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The replacements

The H-1B visa system has been broken for decades. Now workers want Trump to fix it

Illustrations by William Joel

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William Joel / The Verge

In the summer of 2014, Craig Diangelo thought he was on the path to an easy retirement. A veteran of the tech industry, Diangelo got his start as a COBOL programmer in the 1970s. Over the next four decades he learned dozens of new programming languages and kept up with the evolution of the sector from mainframe computers to PCs, from the early days of the web to the advent of cloud computing. He held a position as a senior advisor to the CTO at a major health insurance provider, then took a job as data storage specialist at regional utility Eversource Energy. He lived near his office in Berlin, Connecticut, made a six-figure salary, and was working toward a comfortable pension. And then, in October, he and his fellow staffers were called into an all-hands meeting with the company’s chief information officer.

“She announced that they were going to outsource all of IT infrastructure and development to two companies, Infosys and Tata,” recalled Diangelo. Temporary workers in the US on H-1B visas would arrive, and the Eversource employees would need to train their replacements. “She was saying that they needed to bring over global workers, global workers were more adaptable, [and] can adapt to change a lot faster than Americans can.” Left unsaid was that the new workers would reportedly be getting less than half the salary of those they were replacing, and few if any health and retirement benefits.

In order to receive their severance packages, says Diangelo, employees had to train their replacements and sign non-disparagement agreements barring them from speaking publicly about the outsourcing. “The majority of us were older workers. We found ourselves in situations where the Connecticut economy wasn’t that great. So I would say most of us signed the NDA,” says Diangelo. The process of training their own replacements was hard on many of the workers. “A lot of people felt humiliated, people had severe depression, it was a terrible time.”

Donald Trump promised he would “forever end the use of the H-1B as a cheap labor program and institute an absolute requirement to hire American workers

Over its two terms, the Obama administration moved to expand the H-1B visa system, adding exemptions to the annual limit and increasing the time certain workers can stay. And over the last three decades, Silicon Valley has pushed aggressively to increase the number of H-1B workers in the US, with Facebook, Microsoft, and IBM leading the charge. “Why do we offer so few H-1B visas for talented specialists that the supply runs out within days of becoming available each year, even though we know each of these jobs will create two or three more American jobs in return?” asked Facebook CEO Mark Zuckerberg in April of 2013.

During the presidential campaign of 2016, Donald Trump promised he would “forever end the use of the H-1B as a cheap labor program and institute an absolute requirement to hire American workers for every visa and immigration program. No exceptions.” Diangelo, upset by the lack of action from his local politicians and encouraged by Trump’s tough talk, supported him in November. “I did vote for him, because my frustration level had just, it was like having an exploding head.”

Earlier this week, Trump signed an executive order calling for a review of the H1-B program. The administration proposed setting up a new system that would prioritize applicants with higher wages, rather than relying on a lottery, as the current program does. It also suggested expanding the number of jobs for which companies must try and hire an American first. These ideas aren’t radical — in fact, they are nearly identical to the solutions proposed by a bipartisan bill that has been floating around since 2007. That bill, along with others drafted by California legislators on both sides of the aisle, aims to keep in check a system that corporate America is eager to expand.

Bruce Morrison, a former Democratic Congressman from Connecticut who helped to draft the legislation that created the H-1B system, says that it’s undeniably important for America to attract the world’s best and brightest, and that a system which helps to bring in top talent is key to our economy’s success. The problem is that in the case of H-1B, “the system has been hijacked.”

Instead of allowing a small group of highly skilled workers in to fill positions where no Americans are available, H-1B has become a treadmill for replacing US workers, as well as facilitating the outsourcing of hundreds of thousands of jobs abroad. The end result is unemployed Americans and foreign workers with lower wages, fewer protections, and no clear path to citizenship. “As long as you allow the H-1B cancer to keep growing, you’re hurting everybody except the companies that are getting cheaper labor,” says Morrison.

In 1988, a Booz Allen report commissioned by the Immigration and Naturalization Services highlighted a worrying trend: employers were taking advantage of loose regulation to replace domestic workers with cheaper, imported labor in entry level positions. The AFL-CIO, the biggest national union, pushed legislators for immigration reforms. In 1989, Congress drafted a bill meant to tighten up the laws around the use of temporary foreign workers. Known as the Immigration Act of 1990, it was a bipartisan piece of legislation signed by President George H.W. Bush. The law added a new category of visa so that companies could bring in more high-skilled labor legally, but it also capped the number, and gave the Department of Labor regulatory oversight and enforcement capabilities. The newly minted H-1B visa was intended for workers in fields like science, engineering, math, and technology. Each visa was good for three years, with a one-time renewal option. It was a rare plan backed by both organized labor and business interests.

When it was introduced, the bill capped the number of H1-Bs at 65,000 every year. According to Morrison, the cap was intentionally small, a move meant to encourage companies to quickly move beyond temporary workers and pursue citizenship for the highly skilled employees they wanted to bring in from overseas. “If you need foreign-born people to work for you in America, get them green cards, so they can become part of our labor force and work on the same terms and conditions as everyone else,” Morrison says.

