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U.S. workers going the way of the buggy whip?

Columnist John Brandt warns of the dangers of turning to H1-B workers and the effects on U.S. employees.

John Brandt

I once watched a movie called "Other People's Money," about a small wire company that was ripe for takeover. A corporate raider, played by Danny DiVito, made a very eloquent speech to a hostile crowd of stockowners about buggy whips. He admitted that while the company had hard-working employees who put out a superior product with quality and pride, the advent of cars and mass production assembly lines meant buggy whips were no longer in demand.

Eventually, the stockholders voted to take their money, close the plant and run all the way to the bank. To make sure the movie didn't completely bomb and leave the American worker in the lurches, the witty lawyer and eventual love interest of DeVito played by Penelope Ann Miller found a way to re-employ all of those workers, having them make steel mesh for airbags.

If you fast-forward to today (and reality), you will find that these corporate raiders still exist. The problem is, they're no longer a single player, nor are they obvious. They're using the H1-B visa program, a program created to help U.S. companies fill high-skilled technical position during a skills shortage, to exploit you and the H1-B worker. They're not just putting a bunch of outmoded buggy whip makers out of business. They're putting you out of business.

The way the H1-B program is supposed to work is a company applies to the government to allow them to use workers from overseas for a "highly technical" job that can't be fulfilled by the current U.S. workforce in that area. After approval, workers can apply for the visa and come to the U.S. to work in that job, in that area. The rules are fairly straightforward and simple.

But there are a lot of loopholes in the system that allow businesses to exploit the system.

I heard about a company in Miami who hired no one but H1-B workers to perform IT services in Miami for $20 an hour -- the going rate. Sounds fine, so far, doesn't it?

Here's where it gets dicey. In Dallas, the going rate is $75 an hour. So the hiring company put the workers on planes, trains and automobiles and off they went to Texas. The workers still made $20 an hour, but the company billed them out at the going rate of $75.

One day, this large company in Dallas hired a new vice president for IT and accounting. His first order of business was to use the Miami H1-B company to provide IT contractors. At first there were only a few, but as time went by the handwriting was on the wall. Bear in mind that they didn't fire any of their U.S. workers; they just made them so miserable with excessive overtime, unreasonable deadlines and working conditions that they just left for other jobs.

Over the next few months, this vice president and his staff of "close friends" forced 45 American workers to leave on their own. They were replaced with a full staff of 65-70 H1-B workers as a "cost-cutting" measure. This was just the first installment, and over the next year, 200 U.S. workers were displaced with nearly 300 H1-B workers.

These "cost-cutting" measures allowed many of the senior staff to make their incentive bonuses. During the next two years, the original 45 American workers would have cost $8.6 million in salary and benefits. The H1-B contract was $12 million, and bonuses totaled $4.5 million during the same period. That means that the company decided that it was much better to pay $7.9 million more, in order to "save money." Executive perks included all expenses paid "business trips" to Miami and Orlando, Fla., and Augusta, Ga., during the Masters for them and their families. The executives certainly couldn't afford to pay for these vacations themselves. They were only averaging $24,000 per month plus stock options. Ah, how I love these days of new math.

As a bit of an update, this company has just signed an outsourcing agreement with a significantly large hardware/software/consulting services company to outsource the entire IT staff and most of the corporate accounting department. This "significantly large" company did the same thing for another company in Oklahoma City about two years ago. They were nice enough to hire most of the employees so that no one lost their jobs. Late last year, they released all of them and moved all of the outsourcing operations to the same H1-B country. Isn't America great?

So the next time you hear someone say that they can get people to do the same work for less money, just think of yourself and your fellow American workers as "buggy whips." Then check the math.

Of course, I wouldn't know. I'm just a flunky programmer.

About the author: John Brandt is a site expert on and vice president of technical services, He welcomes your comments and feedback; send them to

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