H-1B Foreign Workers: Better Tracking Needed to Help Determine H-1B Program's Effects on U.S. Workforce
Published: 2003-09-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The continuing use of H-1B visas, which allow employers to fill specialty occupations with highly skilled foreign workers, has been a contentious issue between U.S. workers and employers during the recent economic downturn. The H- 1B program is of particular concern to these groups because employment has substantially decreased within information technology occupations, for which employers often requested H-1B workers. In light of these concerns, GAO sought to determine (1) what major occupational categories H- 1B beneficiaries were approved to fill and what is known about H-1B petition approvals and U.S. citizen employment from 2000-2002; (2) what factors affect employers' decisions about the employment of H-1B workers and U.S. workers; and (3) what is known about H-1B workers' entries, departures, and changes in visa status.
section_title: What GAO Found
paragraphs: H-1B beneficiaries were approved to fill a variety of positions in 2002, and the number of approved petitions (i.e., employer requests to hire H-1B beneficiaries) in certain occupations has generally declined along with the economic downturn, as have U.S. citizen employment levels in these occupations. In contrast with 2000, most H-1B beneficiaries in 2002 were approved to fill positions in fields not directly related to information technology, such as economics, accounting, and biology. Both the number of H-1B petition approvals and U.S. citizens employed in certain occupations, such as systems analysts and electrical engineers, decreased from 2001 to 2002. GAO contacted 145 H-1B employers, and the majority of the 36 employers that agreed to speak with GAO said that they recruited, hired, and retained workers based on the skills needed, rather than the applicant's citizenship or visa status. Despite increases in unemployment, most employers said that finding workers with the skills needed in certain science-related occupations remains difficult. Although some employers acknowledged that H-1B workers might work for lower wages than their U.S. counterparts, the extent to which wage is a factor in employment decisions is unknown. The Department of Homeland Security (DHS) has incomplete information on H-1B worker entries, departures, and changes in visa status. As a result, DHS is not able to provide key information needed to oversee the H-1B program and its effects on the U.S. workforce, including data on the number of H-1B workers in the United States at any time. GAO also found that DHS's ability to provide information on H-1B workers is limited because it has not issued consistent guidance or any regulations on the legal status of unemployed H- 1B workers seeking new jobs. Allowing unemployed H-1B workers to remain in the United States may have implications for the labor force competition faced by U.S. workers. While DHS has long-term plans for providing better information on H-1B workers, policymakers in the interim need data to inform discussions on program changes.

section_title: Letter
paragraphs: The continuing use of H-1B visas, which allow employers to fill specialty  occupations with foreign workers, has been a contentious issue between  U.S. workers and employers during the recent economic downturn. From  March 2001 to March 2003, unemployment among highly educated  individuals increased by about 400,000, resulting in 1.2 million of these  individuals being unemployed. In particular, employment substantially  decreased within information technology (IT) occupations, for which  employers often requested H-1B workers. Critics of the H-1B program  argue that enough U.S. workers are available to fill these highly skilled  positions and that the use of foreign labor results in U.S. worker  displacement. Proponents of the program argue that it has contributed to  our nation’s productivity in the booming economy of the 1990s and that  the need for highly skilled foreign workers continues to exist for certain  highly specialized occupations.
The H-1B program was established in 1990 to assist U.S. employers in  temporarily (for up to 6 years) filling specialty occupations with highly  skilled workers. In order to ensure that American workers are not  adversely affected, employers are required to meet certain labor  conditions, including paying H-1B workers wages comparable to those of  U.S. workers in similar positions and locations. The Department of Labor’s  Wage and Hour Division (WHD) is responsible for ensuring that H-1B  workers are actually working in the occupation listed in the employer’s  application and receiving the required wages.
Legislation creating the H-1B program limited the number of H-1B workers  allowed to enter the country annually to 65,000. In response to employers’  needs during times of greater economic growth, the limit was increased to  115,000 for fiscal years 1999 and 2000 and to 195,000 for fiscal years 2001  through 2003. This cap will revert to 65,000 in October 2003, unless  legislation is enacted to raise the cap.
Because of your interest in the employment status of H-1B workers and  their U.S. counterparts since the economic downturn, we sought to  determine (1) what major occupational categories H-1B beneficiarieswere approved to fill and what is known about H-1B petition approvals  and U.S. citizen employment from 2000-2002; (2) what factors affect  employers’ decisions about the employment of H-1B workers and U.S.  workers; and (3) what is known about H-1B workers’ entries, departures,  and changes in visa status.
To answer the first question, we examined the Department of Homeland  Security’s (DHS) Bureau of Citizenship and Immigration Services’  (BCIS)—formerly the Immigration and Naturalization Service (INS)—  2000-2002 H-1B petition approval data (i.e., data on approved employer  requests to hire H-1B beneficiaries) for five key occupations: systems  analysis and programming; electrical/electronic engineering; economics;  accountants, auditors, and related occupations; and biological sciences. In  addition, we analyzed 2000-2002 Current Population Survey (CPS) data on  U.S. citizen employment in similar occupations. To obtain information  about factors affecting employers’ decisions, we conducted site visits and  telephone interviews with 36 H-1B employers in 6 of the 12 states with the  largest number of H-1B petitions filed by employers—California,  Maryland, New Jersey, New York, Texas, and Virginia—selected for their  geographic dispersion. Employers were selected to obtain a range in both  the number of employer H-1B petition approvals and the occupations (IT- related and non-IT-related) for which they requested H-1B workers.  Seventy-five percent of the 145 employers we contacted chose not to  discuss H-1B issues with us; consequently, our results may be affected by  this self-selection. Most employers that agreed to speak with us used the  H-1B program to fill engineering positions. We also interviewed  associations representing U.S. and H-1B workers and associations  representing employers. To report information available on H-1B workers’  entries, departures, and changes in visa status, we examined DHS data and  reports on planned tracking systems, and we interviewed DHS officials  about their data systems and tracking procedures. We conducted our work  between August 2002 and July 2003, in accordance with generally accepted  government auditing standards. For more details on our scope and  methodology, see appendix I.
subsections: section_title: Background
paragraphs: The H-1 nonimmigrant category was created under the Immigration and  Nationality Act of 1952 to assist U.S. employers needing workers  temporarily. The Immigration Act of 1990 amended the law, by, among  other things, creating the H-1B category for nonimmigrants who  employers sought to work in specialty occupations and fashion modeling.Unlike most temporary worker visa categories, H-1B workers can intend  to both work temporarily and to immigrate permanently at some future  time. Employed H-1B workers may stay in the United States on an H-1B  visa for up to 6 years.
Until 1990, there was no limit on the number of specialty occupation visas  that could be granted to foreign nationals. Through the Immigration Act of  1990, Congress set a yearly cap of 65,000 on H-1B visas. In an effort to help  employers access skilled foreign workers and compete internationally, the  Congress passed the American Competitiveness and Workforce  Improvement Act of 1998, which increased the limit to 115,000 for fiscal  years 1999 and 2000. In 2000, Congress passed the American  Competitiveness in the Twenty-First Century Act, which raised the limit to  195,000 for fiscal year 2001 and maintained that level through fiscal years  2002 and 2003. The limit is scheduled to revert back to 65,000 in fiscal year  2004.
