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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

January 2011: 

H-1B Visa Program: 

Reforms Are Needed to Minimize the Risks and Costs of Current Program: 

GAO-11-26: 

GAO Highlights: 

Highlights of GAO-11-26, a report to congressional committees. 

Why GAO Did This Study: 

Congress created the H-1B program in 1990 to enable U.S. employers to 
hire temporary, foreign workers in specialty occupations. The law 
capped the number of H-1B visas issued per fiscal year at 65,000. 
Since then, the cap has fluctuated with legislative changes. Congress 
asked GAO to assess the impact of the cap on the ability of domestic 
companies to innovate, while ensuring that U.S. workers are not 
disadvantaged. In response, GAO examined what is known about (1) 
employer demand for H-1B workers; (2) how the cap affects employer 
costs and decisions to move operations overseas; (3) H-1B worker 
characteristics and the potential impact of raising the cap; and (4) 
how well requirements of the H-1B program protect U.S. workers. GAO 
analyzed data from 4 federal agencies; interviewed agency officials, 
experts, and H-1B employers; and reviewed agency documents and 
literature. 

What GAO Found: 

In most years, demand for new H-1B workers exceeded the cap: From 2000 
to 2009, demand for new H-1B workers tended to exceed the cap, as 
measured by the numbers of initial petitions submitted by employers 
who are subject to the cap (see figure 1). There is no way to 
precisely determine the level of any unmet demand among employers, 
since they tend to stop submitting (and the Department of Homeland 
Security stops tracking) petitions once the cap is reached each year. 
When we consider all initial petitions, including those from 
universities and research institutions that are not subject to the 
cap, we find that demand for new H-1B workers is largely driven by a 
small number of employers. Over the decade, over 14 percent of all 
initial petitions were submitted by cap-exempt employers, and only a 
few employers (fewer than 1 percent) garnered over one-quarter of all 
H-1B approvals. 

Figure 1: Number of Initial Petitions for New H-1B Workers Submitted 
by Employers Subject to the Cap: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2000; 
Initial H-1B petitions subject to cap: 161,589; 
H-1B petition cap level: 115,000. 

Fiscal year: 2001; 
Initial H-1B petitions subject to cap: 201,195; 
H-1B petition cap level: 195,000. 

Fiscal year: 2002; 
Initial H-1B petitions subject to cap: 108,956; 
H-1B petition cap level: 195,000. 

Fiscal year: 2003; 
Initial H-1B petitions subject to cap: 108,017; 
H-1B petition cap level: 195,000. 

Fiscal year: 2004; 
Initial H-1B petitions subject to cap: 163,229; 
H-1B petition cap level: 65,000. 

Fiscal year: 2005; 
Initial H-1B petitions subject to cap: 117,370; 
H-1B petition cap level: 85,000[A]. 

Fiscal year: 2006; 
Initial H-1B petitions subject to cap: 121,602; 
H-1B petition cap level: 85,000[A]. 

Fiscal year: 2007; 
Initial H-1B petitions subject to cap: 121,633; 
H-1B petition cap level: 85,000[A]. 

Fiscal year: 2008; 
Initial H-1B petitions subject to cap: 122,446; 
H-1B petition cap level: 85,000[A]. 

Fiscal year: 2009; 
Initial H-1B petitions subject to cap: 105,850; 
H-1B petition cap level: 85,000[A]. 

Source: GAO analysis of Department of Homeland Security CLAIMS 3 data 
on initial petitions. 

[A] Includes 20,000 visas allocated to workers graduating from U.S. 
master’s programs or higher. 

[End of figure] 

Most interviewed companies said the H-1B cap and program created 
costs, but were not factors in their decisions to move R&D overseas: 
The 34 H-1B employers GAO interviewed reported that the cap has 
created some additional costs, though the cap’s impact depended on the 
size and maturity of the company. For example, in years when visas 
were denied by the cap, most large firms reported finding other 
(sometimes more costly) ways to hire their preferred job candidates. 
On the other hand, small firms were more likely to fill their 
positions with different candidates, which they said resulted in 
delays and sometimes economic losses, particularly for firms in 
rapidly changing technology fields. Interviewed employers also cited 
costs due to the H-1B lottery process employed when the cap is reached—
noting that it does not allow them to prioritize their candidates if 
they have submitted more than one petition or to make timely hires in 
response to business needs. On the other hand, most employers told us 
that the global marketplace and access to skilled labor drive their 
decisions on whether to move R&D and other activities overseas, not 
the H-1B cap. 

Limitations in agency data and systems hinder tracking the cap and H-
1B workers over time: The total number of H-1B workers in the U.S. at 
any one time-—and information about the length of their stay—-is 
unknown, because (1) data systems among the various agencies that 
process such individuals are not linked so individuals cannot be 
readily tracked, and (2) H-1B workers are not assigned a unique 
identifier that would allow for tracking them over time—-particularly 
if and when their visa status changes. Although information on the 
total H-1B workforce is lacking, data on approved petitions show that, 
since 2000, most people that were approved to be H-1B workers were 
born in China or India, were hired for technology positions, and 
increasingly held advanced degrees. System limitations also hinder the 
Department of Homeland Security from knowing precisely when and 
whether the annual cap has been reached each year, although this 
problem might be remedied through the agency’s data-modernization 
plan. Finally, data limitations, along with complex economic 
relationships, hinder our ability to estimate the potential impact 
raising the cap would have on U.S. worker wages and employment. 

Restricted agency oversight and statutory changes weaken protections 
for U.S. workers: Elements of the H-1B program that could serve as 
worker protections-—such as the requirement to pay prevailing wages, 
the visa’s temporary status, and the cap itself—-are weakened by 
several factors. First, program oversight is fragmented and 
restricted. For example, the Department of Labor’s review of H-1B 
applications from employers is cursory and limited by law to only 
looking for missing information and obvious inaccuracies. Yet a recent 
Department of Homeland Security study reported that 21 percent of the 
H-1B petitions they examined involved fraud or technical violations. 

Second, the H-1B program lacks a legal provision for holding employers 
accountable to program requirements when they obtain H-1B workers 
through a staffing company (see figure 2). Officials from the 
Department of Labor’s investigative office reported receiving the bulk 
of their complaints from H-1B workers contracted by staffing companies. 
Third, statutory changes made to the H-1B program have, in combination 
and in effect, increased the pool of H-1B workers beyond the cap and 
lowered the bar for eligibility. Specifically, these changes have 
increased the available exemptions to the cap; offered unlimited 
extensions on the visa while holders apply for permanent residency; 
and broadened the job and skill categories for eligibility. Regarding 
the latter, over 50 percent of employers requesting H-1B workers 
between June 2009 and July 2010 categorized their prospective H-1B 
workers as receiving entry-level wages, although we cannot tell 
whether this trend reflects lower skill levels or other factors. 

Figure 2: Limited Accountability for Employers Hiring H-1B Workers 
through Staffing Companies: 

[Refer to PDF for image: illustration] 

Traditional H-1B employers: 

Accountable employer: Accountable under H-1B employer requirements: 

Worker: H-B1 visa. 

With staffing companies: 

Accountable staffing company: 

Worker: 
Staffing company[A]: 
Worker: 
Employer: 
Worker: H-1B visa. 

Source: GAO review of Department of Labor information. 

[A] In some cases there may be more than one staffing company involved 
in placing the H-1B worker. 

[End of figure] 

Taken together, the multifaceted challenges identified in this report 
show that the H-1B program, as currently structured, may not be used 
to its full potential and may be detrimental in some cases. Although 
executive agencies overseeing the program can take steps to improve 
tracking, administration, and enforcement, the data we present raise 
difficult policy questions about key program provisions that are 
beyond the jurisdiction of these agencies. Such questions include the 
adequacy of the qualifications of foreign workers the U.S. admits 
through the program, the appropriateness of H-1B hiring by staffing 
companies, and the role of the program with respect to permanent 
residency. The H-1B program presents a difficult challenge in 
balancing the need for high-skilled foreign labor with sufficient 
protections for U.S. workers. As Congress considers immigration reform 
in consultation with diverse stakeholders and experts, and the 
Department of Homeland Security moves forward with its modernization 
efforts, this is an opportune time for Congress to re-examine key 
provisions of the H-1B program. 

What GAO Recommends: 

This report offers several matters for congressional consideration, 
including that Congress re-examine key H-1B program provisions and 
make appropriate changes as needed. GAO also recommends that the 
Departments of Homeland Security and Labor take steps to improve 
efficiency, flexibility, and monitoring of the H-1B program. Homeland 
Security disagreed with two recommendations and one matter, citing 
logistical and other challenges; however, we believe such challenges 
can be overcome. Labor did not respond to our recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-11-26] or key 
components. For more information, contact Andrew Sherrill at (202)512-
7215 or sherrilla@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Demand for H-1B Workers Exceeded the Cap in Most Years and Was Largely 
Driven by a Small Number of Companies: 

Most Interviewed Companies Said the H-1B Cap and Program Created 
Costs, but Were Not Factors in Their Decisions on R&D and Offshoring: 

Although Data Limitations Preclude Knowledge of the Total H-1B 
Workforce and Precise Tracking of the Cap, Characteristics of Those 
Approved to Be H-1B Workers Are Known: 

The Impact of Raising the H-1B Cap on the U.S. Workforce Is Difficult 
to Forecast Due to Complex Economic Factors: 

Limited Agency Oversight and Coordination and Changes to the H-1B 
Program Have Weakened U.S. Worker Protections: 

Conclusions: 

Matters for Congressional Consideration: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methods: 

Appendix II: Characteristics of U.S. and H-1B Workers in Five 
Occupational Groups: 

Appendix III: Labor Force Trends for U.S. Workers in Selected 
Occupations: 

Appendix IV: Characteristics of H-1B Employers: 

Appendix V: Selected H-1B Program Laws: 

Appendix VI: Comments from the Department of Homeland Security: 

Appendix VII: Comments from the Department of Justice: 

Appendix VIII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Median Reported Salaries of Approved H-1B Workers and 
Estimated U.S. Worker Median Salaries in Selected Occupations, 2008: 

Table 2: Summary of Agency Oversight Responsibilities and Limitations 
for the H-1B Program: 

Table 3: H-1B Complaints, Violations, Back Wages, and Fines Assessed 
by Labor's Wage and Hour Division, FY 2000-FY 2009: 

Table 4: Most Common H-1B Violations Identified by Wage and Hour, FY 
2009: 

Table 5: Frequency of Wage Levels Reported on Approved LCAs, June 1, 
2009-July 30, 2010: 

Table 6: H-1B Employers Randomly Selected for Interview by GAO: 

Table 7: Summary of Information Sources by Objective: 

Table 8: Crosswalk from USCIS to Related CPS Occupation Codes: 

Table 9: Select Characteristics of the Top 150 H-1B Employers, FY 2009: 

Table 10: Characteristics of the Top 150 H-1B Employers, FY 2009: 

Figures: 

Figure 1: Legislative Changes Affecting H-1B Cap Level, by Fiscal Year: 

Figure 2: Process of Obtaining an H-1B Visa: 

Figure 3: Number of Initial Petitions for New H-1B Workers Submitted 
by Employers Relative to the Cap, FY 2000-FY 2009: 

Figure 4: Proportion of Total Submitted Petitions for H-1B Workers 
Subject to the Annual Cap, FY 2000-FY 2009: 

Figure 5: Overall Number of Employers Submitting Petitions for H-1B 
Workers (Initial and Extensions) Processed by Homeland Security, FY 
2000-FY 2009: 

Figure 6: Time to Reach Annual Cap and Cap Level, Regular and Master's 
Cap, FY 2000-FY 2010: 

Figure 7: L-1 and H-1B Visas Issued, FY 2000-FY 2008: 

Figure 8: All Submitted Petitions for H-1B Workers (Initial and 
Extensions), FY 2000-FY 2009: 

Figure 9: Country of Birth for Approved H-1B Workers, FY 2000-FY 2009: 

Figure 10: Occupations Approved for H-1B Workers, FY 2000-FY 2009: 

Figure 11: Educational Attainment of Approved H-1B Workers, FY 2000-FY 
2009: 

Figure 12: H-1B Submitted Petitions and Aggregate Employment Growth, 
2000-2009: 

Figure 13: Accountability for Types of Employers under the H-1B 
Program: 

Figure 14: Wage and Hour H-1B Program Investigations by Region, FY 
2006-FY 2009: 

Figure 15: Flow of Newly Approved H-1B Worker Petitions as a 
Proportion of the Estimated Total Stock of U.S. Citizen Workers by 
Occupation, 2000-2009: 

Figure 16: Age of Approved H-1B Workers (Initial and Extensions) and 
Estimated Age of the Stock of U.S. Citizen Workers in Select 
Occupations, 2008: 

Figure 17: Proportion of Approved H-1B Workers (Initial and 
Extensions) and Estimated U.S. Citizen Workers with Advanced Degrees 
in Select Occupations, 2008: 

Figure 18: Median Usual Weekly Earnings in Constant 2009 Dollars among 
U.S. Workers in Occupations with Large Numbers of H-1B Petitions, 2000-
2009: 

Figure 19: Unemployment Rate among U.S. Workers in Occupations with 
Large Numbers of H-1B Petitions, 2000-2009: 

Figure 20: Percent Change in U.S. Worker Employment Since 2000 in 
Occupations with Large Numbers of H-1B Petitions, 2000-2009: 

Figure 21: Industries of Employers Approved to Hire H-1B Workers, FY 
2000-FY 2009: 

Figure 22: Location of Cities with High Numbers of Approved H-1B 
Petitions, FY 2009: 

Abbreviations: 

AC21: American Competitiveness in the Twenty-First Century Act of 2000: 

ADIS: Arrival Departure Information System: 

BFCA: Benefit Fraud and Compliance Assessment Program: 

BLS: Bureau of Labor Statistics: 

CLAIMS 3: Computer Linked Application and Management System, Version 3: 

CPS: Current Population Survey: 

Employment and Training: Labor's Employment and Training 
Administration: 

FDNS: Homeland Security's Directorate of Fraud Detection and National 
Security: 

Homeland Security: Department of Homeland Security: 

IT: information technology: 

Justice: Department of Justice: 

Labor: Department of Labor: 

LAN: local area network: 

LCA: Labor Condition Application: 

NAICS: North American Industry Classification System: 

R&D: research and development: 

State: Department of State: 

USCIS: Homeland Security's U.S. Citizenship and Immigration Services: 

US-VISIT: United States Visitor and Immigrant Status Indicator 
Technology: 

Wage and Hour: Labor's Wage and Hour Division: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

January 14, 2011: 

The Honorable Thad Cochran:
The Honorable Daniel K. Inouye:
United States Senate: 

The Honorable Harold Rogers:
Chairman:
The Honorable Norman D. Dicks:
Ranking Member:
Committee on Appropriations:
House of Representatives: 

The current H-1B program, which permits U.S. employers to hire foreign 
workers in specialty occupations, was authorized in 1990.[Footnote 1] 
The same law also placed a cap of 65,000 on H-1B visas issued per 
fiscal year beginning in fiscal year 1992. However, since then, the 
cap has fluctuated with legislative changes, reaching a peak of 
195,000 in fiscal years 2001 to 2003. Today, the cap is set at 65,000 
and continues to be a topic of debate. Proponents of raising the H-1B 
cap argue that doing so would allow companies to better fill an 
important and growing gap in the supply of U.S. workers, especially in 
the science and technology fields. Opponents of raising the cap argue 
that there is no skill shortage, that the H-1B program displaces U.S. 
workers and undercuts their pay, and that the cap is an essential tool 
to protect U.S. workers. Others argue that the skill criteria for the 
H-1B visa should be revised to better target foreign nationals whose 
talents are undersupplied in the domestic workforce. 

This report responds to a congressional request that GAO assess the 
impact of the current H-1B visa cap on the ability of domestic 
companies to develop modern technology and perform innovative research 
and development (R&D) while ensuring that U.S. workers are not 
unfairly disadvantaged or displaced by H-1B visa holders.[Footnote 2] 
With respect to H-1B employers, we examined what is known about (1) 
their demand for H-1B workers and (2) how the H-1B cap affects costs, 
offshoring,[Footnote 3] and R&D decisions for companies doing business 
in the United States. With respect to H-1B and U.S. workers, we 
examined what is known about (3) H-1B worker characteristics, (4) how 
raising the H-1B cap might affect the employment and wages of U.S. 
workers, and (5) how well H-1B program requirements ensure that U.S. 
workers are not displaced or otherwise disadvantaged by the program. 

To address these questions, we drew upon a range of information 
sources. Specifically, to determine what is known about the demand for 
H-1B workers and their characteristics, we obtained and analyzed 
administrative data on employer applications for H-1B visas from the 
Department of Labor (Labor) for fiscal year 2002 through fiscal year 
2009[Footnote 4] and from the Department of Homeland Security 
(Homeland Security) from fiscal year 2000 through fiscal year 2009; 
collected and analyzed data on the 150 H-1B employers with the 
greatest number of approvals in 2009; and analyzed data on visa 
issuances published by the Department of State (State). 

To understand the impact of the cap on companies' costs and their 
decisions to offshore work and invest in R&D, we interviewed a 
nongeneralizable sample of 34 H-1B hiring companies spanning the 
country in six industrial sectors, with a range of sizes from a few 
workers based in one location to thousands of workers positioned 
around the globe.[Footnote 5] We also conducted interviews with 
representatives from immigration law firms, venture capital companies, 
industry advocacy organizations, and academic institutions, and 
conducted an extensive literature review. 

To examine the impact of the H-1B program on domestic employment, we 
obtained data from Homeland Security on the long-run immigration 
outcomes of prospective H-1B workers that were approved to start work 
in H-1B status between January 1, 2004, and September 30, 2007, for 
whom data were available; analyzed Homeland Security data and Bureau 
of Labor Statistics' (BLS) Current Population Survey (CPS) data from 
2009 to compare the wages of H-1B workers with those of U.S. citizens 
in three occupation groups; and analyzed CPS employment, unemployment, 
and earnings data for the top H-1B occupations. 

To assess the effectiveness of the H-1B program's current protections 
for U.S. workers, we conducted site visits to Labor and Homeland 
Security processing centers for H-1B applications and to Labor's 
regional office that receives the highest number of H-1B-related 
complaints in the country; conducted interviews with agency officials 
from Labor, Homeland Security, the Department of Justice (Justice), 
and State involved with various facets of the program including 
complaint and fraud investigations, as well as with labor advocates 
and experts knowledgeable in this area; and obtained and analyzed 
agency data collected on complaints about the H-1B program. 

To address all objectives, we reviewed relevant federal laws and 
regulations, articles, and the temporary immigration programs of 
several other countries that we selected based on our literature 
review and discussions with experts. 

We conducted this performance audit from May 2009 through January 2011 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

See appendix I for a detailed account of the objectives, scope, and 
methods for this report. 

Background: 

The H-1B program enables companies in the United States to hire 
foreign workers for work in specialty occupations on a temporary 
basis. A specialty occupation is defined as one requiring theoretical 
and practical application of a body of highly specialized knowledge 
and the attainment of a bachelor's degree or higher (or its 
equivalent) in the field of specialty.[Footnote 6] 

The law originally capped the number of H-1B visas at 65,000 per year, 
but the cap has changed several times pursuant to legislation. The 
American Competitiveness and Workforce Improvement Act of 1998 
increased the cap to 115,000 for fiscal year 1999 and fiscal year 
2000.[Footnote 7] The American Competitiveness in the Twenty-First 
Century Act of 2000 (AC21) further increased the limit to 195,000 for 
fiscal year 2001 through fiscal year 2003.[Footnote 8] In fiscal year 
2004, the cap reverted to its original level of 65,000. 

Over this period, statutory changes also allowed for certain 
categories of individuals and companies to be exempt from or to 
receive special treatment under the cap. In 2000, AC21 exempted all 
individuals being hired by institutions of higher education, as well 
as nonprofit and government-research organizations, from the cap. 
[Footnote 9] More recently, the H-1B Visa Reform Act of 2004 allowed 
for an additional 20,000 visas each year for foreign workers holding a 
master's degree or higher from an American institution of higher 
education to be exempted from the numerical cap limitation.[Footnote 
10] In addition, in 2004, consistent with free trade agreements, 
amendments allowed for up to 6,800 of the 65,000 H-1B visas to be set 
aside for workers from Chile and Singapore.[Footnote 11] Figure 1 
depicts the cap levels over the last 20 years and important changes to 
provisions related to their application.[Footnote 12] See appendix V 
for a list of selected H-1B program laws, with descriptions of key 
provisions. 

Figure 1: Legislative Changes Affecting H-1B Cap Level, by Fiscal Year: 

[Refer to PDF for image: time line] 

Changes affecting H-1B cap level: 

1990: 
Major changes to H-1B program: Current program enacted and caps 
established; 

1992-1998: 
H-1B petitions: 65,000. 

1999-2001: 
H-1B petitions: 115,000. 

2001: 
Major changes to H-1B program: Caps not applicable to individuals 
employed by institutions of higher education, as well as nonprofit and 
government research organizations; 
H-1B petitions: 195,000. 

2002-2004: 
H-1B petitions: 195,000. 

2004: 
Major changes to H-1B program: Consistent with free trade agreements, 
up to 6,800 visas are set aside for workers from Chile and Singapore
H-1B petitions: 65,000. 

2005: 
Major changes to H-1B program: Caps not applicable to up to 20,000 
employees with a master’s degree or higher from an American 
institution of higher education; 
H-1B petitions: 85,000 (Including an additional 20,000 to whom cap 
does not apply because they have master’s degree or higher from an 
American institution of higher education). 

2006-2011: 
H-1B petitions: 85,000 (Including an additional 20,000 to whom cap 
does not apply because they have master’s degree or higher from an 
American institution of higher education). 

Source: GAO analysis of federal law. 

Note: Unless otherwise indicated, changes are shown in the fiscal year 
when they became effective. 

[End of figure] 

While the H-1B visa is not considered a permanent visa, H-1B workers 
can apply for extensions and pursue permanent residence in the United 
States. Initial petitions are those filed for a foreign national's 
first-time employment as an H-1B worker and are valid for a period of 
up to 3 years. Generally, initial petitions are counted against the 
annual cap. Extensions--technically referred to as continuing 
employment petitions--may be filed to extend the initial petitions for 
up to an additional 3 years. These extensions may be filed for 
extended employment; sequential employment (when an H-1B worker 
changes employers within his or her 6-year time period); or for 
concurrent employment (when an H-1B worker intends to work 
simultaneously for a second employer). Extensions do not count against 
the cap. While working under an H-1B visa, an H-1B worker may apply 
for legal permanent residence in the United States. After filing an 
application for permanent residence, H-1B workers are eligible to 
obtain additional 1-year visa extensions until their green card is 
issued.[Footnote 13] To obtain such extensions, the green card 
application must be employment-based (i.e. not a green card sponsored 
by a family member). Employment-based green cards can take a number of 
years to obtain due to limits on the number of green cards issued to 
individuals from different countries and in particular employment 
categories.[Footnote 14] 

Program Administration: 

Labor, Homeland Security, and State each play a role in administering 
the application process for an H-1B visa. Labor's Employment and 
Training Administration (Employment and Training) receives and 
approves an initial application, known as the Labor Condition 
Application (LCA), from employers. Homeland Security's U.S. 
Citizenship and Immigration Services (USCIS) reviews an additional 
employer application, known as the I-129 petition, and ultimately 
approves H-1B visa petitions. For prospective H-1B workers residing 
outside the United States, State interviews these approved applicants 
and compares information obtained during the interview against each 
individual's visa application and supporting documents, and ultimately 
issues the visa. For prospective H-1B workers already residing in the 
United States, USCIS updates the workers' visa status without 
involvement from State. 

Homeland Security's USCIS has the primary responsibility for 
administering the H-1B program, which includes responsibility for 
tracking the number of approved petitions against the established cap. 
[Footnote 15] Generally, Homeland Security accepts H-1B petitions in 
the order in which they are received. However, for those years in 
which USCIS anticipates that the number of I-129 petitions filed will 
exceed the cap, USCIS holds a "lottery" to determine which of the 
petitions will be accepted for review. For the lottery, USCIS uses a 
computer-generated random selection process to select the number of 
petitions necessary to reach the cap. USCIS runs two lotteries--one 
for cases subject to the 65,000 cap, and another for the 20,000 visas 
available to foreign workers holding a master's degree or higher from 
an American institution of higher education. 

With regard to enforcement, Labor, Justice, and Homeland Security each 
have specific responsibilities. Labor's Wage and Hour Division (Wage 
and Hour) is responsible for enforcing program rules by investigating 
complaints made against employers by H-1B workers or their 
representatives and assessing penalties when employers are not in 
compliance with the requirements of the program.[Footnote 16] Justice 
is responsible for investigating complaints made by U.S. workers who 
allege that they have been displaced or otherwise harmed by the H-1B 
visa program.[Footnote 17] Finally, Homeland Security's Directorate of 
Fraud Detection and National Security (FDNS) collaborates with its 
Immigration and Customs Enforcement Office to investigate fraud and 
abuse in the program. 

Employer Application Requirements: 

The application and approval process for an employer to hire an H-1B 
worker requires submission of an LCA and the I-129 petition. The 
employers must first submit the LCA to Employment and Training for 
certification.[Footnote 18] The LCA may reflect requests for one or 
more workers. On this form, employers must provide their company name, 
address, Employer Identification Number, and the rate of pay and work 
location for the anticipated H-1B workers among other information. 
Submission of the LCA to Employment and Training also involves 
employers making four attestations: (1) that they will pay H-1B 
workers the amount they pay other employees with similar experience 
and qualifications or the prevailing wage; (2) that the employment of 
H-1B workers will not adversely affect the working conditions of U.S. 
workers similarly employed; (3) that no strike or lockout exists in 
the occupational classification at the place of employment; and (4) 
that the employer has notified employees at the place of employment of 
the intent to employ H-1B workers.[Footnote 19] These attestations are 
designed to protect both the jobs of domestic workers and the rights 
and working conditions of foreign temporary workers. 

H-1B-dependent employers or employers found to have committed a 
willful failure or misrepresentation during the 5-year period 
preceding the filing of the LCA must make additional attestations on 
their LCA.[Footnote 20] They must attest (1) that they did not 
displace a U.S. worker within the period of 90 days before and 90 days 
after filing a petition for an H-1B worker; (2) that they took good-
faith steps prior to filing the H-1B application to recruit U.S. 
workers and that they offered the job to a U.S. applicant who was 
equally or better qualified than an H-1B worker;[Footnote 21] and (3) 
that they not place the H-1B worker with any other employer, unless 
they inquired and have no knowledge that, within the 90 days before 
and 90 days after the placement, the other employer has displaced or 
intends to displace a U.S. worker with the H-1B worker. 

Unlike some other temporary visa programs, the H-1B program does not 
require employers to provide evidence that they have first "tested" 
the U.S. labor market by trying to hire a U.S. worker. Under other 
temporary visa programs, such as the H-2A program for temporary 
agricultural workers[Footnote 22] and the H-2B program for temporary 
nonagricultural seasonal or intermittent workers,[Footnote 23] an 
employer must, for example document that it has conducted detailed 
recruitment efforts, advertised the job as specified, listed the job 
with its State Workforce Agency, and under certain circumstances, 
document why it did not hire applicants it rejected.[Footnote 24] In 
the H-1B program, only those employers that are designated as H-1B- 
dependent or willful violators are subject to any type of labor market 
test. However, these employers need only attest, rather than 
demonstrate, that they took good faith steps to hire a U.S. worker. 

Once Labor has approved the LCA, employers must submit the certified 
LCA to Homeland Security, along with the I-129, for additional review. 
The I-129, submitted by employers to Homeland Security for each 
prospective H-1B worker, must show the wage that will be paid, the 
location of the position, and the worker's qualifications, among other 
information. Figure 2 summarizes the steps required to obtain an H-1B 
visa. 

Figure 2: Process of Obtaining an H-1B Visa: 

[Refer to PDF for image: illustration] 

Prospective Employer: 

Labor Condition Application (LCA): Employer information; Proposed wage 
and work location; 

1) Department of Labor (Labor): Reviews LCA for obvious errors and 
inaccuracies and certifies the LCA if no errors are found. 

I-129 (Visa Petition) Certified LCA: Proposed wage and work location; 
Description of employer and position; Proof of worker’s qualifications 
(such as diplomas): 

2) Department of Homeland Security (Homeland Security): Determines 
whether information on LCA and I-129 is consistent, if the employer 
meets eligibility criteria, if position is a specialty occupation, and 
if the prospective H-1B worker is qualified for the position. 

Worker seeking H-1B visa: 

Prospective H-1B package: Approved I-129 receipt number; Documents 
supporting worker’s status and qualifications: 

3) Department of State (State): Consular Office reviews H-1B package, 
compares documentary evidence against information learned from 
applicant interviews, and issues visa if no problems are found. 

For foreigners already working in the U.S., Homeland Security updates 
visa status without involving State. 

Source: GAO analysis of agency procedures. 

[End of figure] 

Demand for H-1B Workers Exceeded the Cap in Most Years and Was Largely 
Driven by a Small Number of Companies: 

Available data show that, while demand for H-1B workers by employers 
has fluctuated with the economy over the past decade, the demand for H-
1B workers tended to exceed the cap, as measured by the numbers of 
initial petitions submitted by employers. In addition, although the 
vast majority of employers for which Homeland Security processed 
petitions were approved to hire just one worker, a small number of 
employers consistently garnered about 30 percent of all approved 
petitions. 

In Most Years, Demand for H-1B Workers Exceeded the Cap, but Precise 
Measures of Demand Do Not Exist: 

Although a precise measure of demand for H-1B workers does not exist, 
a key proxy--the number of initial petitions for new H-1B workers 
submitted to Homeland Security annually--indicates that demand for H-
1B workers tended to exceed the cap over the last decade.[Footnote 25] 
As shown in figure 3, from 2000 to 2009, initial petitions for new H-
1B workers submitted to Homeland Security by employers who are subject 
to the cap exceeded the cap in all but 3 fiscal years. If initial 
petitions submitted by employers exempt from the cap are also included 
in this measure, the demand for new H-1B workers is higher, since over 
14 percent of all initial petitions across the decade were submitted 
by employers who are not subject to the cap.[Footnote 26] However, the 
number of initial petitions submitted annually is likely to be an 
underestimate of demand for two reasons. First, employers subject to 
the cap may stop submitting initial petitions once they know the cap 
has been reached.[Footnote 27] Second, according to Homeland Security 
officials, Homeland Security stops accepting petitions that are 
subject to the cap once the cap is reached.[Footnote 28] Consequently, 
we cannot precisely determine the level of any unmet demand among 
those employers who are subject to the cap. 

Figure 3: Number of Initial Petitions for New H-1B Workers Submitted 
by Employers Relative to the Cap, FY 2000-FY 2009: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2000; 
H-1b petition cap level: 115,000; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
161,589; 
Initial H-1B petitions subject to cap: 150,368. 

Fiscal year: 2001; 
H-1b petition cap level: 195,000; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
201,195; 
Initial H-1B petitions subject to cap: 184,139. 

Fiscal year: 2002; 
H-1b petition cap level: 195,000; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
108,956; 
Initial H-1B petitions subject to cap: 89,574. 

Fiscal year: 2003; 
H-1b petition cap level: 195,000; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
108,017; 
Initial H-1B petitions subject to cap: 88,182. 

Fiscal year: 2004; 
H-1b petition cap level: 65,000; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
163,229; 
Initial H-1B petitions subject to cap: 143,334. 

Fiscal year: 2005; 
H-1b petition cap level: 85,000[A]; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
117,370; 
Initial H-1B petitions subject to cap: 97,540. 

