GAO Report on the H-1B Program

The Government Accountability Office (GAO) has published a January 2011 report on the H-1B program.    The GAO has produced a a comprehensive, 118-page, report which is intended to provide guidance to Congress with respect to amending or tweaking parts of the H-1B program.

The conclusion of the report is that certain reforms are needed for the H-1B program in order to minimize the risks and costs of the current program.    The main conclusions of the report are as follows.

Most interviewed companies said the H-1B cap and program created costs, but were not factors in their decisions to move R&D overseas.   GAO reports that employers generally indicate that the H-1B program and the cap adds additional costs; however, most large companies, if faced with H-1B cap shortage, find ways to employ talented foreign workers in the U.S., albeit at a higher cost.   On the other hand, small firms were more likely to fill their positions with different candidates, which they said resulted in delays and sometimes economic losses, particularly for firms in rapidly changing technology fields. Interviewed employers also cited costs due to the H-1B lottery process employed when the cap is reached—noting that it does not allow them to prioritize their candidates if they have submitted more than one petition or to make timely hires in response to business needs.

Agency data and systems hinder tracking the cap and H-1B workers over time. The total number of H-1B workers in the U.S. at any one time—and information about the length of their stay—is unknown, because (1) data systems among the various agencies that process such individuals are not linked so individuals cannot be readily tracked, and (2) H-1B workers are not assigned a unique identifier that would allow for tracking them over time—particularly if and when their visa status changes. Although information on the total H-1B workforce is lacking, data on approved petitions show that, since 2000, most people that were approved to be H-1B workers were born in China or India, were hired for technology positions, and increasingly held advanced degrees. System limitations also hinder the Department of Homeland Security from knowing precisely when and whether the annual cap has been reached each year, although this problem might be remedied through the agency’s data-modernization plan. Finally, data limitations, along with complex economic relationships, hinder our ability to estimate the potential impact raising the cap would have on U.S. worker wages and employment.

Staffing (Consulting) Companies Model and Employ of H-1B Workers Weakens Protections for U.S. Workers.   Elements of the H-1B program that could serve as worker protections—such as the requirement to pay prevailing wages, the visa’s temporary status, and the cap itself—are weakened by several factors. First, program oversight is fragmented and restricted. For example, the Department of Labor’s review of H-1B applications from employers is cursory and limited by law to only looking for missing information and obvious inaccuracies. Yet a recent Department of Homeland Security study reported that 21 percent of the H-1B petitions they examined involved fraud or technical violations.

Second, the H-1B program lacks a legal provision for holding employers accountable to program requirements when they obtain H-1B workers through a staffing company (see fig. 2). Officials from the Department of Labor’s investigative office reported receiving the bulk of their complaints from H-1B workers contracted by staffing companies.

Third, statutory changes made to the H-1B program have, in combination and in effect, increased the pool of H-1B workers beyond the cap and lowered the bar for eligibility. Specifically, these changes have increased the available exemptions to the cap; offered unlimited extensions on the visa while holders apply for permanent residency; and broadened the job and skill categories for eligibility. Regarding the latter, over 50 percent of employers requesting H-1B workers between June 2009 and July 2010 categorized their prospective H-1B workers as receiving entry-level wages, although we cannot tell whether this trend reflects lower skill levels or other factors.

Conclusion.   The GAO report concludes that the H-1B program, as currently structured, may not be used to its full potential and may be detrimental in some cases. Although executive agencies overseeing the program can take steps to improve tracking, administration, and enforcement, the data presented in the GAO raises important questions, including the adequacy of the qualifications of foreign workers the U.S. admits through the program, the appropriateness of H-1B hiring by staffing companies, and the role of the program with respect to permanent residency.