In order to hire H-1B employees, employers must first file a Labor  Condition Application (LCA) with Labor, attesting to the fact that the  employer intends to comply with a number of required labor conditions  designed to protect workers. On this application, an employer must state  the number of workers requested, the occupation and location(s) in which  they will work, and the wages they will receive. The employers must  attest, among other things, that: the employment of H-1B workers will not adversely affect the working  conditions of other workers similarly employed in the area; the H-1B workers will be paid wages that are no less than the higher of the  actual wage level paid by the employer to all others with similar  experience and qualifications for the specific employment or the  prevailing wage level for the occupational classification in the area of  intended employment; and no strike, lockout, or work stoppage in the applicable occupational  classification was underway at the time the application was prepared.
H-1B dependent employers (generally those with a workforce consisting of  at least 15 percent H-1B workers) and willful violators (employers who  have been found in violation of the conditions of an earlier LCA) are  subject to additional requirements. These employers must also attest that: before filing an LCA, the employer will make a good faith effort to recruit  U.S. workers for the position, offering wages at least as great as that  required to be offered to the foreign national; the employer will not displace and did not displace any similarly employed  U.S. workers within 90 days prior to or after the date of filing any H-1B  visa petition; and before placing the H-1B employee with another employer, the current  employer will inquire whether or not the other employer has displaced or  intends to displace a similarly employed U.S. worker within 90 days before  or after the new placement of the H-1B worker.
After Labor approves the LCA, an employer who wishes to hire an H-1B  worker can file two types of petitions with BCIS to obtain approval.“Initial” petitions are those that are filed for a foreign national’s first-time  employment in the United States and allow for the H-1B worker to stay in  the United States for 3 years. With some exceptions, these petitions are  counted against the annual cap on the number of H-1B petitions that may  be approved. “Continuing” employment petitions are filed for: extensions  of the initial petitions for another 3 years, the maximum period  permissible under the law; sequential employment, which occurs, for  example, when an H-1B worker changes employers within their 6-year  time period; and concurrent employment, in which the H-1B worker  intends to work simultaneously for a second or subsequent employer.  Continuing petitions do not count against the cap.
In both fiscal years 2001 and 2002, the number of initial H-1B petitions  approved that applied to the cap did not reach the annual limit of 195,000  (see fig. 1). In fiscal year 2001, 163,600 petitions were approved against the  cap. The number of approved petitions decreased by more than 50 percent  in one year, with 79,100 petitions approved against the cap in fiscal year  2002. This recent change contrasts with the trends from fiscal years 1997  through 2000, during which time the cap was lower and the number of  petitions reached or exceeded the annual limit.
DHS is responsible for managing the entry and departure of  nonimmigrants, including H-1B workers. To enhance DHS’s ability in this  regard, legislation was enacted that required the agency to develop an  automated entry/exit control system. Section 110 of the Illegal Immigration  Reform and Immigrant Responsibility Act (IIRIRA) of 1996 required that  this system collect departure records from every foreign national leaving  the United States and match it with arrival records. The act also required  that the system have the capability to assist DHS officials in identifying  nonimmigrants who have been in the United States beyond their  authorized period of stay. The Immigration and Naturalization Service  Data Management Improvement Act of 2000 (DMIA) replaced section 110  of IIRIRA in its entirety. The DMIA, among other things, required that the  entry/exit system integrate arrival and departure information on foreign  nationals required under IIRIRA and contained in the Department of  Justice (now DHS) and Department of State databases. DMIA also  required that this system be fully implemented by December 31, 2005.  Subsequent legislation required that the entry/exit control system must be  capable of interfacing with other law enforcement agencies’ systems.
In 2001, Congress passed legislation that allowed H-1B workers “visa  portability” – the ability to change employers during their stay once the  new employer files an H-1B petition on their behalf. According to the law,  the petition for new employment must have been filed before the end of  the worker’s period of authorized stay. DHS has the authority to issue  regulations that further specify how visa portability will be administered.
In March 2001, when the economy began to decline, U.S. employment  declined as well, with 1.4 million jobs lost during the year. The  unemployment rate rose to 5.8 percent at the end of 2001 and hovered  between 5.5 and 6 percent throughout 2002. Although downturns tend to  affect sectors throughout the economy, existing research indicates that job  loss from 2001-2002 was particularly severe in IT manufacturing, a sub- sector in which many H-1B workers were employed.
Concerns that the H-1B program might have unfairly impacted U.S.  workers during the recent economic downturn have prompted labor  groups to raise questions about the use of the H-1B program. Associations  representing U.S. workers that we spoke with believe that employers  abuse the program by laying off U.S. workers while retaining and hiring  H-1B workers at lower wages. Such practices, according to employee  associations, had the effect of displacing U.S. workers during the  economic downturn. Labor representatives argue that some employers  force H-1B workers to work for lower wages than U.S. citizen workers,  knowing that continued employment is the only legal way for H-1B  workers to remain in the United States. One advocate for H-1B workers  said that some employers dangle the possibility of sponsorship for  permanent residency in front of H-1B workers as a reward for extra work.  These representatives believe that visa portability options do not actually  give H-1B workers more freedom to move around in the labor market,  arguing that H-1B workers are still dependent on their employers to legally  remain in the United States. On the other hand, associations representing  employers argue that H-1B workers were not treated differently than U.S.  workers during the economic downturn, and that use of the H-1B program  by employers has decreased substantially. They also argue that the real  challenge to U.S. workers occurs when companies rely on workers  overseas where the work can be done at a lower cost.
section_title: H-1B Beneficiaries Were Approved to Fill a Broad Range of Occupations, and as U.S. Citizen Employment Generally Declined with the Recent Economic Downturn, So Did the Number of H-1B Petition Approvals
paragraphs: H-1B beneficiaries were approved to fill a wide variety of occupations, and  the number of H-1B petition approvals in certain occupations has  generally declined with the economic downturn, along with the  employment levels of U.S. citizen workers in these occupations. In  contrast with patterns in 2000, most H-1B beneficiaries in 2002 were  approved for positions that were not related to IT. Moreover, a  comparison of H-1B beneficiaries and U.S. citizen workers in five  occupations (electrical/electronic engineers, systems  analysts/programmers, biological/life scientists, economists, and  accountants/auditors) revealed that, in most of these occupations, H-1B  beneficiaries in 2002 were younger and a higher percentage had a graduate  or professional degree. In the three occupational groups for which there  were sufficient data to compare salaries (electrical/electronic engineers,  systems analysts/programmers, and accountants/auditors), salaries listed  on petitions for younger H-1B beneficiaries (18-30 years old) approved in  2001 who did not have advanced degrees were higher than salaries  reported by U.S. citizen workers of the same age group and education  level; however, salaries listed on petitions for older H-1B beneficiaries (31- 50 years old) were either similar or lower than the salaries reported by  their U.S. counterparts. Both the number of H-1B petition approvals and  U.S. citizens employed in certain occupations decreased from 2001 to  2002.