Fiscal year: 2006; 
H-1b petition cap level: 85,000[A]; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
121,602; 
Initial H-1B petitions subject to cap: 102,196. 

Fiscal year: 2007; 
H-1b petition cap level: 85,000[A]; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
121,633; 
Initial H-1B petitions subject to cap: 100,503. 

Fiscal year: 2008; 
H-1b petition cap level: 85,000[A]; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
122,446; 
Initial H-1B petitions subject to cap: 100,208. 

Fiscal year: 2009; 
H-1b petition cap level: 85,000[A]; 
Total initial H-1B petitions submitted to Homeland Security[B]: 
105,850; 
Initial H-1B petitions subject to cap: 87,573. 

Source: GAO analysis of Homeland Security CLAIMS 3 data. 

[A] Includes 20,000 visas allocated to workers graduating from U.S. 
master's programs or higher. 

[B] Total initial petitions submitted to Homeland Security includes 
all initial petitions that were entered into Homeland Security's data 
system, including those from cap-exempt employers. Reported numbers 
only reflect petitions entered into Homeland Security's CLAIMS 3 data 
system and processed by Homeland Security, not the total number 
submitted which is likely higher in years when the cap is reached. 
Petitions submitted under the master's cap cannot be differentiated 
and are therefore included in these data. 

[End of figure] 

When requests to extend H-1B workers' visas (i.e., extensions) 
[Footnote 29] are included in the total count of submitted petitions, 
we found that submitted petitions not subject to the cap generally 
increased as a proportion of overall petitions submitted from fiscal 
years 2000 to 2009, and greatly exceeded those that were subject to 
the cap in the last half of the decade. As shown in figure 4, during 
this time period, the proportion of all submitted petitions that were 
not subject to the cap increased from 48.9 percent in 2000 to 64.6 
percent in 2009. However, as noted previously, submitted petitions for 
H-1B workers subject to the cap are likely to be underestimated. 
Additionally, Homeland Security's data system does not enable us to 
determine which petitions for H-1B workers were subject to the 20,000 
master's cap.[Footnote 30] 

Figure 4: Proportion of Total Submitted Petitions for H-1B Workers 
Subject to the Annual Cap, FY 2000-FY 2009A: 

[Refer to PDF for image: horizontal bar graph] 

Fiscal year: 2000; 
Submitted petitions subject from the cap: 51.1%; 
Submitted petitions exempt from the cap: 48.9%. 

Fiscal year: 2001; 
Submitted petitions subject from the cap: 53.8%; 
Submitted petitions exempt from the cap: 46.2%. 

Fiscal year: 2002; 
Submitted petitions subject from the cap: 41.7%; 
Submitted petitions exempt from the cap: 58.3%. 

Fiscal year: 2003; 
Submitted petitions subject from the cap: 38.3%; 
Submitted petitions exempt from the cap: 61.7%. 

Fiscal year: 2004; 
Submitted petitions subject from the cap: 45.9%; 
Submitted petitions exempt from the cap: 54.1%. 

Fiscal year: 2005; 
Submitted petitions subject from the cap: 36.6%; 
Submitted petitions exempt from the cap: 63.4%. 

Fiscal year: 2006; 
Submitted petitions subject from the cap: 34.1%; 
Submitted petitions exempt from the cap: 65.9%. 

Fiscal year: 2007; 
Submitted petitions subject from the cap: 31.8%; 
Submitted petitions exempt from the cap: 68.2%. 

Fiscal year: 2008; 
Submitted petitions subject from the cap: 34.7%; 
Submitted petitions exempt from the cap: 65.3%. 

Fiscal year: 2009; 
Submitted petitions subject from the cap: 35.4%; 
Submitted petitions exempt from the cap: 64.6%. 

Source: GAO analysis of Homeland Security CLAIMS 3 data. 

[A] Includes initial petitions and requests for visa extensions from 
employers exempt and not exempt from the cap. Submitted petitions that 
were submitted under the master's cap cannot be differentiated and are 
therefore included in these data. 

[End of figure] 

Other Indicators of Demand for H-1B Workers: 

Another proxy of demand for H-1B workers is the number of employers 
that submitted petitions for H-1B workers to Homeland Security each 
year. As shown in figure 5, the overall number of employers submitting 
petitions for H-1B workers--both initial petitions and requests for 
visa extensions--fluctuated from 44,675 in fiscal year 2000 to 58,956 
in fiscal year 2009 with a high of 80,945 in fiscal year 2004, showing 
much less annual fluctuation than the overall number of H-1B workers 
they requested.[Footnote 31] This proxy is also likely to 
underestimate demand because any additional employers submitting 
petitions for H-1B workers subject to the cap were not counted after 
the cap was reached. 

Figure 5: Overall Number of Employers Submitting Petitions for H-1B 
Workers (Initial and Extensions) Processed by Homeland Security, FY 
2000-FY 2009[A]: 

[Refer to PDF for image: line graph] 

Fiscal year: 2000; 
Number of Employers Submitting Petitions: 44,675. 

Fiscal year: 2001; 
Number of Employers Submitting Petitions: 72,892. 

Fiscal year: 2002; 
Number of Employers Submitting Petitions: 74,952. 

Fiscal year: 2003; 
Number of Employers Submitting Petitions: 73,710. 

Fiscal year: 2004; 
Number of Employers Submitting Petitions: 80,945. 

Fiscal year: 2005; 
Number of Employers Submitting Petitions: 68,044. 

Fiscal year: 2006; 
Number of Employers Submitting Petitions: 68,935. 

Fiscal year: 2007; 
Number of Employers Submitting Petitions: 67,173. 

Fiscal year: 2008; 
Number of Employers Submitting Petitions: 58,572. 

Fiscal year: 2009; 
Number of Employers Submitting Petitions: 58,956. 

Source: GAO analysis of Homeland Security CLAIMS 3 data. 

[A] Includes employers who submitted initial petitions and visa 
extensions and who were both exempt and not exempt from the cap. 
Employers who submitted petitions under the master's cap cannot be 
differentiated and are therefore included in these data. All employer- 
based analyses were restricted to petitions with valid Employer 
Identification Numbers. About 220,000 of 2.8 million petitions were 
excluded from our analysis due to missing or invalid Employer 
Identification Numbers. 

[End of figure] 

The time it takes to reach the cap--the date on which Homeland 
Security stops processing initial petitions for new H-1B workers from 
employers subject to the cap--is another proxy for demand. Employers 
may submit petitions for new H-1B workers starting on April 1 of each 
year for the following fiscal year. In some years, the cap was reached 
within a few days of April 1, while in other years the cap was never 
reached. The time it takes to reach the cap is also affected by the 
cap level, which fluctuated over the last decade. However, from fiscal 
year 2005 to fiscal year 2009, the cap level remained constant at 
65,000 for regular requests and 20,000 for master's requests. For 
fiscal year 2005 through fiscal year 2007, the cap was reached in 
October, August, and May, respectively, likely indicating lower demand 
for new H-1B workers than in fiscal years 2008 and 2009, when the cap 
was reached within a few days (see figure 6). Although Homeland 
Security's CLAIMS 3 Mainframe data do not allow us to distinguish 
which submitted initial petitions were eligible for but not counted 
against the master's cap, an indication of demand for that category of 
H-1B workers is how quickly the master's cap is reached. In fiscal 
years 2008 and 2009, the master's cap was reached in April, likely 
indicating a high level of demand for those H-1B workers in recent 
years. In fiscal year 2010, the master's cap was reached before the 
general 65,000 cap. 

Figure 6: Time to Reach Annual Cap and Cap Level, Regular and Master's 
Cap, FY 2000-FY 2010A: 

[Refer to PDF for image: horizontal bar graph] 

Process opens each year on April 1. 

Fiscal year: 2000; 
Annual H-1B cap: 115,000; 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: July 
21. 

Fiscal year: 2001; 
Annual H-1B cap: 195,000; 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: 
Annual cap not reached. 

Fiscal year: 2002; 
Annual H-1B cap: 195,000; 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: 
Annual cap not reached. 

Fiscal year: 2003; 
Annual H-1B cap: 195,000; 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: 
Annual cap not reached. 

Fiscal year: 2004; 
Annual H-1B cap: 65,000. 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: 
February 17. 

Fiscal year: 2005; 
Annual H-1B cap: 85,000*; 
Date when annual cap reached (longer bars suggest lower demand): 
October 1. 

Fiscal year: 2006; 
Annual H-1B cap: 85,000*; 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: 
August 10; 
Submitted H-1B petitions for an additional 20,000 applicants holding a 
master’s degree or higher from an American institution*[B]: January 17. 

Fiscal year: 2007; 
Annual H-1B cap: 85,000*; 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: May 
26; 
Submitted H-1B petitions for an additional 20,000 applicants holding a 
master’s degree or higher from an American institution*[B]: July 26. 

Fiscal year: 2008; 
Annual H-1B cap: 85,000*; 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: April 
2; 
Submitted H-1B petitions for an additional 20,000 applicants holding a 
master’s degree or higher from an American institution*[B]: April 30. 

Fiscal year: 2009; 
Annual H-1B cap: 85,000*; 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: April 
5; Submitted H-1B petitions for an additional 20,000 applicants 
holding a master’s degree or higher from an American institution*[B]: 
April 5. 

Fiscal year: 2010; 
Annual H-1B cap: 85,000*; 
Date when annual cap reached (longer bars suggest lower demand): 
Submitted initial petitions for H-1B workers subject to the cap: 
December 21; 
Submitted H-1B petitions for an additional 20,000 applicants holding a 
master’s degree or higher from an American institution*[B]: July 9; 

Source: GAO analysis of Homeland Security data. 

[A] The cap filing period typically remains open for a total of a year-
and-a-half--from April 1 preceding a given fiscal year until the end 
(September 30) of the following fiscal year (e.g., April 1, 2001, 
through September 30, 2002, for fiscal year 2002). 

[B] According to Homeland Security officials, the agency first began 
tracking the master's cap in fiscal year 2006. Therefore, there is not 
a separate bar for the master's cap for fiscal year 2005. 

Finally, another potential indicator of demand, especially in years 
that the cap has been reached, might be requests for high-skilled 
workers via other visa programs, such as the L-1 visa for intracompany 
transfer of managers.[Footnote 32] From fiscal year 2000 to fiscal 
year 2008, the number of L-1 visas issued--which is not subject to a 
cap--increased by almost 53 percent, while the number of H-1B visas 
issued decreased slightly (see figure 7). 

[End of figure] 

Figure 7: L-1 and H-1B Visas Issued, FY 2000-FY 2008: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2000; 
L-1 visas: 54,963; 
H-1B visas: 133,290. 

Fiscal year: 2001; 
L-1 visas: 59,384; 
H-1B visas: 161,643. 

Fiscal year: 2002; 
L-1 visas: 57,721; 
H-1B visas: 118,352. 

Fiscal year: 2003; 
L-1 visas: 57,245; 
H-1B visas: 107,196. 

Fiscal year: 2004; 
L-1 visas: 62,700; 
H-1B visas: 138,965. 

Fiscal year: 2005; 
L-1 visas: 65,458; 
H-1B visas: 124,099. 

Fiscal year: 2006; 
L-1 visas: 72,613; 
H-1B visas: 135,421. 

Fiscal year: 2007; 
L-1 visas: 84,532; 
H-1B visas: 154,053. 

Fiscal year: 2008; 
L-1 visas: 84,078; 
H-1B visas: 129,464. 

Source: GAO analysis of State visa issuance data. 

[End of figure] 

Influence of Economy on Demand: 

The economy was likely a key contributor to fluctuations in the demand 
for H-1B workers. As shown in figure 8, overall submitted petitions 
for H-1B workers (initial and extensions) went up and down, and ranged 
from a low of 214,654 in fiscal year 2002 to a high of 342,035 in 
fiscal year 2001 over the 10-year period. For example, in fiscal years 
2002 and 2003 there was a downturn in hiring within the technology 
industry; concurrently, the number of submitted petitions for H-1B 
workers--both initial and requests for visa extensions--dropped 
dramatically to 214,654 and 230,423, respectively, even though the cap 
was increased to 195,000 for these years. In subsequent years, the 
number of submitted petitions increased as the economy rebounded, such 
that submitted petitions reached 316,065 in fiscal year 2007. 

Figure 8: All Submitted Petitions for H-1B Workers (Initial and 
Extensions), FY 2000-FY 2009[A]: 

[Refer to PDF for image: line graph] 

Fiscal year: 2000; 
All Submitted Petitions: 293,955. 

Fiscal year: 2001; 
All Submitted Petitions: 342,035. 

Fiscal year: 2002; 
All Submitted Petitions: 214,654. 

Fiscal year: 2003; 
All Submitted Petitions: 230,423. 

Fiscal year: 2004; 
All Submitted Petitions: 312,156. 

Fiscal year: 2005; 
All Submitted Petitions: 266,716. 

Fiscal year: 2006; 
All Submitted Petitions: 299,649. 

Fiscal year: 2007; 
All Submitted Petitions: 316,065. 

Fiscal year: 2008; 
All Submitted Petitions: 288,827. 

Fiscal year: 2009; 
All Submitted Petitions: 247,231. 

Source: GAO analysis of Homeland Security CLAIMS 3 data. 

[A] Includes initial petitions and requests for visa extensions from 
employers exempt and not exempt from the cap. Reported numbers only 
reflect petitions entered into Homeland Security's CLAIMS 3 data 
system and processed by Homeland Security, not the total number 
submitted which is likely higher in years when the cap is reached. 

[End of figure] 

While the Vast Majority of Employers Were Approved for Just One H-1B 
Worker, a Small Set of Employers Garnered Over One-Quarter of All H-1B 
Approvals: 

Most employers that submitted petitions to Homeland Security were 
approved, and most were approved for one H-1B worker, but a small 
percent of employers garnered over one-quarter of all H-1B approvals 
between fiscal year 2000 and fiscal year 2009. Over the 10-year 
period, about 94 percent of all submitted petitions (initial and 
extensions) were approved, with a high of 97 percent in fiscal year 
2006 and a low of 84 percent in fiscal year 2009.[Footnote 33] With 
respect to the number of approved workers per employer, 68 percent of 
employers were approved for 1 H-1B worker and about 99 percent of all 
employers with approved petitions (627,922) were approved for 100 or 
fewer workers. However, over the decade, less than 1 percent of all 
employers with approved petitions were approved to hire almost 30 
percent of all H-1B workers. 

Further, according to Labor's application data, between 3 and 5 
percent of all employers were categorized as being either H-1B-
dependent or willful violators between fiscal year 2002 and fiscal 
year 2008.[Footnote 34] However, Labor does not require employers to 
report (and therefore Labor's data do not indicate) the proportion of 
H-1B workers that comprise each employer's workforce. 

Among the top H-1B-hiring employers--those approved for large numbers 
of H-1B workers--are employers that function as "staffing companies," 
(i.e., employers that apply for H-1B workers but ultimately place 
these workers at the worksites of other employers as part of their 
business model, many of which also outsource work overseas).[Footnote 
35] Some foreign-owned information technology (IT) services firms have 
publicly stated that their ability to provide IT services to U.S. 
customers depends in part on access to significant numbers of H-1B and 
L-1 visa workers. Ultimately, the prevalence of these employers 
participating in the H-1B visa program is difficult to know because 
there are no disclosure requirements and Homeland Security does not 
track such information. However, using publicly available data on H-1B-
hiring employers we learned that at least 10 of the top 85 H-1B-hiring 
employers in fiscal year 2009 participate in staffing arrangements, of 
which at least 6 have headquarters or operations located in India. 
Together, in fiscal year 2009, these 10 employers garnered nearly 
11,456 approvals, or about 6 percent of all H-1B approvals. Further, 3 
of these employers were among the top 5 H-1B-hiring companies, 
receiving 8,431 approvals among them.[Footnote 36] 

Most Interviewed Companies Said the H-1B Cap and Program Created 
Costs, but Were Not Factors in Their Decisions on R&D and Offshoring: 

To better understand the impact of the H-1B cap and program on H-1B 
employers, GAO interviewed 34 companies--including individual 
structured interviews with 31 companies and group discussions with 3 
companies--about how the H-1B program affects their costs of doing 
business, their R&D activities, and their decisions about whether to 
locate work overseas.[Footnote 37] These companies reported that the H-
1B cap created various costs, but those costs varied depending on the 
size[Footnote 38] and maturity of the company. While many companies 
said that access to skilled labor is a significant factor in locating 
their R&D labs, few said that the H-1B cap was an important factor in 
their decisions about locating activities (either R&D or other skilled 
work) abroad, with the exception of IT services firms. 

Depending on Their Size and Maturity, Some of the Interviewed 
Companies Said the Cap Resulted in Hiring Delays and Costs Associated 
with Uncertainty: 

Many of the 34 companies we spoke with cited a range of direct and 
indirect costs associated with the H-1B cap and program features, 
including staffing uncertainties, legal and administrative fees, and 
other costs. However, the nature and extent of some costs varied with 
the type of firm. 

Costs of the H-1B Program: 

According to firms we interviewed, uncertainty in staffing due to the 
cap has imposed varied, and for some significant, costs to doing 
business, although they are difficult to quantify. Twenty-one of the 
31 firms we interviewed individually reported that they had H-1B 
petitions denied due to the cap in years when the cap was reached 
early in the filing season. In these years, the firms did not know 
which, if any, of their H-1B candidates would obtain a visa, and 
several (7) firms said that this situation created uncertainty that 
interfered with both project planning and candidate recruitment. Two 
firms also said that delays in processing their petitions, such as 
requests for additional evidence, sometimes resulted in their 
candidates accepting other positions in the United States or abroad 
instead of waiting for a resolution. In addition, two firms mentioned 
that in order to get the petition application in before the deadline, 
they sometimes made job offers to candidates who required H-1B visas 
before they were certain of the need to hire them. 

Firms cited other costs associated with acquiring H-1B hires, such as 
legal and administrative costs, and Homeland Security filing fees. For 
H-1B applications, the combined legal and filing fee costs among the 
26 firms that reported this information to us ranged from an estimated 
$2,320 to $7,500 or more per petition.[Footnote 39] However, several 
firms mentioned that petitions that generated additional requests for 
evidence from Homeland Security could result in higher legal costs, as 
well as additional administrative costs resulting from the staff hours 
required to collect extensive evidence. Several firms we spoke to also 
noted that Homeland Security filing fees have increased significantly 
in recent years--for example, Homeland Security fees for firms that 
are not exempt from the cap have risen from $110 in fiscal year 2000 
to $2,320 in fiscal year 2009.[Footnote 40] 

With regard to firms that eventually file applications for permanent 
residency for their H-1B workers, some employers we spoke with noted 
that their total legal and administrative costs for the duration of 
the process are large. For example, one company official estimated the 
combined costs of the H-1B and green card process to be about $16,000 
over the duration of the process. Two respondents noted that they have 
such long-term costs in mind when considering H-1B candidates. While 
only a few respondents brought up the cost of sponsoring an H-1B 
worker for permanent residency, nearly all (30 out of 31) of the firms 
we spoke with indicated that they had sponsored at least some of their 
H-1B visa holders for permanent residency, and 8 said that they 
typically sponsor all H-1B visa holders whose job performance was 
satisfactory. 

Experience of Large Firms with H-1B Program: 

In years when firms did not receive approvals for all of their H-1B 
petitions, most of the large, multinational firms we spoke with 
reported that they were generally able to hire their preferred 
candidates because the firms were skilled at navigating the 
immigration system. Specifically, 12 of the 14 large, multinational 
firms we spoke with reported having found a way to hire a job 
candidate denied an H-1B visa due to the cap. They did so, for 
example, by sending the candidate to work in an overseas office and 
subsequently bringing him or her in on an L-1 visa, or by extending 
the practical training period allowed under their student visa for an 
additional year. Some firms noted, however, that these alternatives 
can be very costly. For example, after H-1B visas for preferred job 
candidates fell through, nine companies said they had sometimes placed 
their job candidates temporarily overseas, and three mentioned that 
this process required the company to pay an "expatriate package," with 
allowances for housing and living expenses. One company executive said 
hiring an employee on an expatriate package is often three times more 
costly than hiring the same employee in the U.S.--a point with which 
others we spoke with concurred. 

Experience of Smaller Firms with H-1B Program: 

Of the 13 smaller H-1B employers we spoke with, 8 indicated that they 
had incurred significant business costs resulting from petitions 
denied due to the cap, delays in processing H-1B petitions, and other 
costs associated with the H-1B program. Six of the smaller companies 
we spoke with had petitions denied due to the cap, and of these, four 
indicated they did not have the resources or the infrastructure in 
place to pursue alternatives such as placing a desired employee abroad 
for a year. In addition, executives from four of the six small firms 
we spoke with who had petitions denied due to the cap told us that 
they had to delay or cancel projects, or hire second-choice employees, 
because they were unable to hire all of the employees for whom they 
sought H-1B petitions. Several firms in technology-intensive fields 
such as IT product development--both large and small--stressed that 
the product development cycles in their industries are extremely 
compressed, and in order to be competitive, they frequently need to 
develop new products in a matter of months, not years. Some of these 
firms told us that any delay in hiring an essential employee can, 
therefore, result in significant losses. One founder of a technology 
company, who valued his 3-year-old firm at about $100 million dollars, 
said a 3-month delay in product development could mean lost 
opportunities worth several million dollars. 

Experience of Emerging Firms with Immigration System: 

To gain the perspective of entities that support and work with 
emerging technology companies (high-tech "start-up" firms), we spoke 
with venture capital and law firm representatives who reported that 
start-ups, in particular, often have less time and fewer resources for 
navigating the immigration system, and the impact of employee 
immigration problems on them can be substantial. Some founders of 
start-ups and venture capital firms with whom we spoke reported that 
the skills required by small firms and emerging companies in high-tech 
sectors are often extremely specialized, and sometimes these firms 
cannot readily find a "second-choice" employee in the U.S. labor 
market. For example, one start-up founder stressed that competition 
for "the best people" is fierce in "a high-growth, venture-backed 
business" where building "complex software faster and better than 
companies that are orders of magnitude larger" is critical to 
survival. In addition, foreign nationals seeking to found new 
companies in the United States can face a unique set of difficulties. 
Two lawyers we spoke with whose firms work with many emerging 
technology companies in Silicon Valley described cases in which 
entrepreneurs attempting to establish very early-stage technology 
start-ups were unable to obtain H-1B or other work visas for 
themselves and either relocated the project abroad or had to abandon 
the start-up. 

Most Interviewed Companies Said the Cap Had Little Effect on R&D or 
Offshoring Decisions; However, Certain IT Services Firms Differed: 

When asked about how the H-1B cap affected their decisions on where to 
locate their R&D activities and other operations, 15 of the 28 
companies who responded to these questions said the H-1B cap was not 
an important factor in their decisions on the location of these 
activities. The 20 firms we spoke with that conducted R&D were in a 
variety of industries--including semiconductor and electronics 
manufacturing, pharmaceutical companies, software publishing and 
financial services--and 7 of these 20 were in the manufacturing 
sector. Several firms that conducted R&D reported that their H-1B 
workers were essential to this work in the United States. Furthermore, 
access to skilled labor from around the world was very important to a 
number of the firms we interviewed; 15 of the companies we spoke with 
had R&D centers or labs overseas, and 8 of these firms told us that 
these centers or labs had been set up largely to access the skilled 
workforce in that country. However, only four said the H-1B cap was an 
important determinant in the creation of these overseas centers. 
Respondents from several of the multinational companies we spoke with--
whether headquartered in the United States or not--regarded their 
firms as global entities, and five said that their decisions to expand 
overseas are primarily driven by the pursuit of new markets. In 
addition, firms said many other factors are involved in such 
decisions, including the cost of labor; access to a workforce in a 
variety of time zones; language and culture; proximity to 
universities; and tax law.[Footnote 41] 

While the majority of company officials we spoke to said they had not 
moved work offshore due to the H-1B program or cap, several 
respondents from one group of companies--IT services firms[Footnote 
42]--told us they have moved or would move work offshore as a result 
of the cap or changes in the administration of the H-1B program. One 
large IT services firm that had both an onshore staffing component and 
offshore outsourcing component[Footnote 43] noted that in years when 
the H-1B cap prevented hiring all the foreign workers sought, the 
company could locate a larger portion of the work project overseas. 
Two IT staffing firms we spoke with--firms that place H-1B workers at 
the worksites of client companies--said their U.S. business relies 
heavily on the H-1B program because H-1B visa holders are more willing 
to relocate around the country, and one noted that H-1Bs accept lower 
wages than U.S. workers. 

Several executives at IT staffing firms we interviewed noted that, 
since issuance of a January 2010 Homeland Security memo,[Footnote 44] 
Homeland Security is more aggressively enforcing a requirement that 
staffing firms be able to provide evidence of an employer-employee 
relationship with the H-1B worker they sponsor by, for example, having 
a contract with their clients in place.[Footnote 45] Executives from 
staffing firms told us they often cannot have a contract in place 
because they provide labor on short notice to their client firms. As a 
result of the increased enforcement of this provision, executives at 
one staffing firm told us that they no longer hired H-1Bs for their 
staffing business, and executives at several other staffing firms 
reported that they had ceased hiring new H-1B workers, hiring instead 
only foreign nationals already in the country with a current H-1B 
visa.[Footnote 46],[Footnote 47] Executives at some companies who 
already had an offshore location reported expanding the portion of 
their work conducted overseas, and others reported that they had 
either opened an offshore location to access labor from overseas or 
were considering doing so. 

Some researchers have noted that some IT services firms that conduct 
offshore outsourcing and employ large numbers of H-1B workers[Footnote 
48] offer engineering and R&D services.[Footnote 49] Although 3 of the 
10 IT services firms we spoke with described themselves as conducting 
R&D, 2 of the 3 noted that this R&D involved innovation while on-the- 
job. Some experts we spoke with also noted that learning and 
technological innovation is often attained on the job or through 
informal collaboration, as opposed to through formal R&D efforts. 
Thus, while the movement of IT services work offshore in response to 
the H-1B cap may not result in the direct transfer of formal R&D, it 
may nonetheless result in movement of innovation offshore. 

Companies Also Cited Various Concerns about the Petition Review 
Process and Suggested Some Program Modifications: 

Companies we spoke with reported several concerns with the H-1B 
petition adjudication process, including the amount of paperwork 
required and the level of evidence requested during this process. 
Companies and experts we spoke with suggested several program 
modifications that could remedy some of these reported problems. 

Increasingly burdensome adjudication process: Eighteen of the firms we 
spoke with maintained that the review and adjudication process had 
become increasingly burdensome in recent years, with many of these 
firms complaining about the amount of paperwork they needed to provide 
as part of the adjudication process. Further, eight firms--of all 
sizes and across a range of industries--complained that the number of 
requests for additional evidence from Homeland Security increased 
significantly in recent years. Relatedly, in prior work, we suggested 
that Congress consider streamlining the H-1B approval process by 
eliminating the separate requirement that employers first submit an 
LCA to Labor for review and certification, since another agency 
(USCIS) subsequently conducted a similar review of the LCA.[Footnote 
50] Three years after our recommendation, in 2003, USCIS was moved 
under the newly formed Homeland Security; however, Congress has not 
taken action to streamline the process. 

Inconsistencies in the adjudication process: Executives at several 
companies we spoke with provided examples of what they viewed as 
inconsistencies in the adjudication process. For example, one company 
executive noted that the petitions it sends to one of Homeland 
Security's two processing centers are often processed more efficiently 
than the petitions it sends to the other processing center. Another 
executive noted that at times, "decisions on approving or denying the 
H-1B visa applications seem arbitrary." This executive provided an 
example of a USCIS adjudicator who decided that the project for which 
the company sought an H-1B worker did not require "specialty 
education," but the executive felt that if the adjudicator had 
contacted the client firm, they could have easily seen that a 
specialist was required. Other firms noted that some adjudicators ask 
for evidence that seems unnecessary. For example, an immigration 
lawyer at a multinational pharmaceutical company said that agency 
requests for evidence do not always appear to be "thoughtful," and 
cited a Request for Evidence that demanded a review of the 
qualifications of an applicant who had received a science degree from 
Oxford University. 

Adjudication process not customized for different employers: Several 
companies we spoke with complained that the adjudication process is 
the same for all H-1B employers, irrespective of the employer's track 
record with the H-1B program. For example, the Immigration Policy 
Manager for a large, household-name Fortune 100 company recounted 
being asked to provide photographic evidence of its headquarters as 
part of the Request for Evidence in the petition review process. As 
another example, the Chief Executive Officer of a small software 
application developer who had been using the H-1B program for over 10 
years recounted the frustration of interviewing 60 U.S. candidates 
before finding 3 candidates through international hiring, and then 
facing a vetting process that questioned his effort to hire a U.S. 
citizen. At the same time, Homeland Security staff we spoke with 
reported having to review large stacks of paperwork to adjudicate a 
single petition. 

Experts we spoke with suggested that Homeland Security consider 
creating a risk-based adjudication process whereby businesses are 
ranked on their experience with the program and past compliance 
issues. Such a process could permit well-vetted businesses with a 
strong track-record of H-1B regulatory compliance access to a 
streamlined process for petition approval and reduced requests for 
evidence, thus reducing the burden to firms of providing evidence, and 
would permit Homeland Security investigators to focus their 
investigative efforts efficiently. 

Rigidities in the lottery system: Several company executives, industry 
representatives, and academic researchers we spoke with cited examples 
of what they viewed as rigidities in the lottery system, especially in 
years when the H-1B cap is hit early. Several industry representatives 
told us that the lottery process does not allow their clients to rank 
their top choices; as a result, firms do not necessarily receive 
approval for the most desired H-1B candidates. Several companies we 
spoke with also raised the issue that the annual allotment period does 
not allow firms to make their hiring decisions in response to business 
needs throughout the year, especially during years when the cap is hit 
early in the year. Some company executives and researchers we spoke 
with suggested the following: 

* a more efficient system would permit employers to rank their 
applications so that they are able to hire the best qualified worker 
for the job in highest need; and: 

* to allow more flexible hiring of H-1B workers, Homeland Security 
consider distributing the allocation of H-1B permits throughout the 
year (such as quarterly) rather than annually. 

Visas for emerging technology companies: Entrepreneurs and venture 
capital firms we interviewed said that program rules can inhibit many 
emerging technology companies and other small firms from using the H-
1B program to bring in the talent they need, constraining the ability 
of these companies to grow and innovate in the United States. For 
example, for the earliest stage ventures, when the person who needs 
the H-1B visa is the entrepreneur, there is sometimes no "firm" in 
existence yet that can meet legal criteria for employing H-1Bs. While 
it is not necessarily the role of the H-1B program to provide work 
visas for foreign entrepreneurs, several parties we spoke with 
discussed the risk of the United States losing its advantage in high-
tech entrepreneurship if U.S. immigration policy undermines the 
ability and interest of new entrepreneurs to move to high-tech 
communities like Silicon Valley. Some venture capital firms and 
businesses we spoke with suggested that, in order to promote the 
ability of entrepreneurs to start businesses in the United States, 
Congress should consider creating a visa category for entrepreneurs, 
available to persons with U.S. venture backing.[Footnote 51] 

Agency officials expressed reservations about the feasibility of GAO's 
past recommendation and the suggestions from experts and company 
executives on improving the application process. Homeland Security 
officials believed that Labor would be better suited to review the LCA 
because Labor has specialized knowledge about the computation of 
prevailing wages. Labor officials, however, conceded that their review 
of the LCA is limited by statute, as discussed above. In regard to the 
potential adoption of a customized adjudication process, Labor 
officials noted that a strong track record of compliance with program 
rules does not guarantee future compliance. Homeland Security 
officials also noted that establishing a system for employers to rank 
their submitted petitions in order of priority might increase the 
likelihood of fraud if it also increased incentives for employers to 
submit applications for hypothetical workers in order to capture a 
larger proportion of those selected for the lottery. State officials 
raised questions about the logistics required for allocating H-1B 
petitions throughout the year--for example, whether or how employers 
would be permitted to resubmit petitions after receiving a denial in 
one quarter, and whether such a system might result in more employers 
being denied access to H-1B workers during peak seasons. 

