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Report to the Ranking Minority Member, Subcommittee on Environment, 
Technology, and Standards, Committee on Science, House of 
Representatives:

United States General Accounting Office:

GAO:

September 2003:

H-1B Foreign Workers:

Better Tracking Needed to Help Determine H-1B Program's Effects on U.S. 
Workforce:

H-1B Foreign Workers:

GAO-03-883:

GAO Highlights:

Highlights of GAO-03-883, a report to the Ranking Minority Member, 
Subcommittee on Environment, Technology, and Standards, Committee on 
Science, House of Representatives 

Why GAO Did This Study:

The continuing use of H-1B visas, which allow employers to fill 
specialty occupations with highly skilled foreign workers, has been a 
contentious issue between U.S. workers and employers during the recent 
economic downturn. The H-1B program is of particular concern to these 
groups because employment has substantially decreased within 
information technology occupations, for which employers often 
requested H-1B workers. In light of these concerns, GAO sought to 
determine (1) what major occupational categories H-1B beneficiaries 
were approved to fill and what is known about H-1B petition approvals 
and U.S. citizen employment from 2000-2002; (2) what factors affect 
employers’ decisions about the employment of H-1B workers and U.S. 
workers; and (3) what is known about H-1B workers’ entries, 
departures, and changes in visa status.

What GAO Found:

H-1B beneficiaries were approved to fill a variety of positions in 
2002, and the number of approved petitions (i.e., employer requests to 
hire H-1B beneficiaries) in certain occupations has generally declined 
along with the economic downturn, as have U.S. citizen employment 
levels in these occupations. In contrast with 2000, most H-1B 
beneficiaries in 2002 were approved to fill positions in fields not 
directly related to information technology, such as economics, 
accounting, and biology. Both the number of H-1B petition approvals 
and U.S. citizens employed in certain occupations, such as systems 
analysts and electrical engineers, decreased from 2001 to 2002.

GAO contacted 145 H-1B employers, and the majority of the 36 employers 
that agreed to speak with GAO said that they recruited, hired, and 
retained workers based on the skills needed, rather than the 
applicant’s citizenship or visa status. Despite increases in 
unemployment, most employers said that finding workers with the skills 
needed in certain science-related occupations remains difficult. 
Although some employers acknowledged that H-1B workers might work for 
lower wages than their U.S. counterparts, the extent to which wage is 
a factor in employment decisions is unknown.

The Department of Homeland Security (DHS) has incomplete information 
on H-1B worker entries, departures, and changes in visa status. As a 
result, DHS is not able to provide key information needed to oversee 
the H-1B program and its effects on the U.S. workforce, including data 
on the number of H-1B workers in the United States at any time. GAO 
also found that DHS’s ability to provide information on H-1B workers 
is limited because it has not issued consistent guidance or any 
regulations on the legal status of unemployed H-1B workers seeking new 
jobs. Allowing unemployed H-1B workers to remain in the United States 
may have implications for the labor force competition faced by U.S. 
workers. While DHS has long-term plans for providing better 
information on H-1B workers, policymakers in the interim need data to 
inform discussions on program changes.

What GAO Recommends:

GAO recommends that the Secretary of Homeland Security 
(1) take actions to ensure that change of visa status data are entered 
into DHS’s computer system and are integrated with entry and departure 
data and 
(2) issue regulations that address the extent to which unemployed 
H-1B workers are allowed to remain in the United States. DHS agreed 
with GAO’s recommendations.

www.gao.gov/cgi-bin/getrpt?GAO-03-883.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Sigurd Nilsen at 
(202) 512-7215 or nilsens@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

H-1B Beneficiaries Were Approved to Fill a Broad Range of Occupations, 
and as U.S. Citizen Employment Generally Declined with the Recent 
Economic Downturn, So Did the Number of H-1B Petition Approvals:

The Majority of Employers Interviewed Reported That Skills, Rather Than 
Immigration Status, Determine Employment Decisions, but the Extent to 
Which Wage Plays a Role Is Unknown:

Little Is Known about the Status of H-1B Workers, but New Systems Are 
Being Developed to Improve Tracking Information:

Conclusions:

Recommendations for Executive Action:

Agency Comments:

Appendix I: Scope and Methodology:

CLAIMS 3 Data on H-1B Petition Approvals:

Current Population Survey Estimates:

Salary Comparisons:

Employers Selected for Interviews:

DHS Current and Planned Tracking Systems:

Appendix II: Age Distribution and Salaries of H-1B Beneficiaries and 
U.S. Citizen Workers:

Appendix III: Comments from the Department of Homeland Security:

Appendix IV: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Staff Acknowledgments:

Related GAO Products:

Tables:

Table 1: Top 10 Occupations H-1B Beneficiaries Were Approved to Fill, 
2000, 2002:

Table 2: Change in H-1B Petition Approvals and U.S. Citizen Employment 
for Selected Occupations, 2000-2001, 2001-2002:

Table 3: Department of Labor H-1B Investigations, Violations 
Identified, and Back Wages Due:

Table 4: Summary of Reportable Analyses:

Table 5: Crosswalk from BCIS to CPS Codes:

Table 6: Percentage Distribution of the Age of H-1B Beneficiaries 
Approved in 2002 and U.S. Citizen Workers in 2002:

Table 7: Median Annual Salaries of H-1B Beneficiaries Approved in 2001 
and U.S. Citizen Workers in 2001 in Selected Occupations, by Age and 
Education:

Figures:

Figure 1: H-1B Petitions Approved and Counted Toward the Annual Limit, 
Fiscal Years 1997 through 2002:

Figure 2: Median Age of H-1B Beneficiaries Approved in 2002 and U.S. 
Citizen Workers in 2002 in Selected Occupations:

Figure 3: Percentages of H-1B Beneficiaries Approved in 2002 and U.S. 
Citizen Workers in 2002 with Graduate Degrees by Selected Occupations:

Figure 4: Median Annual Salaries of H-1B Beneficiaries Approved in 2001 
and U.S. Citizen Workers in 2001 in Selected Occupations, by Age and 
Education:

Figure 5: Countries of Birth for H-1B Petition Approvals, 2002:

Figure 6: Total Initial and Continuing H-1B Petitions Approved 
Annually, Calendar Years 2000 through 2002:

Figure 7: L-1 Visa Issuances, Fiscal Years 1998 through 2002:

Abbreviations:

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

BCIS: Bureau of Citizenship and Immigration Services:  

BLS: Bureau of Labor 
Statistics:  

CLAIMS 3: Computer Linked Application Information Management System 3:  

CLAIMS 3 LAN: Computer Linked Application Information Management 
System 3 Local Area Network:  

CPS: Current Population Survey:  

DHS: Department of Homeland Security:  

DMIA: Immigration and Naturalization Service Data Management 
Improvement Act:  

IIRIRA: Illegal Immigration Reform and Immigrant Responsibility Act:  

INS: Immigration and Naturalization Service:  

IT: information technology:  

LCA: Labor Condition Application: 

OES: Occupational Employment Statistics:  

NIIS: Non-Immigrant Information System:  

USA PATRIOT ACT: The Uniting and Strengthening America by Providing 
Appropriate Tools Required to Intercept and Obstruct Terrorism:  

