Are Companies Ripping Off Employees with Retirement Plans and H-1b Visas?

[chemisttree]

Tough finding a job anyone?

Here's another reason to hate lawyers.

I was reviewing Chemjobbers comments regarding last year's ACS podcast about the future employment outlook for chemists when I came across the term"purple squirrel" which I've never heard of before.

I must live a sheltered life.

 

[Locrian]

Why would this make you hate lawyers?

 

[lisab]

The lawyers do the dirty work, but it's the company management teams that ask them to do so. They're the ones who deserve contempt, IMO.

 

[chemisttree]

The lawyers do the dirty work, but it's the company management teams that ask them to do so. They're the ones who deserve contempt, IMO.

You did read that the law firm put on a seminar, right? They do that to drum up business, not in response to requests from paying clients. Sure, there is a market for employing offshore talent vs. american and these lawyers probably do respond to individual clients' requests for help with H-1B visas but this seminar's effort is to teach those whom are not currently clients.

These guys are scum every bit as much as the ambulance-chasers.

 

[edward]

Here is the video of the seminar on YouTube

http://www.youtube.com/watch?feature=player_embedded&v=TCbFEgFajGU

I watched an interview with a former HR manager as he explained how companies avoid hiring women who have children without openly asking them.

He had several suggestions, but the one that caught my eye was when he mentioned escorting the the female applicant to her vehicle after the interview. Sounds like a nice thing to do, but the real reason is for the HR person to look for child seats in the applicants vehicle.

 

[BobG]

I don't see either deserving contempt.

You don't necessarily look at the quantity of workers available when determing whether a shortage of workers exists. You also look at the quality. What you want are the best workers available, preferably at the lowest possible cost.

For example, there's no shortage of American basketball players that would gladly work in the NBA. But there is enough of a shortage of incredibly talented basketball players that NBA teams will look overseas to fill roster spots.

If a worker is just average, even if an average programmer or an average engineer, a company can do better by looking for the best another country has to offer. And that's what most companies doing this are looking to do - replace average American workers with outstanding workers, even if the outstanding workers come from a different country.

On the other hand, globalization takes on an entirely different hue when it starts affecting white collar workers as well as unskilled factory workers.

 

[ImaLooser]

Tough finding a job anyone?

Here's another reason to hate lawyers.

I was reviewing Chemjobbers comments regarding last year's ACS podcast about the future employment outlook for chemists when I came across the term"purple squirrel" which I've never heard of before.

I must live a sheltered life.

This stuff was going on when I worked in Silicon Valley in 1980. It's pretty much impossible to enforce a law like that. It just makes voters feel better, like their country cares about them.

 

[BobG]

Aside from a push to recruit engineers from foreign countries, I do have a comment about the Purple Squirrels that the podcast seemed to gloss over.

You have technical experts working in some office of their company that are asked what requirements they need when it comes time to fill an open slot. These guys are experts in their field, not experts in hiring people. Many provide a dream list that just isn't realistic and a person in HR isn't going to be able to QC those requirements simply because they know little of what's done in each of the offices of their company. Heck, they could have just listed all the qualities the guy that quit had just because they miss that guy so much.

And when it comes hiring time, the guys in the office completely disregard the requirements they laid out because they didn't really do a good job laying out the requirements they needed. Sometimes, defining what an employer wants in a job candidate is like defining pornography. They have a hard time defining it, but they know it when they see it.

I remember the job requirements for my job. You looked at them and had an idea of what the company could pay and you felt like there might be one person in the world that met those requirements and he was probably working in MacDonalds because he was so insulted that no one could pay him what he was worth.

Sometimes the only thing a job seeker gets out of the job requirements is a clue on what story from their past is likely to make an impression on them. Almost no employer is going to go down that list item by item asking you to prove you fulfill each particular item.

Heck, ten years later and I still don't meet the original requirements to get my job in the first place.

 

[humanino]

If I understand correctly, the vast majority of H1B visas go to computer science. I am going outside my field of expertise here, but if I were to extrapolate from what I know (nuclear physics), is it not possible that foreign students are just incredibly better at technical tasks than US students ? Hence employers going through the burden of H1B because they seek the best competitiveness. There are many studies showing that the US education system is broken. Instead of complaining about the competition from abroad, maybe it would be more productive to better oneself. But maybe I completely misunderstand the issue at hand.

 

[Jim Kata]

Don't you just love America? When you fail it's your fault because you didn't work hard enough, not that the system has conspired against you.