subsections: section_title: H-1B Beneficiaries Were Approved to Fill a Wide Array of Highly Skilled Positions in 2002
paragraphs: In 2002, H-1B beneficiaries were approved to fill over 100 occupations, but  IT occupations were no longer the majority of approved occupations, as  they were in 2000 (see table 1). A large proportion of approved petitions  were for fields unrelated to IT, such as university education, economics,  and medicine. However, IT-related occupations still constituted 40 percent  of all petitions approved in 2002 for H-1B beneficiaries, most prominently,  in systems analysis and programming (31 percent). Nine percent were in  electrical/electronic engineering and other IT-related fields. In 2000, the  pattern was different: 65 percent of all approved petitions were for IT- related positions.
section_title: In 2002, H-1B Beneficiaries Approved to Fill Selected Occupations Were Younger and a Higher Percentage Had Advanced Degrees than U.S. Citizen Workers
paragraphs: In most of the five occupations we examined (electrical/electronic  engineers, systems analysts/programmers, biological/life scientists,  economists, and accountants/auditors), H-1B beneficiaries with petitions  approved in 2002 were younger and a higher percentage had an advanced  degree than the population of U.S. citizen workers in 2002. H-1B  beneficiaries with petitions approved in 2002 were younger than U.S.  citizen workers in four of the five occupations: electrical/electronic  engineers, systems analysts/programmers, economists, and  accountants/auditors (see fig. 2). For example, the median age of H-1B  beneficiaries approved for accountant/auditor positions was 32, which was  substantially younger than the median age of 38 for U.S. citizen  accountants/auditors. The largest difference between the median ages,  about 9 years, was for U.S. citizens and H-1B beneficiaries approved for  electrical/electronic engineer positions. We found no significant difference  in the median ages of H-1B beneficiaries and U.S. citizens in biological/life  scientist positions.
In the three occupational groups (electrical/electronic engineers, systems  analysts/programmers, and accountants/auditors) for which there were  sufficient data to compare education levels, a higher percentage of H-1B  beneficiaries with petitions approved in 2002 had earned a graduate or  professional degree than U.S. citizen workers (see fig. 3). For example, 50  percent of H-1B beneficiaries approved to fill electrical/electronic engineer  positions had graduate degrees, compared with 20 percent of U.S. citizen  electrical/electronic engineers. Insufficient data precluded us from  analyzing the education levels of U.S. citizen biological/life scientists and  economists.
The salaries of H-1B beneficiaries and U.S. citizen workers differed from  each other when examined in relation to their education levels and age.In the three occupational groups (electrical/electronic engineers, systems  analysts/programmers, and accountants/auditors) where there were  sufficient data to compare salaries by age and education level, in 2001,  salaries listed on petitions for H-1B beneficiaries were higher (by about  $7,000 - $10,000) than salaries reported by U.S. citizen workers, for those  who were 18-30 years of age and did not have graduate degrees (see fig. 4).  In contrast, salaries listed on petitions for H-1B beneficiaries approved for  either electrical/electronic engineer or systems analyst/programmer  positions who were 31-50 years of age and had graduate degrees were  lower (by about $11,000 - $22,000) than salaries reported by U.S. citizens  with the same characteristics. In addition, salaries listed on petitions for  H-1B beneficiaries approved for electrical/electronic engineer positions  who were 31-50 years old and did not have graduate degrees were lower  (by about $5,000) than salaries reported by their U.S. counterparts. There  were no significant differences between the annual salaries of 31-50 year­ olds in all other cases shown in figure 4. Insufficient data precluded us  from making determinations about the relationship of age and education  to the salaries of H-1B beneficiaries and U.S. citizens who were 18-30 year­ olds with graduate degrees, or those who were in economist or  biological/life scientist positions. (See table 7 in app. II for more details.)  In addition to the factors we examined, a number of other factors can  affect earnings, such as years of experience and geographic location.  However, BCIS does not collect data on years of experience or geographic  location for H-1B beneficiaries.
Almost one-third of H-1B beneficiaries with petitions approved in 2002  were born in India, with the second highest percentage of H-1B  beneficiaries born in China, followed by Canada, the Philippines, and the  United Kingdom (see fig. 5). The remaining 45 percent of H-1B  beneficiaries represented an array of roughly 200 other countries.
section_title: H-1B Petition Approvals and U.S. Citizen Employment in Selected Occupations Declined from 2001 to 2002
paragraphs: After reaching a high level in 2001, the number of H-1B petition approvals  has recently declined substantially. The numbers of both initial and  continuing petitions approved increased from 2000 to 2001 and declined  well below 2000 levels in 2002, as shown in figure 6. The decline in petition  approvals for systems analysis/programming positions constituted 70  percent of the decline in the total number of petition approvals from 2001  to 2002. For each of the 3 years, a larger number of initial petitions were  approved than continuing petitions.
From 2000 to 2001, the estimated numbers of H-1B petition approvals and  U.S. citizens employed in most of the five occupations we examined  increased significantly (see table 2). For example, the number of petitions  approved in biological sciences positions increased by 1,685 to 5,454, and  employment for U.S. citizen biological/life scientists increased by 14,448 to  59,511. However, as U.S. citizen employment declined from 2001 to 2002,  so did the number of H-1B petition approvals (see table 2). In particular, H- 1B petition approvals and U.S. citizen employment decreased in IT  occupations. For example, the number of H-1B petition approvals for  systems analysis/programming positions dropped by 106,671 to 56,184, and  the estimated number of U.S. citizen systems analysts/programmers  employed decreased by 147,005 to 1,577,427.
section_title: The Majority of Employers Interviewed Reported That Skills, Rather Than Immigration Status, Determine Employment Decisions, but the Extent to Which Wage Plays a Role Is Unknown
paragraphs: All 36 employers that we interviewed said they made hiring and layoff  decisions about workers by selecting and retaining candidates with the  skill sets needed for the job, and the majority (19) of employers said that  they did not treat H-1B workers differently when making these decisions.  Most of the employers who said immigration status was a factor in their  decisions noted that they hired H-1B workers only when qualified U.S.  workers were not available. Despite increases in unemployment among  highly skilled U.S. workers, about two-thirds of employers said that finding  workers with the skills needed in certain engineering and other science- related occupations remains difficult. Employers who laid off workers said  that these decisions were based on whether the employee had the skills  that the business needed for the future. While employers cited  disadvantages to the H-1B program, such as cost and lengthy petition  processing times, they said they would continue to use the program to  meet skill needs. Some employers said that they hired H-1B workers in  part because these workers would often accept lower salaries than  similarly qualified U.S. workers; however, these employers said they never  paid H-1B workers less than the required wage. Labor is responsible for  enforcing H-1B wage agreements and has continued to find instances of  employers paying H-1B workers less than the wages required by law, but  the full extent to which such violations occur is unknown.
