Giving Them Hell: John Miano on the H-1B Visa

Wednesday Dec 5th 2007 by James Maguire
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A fierce advocate for the American software developer, John Miano fights the good fight against what he describes as the widespread practice of employers using low-cost foreign workers to depress U.S. tech wages.

John Miano, H-1B activist

John Miano

You might call John Miano the “Lou Dobbs of the tech industry.” Miano, a onetime programmer who’s now a lawyer, is a fierce advocate for American software developers against what he sees as the encroaching tide of low-cost foreign software developers.

The H-1B visa program, which allows skilled foreign workers to work in the U.S. temporarily, is “a complete and total mess,” he says. The program is the ultimate managerial tactic to drive down wages, by his account: it provides lower cost, lower skilled workers who displace American IT professionals. In the never-ending battle between management and labor, the H-1B visa is management’s sharpest tool.

In short, Miano’s not happy. And he’s doing something about it.

One of his chief thrusts is a campaign of legal action taken in partnership with the Programmer’s Guild. As he tells it, many U.S. tech companies strongly favor H-1B workers over American workers, knowing that pay levels for H-1B workers are lower.

Miano launches legal action for American workers who claim they’ve been discriminated against in the hiring process. It’s illegal to discriminate based on immigration status.

“They tell me they’ve applied for a job. At the end, the company writes back to them. ‘Oh, I didn’t realize we couldn’t hire U.S. citizens for this job.’ It’s quite flagrant. I have thousands of these ads. It’s quite open what’s going on here.”

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Before hiring an H-1B worker, American firms must make a good faith effort to hire a U.S. worker. Yet apparently this doesn’t always happen. The Programmer’s Guild (Miano is a board member) links to a controversial YouTube video that allegedly reveals how U.S. firms go through the motions of considering American workers – placing ads, even interviewing – yet actually are willing to hire only foreign workers. (The company depicted in the video disputes the Guild’s interpretation, saying its footage has been misused.)

The results of Miano’s legal action vary based on how egregious the violation is. In most cases, “They tend to settle,” he says. He claims that about 100 firms have had to change their hiring practices in response to suits he’s filed. “At one time we had 300 [lawsuits] in the queue. And we started filing them and at one point the government said, ‘Please stop.’”

So far, Miano’s suits have only been against smaller companies, firms he refers to as “H-1B body shops.” These are firms who hire low-cost H1-B workers, then turn around and sub-contract them out to larger IT companies.

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These larger firms are complicit in H-1B abuse, he claims. These bigger companies use preferred vendors lists (which in itself is a common industry practice that is not illegal). Yet when hiring contract workers, some companies limit their preferred vendors lists to firms that only hire H-1B workers, the so-called “H-1B body shops.”

These larger firms might find themselves in legal hot water, Miano says. “You know that when we do discovery on them, we’re going to find some email from somebody who says, How come you guys are only sending us people from companies that are sending us H-1B workers?”

Apart from the legal issues, Miano says that the preferred vendor list system has become highly constrictive, establishing a near-stranglehold on contract IT hiring – a large part of the tech industry.

“Sometimes when a manager knows somebody, they will say, ‘Okay, I’d like to hire you, but you have to go over to this company, and then work through them,’” he says. “And they’re the ones who support the H-1B workers. They kind of wink and nod that they don’t do it.” But the effect is to block U.S. tech talent.

“We’re starting to get evidence against companies that are using preferred vendors lists to limit the hiring though H-1B body shops.”

Continued: Lower wages?

Lower Wages?

The assertion that H-1B workers are paid less than their domestic counterparts is one that some observers disagree with. The point out that U.S. companies are required by law to pay H1-B workers the prevailing American wage for that position.

But some U.S. companies find a way around this, Miano says. “The specific rules say, there’s supposed to be a prevailing wage source, it’s supposed to be a good source that’s based upon occupation and location.” Yet some employers use a national survey of college graduates, which shows wages of inexperienced workers, he says.