 

[AlephZero]

It's not a new issue or just an american one. I never saw the purple squirrel name before, but years ago some brain-impaired HR person at work agreed to a union demand that every internal job vacancy had to be advertised across the whole company. This created the nonsense that you couldn't "promote" anybody to the next pay grade without going through a full internal recruitment exercise.

It didn't take managers outside of HR very long to figure out how to write job adverts that could only be satisfied by the one person they were meant for. The unions were also smart enough to want to get rid of the unitended consequences, but HR thought this was such a wonderful job creation scheme (for them) that they wanted to keep the system going .

 

[Evo]

If I understand correctly, the vast majority of H1B visas go to computer science. I am going outside my field of expertise here, but if I were to extrapolate from what I know (nuclear physics), is it not possible that foreign students are just incredibly better at technical tasks than US students ? Hence employers going through the burden of H1B because they seek the best competitiveness. There are many studies showing that the US education system is broken. Instead of complaining about the competition from abroad, maybe it would be more productive to better oneself. But maybe I completely misunderstand the issue at hand.

I think you're spot on.

 

[lisab]

If I understand correctly, the vast majority of H1B visas go to computer science. I am going outside my field of expertise here, but if I were to extrapolate from what I know (nuclear physics), is it not possible that foreign students are just incredibly better at technical tasks than US students ? Hence employers going through the burden of H1B because they seek the best competitiveness. There are many studies showing that the US education system is broken. Instead of complaining about the competition from abroad, maybe it would be more productive to better oneself. But maybe I completely misunderstand the issue at hand.

These aren't students, they're working engineers. And the idea that we don't have equivalent skill or talent in the US is pure speculation -- and quite wrong, IMO. But US engineers won't work for what an engineer from, for example Pakistan, would. (And I don't know of any European engineer that would work for that wage, either.)

Does hiring cheaper employees make a company more competitive? Certainly. That's why worker immigration laws are regulated - it would be a disaster to import a lot of cheap workers into high-level jobs. These regulations are most likely found in all first world countries.

IMO - "better than" US talent? No way. Cheaper? Definitely.

Btw, where have you been ?

 

[Evo]

These aren't students, they're working engineers. And the idea that we don't have equivalent skill or talent in the US is pure speculation -- and quite wrong, IMO. But US engineers won't work for what an engineer from, for example Pakistan, would. (And I don't know of any European engineer that would work for that wage, either.)

Does hiring cheaper employees make a company more competitive? Certainly. That's why worker immigration laws are regulated - it would be a disaster to import a lot of cheap workers into high-level jobs. These regulations are most likely found in all first world countries.

IMO - "better than" US talent? No way. Cheaper? Definitely.

Btw, where have you been ?

The last company I worked for had mostly foreign employees in the technical positions. We are one of America's largest technical companies, and the foreign workers got the same pay as the US workers. It really is about getting the best workers.

 

[Vanadium 50]

Lisa, people on H1B's have to be paid at least the prevailing wage. So, by construction, H1B's can't put downward pressure on salaries. What can happen, though, is that with H1B's companies can hire the stereotypical kid from India or China who spent four years studying his brains out in a US college over the US citizen who, again, stereotypically, spent his four years drinking himself into oblivion.

 

[ParticleGrl]

The last company I worked for had mostly foreign employees in the technical positions. We are one of America's largest technical companies, and the foreign workers got the same pay as the US workers. It really is about getting the best workers.

It depends very much- the company I work for (a consulting firm) recently finished a report for a mid-size technical employer.

Our results was that increasing their sponsored visas would lower worker productivity slightly (the main effect here was that labor recruiting from a larger pool requires either slightly worse on-average performance OR increased HR resources), but allow them to lower their labor costs moderately (here it was mainly about a 'visa bonus'. i.e. the visa is worth a substantial amount to the immigrating worker).

This is only true for a large enough company that can sponsor many visas and can centralize the process. Otherwise potential savings is eaten by the sponsoring process.

The video in question strikes me as advice to companies trying to lower labor cost, not find the best worker, for several reasons. The most important is that they've completely discounted the American labor force- they recommend AVOIDING ADS IN PLACES LIKELY TO BE FREQUENTED BY COMPETENT AMERICAN EMPLOYEES. They are actively avoiding the best American talent. They don't want the best possible worker, they want a decent worker at a discount price.

Also- it clearly has nothing to do with the American education system- the most recruited foreign workers are American educated, as is most of the American workforce.

