Saturday, October 3, 2009

What Sen. Grassley Should Not Do on the H-1B Visa

Last week Sen. Grassley continued his passionate cry against the H-1B program with a public letter to brand-new USCIS Director Mayorkas. Rather than furthering the discussion, his comments were loose with facts and do not survive serious analysis. His authority for the “substantial fraud” (his words) is weak.

Almost exactly one year ago, the USCIS produced the “H-1B Benefit Fraud & Compliance Report.” According to Sen. Grassley, the Report alleges that 20.7% of all visa cases reviewed were identified as having “outright fraud or other program violations associated with them.” The Senator’s use of the statistical ".7%" is unfortunate. This precision gives the Report a degree of credibility and meticulousness that it does not deserve. Even the Report itself rounded off to 21% in its conclusion. Similarly, the Senator’s use of the phrase “outright fraud” is exaggerated. “Fraud” is fraud; there is no such thing as “outright fraud”. His aim seems to be to incite.

The Senator’s letter purposefully attempts to confuse issues. In the above citation, note that the Senator says “…or other violations associated with them.” The Report purposefully mixed technical violations and fraud findings. This is akin to mixing drunken driving fatalities and parking tickets in a report on motor vehicle violations. The Senator should be above this kind of word-smithing.

The Senator also casually dismisses one of the Reports key findings: that Staffing Companies and IT Companies are not the types of organizations that are committing the fraud. Specifically, the Report’s fourth finding was that the fraud was more likely in fields such as “accounting, human resources, business analysts, sales and advertising.” Since this finding doesn’t fit Sen. Grassley’s theme, he ignores it.

The Report itself was so poorly researched as to be virtually worthless. The sample used in the Report was 51 cases, which is a statistically insignificant number in a world where at least 100,000 H-1Bs are filed in any given year.

In the year since the publication of the Report, none of the fraud implied in the Report has been acted upon. No arrests have been made and no convictions have occurred. All of the investigations including the much heralded Vision Systems indictments were independent of the Report. It is also worth noting that the government recently amended their indictment in that case, lowering the damages sought. This reduction in allegation received far less press than the initial story.

As I have argued in the past, H-1B fraud likely is overblown. Here is what I said in April,

In prior years we have seen more than twice as many H-1B cases accepted. These numbers provide compelling evidence against the argument that internationally-trained workers are being used to displace American workers and lower US workers salaries. That argument just doesn’t jibe with what is actually happening.

If H-1B visa labor was being used primarily to lower US workers salaries, the H-1B filing numbers wouldn’t be impacted to any meaningful degree. Why? Because the incentive to reduce workers’ salaries is likely greater in a recessed economy, not less. This logic is straightforward and convincing.

The H-1B program surely has problems that legislation could cure. As an experienced Senator, Mr. Grassley knows that reasonable fixes to the H-1B program are attainable. Instead it appears as if the Senator is more interested in inciting a base level voter. The Senator’s aims would be better served by seeking out those organizations that are engaging in fraud, instead of broadly condemning the entire H-1B program. A good start would be to recognize the weak analysis in the "H-1B Benefit Fraud & Compliance Report”. When the Senator relies on the Report and plays politics with his language, his argument rings hollow.

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