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H1Bs - How They Depress the Number of US Engineering Graduates [1]

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Date: 2025-01-21

H1B visas have been around for decades. Corporations absolutely love H1Bs because they love indentured servants who must do exactly what they are told to do. These imported engineers generally provide six years of low-cost labor by US engineering salary standards.

But Indian engineers in the US are paid a fortune by Indian standards. According to salarymonitor.org, the top 10% of workers earn an average of $13,644 per year in India, and the top 1% earn an average of $40,932 per year there. US software engineers earn somewhere between $67K and $167K (averaging $106K) per year according to indeed.com.

When an entry level engineer in India is compared to the US engineer, the Indian engineer earns ~20% of the US engineer’s salary ($14K/$67K) assuming they are paid like the top 10% of Indian workers. US companies can afford to pay entry level Indian engineers in the US as little as $45K and still save over $20K per employee over the cost of an American entry level engineer.

But the greatest advantage is that the Indian engineers cannot leave or fail at their job, or they get shipped back home immediately. Since they cannot leave, employers seldom have to worry about replacing them. Employers avoid the very expensive job search, interview process, and finder’s fee that would be required if an American engineer (or someone with a Green Card) were to leave. H1Bs are a dream come true for many employers

Claims that H1Bs bring the “best and the brightest” to the US are overblown but it is a great sales pitch when companies want to save money by lowering salaries and turnover. They minimize their own corporate advantages and say it is really an advantage for the US economy (very patriotic of them).

H1Bs also provide an enormous financial advantage for Indian contracting companies some of whom have literally thousands of H1B engineers working in the US. These contracting mills are owned by some of India’s largest companies and are highly profitable.

Perhaps the biggest problem for America’s competitiveness is that the pipeline of American engineers dries up making the US increasingly like a third world country. Indian schools are quite inexpensive compared to US engineering schools. A student in a US school will likely graduate owing at least $50K if they attend an in-state engineering college. Their debt load could easily reach $200K for a private (~$80K per year) or out-of-state engineering school like Stamford, Cornell, Brown, or USC.

Prospective engineering students are smart. They understand that when they graduate with a $100K or more loan, they will be competing for a job against an H1B engineer who will likely be paid less than $70K and more likely $45-50K. What student wants to enter a job market like that with a load of student debt? H1B visas make entering the engineering field for a US citizen a bad bet and no intelligent person wants to be that loser.

The ironic part is that companies who are depressing the number of US engineering graduates with their H1B program hires then complain about not being able to find American engineering graduates.

In one job I had, there were a few Indian engineers working writing software, but they hired me as a US citizen because I was able to get a special clearance which was required for a specific set of tasks. Foreign-born engineers were not allowed to do that job. I have little doubt that they would have hired an H1B person if he or she were allowed by law to work in that specialized environment.

Now it is true that living costs in the US are far greater than in India. So imported engineers need higher salaries. But my experience as an engineer working with H1B contractors is that large Indian contracting companies might put 4 or 5 engineers in a two and three-bedroom apartment. They can keep costs down by hiring unmarried people (or leaving wives at home) and providing them with a communal living situation.

Another advantage these H1B contractors have is that they are often required to work together and get the less experienced H1B new hires up to speed. American engineers do not have that support system and are sometimes at a disadvantage as they try to make their way in a new job amid many H1B hires. They can be treated as outsiders, which in fact they are in some circumstances.

Finally, an engineer with 6 years experience in a corporate environment is likely to be a valuable commodity. Sending that person back to India constitutes a reverse brain-drain where all that experience leaves the US and makes India more competitive in the future. It would be better to keep that experience here by hiring a US engineer in the first place.

Corporations are duly bound to give the greatest possible returns to their shareholders. They will lie with little hesitation and hire public relations firms to put the best face on their hiring activities if it gives them an economic advantage. And H1B hires are generally highly advantageous for them.

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