Bob Bob  says: in response to Blue

It's a sad state of affairs (for American technology professionals) when Don Tennant of all people is one of the lone voices in the online media questioning the methods of this study. How bout the argument that "5 American jobs are created for every h-1b visa issued?" Do you find that equally baseless? The h-1b crowd has plenty more of those that are largely unchallenged by the media.

Reply
May 24, 2010 11:26 AM Steve Smith Steve Smith  says:

The study is a typical mumbo-jumbo, plugged values into Minitab without any sanity checks. It is interesting that the study and its on-line supplement do not report wage values. The $75,000 reported in CIO is not in any of these, meaning they must have gotten them from the author.

The fact that this basic piece of information was not reported, especially since comparing to the USCIS data shows how off it is. Also interesting, if you look at the wage data in the LCAs it matches up pretty well to USCIS's figures, yet the study belittles the LCA data in favor of this salary survey that dos not match up.

Even more telling, do some cite checking. For example, to show the LCAs are an invalid measure, the authors site a magazine article. The article makes none of the claims the authors attribute to it. In fact, the article is on an EE Time study in which they followed the Miano study procedure but used engineers (instead of programmers) and got the same result--only the undermines the credibility of Mithas and Lucas.

The big question: Who paid for it?

Reply
May 25, 2010 1:48 AM Don Tennant Don Tennant  says: in response to Steve Smith

Good question on the funding, Steve. I e-mailed the authors, and Hank Lucas sent this reply: "We did not have external funding. The study was done as a part of our regular research activities."

Reply
May 25, 2010 2:53 AM Nickel Nickel  says:

I dont believe that study either. H-1B is a cleverly crafted program that allows businesses to bring in cheap, young, hardworking, docile, smart, ambitious foreign labor who come with full of hopes and dreams and pretty much own these people. We dont use shackles and chains in this modern age, so instead there are visa regulations, paperwork, fees, etc to bind these workers who have no clue how the system is so deceitfully set up. By the time they realize they have been conned by the system it's too late.

The key for the lock (work for me or you will be deported) is placed in the hands of the employers. Some are lucky to find good employers or able to swtich jobs, but a vast majority end up slaving away their youth.  Most companies are not willing to spend money, go through complicated paperwork to hire H-1Bs especially in this economy. After the 6yrs are over, after sucking away their youth dry, they are kicked out to go back to where they came from, and another young, smart, ambitious victim is enslaved.....and where did anyone get the idea that they are paid more?

--Businesses benefit from cheap, skilled, docile, never quitting labor.

--The H-1Bs suffer from being away from home and family, pay visa fees, attorney fees, some very unlucky ones get exploited by the "bodyshops" and have their hopes and dreams squashed.

--Attorneys make good money as well processing paperwork.

--American residents/citizens feel cheated and get angry at the wrong person and spew anger and hatred at the victims on the other side. Some have the wisdom and the balls to fight the slave traders instead of the poor, weak, embattled, conned slaves.

--Even government gains from the program in the form of visa fees, taxes, social security and medicare paid by H-1Bs. As many focus their anger and hatred and pour blame on H-1B workers for all the problems with the economy, society, unemployment and decimation of various industries, focus is taken off the government.

It's a win situation for businesses, attorneys and government but not for workers (both H-1Bs and residents/citizens).

Reply
May 25, 2010 3:09 AM Indian_H1B Indian_H1B  says: in response to Nickel

You're partially right. However, leverage is gained not from the risk of deportation, but from the existence of an oppressively long permanent immigration process. Note that an H-1B is free to move from one sponsoring employer to another, but once the greencard process begins, the H-1B is beholden to the sponsoring employer.

I've been waiting 6 years for my greencard and am aware of some that have been waiting about 9.

Reply
May 25, 2010 5:52 AM jake_leone jake_leone  says: in response to Indian_H1B

I agree with you on this one dude, people here on visa should be able to pursue the Green Card as individuals.  Corporation, headhunters, body-shops, should not be de-facto indenturing people. 

The government has no business tying people down, to one company.  And the increased competition for the worker would be beneficial to the wages of people here on H-1b.

Reply
May 25, 2010 7:09 AM Bob Bob  says:

well, we're usually not in agreement Don, but thank you for calling out this BS

But is it surprising that citizen tech (and ex-tech) workers become 'H-1b haters' when endless bare faced lies are told to destroy your livelyhood?

