back to article US govt ups minimum H-1B tech salaries to $208,000 a year, more than startups can hope to afford, say VCs

The decision by the Trump administration to raise the minimum wage that H-1B visa holders must earn in America before they are eligible to work stateside is going to destroy startup culture, business leaders have warned. Last week, in the latest of a series of immigration crackdowns, the H-1B visa program’s lottery process was …

  1. Michael Hoffmann Silver badge
    Meh

    But wasn't that the point of the H1B?

    Heaven knows I am not a Trump administration fan, quite the contrary, however:

    I thought the point of the H1B was *always* to augment staff when the local market couldn't provide *and* you had to pay notably more in compensation.

    I worked in the USA 25 years ago (oh gods... where did time go?!) and the company had to prove that my compensation was equal or higher - and it was, as I was easily one of the best paid in the organisation in comparable roles.

    What exactly changed in that time (I've been gone from the US for a long time (oh gods... where did time go?!)) that they need to introduce what sounds like a cheap populist measure but actually sounds like "the way things used to be"?

    1. Pascal Monett Silver badge

      Re: But wasn't that the point of the H1B?

      I'm guessing that what happened is 25 years of lobbying from billion-dollar conglomerates to weaken the system and get cheap labor at a minimal price.

      Labor they can then pressure into slave wages and working overtime for nothing because, if you don't, you go back to your country.

      1. Electronics'R'Us
        Holmes

        Re: But wasn't that the point of the H1B?

        The nature of tech has changed dramatically since H1-B was introduced; there were far fewer IT bods as corporate networks were a rarity at the time.

        The programme was for people highly skilled in arts and sciences and in the early days that is precisely who the visas went to.

        I lived and worked in the USA from 1982 to 2004 although not on a H1-B - I got a green card which was simpler in those days but carried a lot of caveats such as no benefits until you had 5 (10?) years worth of paying into the system, you had to have a skill that would be beneficial and some other things that I don't recall right now.

        As the world of technology changed and more and more people ended up in quite highly paid IT and programming, the nature of corporate needs also changed (our wage bill is too high!) and some of those saw a way to game the system with 'some' moving more towards 'many'.

        The H1-B programme has not been properly used for at least the last 15 years (and probably longer) and the blatant gaming of the system made it farcical.

        Those who now complain that the minimum pay is now too high should be complaining about the companies that gamed the system so blatantly as that is really what precipitated this change.

        The we can't find people with the right skills is really code for we can't find people with the minimum necessary skills who will work for much less than the locals expect.

        Given the truly blatant way in which companies gamed the system a backlash was almost inevitable at some point.

        So don't complain these rates are too expensive; many corporations in the USA have been paying sub-par wages for decades and had an effectively indentured workforce.

        I also seem to recall that these visas are not now getting automatic renewal (which effectively was happening for a long time) and have to be re-applied for in the same way as a new one.

        So the overall effect of this is to move the goalposts back to at least close to where they originally were; to bring in people who really do have those rare and difficult to find skills.

        1. Anonymous Coward
          Anonymous Coward

          Re: But wasn't that the point of the H1B?

          I would have loved a green card. I was in on a B-1 visa to help out on some specialised projects where I was a subject matter expert on a few things - I was still paid in the UK etc as I was European support and development manager so was infrequent trips into US. Getting a B-1 was painful enough and it was limited - I think I had 6-12 months on that and was still queried by DHS on the way in.

          My colleagues had H1-B and L-1 transfer visa's.

          I would have loved to work over there (even now).

    2. Anonymous Coward
      Anonymous Coward

      Re: But wasn't that the point of the H1B?

      I'm fairly certain the purpose of the H1B visa was to allow US businesses to hire the professionals they needed but couldn't find locally and lock them in so they couldn't work for anyone else and never have to give them citizenship. A sort of high-skilled slavery.

      1. ecofeco Silver badge

        Re: But wasn't that the point of the H1B?

        All of the above.

  2. Robert Grant

    IANAL, but still. Come on.

    There is a long history of immigrants acting as both founders and early start-up team members in the United States; Silicon Valley in particular. A third of all new VC-backed startups are founded by immigrants and over half of current “unicorns,” those valued at over $1bn, have at least one immigrant founder.