By the late ‘90s, the program had become a valuable resource for employers in the tech sector. Companies like Microsoft, Hewlett Packard, and IBM were using the visa to hire computer programmers, and the tech lobby put pressure on Congress to dramatically increase the number of H-1B visas made available each year. By that point, however, major news programs like 60 Minutes and 48 Hours had begun to report on the use of Indian programmers to supplement and sometimes replace American workers, and sentiment toward the system was shifting. Labor organizations like the AFL-CIO and IEEE opposed an expansion. As a compromise, an updated law included what appeared to be a number of new protections for US workers. First, companies applying for an H-1B worker had to demonstrate they had first tried to hire an American. Second, if they brought in a foreign worker, they had to ensure that person wasn’t displacing or harming American workers.

“The lobbyists for the tech industry were very effective.”

But the bill, known  as the American Competitiveness and Workforce Improvement Act, also created a loophole. If the person being hired through an H-1B had a master’s degree or was being paid at least $60,000, then companies were exempt from the two requirements meant to protect American workers. It was a low bar for companies to reach. “The lobbyists for the tech industry were very effective,” says Morrison.

Over the decades, the number of H-1B workers allowed into the US each year has grown. With the 1998 update, the visa cap lifted to 115,000. In 2000, the limit was boosted again, this time up to 195,000. That year, the law was also tweaked so that renewals no longer counted toward the cap. In 2004, the cap was reset to 65,000, but an exemption was added for 20,000 students graduating from US institutions with master’s degrees. Exemptions were also added for workers affiliated with academic institutions, which can include schools and teaching hospitals. According to Ron Hira, a professor of Public Policy at Howard University who has studied the H-1B issue and testified about it before the Senate, the actual number of visas handed out each year has been around 135,000 over the last five years.

But it’s how H1-B visas are being used by applicants that’s really changed. Data from the 2016 batch of H-1B petitions show that the top 10 sponsors of H-1B visa workers in the US are all corporations with large outsourcing businesses: Indian companies like Infosys, Tata, and Wipro, which pioneered the business, and US-based firms like IBM, Accenture, and Cognizant, which saw the success of the Indian contractors and began offing their own competing outsourcing programs. Those 10 firms have more workers currently employed through the program than the next 90 companies combined, a group that includes all of America’s largest tech companies and banks.

That means that the annual lottery for H1-B visas is now overwhelmed by companies that have built businesses based on foreign labor and business that are fostering a massive outsourcing industry. It used to take months for the program to reach its annual cap. This year it took five days.

And the adoption of H-1B workers can be just the start of a longer off-shoring process. At Toys “R” Us in New Jersey, Abbott Labs in Illinois, and Disney Parks in Florida, entire departments staffed by American citizens were forced to train H-1B workers hired as their replacements. Those replacements were then tasked with training individuals outside the country. Diangelo says that along with training the worker who shadowed him at the office, he was forced to train 10 workers back in India on the intricacies of his job. The daily lessons were conducted remotely using web conferencing software.

“The program is used for some really bright people and in the right way in certain cases, but it’s become overwhelmed by bad actors,” says Hira. “The laws and rules were written at the behest of industry, and employers love the program, because they get to hold the visa, pay lower wages, and avoid providing benefits,” says Hira. “It’s worth tens of billions of dollars to them, which is why they have fought any sort of sensible reform.” Hira estimates that roughly 1.7 million jobs have been offshored to India alone, and though other factors are in play, the H-1B program has helped facilitate that process. “The question is, can you repair the program, can you realign it, so the reality meets the intent?”

The tech industry has continued to lobby in recent years for higher caps on H-1B visas. In 2011, Steve Jobs reportedly used time with President Obama to press the issue. (Obama suggested broader reform was needed first.) In 2013, Facebook’s Mark Zuckerberg founded with a mission to “attract the most talented and hardest-working people,” as Zuckerberg put it in an op-ed that year. Luminaries like Eric Schmidt and Bill Gates signed on. It has since become the industry’s preeminent lobbying channel for the issue.

Trump’s election, meanwhile, seemed to generate uncertainty for tech giants. In January, Microsoft said in a regulatory filing that immigration policy changes or restrictions “may inhibit our ability to adequately staff our research and development efforts.” That month, Silicon Valley was fretting over the direction of the debate on visas; companies like Infosys and Tata took a massive hit on their stock prices. On a call with reporters this week to introduce a new executive order, Trump administration officials directly criticized outsourcing companies for their use of H-1B visas, saying their strategies are “very different” from how the program is generally pictured.

After Trump signed the order, released a statement railing against companies that are “super-dependent” — which they defined as businesses that rely on H-1Bs for over 50 percent of their workforce —  and called for a ban on third-party placement. The criticism was ironic, given that Facebook isn’t “super-dependent,” but is legally considered to be “dependent,” meaning at least 15 percent of its workforce relies on the visa. As the group has in the past, it also called on Congress to “expand the number of H-1B visas offered while reforming the system to protect American workers.”