US-VISIT: U.S. Visitor and Immigrant Status Indicator Technology 
System:   

WHD: Wage and Hour Division:

United States General Accounting Office:

Washington, DC 20548:

September 10, 2003:

The Honorable Mark Udall 
Ranking Minority Member 
Subcommittee on Environment, Technology, and Standards 
Committee on Science 
House of Representatives:

Dear Mr. Udall:

The continuing use of H-1B visas, which allow employers to fill 
specialty occupations[Footnote 1] with foreign workers, has been a 
contentious issue between U.S. workers and employers during the recent 
economic downturn. From March 2001 to March 2003, unemployment among 
highly educated individuals increased by about 400,000, resulting in 
1.2 million of these individuals being unemployed. In particular, 
employment substantially decreased within information technology (IT) 
occupations, for which employers often requested H-1B workers. Critics 
of the H-1B program argue that enough U.S. workers are available to 
fill these highly skilled positions and that the use of foreign labor 
results in U.S. worker displacement. Proponents of the program argue 
that it has contributed to our nation's productivity in the booming 
economy of the 1990s and that the need for highly skilled foreign 
workers continues to exist for certain highly specialized occupations.

The H-1B program was established in 1990 to assist U.S. employers in 
temporarily (for up to 6 years) filling specialty occupations with 
highly skilled workers. In order to ensure that American workers are 
not adversely affected, employers are required to meet certain labor 
conditions, including paying H-1B workers wages comparable to those of 
U.S. workers in similar positions and locations. The Department of 
Labor's Wage and Hour Division (WHD) is responsible for ensuring that 
H-1B workers are actually working in the occupation listed in the 
employer's application and receiving the required wages.

Legislation creating the H-1B program limited the number of H-1B 
workers allowed to enter the country annually to 65,000. In response to 
employers' needs during times of greater economic growth, the limit was 
increased to 115,000 for fiscal years 1999 and 2000 and to 195,000 for 
fiscal years 2001 through 2003. This cap will revert to 65,000 in 
October 2003, unless legislation is enacted to raise the cap.

Because of your interest in the employment status of H-1B workers and 
their U.S. counterparts since the economic downturn, we sought to 
determine (1) what major occupational categories H-1B 
beneficiaries[Footnote 2] were approved to fill and what is known about 
H-1B petition approvals and U.S. citizen employment from 2000-2002; (2) 
what factors affect employers' decisions about the employment of H-1B 
workers and U.S. workers; and (3) what is known about H-1B workers' 
entries, departures, and changes in visa status.

To answer the first question, we examined the Department of Homeland 
Security's (DHS) Bureau of Citizenship and Immigration Services' 
(BCIS)--formerly the Immigration and Naturalization Service 
(INS)[Footnote 3]--2000-2002 H-1B petition approval data (i.e., data on 
approved employer requests to hire H-1B beneficiaries) for five key 
occupations: systems analysis and programming; electrical/electronic 
engineering; economics; accountants, auditors, and related 
occupations; and biological sciences. In addition, we analyzed 2000-
2002 Current Population Survey (CPS) data on U.S. citizen employment in 
similar occupations. To obtain information about factors affecting 
employers' decisions, we conducted site visits and telephone interviews 
with 36 H-1B employers in 6 of the 12 states with the largest number of 
H-1B petitions filed by employers--California, Maryland, New Jersey, 
New York, Texas, and Virginia--selected for their geographic 
dispersion. Employers were selected to obtain a range in both the 
number of employer H-1B petition approvals and the occupations (IT-
related[Footnote 4] and non-IT-related) for which they requested H-1B 
workers. Seventy-five percent of the 145 employers we contacted chose 
not to discuss H-1B issues with us; consequently, our results may be 
affected by this self-selection. Most employers that agreed to speak 
with us used the H-1B program to fill engineering positions. We also 
interviewed associations representing U.S. and H-1B workers and 
associations representing employers. To report information available on 
H-1B workers' entries, departures, and changes in visa status, we 
examined DHS data and reports on planned tracking systems, and we 
interviewed DHS officials about their data systems and tracking 
procedures. We conducted our work between August 2002 and July 2003, in 
accordance with generally accepted government auditing standards. For 
more details on our scope and methodology, see appendix I.

Results in Brief:

H-1B beneficiaries were approved to fill a wide variety of positions, 
and the number of H-1B petition approvals in certain occupations has 
generally declined along with the economic downturn, as have employment 
levels of U.S. citizen workers in these occupations. In contrast with 
2000, most H-1B beneficiaries in 2002 were approved to fill positions 
in fields not directly related to IT, such as economics, accounting, 
and biology. In 2002, 40 percent of all H-1B beneficiaries were 
approved to fill IT-related occupations, such as systems analysis and 
electrical engineering, compared with 65 percent in 2000. We found that 
in most of the five occupations we examined (electrical/electronic 
engineers, systems analysts/programmers, biological/life scientists, 
economists, and accountants/auditors), H-1B beneficiaries with 
petitions approved in 2002 were younger and a higher percentage had an 
advanced degree than the population of U.S. citizen workers in 2002. In 
the three occupational groups (electrical/electronic engineers, 
systems analysts/programmers, and accountants/auditors) for which 
there were sufficient data to compare earnings, salaries listed on 
petitions for younger H-1B beneficiaries (18-30 years old) approved in 
2001 who did not have advanced degrees were higher than salaries 
reported by U.S. citizen workers of the same age group and education 
level. However, salaries listed on petitions for older H-1B 
beneficiaries (31-50 years old) were either similar or lower than the 
salaries reported by their U.S. counterparts. Both the number of H-1B 
petition approvals and U.S. citizens employed in four of the five 
occupations we examined decreased from 2001 to 2002. However, it is 
unclear whether this decrease in U.S. workers employed was paralleled 
by a decrease in H-1B beneficiaries employed in these occupations, 
because BCIS is unable to determine the actual number of H-1B 
beneficiaries who are employed in the United States.

The majority of the 36 employers that agreed to be interviewed said 
they recruited, hired, and retained workers based on the skills needed, 
rather than the applicant's citizenship or visa status. Among employers 
who said visa status was a factor in their decisions, several noted 
that they hired H-1B workers only when qualified U.S. workers were not 
available. Half of the 36 employers we interviewed reported that they 
did not go abroad to recruit workers for U.S. positions, but instead 
found U.S. citizen and H-1B workers through employee referrals, the 
Internet, and U.S. graduate schools. About two-thirds of employers said 
that most H-1B workers hired were already in the United States on 
foreign student visas or working for another employer on an H-1B visa 
when they were recruited. In discussing their recruiting efforts, many 
employers said that intense competition for IT-related workers in 1999 
made it difficult to find qualified workers in the United States, but 
that the supply of workers has since increased while the demand for 
workers has decreased. However, most employers said that finding 
qualified workers in some engineering and other science-related 
professions remains difficult. Employers that laid off workers after 
the economic downturn told us that they made these decisions based on 
changes in business needs, regardless of employee citizenship or visa 
status. The majority of employers interviewed cited cost and lengthy 
petition processing times as major disadvantages to hiring H-1B 
workers; however, they said they would continue to use the H-1B program 
to find candidates with the skills needed. Some employers said that 
they hired H-1B workers in part because these workers would often 
accept lower salaries than similarly qualified U.S. workers; however, 
these employers said they never paid H-1B workers less than the 
required wage. Labor is responsible for, among other things, ensuring 
that employers do not violate H-1B wage agreements, and continues to 
find instances of employers not paying H-1B workers the wages required 
by law; however, the extent to which such violations occur is unknown 
and may be due in part to Labor's limited investigative authority.