“The prevailing wage claim averages about $18,000 a year less,” than the American counterpart, Miano says. In actual wages, this translates to salaries for H-1B workers that are about $12,000 less than comparable American workers. (So some employers can claim they are paying H-1B workers a higher salary than the prevailing wage.) The bottom line, by Miano’s calculation: “The majority of their wages are in the bottom 25th percentile of U.S. wages,” of computer industry workers. (He details his research about lower pay for H-1B worker in this paper.)

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Giving Voice to Discontent

For the many American tech staffers who deplore the rise of offshoring, Miano gives voice to their discontent. As he tells it, shipping work overseas is a twin evil with hiring an H-1B worker in the U.S. The major culprit in both scenarios is misinformed IT management that doesn’t understand the value of American talent.

“In general, I think H-1B and offshoring represent stupidity within the industry,” he says. “I think they’re systematic of much larger problems.”

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One of the main problems: “The industry is dominated by people who don't know how to manage software.” The failure rate of software projects is high, and the cost of software is perceived as too expensive.

“So you look at it: how do you reduce the cost of software? If you’re one of these accountants or former marketing people who learned how to talk the IT buzzwords, and managed to work your way into a CIO position, you face a problem: ‘I need to either find people who can do the same thing for cheaper, or I have to do software development more efficiently.’”

Faced with such a dilemma, the average IT manager is lost, he says. “They’re going to say ‘I have no idea about doing things more efficiently, but I hear there are all these guys over in India and China who are real cheap. Let’s bring them!’”

Yet in reality, offshoring is no panacea, he says.

“You hear about the wonders of offshoring, it’s the same thing, you can get cheaper bodies over there. But from what I’ve seen in offshoring, personally, I’ve never seen offshoring successes.” He cites an anecdote about a company that shifted money from domestic projects to offshoring, even though the overseas work was a losing venture. Why? he asked the banker. “Oh, we’re going to keep offshoring because that’s what Wall Street expects us to do.”

Continued: Taking Legislative Action

In the face of Miano’s belief that offshoring isn’t cost productive – which runs counter to the growing investment in it – one wonders: how can hiring lower-cost developers overseas not be a cost savings? When a U.S. programmer makes, say, $78,000 a year, and an overseas programmer makes $18,000 a year, how can offshoring not boost profits?

“You’re assuming that programmers are fungible,” he says. “It turns out that there’s actually a huge variation in productivity among individual programmers.” U.S. developers may cost more but they offer a 5 to 1 (or more) ratio of greater productivity. Furthermore, due to cultural considerations, Americans programmers are quicker and better at understanding the needs of American clients. “That kind of thing is not exportable.”

In fact, Miano goes so far as to say that offshoring is a trend that’s dying – certainly an attitude that most experts would find flabbergasting. While he concedes that some limited projects will still be sent abroad – “it might be maintaining old mainframes and things like that” – its ceiling is limited.

“I think offshoring is big hype,” he says. “I don’t think offshoring is going to be big 10 years from now.”

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Tech Salaries: From High to Low

A Modest Proposal to Solve the H-1B Visa Crisis

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Taking Action

As part of his crusade for the American programmer, Miano monitors legislation, and he warns that industry lobbyists are attempting to push legislation that would ease or eliminate limits on H-1B visa caps. These lobbyists may attempt to work underneath the radar, he says. “The legislative guys are going to have to slip it in some other bill – they’ll never get this passed as a stand alone increase.”

Strong, concerted efforts are need to block this legislation, he urges. “Basically it’s a test of how well we can stand up to this. Whether their money and their influence can get it slipped into something, or whether we can block it.” He says the time for compromise is past. It’s a losing strategy. “There’s not going to be any compromise. Because every time we’ve seen compromise, the things for us disappeared before the end.”

He recommends that developers and other interested people who seek to influence the debate should join the Programmer’s Guild or the American Engineering Association. “Get involved with what’s going on. Because if this were to ever happen, it would be a serious train wreck.”

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