Homeland Security officials also noted two efforts currently under way 
to streamline the application process for prospective H-1B employers. 
Homeland Security is in the process of developing a product that would 
allow it to use data from a private data vendor to automatically 
download certain data on employers and update those data over time so 
that in the future, employers may not have as heavy a burden in filing 
their petitions. This product is currently being tested. Second, 
Homeland Security is currently preparing a proposed rule, which is 
being reviewed and considered within the agency, to allow employers to 
submit requests for H-1B slots before submitting an LCA. This rule 
would spare employers that were not chosen in the lottery from having 
to file an LCA and could also reduce workloads for Labor. The 
officials did not know whether and when a proposed rule would be 
published for comment and finalized. 

Although Data Limitations Preclude Knowledge of the Total H-1B 
Workforce and Precise Tracking of the Cap, Characteristics of Those 
Approved to Be H-1B Workers Are Known: 

Data on the total number of H-1B workers in the United States are not 
available because of limitations in agency data. In addition, although 
Homeland Security is responsible for tracking the number of H-1B 
petitions approved under the cap or the number of H-1B visas issued, 
[Footnote 52] it cannot precisely do so. However, Homeland Security is 
currently taking steps to address these limitations. Data on the 
annual cohort of people approved to be H-1B workers (referred to as 
"approved H-1B workers" in this report) offer some information on the 
characteristics of likely H-1B workers, including their countries of 
birth, occupations, and education levels. 

Limitations in Agency Data Systems Hinder Tracking the Cap and H-1B 
Workers Over Time, Though Homeland Security Is Working to Improve Its 
Systems: 

Although Homeland Security generally tracks the flow of likely H-1B 
workers into the United States on an annual basis, it cannot determine 
the size of the cumulative H-1B workforce because several agencies or 
departments manage data on this population over time, and the systems 
that capture the data are not easily linked. H-1B petition approvals 
are captured in Homeland Security's CLAIMS 3 data system, as are 
changes in visa status for approved H-1B workers who are already 
residing in the country at the time of approval. However, visas for H- 
1B workers living abroad at the time of approval are captured by a 
data system that is administered by State and not linked to CLAIMS 3. 
Further, information on visa holders who actually enter or exit the 
United States is tracked via Homeland Security's United States Visitor 
and Immigrant Status Indicator Technology (US-VISIT) program, which is 
not systematically linked to CLAIMS 3. Because these data systems do 
not use a unique, person-centric identifier for H-1B workers, Homeland 
Security cannot determine, for example, how many approved H-1B workers 
living abroad actually received an H-1B visa and/or ultimately entered 
the country.[Footnote 53] Similarly, Homeland Security does not track 
H-1B workers after their visas expire, and cannot readily determine if 
and when H-1B workers apply for or are granted legal permanent 
residency, leave the country, or remain in the country on an expired 
visa. The fact that electronic records from different systems are not 
linked also results in unnecessary duplication of efforts. For 
example, according to State officials, while State has some capacity 
to query Homeland Security's CLAIMS 3 database, its consular posts 
cannot import data from CLAIMS 3 to their own data system, so State 
contractors re-enter information from CLAIMS 3 manually into State's 
data system. 

Further, although Homeland Security is responsible for tracking the 
number of H-1B petitions approved under the cap and the number of H-1B 
visas issued, it does not maintain precise information on this. To 
implement the statutory cap on H-1B visas, Homeland Security must take 
the necessary steps to maintain an accurate count of the number of 
aliens subject to the annual cap who are issued visas or otherwise 
provided nonimmigrant status by the Immigration and Nationality Act. 
[Footnote 54] However, according to Homeland Security officials, the 
department's current processes do not allow them to determine 
precisely when approvals reach the number set by the cap. Instead, 
they stop accepting initial petitions for new H-1B workers that are 
subject to the cap when they estimate that the number of approved 
petitions is approaching the mandated limit. In fiscal year 2005, 
Homeland Security's Office of Inspector General found that USCIS 
exceeded the 65,000 cap limit by about 7,000 approved petitions and 
recommended the agency maintain more precise control over the number 
of H-1B visas issued.[Footnote 55] Although the recommendation was 
closed by the Office of Inspector General in 2006, Homeland Security 
officials concede they still cannot precisely count, in an ongoing 
manner, petitions accepted under the cap despite several changes in 
how the agency accepts, monitors, controls, and forecasts receipts for 
submitted petitions subject to the cap. Further, officials noted that 
as long as the process of submitting and adjudicating H-1B petitions 
remains the same, they are unlikely to be able to provide a precise 
count of petitions accepted under the cap. 

The capability to better track the cumulative H-1B workforce and 
petitions accepted under the annual cap may develop with the eventual 
completion of Homeland Security's program to modernize business 
processes and information systems, although challenges remain. 
Homeland Security's "Transformation Program" is a multiprogram, 
multiyear effort, ongoing since 2005, that includes a plan to 
implement an electronic I-129 petition, with a unique identifier for 
each H-1B worker. Using this identifier, Homeland Security would 
likely be able to share data with State and other external partners. 
[Footnote 56] Homeland Security officials reported, for example, that 
they are currently working with agencies that include Justice and 
State to create a cross-reference table of agency identifiers for 
individuals applying for visas. Ultimately, the table would capture 
each record for the same person and employer from all partner agency 
programs, such that records for a specific individual can be merged 
under one unique person-centric identifier. When this occurs, it will 
be possible to identify who is in the United States at any one point 
in time under any and all visa programs. USCIS plans to develop 
internal guidance for the electronic I-129 petition over the next 2 
years. However, according to previous GAO reports, Homeland Security's 
Office of Inspector General, and Homeland Security officials, the 
agency faces challenges finalizing and moving ahead with 
implementation of the program.[Footnote 57] 

Most Approvals for H-1B Workers Were for Workers from India or China 
and for Technology Positions: 

Between fiscal year 2000 and fiscal year 2009, the majority of 
approved H-1B workers (initial and extensions for both employers 
subject to the cap and cap-exempt employers) were born in Asia. Over 
the last decade, the top four countries of birth for approved H-1B 
workers were India, China, Canada, and the Philippines. Across all 10 
years, about 64 percent of approved H-1B workers were born in these 
four countries, with the largest group from India (see figure 9). 

Figure 9: Country of Birth for Approved H-1B Workers, FY 2000-FY 
2009[A]: 

[Refer to PDF for image: illustrated world map] 

India: 46.9%; 
China: 8.9%; 
Canada: 4.3%; 
Philippines: 3.7%; 
United Kingdom 2.1%; 
Taiwan: 1.7%; 
Pakistan: 1.5%; 
Other nations: 31%. 

Source: GAO analysis of Homeland Security CLAIMS 3 data; National 
Atlas of the United States (base map). 

[A] Includes both initial petitions and requests for visa extensions. 

[End of figure] 

Over the same period, more than 40 percent of approved H-1B workers 
(initial and extensions for both employers subject to the cap and cap- 
exempt employers) were approved to fill occupations in systems 
analysis and programming. The next-highest occupational category was 
college and university education, which represented about 7 percent of 
H-1B approvals, as shown in figure 10. 

Figure 10: Occupations Approved for H-1B Workers, FY 2000-FY 2009[A]: 

[Refer to PDF for image: pie-chart] 

Systems analysis and programming: 42%; 
College/university education: 7%; 
Accountants and auditors: 4%; 
Electrical engineers/electronics: 4%; 
Other computer-related: 4%; 
Physicians/surgeons: 3%; 
Biological sciences: 2%; 
All others: 35%. 

Source: GAO analysis of Homeland Security CLAIMS 3 data. 

[A] Includes both initial petitions and requests for visa extensions. 

[End of figure] 

Many Approved H-1B Workers Were Already in the United States and 
Applied to Stay Permanently: 

As compared to fiscal year 2000, in fiscal year 2009, approved H-1B 
workers (initial and extensions for both employers subject to the cap 
and cap-exempt employers) were more likely to be living in the United 
States than living abroad at the time of their initial application, to 
have an advanced degree (master's, professional, or Ph.D.), and to 
have obtained their graduate degrees in the United States. From fiscal 
year 2000 to fiscal year 2009, the proportion of newly approved H-1B 
workers that were already living in the United States increased from 
43 to 62 percent. Many of these workers are likely to have been on 
student or another visa status. In 2000, 40 percent of approved H-1B 
workers (initial and extensions) possessed an advanced degree 
(master's, professional, or Ph.D.), which increased to 59 percent by 
fiscal year 2009 (see figure 11). One reason for this increase may be 
the H-1B Visa Reform Act of 2004, which allowed for an additional 
20,000 approvals each year for foreign workers holding a master's 
degree or higher from an American institute of higher education. 
[Footnote 58] Since then, the proportion of approved H-1B workers who 
graduated with a master's degree from an American institution of 
higher education increased from 29 to 36 percent of all approved 
workers--including initial petitions and visa extensions.[Footnote 59] 

Figure 11: Educational Attainment of Approved H-1B Workers, FY 2000-FY 
2009[A]: 

[Refer to PDF for image: horizontal bar graph] 

Fiscal year: 2000; 
Bachelor's degree or less: 58%; 
Advanced degree (includes master's professional and PhD): 40%. 

Fiscal year: 2001; 
Bachelor's degree or less: 58%; 
Advanced degree (includes master's professional and PhD): 42%. 

Fiscal year: 2002; 
Bachelor's degree or less: 52%; 
Advanced degree (includes master's professional and PhD): 48%. 

Fiscal year: 2003; 
Bachelor's degree or less: 51%; 
Advanced degree (includes master's professional and PhD): 49%. 

Fiscal year: 2004; 
Bachelor's degree or less: 50%; 
Advanced degree (includes master's professional and PhD): 50%. 

Fiscal year: 2005; 
Bachelor's degree or less: 45%; 
Advanced degree (includes master's professional and PhD): 55%. 

Fiscal year: 2006; 
Bachelor's degree or less: 46%; 
Advanced degree (includes master's professional and PhD): 54%. 

Fiscal year: 2007; 
Bachelor's degree or less: 46%; 
Advanced degree (includes master's professional and PhD): 54%. 

Fiscal year: 2008; 
Bachelor's degree or less: 43%; 
Advanced degree (includes master's professional and PhD): 57%. 

Fiscal year: 2009; 
Bachelor's degree or less: 41%; 
Advanced degree (includes master's professional and PhD): 59%. 

Source: GAO analysis of Homeland Security CLAIMS 3 data. 

Note: Bars do not always sum to 100 percent due to our exclusion of 
missing or invalid data. 

[A] Includes both initial petitions and requests for visa extensions. 

[End of figure] 

These findings are consistent with previously discussed findings that 
there has been an increase in the number of approved H-1B workers 
receiving advanced degrees from U.S. universities, as well as those 
who are already residing in the United States at the time of H-1B visa 
approval. This in turn suggests that, in general, the approved H-1B 
population may include more recent graduates, who are younger and more 
highly educated, as compared to their U.S. citizen counterparts in 
similar occupations. In turn, the U.S. citizen population in similar 
occupations may include older, more experienced workers. 

Finally, data on a cohort of approved H-1B workers whose petitions 
were submitted between January 1, 2004, and September 30, 2007, 
(including initial petitions from both employers subject to the cap 
and cap-exempt employers) indicate that a substantial proportion 
subsequently applied for permanent residence in the United States. 
Specifically, from a cohort of 311,847 approved H-1B petitions, we 
were able to obtain unique matches for 169,349 petitions from Homeland 
Security's US-VISIT data. Of these, GAO found that 56,454 of the 
individuals listed on these H-1B petitions had submitted a petition 
for permanent residence by 2010. Thus, at least 18 percent of the 
total cohort had applied for permanent residence by 2010.[Footnote 60] 
Further, about half of those that applied had been approved for 
permanent residence by 2010, 45 percent were still pending, and just 3 
percent had been denied. 

The Impact of Raising the H-1B Cap on the U.S. Workforce Is Difficult 
to Forecast Due to Complex Economic Factors: 

The Impact of Raising the Cap Is Difficult to Estimate: 

In addition to lack of data on the total H-1B workforce previously 
discussed, the potential impact that raising the H-1B cap would have 
on the wages and employment of U.S. workers is difficult to estimate 
because of complex economic relationships. On the one hand, if the H-
1B program successfully provides needed skills for the U.S. economy, 
economic theory suggests that the program should contribute to long-
run economic growth, which is beneficial for all workers. For example, 
additional skilled labor could increase innovation and productivity, 
potentially leading to improved competitiveness of U.S. businesses, 
higher wages in aggregate, and lower prices on goods and services 
purchased by American consumers. On the other hand, certain groups of 
U.S. workers may experience lower wages and employment as a result of 
the inflow of H-1B workers. Furthermore, changes in the wages and 
employment of both U.S. workers and H-1B workers reflect both changes 
in demand for labor and changes in the supply of labor, making it 
difficult to determine the effect that changes in the number of H-1B 
workers would have on outcomes for U.S. workers. 

Although demand for H-1B workers seemed to fluctuate in concert with 
broad economic indicators, relationships still cannot be inferred. As 
shown in figure 12, the number of submitted H-1B petitions has 
generally followed overall employment growth in the U.S. economy. This 
appears consistent with economic theory that suggests that businesses 
require additional labor during periods of economic growth, so 
employers will likely submit more H-1B petitions during these periods. 
At the same time, wage rates and employment levels for U.S. workers 
generally rise during periods of economic growth. Therefore, the 
number of H-1B petitions tends to rise when wages and employment for 
U.S. workers are rising (although the number of approvals is limited 
by the H-1B cap), and to fall when wages and employment for U.S. 
workers are falling. However, this relationship does not reveal what 
the wage rates and employment rates of U.S. workers would have been in 
the absence of H-1B workers. 

Figure 12: H-1B Submitted Petitions and Aggregate Employment Growth, 
2000-2009: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2000; 
Total submitted H-1B petitions[A]: 353,243; 
Percent change in total employment: 2.5%. 

Fiscal year: 2001; 
Total submitted H-1B petitions[A]: 267,004; 
Percent change in total employment: 0%. 

Fiscal year: 2002; 
Total submitted H-1B petitions[A]: 211,191; 
Percent change in total employment: -0.3%. 

Fiscal year: 2003; 
Total submitted H-1B petitions[A]: 246,224; 
Percent change in total employment: 0.9%. 

Fiscal year: 2004; 
Total submitted H-1B petitions[A]: 280,033; 
Percent change in total employment: 1.1%. 

Fiscal year: 2005; 
Total submitted H-1B petitions[A]: 271,303; 
Percent change in total employment: 1.8%. 

Fiscal year: 2006; 
Total submitted H-1B petitions[A]: 297,652; 
Percent change in total employment: 1.9%. 

Fiscal year: 2007; 
Total submitted H-1B petitions[A]: 305,419; 
Percent change in total employment: 1.1%. 

Fiscal year: 2008; 
Total submitted H-1B petitions[A]: 282,926; 
Percent change in total employment: -0.5%. 

Fiscal year: 2009; 
Total submitted H-1B petitions[A]: 209,627; 
Percent change in total employment: -3.8%. 

Source: GAO analysis of Homeland Security CLAIMS 3 data and CPS data. 

[A] Total submitted H-1B petitions represent the number of petitions 
submitted in that calendar year. For example, 353,000 petitions were 
submitted in calendar year 2000. Percent change in total employment 
for a given year is the percent change in the number of workers 
employed between the previous calendar year and the current calendar 
year. Estimated change in total employment has 95 percent confidence 
intervals of within +/-0.5 percentage points. 

[End of figure] 

Due to these complex economic relationships, coupled with limitations 
in data on the total H-1B workforce discussed previously, we did not 
attempt to forecast the impacts of prospective changes in the H-1B cap 
on the U.S. labor force. 

Employment and Earnings Picture Was Mixed for Professions Absorbing H- 
1Bs: 

While GAO did not attempt to forecast the impacts of prospective 
changes in the H-1B cap, we examined 10 years of retrospective data on 
the employment, unemployment, and earnings of U.S. workers in the 
three occupations that absorbed the largest proportion of H-1B workers 
relative to the stock of U.S. workers in these occupations.[Footnote 
61] The three occupations with the highest number of H-1B approvals 
relative to the number of U.S. workers in that occupation were (1) 
systems analysts, programmers, and other computer-related 
workers;[Footnote 62] (2) electrical and electronics engineers; and 
(3) college and university educators. For example, among systems 
analysts, programmers, and other computer-related workers aged 18 to 
50, the number of approved H-1B petitions (initial and extensions) was 
10 percent of the total stock of U.S. citizen workers in private 
sector jobs in this occupation in calendar year 2008.[Footnote 63] 

Our analysis of these three occupations generally revealed a mixed 
earnings and employment picture for U.S. workers in professions 
absorbing H-1Bs. (See appendix III for additional details.) 

* With respect to median earnings, we found that U.S. workers in all 
three occupations, in every year, had significantly higher median 
earnings levels compared to all professional U.S. workers. 

* With respect to real earnings growth, systems analysts, programmers, 
and other computer-related workers had significantly higher real 
earnings growth[Footnote 64] compared to all professional workers; in 
contrast, for electrical and electronics engineers, real earnings 
growth was not significantly different from that for professional 
workers, and for college and university educators, real earnings 
growth was relatively flat over the decade. 

* Unemployment rates for both (1) systems analysts, programmers, and 
other computer-related workers and (2) electrical and electronics 
engineers were relatively cyclical; in contrast, the unemployment rate 
for college and university educators was somewhat less sensitive to 
business cycle fluctuations over the decade. 

* Employment levels (i.e., the number of workers employed) for 
electrical and electronics engineers declined significantly over the 
decade; employment levels for systems analysts, programmers, and other 
computer-related workers were essentially unchanged; and employment 
levels for college and university educators grew significantly over 
the decade. 

H-1B and U.S. Citizen Workers: Salary Differences: 

To examine more closely whether H-1B workers are being paid salaries 
that are comparable to U.S. workers, we examined data on salaries for 
the three occupations that absorbed the largest proportion of H-1B 
workers relative to the stock of U.S. workers in 2008,[Footnote 65] 
and compared this to data on the reported salaries listed by the 
employer on H-1B petitions.[Footnote 66] A comparison of median annual 
salaries reveals that for systems analysts, programmers, and other 
computer-related workers--the largest of the three occupational 
categories we examined--H-1B workers tended to earn less than U.S. 
workers; however, some of the salary gap appears to be explained by 
differences in ages, which may reflect differences in the extent of 
their work experience.[Footnote 67] As shown in table 1, which 
summarizes the median reported earnings of H-1B and U.S. workers by 
age and occupation, among systems analysts, programmers, and other 
computer-related workers, differences in median reported earnings 
between H-1B workers aged 20 to 29 and U.S. workers of the same age 
were not statistically significantly different, and the same was true 
for workers aged 30 to 39; however, H-1B workers aged 40 to 50 had 
median reported earnings that were significantly lower than the median 
earnings of U.S. workers in this occupation. Among electronics and 
electrical engineers, we did not find significant differences in 
median earnings of approved H-1B workers and U.S. workers, overall and 
within the age groups we examined. Among college and university 
educators, differences in reported earnings between H-1B workers and 
U.S. workers were not statistically significant except among younger 
age groups in which the H-1B workers had higher reported earnings than 
U.S. workers in the same age category; however, we could not account 
for all factors that might affect salary levels. (See the discussion 
"Limitations of Wage Comparisons" in appendix I for more information.) 
For all groups, differences in other factors, such as skill level, 
might explain some of the remaining salary differences; however, a 
lack of data on these factors precludes our analysis of them. In 
addition, differences in factors such as geographic location, size of 
firm, and industry, as well as level of education, which may also 
affect salary differences, are not controlled for here due to data 
limitations.[Footnote 68] For example, if certain groups of workers 
are more heavily concentrated in high-cost parts of the country, this 
will be reflected in the median wage. (For additional analyses 
comparing U.S. workers with approved H-1B workers, see appendix II.) 

Table 1: Median Reported Salaries of Approved H-1B Workers and 
Estimated U.S. Worker Median Salaries in Selected Occupations, 2008: 

Age Group: 18-50; 
Electrical/electronics engineering occupations: 
H-1B: $80,000; 
U.S. workers: $80,000; 
Significant difference: no; 
Systems analysis, programming, and other computer-related occupations: 
H-1B: $61,000; 
U.S. workers: $70,000; 
Significant difference: yes; 
Occupations in college and university education: 
H-1B: $48,000; 
U.S. workers: $44,000; 
Significant difference: no. 

Age Group: 20-39[A]; 
Electrical/electronics engineering occupations: 
H-1B: $80,000; 
U.S. workers: $75,000; 
Significant difference: no; 
Systems analysis, programming, and other computer-related occupations: 
H-1B: $60,100; 
U.S. workers: $65,000; 
Significant difference: yes; 
Occupations in college and university education: 
H-1B: $47,237; 
U.S. workers: $35,000; 
Significant difference: yes. 

Age Group: 20-29; 
Electrical/electronics engineering occupations: 
H-1B: $73,000; 
U.S. workers: [B]; 
Significant difference: [B]; 
Systems analysis, programming, and other computer-related occupations: 
H-1B: $60,000; 
U.S. workers: $58,000; 
Significant difference: no; 
Occupations in college and university education: 
H-1B: $42,000; 
U.S. workers: $30,000; 
Significant difference: yes. 

Age Group: 30-39; 
Electrical/electronics engineering occupations: 
H-1B: $86,900; 
U.S. workers: [B]; 
Significant difference: [B]; 
Systems analysis, programming, and other computer-related occupations: 
H-1B: $70,000; 
U.S. workers: $70,000; 
Significant difference: no; 
Occupations in college and university education: 
H-1B: $48,500; 
U.S. workers: [B]; 
Significant difference: [B]. 

Age Group: 40-50; 
Electrical/electronics engineering occupations: 
H-1B: $85,000; 
U.S. workers: $95,000; 
Significant difference: no; 
Systems analysis, programming, and other computer-related occupations: 
H-1B: $77,063; 
U.S. workers: $84,000; 
Significant difference: yes; 
Occupations in college and university education: 
H-1B: $51,905; 
U.S. workers: $52,500; 
Significant difference: no. 

Source: GAO analysis of U.S. self-reported earnings from Labor's CPS 
data and H-1B earnings reported by their prospective employers from 
USCIS CLAIMS 3 data. 

Note: The CPS sample is restricted to U.S. citizens in full-time, 
private sector employment. Estimated median salaries for U.S. workers 
have 95 percent confidence intervals ranging from +/-5 to +/-50 
percent of the estimate itself. When the difference between the 
estimated U.S. worker median is significantly different from the 
corresponding median salary for H-1B, it is noted in the table: 

[A] Tests for differences in medians are shown for the broader age 
group, 20 to 39 years, because we could not produce reliable estimates 
for the smaller age groups--i.e., for 20 to 29 years and 30 to 39 
years--for all occupations, due to small sample size in CPS-based 
estimates. 

[B] Indicates that sample size was too small to produce reliable CPS- 
based estimates. 

[End of table] 

In an attempt to better understand these results, we interviewed 
academic researchers and labor advocates who have studied the impact 
of H-1B workers on particular segments of the workforce. These experts 
and advocates provided examples of several specific segments of the 
workforce for which they believe the H-1B program has had negative 
impacts. 

Because H-1B workers tend to be younger (with less potential work 
experience) than their U.S. counterparts who tend to be older (with 
more potential work experience), some labor advocates we spoke with 
argued that the H-1B program detrimentally impacts older IT 
professionals. Several researchers and labor advocates have stated 
that technology companies seek to replace older, American IT workers 
with cheaper, younger workers that are freshly supplied through the H-
1B program in order to lower costs, and that IT companies have no 
incentive to retain and retrain older workers with the latest skills, 
since the H-1B program provides ready access to young workers with 
cutting-edge training. While companies could use any young, skilled 
workers to lower their labor costs in this manner, advocates argue 
that the H-1B program facilitates the practice of displacing older IT 
workers because it provides an inflow of new workers in IT fields that 
is much larger than would otherwise be available to U.S. employers. 
The analysis presented here does not provide a test of this theory 
because it does not identify what the wages of older U.S. IT 
professionals would have been in the absence of the H-1B program, nor 
does it account for the myriad factors affecting wage, for which we 
lack data. 

Three researchers we spoke with expressed concern about the 
disincentives that U.S. students face in entering science, technology, 
engineering, and mathematics (STEM) fields.[Footnote 69] For example, 
one disincentive is the duration of postdoctoral positions. Data show 
that since the 1960s, postdoctoral positions--which are generally 
exempt from the H-1B cap--have increased in length, with the largest 
increase in biological sciences.[Footnote 70] One researcher posited 
that the increasing length of postdoctoral positions, especially in 
the biomedical fields, is due in part to the presence of large numbers 
of foreign nationals who are willing to work in these low-paid 
positions for many years. For foreign nationals, these postdoctoral 
positions may offer an entrée into the U.S. labor market, and the 
salaries may also compare well to the opportunities available in their 
home countries. 

Testimonial evidence also suggests that U.S. software programmers, 
particularly those seeking IT consulting jobs, may have been 
detrimentally affected by the significant presence of H-1B workers 
and, in particular, by the presence of certain staffing companies. One 
labor advocate we spoke with stated that staffing companies that farm 
out H-1B IT workers to other companies are abundant in the Northeast 
region of the country, and their presence has dramatically reduced the 
availability of jobs for U.S. software programmers in that region. 
Labor investigators we spoke with also noted the concentration of H-
1Bs in the IT consulting industry, particularly in the Northeast 
region. These investigators noted that the bulk of the complaints they 
receive in this region pertain to staffing companies. In addition, 
Labor investigators told us that some staffing companies at times will 
pass an open position amongst themselves, rather than making a job 
opening known to the workforce at large. For example, if one staffing 
company is contacted with a request for a software programmer and does 
not have a worker with the appropriate skillset, this firm may--
unbeknownst to the firm that is seeking the worker--"subcontract" the 
job out to a second staffing company who does have a worker with the 
appropriate skillset--and the first staffing company might take a cut 
of the wages received. 

Limited Agency Oversight and Coordination and Changes to the H-1B 
Program Have Weakened U.S. Worker Protections: 

Responsibility for Worker Protection Is Limited and Dispersed among 
the Many Administering Agencies, and Hampered by Restrictions on Their 
Ability to Collaborate: 

Responsibility for the protection of workers with regard to the H-1B 
visa program is shared by four departments and their respective 
divisions. By virtue of their specific and often cordoned 
responsibilities, however, there is only nominal sharing of the kind 
of information that would allow for better employer screening or more 
active and targeted pursuit of program abuses. Once a visa-holder is 
employed, divisions within Labor, Homeland Security, and Justice may 
pursue enforcement of the H-1B program requirements in accordance with 
their broader responsibilities for enforcing labor or immigration 
laws. However, their work is largely complaint-driven, and information 
sharing among them, or with offices that must screen H-1B 
applications, is also limited. Table 2 summarizes agency oversight 
responsibilities and limitations, which are further elaborated in the 
following pages. 

Table 2: Summary of Agency Oversight Responsibilities and Limitations 
for the H-1B Program: 

Agency division: Labor--Employment and Training Administration; 
Role: Application review: Reviews employer LCA; 
Limitations: Limited by statute to review only for missing information 
and obvious inaccuracies. 

Agency division: Homeland Security--U.S. Citizenship and Immigration 
Services; 
Role: Application review: Reviews employee H-1B petition form (I-129) 
and decides if petition can be approved; 
Limitations: Does not receive information from Labor's Employment and 
Training Administration or Wage and Hour Division. 

Agency division: State--Bureau of Consular Affairs; 
Role: Application review: Interviews prospective H-1B nonimmigrants 
with approved petitions and may issue visas to H-1B candidates living 
abroad; 
Limitations: Limited ability for interviewers (consular officials) to 
question applications previously approved by Labor and Homeland 
Security. 

Agency division: Labor--Wage and Hour Division; 
Role: Enforcement: Investigates complaints regarding compliance with 
program rules as to wages and working conditions; 
Limitations: Limited by: 
* prohibitions on officials initiating investigations based on 
information received from Labor or Homeland Security officials; 
* limited access to LCA database (iCERT); and; 
* lack of subpoena authority for employer records. 

Agency division: Homeland Security--Directorate of Fraud Detection and 
National Security; 
Role: Enforcement: Conducts random investigations of H-1B employers 
through site visits to verify information supplied in the LCA and I-
129 petitions; 
Limitations: The Administrative Site Visit and Verification Program 
was initiated after a "Benefit Fraud and Compliance Assessment" (BFCA) 
found 21 percent fraud in H-1B program; 
however, Homeland Security is continuing to evaluate this program for 
effectiveness. 

Agency division: Justice--Office of Special Counsel; 
Role: Enforcement: Investigates complaints (known as charges) related 
to acts of employment such as hiring and firing; 
Limitations: Reluctance of workers to file complaints for fear of 
employer retaliation; Workers' lack of awareness of their employers' 
intention to hire H-1B workers; Limited agency information sharing. 

Source: GAO review of agency information. 

[End of table] 

Limited and Dispersed Application Review: 

Labor's Employment and Training Administration. While Employment and 
Training reviews the LCA form submitted by a petitioning employer, 
this review is limited by law to looking for missing information and 
obvious inaccuracies.[Footnote 71] For example, an employer may have 
failed to checkmark all the boxes for attesting to his or her 
willingness to comply with program requirements. While Labor's review 
catches some administrative errors made by applicants, it does not 
check the validity of the information on the LCA. Consequently, the 
review is not intended to identify potential employer violations such 
as work sites that do not exist or lack of compliance with the 
attestations made on the LCA. This review is primarily conducted 
electronically with officials reviewing the information flagged by the 
electronic system as problematic. Any greater scrutiny by Employment 
and Training is limited by law. 

Homeland Security's U.S. Citizenship and Immigration Services. 
Adjudicators with USCIS conduct a review of both the employer's 
application and the foreign worker as a job candidate. Specifically, 
Homeland Security reviews two documents for consistency: the LCA 
submitted originally to Labor for review, and the I-129 petition, 
which is submitted by businesses to Homeland Security and generally 
contains correlating information.[Footnote 72] In addition to 
reviewing for consistency, USCIS adjudicators explained that they take 
steps to verify the facts provided for both the employer and the 
prospective worker--for example, by requesting additional information 
from the employer. USCIS's adjudicators do not receive information 
regarding suspicious or problematic employers from Labor's Employment 
and Training Administration that Labor analysts may have become aware 
of during their review of the LCA because Labor does not have a formal 
mechanism for sharing such information with Homeland Security. 

Department of State. State plays a role in the H-1B program by 
interviewing and potentially issuing visas to H-1B candidates living 
abroad, whose petitions were approved by Homeland Security. State 
conducts its own review of the H-1B petitioner and documentation 
pertaining to his or her employer by comparing information gleaned 
from interviews against basic information in the LCA and I-129 
petition, such as the name of the petitioner and the foreign worker. 
However, official department guidance instructs consular officials not 
to question the petition approvals made by Homeland Security when 
making their decision on the visa application without having obtained 
new evidence.[Footnote 73] State guidance stipulates that a petition 
can only be sent back when there has been a clear error committed in 
adjudicating the I-129 petition or new evidence is submitted that 
contradicts Homeland Security adjudicators' decisions. Officials noted 
that there is a high threshold for the identification of a clear error 
and this rationale is almost never used. State has, however, 
recommended 1,744 revocations in fiscal year 2009 based on new 
evidence. As a general rule, State consular officers treat information 
provided to and reviewed by Homeland Security on business 
establishments, relationships, and individual qualifications as bona 
fide. 