Little information is available regarding H-1B workers' entries, 
departures, and changes in visa status due to the limitations of 
current DHS tracking systems, but new systems are being developed to 
provide better information. One reason DHS is unable to determine the 
number of H-1B workers who are in the United States at a given time is 
because it maintains two separate tracking systems that do not share 
data. The Non-Immigrant Information System (NIIS) has data on entries 
and departures and the Computer Linked Application Information 
Management System 3 (CLAIMS 3) has data on changes in visa status. Data 
from both of these systems are needed to calculate the number of H-1B 
workers in the United States. In addition, while DHS collects 
information on change of visa status and jobs held, this information is 
not consistently entered into CLAIMS 3. Because these data are not 
consistently entered, it is not possible to determine the extent to 
which H-1B workers become permanent residents or remain in the United 
States on other employment-related visas to work in the same 
occupations. DHS has recognized the need for more comprehensive and 
reliable immigration data and is working to develop improved tracking 
systems. One system, the U.S. Visitor and Immigrant Status Indicator 
Technology System (US-VISIT), is intended to incorporate data managed 
by DHS as well as other agencies, such as the Department of State, in 
order to provide a foreign national's complete immigration history. DHS 
plans call for these histories to include details about entries, change 
of status, and departures that can be aggregated for reporting 
purposes. US-VISIT will be managed by DHS and is mandated to be fully 
implemented by December 2005. In addition to information systems 
issues, we also determined that DHS's ability to provide information on 
H-1B workers is limited because it has not issued consistent guidance 
or any regulations on the legal status of unemployed H-1B workers who 
remain in the United States while seeking new jobs. While BCIS has the 
authority to issue regulations and has been working to establish them, 
more than 2 years have passed since the agency began this work. With 
inconsistent guidance and without regulations, unemployed H-1B workers 
and their potential employers may be unsure about whether these workers 
can be hired for new positions without first having to leave the 
country. In addition, allowing unemployed H-1B workers to remain in the 
United States to seek new positions may have implications for public 
services, such as Unemployment Insurance, and the labor force 
competition faced by U.S. workers.

To provide better information on H-1B workers and their status changes, 
we recommend that DHS consistently enter change of status data in its 
computer systems and integrate these data with that for entry and 
departure. Furthermore, we recommend that BCIS issue regulations that 
address the extent to which unemployed H-1B workers are allowed to 
remain in the country while seeking other employment. In its written 
comments on a draft of this report, DHS agreed with our 
recommendations.

Background:

The H-1 nonimmigrant category was created under the Immigration and 
Nationality Act of 1952 to assist U.S. employers needing workers 
temporarily. The Immigration Act of 1990 amended the law, by, among 
other things, creating the H-1B category for nonimmigrants[Footnote 5] 
who employers sought to work in specialty occupations and fashion 
modeling.[Footnote 6] Unlike most temporary worker visa categories, H-
1B workers can intend to both work temporarily and to immigrate 
permanently at some future time. Employed H-1B workers may stay in the 
United States on an H-1B visa for up to 6 years.

Until 1990, there was no limit on the number of specialty occupation 
visas that could be granted to foreign nationals. Through the 
Immigration Act of 1990, Congress set a yearly cap of 65,000 on H-1B 
visas. In an effort to help employers access skilled foreign workers 
and compete internationally, the Congress passed the American 
Competitiveness and Workforce Improvement Act of 1998, which increased 
the limit to 115,000 for fiscal years 1999 and 2000. In 2000, Congress 
passed the American Competitiveness in the Twenty-First Century Act, 
which raised the limit to 195,000 for fiscal year 2001 and maintained 
that level through fiscal years 2002 and 2003. The limit is scheduled 
to revert back to 65,000 in fiscal year 2004.

In order to hire H-1B employees, employers must first file a Labor 
Condition Application (LCA) with Labor, attesting to the fact that the 
employer intends to comply with a number of required labor conditions 
designed to protect workers. On this application, an employer must 
state the number of workers requested, the occupation and location(s) 
in which they will work, and the wages they will receive. The employers 
must attest, among other things, that:

* the employment of H-1B workers will not adversely affect the working 
conditions of other workers similarly employed in the area;

* the H-1B workers will be paid wages that are no less than the higher 
of the actual wage level paid by the employer to all others with 
similar experience and qualifications for the specific employment or 
the prevailing wage level for the occupational classification in the 
area of intended employment; and:

* no strike, lockout, or work stoppage in the applicable occupational 
classification was underway at the time the application was prepared.

H-1B dependent employers (generally those with a workforce consisting 
of at least 15 percent H-1B workers) and willful violators (employers 
who have been found in violation of the conditions of an earlier LCA) 
are subject to additional requirements. These employers must also 
attest that:

* before filing an LCA, the employer will make a good faith effort to 
recruit U.S. workers for the position, offering wages at least as great 
as that required to be offered to the foreign national;

* the employer will not displace and did not displace any similarly 
employed U.S. workers within 90 days prior to or after the date of 
filing any H-1B visa petition; and:

* before placing the H-1B employee with another employer, the current 
employer will inquire whether or not the other employer has displaced 
or intends to displace a similarly employed U.S. worker within 90 days 
before or after the new placement of the H-1B worker.

After Labor approves the LCA,[Footnote 7] an employer who wishes to 
hire an H-1B worker can file two types of petitions with BCIS to obtain 
approval.[Footnote 8] "Initial" petitions are those that are filed for 
a foreign national's first-time employment in the United States and 
allow for the H-1B worker to stay in the United States for 3 years. 
With some exceptions, these petitions are counted against the annual 
cap on the number of H-1B petitions that may be approved.[Footnote 9] 
"Continuing" employment petitions are filed for: extensions of the 
initial petitions for another 3 years, the maximum period permissible 
under the law; sequential employment, which occurs, for example, when 
an H-1B worker changes employers within their 6-year time period; and 
concurrent employment, in which the H-1B worker intends to work 
simultaneously for a second or subsequent employer. Continuing 
petitions do not count against the cap.

