Dr. Norm Matloff—H-1B Fraud Still Dwarfed By Legal Abuse
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From Norm Matloff’s H-1B/L-1/offshoring e-newsletter.

Norm Matloff writes

As is always the case when there are news stories, such as the one enclosed below, [Widespread problems, fraud found in H-1B program—U.S. study finds incidents of forged documents, fake degrees, 'shell' companies, By Patrick Thibodeau, Computerworld, October 9, 2008 ] about fraud in the H-1B program, I've been flooded with e-mail messages from people who are elated that "the truth has come out." As always, my response to them is "Thanks for writing, but as I have stated repeatedly, the main issue in H-1B/employer-sponsored green cards is loopholes, not fraud. Indeed, the industry lobbyists love these news stories, because it diverts attention away from the real issue, the loopholes."

No one ever seems to understand that last point. Yes, the industry lobbyists are HAPPY whenever articles on fraud appear, as it allows Congress to shift responsibility to executive branch, which then tightens up enforcement, while leaving the central problems untouched. Congress can then wash their hands of the matter.

Granted, the 20% fraud/technical error rate found in the current audit is significant. But it's no worse than the 21% rate found by the State Dept. in 2000, and the similar results in the 1994 DOL audit. And as to the H-1B found working in a laundry, Bartlett and Steele of the Philadelphia Inquirer found all kinds of incidents like this in their investigation (eventually published as a book[America: Who Stole The Dream]) in the 1990s.

More importantly, that 20% rate must be considered in context:

(a)Whatever new regulations the executive branch imposes as a result of this audit, the employers can easily adapt. For example, the audit found that some employers were paying below the official prevailing wage because they had the worker pay his own H-1B fees, causing his actual pay to dip slightly below the legally required wage. This is nickel-and-dime stuff, folks. So, the employers will now pay the worker slightly higher—big deal. The employers will still be paying only the official prevailing wage, which is far below the real market wage, and it will be business as usual. Again, this is the loopholes at work, in this case in the legal definition of prevailing wage. Most employers who are using H-1Bs as cheap labor are doing so FULLY LEGALLY.

So whatever the executive branch does now to address fraud and technical errors in H-1B applications, it will in most cases NOT cause the employers to switch from hiring H-1Bs to hiring Americans.

(b) The true rate of abuse of the H-1B program is near 100%. (Note the distinction between "fraud" and "abuse.") Virtually all H-1B hires violate the spirit (though not the letter) of H-1B, which is to remedy labor shortages. In virtually all cases, the employer could hire a qualified American. The main exception is the hiring of "the best and the brightest," which as I've shown statistically in my CIS article and elsewhere, is the case only for a tiny percentage of H-1B hires. And this near-100% rate holds for nearly 100% of the employers, including the big-name firms (whom the USCIS report cites as being largely innocent).

I don't know how to say this any more clearly or loudly, but once again, everyone: THE FRAUD ISSUE IS IRRELEVANT. It will be used by the industry lobbyists for their benefit, to prevent Congress from taking real action. This includes the excellent Durbin/Grassley bill; if the bill is addressed at all by Congress, the good, loophole-plugging, parts will be deleted, leaving only the parts dealing with fraud, which are of very little value.


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