H-1B workers are better paid, more educated, study finds

Workers on H-1B visas are 10 years younger, earn 10% more than U.S. workers

H-1B workers are better educated than U.S. born workers and earn more, according to a new study by an independent research group.

The report by two economists at the non-partisan Public Policy Institute of California, also found that, on average, H-1B workers are about 10 years younger than U.S. born workers.

The report's findings concerning pay indirectly challenge beliefs about the H-1B program held by backers like Alan Greenspan, former chairman of the Federal Reserve.

In a recent column in the Financial Times, Greenspan argued that restrictions on the H-1B program protect "many high earners from skilled migrant competitors." He called the H-1B program "a subsidy for the wealthy," meaning well-paid IT workers.

Greenspan has previously called for raising the visa cap.

But according to this study, Greenspan conclusion U.S. IT workers are a "privileged elite is wrong." It found that the average annual earnings of H-1B workers are about 10% higher than the average annual earnings of U.S. workers, after adjustments for age, occupation and education.

The study is drawing reaction from those who see current H-1B policies as a detriment to U.S. workers.

The research may also underscore arguments made by H1-B opponents despite their criticism of the findings, particularly in regard to age. The study found that average age of H-1B workers are 30.6-years-old versus 40.6 for U.S. born IT workers.

In his newsletter, Norman Matloff, a professor of computer science at the University of California at Davis and a longtime critic of the H-1B program, wrote a detailed response in two parts (Part One and two).

On the issue of age discrimination, Matloff believes the H-1B visa plays a paramount role with employers looking to save money by hiring younger, "thus cheaper, H-1Bs, instead of older, thus more expensive Americans."

The study didn't look at some of the broader H1-B issues, such as the types of companies, including offshore outsourcing companies, that use them. President Barack Obama weighed in on that issue this week, at least indirectly, when he said the visa "should be reserved only for those companies that say they cannot find somebody in that particular field."

The study by Magnus Lofstrom and Joseph Hayes does combines data gathered through Freedom of Information Act requests to the U.S. Citizenship and Immigration Service and the U.S. Census to paint its picture of H-1B workers.

The researchers got individual level data from USCIS that included occupation, industry, education, age and annual earnings collected off the I-129 form.

They assembled data about U.S. workers from the U.S. Census American Community Survey, which is based on a sample of 1% of the U.S. population.

Among the things that this study found was that less than one fourth of the U.S.-born workers in IT have graduate degrees while close to one half of the H-1B workers have advanced degrees.

"This research quite strongly points toward a highly educated group of workers, and there is really no evidence in our data that points to lower earnings," said Lofstrom.

The message from their work is "that there is no evidence of lower pay amongst H-1Bs," said Lofstrom.

With respect to the use of H-1Bs and age discrimination, Lofstrom says that "remains a very important question that remains unanswered." Another unanswered question is whether the H-1B workers are having any impact on wage growth, he said.

One limitation in the data is lack of information about the geographic location of the H-1B workers. The concern is that H-1B workers are more likely to work in high-earning areas, such as Silicon Valley, than U.S. born workers.

Lofstrom said those geographic differences could account for a 2% to 4% impact on earnings, but not enough to overturn the report's conclusions.

The study's conclusions aren't being accepted by its critics on almost every point. Among them is John Miano, founder of the Programmers Guild, who has done his own work on the wage issue. He says the study doesn't take into account the legal requirements.

The report shows (table 4) mean annual earnings in IT for H-1B workers at $76,698, and the U.S. born workers, $79,118. The H-1B workers are paid less in that chart, but Lofstrom argues that you have to adjust for the differences in age and education to make a valid comparison.

Miano, however, said the law requires H-1B workers to be paid the higher of the wage paid to similar worker or the prevailing wage for the occupation and location. "If we take the report at face value, the authors have shown that employers are unlawfully paying law wages to H-1B workers by not paying young workers the overall prevailing wage," he said.

The report authors say their research it is built on data, thanks to their FOIA request, that is found in some other studies. But the report doesn't make an argument for expanding the H-1B cap. It says that the higher earnings levels of H-1B workers at current visa cap levels "do not mean that an expansion of the program will lead to similarly positive outcomes."

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.

Copyright © 2012 IDG Communications, Inc.

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