Lower Wages?

The assertion that H-1B workers are paid less than their domestic counterparts is one that some observers disagree with. The point out that U.S. companies are required by law to pay H1-B workers the prevailing American wage for that position.

But some U.S. companies find a way around this, Miano says. “The specific rules say, there’s supposed to be a prevailing wage source, it’s supposed to be a good source that’s based upon occupation and location.” Yet some employers use a national survey of college graduates, which shows wages of inexperienced workers, he says.

“The prevailing wage claim averages about $18,000 a year less,” than the American counterpart, Miano says. In actual wages, this translates to salaries for H-1B workers that are about $12,000 less than comparable American workers. (So some employers can claim they are paying H-1B workers a higher salary than the prevailing wage.) The bottom line, by Miano’s calculation: “The majority of their wages are in the bottom 25th percentile of U.S. wages,” of computer industry workers. (He details his research about lower pay for H-1B worker in this paper.)

For the many American tech staffers who deplore the rise of offshoring, Miano gives voice to their discontent. As he tells it, shipping work overseas is a twin evil with hiring an H-1B worker in the U.S. The major culprit in both scenarios is misinformed IT management that doesn’t understand the value of American talent.

“In general, I think H-1B and offshoring represent stupidity within the industry,” he says. “I think they’re systematic of much larger problems.”

One of the main problems: “The industry is dominated by people who don't know how to manage software.” The failure rate of software projects is high, and the cost of software is perceived as too expensive.

“So you look at it: how do you reduce the cost of software? If you’re one of these accountants or former marketing people who learned how to talk the IT buzzwords, and managed to work your way into a CIO position, you face a problem: ‘I need to either find people who can do the same thing for cheaper, or I have to do software development more efficiently.’”

Faced with such a dilemma, the average IT manager is lost, he says. “They’re going to say ‘I have no idea about doing things more efficiently, but I hear there are all these guys over in India and China who are real cheap. Let’s bring them!’”

Yet in reality, offshoring is no panacea, he says.

“You hear about the wonders of offshoring, it’s the same thing, you can get cheaper bodies over there. But from what I’ve seen in offshoring, personally, I’ve never seen offshoring successes.” He cites an anecdote about a company that shifted money from domestic projects to offshoring, even though the overseas work was a losing venture. Why? he asked the banker. “Oh, we’re going to keep offshoring because that’s what Wall Street expects us to do.”