Most of the information in this section is based on our interviews with  employers of H-1B workers. We contacted 145 employers to discuss issues  related to the H-1B program, and 36, or 25 percent, of the employers  agreed to speak with us. Therefore, our results may be affected by this  self-selection and cannot be viewed as representative of all H-1B  employers.
subsections: section_title: The Majority of Employers Said They Recruited and Hired Workers Based on Skill Needs, Regardless of Visa Status
paragraphs: All employers interviewed said that finding qualified workers with the  needed skill sets was the main factor in recruiting and hiring candidates,  and the majority (19) of the 36 employers said that H-1B candidates were  not treated differently in the recruiting and hiring process. Several  employers mentioned that they were looking for experienced workers and  that qualified candidates often had a minimum of 2 to 3 years of relevant  work experience. These employers said their need to remain competitive  prevented them from spending time to train workers who did not have the  necessary skills. In addition to the need for technical skills and  experience, employers that hired for consulting positions—in which  workers are sent to different job locations or relocated frequently—said  that flexibility was an important consideration in hiring decisions. These  employers said that H-1B workers, having moved to the United States from  another country, were very flexible in moving within the United States.
Many employers told us that immigration status was a factor in their  decision-making when they looked for candidates with experience in  particular skill sets. Most of these employers said that they looked at  available U.S. workers before considering applicants that required H-1B  visa sponsorship and that they hired H-1B workers only when there were  no qualified U.S. workers available. One company that hired H-1B workers  primarily for product development engineering said that company policy  states that H-1B workers can only be hired after managers conduct  rigorous and unsuccessful searches for qualified U.S. candidates. Other  companies told us that because of the costs of processing and legal fees,  they hired candidates requiring H-1B sponsorship as a last resort.
Six employers cited the cost of U.S. labor as another factor in employment  decisions. While these employers said that they never paid H-1B workers  salaries below the prevailing wage, they did acknowledge that H-1B  workers were often prepared to work for less money than U.S. workers.  These employers said that they could not compete with the large salaries  offered to U.S. workers by the major IT and pharmaceutical companies.  These employers also told us that they had to recruit overseas because  U.S. workers either demanded salaries that were too high or were already  employed with other companies. A number of employers interviewed  acknowledged that some H-1B workers coming directly from other  countries might initially have accepted an offer with lower pay, but that it  would have been unwise for employers to pay these workers less than  their U.S. counterparts because they would soon leave for a higher wage  offered by a different employer.
Half of the employers we interviewed said they did not recruit overseas for  U.S. positions, but instead recruited workers through a variety of methods,  including employee referrals, the Internet, and outreach at U.S. graduate  schools. These employers said that they used the same methods to recruit  H-1B candidates and U.S. workers. Employee referrals and job boards on  the Internet were the most commonly cited recruiting methods. Several  employers noted that many H-1B workers were hired through referrals by  other workers already employed by their companies. In addition, about  two-thirds of employers said that most H-1B workers hired were already in  the United States attending graduate schools on student visas or working  for another employer on an H-1B visa.
Many of the employers interviewed said that they recruited overseas for  U.S. positions before the recent economic downturn because they could  not find enough qualified U.S. workers. However, most of these employers  said they have not recruited overseas for these positions since the  downturn. One employer cited the anticipation of Year 2000 computer  problems as a major factor in recruiting overseas, claiming the company  needed workers who were skilled in programming older mainframe  systems, whereas available U.S. workers were experienced in more  advanced technologies. Many of the employers interviewed reported that  there is a greater supply of workers for certain IT positions (e.g., systems  analysts and programmers) since the economic downturn, but also said  they have substantially reduced their hiring since the economic downturn  and have cut back on their use of the H-1B program.
Of the 36 employers we interviewed, about two-thirds said that despite the  increase in the number of unemployed workers since the economic  downturn, finding qualified workers in some engineering and other  science-related occupations remains difficult. These employers told us  that they look for superior candidates or those who are in fields with a  smaller pool of qualified candidates, such as chemists. One Internet  company said that it is difficult to hire the most productive workers  because such top performers are unlikely to be looking for work. Four  employers said they were looking for candidates with unique skills. For  example, one employer told us that foreign workers who helped develop  products overseas were the most qualified to help introduce those  products to the U.S. market.
section_title: Employers Interviewed Said They Released Workers Based on Business Needs, Regardless of Visa Status
paragraphs: Thirty of the 36 employers interviewed experienced layoffs, and all 30 said  that the layoffs were based on whether the employees had the skill sets  that the business would need in the future, regardless of their immigration  status. Seven of these 30 employers also added that employee  performance was a major consideration in layoff decisions. Several  companies said that layoffs were due to positions being eliminated or  decisions to close offices in certain locations. However, some companies  said that if they were eliminating a product line or regional office,  employees—whether H-1B workers or U.S. citizens—would be transferred  to another division or product line if their skills were needed. All  30 employers said that H-1B status was not a factor in these decisions, and  19 of these employers reported that they had laid off H-1B workers.  According to a few employers, H-1B workers were often the last to be  released because they frequently work in research and development  positions that create new products or other areas of the business that  generate revenue. Details about the number of workers laid off by  employers were not publicly available, and most employers declined to  share this information with us.
Labor associations argue that U.S. workers are being displaced by H-1B  workers whom employers view as a more affordable source of labor.  These groups cited anecdotal accounts of employers laying off U.S  workers and then retaining or hiring H-1B workers for the same positions  or outsourcing the work to companies using foreign labor. In the case of  H-1B dependent employers, the law prohibits companies from hiring H-1B  workers when it has the effect of displacing similarly employed U.S.  workers in the workforce. Although Labor has found no instances of such  illegal displacement by H-1B dependent employers, a few cases are  currently under investigation.
section_title: Most Employers Cited Cost and Lengthy Petition Processing Time as Major Disadvantages of the H-1B Program, but Said They Will Continue to Use the Program to Find the Skills Needed
paragraphs: Nearly all employers interviewed said that the length of time required to  process petitions is a major disadvantage of the H-1B program. About half  of these employers said that hiring an H-1B worker could take from  2 to 6 months, but that they often pay an additional $1,000 fee for premium  processing, which substantially reduces processing time. In addition, most  employers interviewed said that the combination of processing fees and  legal fees made the program very costly, with costs cited ranging from  $2,500 to $8,000 to hire an H-1B worker.
Citing their need to fill permanent positions, some employers noted that  the main disadvantage of the H-1B program is its temporary provision of  labor. These employers said they experience a substantial loss of  intellectual capital when an H-1B visa has expired and a foreign national is  forced to leave the United States. Nearly all employers interviewed said  that in order to retain these foreign workers, they often sponsored H-1B  workers for permanent residency either as part of their initial employment  offer or after a certain period of employment. Some of these employers  said that the fees associated with applications for permanent residency  can raise the cost of hiring an H-1B worker substantially, with a few citing  costs as high as $10,000 to $15,000. A few companies said that if their H-1B  workers were unable to obtain permanent residency, they would send  them to one of their foreign offices for a year and then bring them back to  the United States on new H-1B visas.
