Corporations Are Gaming the Visa System and Cheating American Workers

The U.S. Citizenship and Immigration Services (USCIS) has issued a statement citing massive fraud in its new electronic registration system for the H-1B visa. Each year, thousands of foreign workers register to participate in a lottery for one of the 85,000 H-1B visa slots available. This year, the system was flooded with 781,000 registrations—more than double the number filed in 2022.

Why the two-fold increase? In a word, fraud. USCIS posits that companies, which submit the applications on behalf of foreign workers, have been colluding to gain an unfair advantage by submitting multiple registrations on behalf of the same applicant to increase the chances of being approved. The Biden administration has accused dozens of small tech companies of doubling up their requests, though it declined to name them.

That year, 408,891 duplicative requests were received from 96,000 individuals, suggesting each of the applicants potentially sought out at least four companies to file an H-1B registration on their behalf. While that’s not illegal, USCIS noticed a pernicious pattern of petitions being filed by dubious companies in an attempt to game the lottery system.

The fraud is the result of how low the barriers to entry have become since 2019, when the entire process was made less rigorous. But gaming the system to improve one’s odds dates back to the early nineties, when “outsourcing” companies relied on importing cheap labor from India, “leasing” those workers to Fortune 500 companies and then profiting on the wage arbitrage. The intent then was to barrage the system with H-1B petitions in the hopes of increasing the number of workers that could be grabbed from the lottery. The New York Times wrote about the phenomenon as far back as 2015.

Like any lottery, a player can increase their chances of winning by buying more tickets. In the case of today’s H-1B visa lottery, the outsourcing companies are again flooding the immigration system with a massive number of petitions, but what’s different and what makes it a scam is many of the petitions being filed are for jobs that don’t exist.

These companies are stockpiling workers in the hopes they’ll find “clients” to lease the H-1B holders to in the future. If they fail, the workers will be “benched,” meaning they’ll wait around until they find work.

By law, an H-1B worker is supposed to be continuously employed and paid. And while there are countless cases of federal agencies prosecuting outsourcing companies for violating the law, most companies still try to get away with it, because preying on foreign workers desperate to enter the U.S. is a lucrative business.

Although it’s illegal to pay to stay, many foreign workers will pay outsourcing companies handsomely in exchange for a visa sponsorship; if not through outright bribes, they’ll offer a percentage of their salary.

Since launching the new H-1B lottery system, the USCIS has increased the potential for outsourcing companies and foreign workers alike to game it. The ease of the system, which involves completing a simple online registration form and paying the low upfront cost of $10, has essentially invited greater levels of fraud.

While the system was being implemented, the USCIS was warned of the suspected abuse, but fears were assuaged by the promise of new reforms to come, such as raising the prevailing wage levels, making changes to specialty occupations, prioritizing selection based on highest wages, and closing the outsourcing loophole.

Unfortunately, those reforms fizzled. Some were challenged in court by immigration lawyers, who ironically now decry the very fraud that would have been eradicated. Others have been quietly abandoned by the Biden administration, which has shown no desire to pursue them further, even though candidate Biden campaigned on reforming the H-1B visa program wage requirements.

USCIS says they intend to prosecute the bad actors for abusing the system, but given the administration’s current stance on immigration reform, things don’t look very promising. Since Biden has been in office, denial rates for H-1B visas have gone down significantly, including those for outsourcing companies.

One proposed rule change by USCIS is to raise the registration fee from $10 to $215, which would significantly deter multiple applications. While that may sound significant, it grossly underestimates the amount some foreign workers will pay to improve their chances of winning the H-1B visa lottery. It would be even better to raise the fee to at least $500, but truth be told, if the Biden administration is serious about reforming the H-1B visa program, it needs to enact changes that would prioritize H-1B candidates based on the willingness of employers to pay the highest wages, versus the current random lottery system that doesn’t take attributes such as merit into account.

The contingent beneficiaries of the current system—tech companies and consulting firms—are quick to advocate for more H-1B visas or eliminating the quota altogether. However, for working Americans, the only thing keeping their jobs from being outsourced and eventually offshored, are the quotas.

If the administration truly cares about working families as President Biden claims to, these rules should be enforced—and strengthened.

The H-1B visa program is predicated on facilitating the displacement of American professionals with cheaper foreign workers. The fraud that was exposed last week simply provides more gris for the mill and demonstrates the eagerness of companies to prioritize the hiring of foreigners to outsource and eventually offshore U.S. jobs.

It’s time to reverse course and stop cheating American workers out of good jobs.

Kevin Lynn is the Executive Director of the Institute for Sound Public Policy and the Founder of U.S. Tech Workers. Lynn writes about the role that the nonimmigrant employment visa system has on skilled white-collar workers. He is based in Pennsylvania. Contact him at klynn at ifspp dot org.

The views expressed in this article are the writer’s own.