Lisa, people on H1B's have to be paid at least the prevailing wage. So, by construction, H1B's can't put downward pressure on salaries.

There are a lot of ways around this. Let's say you really need someone with to work as a programmer with experience doing numerical hydrodynamic simulations. This is rare enough to command a wage premium over a standard programmer. However, when you sponsor the H1B, you can report the job as a programmer I or whatever the relevant basic programming job is for your company. This let's you hire extra skills without paying extra money. This seems pretty common given that:
1. a 10% increase in H1Bs lowers competing wages by 4% (http://www.nber.org/papers/w12085)
2. Government OES numbers indicate that 90% of H1B IT workers make less than the median wage of their field

 

[Evo]

Also- it clearly has nothing to do with the American education system- most recruited foreign workers are American educated, as is most of the American workforce.

Right, it has to do with getting the best workers.

 

[ParticleGrl]

Right, it has to do with getting the best workers.

Did you read the rest of my post? It has to do with getting the best workers FOR THE COST. If you only get a slight decline in quality BUT save a moderate amount in labor cost, you do it. The labor lawyers who made the video clearly don't want the best workers- they refuse to even try to recruit American workers. If the best worker is American, they won't find him/her because they make it a point to actively avoid any avenue that might recruit him/her.

If, somehow, a "purple squirrel" American worker comes through the door, they have an HR interviewing expert whose job is to find a way to disqualify the person. NOT how to assess for quality, just blanket disqualification.

 

[humanino]

My H1B salary was matched with the standard salary for my competences. I am sorry, but I still do not understand how you can lower costs with this strategy. As far as I understand, it is far cheaper to subcontract labor abroad.

 

[Evo]

Did you read the rest of my post? It has to do with getting the best workers FOR THE COST. If you only get a slight decline in quality BUT save a moderate amount in labor cost, you do it. The labor lawyers who made the video clearly don't want the best workers- they refuse to even try to recruit American workers. If the best worker is American, they won't find him/her because they make it a point to actively avoid any avenue that might recruit him/her.

The people that I worked with made the same as American workers, they hired based on qualifications. Obviously, I'm American, there was no preferential hiring. I'd be willing to go out on a limb, based on my close to a half century of employment, which included hiring, that if there is a preference for hiring non-American talent, it's because non-American's might have a better work ethic. Just my personal observations. But honestly, these positions just had higher qualified non-American applicants, IMO. Hiring included aptitude tests, so ability and knowledge were a key part of the hiring process. And employees represented numerous countries, European, Asian, etc...

 

[ParticleGrl]

The people that I worked with made the same as American workers, they hired based on qualifications.

I'm sure there are companies that have the integrity to follow the spirit of the program, and that's great.

However, that doesn't change the fact that lots of companies don't. The research I've cited above shows that a 10% increase of H1B workers in a field depresses salaries across the board by ~4%, and the OES data from the BLS suggests that 90% of H1Bs make less than the median wage for their occupation and location.

I'd be willing to go out on a limb, based on my close to a half century of employment, which included hiring...

In that time, have you ever been asked to work with these types of labor lawyer consultants to help fill positions? I'm willing to bet the companies that hire them ARE looking to abuse the system. Ron Hira at Rutgers has done some work suggesting that most of the abuse is in the IT and programming sectors- they also hire the bulk of h1bs, so its possible if you are outside those fields you won't see as much of that sort of thing.

My company was recently hired by a mid-sized technical employer entirely to study whether increasing their visa sponsorship would save them money on labor costs, and our answer was yes, at the small expense of productivity (its not that the workers are worse, its that the search is harder with more applicants).

Personally, I think the best solution is to allow more no-strings-attached immigration. Get rid of the 'visa bonus' and wages should equalize, which gets rid of the incentive to engage in the shenanigans some companies play.

 

[Vanadium 50]

. a 10% increase in H1Bs lowers competing wages by 4% (http://www.nber.org/papers/w12085)

Your reference says, on page 25, "There is, in fact, very little difference between the average earnings of native- and foreign-born doctorates in the United States. "

It's true that if engineers are in short supply, even a bad one can demand a high salary, so yes, there is wage depression simply by supply and demand. According to Wikipedia, Microsoft is the largest US employer of H1B's, and they make up 1.6% of its workforce. So it can't be a huge effect.