Despite the disadvantages of the H-1B program cited, 31 of the 36  employers interviewed said they would continue to use the program in the  future to meet skill needs. These employers believe that once the economy  recovers it will be difficult to find enough qualified U.S. workers, and that  the H-1B program gives them the opportunity to access a larger pool of  workers. Of the 24 employers that commented on the H-1B cap, 16 said  they were concerned that a limit of 65,000 would create processing  backlogs at BCIS when the economy improves, and feared that they would  have to wait several months longer to hire H-1B workers, as was the case  when the cap was reached in 2000.
While employers said that they would continue to use the H-1B program, a  few employers mentioned that they are seeking additional visa options for  bringing highly skilled workers to the United States. For example, in  recent years, employers have increasingly turned to the L-1 visa, an  intracompany transfer visa that can be used by companies to bring their  foreign professional workers to the United States on a temporary basis  (see fig. 7). L-1 visas do not have an annual cap and are not subject to  prevailing wage laws. Department of State statistics show that the use of  L-1 visas has increased substantially since fiscal year 1998. The number of  L-1 visas issued in fiscal year 1998 was 38,307 and rose to 41,739 in fiscal  year 1999, peaked in fiscal year 2001 at 59,384, and decreased slightly in  fiscal year 2002 to 57,721. Eight companies noted that the process to  obtain an L-1 visa was less cumbersome than the H-1B visa process, and a  few said that they planned to increase use of the L-1 visa in the future.
In addition to using other visas, some employers said that they are now  considering outsourcing work or moving their own operations offshore to  remain competitive. A few employers said that if they cannot find enough  highly skilled workers within the United States, they would start operating  overseas. One offshore IT services company said its competitive advantage  comes from offering U.S. clients IT services in India, which can  significantly reduce costs. According to a temporary staffing agency, some  companies are increasingly using contract or temporary staff as a way of  cutting labor costs and avoiding the bad publicity associated with layoffs.
section_title: The Extent to Which Wage Is a Factor in Employment Decisions Is Unknown
paragraphs: While a number of employers acknowledged that some H-1B workers  might accept lower salaries than U.S. workers, the extent to which wage is  a factor in employment decisions is unknown. Labor’s Wage and Hour  Division (WHD), which is responsible for ensuring that H-1B workers are  receiving legally required wages, has continued to find instances of  program abuse. As shown in table 3, the number of investigations in which  violations were found doubled from fiscal year 2000 to 2002, and the  amount of back wages owed to H-1B workers by employers increased  from $1.6 million in fiscal year 2000 to $4.2 million in fiscal year 2002.  These violations were largely due to employers bringing H-1B workers into  the United States to work, but not paying them any wages until jobs are  available, according to WHD officials. This dramatic increase in  violations and back wages owed to H-1B workers may be due to the  increase in the number of H-1B workers who have entered the country  over the years and does not necessarily indicate an increase in the  percentage of H-1B workers affected by wage violations.
The extent to which violations of the H-1B program take place is unknown  and may be due in part to WHD’s limited investigative authority. WHD can  initiate H-1B-related investigations only under limited circumstances.  WHD may investigate (1) when a complaint is filed by an aggrieved person  or organization, such as an H-1B worker, a U.S. worker, or the employee  bargaining representative; (2) on a random basis, employers, who, within  the previous 5 years, have been found to have committed a willful failure  to meet LCA work conditions; and (3) if it receives specific credible  information from a reliable source (other than the complainant) that the  employer has failed to meet certain specified work conditions. According  to WHD officials, H-1B workers may be reluctant to complain, given their  dependency upon their employers for continued residency in the United  States. In 2000, we suggested that the Congress consider broadening  Labor’s enforcement authority to improve its ability to conduct  investigations under the H-1B program. In response, Labor concurred with  our suggestion, indicating that it has long urged that the Congress  reconsider and expand the narrow limits on its enforcement authority.
section_title: Little Is Known about the Status of H-1B Workers, but New Systems Are Being Developed to Improve Tracking Information
paragraphs: Little is known about the status of H-1B workers due to the limitations of  current DHS tracking systems, but new systems to provide more  comprehensive information are being developed. One reason DHS is  unable to determine the number of H-1B workers who are in the United  States at a given time is because it has two separate tracking systems that  do not share data. The Non-Immigrant Information System (NIIS) has data  on entries and departures of H-1B workers and the Computer Linked  Application Information Management System 3 (CLAIMS 3) has data on  changes in visa status, but data from both of these systems are needed to  calculate the number of H-1B workers in the United States. In addition,  while DHS collects information on departures, change of visa status, and  occupations performed under a new status, this information is not  consistently collected and entered into current systems. DHS has  recognized the need for more comprehensive immigration data and is  working to develop improved tracking systems. One system, known as the  U.S. Visitor and Immigrant Status Indicator Technology System (US- VISIT), is intended to incorporate data managed by DHS as well as other  agencies to provide a foreign national’s complete immigration history.  System plans also provide for capabilities to generate aggregated reports  on foreign nationals. In addition to information systems issues, we also  determined that DHS’s ability to provide information on H-1B workers is  limited because it has not issued consistent guidance or any regulations on  the legal status of unemployed H-1B workers who remain in the United  States while seeking new jobs. The lack of clear guidance or any  regulations on this issue has resulted in uncertainty among H-1B workers  and employers about the appropriate actions needed for being in  compliance with the law.
subsections: section_title: DHS Has Incomplete Information on H-1B Worker Entries, Departures, and Changes of Visa Status
paragraphs: DHS cannot account for all the H-1B worker entries, departures, and  changes of visa status using its current tracking systems, because NIIS and  CLAIMS 3 data are not integrated, and data for certain fields in each of  these systems are not consistently collected and entered. As a result, DHS  is not able to provide some key information needed to oversee the H-1B  program and assess its effects on the U.S. workforce. This includes  information on the number of H-1B workers in the United States at any  time, the extent to which these workers become unemployed, the extent  to which H-1B workers become long-term members of the labor force  through other immigration statuses, and the occupations they fill as  permanent members of the labor force.
We found that obtaining better arrival and departure information on H-1B  workers requires integration of change of status data from CLAIMS 3 with  data from NIIS, and that such integration has proven to be challenging.  Currently, if a foreign national enters the United States under a student  visa and later becomes an H-1B worker, NIIS will not have a record that  indicates this person is an H-1B worker, unless the person exits and re- enters the United States under the H-1B visa. In 2001, DHS officials  attempted to obtain better information on the number of nonimmigrants in  the United States and their current statuses by matching CLAIMS 3 and  NIIS data using automated formulas, but found that about 60 percent of  the records between these two systems still needed to be matched  manually. This was mainly because the two systems do not have unique  identifiers for matching records. While DHS is examining ways to improve  its ability to match these records through formulas or by creating unique  identifiers, arrival and departure data continue to be separated from  change of status data.
