Abusing the H1B Visa and Global Labor Market Trends

Article courtesy eWeek

In the last few weeks, eWeek has reported on a number of H1B abuse cases – some pretty flagrant and outrageous cases of foreign workers being brought to the US and being bullied into wages and contracts that violate the intent of our labor law.  These kinds of abuses are damaging to the foreign workers, to local workers, and in the end, even to the businesses who’ve perpetrated them.

Flouting the law and under-cutting prevailing wage rates obviously hurts the worker in question.  But it also hurts the US workers as well – by undercutting their wages, and driving them down.  Our law protects against prevailing wage abuses for just that reason.  There’s an obvious legal impact to the businesses who’ve broken the law as well – but damage is also done to their industry – first by damaging the reputation of the industry, which is increasingly using a global workforce, and second, by disconnecting prices in the industry from actual costs in the minds of their customers.

But in an age where using offshore workers has a simultaneously good and bad reputation, practices like this just serve to further damage the reputations of firms who use foreign workers.  The really galling aspect of this issue may come down to the fact that it undercuts a trend which is going to continue to define our future – globalization:

1. The labor force is becoming increasingly global – this kind of abuse hampers that process in the short term, and fosters distrust in the global labor market, which interferes with the labor supply for others in the market.

2. Because the labor force is globalizing (and is unlikely to stop), the arbitrage opportunity that exists now will not exist forever – increasingly global workers will look to prevailing wages outside of their immediate local areas.  This abuse looks even poorer in that light – trying to get while the getting is good.  The focus of offshoring to save money will probably turn into one of offshoring to source the best talent.  Abusive practices will hamper firms from getting the best talent at minimum.

3. These visas came out of a limited pool that is often quickly exhausted, so they came at the price of other, more honest firms getting these visas.

The world of technical and scientific jobs is coming up on a period of change which is going to affect economies and policies in countries around the globe – as impediments to cross-border collaboration continue to drop, and wage rates across the world become more transparent, the system for protecting the workers rights, and creating a system of trust is going to improve.