Trump’s executive order does not increase the H-1B cap, but the administration says it is asking government agencies for suggestions on how to do away with the lottery format, and instead implement a process that favors higher-wage workers first. That move would echo a 2007 bipartisan bill crafted by Senators Dick Durbin, a Democrat from Illinois, and Chuck Grassley, a Republican from Iowa, that has been floated several time with no success. The bill would replace the current system with a preference system that would favor students and those being paid higher wages. A second bill introduced last year by California Congressman Darrell Issa would tweak the hiring requirements so that companies have to show they tried to hire an American for any position paying $100,000 or less, up from $60,000. It would also do away with the exemption that allows companies to displace American workers if their replacement has a master’s degree or better. But it would leave the current lottery system in place.

Not everyone in Washington agrees that reforms or cutbacks are needed. Senators like Orrin Hatch of Utah and Marco Rubio of Florida have been pushing an updated version of a bill known as “I-Squared” that would dramatically increase the number of visas approved each year but not drastically raise the requirements, moving the cap from 65,000 back to the 195,000 level it hit in 2000.

“The simplest, quickest, easiest fix out there is the Durbin-Grassley bill, I think, but the tech community has been dead set against it,” says Daniel Costa, director of immigration law and policy research at the Economic Policy Institute. The I Squared bill, says Costa, is a gift to the tech industry, offering “many more numbers and no real reforms.” He says that while Trump’s proposal calls for stronger enforcement, it isn’t very specific, and that deeper reform is needed. “What we’re all talking about here is really just sort of minimum basic standards to make this thing not be a total corporate scam.” In the current system, Costa believes that “US workers are getting screwed and migrant workers who come here are getting screwed as well.”

Whether the Trump administration will effectively alter the current status of H-1B visas remains to be seen. Though the president has framed himself as a staunch critic of the program, his businesses have utilized the program in the past. According to CNN, nearly 300 foreign guest workers came to the US on H-1B visas to work at Trump's model management company, his international hotel and tower, and the Trump Organization at large. And not all the placements filled the description of uniquely skilled, high-tech workers: the jobs ranged from engineers, to hotel managers, to fashion models.

Despite the threat of outsourcing, many Americans caught up in the system don’t blame foreign workers. Matthew Culver, a product engineer who worked for Carnival Cruise Lines, was asked to train an H-1B worker as his replacement before being let go. He refused, and was dismissed. “I have no animosity or no ill will towards the people who are taking the jobs. They’re just trying to provide for their families as well,” he told The Verge. “The fact that the opportunity exists to begin with, that’s really the problem and that’s for the enrichment of the few individuals who are selling out our economy.”

“They’re taking our jobs. They’re taking our manufacturing jobs. They’re taking our money. They’re killing us.”

Meanwhile the language from the White House around foreigners working in the United States has been marked with a nationalistic sentiment. Discussing the outsourcing trends to countries like India in April of last year, Trump said that “our jobs are being taken. We are losing at every front. There is nothing good. Our country does not win anymore. The jobs are being stripped.” On a different occasion, Trump objected to Mexican workers filling American jobs, saying, “They’re taking our jobs. They’re taking our manufacturing jobs. They’re taking our money. They’re killing us.” That aggressive rhetoric coincides with a spike in hate crimes in the days after Trump’s election last fall. In Kansas this February, a man shot two Indian engineers dead after telling them to “get out of my country.” Both men were working in the United States on H-1B visas.

The new executive order has tech workers like Craig Diangelo feeling hopeful. “It's a step in the right direction, but I would like to know what kinds of administrative actions will be taken if the government finds companies abusing the law,” he told The Verge. “Personally, I would have liked to have seen a one-year suspension of the lottery while a non-partisan group made changes to the law.”

After being let go from Eversource Energy, Diangelo was unemployed for a while. He lost out on a lot of his pension because he was forced into early retirement. Eventually, he found a new job as an IT consultant. While it doesn’t pay as much as his last gig, Diangelo considers himself lucky. “Last week I got together with six of my former co-workers, and I’m the only one that’s fully employed. After three years there is one guy who is driving a school bus, there is another guy working at the local supermarket stocking shelves, there are other people who are not working at all.” Diangelo tears up a bit when discussing their plight. “I look at my co-workers, people with advanced degrees, and they are working at the supermarket stocking shelves or driving school buses. Really? It does become humiliating.”

For several years, former Eversource employees upheld their NDAs, and didn’t speak with the press. “They are all afraid they will get sued for their severance,” says Diangelo. “A lot of them have gone through most of their savings.” But after finding a new job, Diangelo decided he’d had enough. “I finally said to myself, this is ridiculous, I’m living in the shadows because of a corporation, and I started to speak out.” He is part of a group of tech workers pushing for reform to the H-1B system and speaking out despite the threat of a lawsuit or loss of severance pay. “There has to be a change to the law,” says Diangelo. “I don’t see how you could bring over individuals on visas to take jobs from people that are already doing them. That has to stop.”