    H1-B visas are not anything to do with immigration. People holding them are not immigrants.

    1. HammerOn1024

      Re: IANAL, but still. Come on.

      Correct and it also has ZERO to do with starting a business. Hiring someone for $50,000 or $150,000 is just fine... as long as they are not citizens of another country and one is trying to bring in someone under the H1-B program.

  3. Anonymous Coward
    Anonymous Coward

    Dear VCs: if your business can't pay a competitive wage to staff then it's not a sustainable business. You're welcome.

    1. Anonymous Coward
      Anonymous Coward

      Dear AC, a base (fixed) income at more than 30% above market rate makes it not sustainable, especially at the beginning when companys hardly make a profit. That's why there are additional things like equity or boni (ffs. bonus is Latin, plural should be boni) that are offered, based on how well the company does. Would who complain now all be able to afford that, if these were also taken into consideration? Not likely, but it would open some more doors.

      Thanks for reading the text by the way. The reading comprehension exhibited by you clearly shows why the H1B visa program is so important.

      1. Anonymous Coward
        Anonymous Coward

        "companys"

        "Would who"

        You sure aren't a shining example of the education system you came from. Were you ever taught to proofread?

        1. goodjudge
          Joke

          Tsk tsk

          You shouldn't end a sentence with a preposition: "... system from which you came."

      2. Roland6 Silver badge

        Dear AC, a base (fixed) income at more than 30% above market rate makes it not sustainable, especially at the beginning when companys hardly make a profit.

        Well the obvious solution to the problem is if you really need foreign labour is to not base your start-up in the USA.

        Brexit Britain is due to go-live in a couple of months, suggest you take a look, it isn't a bad place for a tech startup...

    2. Warm Braw

      If you're constantly importing staff into, say, the Bay Area with the result that you end up with an inflationary spiral caused by wages chasing an ever-increasing cost of living, it isn't sustainable either. Particularly if you drive out all the lower-paid workers your expensive staff depend on.

      There are signs that coronavirus has belatedly demonstrated that people do not need to gather in one place to deliver effective results and that there are substantial cost savings to be made by moving staff out of expensive hotspots.

      I suspect the H-1B change may now be largely irrelevant - instead of onshoring cheaper workers, more jobs are going be offshored instead now the feasibility is unarguable.

      One of the EU arguments for the freedom of movement of people was that the freedom of movement of money otherwise gave an advantage to the rich (which is why people like Farage and Trump are so opposed to it). For service workers, technology has given them a virtual freedom of movement - physically keeping them out isn't going to work any more.

    3. Anonymous Coward
      Anonymous Coward

      > Dear VCs: if your business can't pay a competitive wage to staff then it's not a sustainable business. You're welcome.

      also

      Dear VCs: if your business can't pay an H1B wage premium then you could always hire a US worker on a lower wage and train them in the skills you need?

      1. Version 1.0 Silver badge

        So they will hire an American worker, get them up to speed and then send them overseas to train the locals and then, once the job is done, retire/fire them now that the jobs have move overseas. Welcome to corporate Americana.

      2. Roland6 Silver badge

        >Dear VCs: if your business can't pay an H1B wage premium then you could always invest in another startup that trains US workers in the skills your first business needs?

    4. IGotOut Silver badge

      "if your business can't pay a competitive wage to staff then it's not a sustainable business. You're welcome."

      So you have no issue with raising the minimum wage to $50.

      It depends on what you class as competitive.

    5. trevorde Silver badge

      "... decision has sparked anger and frustration, particularly from startups that can’t afford to pay high wages and rely instead on things like equity, bonuses, and various perks to get the best candidates. None of those alternative forms of economic reward are accepted under the new rules."

      1. ecofeco Silver badge

        Works for me.

  4. Anonymous Coward
    Anonymous Coward

    The principle makes economic sense to me...

    “Modifying the H-1B cap selection process by replacing the random selection process with a wage-level-based selection process is a better way to allocate H-1Bs when demand exceeds supply,”

    This makes sense, ensuring that the positions that pay the most (and are will therefore tend to be for the most important needs/roles and with companies that tend to be more ethical about their staffing decisions.) are the ones that are staffed first.