Does anyone really believe that two professors at the University of Maryland's Robert H. Smith School of Business have never taken a statistics course?  Or that they forgot what they would have learned in the first week in stat 101?

So what does that leave --> they're lying.  People on state government salaries, telling lies that hurt the citizen of Maryland, on company time

have your life destroyed by lies Don, and I bet you'd become a 'hater' of whoever did it

Reply
May 25, 2010 7:37 AM Bob Bob  says: in response to Bob

and does that explain "The contention of H-1B haters that the visa program is a conspiracy by government interests, big business and liberal media"?

Reply
May 25, 2010 9:24 AM Indian_H1B Indian_H1B  says: in response to Bob

I think the meat of the argument will be between Hira, Matloff and the paper's writers. Most of the comments above spew the usual racist bilge one has come to expect from the "H-1B is evil" kool-aid camp.

To the people above who say that data is available on a public website, let me share my own case. The only data that's available on a USCIS website regarding my H-1B contains my salary as of when my H-1B was FIRST applied. 6+ years down, I make a little more than twice as much as I did when the application went in. In fact, I'm unaware of any way to sample my salary barring a way to mine IRS data.

I do agree that the study is likely flawed simply because I'm a bit of a market sentimentalist. Why any company will pay 6-7% more for an H-1B from abroad in addition to the non-trivial H-1B app fees assuming he/she is identical in skills to a native employee is beyond me. I think that 80% of all H-1Bs make exactly what the market would pay a comparable American employee and 20% are underpaid (victims of the Indian bodyshop scourge). On average, H-1Bs are likely underpaid.

Reply
May 25, 2010 9:51 AM Don Tennant Don Tennant  says: in response to Bob

Nah. If my life was destroyed by the H-1B visa program, that would not make me hate an individual just because he holds an H-1B visa. I'm not too big on the hating people thing. It tends to make things worse, not better. I would hate abuse of the program, but I already hate that.

Reply
May 25, 2010 9:58 AM Don Tennant Don Tennant  says: in response to Bob

If you're asking me whether this report shows that there is a conspiracy of government interests, big business and liberal media to import cheap labor, my answer is of course not. It simply shows that there are boneheads in academia who do flawed research, and boneheads in the media who do flawed reporting.

Reply
May 26, 2010 5:04 AM PhD Candidate PhD Candidate  says:

True academic research must be replicable (able to be repeated and tested to validate results).  This is an absolute must.  Otherwise, it is bad quality.

It is possible the professors conducted several studies but published only the one that met their desired result.  This occurs frequently in medical research.  Undesired results are not published; they are proprietary secrets.

Just because the professors claim this particular study had no external funding means nothing.  Money is fungible (substitutable).  Options: 1) Their general research funds could have come from H1B supporters. 2) One or both professors could receive other funds from H1B supporters.  3) In academia, there is no better way to obtain industry funding (speaking fees, consulting contracts, direct grants) than to publish something industry favors.  It's called paying your dues in advance.

Reply
May 26, 2010 5:29 AM Indian_H1B Indian_H1B  says: in response to jake_leone

Right, and to ensure the US is attracting the right breed of immigrants, permanent residency should be based on a weighted average of things such as academic accomplishment, salary and taxes paid. By disassociating the greencard from the employer, you ensure that some guy who got a fly-by-night engineering degree from the street I grew up on in Bangalore neither has an anchor to pin hopes on (the insidious body shop on the street YOU grew up on), nor can his employer squeeze him dry on 25 bucks an hour for a decade while advertising to the world that he's being paid a hundred bucks an hour.

The current process of valuing a greencard applicant is as bad as valuing a company based on how its balance sheet looked in 2004. Doesn't matter if it was Enron or Apple.

Reply
May 26, 2010 12:13 PM ss ss  says:

I am an IT profession of India based IT company which is supposed to be the highest payers amongst Indian IT companies. 90% of the people working  in my project earn less than 67,000 USD per annum. I can definitely tell that the data of professors is not correct.

Reply
May 27, 2010 2:49 AM Proud_Desi Proud_Desi  says:

Look.  It is not meaningful to debate papers.  This is distraction from truth.

Fact is fact.  You Americans are not working.  You are lazy.  This is why American companies are replacing fat and lazy and old US worker with young Indian.  We are hungry.  We work hard.