Limited Enforcement: 

Labor's Wage and Hour Division. Labor's Wage and Hour investigates H-
1B complaints primarily related to improper wage payments and failures 
to notify workers that a company intends to hire an H-1B worker. 
However, its ability to enforce worker protections with regard to the 
H-1B program is limited.[Footnote 74] Although the Secretary of Labor 
has authority to initiate investigations, Wage and Hour reported that 
it had never initiated an investigation under this authority. 
Officials explained that they rarely proactively investigate companies 
for H-1B violations, and that they may generally only act on formal 
complaints.[Footnote 75] Moreover, by law, investigations can only be 
initiated from information obtained from an aggrieved or credible 
party outside of Labor.[Footnote 76] Further, Labor officials told us 
they have interpreted this restriction to include information from 
Homeland Security as well. As a result, Labor's Wage and Hour could 
not initiate a complaint based on any information it might receive 
from Homeland Security, such as information on potential abuses that 
Homeland Security might glean from its review of the I-129 petition. 
In a prior report, GAO suggested that Congress remove these legal 
restrictions, but Congress has yet to take action.[Footnote 77] 

While the majority of complaints received by Labor have been reported 
by H-1B workers, very few complaints are filed. In 2009, only 664 out 
of 51,980 companies approved to hire new or extending H-1B workers had 
complaints against them. According to agency officials, H-1B workers 
are likely to be reluctant to file complaints against employers for 
fear that the company might be disbarred, which in turn could result 
in the complainant and fellow H-1B workers at the company losing their 
jobs and potentially having to leave the United States. Further, 
investigators told us that even after an H-1B worker files a 
complaint, the H-1B worker may not cooperate in the investigation for 
fear of similar repercussions. In these instances, investigators are 
sometimes unable to complete the investigation. The relatively small 
number of H-1B-related complaints in 2009 nevertheless resulted in 
Labor requiring companies to pay over $10 million in unpaid wages to 
1,202 workers and $739,929 in civil monetary penalties (see table 3). 

Table 3: H-1B Complaints, Violations, Back Wages, and Fines Assessed 
by Labor's Wage and Hour Division, FY 2000-FY 2009: 

Fiscal year: 2000; 
Number of complaints received: 123; 
Number of complaints resulting in investigations: 117; 
Number of cases with violations[A]: 54; 
Number of violations found: 375; 
Amount due in back wages: $1.2 million; 
Number of employees due back wages: 226; 
Civil monetary penalties assessed: $21,000; 
Number of disbarments of H-1B employers: 3. 

Fiscal year: 2001; 
Number of complaints received: 209; 
Number of complaints resulting in investigations: 192; 
Number of cases with violations[A]: 37; 
Number of violations found: 164; 
Amount due in back wages: $0.6 million; 
Number of employees due back wages: 135; 
Civil monetary penalties assessed: $17,750; 
Number of disbarments of H-1B employers: 7. 

Fiscal year: 2002; 
Number of complaints received: 249; 
Number of complaints resulting in investigations: 238; 
Number of cases with violations[A]: 105; 
Number of violations found: 977; 
Amount due in back wages: $3.7 million; 
Number of employees due back wages: 817; 
Civil monetary penalties assessed: $48,350; 
Number of disbarments of H-1B employers: 7. 

Fiscal year: 2003; 
Number of complaints received: 158; 
Number of complaints resulting in investigations: 148; 
Number of cases with violations[A]: 121; 
Number of violations found: 711; 
Amount due in back wages: $4.0 million; 
Number of employees due back wages: 550; 
Civil monetary penalties assessed: $128,890; 
Number of disbarments of H-1B employers: 19. 

Fiscal year: 2004; 
Number of complaints received: 172; 
Number of complaints resulting in investigations: 158; 
Number of cases with violations[A]: 117; 
Number of violations found: 561; 
Amount due in back wages: $4.2 million; 
Number of employees due back wages: 376; 
Civil monetary penalties assessed: $114,125; 
Number of disbarments of H-1B employers: 14. 

Fiscal year: 2005; 
Number of complaints received: 184; 
Number of complaints resulting in investigations: 173; 
Number of cases with violations[A]: 90; 
Number of violations found: 733; 
Amount due in back wages: $5.1 million; 
Number of employees due back wages: 593; 
Civil monetary penalties assessed: $86,100; 
Number of disbarments of H-1B employers: 17. 

Fiscal year: 2006; 
Number of complaints received: 231; 
Number of complaints resulting in investigations: 214; 
Number of cases with violations[A]: 107; 
Number of violations found: 1,000; 
Amount due in back wages: $4.6 million; 
Number of employees due back wages: 823; 
Civil monetary penalties assessed: $328,050; 
Number of disbarments of H-1B employers: 16. 

Fiscal year: 2007; 
Number of complaints received: 299; 
Number of complaints resulting in investigations: 291; 
Number of cases with violations[A]: 133; 
Number of violations found: 1,026; 
Amount due in back wages: $6.4 million; 
Number of employees due back wages: 657; 
Civil monetary penalties assessed: $324,325; 
Number of disbarments of H-1B employers: 13. 

Fiscal year: 2008; 
Number of complaints received: 319; 
Number of complaints resulting in investigations: 304; 
Number of cases with violations[A]: 155; 
Number of violations found: 1,829; 
Amount due in back wages: $8.2 million; 
Number of employees due back wages: 1162; 
Civil monetary penalties assessed: $362,750; 
Number of disbarments of H-1B employers: 17. 

Fiscal year: 2009; 
Number of complaints received: 664; 
Number of complaints resulting in investigations: 555; 
Number of cases with violations[A]: 152; 
Number of violations found: 2,834; 
Amount due in back wages: $11.0 million; 
Number of employees due back wages: 1202; 
Civil monetary penalties assessed: $739,929; 
Number of disbarments of H-1B employers: 13. 

Source: Labor's Wage and Hour. 

[A] Cases with violations includes the number of cases in which Labor 
found the employer was in fact in violation of the program 
requirements. Each case may include multiple violations that were not 
originally included in the complaint, therefore making the number of 
cases with violations at times higher than the number of complaints. 

[End of table] 

Labor's ability to enforce worker protections under the program is 
also hampered by obstacles cited by officials at both headquarters and 
in Wage and Hour's Northeast Regional Office, which receives the 
greatest number of H-1B complaints: 

First, with the introduction in June 2009 of the automated "iCERT" 
system maintained by Employment and Training, Wage and Hour stated 
that they can no longer access the database of LCAs. Prior access had 
allowed investigators to quickly assess the accuracy of the 
attestations made by an employer. Without this access, officials 
stated that they must request the LCA from the employer, which can 
increase the time and resources required to conduct an investigation. 
Employment and Training reported that improved access to the iCERT 
System is under development and planned for implementation in April 
2011. 

Second, Wage and Hour has limited ability to persuade employers to 
cooperate with investigations. The fine it can levy against employers 
for not cooperating is far less than the potential penalty for a 
finding of noncompliance with the terms of the program.[Footnote 78] 
Investigators noted that when employers do not cooperate, it can take 
them months to obtain the requested paperwork, which essentially 
stalls the time-sensitive investigation. 

Third, Wage and Hour lacks subpoena authority to obtain such records 
directly from the employer. In contrast, Wage and Hour, as well as 
Employment and Training, have subpoena power for other labor 
protection programs they administer, such as under the Fair Labor 
Standards Act and the Migrant and Seasonal Agricultural Worker 
Protection Act.[Footnote 79] According to Wage and Hour officials, 
subpoena power increases cooperation from companies and is the most 
effective way to speed up investigations, since companies could face 
harsh penalties, such as debarment, for not cooperating. The 
Department of Justice also has subpoena power for its investigations 
related to the H-1B program.[Footnote 80] Justice officials we spoke 
with noted that while they rarely have to invoke subpoena power in 
their investigations, generally employers are aware of the subpoena 
power and are therefore more likely to comply with Justice's requests 
for records. 

Homeland Security's Directorate of Fraud Detection and National 
Security. In its capacity to investigate immigration fraud, FDNS has 
recently introduced some proactive enforcement for the H-1B program 
through several random investigations into temporary visa programs. 
Through a Benefit Fraud and Compliance Assessment (BFCA), Homeland 
Security examined 246 H-1B petitions for possible violations.[Footnote 
81] The BFCA found that 21 percent of H-1B petitions involved fraud or 
technical violations. Examples of fraud include cases in which 
businesses listed on the LCA and I-129 did not exist; educational 
degrees were found to be fraudulent; signatures were forged on 
supporting documents; and H-1B workers were performing duties or 
receiving payment significantly different from those described in the 
applications. 

As a result of the high rate of fraud identified in the BFCA, Homeland 
Security launched what it calls its Administrative Site Visit and 
Verification Program--an ongoing initiative to visit work sites of H- 
1B-hiring companies considered to be at a higher risk for abusing the 
program, according to officials. During fiscal year 2010, USCIS 
oversaw 14,433 H-1B site inspections, which resulted in 1,176 adverse 
actions. Such actions can include the revocation or denial of 
benefits, and may involve referral of a case for criminal 
investigation.[Footnote 82] FDNS is continuing to evaluate this 
initiative and refine the indicators it uses to identify groups of 
high-risk companies. 

Department of Justice's Office of Special Counsel. Justice's Office of 
Special Counsel also conducts investigations; but its enforcement 
abilities are also limited. Justice's jurisdiction limits it to pursue 
charges related to unfair immigration-related employment practices, 
such as discriminatory hiring or firing.[Footnote 83] For example, 
such charges generally allege that an H-1B worker was hired in place 
of a U.S. worker, or that a company is using discriminatory hiring 
practices that put U.S. workers at a disadvantage, such as explicitly 
advertising for an H-1B worker. 

Justice receives and investigates few charges related to the H-1B 
program (at most 70 per year over the last 5 years with the number 
decreasing) and reported that their ability to enforce the law depends 
on the willingness and ability of U.S. workers to complain.[Footnote 
84] Justice officials explained that the low number of charges they 
receive is likely because U.S. workers are often unaware that an 
employer intends to or did hire an H-1B worker. For example, although 
employers are supposed to post a public statement declaring their 
intention to hire an H-1B worker, the statement might be posted in a 
lunch room where it may or may not be seen by affected employees. 
Further, Labor investigators reported that many of the companies they 
investigate do not comply with requirements to post notice. In 
contrast, Labor requires applicants for other temporary visa programs, 
such as the H-2A program, to display such postings on a centralized 
Web site that is managed by Labor.[Footnote 85] Justice officials 
noted that the lack of a centralized Web site makes it difficult for 
U.S. workers to learn that U.S. employers are hiring H-1B workers and 
also for Justice to monitor the compliance of companies with 
antidiscrimination law, especially those operating offshore. 

Justice informally shares information on a periodic basis with Labor 
and Homeland Security when it receives information about potential 
abuse that does not fall under its jurisdiction. However, there is no 
formal mechanism in place to exchange information with these other 
agencies, although officials explained that some attempts to arrange 
information-sharing agreements between Justice and these agencies have 
been made in the past. When Justice has referred cases that fell 
within Labor's jurisdiction, Justice officials told us they were not 
generally made aware of the outcomes of these referrals. Although 
Justice accepts referrals from other agencies, officials reported only 
receiving one referral from Labor related to the H-1B program. 

Department of State. If or when State officials learn of an employer 
potentially violating program requirements, unlike other agencies, 
State may act as an aggrieved party on behalf of an H-1B worker and 
file a formal complaint with Wage and Hour regarding the business. For 
example, agency officials noted that during consular interviews with 
spouses of H-1B workers attempting to enter the United States, the 
consular official may uncover potential abuses by the H-1B worker's 
employer and will then file a complaint with Wage and Hour. However, 
such incidents are limited in number, with an average of 160 
recommendations per year since 2005. 

Lack of Accountability Provisions for Staffing Companies Also Hinders 
Enforcement: 

The laws governing the H-1B program do not include explicit provisions 
to hold employers that obtained the H-1B worker through a staffing 
company accountable to the program requirements that are applicable to 
the employer who applied for H-1B visas on behalf of foreign workers. 
[Footnote 86] As previously noted, some staffing companies complete 
and submit to Labor an LCA as the employing company, but then contract 
the H-1B worker out to another employer. At times, that employer may 
contract the H-1B worker out again, creating multiple middlemen 
according to officials (see figure 13). Regardless of where the H-1B 
worker is ultimately employed, Wage and Hour officials told us that 
only the staffing company, as the employer who has petitioned for the 
visa and made the attestations to comply, is technically accountable 
and ultimately liable for complying with program requirements. They 
explained that the contractual relationship itself does not transfer 
the obligations of the contractor for worker protection to any 
subsequent employers. Especially in instances in which multiple 
middlemen are involved, it is difficult to expect the staffing 
companies themselves to be accountable for the actions of an employer 
up to three or four employers removed. 

Figure 13: Accountability for Types of Employers under the H-1B 
Program: 

[Refer to PDF for image: illustration] 

Traditional H-1B employers: 

Accountable employer: Accountable under H-1B employer requirements: 

Worker: H-B1 visa. 

With staffing companies: 

Accountable staffing company: 

Worker: 
Staffing company[A]: 
Worker: 
Employer: 
Worker: H-1B visa. 

Source: GAO review of Department of Labor information. 

[A] In some cases there may be more than one staffing company involved 
in placing the H-1B worker. 

[End of figure] 

Wage and Hour investigators reported that a large number of the 
complaints they receive were related to the activities of staffing 
companies. In fact, investigators from the Northeast region--the 
region that receives the highest number of H-1B complaints (see figure 
14)--said that nearly all of the complaints they receive involve 
staffing companies and that the number of complaints are growing. 
However, the precise number of complaints related to staffing 
companies is not known because Labor does not track this information 
in its complaint data. The most frequent type of violation resulting 
from a complaint is that the employer failed to pay the required wage 
rate. Other frequent violations identified as a result of complaints 
include the failure of the employer to post notice that they intend to 
hire an H-1B worker and the failure to comply with the attestations 
made in the LCA (see table 4). 

Figure 14: Wage and Hour H-1B Program Investigations by Region, FY 
2006-FY 2009: 

[Refer to PDF for image: illustrated U.S. map] 

Region: Northeast; 
Number of complaints investigated: 249. 

Region: Southeast; 
Number of complaints investigated: 94. 

Region: Midwest; 
Number of complaints investigated: 132. 

Region: Southwest; 
Number of complaints investigated: 43. 

Region: West; 
Number of complaints investigated: 156. 

Sources: GAO analysis of Labor Wage and Hour data; National Atlas of 
the United States (base map). 

Note: This map reflects the number of complaints investigated, not the 
number of complaints received. 

[End of figure] 

Table 4: Most Common H-1B Violations Identified by Wage and Hour, FY 
2009: 

Violation[A]: Failure to pay employee required wage rate; 
Number of cases in which violations occurred: 114; 
Number of occurrences: 977. 

Violation[A]: Failure to post notice of LCA filings for 10 days in two 
locations at each place of employment where H-1B will be employed; 
Number of cases in which violations occurred: 39; 
Number of occurrences: 315. 

Violation[A]: Failure to comply with the attestations made in the LCA; 
Number of cases in which violations occurred: 34; 
Number of occurrences: 170. 

Violation[A]: Required or accepted payment of the additional petition 
fee by employee; 
Number of cases in which violations occurred: 34; 
Number of occurrences: 78. 

Violation[A]: Failure to maintain documentation as required; 
Number of cases in which violations occurred: 28; 
Number of occurrences: 180. 

Violation[A]: Failure to make available for public examination any of 
the required records; 
Number of cases in which violations occurred: 23; 
Number of occurrences: 290. 

Violation[A]: Willfully failed to pay employee required wage rate; 
Number of cases in which violations occurred: 10; 
Number of occurrences: 63. 

Violation[A]: Misrepresented rate of pay on LCA; 
Number of cases in which violations occurred: 9; 
Number of occurrences: 33. 

Violation[A]: Misrepresented place of intended employment on LCA; 
Number of cases in which violations occurred: 6; 
Number of occurrences: 24. 

Violation[A]: Failure to provide H-1B worker copy of LCA; 
Number of cases in which violations occurred: 7; 
Number of occurrences: 7. 

Source: Labor's Wage and Hour Division. 

[A] These categories were determined by Labor's Wage and Hour Division 
officials. Because categories could not be aggregated by larger topics 
due to potential duplication, additional violations, such as 
misrepresenting facts on the LCA, may occur more frequently but are 
not reflected in this table. 

[End of table] 

Complaints received by Wage and Hour pertaining to staffing companies 
generally relate to the payment of H-1B workers, according to 
investigators. Officials told us that the most common complaint 
associated with staffing companies pertained to unpaid "benching"--
when a staffing company does not have a job placement for the H-1B 
worker and does not pay them. In these instances, a staffing company 
sometimes asks the H-1B worker to conduct their own job search or to 
take an unpaid leave until the company identifies a client. For 
example, one investigator described how one employer maintained a 
house for its unemployed H-1B workers, and instructed them to conduct 
their own Internet searches for a job placement. In another case, Wage 
and Hour found that a staffing company forced employees to go on leave 
when it did not have jobs for them and boarded them in a guesthouse 
while they were unemployed. At times, employees are unaware of their 
right to receive payment during these "benched" time periods which, 
according to one complainant, lasted as long as 13 months. 
Investigators said that the problem of unpaid benching has become more 
severe with the economic downturn as staffing companies have fewer 
jobs in which to place H-1B workers. Instead, they may "stockpile" the 
workers in anticipation of an economic recovery. 

In investigating complaints related to staffing companies, 
investigators often identify additional violations of the attestations 
on the LCA. For example, Labor officials noted that in 90 percent of 
their investigations related to staffing companies, the hiring company 
did not post notice of the filing of the LCA indicating the intention 
to hire an H-1B worker. In some instances, according to these 
officials, the subsequent employer may not even know that the 
contracted worker is an H-1B worker, much less be aware of any 
requirements associated with the visa--such as the requirement for 
employers to post notice of their filing of an LCA. In addition, in 
some instances workers procured by staffing companies were either not 
working for the employer listed or not performing the duties described 
on the LCA. 

Some attempts have been made to control the use of staffing companies 
in other visa programs and in the H-1B program. For example, the L-1 
Visa Reform (Intracompany Transferee) Act of 2004 essentially barred 
staffing companies--whose main revenue source is providing labor-for- 
hire--from receiving L-1 visas.[Footnote 87] However, according to 
experts we interviewed, some staffing companies avoided this legal 
restriction by differentiating themselves from staffing companies by 
describing themselves as "IT solutions" companies. In addition to 
providing labor-for-hire, such companies sell the development of a 
product, and therefore are not barred from the use of L-1 visas. 
Additionally, in January 2010, Homeland Security issued a memo on 
determining when there is a valid employer-employee relationship 
between a staffing company and an H-1B worker for whom it has obtained 
an H-1B visa.[Footnote 88] Whether there is such a relationship 
depends largely on the right of a staffing company to control the 
manner and means by which the H-1B nonimmigrant works. However, 
officials indicated that it is too early to know if the memo has 
improved compliance with program requirements.[Footnote 89] 

Changes to Program Legislation Have Diluted Worker Protections: 

Changes to the H-1B program over time have weakened U.S. worker 
protections related to the (1) temporary nature of the program, (2) 
pool of H-1B workers eligible for H-1B status, and (3) cap. 

Ability to Seek Permanent Residency While on Temporary Visa and 
Extension Periods: 

Since the 1990s, the law has allowed H-1B workers to pursue permanent 
residency in the United States and to remain in the country for an 
unlimited period of time while their permanent residency application 
is pending. The Immigration Act of 1990 removed the requirement that H-
1B visa applicants have a residence in a foreign country that they had 
no intention of abandoning.[Footnote 90] In addition, H-1B workers 
were able to apply for permanent status[Footnote 91] and eventually to 
obtain an unlimited number of annual extensions as long as they file 
an LCA for permanent residency at least 1 year prior to submitting the 
final application for an extension of the H-1B visa.[Footnote 92] 

As a result of these legislative changes, the number of H-1B workers 
in the workforce has likely increased. As noted elsewhere in this 
report, many H-1B workers apply for green cards. In fact, among a 
cohort GAO reviewed, at least 18 percent applied for green cards 
within 6 years or less of the start date of their H-1B visas. Although 
the employment-based permanent residency applications take a number of 
years for a decision, the amount of time varies by home country, with 
approvals of employment-based permanent visas for skilled-worker 
categories taking the longest for citizens from China, India, and 
Mexico.[Footnote 93] An H-1B worker from one of these countries could 
remain in the United States for over a decade before obtaining a green 
card. 

Broadened Criteria for Worker Qualifications: 

Legislative changes have broadened the skill requirements for H-1B 
workers. The original H-visa program, established under the 
Immigration and Nationality Act in 1952, authorized visas for aliens 
with a residence in a foreign country that the alien had no intention 
of abandoning, who were of distinguished merit and ability, and were 
coming to the United States to perform temporary service of an 
exceptional nature requiring such merit and ability.[Footnote 94] 
However, in 1990, besides removing the foreign residence requirement, 
the original language was replaced with language authorizing H-1B 
visas for aliens coming temporarily to the United States to perform 
services in a "specialty occupation."[Footnote 95] A specialty 
occupation was defined as one that required a theoretical and 
practical application of a body of highly specialized knowledge, and 
at a minimum, a bachelor's or higher degree in the specific specialty 
(see appendix V). This increased the pool of eligible workers to 
include a wider range of skill levels. 

Labor's application data show that H-1B workers are often not paid 
wages associated with the highest skills in their fields. 
Specifically, these data show that over half (54 percent) of the 
workers with approved LCAs from June 2009 through July 2010 were 
categorized as entry-level positions and were paid at the lowest pay 
grades allowed under the prevailing wage levels (see table 5). This 
pay grade is designated for jobs needing a basic understanding of 
duties and the ability of the worker to perform routine tasks that 
require limited judgment. In comparison, 6 percent of approved 
applicants whose wages were reported on the LCA were paid within the 
top pay grade designated for workers that requires sufficient 
experience and a high level of independent judgment. However, such 
data do not, by themselves, indicate whether H-1B workers are 
generally less skilled than their U.S. counterparts, or whether they 
are younger or more likely to accept lower wages. 

Table 5: Frequency of Wage Levels Reported on Approved LCAs, June 1, 
2009-July 30, 2010: 

Wage level reported on LCA: I: Entry Level; 
(basic understanding of duties and perform routine tasks requiring 
limited judgment); 
Number of records: 130,528; 
Percentage of total wage levels reported: 54%. 

Wage level reported on LCA: II: Qualified; 
(have good understanding of occupation and perform moderately complex 
tasks that require limited judgment); 
Number of records: 69,806; 
Percentage of total wage levels reported: 29%. 

Wage level reported on LCA: III: Experienced; 
(experienced with special skills or knowledge and sound understanding 
of occupation); 
Number of records: 26,731; 
Percentage of total wage levels reported: 11%. 

Wage level reported on LCA: IV: Fully Competent; 
(competent with sufficient experience and will require a high level of 
independent judgment); 
Number of records: 14,617; 
Percentage of total wage levels reported: 6%. 

Wage level reported on LCA: Total reported; 
Number of records: 241,682; 
Percentage of total wage levels reported: 100%. 

Source: Labor's Employment and Training Administration. 

[End of table] 

In contrast to the H-1B visa program, temporary visa programs in other 
countries take steps to identify foreign workers with skills that are 
in short supply.[Footnote 96] For example, Australia has a system in 
which applicants receive points for certain types of qualifications 
that are in short supply in the Australian economy. Those with the 
highest number of points are granted visas to enter. The United 
Kingdom uses a committee comprised of five independent economists to 
identify shortages in particular occupations. Canada has a pilot 
temporary program under way that also attempts to identify specific 
jobs where shortages exist and skills are needed. 

The U.S. permanent visa program also does more to assure that the 
skills of the foreign worker are not readily available state-side by, 
in most cases, requiring the employer who sponsors the green card 
applicant to attest that it was not able to find a comparably skilled 
U.S. applicant. 

Exemptions to the Cap and Alternative Visas: 

While providing employers greater access to foreign labor, exemptions 
to the H-1B cap and the existence of other visa programs for temporary 
workers have increased their numbers far beyond the cap. With 
universities, nonprofit organizations that conduct research, and 
governmental research organizations able to hire an unlimited number 
of H-1B workers through exemptions, many more H-1B workers have 
entered the United States each year than the annual numeric limit of 
65,000 imposed by the cap. For example, 87,519 workers (initial and 
extensions) in 2009 were approved for visas to work for 6,034 cap- 
exempt companies. In addition, company executives reported that as an 
alternative to the H-1B visa, companies use the L-1 visa--which allows 
foreign workers to relocate to a company's U.S. office after having 
worked abroad for the company for at least 1 year. As previously 
noted, between 2000 and 2008, the number of foreign workers issued L-1 
visas--which are not subject to a cap--has increased by more than 50 
percent. As noted earlier, Homeland Security currently does not have 
the capability to determine the cumulative H-1B workforce, such that 
the effect on U.S. workers can be assessed. Whether or not Homeland 
Security's Transformation Program will address this problem remains to 
be seen.[Footnote 97] 

Conclusions: 

In creating the H-1B visa program, Congress sought to strike a 
difficult balance between satisfying the needs of a wide variety of 
businesses for high-skilled foreign labor while protecting access to 
jobs and appropriate compensation for U.S. workers. The initial 
temporary nature of the program and the annual cap were key tools to 
protect U.S. workers. Over its history, however, Congress has made 
numerous changes to the program, including broadening the eligibility 
requirements and allowing for exemptions to the cap and for H-1B 
workers to pursue long-term residency. The result is that, today, the 
number of H-1B workers approved to enter the United States each year 
greatly exceeds the numeric limit established by the cap, and the 
majority of applicants are categorized as entry-level. Moreover, a 
substantial proportion appears to remain in the country beyond the 6- 
year visa period in pursuit of permanent residency. Homeland Security, 
faced with challenges in administering a program managed in part by 
four different federal agencies, has difficulty tracking the cap and 
cannot readily determine how many H-1B workers are currently in the 
United States or how many stay after their visas expire. Lack of 
information on the total H-1B workforce makes it impossible to 
understand the long-term impact of the program and leaves the program 
vulnerable to fraud and abuse--a known issue in this program. 

Restrictions on agencies' abilities to enforce program requirements 
and coordinate with one another widen the risk of fraud and abuse, and 
undermine efforts to enforce worker protections. Restrictions on 
sharing and leveraging information between and within federal agencies 
likely inhibit the pursuit of worker allegations of abuse and allow 
some labor abuses to go undetected. The involvement of staffing 
companies, whose share of H-1B workers is not precisely known but is 
likely not trivial, further weakens enforcement efforts because the 
end-user of the H-1B worker is not liable for complying with labor 
protection requirements. 

At the same time, many members of the business community we 
interviewed cited their own frustrations with the ability of this 
program to serve their needs for high-skilled labor. The one-size-fits-
all application process wastes business and government resources in 
compiling and reviewing paperwork on well-vetted companies with years 
of experience in the program. The lottery system does not permit 
companies to prioritize their candidates, and as a result, coveted H-
1B slots may not be allocated to companies' top candidates. The annual 
application cycle hinders flexibility in hiring, prompting some 
companies to prematurely petition for candidates instead of holding 
out for better ones in years when the cap is hit early. Moreover, 
start-up companies, which some argue are the backbone of innovation in 
the United States, cannot use the H-1B visa for their employees until 
their company is fully established. 

In an era when companies are competing in a global market for cutting- 
edge skills, the H-1B program plays an important role. As currently 
structured, however, the program may not be used to its full potential 
and may be detrimental in some cases. Some improvements can be made 
through executive actions by the agencies overseeing the program. 
However, balancing the needs of the economy for high-skilled foreign 
labor and protecting the employment and wages of current U.S. workers 
is a policy matter for Congress. Certainly there are no easy 
solutions, but data we present suggest that the program may continue 
to fall short and raise difficult policy questions. Such questions 
include the appropriateness of the current qualifications for H-1B 
workers, the use of H-1B visas as a bridge to permanent residence, the 
involvement of staffing companies in the H-1B program, and exemptions 
from the cap. As Congress considers immigration reform in consultation 
with diverse stakeholders and experts, and as Homeland Security moves 
forward with its modernization efforts, this is an opportune time for 
Congress to review the goals and purpose of the H-1B program and re-
examine its key provisions. 

Matters for Congressional Consideration: 

To ensure that the H-1B program continues to meet the needs of 
businesses in a global economy while maintaining a balance of 
protections for U.S. workers, Congress may wish to consider reviewing 
the merits and shortcomings of key program provisions and making 
appropriate changes as needed. Such a review may include, but would 
not necessarily be limited to: 

* the qualifications required for workers eligible under the H-1B 
program, 

* exemptions from the cap, 

* the appropriateness of H-1B hiring by staffing companies, 

* the level of the cap, and: 

* the role the program should play in the U.S. immigration system in 
relationship to permanent residency. 

To reduce duplication and fragmentation in the administration and 
oversight of the H-1B application process, consistent with past GAO 
matters for congressional consideration, consider eliminating the 
requirement that employers first submit a Labor Condition Application 
(LCA) to the Department of Labor for certification, and require 
instead that employers submit this application along with the I-129 
application to the Department of Homeland Security's U.S. Citizenship 
and Immigration Services for review. 

To improve the Department of Labor's ability to investigate and 
enforce employer compliance with H-1B program requirements, consider 
granting the department subpoena power to obtain employer records 
during investigations under the H-1B program. 

To help ensure the full protection of H-1B workers employed through 
staffing companies, consider holding the employer where an H-1B visa 
holder performs work accountable for meeting program requirements to 
the same extent as the employer that submitted the LCA form. 

Recommendations for Executive Action: 

Based on our review, we are making four recommendations. 

We are making the following two recommendations to the Secretary of 
Homeland Security: 

To help ensure that the number of new H-1B workers who are subject to 
the cap--both entering the United States and changing to H-1B status 
within the United States--does not exceed the cap each year, U.S. 
Citizenship and Immigration Services should take steps to improve its 
tracking of the number of approved H-1B applications and the number of 
issued visas under the cap by fully leveraging the transformation 
effort currently under way, which involves the adoption of an 
electronic petition processing system that will be linked to the 
Department of State's tracking system. Such steps should ensure that 
linkages to the Department of State's tracking system will provide 
Homeland Security with timely access to data on visa issuances, and 
that mechanisms for tracking petitions and visas against the cap are 
incorporated into U.S. Citizenship and Immigration Services' business 
rules to be developed for the new electronic petition system. 

To address business concerns without undermining program integrity, 
U.S. Citizenship and Immigration Services should, to the extent 
permitted by its existing statutory authority, explore options for 
increasing the flexibility of the application process for H-1B 
employers, such as: 

* allowing employers to rank their applications for visa candidates so 
that they can hire the best qualified worker for the jobs in highest 
need; 

* distributing the applications granted under the annual cap in 
allotments throughout the year (e.g. quarterly); and: 

* establishing a system whereby businesses with a strong track-record 
of compliance with H-1B regulations may use a streamlined application 
process. 

We are making the following two recommendations to the Secretary of 
Labor: 

To improve the transparency and oversight of the posting requirement 
on the Labor Condition Application (LCA), as part of its current 
oversight role, the Employment and Training Administration should 
develop and maintain a centralized Web site, accessible to the public, 
where businesses must post notice of the intent to hire H-1B workers. 
Such notices should continue to specify the job category and worksite 
location noted on the LCA and required by statute on current 
noncentralized postings. 