    $208,000 a year seems like a lot to me, but if that is the cutoff below which the number of H1-B visas runs out, then I for one welcome our six-figure making H1-B overlords!

    1. Fruit and Nutcase Silver badge
      Facepalm

      Re: The principle makes economic sense to me...

      There's always the E1-B to bring in talent.

      https://www.bbc.co.uk/news/world-us-canada-43256318

    2. Phil O'Sophical Silver badge

      Re: The principle makes economic sense to me...

      $208,000 a year seems like a lot to me

      It's the headline-grabbing clickbait, salary for an "IT analyst'. The article does go on to say "An entry-level programmer would need to make $111,946 instead of the previous $78,125.".

      1. Aitor 1

        Re: The principle makes economic sense to me...

        The sl8ght issue is that in Boston 120.000 is a senior role, mostly, so rather than get a brilliant junior you would get a senior.

        And you wont hire seniors from other countries... well, you wont hire them in the us.. you will hire them where they live and wont pay taxes in the US.

        Unless the US gvnt also taxes IT services they are shooting themselves in tbe foot.

        Note: yes, the current system was/is a travesty in some sectors, but it is also very harsh on the inmigrants. If you get someone from abroad, just dont kick him/her after a few years if productive to society.

      2. ecofeco Silver badge

        Re: The principle makes economic sense to me...

        I have yet to meet any entry level programmer making $78K outside of Silly Valley.

      3. Anonymous Coward
        Anonymous Coward

        Re: The principle makes economic sense to me...

        Yes, I read that. So it sounds like they are not doing an "auction" for these H1-B's, but there is a government policy that states if you are a programmer and want an H1-B, you have to get paid this much, or so much for an IT analyst.

        I was not aware that the government sets targets for individual occupations within the H1-B program. I'm not sure what I think of that. I guess you don't want all the visas going to a couple occupations, but I would rather prefer an auction process of some kind, during which the compensation paid for the H1-B applicant is listed, and if there are 200,000K applicants and 50K visas, the visas go to the 50K highest-paid applicants.

    3. EnviableOne

      Re: The principle makes economic sense to me...

      Fully agree the idea of a wage-level base, rather than a lottery makes sense, but I would say a points based system is even better, where the industries most in need get their higher paid staff first....

      however the 30-50% premium to market rates is steep, an 10-15% would be appropriate (i.e. you tried paying above market, but still couldnt recruit, so will pay JF that much)

  5. Anonymous Coward
    Thumb Up

    Seems an excellent idea...

    The US administration is sending out a strong signal that the H-1B system should be used as a last resort to increase the size of the US's pool of talent, favouring actual citizens, not as a mechanism to drive down wages.

    Everyone wins, except a few whiners at VC funds - who aren't exactly short of money themselves.

    1. ecofeco Silver badge

      Re: Seems an excellent idea...

      1B system should be used as a last resort to increase the size of the US's pool of talent,

      Exactly. As was the original intention, but many knew it would eventually be abused. And so it was.

  6. Anonymous Coward
    Anonymous Coward

    Since when...

    Did startups import developers? I though they all used India / Romania.

    Also, in a world where remote working is extremely possible (and has been forever) why would you need your developers to be in the same country?

    I'd find it more appealling if I could stay where I am rather than go to another country to write software.

    Ive worked for American firms before and I understand the "running around a building looking flustered to appear busy" culture over there, but come on, it had to die at some point.

    You'll have to actually produce results now.

    I worked for a US based auction house in their base in London and my god, it always felt incredibly busy and stressful but not a lot was actually happening.

    The vast majority of people held positions that required very little work but carried fancy titles like VP of Facilities Procurement. Bathroom Strategy Executive etc.

    As one of very few Brits in the firm, I found it hilarious.

    They paid very well, my salary and benefits were incredibly generous, but my word are Americans up their own arse.

    I've never seen such rampant nepotism as well. We think it's bad in the UK, but Jesus Christ is it bad in the US.

    At least over here if daddy gets you a job you still have to produce something and participate.