In both fiscal years 2001 and 2002, the number of initial H-1B 
petitions approved that applied to the cap did not reach the annual 
limit of 195,000 (see fig. 1). In fiscal year 2001, 163,600 petitions 
were approved against the cap. The number of approved petitions 
decreased by more than 50 percent in one year, with 79,100 petitions 
approved against the cap in fiscal year 2002. This recent change 
contrasts with the trends from fiscal years 1997 through 2000, during 
which time the cap was lower and the number of petitions reached or 
exceeded the annual limit.[Footnote 10]

Figure 1: H-1B Petitions Approved and Counted Toward the Annual Limit, 
Fiscal Years 1997 through 2002:

[See PDF for image]

[End of figure]

DHS is responsible for managing the entry and departure of 
nonimmigrants, including H-1B workers. To enhance DHS's ability in this 
regard, legislation was enacted that required the agency to develop an 
automated entry/exit control system. Section 110 of the Illegal 
Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996 
required that this system collect departure records from every foreign 
national leaving the United States and match it with arrival records. 
The act also required that the system have the capability to assist DHS 
officials in identifying nonimmigrants who have been in the United 
States beyond their authorized period of stay. The Immigration and 
Naturalization Service Data Management Improvement Act of 2000 (DMIA) 
replaced section 110 of IIRIRA in its entirety. The DMIA, among other 
things, required that the entry/exit system integrate arrival and 
departure information on foreign nationals required under IIRIRA and 
contained in the Department of Justice (now DHS) and Department of 
State databases. DMIA also required that this system be fully 
implemented by December 31, 2005. Subsequent legislation required that 
the entry/exit control system must be capable of interfacing with other 
law enforcement agencies' systems.[Footnote 11]

In 2001, Congress passed legislation that allowed H-1B workers "visa 
portability" - the ability to change employers during their stay once 
the new employer files an H-1B petition on their behalf. According to 
the law, the petition for new employment must have been filed before 
the end of the worker's period of authorized stay. DHS has the 
authority to issue regulations that further specify how visa 
portability will be administered.

In March 2001, when the economy began to decline, U.S. employment 
declined as well, with 1.4 million jobs lost during the year. The 
unemployment rate rose to 5.8 percent at the end of 2001 and hovered 
between 5.5 and 6 percent throughout 2002. Although downturns tend to 
affect sectors throughout the economy, existing research indicates that 
job loss from 2001-2002 was particularly severe in IT manufacturing, a 
sub-sector in which many H-1B workers were employed.

Concerns that the H-1B program might have unfairly impacted U.S. 
workers during the recent economic downturn have prompted labor groups 
to raise questions about the use of the H-1B program. Associations 
representing U.S. workers that we spoke with believe that employers 
abuse the program by laying off U.S. workers while retaining and hiring 
H-1B workers at lower wages. Such practices, according to employee 
associations, had the effect of displacing U.S. workers during the 
economic downturn. Labor representatives argue that some employers 
force H-1B workers to work for lower wages than U.S. citizen workers, 
knowing that continued employment is the only legal way for H-1B 
workers to remain in the United States. One advocate for H-1B workers 
said that some employers dangle the possibility of sponsorship for 
permanent residency in front of H-1B workers as a reward for extra 
work. These representatives believe that visa portability options do 
not actually give H-1B workers more freedom to move around in the labor 
market, arguing that H-1B workers are still dependent on their 
employers to legally remain in the United States. On the other hand, 
associations representing employers argue that H-1B workers were not 
treated differently than U.S. workers during the economic downturn, and 
that use of the H-1B program by employers has decreased substantially. 
They also argue that the real challenge to U.S. workers occurs when 
companies rely on workers overseas where the work can be done at a 
lower cost.

H-1B Beneficiaries Were Approved to Fill a Broad Range of Occupations, 
and as U.S. Citizen Employment Generally Declined with the Recent 
Economic Downturn, So Did the Number of H-1B Petition Approvals:

H-1B beneficiaries were approved to fill a wide variety of occupations, 
and the number of H-1B petition approvals in certain occupations has 
generally declined with the economic downturn, along with the 
employment levels of U.S. citizen workers in these occupations. In 
contrast with patterns in 2000, most H-1B beneficiaries in 2002 were 
approved for positions that were not related to IT. Moreover, a 
comparison of H-1B beneficiaries and U.S. citizen workers in five 
occupations (electrical/electronic engineers, systems analysts/
programmers, biological/life scientists, economists, and accountants/
auditors) revealed that, in most of these occupations, H-1B 
beneficiaries in 2002 were younger and a higher percentage had a 
graduate or professional degree.[Footnote 12] In the three occupational 
groups for which there were sufficient data to compare salaries 
(electrical/electronic engineers, systems analysts/programmers, and 
accountants/auditors), salaries listed on petitions for younger H-1B 
beneficiaries (18-30 years old) approved in 2001 who did not have 
advanced degrees were higher than salaries reported by U.S. citizen 
workers of the same age group and education level; however, salaries 
listed on petitions for older H-1B beneficiaries (31-50 years old) were 
either similar or lower than the salaries reported by their U.S. 
counterparts. Both the number of H-1B petition approvals and U.S. 
citizens employed in certain occupations decreased from 2001 to 
2002.[Footnote 13]

H-1B Beneficiaries Were Approved to Fill a Wide Array of Highly Skilled 
Positions in 2002:

In 2002, H-1B beneficiaries were approved to fill over 100 occupations, 
but IT occupations were no longer the majority of approved occupations, 
as they were in 2000 (see table 1). A large proportion of approved 
petitions were for fields unrelated to IT, such as university 
education, economics, and medicine. However, IT-related occupations 
still constituted 40 percent of all petitions approved in 2002 for H-1B 
beneficiaries, most prominently, in systems analysis and programming 
(31 percent). Nine percent were in electrical/electronic engineering 
and other IT-related fields. In 2000, the pattern was different: 65 
percent of all approved petitions were for IT-related positions.

Table 1: Top 10 Occupations H-1B Beneficiaries Were Approved to Fill, 
2000, 2002:

2000: Occupation: Systems analysis and programming[A]; 2000: Percent of 
total: 54;  2002: Occupation: Systems analysis and 
programming[A]; 2002: Percent of total: 31.

2000: Occupation: Electrical/electronic engineering[A]; 2000: Percent 
of total: 5;  2002: Occupation: College and university 
education; 2002: Percent of total: 8.

2000: Occupation: Computer-related, other[A]; 2000: Percent of total: 
4; 2002: Occupation: Accountants, auditors, and related 
occupations; 2002: Percent of total: 5.

2000: Occupation: College and university education; 2000: Percent of 
total: 3; 2002: Occupation: Electrical/electronic 
engineering[A]; 2002: Percent of total: 4.

2000: Occupation: Accountants, auditors, and related occupations; 2000: 
Percent of total: 3; 2002: Occupation: Computer-related, 
other[A]; 2002: Percent of total: 3.

2000: Occupation: Architecture, other; 2000: Percent of total: 3; 
2002: Occupation: Biological sciences; 2002: Percent of total: 
3.

2000: Occupation: Economics; 2000: Percent of total: 2; 2002: 
Occupation: Physicians and surgeons; 2002: Percent of total: 3.

2000: Occupation: Mechanical engineering; 2000: Percent of total: 2; 
2002: Occupation: Miscellaneous managers and officials, other; 
2002: Percent of total: 3.

2000: Occupation: Physicians and surgeons; 2000: Percent of total: 2; 
2002: Occupation: Economics; 2002: Percent of total: 3.

2000: Occupation: Miscellaneous professional, technical, and 
managerial; 2000: Percent of total: 2; 2002: Occupation: 
Miscellaneous professional, technical, and managerial; 2002: Percent of 
total: 2.

2000: Occupation: All other IT-related occupations[A]; 2000: Percent of 
total: 2; 2002: Occupation: All other IT-related 
occupations[A]; 2002: Percent of total: 2.

