Study: H-1B use cuts tech wages by up to 6%

The use of H-1B workers by U.S. companies is decreasing wages by as much as 6% for some IT workers, according to a study by researchers at New York University's and the University of Pennsylvania's business schools.

The study, released earlier this month by professors from the Stern and Wharton schools of business, concluded that H-1B workers' entry into the U.S. at current levels is causing a 5% to 6% drop in wages for computer programmers, systems analysts and software engineers. The study also found that offshore outsourcing decreases wages for a broader category of workers, including IT managers, by 2% to 3%.

The IT workers most likely to be affected by the downward pressure on wages are recent college graduates and people changing jobs, the researchers said.

The authors of the study, Prasanna Tambe, an assistant professor at Stern, and Lorin Hitt, a professor at Wharton, said they used data from multiple sources, including a "leading online job search site" that they wouldn't identify. Tambe and Hitt said they combined the demographic and wage data of individual companies available at the job-search site with information on H-1B visas and outsourcing available through the government and other public sources.

The study was based on information compiled on 156,000 IT workers employed at nearly 7,500 publicly held U.S. firms, Tambe and Hitt said.

The data from the combined sources provided what they called a "micro-data" view of public companies that hire H-1B visa holders and offshore workers. T

he goal of the study was to "precisely look at how domestic workers are being affected by globalization," Tambe said. "I'm not making a judgment on whether that is good or bad." In addition, the researchers wrote, "we simply sought to dispel the myth that globalization generates no losers" and to provide U.S. policymakers with data on how the H-1B program affects IT wages.

They did urge lawmakers to carefully weigh the effects of globalization on workers "against the macro-level economic effects."

"Offshoring will most likely remain a necessary and important part of the global economy," the authors said. "There is substantial evidence that H-1B admissions appear to directly improve levels of innovation and entrepreneurship, which in the long term should create new jobs and raise demand for technology workers in other areas."

This version of the story originally appeared in Computerworld's print edition. An expanded version also has been posted on our Web site.

Copyright © 2009 IDG Communications, Inc.

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