Although data integration could improve information on H-1B workers,  DHS may continue to face challenges accounting for all departures  because these data are not consistently collected. While NIIS is supposed  to maintain departure records for H-1B workers, along with other  nonimmigrants, data from fiscal years 1998 through 2000 indicate that  departure information for foreign nationals is missing in about 20 percent  of the cases. DHS cannot account for all H-1B worker departures because  some nonimmigrants, especially those departing through land borders, do  not submit departure forms when leaving the United States. The United  States has an agreement with Canada that allows Canadian immigration  officials to collect departure forms and submit them to DHS. However,  Canadian officials are not required to collect these forms and, therefore,  some nonimmigrant departures from the United States through Canada are  not recorded. DHS also does not have immigration officials at some  departure areas along the Mexican border, thereby relying on  nonimmigrants to voluntarily deposit departure forms in collection boxes.
DHS officials also told us that airlines do not consistently collect and/or  return departure forms to DHS. In addition, some H-1B workers become  permanent residents and, therefore, are no longer required to submit  departure forms when exiting the country, leaving NIIS with no record of  their departures from the United States.
Moreover, DHS does not consistently enter change of status and  occupation data into CLAIMS 3. As a result, it is not possible to determine  either the number of H-1B workers who remained a part of the U.S.  workforce by becoming permanent residents or other employment-related  visa holders and the types of jobs they performed. About 50 percent of  electronic records on permanent residents do not include data on  residents’ prior visa status, according to a DHS official. Also, in fiscal years  2000 and 2001, about 20 to 25 percent of electronic records on permanent  residents who were known to have been H-1B workers did not contain  information on their occupations. In the data sets used to determine the  number of nonimmigrants, such as H-1B workers, who changed to other  employment-related visa statuses, the prior status data was missing in 30  percent of the cases. In addition, BCIS officials told us that occupation  data for H-1B workers who changed to other employment-related visa  statuses was often missing, but they were unable to tell us the extent to  which this occurred. Although no formal studies have been conducted to  determine why these data are missing, DHS officials believe that this is  primarily due to contractors not entering prior visa status and occupation  information into CLAIMS 3. One official said that some data contractors  may not enter this information because CLAIMS 3 will accept records if  the prior visa status and occupations fields are left blank. These data could  also be missing because individuals without a prior status or occupation  may leave these fields blank on their applications. These individuals, such  as spouses of permanent residents, may be coming directly from a foreign  country without having previously entered the United States under a  nonimmigrant visa.
DHS also maintains information in CLAIMS 3 that could indicate whether  an H-1B worker is no longer employed and possibly no longer in H-1B  status, but the agency has faced challenges with collecting this  information. When H-1B workers become unemployed before their visas  expire, employers are required to submit a letter to DHS stating that these  workers are no longer employed with them. DHS uses this information to  revoke the H-1B petitions, and this is indicated in CLAIMS 3. However,  agency officials do not believe that all employers are submitting these  letters, because DHS officials believe they have not received an equal  number of subsequent employment petitions as notices that the H-1B  worker is no longer with a former employer. Agency officials said that they  are not able to better ensure the collection of these letters because they do  not have the resources to proactively monitor employers. In addition,  since the agency is not currently concerned about reaching the H-1B  worker cap on petitions, a 6-month to a year lag time exists for entering  data about revoked petitions.
section_title: DHS Is Developing New Data Systems to Obtain More Comprehensive Tracking Information
paragraphs: DHS recognizes the need for a more integrated system to track  information on foreign nationals and is currently developing systems to  meet this need. DHS is mandated to develop an information system that  will integrate arrival and departure information on foreign nationals from  databases within DHS and across other government agencies, such as the  Department of State and law enforcement agencies. DHS is currently  working with State to develop this system, known as US-VISIT, which is  mandated by Congress to be fully implemented by December 2005. DHS  plans call for US-VISIT to have the capability to generate a single  comprehensive record of an individual’s entire immigration history, from  the initial request to enter the United States (e.g., H-1B worker petitions)  through departure and any re-entry. DHS’s plans also call for individual  records in US-VISIT to be updated almost immediately as users of the  different component databases update their records. For example, if a  DHS official updates a nonimmigrant’s record to reflect that a person has  changed visa status, that person’s US-VISIT record should reflect this  change almost immediately. Moreover, DHS plans for US-VISIT to be able  to generate statistical reports on nonimmigrants. As required by law, these  reports will include the number of nonimmigrants, including H-1B  workers, who have entered, exited, and remained in the United States.
section_title: DHS Has Not Clarified the Status of Unemployed H- 1B Workers through Guidance or Regulations
paragraphs: In addition to information systems issues, DHS’s ability to provide  information on the status of the H-1B population is constrained because it  has not issued consistent guidance or any regulations for implementing  the visa portability provision of the American Competitiveness in the  Twenty-First Century Act of 2000 (AC21). This has resulted in uncertainty  about the extent to which unemployed H-1B workers can legally remain in  the United States while seeking new jobs. Regulations have been in  development for over 2 years, and interim guidance has not clarified this  issue. For example, 1999 guidance stated that unemployed H-1B workers  are out of status and should leave the United States or seek a change in  status. However, in 2001, DHS issued guidance stating that AC21’s visa  portability provisions appear to include unemployed individuals and that it  expected to issue regulations addressing their status.
Currently, BCIS officials are addressing this issue on a case-by-case basis,and decisions have been inconsistent, according to a few employers.  These employers told us that in some cases, H-1B workers who were  unemployed for more than 3 months were required to exit and re-enter the  United States before beginning work with a new employer because they  were considered out of legal status. Yet, overall, BCIS officials have not  offered these employers clear directions about allowable timeframes for  H-1B workers to be unemployed and remain in the country. This lack of  clear guidance or any regulations can contribute to uncertainties in the  circumstances facing these workers. Moreover, employers told us that this  situation makes planning a worker’s starting date for a new job difficult. In  addition, if employers pay for the cost of re-entry, this process can impose  an unexpected cost of hiring an unemployed H-1B worker.
The agency has been working to develop regulations related to visa  portability since October 2000, but internal debates have prevented  regulations from being issued sooner, according to a BCIS official. For  example, the agency official told us that BCIS is concerned about  immigration enforcement issues that may arise by allowing unemployed H- 1B workers to remain in the United States. Labor officials said that they  were concerned about how unemployed H-1B workers in the United States  might impact government programs for the unemployed if, for example,  unemployed H-1B workers attempted to collect Unemployment Insurance.  In addition, a U.S. labor representative said that another implication of  allowing unemployed H-1B workers to remain in the United States is that  they will be competing with unemployed U.S. workers for highly skilled  positions.
section_title: Conclusions
paragraphs: Much of the information policymakers need to effectively oversee the H- 1B program is not available because of limitations of DHS’s current  tracking systems. Without this information, policymakers cannot  determine whether this program is meeting the need for highly skilled  temporary workers in the current economic climate and how to adjust  policies that may affect workforce conditions over time, such as the H-1B  visa cap, accordingly. Examples of needed information include the total  number of H-1B workers in the United States at a given time and the  numbers of H-1B workers employed in various occupations, the extent to  which H-1B workers become long-term members of the labor force  through permanent residency or other immigration statuses, and the  occupations they fill as long-term members of the labor force. Such  information could also assist policymakers in better determining program  effects on workforce conditions such as wages and the proportion of jobs  filled by H-1B workers. While DHS has long-term plans for providing better  information on H-1B workers, policymakers in the interim need data to  inform discussions of program changes.