2000: Occupation: All other occupations; 2000: Percent of total: 19; 
2002: Occupation: All other occupations; 2002: Percent of 
total: 34.

2000: Occupation: Total approvals; 2000: Percent of total: 100; 
2002: Occupation: Total approvals; 2002: Percent of total: 
100.

Source: GAO analysis of BCIS data.

Note: The percent totals for the occupations above do not sum to 100 
percent due to rounding.

[A] IT-related occupations.

[End of table]

In 2002, H-1B Beneficiaries Approved to Fill Selected Occupations Were 
Younger and a Higher Percentage Had Advanced Degrees than U.S. Citizen 
Workers:

In most of the five occupations we examined (electrical/electronic 
engineers, systems analysts/programmers, biological/life scientists, 
economists, and accountants/auditors), H-1B beneficiaries with 
petitions approved in 2002 were younger and a higher percentage had an 
advanced degree than the population of U.S. citizen workers in 2002. H-
1B beneficiaries with petitions approved in 2002 were younger than U.S. 
citizen workers in four of the five occupations: electrical/electronic 
engineers, systems analysts/programmers, economists, and accountants/
auditors (see fig. 2).[Footnote 14] For example, the median age of H-1B 
beneficiaries approved for accountant/auditor positions was 32, which 
was substantially younger than the median age of 38 for U.S. citizen 
accountants/auditors. The largest difference between the median ages, 
about 9 years, was for U.S. citizens and H-1B beneficiaries approved 
for electrical/electronic engineer positions. We found no significant 
difference in the median ages of H-1B beneficiaries and U.S. citizens 
in biological/life scientist positions.

Figure 2: Median Age of H-1B Beneficiaries Approved in 2002 and U.S. 
Citizen Workers in 2002 in Selected Occupations:

[See PDF for image]

[A] Age differences between H-1B beneficiaries and U.S. citizen workers 
are significant at the 95-percent confidence level.

[End of figure]

In the three occupational groups (electrical/electronic engineers, 
systems analysts/programmers, and accountants/auditors) for which 
there were sufficient data to compare education levels, a higher 
percentage of H-1B beneficiaries with petitions approved in 2002 had 
earned a graduate or professional degree than U.S. citizen workers (see 
fig. 3). For example, 50 percent of H-1B beneficiaries approved to fill 
electrical/electronic engineer positions had graduate degrees, 
compared with 20 percent of U.S. citizen electrical/electronic 
engineers.[Footnote 15] Insufficient data precluded us from analyzing 
the education levels of U.S. citizen biological/life scientists and 
economists.

Figure 3: Percentages of H-1B Beneficiaries Approved in 2002 and U.S. 
Citizen Workers in 2002 with Graduate Degrees by Selected Occupations:

[See PDF for image]

Note: Figure 3 does not include information on education for 
biological/life scientists and economists because the CPS sample sizes 
were too small to analyze.

[A] Educational attainment differences between H-1B beneficiaries and 
U.S. citizen workers are significant at the 95-percent confidence 
level.

[End of figure]

The salaries of H-1B beneficiaries and U.S. citizen workers differed 
from each other when examined in relation to their education levels and 
age.[Footnote 16] In the three occupational groups (electrical/
electronic engineers, systems analysts/programmers, and accountants/
auditors) where there were sufficient data to compare salaries by age 
and education level, in 2001, salaries listed on petitions for H-1B 
beneficiaries were higher (by about $7,000 - $10,000) than salaries 
reported by U.S. citizen workers, for those who were 18-30 years of age 
and did not have graduate degrees (see fig. 4). In contrast, salaries 
listed on petitions for H-1B beneficiaries approved for either 
electrical/electronic engineer or systems analyst/programmer positions 
who were 31-50 years of age and had graduate degrees were lower (by 
about $11,000 - $22,000) than salaries reported by U.S. citizens with 
the same characteristics. In addition, salaries listed on petitions for 
H-1B beneficiaries approved for electrical/electronic engineer 
positions who were 31-50 years old and did not have graduate degrees 
were lower (by about $5,000) than salaries reported by their U.S. 
counterparts. There were no significant differences between the annual 
salaries of 31-50 year-olds in all other cases shown in figure 4. 
Insufficient data precluded us from making determinations about the 
relationship of age and education to the salaries of H-1B beneficiaries 
and U.S. citizens who were 18-30 year-olds with graduate degrees, or 
those who were in economist or biological/life scientist positions. 
(See table 7 in app. II for more details.) In addition to the factors 
we examined, a number of other factors can affect earnings, such as 
years of experience and geographic location. However, BCIS does not 
collect data on years of experience or geographic location for H-1B 
beneficiaries.

Figure 4: Median Annual Salaries of H-1B Beneficiaries Approved in 2001 
and U.S. Citizen Workers in 2001 in Selected Occupations, by Age and 
Education:

[See PDF for image]

Note: Figure 4 does not include information on salaries for persons age 
18 to 30 with graduate degrees or for economists and biological/life 
scientists because the CPS sample sizes were too small to analyze.

[A] The differences in salaries between H-1B beneficiaries and U.S. 
citizen workers are statistically significant at the 95-percent 
confidence level.

[B] Indicates those with bachelor's degrees, or less education.

[C] Indicates those with graduate degrees.

[End of figure]

Almost one-third of H-1B beneficiaries with petitions approved in 2002 
were born in India, with the second highest percentage of H-1B 
beneficiaries born in China, followed by Canada, the Philippines, and 
the United Kingdom (see fig. 5). The remaining 45 percent of H-1B 
beneficiaries represented an array of roughly 200 other countries.

Figure 5: Countries of Birth for H-1B Petition Approvals, 2002:

[See PDF for image]

[End of figure]

H-1B Petition Approvals and U.S. Citizen Employment in Selected 
Occupations Declined from 2001 to 2002:

After reaching a high level in 2001, the number of H-1B petition 
approvals has recently declined substantially. The numbers of both 
initial and continuing petitions approved increased from 2000 to 2001 
and declined well below 2000 levels in 2002, as shown in figure 6. The 
decline in petition approvals for systems analysis/programming 
positions constituted 70 percent of the decline in the total number of 
petition approvals from 2001 to 2002. For each of the 3 years, a larger 
number of initial petitions were approved than continuing petitions.

Figure 6: Total Initial and Continuing H-1B Petitions Approved 
Annually, Calendar Years 2000 through 2002:

[See PDF for image]

[End of figure]

From 2000 to 2001, the estimated numbers of H-1B petition approvals and 
U.S. citizens employed in most of the five occupations we examined 
increased significantly (see table 2). For example, the number of 
petitions approved in biological sciences positions increased by 1,685 
to 5,454, and employment for U.S. citizen biological/life scientists 
increased by 14,448 to 59,511. However, as U.S. citizen employment 
declined from 2001 to 2002, so did the number of H-1B petition 
approvals (see table 2). In particular, H-1B petition approvals and 
U.S. citizen employment decreased in IT occupations. For example, the 
number of H-1B petition approvals for systems analysis/programming 
positions dropped by 106,671 to 56,184, and the estimated number of 
U.S. citizen systems analysts/programmers employed decreased by 147,005 
to 1,577,427.[Footnote 17]

Table 2: Change in H-1B Petition Approvals and U.S. Citizen Employment 
for Selected Occupations, 2000-2001, 2001-2002:

Occupation: Electrical/electronic engineers; Change from 2000-2001: H-
1B petition approvals: 2,840; Change from 2000-2001: U.S citizen 
employment estimates: 16,868; Change from 2001-2002: H-1B 
petition approvals: -8,426; Change from 2001-2002: U.S citizen 
employment estimates: -54,031.