    In this firm, they got a title, a desk, a phone, a laptop, your own PC and various other very expensive bits but they weren't really expected to do anything. Granted they weren't being paid, they were "interned" but by the time they'd sat around for two years they could claim to have experience in their alloted job title.

    "Yeah I was VP of X at Y prestigious firm for 2 years".

    They would legit move on to other firms to grab the same title on the back of zero actual experience. Most of them would end up back at their original desk within 6 months because they were fundamentally useless, but they'd a promotion and run the cycle again.

    Wash, rinse, repeat up the pole. Hoovering up free money each time they went. Amassing small fortunes for nothing.

    Absurd.

  7. sabroni Silver badge
    Unhappy

    re: going to destroy startup culture, business leaders have warned

    Oh no. Don't make me like something Trump has done.....

    1. Robert Grant

      Re: re: going to destroy startup culture, business leaders have warned

      www.wsj.com/articles/the-only-good-thing-about-donald-trump-is-all-his-policies-1519689494

    2. First Light

      Re: re: going to destroy startup culture, business leaders have warned

      We can allow him one thing - but the five hundred thousand million other awful things he has done will get him in the end . . .

  8. lglethal Silver badge
    Stop

    One step forward, one step back...

    I understand and completely agree with the changes that make it those applicants with the highest paid salaries gets visas first. That makes complete sense to me and goes along way to fixing the abuse of H-1B visas.

    But why after doing that, do they need to set minimum limits? Surely it should simply be, you have 100,000 visas available. The top 100,000 applicants receiving the highest salaries get the visas. If that 100,000th salary is $200k, or $50k, it shouldnt matter. You have your 100,000 visas. Done.

    If this was a guaranteed visa limit then fine. Or in other words, if your salary is over $200k then you're still guaranteed a visa even if your number 100,001 in the list of highest earning applicants. But (at least in this article) this is written as the minimum salary. So even if your position 1000 in the list of highest earning applicants, if you're under $200k, no visa for you. If that's really the case, then you may as well throw the H-1B in the garbage tip. It's becomes useless as a scheme to get in needed talent.

    1. Robert Grant

      Re: One step forward, one step back...

      How do you calculate the maximum salary for the first visa being awarded across a year, when the company that wants the visa may not exist at the start of that year?

  9. Anonymous Coward
    Anonymous Coward

    Americans First

    Good! No sympathy from Americans. These corporations use this program to replace Americans with mostly Indians which is racial discrimination. Foreigners already employed by these companies prefer to hire their own race. I've seen what has happened since 1990 and Trump is putting Americans First. If those companies don't like it they are free to move to other countries.

    1. ecofeco Silver badge

      Re: Americans First

      The downvotes are incredible. It is a verified fact that H1-B has been abused and used to drive down tech wages.

      I know many people with 20+ years of experience who are now making 20% less than they did when they started as a direct result of H1-B abuse.

  10. Anonymous Coward
    Anonymous Coward

    An entry level programmer in the US makes $78,125 ???

    In the UK you have to be a contractor, or a senior with 30+ years experience to make that kind of money. Clearly I'm living in the wrong country!

    1. Sean o' bhaile na gleann

      Yeah, but how much is $78K really worth (cost of living, etc.)?

      I did a stint in the US at the end of the 70's. Prior UK job was paying ~£4K pa which was low enough to cause me some difficulty.

      The US gig paid me $17K - and it was barely enough to live on

      1. J27

        I'm in the position where I have family living in both the US and UK. If you're comparing similar places. E.G. London to New York City or nowhere to nowhere the US has a significantly lower cost of living than the UK.

        1. raving angry loony

          no, it doesn't have a lower cost of living.

          Because you're not counting healthcare and education.

    2. ecofeco Silver badge

      No entry level programmer is being paid $78K a year outside of Silly Valley.

      1. Mr Sceptical
        WTF?

        Wages are not comparable

        We' ve got an embedded engineer (read: technician) at a client in the US - his package is $125K for what would be a £35-45K role in the UK...

      2. ThomH

        And no programmer in Silicon Valley can afford to pay rent if they earn only $78k.

  11. Claverhouse Silver badge
    Happy

    Look ! Free Coffee !