To improve the efficiency and effectiveness of its investigations of 
employer compliance with H-1B requirements, the Employment and 
Training Administration should provide Labor's Wage and Hour Division 
searchable access to the LCA database. 

Agency Comments and Our Evaluation: 

The Departments of Homeland Security, Justice, Labor, and State were 
provided a draft of this report for review and comment. The 
Departments of Homeland Security and Justice provided written 
responses to one or more of our recommendations, which appear in 
appendixes VI and VII of this report. Labor and State did not provide 
a written response to our recommendations. In addition, Homeland 
Security, Justice, and Labor provided technical comments, which have 
been incorporated into the report where appropriate. 

In brief, the Department of Justice expressed support for our 
recommendation that Labor develop and maintain a Web site where 
businesses post notice of their intent to hire H-1B workers. In 
addition, Justice offered two more recommendations that build on our 
findings regarding the lack of a labor market test for most H-1B 
employers and the limited use of its complaint process by U.S. 
workers.[Footnote 98] However, Homeland Security did not agree with 
the two recommendations we made pertaining to Homeland Security's U.S. 
Citizenship and Immigration Services, nor did it agree with one matter 
for congressional consideration. 

The recommendation in our draft report on improving H-1B cap 
management emphasized that Homeland Security should leverage its 
transformation effort by reaching an agreement with State to ensure 
that, by linking data systems, it would have real-time information on 
the number of visas approved under the cap. In response, Homeland 
Security cited as evidence of its intentions the work already under 
way to develop an electronic exchange of visa and immigration data 
with State. However, in our review of the department's memorandum of 
agreement and letter of intent with State that discuss such exchanges, 
we did not find specific references to improving cap management with 
State's visa data. Further, Homeland Security added that data to be 
exchanged with State may only slightly improve cap management because 
State's data (1) do not include individuals already in the United 
States who are seeking to change their visa status, and (2) will be 
too old to assist Homeland Security with cap management, since it is 
typically months after Homeland Security approves petitions that State 
issues visas to individuals residing outside of the United States. 

We understand that, for individuals already residing in the United 
States, Homeland Security does not depend on State, but has its own 
data on changes in visa status for approved H-1B workers. We also 
acknowledge that for individuals residing outside of the United 
States, there is some lapse in time between Homeland Security's 
approval of an H-1B petition and State's issuance (or decision not to 
issue) a visa. Nevertheless, we maintain that possessing timely and 
accurate information on petitions and visas that count against the cap 
for all individuals--both within and outside the United States--could 
provide a more reliable basis for ongoing monitoring with respect to 
the annual visa cap. Improved tracking would in turn provide Homeland 
Security the information it needs to reduce the potential for 
exceeding the visa cap and ensure that, in high-demand years, only 
65,000 visas are issued. In response to Homeland Security's comments, 
we clarified our recommendation with respect to the steps it should 
take, including the importance of incorporating better tracking 
mechanisms in the business rules to be developed for the new 
electronic petition system. 

With regard to our recommendation that U.S. Citizenship and 
Immigration explore options for increasing the flexibility of the 
application process for H-1B employers within its statutory authority, 
Homeland Security raised several concerns about the feasibility of our 
suggested options and noted one initiative under way that may expedite 
the application process for employers. We continue to believe that 
additional efforts are warranted to more fully explore the potential 
benefits and costs of these options. 

* Homeland Security said it believes that current law does not allow 
the department to exempt petitioners with track records of H-1B 
compliance from evidentiary requirements. However, we believe there 
may be additional opportunities to streamline the application process 
for businesses by not requiring them to resubmit evidence that they 
have already provided, without exempting petitioners from evidentiary 
requirements. Homeland Security noted its own initiative--the 
Validation Instrument for Business Enterprises (VIBE) system--is 
intended to reduce the need for petitioners to submit certain 
documentation by providing the department with the means to verify the 
petitioners' information through an independent source, but 
acknowledged in its technical comments that the system will not 
necessarily reduce the burden of providing supporting documentation 
for petitioners in the immediate future. 

* Homeland Security noted that implementation of a beneficiary ranking 
process would be extremely complicated and resource intensive and 
would decrease flexibility for employers. We continue to believe that 
such obstacles could be surmountable through technology. For example, 
petitioner-level electronic accounts--as planned in the electronic 
petition system slated for 2012--could allow employers to manage, and 
possibly change, their rankings without necessarily decreasing their 
flexibility. Homeland Security also stated that implementing a 
quarterly cap allocation is neither warranted nor feasible. Again, we 
believe that distributing the annual cap in allotments throughout the 
year might be feasible with an electronic petition system. For 
example, quarterly allocations of visas could be administered by 
creating an electronic queue whereby petitions that were not selected 
in one lottery round would have priority in the next. An automated cap 
management system that combines electronic tracking and queuing might 
reduce, for federal managers themselves, the level of complexity 
involved in managing the program. Homeland Security also expressed 
concern that a ranking system might encourage petitioners to over- 
submit petitions in an attempt to increase their chances of obtaining 
H-1B workers. The department is, nevertheless, considering a similar 
option that would allow petitioners to request visa slots prior to 
submitting an LCA. Whether or not petitioners would over-submit in 
response to either option is a matter that we believe should be 
further studied or tested. In summary, we believe that Homeland 
Security's ongoing Transformation Project--currently in its 
development phase--affords the opportunity to explore creative and 
thoughtful solutions to the challenges of administering the H-1B 
program. Such an examination could weigh the potential costs and risks 
associated with the options we outlined against their potential 
benefits in savings for taxpayers and petitioners--with the ultimate 
goal of supporting legitimate business needs while not compromising 
worker protections. 

Homeland Security disagreed with our asking Congress to consider 
transferring the review of the LCA from Labor to U.S. Citizen and 
Immigration Services, citing internal lack of expertise in wage and 
labor determinations and Labor's role in enforcing labor violations. 
While we recognize Labor's expertise, Labor officials told us that, 
unless its legal authority is expanded to allow for verification of 
employer attestations, the Employment and Training Administration's 
review can only ensure that employers have completed the form's 
questions and check-box questionnaire and that there are no obvious 
inaccuracies. We maintain that such a limited review could be readily 
subsumed in Homeland Security's petition adjudication process because 
it too reviews the LCA. We are not recommending that Labor's 
enforcement role, carried out by its Wage and Hour Division, be 
transferred to Homeland Security. Further, we do not believe that 
Labor's enforcement efforts would be compromised by transferring the 
LCA approval process to Homeland Security, especially in light of 
challenges Wage and Hour faces with gaining access to LCA information 
from the Employment and Training Administration, as identified in this 
report. 

We are sending copies of this report to the Secretaries of Homeland 
Security, Labor, and State, the Attorney General, appropriate 
congressional committees, and other interested parties. In addition, 
the report will be available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-7215 or sherrilla@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix VIII. 

Signed by: 

Andrew Sherrill: 
Director, Education, Workforce, and Income Security: 

[End of section] 

Appendix I: Objectives, Scope, and Methods: 

We conducted our work in response to a House report that accompanied 
the Consolidated Security, Disaster Assistance, and Continuing 
Appropriations Act of 2009. The House report directs GAO to examine 
the impact of the H-1B visa cap on the ability of domestic companies 
to develop modern technology and perform innovative scientific 
research and development (R&D), while ensuring U.S. workers are not 
unfairly displaced or otherwise disadvantaged by H-1B visa holders. To 
do this, in agreement with cognizant Hill staff, GAO addressed five 
objectives. Specifically, with respect to H-1B employers, we examined 
what is known about (1) their demand for H-1B workers and (2) how the 
H-1B cap affects their costs, R&D, and offshoring decisions. With 
respect to H-1B and U.S. workers, we examined what is known about (3) 
H-1B worker characteristics, (4) how raising the H-1B cap might affect 
employment and wages of U.S. workers, and (5) how well H-1B program 
requirements ensure that U.S. workers are not displaced or 
disadvantaged by the program. 

This appendix provides a detailed account of the data sources used to 
answer these questions, the analyses we conducted, and any limitations 
we encountered. The appendix is organized into four sections. Section 
1 describes the key information sources we used for the report. 
Section 2 describes our methods for comparing the characteristics and 
wages of U.S. workers with those of approved H-1B workers (which are 
presented in the report and in appendix II). Section 3 describes our 
methods for analyzing employment levels, unemployment rates, and wages 
of U.S. workers in those occupations with the highest concentration of 
approved H-1B workers. Section 4 describes our methods for analyzing 
the long-term immigration outcomes of a cohort of H-1B approved H-1B 
workers. 

Section 1: Information Sources: 

Our information sources included electronic data from datasets 
administered by the Departments of Labor, Homeland Security, Justice, 
and State, and by private vendors. Details on the scope and purpose of 
these data are described below. For each of the datasets described 
above, we conducted a data reliability assessment of selected 
variables by conducting electronic data tests for completeness and 
accuracy, reviewing documentation on the dataset, interviewing 
knowledgeable officials about how the data are collected and 
maintained and their appropriate uses, or completing all of these. For 
the purposes of our analysis, we found the variables that we reported 
on from these datasets to be sufficiently reliable.[Footnote 99] 

In addition to electronic data, our information sources included 
interviews with a nonprobability sample of H-1B employers, site 
visits, and reviews of agency documentation and pertinent literature. 
Details on the scope and purpose of these information sources are also 
described below. 

Department of Labor Data: 

Labor Condition Application Data: 

To obtain information on the characteristics of employers requesting H-
1B workers and the positions they sought to fill over the past decade, 
we analyzed two administrative datasets containing information from 
the Labor Condition Application (LCA) filed by prospective H-1B 
employers to the Department of Labor (Labor). 

First, we analyzed the Efile H-1B Disclosure Data managed by Labor's 
Employment and Training Administration (Employment and Training). 
These data included all the applications filed electronically from 
2002 through 2009.[Footnote 100] We analyzed the data from a total of 
2,451,785 applications to determine (1) the number of unique companies 
that submitted applications each year; (2) the total number of H-1B 
workers these companies requested each year; (3) the number of 
applications that were certified or denied; and (4) the number of 
companies that were either H-1B dependent (i.e., those with 15 percent 
or more of their workforce comprised of H-1B workers) or willful 
violators. 

Second, we obtained and analyzed more recent data on LCAs that were 
filed from June 2009 through July 2010, which were processed through 
Labor's new iCERT system. Unlike Labor's data from previous years, the 
iCERT data contained detailed information on the prospective H-1B 
worker's skill level, which is specified by the employer on the LCA. 
We received data including the skill level listed on 258,847 LCAs that 
were filed between June 2009 and July 2010. The iCERT data also 
contain a variable indicating whether the petitioning employer was H-
1B dependent. We obtained and tabulated this variable for the top 150 
H-1B hiring companies (which we defined as those requesting the 
highest number of H-1Bs in 2009). 

Wage and Hour Complaint Data: 

To understand trends in H-1B complaints received by Labor's Wage and 
Hour Division (Wage and Hour) and their outcomes over time, we 
analyzed extracts from Wage and Hour's Investigative Support and 
Reporting Database. Specifically, for fiscal year 2000 to fiscal year 
2009, we obtained the number of complaints received, the number of 
complaints resulting in investigations, the number of cases found to 
have violations, and the prevalence of specific types of violations. 
We also requested and received additional data from Wage and Hour on 
the outcomes of these investigations including the total back wages 
due to employees, the number of employees that were due to receive 
back wages, the total civil monetary penalties assessed to violators, 
and the number of disbarments of H-1B employers. To identify potential 
regional variations, for fiscal year 2006 to fiscal year 2009, we 
collected and reviewed the number and nature of complaints 
investigated by region. To more fully understand the extent and impact 
of the most common types of violations alleged in complaints that Wage 
and Hour investigated, for fiscal year 2009, we analyzed the number of 
cases involving each type of violation, the number of times each 
violation occurred,[Footnote 101] and the number of employees impacted. 

Current Population Survey Data: 

To determine the characteristics of U.S. workers in select occupations 
over the past decade, we analyzed Current Population Survey (CPS) 
data. The CPS Basic Monthly Survey--a survey of about 50,000 
households that is conducted by the Bureau of Labor Statistics (BLS)--
provides a comprehensive body of information on the employment and 
unemployment experience of the nation's population. The March Annual 
Social and Economic CPS supplement is one source of detailed 
information on income and work experience in the United States. We 
used both the basic monthly CPS survey data and published estimates 
based on these surveys over the past decade to produce annual 
estimates for the 10-year period. We used the March 2009 Annual Social 
and Economic supplement to produce some additional estimates in this 
report. A more complete description of the surveys, including sample 
design, estimation, and other methodology can be found in the CPS 
documentation prepared by Census and BLS.[Footnote 102] 

We used the March 2009 supplement data to produce estimates for U.S. 
citizens' longest held job in the previous year, highest degree 
attained, age, and wages.[Footnote 103] For this analysis, we 
restricted the population to those U.S. citizens who were full-time 
wage and salary workers (excluding self-employed) aged 18 to 50 and 
working for private employers (excluding government). We estimated 
median salaries for this population by age and education level for 
three occupations of interest: (1) systems analysis, programming, and 
other computer-related occupations; (2) electrical/electronic 
engineering; and (3) college and university educators. The occupation 
and salary information used was for the longest held job in 2008. We 
compared these median estimates to median salaries reported on 2008 H- 
1B worker petitions for similar occupations and age groups. 

We used CPS's basic monthly survey data to examine how the proportion 
of H-1B to U.S. citizen workers changed over the last decade for these 
same five occupations of interest. Specifically, for 2000 to 2009, we 
computed yearly averages from the 12 monthly CPS surveys from each of 
the years. For these estimates, we restricted the population to U.S. 
citizen full-time adult workers.[Footnote 104] Although the 
occupational categories are the same as those used for the March 2009 
supplement analysis, the occupation was for the job held by the U.S. 
worker the prior week. Additional details of this analysis are 
presented in Sections 2 and 3 of this appendix. 

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. This is the interval 
that would contain the actual population value for 95 percent of the 
samples that could have been drawn. The 95 percent confidence 
intervals provided in this report were developed from standard error 
estimates that were either provided by BLS for the underlying estimate 
(for median weekly wages), or computed using formulas and methods 
described in CPS documentation.[Footnote 105] 

Consistent with the CPS documentation guidelines, we do not produce 
annual estimates from the basic 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. 

Department of Homeland Security Data: 

Data on H-1B Petitions Filed by Employers: 

To help analyze trends in demand for and characteristics of H-1B 
workers and employers over the last decade, we used administrative 
data collected by Department of Homeland Security's (Homeland 
Security) U.S. Citizenship and Immigration Services (USCIS) reflecting 
information supplied by prospective H-1B employers on the I-129 form, 
the form that is used to petition for an H-1B worker. These data, 
known as the Computer Linked Application Information Management 
System, Version 3.0 (CLAIMS 3) provide detailed information on the 
characteristics of prospective H-1B employers and workers. We used two 
versions of these data--CLAIMS 3 Mainframe and CLAIMS 3 Local Area 
Network (LAN)--because they contained different variables. 

Using the CLAIMS 3 Mainframe database from fiscal years 2000 through 
2009, for each fiscal year we determined: 

* the number of H-1B initial petitions and extensions submitted by all 
employers, employers subject to the cap, and cap-exempt employers; 

* the number of H-1B petitions approved or denied by Homeland 
Security, by initial petitions and extensions; 

* the total number of companies and the total number of cap-exempt 
companies that submitted and had approved H-1B petitions, by initial 
petitions and extensions; 

* the characteristics of companies that were approved by Homeland 
Security to hire H-1B workers, including their industry codes and the 
number of workers they requested; and: 

* the characteristics of workers that Homeland Security approved as H- 
1Bs, including whether or not the workers were residing in the United 
States at the time of application; their countries of birth, education 
level, age, rate of pay, occupation, industry, and the location of 
their prospective place of employment.[Footnote 106] 

Because the CLAIMS 3 Mainframe database does not distinguish or 
contain data on petitions subject to the master's cap, we also 
obtained and analyzed data from the CLAIMS 3 LAN database from fiscal 
years 2004 through 2009 to determine the number of approved H-1B 
petitions for workers who graduated with a master's degree or higher 
from an American institution of higher education.[Footnote 107] 

To understand how the number and demographic characteristics of 
approved H-1B workers compared to U.S. citizen workers over the last 
decade, we used USCIS's CLAIMS 3 Mainframe H-1B approval data for 
2008[Footnote 108] for five key occupations: (1) systems analysis, 
programming, and other computer-related occupations;[Footnote 109] (2) 
electrical/electronic engineering; (3) college and university 
educators; (4) accountants, auditors, and related occupations; and (5) 
physicians and surgeons. These analyses are described in detail in 
Section 2. 

Finally, we used CLAIMS 3 Mainframe data for fiscal year 2009 to 
identify the 150 employers with the highest number of approved H-1B 
petitions, and we collected additional data on these employers as 
described below in the "Data from Private Vendors" section. 

Limitations of H-1B Petition Data: 

While the CLAIMS 3 data provided a variety of information on approved 
H-1B workers, these data had several limitations with respect to 
understanding demand for and characteristics of H-1B workers. Most 
importantly, they did not provide information on how many H-1B 
workers, whose petitions were approved, were actually working in the 
United States in any particular year. Therefore, although the CLAIMS 3 
data are informative about approved H-1B petitions and about some 
characteristics of the workers listed on those petitions, these 
characteristics may not be indicative of the characteristics of all H- 
1B workers in a given year. For example: 

* Of the H-1B petitions submitted in fiscal year 2008 and approved, we 
do not know the proportion that began work in 2008. Some may not have 
started work until 2009; 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. 

* An individual H-1B worker could be represented in multiple petitions 
filed by the same employer in the same year prior to March 2008. 

* USCIS's CLAIMS 3 data can only provide information on the flow of 
new H-1B workers into the U.S. workforce, not about the stock of all H-
1B workers in those occupations. In other words, they can provide 
information on the number of H-1B workers whose petitions were 
submitted and approved for fiscal year 2008, but not on the number of 
H-1B workers that were actually employed in the United States in 2008. 

Because of these uncertainties, we do not know how well the 
characteristics of approved H-1B workers whose petitions were 
submitted in any year would approximate the characteristics of the 
population of H-1B workers actually employed in that year. Further, 
because of these limitations we do not know the number of new H-1B 
workers actually entering the U.S. workforce in any given year. 

United States Visitor and Immigrant Status Indicator Technology (US-
VISIT) Data: 

To examine the long-term immigration outcomes for H-1B workers, we 
obtained data from Homeland Security's US-VISIT Arrival Departure 
Information System (ADIS) database, which were matched against H-1B 
petition data. US-VISIT data are collected on noncitizens at the point 
of entry into the United States and contain other immigration 
information, including the dates of entry into and exit from the 
country; the date a petition to convert to permanent residency was 
submitted (if one was submitted) and the status of that petition 
(approved, denied, or pending); the person's country of citizenship; 
and country from which their entry visa was issued. For a summary of 
the methods used and any limitations encountered in conducting data 
matches and related analysis, see Section 4 of this appendix. 

Department of Justice Data: 

Complaint Data: 

To understand trends in the number of complaints (known as charges) 
that are filed with the Department of Justice (Justice) regarding the 
H-1B program over time, we obtained data on the number of H-1B-related 
charges Justice received from fiscal year 2006 through March 2010. 
Specifically, we analyzed information on all inactive cases,[Footnote 
110] including on whether the matter was Justice-initiated or 
complaint-driven, the number of charges per fiscal year, initial 
investigation and completion dates, the alleged violation committed by 
the company cited in the charge, and the outcome of each charge. For 
cases that were resolved from fiscal year 2006 to March 2010, we 
analyzed summaries provided by Justice describing the nature and 
resolution of all cases on which Justice took action. 

Department of State Data: 

Data on Visa Issuances: 

To determine the number of H-1B and L-1 visas issued from 2000 to 
2009, we reviewed and compiled data on visa issuances published by the 
Department of State (State). 

Data from Private Vendors: 

To learn more about the top 150 H-1B hiring companies in fiscal year 
2009 (beyond the information available in agency administrative 
databases), we gathered additional information on these companies 
through Mergent Online and LexisNexis's Dossier databases. We used 
these databases to obtain information on country of incorporation, 
country of operations (location), primary North American Industry 
Classification System (NAICS), number of employees, net income, 
operating income, total assets, and business description for each 
company. For several companies for which neither database had 
available information or we wanted additional information (i.e., a 
more detailed business description), we downloaded and saved 
information from company Web sites. 

Data Reliability: 

For each of the datasets described above, we conducted a data 
reliability assessment of selected variables by conducting electronic 
data tests for completeness and accuracy, reviewing documentation on 
the dataset, or interviewing knowledgeable officials about how the 
data are collected and maintained and their appropriate uses. For the 
purposes of our analysis, we found the variables that we reported on 
from these datasets to be sufficiently reliable. In several instances, 
we identified inconsistencies with the reporting of particular data 
fields. In these instances, we took steps to address these 
inconsistencies by using criteria to create decision rules. For 
example, a given H-1B employer might have reported different industry 
codes on their H-1B petition applications in a given year. When this 
occurred, except if a company had multiple industry codes listed the 
same number of times, we identified the industry that the employer 
most frequently listed on the petition. If more than one industry code 
appeared the same number of times, the company was double counted to 
reflect equally relevant industries. In other instances, when it was 
not possible to apply a reasonable decision rule, we did not include 
the data field in our analysis. 

Interviews with H-1B Employers: 

To determine how the H-1B cap and program affects the costs, R&D, and 
offshoring decisions of firms doing business in the United States, we 
spoke to a nongeneralizable sample of 34 companies that employed H-1B 
workers in fiscal year 2008. For 31 of these companies, we conducted 
structured interviews with representatives of the company. For the 
remaining 3 companies, we spoke with a company representative in two 
separate focus groups. 

Of the 31 firms with whom we conducted structured individual 
interviews, 22 were selected randomly from a stratified sample of all 
H-1B hiring firms in fiscal year 2008. The universe of H-1B hiring 
firms (excluding nonprofits and universities) was stratified into 
three groups according to the number of approved H-1B petitions. 
Anticipating a high refusal rate from companies we asked to 
participate in the structured interview, we over-sampled for each of 
these groups. Ultimately, of the 150 companies we contacted, 22 agreed 
to speak with us.[Footnote 111] The following table summarizes the 
population of companies and the number of companies contacted. 

Table 6: H-1B Employers Randomly Selected for Interview by GAO: 

Description: Large (100+ H-1B approvals); 
Population: 185: 
Contacted: 50; 
Participated: 5. 

Description: Medium (10-99 H-1B approvals); 
Population: 2,983; 
Contacted: 40; 
Participated: 11. 

Description: Small (1-9 H-1B approvals); 
Population: 48,774; 
Contacted: 60; 
Participated: 6. 

Description: Total; 
Population: 51,942; 
Contacted: 150; 
Participated: 22. 

Source: GAO. 

[End of table] 

The remaining firms with which we conducted additional structured 
interviews were selected by GAO based on referrals from industry 
contacts. Some of these firms were chosen because they were known 
leaders in key sectors of the economy, while others were chosen 
because they represented firms from sectors that were difficult to 
contact and whom we expected would not be well represented by the 
random sample (including one start-up company and one small H-1B-
dependent staffing firm). Ultimately, we conducted structured 
individual interviews with 9 additional firms selected based on 
referrals from industry contacts, for a total of 31 individual 
interviews; and we conducted focus group interviews with 3 additional 
firms selected based on referrals from industry contacts. This 
selection of a total of 34 firms constitutes a nongeneralizable sample 
and cannot be used to make inferences beyond the specific firms 
selected. 

The firms we spoke with were located throughout the country and 
reflected six industrial sectors and a range of sizes (from a few 
workers based in one location to thousands of workers positioned 
around the globe). Through these interviews, we spoke with key 
executives in a variety of technology-intensive industries, including 
information technology (IT); semiconductor manufacturing and other 
manufacturing and engineering firms; and pharmaceuticals and 
biotechnology. Regarding technology-intensive industries, we spoke 
with representatives of several large multinational companies, 
including four of the top U.S.-based H-1B employers (i.e., U.S.-based 
companies that were among the top 50 companies with the highest number 
of approved H-1B petitions), as well as several small and emerging 
technology companies who use H-1B workers for highly specialized 
positions. We also spoke with 10 IT services firms, including three 
large (meaning they employed at least 100 H-1B workers) foreign-owned 
H-1B staffing and outsourcing companies, and several smaller IT 
staffing and consulting firms. In addition, we spoke with companies in 
several other sectors, including two financial organizations, a health 
care provider, and a consumer retail firm. 

To develop our structured interview questionnaire, we took several 
steps. First, we conducted two focus groups with H-1B employers and 
representatives of major industry organizations. In these focus 
groups, we tested preliminary versions of our interview questions, and 
used the discussion to revise the questions. We also conducted six 
tests of the structured interview with individual companies. The 
responses from the three companies that participated in our focus 
groups were not included in the tabulated results based on interviews 
with individual firms, because the structure of our individual firm 
interviews differed significantly from the structure of our focus 
groups. However, the responses from all six of our test interviews 
were included in our tabulated results of company interviews. 

To analyze the data we collected from the company interviews, we 
conducted a content analysis of company responses. This analysis 
involved coding the interview responses and conducting frequency 
analyses of the topics and themes that were raised by the company 
representatives. Two analysts coded the responses. Any discrepancies 
in coding were discussed and resolved before finalizing the resulting 
data set. 

During our interviews, employers and experts offered a number of 
suggestions for how the program could be improved. Although it was not 
possible to publish all of the suggestions, those that are mentioned 
in the report were chosen on the basis of the following factors: (1) 
frequency of suggestion, (2) feasibility, (3) potential for economic 
efficiency, and (4) corroboration with other information sources. 

Site Visits, Interviews, and Review of Documentary Evidence: 

To understand the (1) H-1B certification, adjudication, and 
enforcement processes; (2) the responsibilities of each agency 
involved; (3) the effectiveness of the H-1B program's protections for 
U.S. workers; and (4) the reliability of the datasets we used, we 
conducted three site visits and conducted numerous interviews with 
agency officials, labor advocates, and academics. To understand the 
processing of applications, we visited Labor's LCA processing center 
in Illinois and Homeland Security's I-129 processing center in 
California. We also conducted interviews with State's Kentucky Service 
Center, where I-129 petitions that have been approved by Homeland 
Security are entered into a State database that is accessible to 
consular offices around the world. To understand investigations 
related to approved H-1B visa holders, we visited Labor's Wage and 
Hour Division's Northeast Regional Office in Philadelphia, the 
regional office that had received the highest number of H-1B-related 
complaints in the country. In addition, we conducted interviews with 
officials from Labor, Homeland Security's USCIS and US-VISIT offices, 
State, and Justice with regard to their roles in all phases of the H-
1B program. We also reviewed agency documentation and the laws and 
regulations related to the H-1B program. 

To deepen our understanding of the role of the H-1B program for 
businesses in specific segments of the economy, and the impact of the 
H-1B program on U.S. workers, we interviewed a number of academics and 
business advocates. Specifically, we interviewed leading academics in 
the areas of business, economics, demography, international relations, 
and labor relations. To better understand the specific issues facing 
start-up companies and high-tech organizations, we conducted 
interviews with venture capital companies and immigration law firms 
that work with start-up companies. To better understand the specific 
issues facing firms in the IT staffing and services industry, we 
interviewed industry advocacy organizations. 

We also conducted an extensive review of the academic literature, 
which included articles and studies on the impact of migration on U.S. 
workers, trends in international business, and trends in the education 
of foreign students in science and technology fields. 

Finally, to address all objectives, we reviewed relevant federal laws 
and regulations; news media articles, and the temporary immigration 
programs of several other countries that we selected based on our 
literature review and our discussions with experts. 

Table 7 provides a summary of how the information sources described 
were used to answer each of the reporting objectives. 

Table 7: Summary of Information Sources by Objective: 

Department of Labor data: 

LCA data; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Check]; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Empty]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Empty]; 
Objective 5: Effectiveness of protections for U.S. workers: [Empty]. 

Wage and Hour Division complaint data; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Empty]; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Empty]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Empty]; 
Objective 5: Effectiveness of protections for U.S. workers: [Check]. 

CPS data; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Empty]; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Check]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Check]; 
Objective 5: Effectiveness of protections for U.S. workers: [Empty]. 

Department of Homeland Security data; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Empty]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Empty]; 
Objective 5: Effectiveness of protections for U.S. workers: [Empty]. 

H-1B employer petition data; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Check]; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Check]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Check]; 
Objective 5: Effectiveness of protections for U.S. workers: [Empty]. 

U.S-VISIT data; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Empty]; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Check]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Empty]; 
Objective 5: Effectiveness of protections for U.S. workers: [Empty]. 

Department of Justice complaint data; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Empty]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Empty]; 
Objective 5: Effectiveness of protections for U.S. workers: [Check]. 

Department of State data on visa issuances; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Check]; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Empty]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Empty]; 
Objective 5: Effectiveness of protections for U.S. workers: [Empty]. 

Mergent Online data; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Check]; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Empty]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B- 
intensive industries: [Empty]; 
Objective 5: Effectiveness of protections for U.S. workers: [Empty]. 

LexisNexis Dossier database; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Check]; 
Objective 2: Impact of the H-1B cap and program on employers: [Empty]; 
Objective 3: Characteristics of approved H-1B workers: [Empty]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B- 
intensive industries: [Empty]; 
Objective 5: Effectiveness of protections for U.S. workers: [Empty]. 

Structured interviews with H-1B employers; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Empty]; 
Objective 2: Impact of the H-1B cap and program on employers: [Check]; 
Objective 3: Characteristics of approved H-1B workers: [Empty]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Empty]; 
Objective 5: Effectiveness of protections for U.S. workers: [Empty]. 

Site visits, interviews, and reviews of documentary evidence; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Check]; 
Objective 2: Impact of the H-1B cap and program on employers: [Check]; 
Objective 3: Characteristics of approved H-1B workers: [Check]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Check]; 
Objective 5: Effectiveness of protections for U.S. workers: [Check]. 

Relevant laws and regulations; 
Objective 1: Demand for H-1B workers and characteristics of H-1B 
employers: Department of Labor data: [Check]; 
Objective 2: Impact of the H-1B cap and program on employers: [Check]; 
Objective 3: Characteristics of approved H-1B workers: [Check]; 
Objective 4: Employment and wages of the U.S. workforce in H-1B-
intensive industries: [Check]; 
Objective 5: Effectiveness of protections for U.S. workers: [Check]. 

Source: GAO. 

[End of table] 

Section 2: Methods for Comparing U.S. and H-1B Workers: 

As part of our examination of the impact of the H-1B program on 
domestic employment, we used data from the 2009 March supplement of 
the CPS to estimate the number of U.S. citizen workers in 2008, their 
age distribution, and their education levels for five occupational 
categories[Footnote 112] that received the most H-1B approvals in 
fiscal year 2009. Ideally we would have compared U.S. workers to 
actual H-1B workers; however, data on actual H-1B workers do not 
exist. The data we analyzed (CLAIMS 3), as explained above, pertain to 
prospective H-1B workers (those whose petitions were submitted in a 
given year and approved by Homeland Security). 

To help ensure that we were comparing workers in the same occupational 
categories, we had to combine some occupational categories in the CPS 
to better match those in the CLAIMS 3 data, as shown in table 8. 