Occupation: Systems analysts/programmers; Change from 2000-2001: H-1B 
petition approvals: 17,513; Change from 2000-2001: U.S citizen 
employment estimates: -62,852; Change from 2001-2002: H-1B 
petition approvals: -106,671; Change from 2001-2002: U.S citizen 
employment estimates: -147,005.

Occupation: Biological/life scientists; Change from 2000-2001: H-1B 
petition approvals: 1,685; Change from 2000-2001: U.S citizen 
employment estimates: 14,448; Change from 2001-2002: H-1B 
petition approvals: -233; Change from 2001-2002: U.S citizen employment 
estimates: -10,840.

Occupation: Economists; Change from 2000-2001: H-1B petition approvals: 
1,534; Change from 2000-2001: U.S citizen employment estimates: -8,700; 
Change from 2001-2002: H-1B petition approvals: -1,467; Change 
from 2001-2002: U.S citizen employment estimates: -7,868.

Occupation: Accountants/auditors; Change from 2000-2001: H-1B petition 
approvals: 3,677; Change from 2000-2001: U.S citizen employment 
estimates: 15,099; Change from 2001-2002: H-1B petition 
approvals: -3,082; Change from 2001-2002: U.S citizen employment 
estimates: 5,701.

Source: GAO analysis of BCIS and CPS data.

[End of table]

The Majority of Employers Interviewed Reported That Skills, Rather Than 
Immigration Status, Determine Employment Decisions, but the Extent to 
Which Wage Plays a Role Is Unknown:

All 36 employers that we interviewed said they made hiring and layoff 
decisions about workers by selecting and retaining candidates with the 
skill sets needed for the job, and the majority (19) of employers said 
that they did not treat H-1B workers differently when making these 
decisions. Most of the employers who said immigration status was a 
factor in their decisions noted that they hired H-1B workers only when 
qualified U.S. workers were not available. Despite increases in 
unemployment among highly skilled U.S. workers, about two-thirds of 
employers said that finding workers with the skills needed in certain 
engineering and other science-related occupations remains difficult. 
Employers who laid off workers said that these decisions were based on 
whether the employee had the skills that the business needed for the 
future. While employers cited disadvantages to the H-1B program, such 
as cost and lengthy petition processing times, they said they would 
continue to use the program to meet skill needs. Some employers said 
that they hired H-1B workers in part because these workers would often 
accept lower salaries than similarly qualified U.S. workers; however, 
these employers said they never paid H-1B workers less than the 
required wage. Labor is responsible for enforcing H-1B wage agreements 
and has continued to find instances of employers paying H-1B workers 
less than the wages required by law, but the full extent to which such 
violations occur is unknown.

Most of the information in this section is based on our interviews with 
employers of H-1B workers. We contacted 145 employers to discuss issues 
related to the H-1B program, and 36, or 25 percent, of the employers 
agreed to speak with us. Therefore, our results may be affected by this 
self-selection and cannot be viewed as representative of all H-1B 
employers.

The Majority of Employers Said They Recruited and Hired Workers Based 
on Skill Needs, Regardless of Visa Status:

All employers interviewed said that finding qualified workers with the 
needed skill sets was the main factor in recruiting and hiring 
candidates, and the majority (19) of the 36 employers said that H-1B 
candidates were not treated differently in the recruiting and hiring 
process. Several employers mentioned that they were looking for 
experienced workers and that qualified candidates often had a minimum 
of 2 to 3 years of relevant work experience. These employers said their 
need to remain competitive prevented them from spending time to train 
workers who did not have the necessary skills. In addition to the need 
for technical skills and experience, employers that hired for 
consulting positions--in which workers are sent to different job 
locations or relocated frequently--said that flexibility was an 
important consideration in hiring decisions. These employers said that 
H-1B workers, having moved to the United States from another country, 
were very flexible in moving within the United States.

Many employers told us that immigration status was a factor in their 
decision-making when they looked for candidates with experience in 
particular skill sets. Most of these employers said that they looked at 
available U.S. workers before considering applicants that required H-1B 
visa sponsorship and that they hired H-1B workers only when there were 
no qualified U.S. workers available. One company that hired H-1B 
workers primarily for product development engineering said that company 
policy states that H-1B workers can only be hired after managers 
conduct rigorous and unsuccessful searches for qualified U.S. 
candidates. Other companies told us that because of the costs of 
processing and legal fees, they hired candidates requiring H-1B 
sponsorship as a last resort.

Six employers cited the cost of U.S. labor as another factor in 
employment decisions. While these employers said that they never paid 
H-1B workers salaries below the prevailing wage, they did acknowledge 
that H-1B workers were often prepared to work for less money than U.S. 
workers. These employers said that they could not compete with the 
large salaries offered to U.S. workers by the major IT and 
pharmaceutical companies. These employers also told us that they had to 
recruit overseas because U.S. workers either demanded salaries that 
were too high or were already employed with other companies. A number 
of employers interviewed acknowledged that some H-1B workers coming 
directly from other countries might initially have accepted an offer 
with lower pay, but that it would have been unwise for employers to pay 
these workers less than their U.S. counterparts because they would soon 
leave for a higher wage offered by a different employer.

Half of the employers we interviewed said they did not recruit overseas 
for U.S. positions, but instead recruited workers through a variety of 
methods, including employee referrals, the Internet, and outreach at 
U.S. graduate schools. These employers said that they used the same 
methods to recruit H-1B candidates and U.S. workers. Employee referrals 
and job boards on the Internet were the most commonly cited recruiting 
methods. Several employers noted that many H-1B workers were hired 
through referrals by other workers already employed by their companies. 
In addition, about two-thirds of employers said that most H-1B workers 
hired were already in the United States attending graduate schools on 
student visas or working for another employer on an H-1B visa.

Many of the employers interviewed said that they recruited overseas for 
U.S. positions before the recent economic downturn because they could 
not find enough qualified U.S. workers. However, most of these 
employers said they have not recruited overseas for these positions 
since the downturn. One employer cited the anticipation of Year 2000 
computer problems as a major factor in recruiting overseas, claiming 
the company needed workers who were skilled in programming older 
mainframe systems, whereas available U.S. workers were experienced in 
more advanced technologies. Many of the employers interviewed reported 
that there is a greater supply of workers for certain IT positions 
(e.g., systems analysts and programmers) since the economic downturn, 
but also said they have substantially reduced their hiring since the 
economic downturn and have cut back on their use of the H-1B program.

Of the 36 employers we interviewed, about two-thirds said that despite 
the increase in the number of unemployed workers since the economic 
downturn, finding qualified workers in some engineering and other 
science-related occupations remains difficult. These employers told us 
that they look for superior candidates or those who are in fields with 
a smaller pool of qualified candidates, such as chemists. One Internet 
company said that it is difficult to hire the most productive workers 
because such top performers are unlikely to be looking for work. Four 
employers said they were looking for candidates with unique skills. For 
example, one employer told us that foreign workers who helped develop 
products overseas were the most qualified to help introduce those 
products to the U.S. market.