Employers also have expressed concern about how BCIS determines the  legal status of unemployed H-1B workers. BCIS determines on a case-by- case basis whether an unemployed H-1B worker is allowed to stay in the  United States while looking for another job. However, H-1B workers and  employers are unsure about whether these workers can be hired for new  positions without first having to exit and re-enter the country, which  would be required if the workers’ legal immigration status was determined  to have expired. While this issue is no doubt a concern for H-1B workers  who have become unemployed, it is also a growing concern to employers  who may wish to hire these workers.
section_title: Recommendations for Executive Action
paragraphs: To provide better information on H-1B workers and their status changes,  we recommend that the Secretary of DHS take actions to ensure that  information on prior visa status and occupations for permanent residents  and other employment-related visa holders is consistently entered into  their current tracking systems, and that such information becomes  integrated with entry and departure information when planned tracking  systems are complete.
In order to improve program management, we also recommend that the  Secretary of DHS issue regulations that address the extent to which  unemployed H-1B workers are allowed to remain in the United States  while seeking other employment.
section_title: Agency Comments
paragraphs: We provided a draft of this report to DHS and Labor for their review. DHS  concurred with our recommendations and acknowledged the need for an  improved tracking system to link information related to H-1B  nonimmigrants among the State Department, Labor, and DHS. DHS also  said that it is in the planning stages to make changes to CLAIMS 3, which  will ensure that information on prior visa status and occupations for  permanent residents and other employment-related visa holders is  consistently entered. In addition, DHS said that issuing regulations is a  priority and that the final rule for implementing the law authorizing visa  portability for H-1B workers is undergoing revisions based on intra-agency  comments. DHS’s comments are reprinted in appendix III. Labor had no  formal comments. DHS and Labor also provided technical comments that  we incorporated as appropriate.
As arranged with your office, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days from its  issue date. At that time, we will send copies of this report to the Secretary  of Homeland Security, the Secretary of Labor, appropriate congressional  committees, and other interested parties. In addition, the report will be  available at no charge on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-7215. Other contacts and staff acknowledgments are listed in  appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To obtain information on the occupations H-1B beneficiaries were  approved to fill and demographic information and wage characteristics for  H-1B beneficiaries and U.S. citizens, we examined the Bureau of  Citizenship and Immigration Services’ (BCIS) 2000-2002 H-1B petition  approval data for five key occupations: systems analysis and  programming; electrical/electronic engineering; economics; accountants,  auditors, and related occupations; and biological sciences. In addition, we  examined 2000-2002 Current Population Survey (CPS) data on U.S. citizen  employment in similar occupations.
subsections: section_title: CLAIMS 3 Data on H-1B Petition Approvals
paragraphs: To obtain information on the occupations H-1B beneficiaries were  approved to fill, we examined 2000-2002 H-1B petition approval data from  BCIS’s Computer Linked Application Information Management System  Local Area Network (CLAIMS 3 LAN). These data provided a variety of  information on the H-1B beneficiaries in each year, such as the age,  education level, and annual salary expected for each beneficiary at the  time the petition was filed. However, neither the CLAIMS 3 LAN data nor  BCIS itself can provide information on how many H-1B beneficiaries  approved for employment in a year are actually working in the United  States in any particular year. The CLAIMS 3 LAN data may be informative  about H-1B petitions approved in a given year and about some  characteristics of those beneficiaries. However, these characteristics may  not be indicative of the characteristics of all H-1B workers in a given year.  For example:
Of the H-1B beneficiaries approved in 2001, we do not know the  proportion that began work in 2001. Some may not have started work until  2002; others may not have started work at all.
An individual H-1B worker could be represented in multiple petitions filed  by different employers in the same year.
We do not know the proportion of H-1B workers in 2001 who obtained  their H-1B petition approvals in 2001, 2000, 1999, or 1998.
Characteristics of H-1B beneficiaries approved in 2001 and working in  2001 may differ from characteristics of the H-1B workforce working in  2001 who received their approval in 1998-2000. For example, H-1B workers  approved in 1998-2000 could, on average, be older in 2001 than those  workers approved in 2001.
Because of these uncertainties, we do not know how well the  characteristics of the H-1B beneficiaries in any year would approximate  the characteristics of the population of H-1B workers actually employed in  that year.
section_title: Current Population Survey Estimates
paragraphs: To obtain demographic information for U.S. citizens working in the five  occupations we examined, we used the monthly CPS from 2002. The CPS  is a monthly survey of about 50,000 households that is conducted by the  Bureau of the Census for the Bureau of Labor Statistics (BLS). The CPS  provides a comprehensive body of information on the employment and  unemployment experience of the nation’s population. A more complete  description of the survey, including sample design, estimation, and other  methodology can be found in the CPS documentation prepared by Census  and BLS.
We used the 2002 CPS data to produce estimates of longest held job in the  previous year, highest degree attained, citizenship, and age. We used the  March 2002 Supplement of the Current Population Survey for all estimates  of median wages of U.S. citizens working for private employers. This  March Supplement (the Annual Demographic Supplement) is specifically  designed to estimate family characteristics, including income from all  sources and occupation and industry classification of the job held longest  during the previous year. It is conducted during the month of March each  year because it is believed that since March is the month before the  deadline for filing federal income tax returns, respondents would be more  likely to report income more accurately than at any other point during the  year.
subsections: section_title: Sampling Error
paragraphs: Because the CPS is a probability sample based on random selections, the  sample is only one of a large number of samples that might have been  drawn. Since each sample could have provided different estimates,  confidence in the precision of the particular sample’s results is expressed  as a 95-percent confidence interval (e.g., plus or minus 4 percentage  points). This is the interval that would contain the actual population value  for 95 percent of the samples that could have been drawn. As a result, we  are 95-percent confident that each of the confidence intervals in this  report will include the true values in the study population. We use the CPS  general variance methodology to estimate this sampling error and report it  as confidence intervals. Percentage estimates we produce from the CPS  data have 95-percent confidence intervals of +/- 10 percentage points or  less. Estimates other than percentages have 95-percent confidence  intervals of no more than +/- 10 percent of the estimate itself. Consistent  with the CPS documentation guidelines, we do not produce annual  estimates from the monthly CPS data files for populations of less than  35,000, or estimates based on the March Supplement data for populations  of less than 75,000. The blank cells in table 4 identify the estimates that we  do not produce because they are for small populations.
We compared CPS estimates of the number of U.S. citizen workers, age  distribution, and highest degree attained to comparable categories of H-1B  beneficiary approvals for the five occupation categories we examined.
While we attempted to produce CPS estimates of U.S. citizens for a  population that would be similar to H-1B workers, we could only make  comparisons to H-1B beneficiaries with petitions approved in a particular  year.
