H-1B Workers Earn More Than U.S. Workers, Finds Study

A University of Maryland report claims to dispel the idea that programs such as H-1B visas and foreign workers are cheap sources of labor for American companies. The study finds foreign workers in the United States have actually earned more than U.S. tech professionals. The study's authors, professors Sunil Mithas and Henry Lucas, recently spoke with eWEEK on the implications of wage deltas between the United States and visa workers.

The following question-and-answer interview seeks to get a better understanding of the findings and implications of the recently published report, "Are Foreign IT Workers Cheaper? U.S. Visa Policies and Compensation of Information Technology Professionals," from the University of Maryland's Department of Decision, Operations and Information Technologies at the Robert H. Smith School of Business.

A commonly heard complaint is that H-1B visa holders are used by companies to suppress higher wage American technology workers and supplant them with cheaper foreign technology workers. The study finds the opposite is actually taking place: The majority of foreign technology workers using visas and green cards in the United States are making premium wages. From the report:

""IT professionals without U.S. citizenship earn approximately 8.1% more than those with U.S. citizenship; IT professionals on an H-1B or other work visa earn approximately 7.9% more than those with U.S. citizenship; and IT professionals with a green card earn approximately 13.6% more than those with U.S. citizenship or work visa holders.""

Another key finding of the study is the level of government caps on H-1B visas affects the range of salaries. The idea is based in the laws of supply and demand: The lower the visa cap, the higher the salary. Visa caps have fluctuated between 85,000 a year for H-1B and foreign student visas up to levels of 195,000 in the years following the 2001-2002 recession. In the years when the cap was 195,000, wages were lower. In 2010, the visa cap on H-1B visas is 65,000 plus another 20,000 for foreign graduate student visas. From the study:

""The salary premiums for non-U.S. citizens and for those on work visas fluctuate in response to supply shocks created by the annual caps on new H-1B visas. Setting lower and fully utilized annual caps results in higher salary premiums for non-U.S. citizens and those with work visas.""

Why are foreign workers earning more? The report says "because of their intangible human capital, rigorous screening and selection processes, and willingness to work across borders, [foreign visa workers] are likely to earn higher wages than U.S. citizen IT professionals."
This interview was conducted via e-mail on May 19 with the report's authors, Assistant Professor Sunil Mithas and Professor Henry Lucas, Smith Department Chair of Information Systems. The report used wage and compensation data on 50,000 IT professionals from 2000 to 2005.
eWEEK: Your findings show that on the whole, visa-holding workers have made more money than U.S. IT workers. What is the significance of these findings for U.S. workers in IT?
U.S. IT professionals need to acquire global experience which is one reason that makes "foreign" workers attractive to global firms because such workers can help to create goods and services for global markets. More than 40 percent of revenues and 30 percent of profits of large U.S. firms in recent years came from markets abroad.