Employers Interviewed Said They Released Workers Based on Business 
Needs, Regardless of Visa Status:

Thirty of the 36 employers interviewed experienced layoffs, and all 30 
said that the layoffs were based on whether the employees had the skill 
sets that the business would need in the future, regardless of their 
immigration status. Seven of these 30 employers also added that 
employee performance was a major consideration in layoff decisions. 
Several companies said that layoffs were due to positions being 
eliminated or decisions to close offices in certain locations. However, 
some companies said that if they were eliminating a product line or 
regional office, employees--whether H-1B workers or U.S. citizens--
would be transferred to another division or product line if their 
skills were needed. All 30 employers said that H-1B status was not a 
factor in these decisions, and 19 of these employers reported that they 
had laid off H-1B workers. According to a few employers, H-1B workers 
were often the last to be released because they frequently work in 
research and development positions that create new products or other 
areas of the business that generate revenue. Details about the number 
of workers laid off by employers were not publicly available, and most 
employers declined to share this information with us.

Labor associations argue that U.S. workers are being displaced by H-1B 
workers whom employers view as a more affordable source of labor. These 
groups cited anecdotal accounts of employers laying off U.S workers and 
then retaining or hiring H-1B workers for the same positions or 
outsourcing the work to companies using foreign labor. In the case of 
H-1B dependent employers, the law prohibits companies from hiring H-1B 
workers when it has the effect of displacing similarly employed U.S. 
workers in the workforce. Although Labor has found no instances of such 
illegal displacement by H-1B dependent employers, a few cases are 
currently under investigation.

Most Employers Cited Cost and Lengthy Petition Processing Time as Major 
Disadvantages of the H-1B Program, but Said They Will Continue to Use 
the Program to Find the Skills Needed:

Nearly all employers interviewed said that the length of time required 
to process petitions is a major disadvantage of the H-1B program. About 
half of these employers said that hiring an H-1B worker could take from 
2 to 6 months, but that they often pay an additional $1,000 fee for 
premium processing, which substantially reduces processing time. In 
addition, most employers interviewed said that the combination of 
processing fees and legal fees made the program very costly, with costs 
cited ranging from $2,500 to $8,000 to hire an H-1B worker.

Citing their need to fill permanent positions, some employers noted 
that the main disadvantage of the H-1B program is its temporary 
provision of labor. These employers said they experience a substantial 
loss of intellectual capital when an H-1B visa has expired and a 
foreign national is forced to leave the United States. Nearly all 
employers interviewed said that in order to retain these foreign 
workers, they often sponsored H-1B workers for permanent residency 
either as part of their initial employment offer or after a certain 
period of employment. Some of these employers said that the fees 
associated with applications for permanent residency can raise the cost 
of hiring an H-1B worker substantially, with a few citing costs as high 
as $10,000 to $15,000. A few companies said that if their H-1B workers 
were unable to obtain permanent residency, they would send them to one 
of their foreign offices for a year and then bring them back to the 
United States on new H-1B visas.

Despite the disadvantages of the H-1B program cited, 31 of the 36 
employers interviewed said they would continue to use the program in 
the future to meet skill needs. These employers believe that once the 
economy recovers it will be difficult to find enough qualified U.S. 
workers, and that the H-1B program gives them the opportunity to access 
a larger pool of workers. Of the 24 employers that commented on the H-
1B cap, 16 said they were concerned that a limit of 65,000 would create 
processing backlogs at BCIS when the economy improves, and feared that 
they would have to wait several months longer to hire H-1B workers, as 
was the case when the cap was reached in 2000.

While employers said that they would continue to use the H-1B program, 
a few employers mentioned that they are seeking additional visa options 
for bringing highly skilled workers to the United States. For example, 
in recent years, employers have increasingly turned to the L-1 visa, an 
intracompany transfer visa that can be used by companies to bring their 
foreign professional workers to the United States on a temporary basis 
(see fig. 7).[Footnote 18] L-1 visas do not have an annual cap and are 
not subject to prevailing wage laws. Department of State statistics 
show that the use of L-1 visas has increased substantially since fiscal 
year 1998. The number of L-1 visas issued in fiscal year 1998 was 
38,307 and rose to 41,739 in fiscal year 1999, peaked in fiscal year 
2001 at 59,384, and decreased slightly in fiscal year 2002 to 57,721. 
Eight companies noted that the process to obtain an L-1 visa was less 
cumbersome than the H-1B visa process, and a few said that they planned 
to increase use of the L-1 visa in the future.

Figure 7: L-1 Visa Issuances, Fiscal Years 1998 through 2002:

[See PDF for image]

[End of figure]

In addition to using other visas, some employers said that they are now 
considering outsourcing work or moving their own operations offshore to 
remain competitive. A few employers said that if they cannot find 
enough highly skilled workers within the United States, they would 
start operating overseas. One offshore IT services company said its 
competitive advantage comes from offering U.S. clients IT services in 
India, which can significantly reduce costs. According to a temporary 
staffing agency, some companies are increasingly using contract or 
temporary staff as a way of cutting labor costs and avoiding the bad 
publicity associated with layoffs.

The Extent to Which Wage Is a Factor in Employment Decisions Is 
Unknown:

While a number of employers acknowledged that some H-1B workers might 
accept lower salaries than U.S. workers, the extent to which wage is a 
factor in employment decisions is unknown. Labor's Wage and Hour 
Division (WHD), which is responsible for ensuring that H-1B workers are 
receiving legally required wages, has continued to find instances of 
program abuse. As shown in table 3, the number of investigations in 
which violations were found doubled from fiscal year 2000 to 2002, and 
the amount of back wages owed to H-1B workers by employers increased 
from $1.6 million in fiscal year 2000 to $4.2 million in fiscal year 
2002. These violations were largely due to employers bringing H-1B 
workers into the United States to work, but not paying them any wages 
until jobs are available,[Footnote 19] according to WHD officials. This 
dramatic increase in violations and back wages owed to H-1B workers may 
be due to the increase in the number of H-1B workers who have entered 
the country over the years and does not necessarily indicate an 
increase in the percentage of H-1B workers affected by wage violations.

Table 3: Department of Labor H-1B Investigations, Violations 
Identified, and Back Wages Due:

Fiscal year: 2000; Investigations finalized: 58; Number of 
investigations showing violation: 51; Investigations showing a 
violation as a percentage of total investigations finalized: 88%; 
Investigations where back wages found due: 49; Amount of back wages 
found due: $1,629,173; Number of employees due back wages: 339.

Fiscal year: 2001; Investigations finalized: 60; Number of 
investigations showing violation: 54; Investigations showing a 
violation as a percentage of total investigations finalized: 90%; 
Investigations where back wages found due: 48; Amount of back wages 
found due: $1,335,147; Number of employees due back wages: 198.

Fiscal year: 2002; Investigations finalized: 134; Number of 
investigations showing violation: 112; Investigations showing a 
violation as a percentage of total investigations finalized: 84%; 
Investigations where back wages found due: 94; Amount of back wages 
found due: $4,211,209; Number of employees due back wages: 580.