Go to IBM, Bank of America, Citibank, Microsoft, Cisco, all big universitys.  You see Indians. We are everywhere.

Reply
May 27, 2010 3:18 AM Proud_Desi Proud_Desi  says: in response to Nickel

Nickel

What you call "exploited and kept in bondage" is nothing new in US. Barbados had white slavery (7000 Irish). Virginia was penal colony. Then you had African slavery. H1B is nothing like this. How can you call it bondage? I can move to different employer any time.

We live in economy where world is flat.

If H1B employers are breaking law, you must prove it. Why can you not prove it? I never see American say on TV say an Indian replaced me.  Why not?  Because American would have to admit he is paid to much or has old skills.

Even if it happens, it is legal. 

You say you feel sorry for me.  It is called guilt and compensation.  It is why your government SBA will give me low interest loan to start business.  Your children can work for my children.

PS: Learn to spell.  It is system not sytem.

Reply
May 27, 2010 4:03 AM R. Lawson R. Lawson  says:

Great, and fair, post.

My entire objection to the H-1b program is the downward pressure it places on wages, as well as how it enables the exploitation of immigrant workers.  This research was designed to challenge that basic objection.

The "research" was filled with logical fallacies and cherry picking of data - and more importantly ignorance of data that challenged their findings.  I have always been careful to use data from an independent source - EVEN when it challenged my own views on things.

Unfortunately this type of garbage research - that frankly should be shameful for any respectable academic to associate his name with - will be used by lobbyists while more grounded research will be ignored.  This is a victory for the IT lobbyists and industry insiders, and a huge loss for both academia and IT professionals. 

There really should be an academic peer-review of this research.  School administrators need to examine this very closely.

Reply
May 27, 2010 10:00 AM Nickel Nickel  says: in response to Proud_Desi

People like you are so stupid, ignorant (or you may be a troll) but all you know is work work work and work hard, that's the reason you people are exploited. You may be intelligent and know to work hard, but I'm not so sure if you are wise and understand the sytem as a whole. Read my post in this column if you are interested...but I feel sorry for you.

Not only you are exploited and kept in bondage, you are also taught that you are kept so because you are worthy of it. Please educate yourself and try to understand the system. Having a microscopic view and knowing nothing other than laboring in front of a computer doesnt help much in life....well...I dont know...I just have a feeling that you are just a loser troll...

Reply
May 27, 2010 10:16 AM countryboy countryboy  says: in response to Indian_H1B

Hey CodeCorrector. I thought they'd shipped you out by now. Of course. at minimum wage, they'll keep you as long as possible. You should hold out for a new broom and pan.

Reply
May 28, 2010 6:44 AM Dolores Dolores  says: in response to Rudy Torrent

Here's is Norm Matloff's excellent explaination of why this study cannot be taken seriously.

http://www.eweek.com/c/a/IT-Management/Professor-Blasts-Research-on-H1B-Visa-Workers-Earning-Higher-Wages-266591/

Reply
May 28, 2010 12:08 PM Rudy Torrent Rudy Torrent  says: in response to Proud_Desi

"Proud_Desi:  is typical of the delusional Desis who have infested the American I.T. industry, like Rajesh Kumar Ramachandran of Collabera , who had this to say:

Now listen carefully to me asshole.. dont just bark around in the corner like a rabies stricken stray dog about your pathetic views about politics and jobs. If your insecure about your skills and abilities thats your fucking problem not Indians or any other politicians.. Well you want me to provoke you well then hear this, we are gonna take all your jobs away.. we gonna make sure that you dont even have money to buy shit and eat, we gonna takle evrything thatwas yours.. we gonna drape the Statue of Liberty with a saree (you dont know wahta saree iis, well its a dress which Indian women wear).. now get your fucking stinking face out of here ASSHOLE!!!!!

Reply

Post a comment

 

 

 

 


(Maximum characters: 1200). You have 1200 characters left.

 

 

Subscribe to our Newsletters

Sign up now and get the best business technology insights direct to your inbox.


 
Resource centers

Business Intelligence

Business performance information for strategic and operational decision-making

SOA

SOA uses interoperable services grouped around business processes to ease data integration

Data Warehousing

Data warehousing helps companies make sense of their operational data


Thanks for your registration, follow us on our social networks to keep up-to-date