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IBM in the H-1B Hotseat (Again) May 23, 2015 matloff

After exposure earlier this year of Southern California Edison and Disney of those firms’ abuse of the H-1B work visa, thus giving a black eye to the visa program, the latest outrage involves IBM. This is interesting because IBM is a tech company — all the tech firms abuse H-1B, but usually that doesn’t make the newspaper — yet it is hardly the first time IBM has been embroiled in controversy over H-1B.  On the contrary, abuses by the firm have emerged ever since the visa program was established in the early 1990s. One 2012 internal memo is particularly damning, in which IBM HR says, “The cost difference is too great for the business not to look for” H-1Bs.

In the last few days, IBM has been accused of reneging on commitments it made to hire in Iowa, with funding from the state and local governments, all the while hiring H-1Bs. But the firm may have chosen the wrong state in which to engage in this kind of thing, as it is the home state of Senator Chuck Grassley, a major critic of H-1B, who asked the company to explain its actions.

IBM has now responded to the senator. The thrust of its argument is that it is hires H-1Bs because the latter have skills for which there is a shortage of qualified American workers, citing among other things cloud and mobile computing, data analytics and security.

As quoted in one of the above links, Professor Ron Hira replied that the median wage IBM has been paying its H-1Bs is $74,753, far below what American professionals with those specialties make. This is a fundamental economic principle; a rare in-demand skill should bring higher wages, not lower ones. Expertise in mobile computing, for instance, commands about a 20% salary premium.

Using the standard argument the industry lobbyists have been making for almost 25 years, IBM says once again that H-1Bs are needed for the short term, but the long-term solution is beefed up efforts at education and retraining in special skills. This has been the greatest red herring in the entire H-1B debate, and I’ve written extensively about it. No need to go into that here; let’s just say that it is certain that IBM rejects many American applicants who are well qualified for those jobs, and that many existing IBM workers could quickly learn new material to perform that work as well.

Note by the way my word “quickly” here, which is important because IBM says it needs to hire H-1Bs in order to fulfill contracts in a “timely” manner. Well, there is more on this. Another standard industry tack has been to portray older American workers as “fat and lazy,” unwilling to learn new things, and last Fall the company accused its workers of exactly that. It informed certain employees — who, not coincidentally were in the firm’s Global Technology Services offshoring group — that their pay would be temporarily cut 10% while the workers underwent training in certain key areas. And the areas the firm cited were — are you ready for this? — cloud, analytics, mobile and social! In other words, the skills the company now says it has an “emergency” need for are the same ones it was training Americans for back in September!

So, where is the disconnect? Are IBM’s American employees really fat and lazy, and unwilling/incapable of learning new things? Did that training program last Fall fail? Or is it just that IBM simply doesn’t want to pay American-level salaries? Given the $74,753 median H-1B salaries, tne answer seems clear: IBM really does believe “The cost difference is too great for the business not to look for” H-1Bs.

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