    ... startups that can’t afford to pay high wages and rely instead on things like equity, bonuses, and various perks to get the best candidates.

    1. Anonymous Coward
      Anonymous Coward

      Re: Look ! Free Coffee !

      Without a permit to work in the US they cannot be employed even if the perks include housing, food and bills.

      That the US has become reliant upon other countries for their skills staff speaks volumes about their own education system.

      If I was a US citizen then I would require that foreign workers fund the US education system directly, so yes foreigners can have $xxx,xxx wages but they only get the same as their US peers, the difference going towards educating the US masses in the manner of apprenticeships.

      If they had supported their countrymen's education then perhaps they would not need to bring in outsiders at all, that they do says that the US system is broken if it cannot supply enough experts for industry

      1. ecofeco Silver badge

        Re: Look ! Free Coffee !

        No, there are plenty of skilled, experienced and well educated Americans.

        The companies just don't want to pay fair wages.

        1. This post has been deleted by its author

  12. J27

    I'm happy to announce my availability to take a H1B visa. First one to offer me a relevant development job for $200,000/year+ wins. I'll even move to Baltimore if necessary.

  13. raving angry loony

    Think that's a lot?

    Sure, most of these jobs come with decent health insurance. Unless, of course, you have what they love to call a "pre-existing condition", in which case should that be the cause of your hospitalization then that US$200k will last two or three days in a hospital and you'll end up bankrupt anyway. Unless you can quickly retreat to a country with public healthcare of course, after not having paid any tax in that country while you earned that much. I know several people who did that.

    I despise the traitorous swine who go there then come back when the going gets tough. They contribute to the wealth of US corporations and their government after having sponged what they could from good public education systems in their home countries, then come back to their home countries after having paid no tax for years to get the benefit of a civilized healthcare system that doesn't condemn people to die just because it was a problem that existed before they got their last job.

    Good ole' USA, still plundering other countries for their wealth and brains. Nothing but murderous pirates really.

    1. ThomH

      Re: Think that's a lot?

      The Affordable Care Act guarantees cover for preexisting conditions; an insurance company can neither raise premiums nor deny care based on that premise.

      1. raving angry loony

        Re: Think that's a lot?

        ACA passed in 2010, after my experiences with it, and wasn't it repealed or castrated under Trump? If not, good for the USA, maybe finally taking baby steps to being a civilized nation. Long way to go yet, of course.

        1. ThomH

          Re: Think that's a lot?

          For the time being the rule about coverage of preexisting conditions still stands. I think it'll be back in front of the Supreme Court shortly — possibly tomorrow? — so we'll see.

  14. tyrfing

    H1-B was intended to be temporary

    H1-B was intended to be temporary - to fill a gap until a native worker could be found or trained.

    This is why the visa ran out and limited the person to working for one company.

    I've been saying for years that they needed to implement a low-end cutoff to prevent abuse from companies like Infosys, who would bring workers in and then hire them out to other companies.

    Now they need to enforce this. If an abuse of this is found, the entire chain of people up to the board of directors needs to be personally liable for the violation.

    It has been abused widely for years. The only way to get it back to where it should be is to go through the whole industry with fire and sword.

  15. c1ue

    Startups not being able to afford H1B salaries is a feature, not a bug. Some poor slob coming over in the hopes of a mere 7 year term as an indentured servant shouldn't be working for startups - which fail 90% of the time.

    Unless these VCs mean "startups" like Uber...

    1. ThomH

      I'm pretty sure the maximum on an H-1B is six years; technically it's three years initially but you can go back to the embassy in your home country and apply for a three-year extension — but that's just an extension, not a new visa, so it's a pretty certain thing. Though they'll still make cursory enquiries about whether you're retaining convincing links to your home country.

      They're also transferrable so startup aren't as much of a risk as you think. Just make sure you keep enough of an eye on things to keep one step ahead. It means never setting up on your own but a lot of Bay Area startups are fine sponsoring an H-1B transfer, which is a lot easier than getting a new one.