Table 8: Crosswalk from USCIS to Related CPS Occupation Codes: 

USCIS occupations: 

USCIS code: 030 and 039; 
USCIS occupational title: Systems analysis, programming, and other 
computer-related occupations[B]; 
Related CPS occupations[A]: 2003-2009: 
CPS codes: 1000, 1010, 1020, 1060, 1220; 
CPS occupational title: Computer scientists and systems analysts, 
computer programmers, database administrators, and operations research 
analysts; 
Related CPS occupations[A]: 2000-2002: 
CPS codes: 064, 229, 065; 
CPS occupational title: Computer systems analysts and scientists, 
computer programmers, operations and systems researchers and analysts. 

USCIS code: 003; 
USCIS occupational title: Electrical/electronic engineers; 
Related CPS occupations[A]: 2003-2009: 
CPS codes: 1410; 
CPS occupational title: Electrical and electronic engineers; 
Related CPS occupations[A]: 2000-2002: 
CPS codes: 055; 
CPS occupational title: Electrical and electronic engineers. 

USCIS code: 160; 
USCIS occupational title: Accountants, auditors, and related 
occupations; 
Related CPS occupations[A]: 2003-2009: 
CPS codes: 0800; 
CPS occupational title: Accountants and auditors; 
Related CPS occupations[A]: 2000-2002: 
CPS codes: 023; 
CPS occupational title: Accountants and auditors. 

USCIS code: 090; 
USCIS occupational title: Occupations in college and university 
education[C]; 
Related CPS occupations[A]: 2003-2009: 
CPS codes: 2200; 
CPS occupational title: Postsecondary teachers; 
Related CPS occupations[A]: 2000-2002: 
CPS codes: 113, 114, 115, 116, 117, 118, 119, 123, 124, 125, 126, 127, 
128, 129, 133, 134, 135, 136, 137, 138, 139, 143, 144, 145, 146, 147, 
148, 149, 153, 154; 
CPS occupational title: Categories 113-154, all of which appear here, 
are different types of "postsecondary teachers." 

USCIS code: 070; 
USCIS occupational title: Physicians and Surgeons; 
Related CPS occupations[A]: 2003-2009: 
CPS codes: 3060; 
2003-2009: Physicians and surgeons; 
occupations; 
Related CPS occupations[A]: 2000-2002: 
CPS codes: 084; 
CPS occupational title: Physicians. 

Source: Basic Monthly CPS, 2009, and USCIS. 

[A] Related CPS codes and titles changed in 2003. 

[B] See footnote 14 for details on how "other computer-related 
occupations" was defined. 

[C] H-1B workers at universities may be employed in positions other 
than teaching. 

[End of table] 

Limitations of Wage Comparisons: 

In addition, we compared salaries of U.S. workers with those of H-1B 
workers, although this comparison had limitations. Specifically, we 
compared the CPS median salary estimates for the 2009 March supplement 
to median salary figures reported in CLAIMS 3 salary data for the 
approved H-1B workers whose petitions were submitted in 2008 for three 
of the occupations of interest overall and by age group. Although 
several of the comparisons we were able to make did show a 
statistically significant difference between the CLAIMS 3 H-1B 
workers' median salary and the "comparable" CPS estimate, these 
analyses have several limitations: 

* Within each occupational group, there can be variation in the types 
of jobs and work performed. Our data do not account for these 
subtleties. Therefore, it is possible that H-1B workers may have been 
working in relatively more or less sophisticated jobs than U.S. 
workers within the same occupational group. For example, H-1B workers 
and U.S. workers in the occupation "college and university education" 
may have different fields of education and work in different types of 
institutions. 

* The measures of median annual salaries for U.S. citizens could 
include bonuses, but the median annual salaries reported in the CLAIMS 
3 database most likely do not. Neither median salary includes noncash 
benefits such as health insurance or pensions. 

* CPS salary reported in the 2009 March supplement was for the longest 
held position actually worked in 2008, as reported by workers 
themselves (or knowledgeable members of their household). In contrast, 
the salaries reported in the CLAIMS 3 database are reported by 
prospective H-1B employers and reflect what the employer intends to 
pay the H-1B worker in fiscal year 2008 or fiscal year 2009, a time 
period covering October 1, 2007, through September 30, 2009. 

* We identified patterns in the H-1B worker salary data that raise 
concerns about the validity of that data. Specifically, the frequency 
distributions we ran on the salaries of H-1B workers 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. To minimize the influence of these outliers, we used 
median salary rather than mean. 

In light of these limitations, caution should be used in interpreting 
differences found in comparing estimated 2008 median U.S. citizen 
worker salaries and the median salaries for H-1B worker petitions 
submitted in 2008. 

Section 3: Analysis of Employment and Wages of U.S. Workforce: 

To determine how raising the H-1B cap might affect the employment and 
wages of U.S. workers, we examined labor market indicators (employment 
levels, unemployment rates, and usual weekly earnings) of U.S. workers 
in three occupations approved to receive the largest proportion of 
approved H-1B petitions relative to the total U.S. workforce in those 
occupations: (1) systems analysis, programming, and other computer- 
related occupations; (2) electrical and electronics engineers; and (3) 
college and university education. For this analysis, we relied on 
three sets of published CPS estimates of annual averages based on data 
collected through CPS basic monthly surveys: (1) median weekly 
earnings (at last week's primary job) of full-time wage and salary 
workers by detailed occupation and sex, 2000 to 2009 annual averages; 
(2) employed persons by detailed occupation and sex, annual averages 
2000 to 2009; and (3) unemployment levels and rates by detailed 
occupation, 2000 to 2009 annual averages. These data were provided to 
us by staff at BLS. 

In addition to presenting estimates of the employment levels, 
unemployment rates, and median usual weekly earnings for each 
occupational group, we also calculated and presented estimates of the 
change over the decade in the unemployment rate and median usual 
weekly wage for each occupational group, and the growth rate relative 
to year 2000 for the employment level for each occupational group. 
[Footnote 113] 

In order to better understand trends identified in our analysis and 
the specific issues facing workers in segments of the economy that may 
not be apparent from national labor force statistics, we also spoke 
with several labor advocates who work with and advocate for computer 
scientists and computer programmers, as well as academic researchers 
who do research on the U.S. science, engineering, and technology 
workforce. 

Section 4: Analysis of Long-Term Immigration Outcomes of H-1B Workers: 

To examine the long-term immigration outcomes of H-1B workers, GAO 
obtained data from Homeland Security's US-VISIT ADIS database. The 
ADIS data provided was based on matching ADIS data with 302,550 
records from Homeland Security's CLAIMS 3 database[Footnote 114] 
submitted by GAO to US-VISIT for this purpose. The CLAIMS 3 records 
used for matching consisted of approved initial H-1B petitions that 
were valid to start work in H-1B status between January 1, 2004, and 
September 30, 2007. 

Matched Data Received from US-VISIT: 

US-VISIT matched the submitted records by first name, last name, and 
date of birth to the ADIS data system. US-VISIT's matching returned a 
total of 5,091,369 event records from the ADIS system, containing 
information about 375,641 persons in the ADIS system. These event 
records, which US-VISIT provided GAO, contained data on the following 
events for foreign nationals: entry into the country; exit from the 
country; petition to convert to permanent residence status (I-485); 
and status of petition to convert to permanent residence (approved, 
denied, or pending.) Each event record has an associated event date. 
US-VISIT also provided the following identifying information: ADIS 
person identifier, first name, last name, date of birth, country of 
citizenship, country of issuance, I-94 number, and CLAIMS 3 receipt 
number, where available. 

How GAO Determined Reliable Matches: 

GAO took a number of steps to identify reliable matches between CLAIMS 
3 and ADIS data. We determined that the match was reliable if at least 
one of the following three conditions held: (1) the ADIS person had an 
H-1B visa status at some point during their history; (2) the CLAIMS 3 
receipt number in the CLAIMS 3 data matched at least one of the CLAIMS 
3 receipt numbers recorded in the ADIS system; (3) the I-94 number 
recorded with the petitioners' I-129 form matched at least one of the 
I-94 numbers on file in the ADIS system. In the case of one-to-many 
and many-to-many matches, we selected the match that met criteria 2 or 
3 over criteria 1. We determined that 169,349 records met these 
criteria. 

There are various reasons why a visa might not be used or a 
beneficiary might not be in the ADIS system for an approved H-1B 
petition. For example, an H-1B visa might not be used for an approved 
petition when the employer decides not to offer the beneficiary the 
job; the beneficiary decides not to accept the job; or the beneficiary 
obtains a different U.S. visa status, such as through marriage, 
student visas, or other work visas.[Footnote 115] An H-1B visa might 
be used, but the beneficiary would not be in the ADIS system for 
several reasons. First, the ADIS system became fully operational in 
January 2004; those who were already in the United States at the time 
they submitted their H-1B petition (such as students enrolled in U.S. 
universities) and did not enter or exit the country after January 2004 
may not have been entered in the ADIS system. In addition, some 
beneficiaries who entered the United States by land may have entered 
the country without going through an official border station where 
they submit an I-94 form. Finally, a beneficiary's record may not be 
in the ADIS system due to data quality problems. For example, if an H-
1B beneficiary changed their name through marriage and subsequently 
had an I-485 submitted on their behalf, US-VISIT may at times be 
unable to link the I-485 submission to the H-1B beneficiary due to the 
name change. 

We conducted this performance audit from May 2009 through January 2011 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Characteristics of U.S. and H-1B Workers in Five 
Occupational Groups: 

This appendix provides additional analyses of the characteristics of 
U.S. and approved H-1B workers in five occupational groups between 
2000 and 2009. 

For H-1B-Heavy Occupations, the Proportion of H-1B-Approved Workers 
Generally Decreased over Time: 

For five occupational groups with large numbers of approved H-1B 
workers over the last decade, we compared newly approved H-1B workers 
[Footnote 116] with the stock of U.S. citizen workers in those 
occupations and found that the relative number and proportion of newly 
approved H-1B workers varied over the decade for all five occupations, 
but decreased overall. The five occupations we examined and that 
represent occupations with the highest concentration of newly approved 
H-1B workers included (1) systems analysts, programmers, and other 
computer-related workers; (2) electrical and electronics engineers; 
(3) accountants and auditors; (4) college and university educators; 
and (5) physicians and surgeons. 

Despite some fluctuations over time, the overall number of newly 
approved petitions for H-1B workers across these five occupational 
groups declined from 137,371 in 2000 to 44,946 in 2009, and the 
proportion relative to estimates of U.S. citizen workers fell from 
about 2.5 percent to less than 1 percent between 2000 and 2009. For 
specific occupations, as shown in figure 15, the highest proportion of 
newly approved H-1B workers as compared to U.S. citizen workers was in 
the systems analysis, programming, and other computer-related 
occupations, averaging about 3 percent across the decade, while the 
lowest proportion was in the accounting occupations and physicians and 
surgeons occupations, averaging less than 1 percent. Further, for 
electrical and electronics engineering and systems analysis, 
programming, and other computer-related occupations, the declines in 
the proportion of newly approved H-1B workers as compared to U.S. 
citizen workers seem to coincide with the economic downturn of 2002. 

Figure 15: Flow of Newly Approved H-1B Worker Petitions as a 
Proportion of the Estimated Total Stock of U.S. Citizen Workers by 
Occupation, 2000-2009: 

[Refer to PDF for image: illustrated table] 

Calendar year: 2000; 
Electrical/electronic engineers: 1.3; 
Systems analysts, programmers, and other computer-related workers: 5.1; 
College and university educators: 0.9; 
Accountants and auditors: 0.4; 
Physicians and surgeons: 0.3. 

Calendar year: 2001; 
Electrical/electronic engineers: 1.0; 
Systems analysts, programmers, and other computer-related workers: 2.1; 
College and university educators: 1.3; 
Accountants and auditors: 0.4; 
Physicians and surgeons: 0.3. 

Calendar year: 2002; 
Electrical/electronic engineers: 0.6; 
Systems analysts, programmers, and other computer-related workers: 1.0; 
College and university educators: 1.5; 
Accountants and auditors: 0.4; 
Physicians and surgeons: 0.4. 

Calendar year: 2003; 
Electrical/electronic engineers: 1.0; 
Systems analysts, programmers, and other computer-related workers: 1.9; 
College and university educators: 1.4; 
Accountants and auditors: 0.4; 
Physicians and surgeons: 0.4. 

Calendar year: 2004; 
Electrical/electronic engineers: 1.1; 
Systems analysts, programmers, and other computer-related workers: 3.1; 
College and university educators: 1.3; 
Accountants and auditors: 0.4; 
Physicians and surgeons: 0.4. 

Calendar year: 2005; 
Electrical/electronic engineers: 1.4; 
Systems analysts, programmers, and other computer-related workers: 2.6; 
College and university educators: 1.3; 
Accountants and auditors: 0.4; 
Physicians and surgeons: 0.4. 

Calendar year: 2006; 
Electrical/electronic engineers: 1.0; 
Systems analysts, programmers, and other computer-related workers: 3.1; 
College and university educators: 1.2; 
Accountants and auditors: 0.3; 
Physicians and surgeons: 0.4. 

Calendar year: 2007; 
Electrical/electronic engineers: 1.0; 
Systems analysts, programmers, and other computer-related workers: 3.0; 
College and university educators: 1.1; 
Accountants and auditors: 0.2; 
Physicians and surgeons: 0.4. 

Calendar year: 2008; 
Electrical/electronic engineers: 1.1; 
Systems analysts, programmers, and other computer-related workers: 2.8; 
College and university educators: 1.2; 
Accountants and auditors: 0.2; 
Physicians and surgeons: 0.4. 

Calendar year: 2009; 
Electrical/electronic engineers: 1.4; 
Systems analysts, programmers, and other computer-related workers: 1.4; 
College and university educators: 0.7; 
Accountants and auditors: 0.3; 
Physicians and surgeons: 0.4. 

Source: GAO analysis of Homeland Security CLAIMS 3 data and CPS data. 

Note: As noted previously, the cumulative number of H-1B workers in 
the United States at any one point in time is unknown. Thus, this 
comparison is based on the number of newly approved H-1B workers 
(initial petitions) as a proportion of U.S. citizen workers in the 
occupations of interest--not the total number of H-1B workers as a 
proportion of U.S. citizen workers in the occupations of interest. For 
example, in fiscal year 2000 there were about 116,231 newly approved H-
1B worker petitions in the systems analysis/computers occupations, as 
compared to an estimated total stock of 2,290,612 U.S. citizen 
workers. Estimated percents displayed in this figure have 95 percent 
confidence intervals that are within +/-0.25 percentage points of the 
estimate itself. 

[End of figure] 

We did not examine potential reasons behind this relative decline in 
the proportion of H-1B workers over time; however, fluctuations in the 
economy and H-1B cap were likely contributing factors. 

For H-1B-Heavy Occupations, Approved H-1B Workers Were Younger and 
More Educated Relative to U.S. Citizen Workers: 

In 2008, approved H-1B workers (initial and extensions) were generally 
younger and more educated as compared to their U.S. citizen 
counterparts in similar occupations, although this varied by the 
particular occupation (see figure 16).[Footnote 117] 

Figure 16: Age of Approved H-1B Workers (Initial and Extensions) and 
Estimated Age of the Stock of U.S. Citizen Workers in Select 
Occupations, 2008: 

[Refer to PDF for image: 5 vertical bar graphs] 

Electrical/electronics engineers: 
Age 20-25: 
H-1B workers: 5%; 
U.S. citizens: 2%; 
Age 25-30: 
H-1B workers: 36%; 
U.S. citizens: 15%; 
Age 30-25: 
H-1B workers: 32%; 
U.S. citizens: 14%; 
Age 35-40: 
H-1B workers: 18%; 
U.S. citizens: 19%; 
Age 40-50: 
H-1B workers: 9%; 
U.S. citizens: 50%. 

Systems analysts, programmers, and other computer-related workers: 
Age 20-25: 
H-1B workers: 7%; 
U.S. citizens: 5%; 
Age 25-30: 
H-1B workers: 43%; 
U.S. citizens: 16%; 
Age 30-25: 
H-1B workers: 33%; 
U.S. citizens: 17%; 
Age 35-40: 
H-1B workers: 13%; 
U.S. citizens: 22%; 
Age 40-50: 
H-1B workers: 4%; 
U.S. citizens: 30%. 

College and university educators: 
Age 20-25: 
H-1B workers: 1%; 
U.S. citizens: 8%; 
Age 25-30: 
H-1B workers: 12%; 
U.S. citizens: 27%; 
Age 30-25: 
H-1B workers: 39%; 
U.S. citizens: 13%; 
Age 35-40: 
H-1B workers: 34%; 
U.S. citizens: 21%; 
Age 40-50: 
H-1B workers: 14%; 
U.S. citizens: 31%. 

Accountants and auditors: 
Age 20-25: 
H-1B workers: 7%; 
U.S. citizens: 8%; 
Age 25-30: 
H-1B workers: 33%; 
U.S. citizens: 25%; 
Age 30-25: 
H-1B workers: 32%; 
U.S. citizens: 18%; 
Age 35-40: 
H-1B workers: 18%; 
U.S. citizens: 20%; 
Age 40-50: 
H-1B workers: 9%; 
U.S. citizens: 29%. 

Physicians and Surgeons: 
Age 20-25: 
H-1B workers: 0%; 
U.S. citizens: 0%; 
Age 25-30: 
H-1B workers: 20%; 
U.S. citizens: 8%; 
Age 30-25: 
H-1B workers: 42%; 
U.S. citizens: 21%; 
Age 35-40: 
H-1B workers: 28%; 
U.S. citizens: 27%; 
Age 40-50: 
H-1B workers: 10%; 
U.S. citizens: 45%. 

Source: GAO analysis of Homeland Security CLAIMS 3 data and CPS data. 

Note: Estimates for U.S. workers are based on Current Population 
Survey (CPS) data. Percentage estimates have 95 percent confidence 
intervals of +/-13 percentage points or less. 

[End of figure] 

In these five occupations, we generally found that a higher percentage 
of approved H-1B workers had earned an advanced graduate degree 
(including master's, Ph.D., or professional degree) than U.S. citizen 
workers, as shown in figure 17. Across the five occupations, 56 
percent of approved H-1B workers had graduate degrees, as compared to 
an estimated 29 percent of the total stock of U.S. citizen workers. 
[Footnote 118] For this comparison, all U.S. citizen estimates are for 
the population of U.S. citizens aged 18 to 50 years old in private, 
full-time employment, excluding those in government employment and the 
self-employed. 

Figure 17: Proportion of Approved H-1B Workers (Initial and 
Extensions) and Estimated U.S. Citizen Workers with Advanced Degrees 
in Select Occupations, 2008: 

[Refer to PDF for image: horizontal bar graph] 

Electrical/electronics engineers: 
Approved H-1B workers: 69%; 
U.S. citizen workers: 33%. 

Systems analysts, programmers, and other computer-related workers: 
Approved H-1B workers: 46%; 
U.S. citizen workers: 18%. 

College and university educators: 
Approved H-1B workers: 95%; 
U.S. citizen workers: 62%. 

Accountants and auditors: 
Approved H-1B workers: 51%; 
U.S. citizen workers: 15%. 

Physicians and surgeons: 
Approved H-1B workers: 99%; 
U.S. citizen workers: 98%. 

Source: GAO analysis of Homeland Security CLAIMS 3 data and CPS data. 

Note: Estimates for H-1B workers are based on approved petitions. 
Estimates for U.S. workers are based on CPS data. CPS percentage 
estimates for electrical engineering, electronics, and related 
occupations and for university and college education have 95 percent 
confidence intervals of within +/-12 percentage points of the estimate 
itself. CPS percentage estimates for other occupations shown have 95 
percent confidence intervals of within +/-4 percentage points of the 
estimate itself. Estimates are for the population of U.S. citizen 
workers, aged 18 to 50, in full-time private employment (excluding 
those working in government and the self-employed). 

[End of figure] 

[End of section] 

Appendix III: Labor Force Trends for U.S. Workers in Selected 
Occupations: 

This appendix presents analyses of median earnings growth, 
unemployment rates, and employment levels for the three occupations 
with the highest proportion of approved petitions for H-1B workers 
over the past decade. 

A Retrospective View Shows a Mixed Employment and Earnings Picture for 
Professions Absorbing H-1Bs: 

To shed light on the U.S. workforce most likely to have been affected 
by the H-1B program over the past decade, we reviewed 10 years of data 
on the employment, unemployment, and earnings of U.S. workers in the 
three occupations[Footnote 119] with the largest proportion of 
approved H-1B petitions relative to the stock of U.S. workers over the 
past decade. We found that U.S. workers in all three occupations, in 
every year, had significantly higher median earnings levels compared 
to U.S. workers in all professional occupations. We also found that 
one of the three occupations--systems analysts and computer 
programmers--had significantly higher earnings growth compared to all 
professional U.S. workers. However, unemployment rates were cyclical 
for two groups and employment levels varied among the three groups 
(i.e., declining for electrical and electronics engineers, growing for 
college and university educators, and remaining essentially unchanged 
among systems analysts and computer programmers). 

Earnings and Earnings Growth among Selected Occupations: 

Real earnings growth among systems analysts, programmers, and other 
computer-related U.S. workers was relatively strong over the decade--
12 percent--and was significantly larger than real earnings growth 
among all professional workers over the decade, which was about 4 
percent. Among electrical and electronics engineers, real earnings 
growth was about 8 percent over the decade; however, the difference 
between this increase and that of all professional workers was not 
statistically significant. Among college educators, real earnings did 
not grow significantly over the decade. As can be seen in figure 18, 
in every year over the past decade all three occupations had median 
weekly earnings levels that were significantly higher than the median 
earnings among all professional workers. However, real earnings growth 
among college and university educators was essentially flat over the 
decade. 

Figure 18: Median Usual Weekly Earnings in Constant 2009 Dollars among 
U.S. Workers in Occupations with Large Numbers of H-1B Petitions, 2000-
2009: 

[Refer to PDF for image: multiple line graph] 

Median usual weekly earnings (in 2009 dollars): 

Fiscal year: 2000; 
Average for all professional occupations: $959; 
Electrical/electronics engineers: $1,391; 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,204; 
College and university educators: $1,155. 

Fiscal year: 2001; 
Average for all professional occupations: $961; 
Electrical/electronics engineers: $1,431; 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,279; 
College and university educators: $1,207. 

Fiscal year: 2002; 
Average for all professional occupations: $981; 
Electrical/electronics engineers: $1,449; 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,301; 
College and university educators: $1,211. 

Fiscal year: 2003; 
Average for all professional occupations: $985; 
Electrical/electronics engineers: $1,553; 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,290; 
College and university educators: $1,145. 

Fiscal year: 2004; 
Average for all professional occupations: $1,003; 
Electrical/electronics engineers: $1,450; 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,335; 
College and university educators: $1,174. 

Fiscal year: 2005; 
Average for all professional occupations: $991; 
Electrical/electronics engineers: $1,483; 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,331; 
College and university educators: $1,178. 

Fiscal year: 2006; 
Average for all professional occupations: $987; 
Electrical/electronics engineers: $1,474; 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,317; 
College and university educators: $1,126. 

Fiscal year: 2007; 
Average for all professional occupations: $984; 
Electrical/electronics engineers: $1,504; 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,348; 
College and university educators: $1,170. 

Fiscal year: 2008; 
Average for all professional occupations: $976; 
Electrical/electronics engineers: $1,438; 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,332; 
College and university educators: $1,145. 

Fiscal year: 2009; 
Average for all professional occupations: $994 (up 4% since 2000); 
Electrical/electronics engineers: $1,502 (up 8% since 2000); 
Systems analysts, programmers, and other computer-related workers[A]: 
$1,351 (up 12% since 2000); 
College and university educators: $1,169 (up 1% since 2000). 

Source: GAO analysis of data from the CPS provided by the Bureau of 
Labor Statistics. 

[A] The occupation "systems analysis, programming, and other computer- 
related workers" includes five CPS occupational groups: (1) computer 
scientists and systems analysts; (2) computer programmers; (3) 
computer software engineers; (4) database administrators; and (5) 
operations research analysts. The central tendency for wage shown here 
is a weighted average of the median wage for each of these five 
occupations. Estimated median earnings have 95 percent confidence 
intervals within +/-1 percent of the estimate itself for all 
professional occupations; within +/-3 percent for systems analysis, 
programmers, and other computer-related occupations; within +/-11 
percent for electrical and electronics engineers; and within +/-6 
percent for college and university educators. 

[End of figure] 

Rates of Unemployment among Selected Occupations: 

Unemployment rates among (1) electrical and electronics engineers and 
(2) system analysts, programmers, and other computer-related workers 
showed greater cyclical variation than did the unemployment rate for 
all U.S. workers in professional occupations. In contrast, the 
unemployment rate among college and university educators was somewhat 
less sensitive to business cycle fluctuations, and in most years was 
close to or lower than the unemployment rate for all professional 
occupations (see figure 19). 

Figure 19: Unemployment Rate among U.S. Workers in Occupations with 
Large Numbers of H-1B Petitions, 2000-2009: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2000; 
Average for all professional occupations: 1.9%; 
Electrical/electronics engineers: 1.3%; 
Systems analysts, programmers, and other computer-related workers[A]: 
2%; 
College and university educators: 2%. 

Fiscal year: 2001; 
Average for all professional occupations: 2.3%; 
Electrical/electronics engineers: 1.4%; 
Systems analysts, programmers, and other computer-related workers[A]: 
3.6%; 
College and university educators: 2.1%. 

Fiscal year: 2002; 
Average for all professional occupations: 3%; 
Electrical/electronics engineers: 3.9%; 
Systems analysts, programmers, and other computer-related workers[A]: 
4.9%; 
College and university educators: 2.5%. 

Fiscal year: 2003; 
Average for all professional occupations: 3.2%; 
Electrical/electronics engineers: 6.2%; 
Systems analysts, programmers, and other computer-related workers[A]: 
5.4%; 
College and university educators: 2.2v 

Fiscal year: 2004; 
Average for all professional occupations: 2.8%; 
Electrical/electronics engineers: 2.2%; 
Systems analysts, programmers, and other computer-related workers[A]: 
4%; 
College and university educators: 2.1%. 

Fiscal year: 2005; 
Average for all professional occupations: 2.4%; 
Electrical/electronics engineers: 1.7%; 
Systems analysts, programmers, and other computer-related workers[A]: 
2.6%; 
College and university educators: 2.3%. 

Fiscal year: 2006; 
Average for all professional occupations: 2.1%; 
Electrical/electronics engineers: 1.7%; 
Systems analysts, programmers, and other computer-related workers[A]: 
2.3%; 
College and university educators: 2.1%. 

Fiscal year: 2007; 
Average for all professional occupations: 2.1%; 
Electrical/electronics engineers: 0.9%; 
Systems analysts, programmers, and other computer-related workers[A]: 
2%; 
College and university educators: 2.5%. 

Fiscal year: 2008; 
Average for all professional occupations: 2.7%; 
Electrical/electronics engineers: 2.4%; 
Systems analysts, programmers, and other computer-related workers[A]: 
2.3%; 
College and university educators: 2.8%. 

Fiscal year: 2009; 
Average for all professional occupations: 4.4%; 
Electrical/electronics engineers: 6.4%; 
Systems analysts, programmers, and other computer-related workers[A]: 
5%; 
College and university educators: 3.2%. 

Source: GAO analysis of data from the CPS provided by the Bureau of 
Labor Statistics. 

[A] The occupation "systems analysis, programming, and other computer- 
related workers" includes five CPS occupational groups: (1) computer 
scientists and systems analysts; (2) computer programmers; (3) 
computer software engineers; (4) database administrators; and (5) 
operations research analysts. Estimated unemployment rates have 95 
percent confidence intervals within +/-0.3 percentage points for all 
professional occupations; within +/-1.2 percentage points for systems 
analysis, programmers, and other computer-related occupations; within 
+/-3 percentage points for electrical and electronics engineers; and 
within +/-1.1 percentage points for college and university educators. 

[End of figure] 

Employment in Selected Occupations: 

Employment among electrical and electronics engineers declined by 29 
percent over the decade, and there was no significant change in the 
level of employment among systems analysts, programmers, and other 
computer-related workers. In contrast, employment grew by 15 percent 
among all professional occupations over the past decade. Employment 
among college and university educators grew by 26 percent over the 
decade (see figure 20). 

Figure 20: Percent Change in U.S. Worker Employment Since 2000 in 
Occupations with Large Numbers of H-1B Petitions, 2000-2009: 

[Refer to PDF for image: multiple line graph] 

Fiscal year: 2000%; 
Average for all professional occupations: 0%; 
Electrical/electronics engineers: 0%; 
Systems analysts, programmers, and other computer-related workers[A]: 
0%; 
College and university educators: 0%. 

Fiscal year: 2001%; 
Average for all professional occupations: 2%; 
Electrical/electronics engineers: -13%; 
Systems analysts, programmers, and other computer-related workers[A]: 
-5%; 
College and university educators: 5%. 

Fiscal year: 2002%; 
Average for all professional occupations: 2%; 
Electrical/electronics engineers: -13%; 
Systems analysts, programmers, and other computer-related workers[A]: 
-10%; 
College and university educators: 2%. 

Fiscal year: 2003%; 
Average for all professional occupations: 5%; 
Electrical/electronics engineers: -18%; 
Systems analysts, programmers, and other computer-related workers[A]: 
-10%; 
College and university educators: 7%. 

Fiscal year: 2004%; 
Average for all professional occupations: 6%; 
Electrical/electronics engineers: -23%; 
Systems analysts, programmers, and other computer-related workers[A]: 
-8%; 
College and university educators: 12%. 

Fiscal year: 2005%; 
Average for all professional occupations: 8%; 
Electrical/electronics engineers: -21%; 
Systems analysts, programmers, and other computer-related workers[A]: 
-5%; 
College and university educators: 13%. 

Fiscal year: 2006%; 
Average for all professional occupations: 9%; 
Electrical/electronics engineers: -14%; 
Systems analysts, programmers, and other computer-related workers[A]: 
-6%; 
College and university educators: 14%. 

Fiscal year: 2007%; 
Average for all professional occupations: 13%; 
Electrical/electronics engineers: -22%; 
Systems analysts, programmers, and other computer-related workers[A]: 
0%; 
College and university educators: 20%. 

Fiscal year: 2008%; 
Average for all professional occupations: 15%; 
Electrical/electronics engineers: -21%; 
Systems analysts, programmers, and other computer-related workers[A]: 
5%; 
College and university educators: 16%. 

Fiscal year: 2009%; 
Average for all professional occupations: 14.9%; 
Electrical/electronics engineers: -29.3%; 
Systems analysts, programmers, and other computer-related workers[A]: 
-1%; 
College and university educators: 25.9%. 

Source: GAO analysis of data from the CPS provided by the Bureau of 
Labor Statistics. 

[A] The occupation "systems analysis, programming, and other computer- 
related workers" includes five CPS occupational groups: (1) computer 
scientists and systems analysts; (2) computer programmers; (3) 
computer software engineers; (4) database administrators; and (5) 
operations research analysts. Estimated percent changes in employment 
relative to 2000 have 95 percent confidence intervals within +/-2 
percentage points for all professional occupations; within +/-7 
percentage points for systems analysis, programmers and other computer-
related occupations; within +/-15 percentage points for electrical and 
electronics engineers and for college and university educators. 

[End of figure] 

[End of section] 

Appendix IV: Characteristics of H-1B Employers: 

This appendix provides additional analyses of H-1B employers in fiscal 
year 2000 through fiscal year 2009 and more detailed analyses of the 
top 150 H-1B hiring companies in fiscal year 2009. 

