H-1B and the IT job market in California

“There isn’t a clearer cut case of adverse impacts – the American worker is losing his job to an H-1B.” The person quoted was referring to the decision by Southern California Edison (SCE) in 2015 to lay off hundreds of domestic IT workers, and then turn to temporary work visa firms to replace the workers with Indians.

The dispute over outsourcing of IT jobs to outsourcing firms is complicated by the lack of public information on the detailed economics of major players such as SCE, plus the inherent complexity of IT workforce management.

We need an in-depth analysis by some one willing to suspend judgment. See George Borjas’ blog posting here, in which he reviews some recent research. For him, the only real benefit to American workers would come when temporary STEM workers bring skills and knowledge which spills over onto domestic co-workers. In the SCE case, it’s highly unlikely this would happen, because per Borjas these H-1B workers aren’t that special.

SCE had about 1,800 employees, plus an additional 1,500 contract workers. The 2015 layoffs involved about 400 workers. SCE hired Infosys, from Bangalore, and Tata Consultancy Services, headquartered in Mumbai, for replacements. Terminated employees signed confidentiality and non-disparagement agreements.

The Economic Policy Institute reports that the ten top IT outsourcing firms doing business in California filled applications in 2015 for 69,000 temporary H-1B jobs.

Over two-thirds of H-1B visas are granted for systems analysis and programming jobs.

On February 25 of this year Ron Hira of the Economic Policy Institute testified to Senate Subcommittee on Immigration and the National Interest of the Judiciary Committee.

Hira has estimated that SCE and other H-1B workers are paid less than prevailing wages. He did not have access to actual wages of lay off workers. He did know what H-1B worker wages for SCE, – in the $65K – $70K range, which he compared to the Dept of Labor estimates of the average wage of “computer systems analyst” of $91,990. And he had an Aon-Hewitt compensation study showing that IT employees of SCE were paid above $100K.

Wage data for IT certainly suggests that SCE and other outsourcing companies are saving a bundle on wages. BLS data show there were 74,000 computer systems analysts in California in 2014 with an average salary of $99,000. There were 548,000 computer and mathematical jobs in total in the state, with an average salary of $102,000.

The Dept of Labor has determined that SCE did not violate the H-1B law.

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