In order to compare the H-1B beneficiary occupations to CPS U.S.  workforce occupations, we combined some occupational categories in the  CPS to better match those of the BCIS data, as shown in table 5.
In order to verify our estimates of the numbers of U.S. citizens in the key  occupations and their average annual salaries, we compared the March  Supplement employment statistics for 2001 to those reported in the  Occupational Employment Statistics (OES) 2001 survey. We did not use  the OES for our analysis because the survey collects data from employers  and does not provide information about individual workers, such as age  and education.
section_title: Salary Comparisons
paragraphs: We compared the CPS median salary estimates for 2001 to median salary  figures reported for the 2001 H-1B beneficiaries for several occupations,  and for four age by education categories. For two of the occupations  (biological/life scientists and economists), we did not produce CPS  estimates due to insufficient data (see table 7). Although several of the  comparisons we were able to make did show a statistically significant  difference between the CLAIMS 3 H-1B beneficiary median salary and the  “comparable” CPS estimate, it is difficult to interpret this result in terms of  actual H-1B workers in 2001. There are several limitations that lead to  uncertainty in the interpretation of these results:
Although reporting problems are an issue with any measure of income, we  have additional concerns about the validity of the H-1B beneficiary  salaries, because the frequency distributions of the salaries of H-1B  beneficiaries in the five key occupations showed that employers reported  a number of very low and very high salaries for the “annual rate of pay” on  the petition application. We had no basis for determining whether the high  and low salaries were data entry errors, estimated payments for an  employment period of more or less than a year, or were very high or low  for some other reason.
The measures of median annual salaries for U.S. citizens could include  bonuses, but the median annual salaries listed on H-1B beneficiary petition  approvals most likely do not. Neither median salary includes noncash  benefits such as health insurance or pensions.
CPS salary reported in March 2002 was for the longest held position  actually worked in 2001, and reported by the worker himself (or a  knowledgeable member of the household). In contrast, salaries reported in  the CLAIMS 3 database for H-1B beneficiaries are provided by the  employer requesting the petition approval in possibly 2000 or 2001 for an  H-1B beneficiary likely beginning work in 2001 or 2002.
The 2001 H-1B workforce includes not only a portion of those H-1B  beneficiaries approved in 2001, but also those approved in prior years and  beginning to work in the United States in 1999, 2000, or 2001. In 2001, the  more experienced H-1B workers may have salary patterns that differ from  new recipients in 2001.
The definition of education level used to create our four age categories by  education level cells is somewhat different for the H-1B beneficiaries as  compared to the CPS U.S. workforce estimates. H-1B beneficiary status  requires the attainment of a bachelor’s degree or higher (or its equivalent)  in the field of specialty. In contrast, the education level recorded in the  CPS is the highest degree attained – not necessarily related to any  particular occupation.
In light of these limitations, caution should be used in interpreting  differences found in comparing CPS 2001 median salary estimates and  2001 H-1B beneficiary salaries.
section_title: Employers Selected for Interviews
paragraphs: To obtain information about the factors affecting employer decisions  about the employment of H-1B workers, we conducted site visits and telephone interviews with 36 H-1B employers in 6 of the 12 states with the  largest number of H-1B petitioners—California, Maryland, New Jersey,  New York, Texas, and Virginia—selected for their geographic dispersion.  Employers were selected based on their number of H-1B petition  approvals and occupations for which they requested H-1B workers in  fiscal year 2000. Specifically, we selected a variety of large (100 or more H- 1B workers), medium (30-99 H-1B workers), and small (29 or fewer H-1B  workers) employers to participate in the study. To obtain a range of  occupations for which employers hired H-1B workers, we also selected  employers based on whether they hired H-1B workers for either IT-related  or non-IT-related positions, such as those in accounting or life sciences.  We used fiscal year 2000 BCIS data to select employers because we  wanted to capture any changes in H-1B worker staff since the economic  downturn.
Through interviews with these employers, we collected qualitative  information on the factors affecting employers’ decisions in recruiting,  hiring, and laying off both H-1B workers and U.S. citizen employees.  Employer participation in this study was voluntary. We contacted 145  employers, and 25 percent, or 36, of these employers chose to participate;  consequently, our results may be biased by this self-selection. In order to  provide a broader perspective, we interviewed associations representing  highly skilled workers and associations representing employers to obtain  their views on how employers make decisions about their U.S. and H-1B  workers. We also interviewed Labor WHD officials about the agency’s  enforcement authority and employer violations of the H-1B program  requirements.
section_title: DHS Current and Planned Tracking Systems
paragraphs: To obtain information available on H-1B workers’ entries, departures, and  changes in visa status, we examined DHS data from current tracking  systems. However, we determined that these data had limitations that  precluded them from meeting our reliability standards. As a result, we did  not include them in our report. For example, we obtained data from DHS  on the total arrivals and departures of H-1B workers for fiscal year 2000  and the number of permanent residents who reported previously being H- 1B workers immediately before changing status in fiscal years 2000 and  2001. According to DHS officials, these were the most recent automated  data available. We also obtained data on the number of H-1B workers who  changed from H-1B to other employment-related visa statuses from  January 1, 2000 to December 31, 2002. In addition, we spoke with DHS  officials about the limitations of these data, data on the occupations of  employment-related visa holders, and current tracking systems.
We also obtained and reviewed reports on DHS’s planned tracking  systems. Among the documents we reviewed were the concept of  operations for US-VISIT (formerly known as the entry/exit system), a  report on system requirements for US-VISIT, the Data Management and  Improvement Act Task Force’s first annual report, and a report on the case  management system that is planned to replace CLAIMS 3. We also  interviewed DHS officials who are developing the new systems to learn  more about the planned system capabilities.
section_title: Appendix II: Age Distribution and Salaries of H-1B Beneficiaries and U.S. Citizen Workers
paragraphs: Tables 6 and 7 provide information on the age distribution and salaries of  H-1B beneficiaries and U.S. citizen workers.
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the above contacts, Danielle Giese and Emily Leventhal  made significant contributions to this report. Also, Shana Wallace assisted  in the study design and analysis; Mark Ramage assisted in the statistical  analysis; Julian Klazkin provided legal support; and Patrick DiBattista  assisted in the message and report development.
section_title: Related GAO Products
paragraphs: Information Technology: Homeland Security Needs to Improve Entry  Exit System Expenditure Planning. GAO-03-563. Washington, D.C.: June  9, 2003.
High-Skill Training: Grants from H-1B Visa Fees Meet Specific  Workforce Needs, but at Varying Skill Levels. GAO-02-881. Washington  D.C.: September 20, 2002.
Immigration Benefits: Several Factors Impede Timeliness of  Applications Processing. GAO-01-488. Washington, D.C.: May 4, 2001.
H-1B Foreign Workers: Better Controls Needed to Help Employers and  Protect Workers. GAO/HEHS-00-157. Washington, D.C.: September 7, 2000.
Immigration and the Labor Market: Nonimmigrant Alien Workers in the  United States. GAO/PEMD-92-17. Washington, D.C.: April 28, 1992.