      There are substantial abuses of the H-1B system, creating underpaid contractors that first replace local full-time employees and then take the work back overseas with them because if contracting works then why not full outsourcing? But the original idea is valid, i.e. that America benefits if skilled workers are imported for roles that can't locally be filled.

  16. Anonymous Coward
    Anonymous Coward

    I think it's an excellent idea..

    .. fully in line with Trump's apparent brief over the years he's been let loose in the US to destroy everything that may generate income.

    Why excellent? Well, from a European perspective - now maybe more startups will happen here now, assuming we can somehow improve the investment climate and especially decision speed because glaciers tends to move faster, even with global warming in play.

    And don't get me started on national borders, or Brexit. Sigh.

  17. Anonymous Coward
    Anonymous Coward

    I first ran into H-1B visa workers in the first half of the 1990s at a large telecom. The Immigration Act of 1990 was the law that actually created H-1B visas. My company was a pioneer in abusing the law. I saw more and more Indian workers arrive, but at the time I attributed it solely to the Indian directors, one of whom had his wife as a direct report. These workers were indentured servants, working until midnight or even later. Then management would ding us because we actually wanted to go home in the evening.

    I ran into them again at my next company, circa 2001. An Indian promoter was trying his best to convince management to hire his team to do major software development, with almost no one in the US. I raised the issue of the time difference, but management only saw dollar signs (of alleged savings).

    The H-1B system should be returned to its original purpose, allowing very smart people to add to the US, and not the corporate welfare system it has become. All candidates should have a minimum of a MS degree from a reputable school.

    Trump has the morals of an alleycat and is the boss from hell, but this restriction on H-1B visas is welcome.

  18. sigATfig

    I've 2 engineering degrees and have worked in IT for 30 years. I've been laid off 6 times. h1bvisa program has been skammed to the max. Its all about cheap labor and a way for corps to layoff citizens that they pay benefits too, and hire cheap foreign contract workers that dont even know what they are doing.

    I've worked with many visa holders, i've been involved in hiring them at various corps. Overall they are just AVG...most need to be trained on the job...very very very few are anything exception.

    If you want YOUR KIDS and YOUR GRANDKIDS to have jobs, be able to afford skool, get married and have children, buy a house, then you should be against all these work visa programs. Visa workers send a lot of $$$ back home instead of investing it in team usa. You cant blame them for wanting to leave their junk countries and come here and enjoy what AMERIKANS have built. But its long past time to put our own families, friends, relatives. neigbhors FIRST so they dont end up on government support because corps refuse to hire them. Visa work programs are just CORP WELFARE. Nothing more.

  19. larryg

    highly specialized knowledge

    *First, the H-1B was for people with "highly specialized knowledge" and it wasn't ever meant to replace American workers.

    *Second, the biggest problem is that the minimum salary requirement was set at 60K in 1989

    *Third, Most (almost all) of H-1B goes into IT

    *Fourth, They are almost all from India

    *Fifth, The H-1B workers are not treated as American workers and they can't quit without being forced out of Country. Basically, we are importing 3rd world workers rights into our ecosystem, as a result benefits are deteriorating along with pay and stability

    *Sixth, There is allot of fraud. I've seen this myself.

    Computer Professionals 27%

    Bachelor's Degree 31%

    From: https://en.wikipedia.org/wiki/H-1B_visa

    Also: https://spectrum.ieee.org/view-from-the-valley/at-work/tech-careers/commentary-the-h1b-problem-as-ieeeusa-sees-it

    And before Partisanship: http://www.npr.org/sections/alltechconsidered/2013/04/03/176134694/Whos-Hiring-H1-B-Visa-Workers-Its-Not-Who-You-Might-Think

    H-1B has killed IT salary and stability at least in The Dallas Area. I've been laid off because they hired an Indian firm to take over all of IT and this is common. I worked for an Indian company and made ... guess.. exactly 60K. That was at Citi Bank and most of their IT was H-1B. Also, the Indian company was happy to abuse us. We were required to do one on-call weekend at first. Which wasn't emergency on-call. It was you will be answering calls Friday night from 5PM, after work, through till Monday at 7am and then work normally. Then they added an entire 5 day week as well, in which we were expected to work all day then take calls all night. I quit after my second 'on call' week.

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