I personally don't find that study convincing, as it uses correlation to infer causality, but take it at face value: 10% H1B's mean 3% reduction in wages. So the Microsoft 1.6% should cause a wage depression of 0.5%. Ignoring the inconvenient fact that Microsoft has a higher starting pay than its rivals, this works out to 22 cents an hour.

 

[Vanadium 50]

The research I've cited above shows that a 10% increase of H1B workers in a field depresses salaries across the board by ~4%

That's not what it said. If I have 100 H1B's and go to 110 (10% increase), wages do not fall by 3%.

 

[ParticleGrl]

According to Wikipedia, Microsoft is the largest US employer of H1B's, and they make up 1.6% of its workforce. So it can't be a huge effect.

For doctorates, a large chunk of the effect is through postdoc conditions (in general, postdoc conditions are the barometer for technical phd labor markets), so comparing against full time employees is likely to suppress the effect quite a bit. Remember- that study is only doctorates.

Also, the BLS OES data still suggests that the majority of H1Bs make below the median in their field. Its possible there is large reporting bias, but the existence of a visa premium makes sense, and it seems likely some employers would find a way to use it to their benefit.

 

[humanino]

I clearly make less than the median, because I am a junior staff in the pool. But, I cannot stay on H1B longer than 5 years, and almost everybody went through the same process. The initial claim that there is a systemic problem with the H1B program is quite extraordinary, and the soundbites can be interpreted innocuously by someone living the ordinary reality of the H1B program. I would be interested in a more convincing study.

 

[BobG]

Also, the BLS OES data still suggests that the majority of H1Bs make below the median in their field. Its possible there is large reporting bias, but the existence of a visa premium makes sense, and it seems likely some employers would find a way to use it to their benefit.

I clearly make less than the median, because I am a junior staff in the pool. But, I cannot stay on H1B longer than 5 years, and almost everybody went through the same process. The initial claim that there is a systemic problem with the H1B program is quite extraordinary, and the soundbites can be interpreted innocuously by someone living the ordinary reality of the H1B program. I would be interested in a more convincing study.

Obviously, a lot depends on the trends. People on H1B Visas eventually either become permanent residents or leave the country. And if they become permanent residents no longer in the H1B program, how does a study report them?

In other words, people here on a H1B Visa can make the same as American workers with the same experience and still depress the mean wage of all employees. A high influx of new workers means you can implement more of an "up or out" attitude towards current workers. Experience counts for more if the probability of a new employee being good is lower. In other words, an employee's replacement value, how much better he is than the average expected replacement, is higher if the overall quality of the replacement pool is lower.

This can actually be more of a problem than just lowering wages for new employees. How does the influx of H1B workers affect the average age of programmers and engineers a company has? And what does that mean career wise, especially for employees in their 40's and 50's? Forcing a young person to realize they may not be competitive in the career field they chose has a completely different impact than waiting for a couple decades before telling a worker he just isn't all that special (and, presumably, even if not definitely, it would be the "just good enough" experienced workers that would experience the biggest impact).

 

[chemisttree]

My H1B salary was matched with the standard salary for my competences. I am sorry, but I still do not understand how you can lower costs with this strategy. As far as I understand, it is far cheaper to subcontract labor abroad.

I've always thought that as well. I assumed the HR folks had determined that american workers were more likely to unionize, sue for discrimination of one sort or another, were more lazy, more likely to quit for better pay or working conditions.

How does your employer handle your retirement?

 

[Evo]

I've always thought that as well. I assumed the HR folks had determined that american workers were more likely to unionize, sue for discrimination of one sort or another, were more lazy, more likely to quit for better pay or working conditions.

How does your employer handle your retirement?

LOL, IIRC, humanino doesn't work for an ordinary employer.

chemisttree, do you realize that most big companies did away with retirement plans years ago? I worked 32 years in management for AT&T, they did away with their retirement plan ages ago. I got some class action thing in the mail a few years ago saying AT&T owed me a retirement as a result, but it was when I was having surgery, so threw the package into a drawer and never responded. I'm sure if I read it now, I would kick myself.

 

[humanino]

How does your employer handle your retirement?

401k with contribution matched.

humanino doesn't work for an ordinary employer.

I realize that not having a private employer may certainly shelter me from unethical practices. Hence my surprise and interest in this thread.

 

[chemisttree]

LOL, IIRC, humanino doesn't work for an ordinary employer.

chemisttree, do you realize that most big companies did away with retirement plans years ago?

Yes. I was just wondering if there might be a vesting period. Several of our H-1b's left long before they were vested. I thought they were getting ripped off.