Many Employers Approved for H-1B Workers Were in Scientific, 
Professional, and Technical Services: 

Over a third of employers approved to hire H-1B workers between fiscal 
year 2000 and fiscal year 2009 were employers that provided 
scientific, professional, or technical services (see figure 21). For 
example, in fiscal year 2009, at least 38 percent of employers 
approved to hire one or more H-1B workers indicated that they were in 
one industry--the professional, scientific, and technical services 
industry. Services within this industry include legal services; 
accounting, bookkeeping, and payroll services; architectural, 
engineering, and specialized design services; computer services; 
consulting services; and research services. Also in fiscal year 2009, 
the manufacturing, health care and social assistance, educational 
services, and finance and insurance sectors received the next-highest 
share of one or more H-1B approvals--that is, 11, 10, 7, and 6 percent 
of companies approved to hire H-1B workers, respectively. 

Figure 21: Industries of Employers Approved to Hire H-1B Workers, FY 
2000-FY 2009: 

[Refer to PDF for image: pie-chart] 

Professional, scientific, and technical services: 38%; Manufacturing: 
11%; 
Health care and social assistance: 8%; 
Educational services: 6%; 
Finance or insurance: 5%; 
All others: 32%. 

Source: GAO analysis of Homeland Security CLAIMS 3 data. 

[End of figure] 

Many Employers Approved for H-1B Workers Were Located in High- 
Technology Corridors: 

While H-1B hiring employers were located throughout the continental 
United States in fiscal year 2009, they tended to be concentrated in 
several high-technology pockets of the country such as Silicon Valley, 
Southern California, and the Tri-State area of New York, New Jersey, 
and Connecticut (see figure 22). 

Figure 22: Location of Cities with High Numbers of Approved H-1B 
Petitions, FY 2009: 

[Refer to PDF for image: illustrated U.S. map] 

Indicated on the map are approved H-1B Petitions, FY 2009, Centered on 
cities with the following number of approvals: 
500: 
1,000: 
5,000: 

The following cities are depicted: 

500 or more approvals: 
Austin, Texas; 
Buffalo, New York; 
Charlotte, North Carolina; 
Cleveland, Ohio; 
Columbus, Ohio; 
Indianapolis, Indiana; 
Minneapolis, Minnesota; 
Nashville, Tennessee; 
Phoenix, Arizona; 
Pittsburgh, Pennsylvania; 
St. Louis, Missouri; 
Tampa, Florida. 

1,000 or more approvals: 

Chicago, Illinois; 
Detroit, Michigan; 
Durham, North Carolina; 
Fort Lauderdale, Florida; 
Houston, Texas; 
San Diego, California; 

5,000 or more approvals: 
Boston, Massachusetts; 
New York, New York; 
Seattle, Washington; 
Washington, D.C. 

Source: GAO analysis of Homeland Security CLAIMS 3 data; National 
Atlas of the United States (base map). 

[End of figure] 

The Vast Majority of Top 150 H-1B Employers Operated in the United 
States: 

For the 150 employers with the largest number of approved petitions in 
fiscal year 2009 (representing 26 percent of all approvals in fiscal 
year 2009), and for which we were able to obtain additional publicly 
available information (133 employers), we found that the majority of 
employers operated in the United States, although 7 operated in India 
and 2 in the United Kingdom. 

GAO also reviewed data from Labor's LCAs on the top 150 employers of H-
1Bs in fiscal year 2009, including whether the employer is H-1B- 
dependent; whether the employer is a willful violator; and the number 
of petitions requested at each of the four possible skill levels. As 
indicated in table 9, among the 150 companies for which Labor provided 
data, 24 were H-1B dependent, and 9 of which were also deemed "willful 
violators." The remaining 126 firms were neither H-1B dependent nor 
willful violators. In addition, on average, these firms indicated that 
they would pay workers at the prevailing wage for skill-level one 52 
percent of the time; the prevailing wage for skill-level two 30 
percent of the time; the prevailing wage for skill-level three 12 
percent of the time; and the prevailing wage for skill-level four 6 
percent of the time. 

Table 9: Select Characteristics of the Top 150 H-1B Employers, FY 2009: 

Characteristic[A]: Publicly traded; 
Total: 66. 

Characteristic[A]: Private; 
Total: 68. 

Characteristic[A]: Missing; 
Total: 16. 

Characteristic[A]: Subsidiaries; 
Total: 58. 

Characteristic[A]: Incorporated in a Foreign Country; 
Total: 7. 

Characteristic[A]: Location of employer: USA; 
Total: 123. 

Characteristic[A]: Location of employer: India; 
Total: 7. 

Characteristic[A]: Location of employer: United Kingdom; 
Total: 2. 

Characteristic[A]: Location of employer: Missing; 
Total: 18. 

Characteristic[A]: H-1B Dependent; 
Total: 24. 

Characteristic[A]: Willful Violators; 
Total: 9. 

Characteristic[A]: Proportion of time employers, on average, will pay 
prevailing wage at each skill level. 

Skill level one; 
Total: 52%. 

Skill level two; 
Total: 30%. 

Skill level three; 
Total: 12%. 

Skill level four; 
Total: 6%. 

Characteristic[A]: Number of employees[B]: Median; 
Total: 16,151. 

Characteristic[A]: Number of employees[B]: 10,000 or fewer; 
Total: 48. 

Characteristic[A]: Number of employees[B]: Over 10,000; 
Total: 80. 

Characteristic[A]: Number of employees[B]: Over 100,000; 
Total: 12. 

Characteristic[A]: Number of employees[B]: Over 200,000; 
Total: 8. 

Characteristic[A]: Number of employees[B]: Over 500,000; 
Total: 1. 

Source: GAO analysis of Mergent Online and LexisNexis's Dossier 
databases and Labor data. 

[A] Due to missing data on some characteristics, the data presented 
does not always represent 150 companies. 

[B] For the 128 employers for which information on the number of 
employees was available, the dates associated with the employer counts 
for employees ranged from December 2004 to June 2010, although most 
dates were in fiscal year 2009. 

[End of table] 

Many of the Top 150 H-1B Employers Were in the Manufacturing or 
Educational Services Industry: 

Regarding industry, we found that, similar to the universe of all H-1B 
hiring employers, most of the top H-1B employers were in the 
professional, technical, and scientific services industry, although 
many were also in the manufacturing industry or the educational 
services industry.[Footnote 120] While the top 150 H-1B-hiring 
employers spanned a range of industries, these employers were 
distinctly concentrated in a few, more specific industry groups, 
including electronic computer manufacturing; software publishing; 
custom computer programming services (firms that write, modify, and 
test software for clients); computer systems design services; and 
colleges, universities, and professional schools. 

In terms of the type of employers, a relatively large number (44 of 
the 150 employers) were universities, compared to 6 percent of H-1B 
hiring employers in fiscal year 2009. We also found that at least 33 
employers could be categorized as information technology (IT) 
services--those that either provide staff or full project teams to 
other companies for IT projects (see table 10).[Footnote 121] 

Table 10: Characteristics of the Top 150 H-1B Employers, FY 2009: 

Industry[B]: 

Characteristic[A]: Professional, scientific, technical services; 
Total: 33. 

Characteristic[A]: Professional, scientific, technical services; 
Custom computer programming services; 
Total: 12. 

Characteristic[A]: Professional, scientific, technical services; 
Computer systems design services; 
Total: 8. 

Characteristic[A]: Professional, scientific, technical services; Other; 
Total: 13. 

Characteristic[A]: Manufacturing; 
Total: 33. 

Characteristic[A]: Manufacturing; Electronic computer manufacturing; 
Total: 6. 

Characteristic[A]: Manufacturing; Other; 
Total: 27. 

Characteristic[A]: Educational services; 
Total: 28. 

Characteristic[A]: Educational services; Colleges, universities, and 
professional schools; 
Total: 23. 

Characteristic[A]: Educational services; Other; 
Total: 5. 

Characteristic[A]: Information services; 
Total: 13. 

Characteristic[A]: Information services; Software publishing; 
Total: 5. 

Characteristic[A]: Information services; Other; 
Total: 8. 

Characteristic[A]: Finance and insurance; 
Total: 10. 

Characteristic[A]: Health care and social assistance; 
Total: 8. 

Characteristic[A]: Other industry; 
Total: 6. 

Characteristic[A]: Missing; 
Total: 19. 

Type of employer[B]: 

Characteristic[A]: Institutions of higher education; 
Total: 44. 

Characteristic[A]: Financial institutions; 
Total: 13. 

Characteristic[A]: IT services; 
Total: 33. 

Source: GAO analysis of Mergent Online and LexisNexis's Dossier 
databases. 

[A] Due to missing data on some characteristics, the data presented do 
not always represent 150 companies. 

[B] The industry numbers are based on the North American Industry 
Classification System codes, and the types of employers are based on 
GAO's analysis of company descriptions. 

[End of table] 

[End of section] 

Appendix V: Selected H-1B Program Laws: 

This appendix provides a chronological list of major laws and 
descriptions of certain key provisions related to the H-1B program. 
Laws identified may contain additional provisions related to the H-1B 
program not described here, and there may be additional laws not 
included here that have made various changes in the H-1B program. This 
is not intended to be an exhaustive summary of all laws and provisions 
related to the H-1B program. 

Selected laws: Immigration and Nationality Act, ch. 447, §§ 
101(a)(15)(H) and 214(c), 66 Stat. 163, 168 and189-90 (1952); 
Description of key provisions: 
* Authorized H-1B visas for aliens with a residence in a foreign 
country that the alien had no intention of abandoning, who were of 
distinguished merit and ability, and were coming to the United States 
to perform temporary service of an exceptional nature requiring such 
merit and ability. 

Selected laws: Immigration Reform and Control Act of 1986, Pub. L. No. 
99-603, § 102, 100 Stat. 3359, 3474-80; 
Description of key provisions: 
* Makes it an unfair immigration-related employment practice for most 
employers to discriminate against any individual (other than an 
unauthorized alien) with respect to hiring, recruitment, firing, or 
referral for fee because of such individual's origin or citizenship 
status. States that it is not an unfair immigration-related employment 
practice to hire a U.S. citizen or national over an equally qualified 
alien; 
* Requires that complaints of violations be filed with the Special 
Counsel for Immigration-Related Unfair Employment Practices 
(established by the act) within the Department of Justice; 
* Authorizes the Special Counsel to (1) investigate complaints and 
determine (within 120 days) whether to bring such complaints before a 
specially trained administrative law judge and (2) initiate 
investigations and complaints. Permits private actions if the Special 
Counsel does not file a complaint within such 120-day period. 

Selected laws: Immigration Act of 1990, Pub. L. No. 101-649, § 205, 
104 Stat. 4978, 5019-22; 
Description of key provisions: 
* Removed requirement that alien have a residence in a foreign country 
and no intention of abandoning it, and revised statute to authorize H-
1B visas for aliens coming temporarily to the U.S. to perform services 
in a "specialty occupation," which was defined as one that requires, 
at a minimum, theoretical and practical application of a body of 
highly specialized knowledge and the attainment of a bachelor's or 
higher degree in the specific specialty (or its equivalent); 
* Established the LCA process, to be administered by Labor, that 
requires employers to make certain attestations[A]; 
* Limited the number of H-1B visas that could be issued during a 
fiscal year to 65,000 beginning in fiscal year 1992; 
* Limited the period of authorized admission as an H-1B nonimmigrant 
to 6 years; 
* Established "dual intent" provision, under which H-1B visa holders 
could also pursue permanent residency; 
* Assigned responsibility to Labor to enforce program rules by 
investigating complaints made by H-1B workers or their representatives 
against employers, and by making referrals to Justice and imposing 
civil monetary penalties where it finds a failure by the employer to 
meet certain required conditions or the misrepresentation of material 
fact. 

Selected laws: Immigration Technical Corrections Act of 1991, Pub. L. 
No. 102-232, tit. III, § 303(a)(7)(B)(iii), 102 Stat. 1742, 1747; 
Description of key provisions: 
* Restricted Labor to reviewing LCAs only for completeness and obvious 
inaccuracies; 
* Required Labor, if an LCA is complete and has no obvious 
inaccuracies, to certify it within 7 days. 

Selected laws: American Competitiveness and Workforce Improvement Act 
of 1998, Pub. L. No. 105-277, div. C, tit. IV, §§ 411-418, 112 Stat. 
2681-641, 2681-642 - 2681-657; 
Description of key provisions: 
* Temporarily raised the cap on H-1B visas for fiscal years 1999 to 
2001 to a high of 115,000; 
returned the cap to 65,000 for the following years; 
* Defined "H-1B-dependent employer" as employer that has: 
- 25 or fewer full-time equivalent employees in the U.S. and employs 
more than seven H-1B nonimmigrants; 
- 26 to 50 full-time equivalent employees in the U.S. and employs more 
than 12 H-1B nonimmigrants; or; 
* At least 51 full-time equivalent employees in the U.S., of whom at 
least 15 percent are H-1B nonimmigrants; 
* Required H-1B-dependent employers and those that committed a willful 
failure or misrepresentation during the 5 years preceding filing of an 
LCA[B] to include additional attestations; 
- Provided that H-1B-dependent employers and such willful violators 
are not required to make these additional attestations with respect to 
H-1B nonimmigrants receiving annual wages of at least $60,000 or those 
with a master's or higher degree (or its equivalent) in a specialty 
related to the job; 
* Required that H-1B workers waiting for final adjudication of their 
requests for permanent residence status be given 1-year extensions of 
their H-1B visas until their requests have been adjudicated; 
* Provided Labor increased authority to investigate and enforce 
program compliance and assess civil monetary penalties against 
employers found to be in violation of certain program requirements; 
* Required that steps be taken to maintain accurate count of the 
number of aliens issued H-1B or other nonimmigrant visas.[C] 

Selected laws: American Competitiveness in the Twenty-first Century 
Act of 2000, Pub. L. No. 106-313, §§ 102-106, 114 Stat. 1251, 1251-55; 
Description of key provisions: 
* Temporarily raised the cap on H-1B visas for fiscal years 2001 to 
2003 to 195,000; 
cap returned to 65,000 for the following years; 
* Exempts an alien from the H-1B cap if he or she is employed (or has 
received an offer of employment) a: 
- an institution of higher education or its related or affiliated 
nonprofit entity; 
- a nonprofit research organization; or; 
- a governmental research organization; 
* Created increased portability of H-1B visas by authorizing H-1B 
workers to accept new employment upon the filing by the prospective 
employer of a new petition on his or her behalf. The H-1B worker's 
employment authorization may be extended until the petition is 
adjudicated. 

Selected laws: United States-Chile Free Trade Agreement Implementation 
Act, Pub. L. No. 108-77, § 402(b)(2)(B), 117 Stat. 909, 940 (2003) and 
the United States-Singapore Free Trade Agreement Implementation Act, 
Pub. L. No. 108-78, § 402(1), 117 Stat. 948, 970-71; 
Description of key provisions: 
* Created a new nonimmigrant classification available each fiscal year 
to up to 1,400 professionals from Chile and 5,400 professionals from 
Singapore, known as H-1B1. These H-1B1 visas count against the H-1B 
cap. 

Selected laws: H-1B Visa Reform Act of 2004, Pub. L. No. 108-447, div. 
J, tit. IV, subtit. B, §§ 422, 424 and 425(a) 118 Stat. 3353, 3353-56; 
Description of key provisions: 
* Provided Labor increased authority to initiate investigations in 
cases where the Secretary personally certifies there is reasonable 
cause and approves the investigation. Information providing the basis 
for the investigation must originate outside Labor unless it was 
lawfully obtained in the course of another Labor investigation. In 
addition, receipt of information submitted to Justice or Labor to 
secure employment of an H-1B worker cannot provide the basis for such 
investigation; 
* Exempted the first 20,000 petitions received for individuals who 
have earned a master's degree or higher from a U.S. institution of 
higher education; 
* Raised the fee imposed on most employers when filing an H-1B visa 
petition to $750 or $1,500 and imposed an additional fraud prevention 
and detection fee of $500. 

Selected laws: Pub. L. No 111-230; 
Description of key provisions: 
* Increased the fees by $2,000 for petitions filed between August 13, 
2010, and October 1, 2014, if the petitioner has 50 or more employees 
in the U.S. and more than fifty percent of those U.S. employees are in 
H-1B or L nonimmigrant status. 

Source: GAO. 

[A] Required attestations were as follows: (1) employer will pay H-1B 
workers the employer's actual wage for the position or the prevailing 
wage in the area, whichever is higher; (2) employer will provide 
working conditions for H-1B employees that will not adversely affect 
the working conditions of workers similarly employed; (3) no strike or 
lockout exists in the course of a labor dispute in the occupational 
classification at the place of employment; and (4) the employer has 
provided notice that it is filing an LCA application to the bargaining 
representative (if any) of its employees in the occupational 
classification and area for which aliens are sought, or if there is no 
bargaining representative, by posting notice of the filing in 
conspicuous locations at the place of employment. 

[B] Additional attestations include the following: (1) employer did 
not and will not displace a U.S. worker it employs within 90 days 
before and 90 days after filing any visa petition supported by the 
LCA; (2) employer will not place the nonimmigrant with any other 
employer where he or she performs duties at a worksite owned, 
operated, or controlled by that other employer and there are indicia 
of an employment relationship between the nonimmigrant and other 
employer unless it has inquired whether the other employer has 
displaced or intends to displace one of its U.S. workers within 90 
days before or 90 days after the placement; and (3) employer has taken 
good faith steps, prior to filing the LCA, to recruit in the United 
States using procedures that meet industrywide standards and offering 
compensation at least as great as that required to be offered to H-1B 
nonimmigrants, U.S. workers for the job and has offered it to any U.S. 
worker who applies and is equally or better qualified for it. 

[C] This responsibility was originally assigned to the Attorney 
General but was later transferred to Homeland Security. Pub. L. No. 
109-13, div. B, tit. IV, § 406, 119 Stat. 320. 

[End of table] 

[End of section] 

Appendix VI: Comments from the Department of Homeland Security: 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

November 30, 2010: 

Andrew Sherrill: 
Director: 
Education, Workforce, and Income Security Issues: 
441 G Street, NW: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Sherrill: 

RE: GAO-11-26, Draft GAO Report: H-1B Visa Program: Reforms Are Needed 
to Minimize the Risks and Costs of Current Program, (130916)
Thank you for the opportunity to review and comment on the Government 
Accountability Office (GAO) draft report entitled, "H-1B Visa Program: 
Reforms Are Needed to Minimize the Risks and Costs of Current 
Program." The Department of Homeland Security (OHS) appreciates the 
opportunity to review and respond to the Government Accountability 
Office (GAO) subject report. 

To ensure that the number of new H-1B workers who are not cap-exempt 
and who seek to enter the United States each year does not exceed the 
statutory cap, GAO recommends that the Secretary of Homeland Security 
direct U.S. Citizenship and Immigration Services (USCIS) to take the 
following steps: 

Recommendation I: To improve its tracking of the number of approved H-
1B applications and the number of issued visas under the cap by fully 
leveraging the transformation effort currently underway, which 
involves the adoption of an electronic petition processing system that 
will be linked to the Department of State's tracking system. Homeland 
Security should consider entering into a Memorandum of Understanding 
with the Department of State, or modifying their existing agreement, 
to ensure that by linking electronic data systems, both agencies will 
have real-time information on the number of visas that have been 
approved under the cap. 

Response: Non-concur. USCIS has been working within DHS, and 
collaborating with the Department of State (DOS), to establish an 
appropriate data exchange framework, including the Consular 
Consolidated Database (CCD), that would support retrieval of case 
data. The existing data-sharing Memorandum of Understanding (MOU) 
between DHS and DOS is sufficient without modification. However, USCIS 
and the DOS Bureau of Consular Affairs did draft and sign a more 
specific Letter of Intent (LOI) to establish electronic visa, 
immigration, and citizenship data exchanges. This LOt complies with 
the existing MOU and documents the intent to continue the existing 
data-sharing relationship and establish electronic visa, immigration, 
and citizenship data exchanges through the USCIS Transformation 
Program, the DOS Global Visa System, Global Citizenship Services, and 
Consular Case Management Service projects. 

Even if electronic data sharing is established, it will still be 
difficult to maintain an exact count of petitions for visa issuance 
while timely adjudicating petitions. USCIS believes that implementing 
this recommendation may only slightly improve cap management. First, 
DOS visa data will not include individuals already in the United 
States seeking to change their nonimmigrant status. Second, most real-
time visa data will be too old for cap management use. While most non-
exempt petitions are filed and approved between April and September, 
it is typically months later when DOS issues the relating visas. For 
example, USCIS received more than enough petitions in the first few 
days of each filing season to meet the FY08 and FY09 caps. Those 
petitions requested October 1 employment start dates. USCIS held the 
random selection process in April and receipted and approved the 
petitions shortly thereafter. The approved beneficiaries needing 
nonimmigrant visas did not appear at the consulates to obtain the H-IB 
visa until months later. By that time, most H-IB cap petitions had 
already been adjudicated. 

Recommendation 2: To ensure business concerns without undermining 
program integrity, USCIS should to the extent permitted by its 
statutory authority, explore options for increasing the flexibility of 
the application process for H-1B employers, such as: 

* Allowing employers to rank their applications for visa candidates so 
that they can hire the best qualified worker for the jobs in highest 
need; 

* Distributing the applications granted under the annual cap in 
allotments throughout the year (e.g. quarterly); and; 

* Establishing a system whereby businesses with a strong track-record 
of compliance with H-1B regulations may use a streamlined application 
process. 

Response: Non-concur. USCIS does not believe that the recommendation 
to allow employers to rank beneficiaries is feasible. Such a practice 
would lead to an extremely complicated cap management process. 
Allowing for ranking of beneficiaries would also require complex file 
intake and adjudication processes. These processes would be time-
consuming and resource-intensive. It would actually decrease 
flexibility for employers because employers would have to submit a 
list of ranked petitions at the beginning of the cap season and could 
not later add beneficiaries or change rankings. Finally, as USCIS 
stated in previous meetings with GAO, the implementation of a 
beneficiary ranking process could create significant vulnerabilities 
as it might encourage petitioners to submit additional petitions for 
individuals they have no intention of hiring in an attempt to increase 
the chances of obtaining a cap number for a particular individual. 

USCIS also does not believe that quarterly cap allocation is warranted 
or feasible for the H-1B program. H-1B specialty occupations are not 
as affected by seasonal demands as the H-2B classification. 
Furthermore, maintaining an accurate quarterly cap would be even more 
complex and problematic than maintaining the annual cap. Under 
quarterly allotment, petitions could be filed beginning in April, 
July, October, and January. It is possible that beginning in October, 
caps for the first, second, and third quarters could all be open at 
the same time, thereby tripling the complexity of cap management. 

USCIS does not believe that current law allows us to exempt 
petitioners with track records of F1-1B compliance from evidentiary 
requirements. However, the Agency is developing our Validation 
Instrument for Business Enterprises (VIBE) system. VIBE is an 
adjudicative tool that will provide officers with the means to verify 
through an independent information provider the petitioner's business 
information. In September 2009, USCIS awarded Dun & Bradstreet the 
contract to serve as the independent information provider. Once USCIS 
fully implements VIBE, we anticipate that it will reduce the need for 
petitioners to submit duplicative paper documentation to establish 
their current level of business operations. This will, in tum and over 
time, reduce the number of Requests for Evidence (RFEs) USCIS issues 
to otherwise eligible petitioners. 

Draft Matters for Congressional Consideration 2: To reduce duplication 
and fragmentation in the administration and oversight of the H-1B 
application process, consistent with past GAO matters for 
congressional consideration, consider eliminating the requirement that 
employers first submit a Labor Condition Application (LCA) to the 
Department of Labor (DOL) for certification, and require instead that 
employers submit this application along with the 1-129 application to 
the Department of Homeland Security's U.S. Citizenship and Immigration 
Services for review. 

Response: Non-concur. USCIS does not believe that eliminating the 
requirement for employers to first submit an LCA to DOL is either 
desirable or practicable. The LCA is an attestation of standards to 
which the employer must adhere. By completing and signing the LCA, the 
employer: 

* Agrees to several issues regarding an employer's responsibilities, 
including the wages, benefits, and working conditions provided to U.S. 
workers and the nonimmigrant workers; and; 

* States that at the time of filing there is no strike or lockout in 
the course of a labor dispute at the place of employment. 

USCIS reviews the H-I B petition, the certified LCA, and the 
petitioner's supporting evidence to determine if: 

* The job meets the requirements of a specialty occupation; 

* The qualifications of the prospective H-1B worker meet the statutory 
and regulatory requirements; and; 

* The content of the certified LCA corresponds with the petition under 
review. 

USCIS does not re-adjudicate the DOL's determinations on the LCA; it 
relies on DOL's expertise to make these findings. USCIS does not 
believe that it has the necessary expertise to make wage and labor 
determinations. Moreover, it is DOL, not USCIS, that has the authority 
to enforce any violations of the LCA. 

Thank you for the opportunity to comment on this Draft Report. We look 
forward to working with you on future Homeland Security issues. 

Sincerely, 

Signed by: 

Jerald E. Levine: 
Director: 
Departmental Audit Liaison Office: 

[End of section] 

Appendix VII: Comments from the Department of Justice: 

U.S. Department of Justice Civil: 
Rights Division: 
Office of Special Counsel for Immigration-Related Unfair Employment 
Practices - NYA: 
950 Pennsylvania Avenue, NW: 
Washington, DC 20530: 
Main (202) 616-5594: 
Fat (202) 616-5509: 

November 23, 2010: 

Andrew Sherrill: 
Director, Education, Workforce, and Income Security Issues: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Mr. Sherrill: 

Thank you for the opportunity to review the final draft of the 
Government Accountability Office (GAO) report, HI -B Visa Program: 
Reforms are Needed to Minimize the Risks and Costs . of Current 
Program. The report was reviewed by the Department of Justice, Civil 
Rights Division, Office of Special Counsel for Immigration Related 
Unfair Employment Practices (OSC), which participated in the GAO 
review. This letter constitutes the Department's formal comments. I 
request that the GAO include this letter in the final report. 

GAO Recommendation that the Department of Labor Develop and Maintain a 
Centralized Website, Accessible to the Public, Where Businesses Must 
Post Notice of Their Intent to Hire H-1B Workers: 

The Department of Justice supports this recommendation, and believes 
the website would help U.S. workers determine if they have been 
impermissibly replaced by H-1 B visa holders and identify employers 
who may be engaged in a pattern or practice of discrimination against 
U.S. workers. 

Before Seeking to Hue an H-1B Visa Holder, all Employers Should be 
Required to "Test" the Labor Market to Determine Whether Qualified 
U.S. Workers Arc Available and to Hire any Equally or Better Qualified 
U.S. Workers Who Apply: 

The Department of Justice notes that only a small number of employers 
are currently required to "test" the labor market for qualified U.S. 
workers prior to seeking an H1-B visa and to hire any equally or 
better qualified U.S. workers who apply for the job.[Footnote 1] At 
present, an employer is subject to this requirement only if the 
employer is submitting a labor condition application (LCA) to employ 
an H-1B non-immigrant who earns less than $60,000 annually and does 
not possess a master's or other higher degree, and the employer is 
either a H-1B dependent entity[Footnote 2] or a willful 
violator.[Footnote 3] 

Although this issue is mentioned in the draft report, the GAO does not 
propose any recommendations to address this deficit. To ensure that 
U.S. workers are not disadvantaged by the H-1B program, the Department 
of Justice believes that all employers be required to provide 
attestations that they have first "tested" the labor market and hired 
any equally or better qualified U.S. workers when they submit an LCA 
to employ an H-1B non-immigrant. 

The Department of Labor Should Display Information about Worker 
Protections and OSC's Contact Information on all H1-B Educational 
Material and the Centralized Database for H1-B Postings: 

The Department of Justice believes that greater awareness about the 
anti-discrimination provision of the Immigration and Nationality Act, 
8 U.S.C. § 1324b, and OSC's enforcement of worker protections against 
citizenship status discrimination, will help ensure that U.S. workers 
who may have been discriminated in favor of Hl-B visa holders are able 
to vindicate their rights. Therefore, it recommends that the 
Department of Labor display information about worker protections 
available under the anti-discrimination provision and OSC's worker 
hotline number on all H1-B educational material and on the centralized 
database for H1-B postings, if the database is implemented. 

The extensive efforts that your staff has put into this report and the 
opportunity to work with the GAO on these important issues are 
appreciated. 

Sincerely, 

Signed by: 

Leon Rodriguez: 
Chief of Staff: 

Footnotes: 

[1] Specifically, prior to applying for an H-1B non-immigrant visa, 
such employers must attest that they have made a good faith effort to 
recruit U.S. workers using procedures that meet industry-wide 
standards, and that they will offer the job for which they are seeking 
H-1B non-immigrants to all U.S. workers who apply and have 
qualifications equal to or better than the H-1B non-immigrants sought. 

[2] Pursuant to 20 C.F.R. 655.736(a)(l), an H-1B dependent employer is 
determined by calculating the number of full-time employees relative 
to the number of H-1 B visa holders employed. Depending on the total 
numbers of employees, a company will be deemed H-1B dependent if it 
has between 15% and 28% H-1B visa holders on staff. 

[3] A willful violator is an employer that meets all of the following 
standards: 

(i) A finding of violation by the employer is entered in either of the 
following two types of enforcement proceedings: 
(A) A Department of Labor proceeding under section 212(0(2) of the INA 
(8 U.S.C. 1182(n)(2XC)); or; 
(B) A Department of Justice proceeding under section 212(0(5) of the 
INA (8 U.S.C. 1182(n)(5)). 

[ii] The Department of Labor and/or Department of Justice finds that 
the employer has committed either a willful failure or a 
misrepresentation of a material fact during the five-year period 
preceding the filing of the LCA; and; 
(iii) The findings of the agencies are catered on or after October 21, 
1998. 20 CFR §655.736. 

[End of section] 

Appendix VIII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Andrew Sherrill, (202) 512-7215 or sherrilla@gao.gov: 

Staff Acknowledgments: 

Michele Grgich (Assistant Director) and Erin Godtland (Economist-in- 
Charge) managed this engagement. Core team-members included: Nisha 
Hazra, Melissa Jaynes, and Jennifer McDonald (Education, Workforce and 
Income Security); and Hiwotte Amare and Rhiannon Patterson (Applied 
Research and Methods). In addition, the following people made 
significant contributions to this work: James Bennett and Susan 
Bernstein (Education Workforce, and Income Security Issues) and Susan 
Baker, Melinda Cordero, Namita Bhatia-Sabharwal, Mark Ramage, and 
Shana Wallace (Applied Research and Methods) and Ashley McCall 
(Library and Information Services). Stakeholders included: Barbara 
Bovjberg (Education, Workforce, and Income Security); Tom McCool 
(Applied Research and Methods); Ronald Fecso (Chief Statistician); 
Sheila McCoy and Craig Winslow (General Counsel); Richard Stana and 
Mike Dino (Homeland Security and Justice); Loren Yager and Jess Ford 
(International Affairs and Trade); and Muriel Forester (Strategic 
Planning and External Liaison). Referencers included Jamie Whitcomb 
(lead), Alison Grantham, and Karen Brown (Education, Workforce, and 
Income Security) and DuEwa Kamara and Courtney LaFountain (Applied 
Research and Methods). 

[End of section] 

Footnotes: 

[1] Immigration Act of 1990, Pub. L. No. 101-649, § 205, 104 Stat. 
4978, 5019-22 (codified at 8 U.S.C. § 1101(a)(15)(H)(i)(b). 

[2] H.R. Rpt. No. 110-862 at 132-133. 

[3] Offshoring generally refers to the practice, by either U.S. 
companies or government entities, of replacing goods or services 
produced domestically with imported goods or services. See GAO, 
International Trade: Current Government Data Provide Limited Insight 
into Offshoring of Services, [hyperlink, 
http://www.gao.gov/products/GAO-04-932] (Washington, D.C.: Sept. 22, 
2004) and Offshoring of Services: An Overview of the Issues, 
[hyperlink, http://www.gao.gov/products/GAO-06-5] (Washington, D.C.: 
Nov. 28, 2005). 

[4] Data on employer applications for H-1B visas that were submitted 
to the Department of Labor prior to fiscal year 2002 were not readily 
available. 

[5] Twenty-two companies were randomly selected from the 51,942 H-1B 
employers that received approved petitions in fiscal year 2008. An 
additional 12 H-1B hiring firms were selected based on referrals from 
industry contacts, because they were known leaders in key sectors of 
the economy, and other factors. See appendix I for more details. 

[6] 8 U.S.C. § 1184(i). Fashion models of distinguished merit and 
ability also qualify for H-1B visas and do not need to meet the 
definition of specialty occupation. This report will focus solely on 
the specialty workers. 

[7] Pub. L. No. 105-277, tit. IV, § 411, 112 Stat. 2681, 2681-642. 

[8] Pub. L. No. 106-313, § 102, 114 Stat. 1251, 1251. 

[9] §103, 114 Stat. 1252. 

[10] Pub. L. No. 108-447, div. J, tit. IV, subtit. B, § 425(a), 118 
Stat. 2809, 3356. 

[11] United States-Chile Free Trade Agreement Implementation Act, Pub. 
L. No. 108-77, § 402(a)(2)(B), 117 Stat. 909, 940 (2003), and United 
States-Singapore Free Trade Agreement Implementation Act, Pub. L. No. 
108-78, § 402(2), 117 Stat. 948, 970-71 (2003). 

[12] Other changes to the program have occurred. For example, the 2000 
legislation increased "visa portability" for H-1B workers, permitting 
them to change employers within their 6-year time period (sequential 
employment) once the new employer files an H-1B petition on their 
behalf. AC21, § 105, 114 Stat. 1253. 

[13] AC21 § 106(a) and (b), 114 Stat. 1253-54. 

[14] The identification card that proves permanent resident status of 
an alien in the United States, a U.S. Permanent Resident Card, is 
commonly referred to as a "green card." It serves as proof that its 
holder, a lawful permanent resident, has permission to reside and work 
in the United States. 

[15] Homeland Security is required to take necessary steps to maintain 
an accurate count of the number of aliens subject to the H-1B cap who 
are issued visas. 8 U.S.C. § 1184 notes. 

[16] The Secretary of Labor may also initiate an investigation of any 
H-1B employer if the Secretary of Labor has reasonable cause to 
believe that the employer is not in compliance with the program. 8 
U.S.C. § 1182(n)(2)(G). However, the authority is limited in that the 
Secretary of Labor must certify that reasonable cause exists and that 
the investigation was initiated for reasons other than Labor's review 
of the employer's application for completeness and obvious 
inaccuracies. 

[17] U.S. workers (and others on their behalf) may file a complaint, 
known as a charge, to the Department of Justice's Office of Special 
Counsel for Immigration Related Unfair Employment Practices, which 
will pursue discrimination charges alleging that an employer has given 
certain preferential treatment in hiring an H-1B worker. 8 U.S.C. § 
1324b(b) and (c). Any aggrieved person or organization may also file a 
complaint with Labor against an employer. When Labor's Wage and Hour 
Division finds the employer out of compliance with H-1B program 
requirements, it can assess fines and impose remedies such as payment 
of back wages to H-1B workers and disqualification from the program, 
depending on the specific violations, for from 1 to 3 years. 

[18] By statute, Labor is required to conduct its review within 7 days 
and may only review applications for omissions and obvious 
inaccuracies. 8 U.S.C. § 1182(n)(1)(G)(ii) and 20 CFR 655.730(b). It 
has no statutory authority to verify the authenticity of the 
information. 

[19] 8 U.S.C. § 1182(n)(1)(A)-(D). 

[20] 8 U.S.C. § 1182(n)(1)(E)(ii). H-1B-dependent employers are those 
with 25 or fewer total employees and more than 7 H-1B employees, 26 to 
50 total employees and more than 12 H-1B employees, or with at least 
51 total employees and at least 15 percent of them H-1B employees. 8 
U.S.C. § 1182(n)(3)(A). H-1B-dependent employers are exempt from this 
requirement with respect to employees to whom they pay at least 
$60,000 per year, as well as employees with a master's degree or 
higher in a specialty related to their H-1B employment. 8 U.S.C. § 
1182(n)(3)(B). 

[21] H-1B employers are exempt from this requirement with respect to 
certain high-priority employees under 8 U.S.C. § 1153(b)(1). 

[22] 8 U.S.C. § 1101(a)(15)(H)(ii)(a). 

[23] 8 U.S.C. 1101(a)(15)(H)(ii)(b). 

[24] 20 C.F.R. §§ 655.1-655.119 (2009). 

[25] Each submitted petition is for one H-1B worker. Thus, the number 
of petitions submitted to Homeland Security can be used as a proxy for 
the number of workers requested. However, this proxy has several 
limitations, which are detailed in appendix I. 

[26] Initial petitions for new H-1B workers are counted against an 
annual cap (currently 65,000 for regular petitions and 20,000 since 
2005 for petitions for those with graduate degrees from a U.S. 
institution of higher education), unless they are submitted by cap- 
exempt employers. Cap-exempt employers are universities, and 
nonprofit, or governmental research organizations. 8 U.S.C. § 
1184(g)(5). 

[27] Reported numbers only reflect petitions entered into Homeland 
Security's Computer Linked Application Management System, Version 3 
(CLAIMS 3) data system--processed by Homeland Security. At any point 
in a given year, when Homeland Security determines that submitted 
initial petitions that are subject to the cap will likely exceed the 
cap, the agency stops accepting these petitions, and does not enter 
them into its data system. For initial petitions that are subject to 
the cap and are submitted on the last day, Homeland Security holds a 
"lottery" to determine which to accept under the cap. Initial 
petitions that are subject to the cap and are not selected via the 
lottery are not entered into Homeland Security's data system, CLAIMS 
3. For fiscal year 2008 and fiscal year 2009, the cap was reached very 
early in the filing season, after which requests subject to the cap 
were not entered into CLAIMS 3 or processed by Homeland Security. As a 
result, it is likely that the number of processed initial petitions 
subject to the cap is highly underestimated in these years. 

[28] This is true only for regular petitions not subject to the 
master's cap. In years in which the master's cap is reached first, 
after processed petitions subject to the master's cap exceed the 
20,000 master's cap, Homeland Security adds unprocessed master's 
petitions into the universe of regular cap cases; therefore, in these 
years some master's petitions have two chances of being selected for 
processing. Homeland Security does not track the number of processed 
petitions that were eligible for the master's cap, but were ultimately 
counted against the regular cap. 

[29] Continuing petitions, known as extensions, are not limited by and 
do not count against the annual cap with one exception--if the H-1B 
worker was initially approved to work for an employer that is not 
subject to the cap and the worker changes to an employer that is 
subject to the cap. 

[30] Our petition and employer-level analysis of petitions for H-1B 
workers processed by Homeland Security used data from its CLAIMS 3 
Mainframe database, which does not allow us to determine which 
petitions for H-1B workers were subject to the master's cap. Homeland 
Security's CLAIMS 3 LAN database does track information related to H-
1B workers graduating with a master's degree or higher from an 
American institution of higher education, but these two data systems 
are not linked. 

[31] All employer-based analyses were restricted to petitions with 
valid Employer Identification Numbers. About 220,000 of 2.8 million 
petitions were excluded from our analysis due to missing or invalid 
Employer Identification Numbers. 

[32] L-1 visas are issued to intracompany transferees who work for an 
international firm or corporation in executive and managerial 
positions or have specialized product knowledge. 8 U.S.C. § 
1101(a)(15)(L). L-1 visa holders can stay in the United States for up 
to 5 or 7 years, depending on the type of services provided. 8 U.S.C. 
§1184(c)(2). 

[33] As noted earlier, Homeland Security does not enter petitions that 
are subject to the cap and submitted after the cap is reached into its 
data system, CLAIMS 3. Because our analysis is based on requests 
entered into its data system, we cannot determine approval rates for 
all submitted petitions. 

[34] LCA data for these years do not allow for these two categories to 
be analyzed separately. 

[35] Such employers are also referred to as third-party contractors or 
placing employers. Employers at which staffing companies place H-1B 
workers are referred to as placement employers. 

[36] For additional information on H-1B employers, please refer to 
appendix IV. 

[37] This selection of 31 firms constitutes a nongeneralizable sample 
and cannot be used to make inferences beyond the specific 31 firms 
selected. We also spoke with 3 additional companies as part of focus 
groups we conducted, consisting of H-1B employers and industry 
associations. See appendix I for more information on our focus groups 
and individual interviews. 

[38] We defined "large" firms as those with 1,000 or more employees in 
the United States, and "small" firms as those with fewer than 500 
employees in the United States. Multinational firms are defined as 
those who indicated that they have branches or affiliates outside of 
the United States. 

[39] The median reported combined legal and filing fee cost was $3,820. 

[40] This increase can be attributed, at least in part, to changes in 
the law. For example, in 2005, Homeland Security was required to begin 
collecting an additional $500 fee to be used for fraud prevention and 
detection purposes. In addition, recent legislation established an 
additional fee of $2,000 for petitions filed through September 30, 
2014, for petitioners with 50 or more employees in the United States 
and more than 50 percent of those U.S. employees on H-1B or L visas. 
Act of August 13, 2010, Pub. L. No. 111-230, § 402(b), 123 Stat. 2485, 
2487. 

[41] Academic research has also identified some of these factors as 
important drivers in private sector decisions about the location of 
R&D. See for example, Ashok Bardhan and Dwight Jaffee, "Globalization 
of R&D: offshoring innovative activity to emerging economies" in 
Global Outsourcing and Offshoring: An Integrated Approach to Theory 
and Corporate Strategy, Farok Contractor, Vikas Kumar, Sumit Kundu and 
Torben Pedersen, Eds. (Cambridge University Press, November 2010). 

[42] As noted earlier, personnel from IT services firms we spoke with 
describe their firms using different terms, including staffing firms, 
solutions firms, and consulting firms. According to industry 
representatives, a pure IT staffing firm (or "labor augmentation" 
firm) simply provides workers with the expertise necessary to staff a 
project, while an "IT solutions" firm takes responsibility for the 
deliverable product. 

[43] According to an industry organization representing the IT 
services industry, outsourcing firms that offshore work typically call 
themselves IT solutions firms in order to differentiate themselves 
from staffing firms. Others view them as a different business model--
that is, one that uses onshore staff to provide access to a large, 
less expensive offshore labor force. An example might be an offshore 
outsourcing firm that takes over an IT help desk department, and uses 
its onshore component (staffed by H-1B workers) to establish 
relationships with and manage projects for the client company in the 
United States, while using the offshore component to staff the help 
desk. As such, several of the IT services firms we contacted that 
conducted offshore outsourcing could be considered a hybrid between an 
IT staffing and a solutions firm, at times providing IT staff to work 
at client sites, at times offshoring IT work to their overseas 
component, and at times providing both onshore and offshore work for a 
client. 

[44] The January 8, 2010, memorandum by Associate Director Donald 
Neufeld (commonly referred to as the "Neufeld Memo"). For more 
information on this memo, see our discussion of the fifth objective. 

[45] 20 C.F.R. § 214.2(h)(4)(ii) (2009). This requirement, according 
to one executive at a staffing firm we spoke with, was not necessarily 
enforced in the past. 

[46] An H-1B visa transfer can be submitted at any point throughout 
the year, may not be subject to the cap, and--according to firm 
officials we spoke with--is typically processed much more quickly than 
a petition for an initial H-1B visa. Some said they were able to 
satisfy Homeland Security that they have a client contract in place 
before submitting the H-1B transfer petition because the client could 
meet the potential employee (unlike for foreign nationals applying for 
initial H-1B visas) and therefore was more willing to write the 
contract. Also, petitions for H-1B transfers could be submitted 
throughout the year, allowing staffing firms to submit the petitions 
at the time they were arranging the work contract with the client 
company. Like petitions for initial H-1B visas, H-1B transfer 
petitions involve firms submitting LCAs prior to requesting the 
transfer. 

[47] One staffing firm reported that another important source of 
employees is the spouses of current H-1B visa holders, who can 
petition for a change in visa status to H-1B once they are offered a 
job. 

[48] For a discussion of IT services firms that conduct offshore 
outsourcing and employ large numbers of H-1B workers, see Ron Hira, 
"U.S. immigration regulations and India's information technology 
industry," Technological Forecasting and Social Change, vol. 71, issue 
8 (October 2004): 837-854. 

[49] Some researchers have noted that while many of the large offshore 
outsourcing firms started out in the "lower end" of the IT services 
market (for example, business process outsourcing, quality assurance, 
and design verification), some of these firms now offer engineering 
services and R&D services to their clients, and are seeking to expand 
the "higher value" portion of their business. For example, see Rafiq 
Dossani, "A Decade After Y2K: Has Indian IT Emerged?," in Re-examining 
the Service Revolution, D. Brexnitz and J. Zysman, Eds. (Yale 
University Press, forthcoming in 2011); and Ron Hira, "The 
Globalization of Research, Development, and Innovation," in 
Manufacturing a Better Future for America, Richard McCormack, Editor 
(Washington, D.C.: Alliance for American Manufacturing, 2009). 

[50] GAO, H-1B Foreign Workers: Better Controls Needed to Help 
Employers and Protect Workers, [hyperlink, 
http://www.gao.gov/products/HEHS-00-157] (Washington, D.C.: Sept. 7, 
2000). 

[51] For example, the Start-Up Visa Act, introduced by Senators Kerry 
and Lugar (S. 3029) and Representatives Maloney and Watson (H.R. 5193) 
in the 111TH Congress was an effort to expand the E-B5 visa to 
immigrant entrepreneurs who, among other things, have investment 
capital available from a sponsoring U.S. venture capital or angel 
investor of at least $100,000 in an equity financing of not less than 
$250,000. The E-B5 visas are authorized under 8 U.S.C. §1153(b)(5) and 
generally are available currently to investors with at least 
$1,000,000 of personal capital available to invest in the United 
States. However, some parties we spoke with noted that it would be 
useful to have a venture backing requirement with a relatively low 
threshold so that the visa would be available to early-stage 
innovators. 

[52] 8 U.S.C. § 1184 note. 

[53] Attempts have been made to estimate the number of H-1B workers 
residing in the United States, but challenges to doing so include 
statutory changes in the numeric cap and inability to track H-1B 
workers after they enter the country. 

[54] 8 U.S.C. § 1184(g). 

[55] Specifically, the OIG recommended the agency count visas issued 
and changes from another visa type to an H-1B until they reach the cap 
limit. See Department of Homeland Security, Office of Inspector 
General, USCIS Approval of H-1B Petitions Exceeded 65,000 Cap in 
Fiscal Year 2005, OIG-05-49 (September 2005). 

[56] According to Homeland Security Officials, I-129 form 
modifications are included in the USCIS Transformation Program's 
overall form redesign initiative. Homeland Security anticipates 
accepting electronic I-129 applications as a part of the 
Transformation Program's Increment 1 Release B, which is scheduled to 
begin deployment in 2012. 

[57] See GAO, Homeland Security: Despite Progress, DHS Continues to Be 
Challenged in Managing its Multi-Billion Dollar Annual Investment in 
Large-Scale Information Technology Systems, [hyperlink, 
http://www.gao.gov/products/GAO-09-1002T] (Washington, D.C.: Sept. 15, 
2009). 

[58] Pub. L. No. 108-447, div. J, tit. IV, subtit. B, § 425(a), 118 
Stat. 2809, 3356. 

[59] According to Homeland Security officials, the agency first began 
tracking petitions submitted under the master's cap in fiscal year 
2006. 

[60] We could not analyze the remaining petitions in the cohort 
because we could not obtain a unique match for the individual listed 
in the petition between the data in CLAIMS 3 and the US-VISIT system. 
More information about the US-VISIT data and how GAO matched the data 
is available in appendix I. 

[61] From the five occupations that absorbed the largest numbers of H- 
1B approvals, we selected the three occupations that absorbed the 
largest proportion of H-1B approvals relative to the stock of U.S. 
workers in that occupation in 2008. We made this comparison by 
comparing data on U.S. workers from the March 2009 CPS, which asks 
about employment and earnings from calendar year 2008, to H-1B 
petitions (both initial and continuing) submitted in calendar year 
2008. 

[62] In order to compare the CPS U.S. workforce occupations to the H-
1B beneficiary occupations, we combined some occupational categories 
in both CLAIMS 3 and CPS to better align the CPS and USCIS data. The 
occupation "systems analysis, programming, and other computer-related 
occupations" includes five CPS occupational groups: (1) computer 
scientists and systems analysts; (2) computer programmers; (3) 
computer software engineers; (4) database administrators; and (5) 
operations research analysts. In CLAIMS 3, the occupation "systems 
analysis, programming, and other computer-related occupations" 
includes two occupational groups: (1) occupations in systems analysis 
and programming and (2) other computer-related occupations--database 
administrators, database design analysts, and microcomputer support 
specialists. See appendix I for more details. 

[63] H-1B petitions in this occupation are approximately 10 percent of 
the total number of U.S. workers aged 18 to 50 years old, in the 
private sector, in this occupation. Note that if U.S. workers in the 
government sector and self-employed workers are included, H-1B 
petitions would then be approximately 9 percent of the total number of 
U.S. workers in this age group and occupation. 

[64] Real earnings are adjusted for inflation and indexed to 2009 
dollars. 

[65] As noted earlier, because of differences in the occupational 
categories in CLAIMS 3 and CPS data on U.S. workers, five of the 
occupational categories for U.S. workers are grouped together. 
Computer programmers, computer scientists and systems analysts, 
computer software engineers, computer support specialists, and 
operation research analysts are grouped into the category "systems 
analysis, programming, and other computer-related occupations." 

[66] Table 1 restricts the analysis to U.S. workers in full-time, 
private sector employment. Including self-employed and government 
workers increases the estimated number of U.S. workers in each 
occupation, with the largest increase in college and university 
educators. Including government workers and the self-employed does not 
qualitatively change most of the results presented in table 1, with 
the following exceptions: for the occupation "systems analysts, 
programmers, and other computer-related occupations," there is no 
longer a statistically significant difference between the wages of H-
1B workers and U.S. workers, in the age categories 20 to 39 or 40 to 
50. For the occupation "college and university educators," when 
government and self-employed workers are included in the analysis, 
there is a statistically significant difference between the wages of H-
1B workers and U.S. workers in the age category 40 to 50, with the 
median U.S. worker earning about $10,000 more than the median H-1B 
worker. 

[67] See appendix II for the age distributions of approved H-1B 
workers and U.S. citizens in these occupations, which show that H-1B 
workers in (1) systems analysis, programming, and other computer-
related occupations and (2) electrical and electronics engineers were 
generally younger than their U.S.-citizen counterparts. 

[68] GAO did not present analysis of wage rates by occupation within 
different geographic areas or within education levels because of small 
sample size constraints in the analysis of CPS data. 

[69] Using National Science Foundation data, the Congressional 
Research Service reports that the percentage of doctorates in the 
sciences that were earned by foreign students on temporary visas rose 
from 23 percent in 1997 to 32 percent in 2006, and the percentage of 
doctorates in engineering that were earned by foreign students on 
temporary visas rose from 41 percent in 1997 to 59 percent in 2006. 
Further, in 2007, 57 percent of postdoctoral students in the 
biological sciences were foreigners on temporary visas. 

[70] According to a National Academy of Sciences study, the average 
length of postdoctoral positions in the biological sciences increased 
from an average of 24 months for cohorts graduating prior to 1965 to 
an average of 46 months for cohorts graduating in the early 1990s. 

[71] 8 U.S.C. § 1182(n)(1)(G)(ii). 

[72] The LCA form requires additional information to the I-129 
regarding the prevailing wage source and check boxes for attestations 
to U.S. worker protections. 

[73] State's guidance for consular officers specifically states: 
"Consular officers do not have the authority to question the approval 
of H petitions without specific evidence, unavailable to Homeland 
Security at the time of petition approval, that the beneficiary may 
not be entitled to status. Disagreement with DHS's interpretation of 
the law or the facts, however, is not sufficient reason to ask DHS to 
reconsider its approval of the petition." 

[74] Specifically, Wage and Hour Division can only initiate H-1B- 
related investigations as a result of one of four circumstances: (1) 
Wage and Hour receives a complaint from an aggrieved person or 
organization; (2) Wage and Hour receives specific, credible 
information from a knowledgeable source (other than an aggrieved 
party) that an employer willfully failed to meet certain LCA 
conditions, engaged in a pattern or practice of failures to meet such 
conditions, or committed substantial failure to meet such conditions 
that affects multiple employees; (3) Wage and Hour conducts random 
investigations of employers who (within the last five years) were 
found by the Secretary of Labor to be willful violators of the H-1B 
program provisions; (4) the Secretary of Labor personally certifies 
that there is reasonable cause to believe that an employer is in 
violation and then approves commencement of an investigation. 8 U.S.C. 
§§ 1182(n)(2). 

[75] While Wage and Hour annually conducts approximately a half dozen 
random investigations into H-1B employers identified as willful 
violators, these investigations concern employers already identified 
as problematic and at maximum have included seven investigations per 
fiscal year with none in 2009. Wage and Hour does not conduct 
proactive or random investigations of H-1B employers that are in good 
standing. 

[76] 8 U.S.C. § 1182(n)(2)(ii) and (iii). 

[77] GAO, H-1B Visa Program: Labor Could Improve Its Oversight and 
Increase Information Sharing with Homeland Security, [hyperlink, 
http://www.gao.gov/products/GAO-06-720] (Washington, D.C.: June 22, 
2006). 

[78] The maximum fine Wage and Hour can levy for noncompliance in 
investigations is $1,000. 

[79] 29 U.S.C. §§ 161 and 1862(b) 

[80] 8 U.S.C. § 1324b(f)(2). 

[81] The USCIS H-1B Benefit Fraud and Compliance Assessment, published 
in September 2008, specifically reviewed 246 of the 96,827 approved, 
denied, or pending I-129 petitions filed between October 1, 2005, and 
March 31, 2006. 

[82] According to officials, cases referred for criminal investigation 
may include examples such as fraud conspiracies, cases involving 
individuals from special interest countries, and attorney or document 
preparer fraud. 

[83] 8 U.S.C. § 1324b(a)(1). 

[84] Although Justice investigates few H-1B cases, in its technical 
comments, Justice indicated that H-1B cases sometimes represented a 
significant percent of investigations (i.e., 29, 14 and 10 percent of 
cases in 2006, 2007 and 2009, respectively). 

[85] H-2A job postings from the last 30 days are made public by Labor 
at [hyperlink, http://icert.doleta.gov/]. 

[86] If an employer-employee relationship exists between a staffing 
company and an H-1B worker, the staffing company may submit an LCA and 
is thus statutorily bound by program requirements. 

[87] Pub. L. No. 108-447, div. J, tit. IV, subtit. A, § 412, 118 Stat. 
2809, 3351 - 52 (codified at 8 U.S.C. § 1184(c)(2)(F). 

[88] This memo is commonly referred to as the "Neufeld Memo." 

[89] On February 18, 2010, USCIS's Office of Public Engagement hosted 
a collaboration session in connection with the Neufeld Memo. At that 
session, which was attended by approximately 40 stakeholders in person 
and more than 600 via telephone, various concerns about the memorandum 
were raised. 

[90] Pub. L. No. 101-649, § 205(e)(1), 104 Stat. 4978, 5022. 

[91] Pub. L. No. 101-649, § 205(b)(2), 104 Stat. 4978, 5020. This was 
known as the dual intent provision because the H-1B visa is temporary 
but the worker's intent is to become a permanent resident. 

[92] AC21 § 106(a) and (b), 114 Stat. 1253-54 and AC21§104(c). Such 
annual extensions are available when 365 or more days have elapsed 
since the H-1B worker submits an LCA for permanent status. The initial 
H-1B extension application is submitted 3 years after the initial 
application is approved and extends the temporary program limit to 6 
years. Thus, the practical effect is that an H-1B worker seeking to 
remain in the United States while waiting for a green card must apply 
for the green card prior to their fifth year as an H-1B worker. 

[93] Permanent visa classes include employment-based preferences, 
family-sponsored, and diversity immigrant categories, with only 
employment-based preferences being used as comparison in this report. 

[94] Ch. 477, § 101(a)(15)(H)(i), 66 Stat. 163, 166. 

[95] Pub. L. No. 101-649, § 205(c), 104 Stat. 4978, 5021. 

[96] We did not conduct an independent legal analysis of foreign laws. 
Rather, we relied upon secondary source materials. 

[97] 20 C.F.R. § 656.17(g) (2009) 

[98] Specifically, Justice recommended that (1) before seeking to hire 
an H-1B visa holder, all employers should be required to "test" the 
labor market to determine whether qualified U.S. workers are available 
and to hire any equally or better qualified U.S. workers who apply, 
and (2) the Department of Labor should display information about 
worker protections and the Office of Special Counsel's contact 
information on all H-1B educational material and the centralized 
database for H-1B postings. See appendix VII for Justice's comments. 

[99] In several instances, we identified inconsistencies with the 
reporting of particular data fields. In these instances, we took steps 
to address these inconsistencies using criteria to create decision 
rules. For example, a given H-1B employer might have reported 
different industry codes on their H-1B petition applications in a 
given year. When this occurred, we used the industry code that the 
employer most frequently listed on its petitions. In other instances, 
when it was not possible to apply a decision rule, we did not include 
the data in our analysis. 

[100] Prior to 2002, these data are not available electronically. 

[101] For each case, a violation can occur multiple times. 

[102] See BLS, Technical Paper 66: Design and Methodology - Current 
Population Survey and Current Population Survey, 2009 Annual Social 
and Economic (ASEC) Supplement. Electronic versions are available at 
[hyperlink, http://www.census.gov/prod/2006pubs/tp-66.pdf] and 
[hyperlink, http://www.census.gov/apsd/techdoc/cps/cpsmar09.pdf]. 

[103] The most recently available March supplement is from 2009, which 
asks about earnings and education for the past year (2008). 

[104] For this population, we did not exclude government workers and 
self-employed workers. 

[105] For estimates based on the 2009 March supplement CPS survey, 
standard errors are described in appendix G of [hyperlink, 
http://www.census.gov/apsd/techdoc/cps/cpsmar10.pdf]. For estimates 
based on averages on basic monthly CPS surveys, standard error 
computation is described in the BLS Employment and Earnings 
publications (see [hyperlink, 
http://www.bls.gov/opub/ee/empearn200912.pdf]). 

[106] We did not include H-B3 (fashion models) in these analyses, but 
included all other types of approved H-1B workers. 

[107] According to Homeland Security officials, this variable was not 
available in the CLAIMS 3 Mainframe data and was only available from 
fiscal year 2006 onward because, prior to that year, this information 
was not tracked. 

[108] In order to compare characteristics of H-1B workers to U.S. 
citizen workers by occupation, we matched data from Homeland 
Security's CLAIMS 3 database with information from CPS's March 
supplemental data. We used the most recently available March 
supplement (i.e., from 2009), which asks about earnings and education 
for the past year (2008). We selected 2008 CLAIMS 3 data to most 
closely match the CPS data time frames. See Section 2 for more details 
on this analysis. 

[109] The occupational categories for "systems analysis and 
programming" and "other computer-related occupations" were combined 
into one category for the purposes of this analysis. "Other computer- 
related occupations" includes database administrators, database design 
analysts, and microcomputer support specialists. See Section 2 for 
additional details on the occupational codes. 

[110] Due to the sensitivity of Justice's ongoing investigations, we 
were only provided information on cases which were no longer active. 

[111] The high refusal rate was consistent with a past GAO review of 
the H-1B program, which endeavored to speak with private businesses 
about their experiences with the program (see GAO, H-1B Foreign 
Workers: Better Tracking Needed to Help Determine H-1B Program's 
Effects on U.S. Workforce, GAO-03-883 (Washington, D.C.: Sept. 10, 
2003). 

[112] The occupation "systems analysis, programming, and other 
computer-related occupations" includes five CPS occupational groups: 
(1) computer scientists and systems analysts; (2) computer 
programmers; (3) computer software engineers; (4) database 
administrators; and (5) operations research analysts. In CLAIMS 3, the 
occupation "systems analysis, programming, and other computer-related 
occupations" includes two occupational groups: (1) occupations in 
systems analysis and programming and (2) other computer-related 
occupations--database administrators, database design analysts, and 
microcomputer support specialists. 

[113] In order to calculate the median usual weekly earnings for the 
combined category of "systems analysis, programming, and other 
computer-related occupations" we calculated the weighted average of 
the median usual weekly earnings for each of the occupational groups, 
using the number of full-time wage and salary workers employed in each 
detailed occupation as the weight. 

[114] See our discussion of the CLAIMS 3 data above. 

[115] H-1B petitioners are permitted to apply for other visas while 
their H-1B visa status is open. 

[116] For this comparison, we included H-1B workers whose initial 
petitions were submitted each specific calendar year and were approved 
as of October 2009. Calendar year 2009 only includes data up through 
October. 

[117] In order to compare characteristics of H-1B workers to U.S. 
citizen workers by occupation, we compared data from Homeland 
Security's CLAIMS 3 database with information from CPS's March 
supplemental data. The most recently available March supplement is 
from 2009, which asks about earnings and education for the past year. 
We selected 2008 CLAIMS 3 data to most closely match the CPS data time 
frames. The occupation "systems analysis, programming, and other 
computer-related occupations" includes five CPS occupational groups: 
(1) computer scientists and systems analysts; (2) computer 
programmers; (3) computer software engineers; (4) database 
administrators; and (5) operations research analysts. In CLAIMS 3, the 
occupation "systems analysis, programming, and other computer-related 
occupations" includes two occupational groups: (1) occupations in 
systems analysis and programming and (2) other computer-related 
occupations--database administrators, database design analysts, and 
microcomputer support specialists. 

[118] Graduate degree category includes degrees that are master's, 
Ph.D., or professional. 

[119] In order to compare the CPS U.S. workforce occupations to the H- 
1B beneficiary occupations, we combined some occupational categories 
in both CLAIMS 3 and CPS to better align the CPS and CLAIMS 3 data. 
The occupation "systems analysis, programming, and selected other 
computer-related occupations" includes five CPS occupational groups: 
(1) computer scientists and systems analysts; (2) computer 
programmers; (3) computer software engineers, (4) database 
administrators; and (5) operations research analysts. In CLAIMS 3, the 
occupation "systems analysis, programming, and selected other computer-
related occupations" includes two occupational groups: (1) occupations 
in systems analysis and programming and (2) other computer-related 
occupations--database administrators, database design analysts, and 
microcomputer support specialists. 

[120] The information presented in this section on the top 150 H-1B 
hiring employers for fiscal year 2009 is based on the most recently 
available information from Mergent Online and LexisNexis's Dossier 
databases, as of June 2010. Characteristic information was not 
available for all employers. 

[121] The IT services firms we spoke with describe themselves using 
different terms, including IT services firms, staffing firms, 
solutions firms, or consulting firms. According to an IT industry 
organization, a pure IT staffing firm (also known as a third-party 
contractor) is not responsible for an end product, but is solely 
responsible for providing their client with the expertise (staff) 
needed to work on a project. A pure IT solutions firm takes 
responsibility for the deliverable product. Many firms are a hybrid of 
these two models. To the extent that IT solutions firms serve as 
intermediaries in staffing workers at other companies, these firms may 
also be referred to as "third-party contractors." 

[End of section] 

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