Fiscal year: 2003 (thru 3-03); Investigations finalized: 71; Number of 
investigations showing violation: 62; Investigations showing a 
violation as a percentage of total investigations finalized: 87%; 
Investigations where back wages found due: 56; Amount of back wages 
found due: $2,126,881; Number of employees due back wages: 478.

Source: Department of Labor, Wage and Hour Division.

[End of table]

The extent to which violations of the H-1B program take place is 
unknown and may be due in part to WHD's limited investigative 
authority. WHD can initiate H-1B-related investigations only under 
limited circumstances. WHD may investigate (1) when a complaint is 
filed by an aggrieved person or organization, such as an H-1B worker, a 
U.S. worker, or the employee bargaining representative; (2) on a random 
basis, employers, who, within the previous 5 years, have been found to 
have committed a willful failure to meet LCA work conditions; and (3) 
if it receives specific credible information from a reliable source 
(other than the complainant) that the employer has failed to meet 
certain specified work conditions. According to WHD officials, H-1B 
workers may be reluctant to complain, given their dependency upon their 
employers for continued residency in the United States. In 2000, we 
suggested that the Congress consider broadening Labor's enforcement 
authority to improve its ability to conduct investigations under the H-
1B program. In response, Labor concurred with our suggestion, 
indicating that it has long urged that the Congress reconsider and 
expand the narrow limits on its enforcement authority.[Footnote 20]

Little Is Known about the Status of H-1B Workers, but New Systems Are 
Being Developed to Improve Tracking Information:

Little is known about the status of H-1B workers due to the limitations 
of current DHS tracking systems, but new systems to provide more 
comprehensive information are being developed. One reason DHS is unable 
to determine the number of H-1B workers who are in the United States at 
a given time is because it has two separate tracking systems that do 
not share data. The Non-Immigrant Information System (NIIS) has data on 
entries and departures of H-1B workers and the Computer Linked 
Application Information Management System 3 (CLAIMS 3) has data on 
changes in visa status, but data from both of these systems are needed 
to calculate the number of H-1B workers in the United States. In 
addition, while DHS collects information on departures, change of visa 
status, and occupations performed under a new status, this information 
is not consistently collected and entered into current systems. DHS has 
recognized the need for more comprehensive immigration data and is 
working to develop improved tracking systems. One system, known as the 
U.S. Visitor and Immigrant Status Indicator Technology System (US-
VISIT), is intended to incorporate data managed by DHS as well as other 
agencies to provide a foreign national's complete immigration history. 
System plans also provide for capabilities to generate aggregated 
reports on foreign nationals. In addition to information systems 
issues, we also determined that DHS's ability to provide information on 
H-1B workers is limited because it has not issued consistent guidance 
or any regulations on the legal status of unemployed H-1B workers who 
remain in the United States while seeking new jobs. The lack of clear 
guidance or any regulations on this issue has resulted in uncertainty 
among H-1B workers and employers about the appropriate actions needed 
for being in compliance with the law.

DHS Has Incomplete Information on H-1B Worker Entries, Departures, and 
Changes of Visa Status:

DHS cannot account for all the H-1B worker entries, departures, and 
changes of visa status using its current tracking systems, because NIIS 
and CLAIMS 3 data are not integrated, and data for certain fields in 
each of these systems are not consistently collected and entered. As a 
result, DHS is not able to provide some key information needed to 
oversee the H-1B program and assess its effects on the U.S. workforce. 
This includes information on the number of H-1B workers in the United 
States at any time, the extent to which these workers become 
unemployed, the extent to which H-1B workers become long-term members 
of the labor force through other immigration statuses, and the 
occupations they fill as permanent members of the labor force.

We found that obtaining better arrival and departure information on H-
1B workers requires integration of change of status data from CLAIMS 3 
with data from NIIS, and that such integration has proven to be 
challenging. Currently, if a foreign national enters the United States 
under a student visa and later becomes an H-1B worker, NIIS will not 
have a record that indicates this person is an H-1B worker, unless the 
person exits and re-enters the United States under the H-1B 
visa.[Footnote 21] In 2001, DHS officials attempted to obtain better 
information on the number of nonimmigrants in the United States and 
their current statuses by matching CLAIMS 3 and NIIS data using 
automated formulas, but found that about 60 percent of the records 
between these two systems still needed to be matched manually. This was 
mainly because the two systems do not have unique identifiers for 
matching records. While DHS is examining ways to improve its ability to 
match these records through formulas or by creating unique identifiers, 
arrival and departure data continue to be separated from change of 
status data.

Although data integration could improve information on H-1B workers, 
DHS may continue to face challenges accounting for all departures 
because these data are not consistently collected. While NIIS is 
supposed to maintain departure records for H-1B workers, along with 
other nonimmigrants,[Footnote 22] data from fiscal years 1998 through 
2000 indicate that departure information for foreign nationals is 
missing in about 20 percent of the cases.[Footnote 23] DHS cannot 
account for all H-1B worker departures because some nonimmigrants, 
especially those departing through land borders, do not submit 
departure forms when leaving the United States. The United States has 
an agreement with Canada that allows Canadian immigration officials to 
collect departure forms and submit them to DHS. However, Canadian 
officials are not required to collect these forms and, therefore, some 
nonimmigrant departures from the United States through Canada are not 
recorded. DHS also does not have immigration officials at some 
departure areas along the Mexican border, thereby relying on 
nonimmigrants to voluntarily deposit departure forms in collection 
boxes. DHS officials also told us that airlines do not consistently 
collect and/or return departure forms to DHS. In addition, some H-1B 
workers become permanent residents and, therefore, are no longer 
required to submit departure forms when exiting the country, leaving 
NIIS with no record of their departures from the United States.

Moreover, DHS does not consistently enter change of status and 
occupation data into CLAIMS 3. As a result, it is not possible to 
determine either the number of H-1B workers who remained a part of the 
U.S. workforce by becoming permanent residents or other employment-
related visa holders and the types of jobs they performed. About 50 
percent of electronic records on permanent residents do not include 
data on residents' prior visa status, according to a DHS official. 
Also, in fiscal years 2000 and 2001, about 20 to 25 percent of 
electronic records on permanent residents who were known to have been 
H-1B workers did not contain information on their occupations. In the 
data sets used to determine the number of nonimmigrants, such as H-1B 
workers, who changed to other employment-related visa statuses, the 
prior status data was missing in 30 percent of the cases. In addition, 
BCIS officials told us that occupation data for H-1B workers who 
changed to other employment-related visa statuses was often missing, 
but they were unable to tell us the extent to which this occurred. 
Although no formal studies have been conducted to determine why these 
data are missing, DHS officials believe that this is primarily due to 
contractors not entering prior visa status and occupation information 
into CLAIMS 3. One official said that some data contractors may not 
enter this information because CLAIMS 3 will accept records if the 
prior visa status and occupations fields are left blank. These data 
could also be missing because individuals without a prior status or 
occupation may leave these fields blank on their applications. These 
individuals, such as spouses of permanent residents, may be coming 
directly from a foreign country without having previously entered the 
United States under a nonimmigrant visa.

DHS also maintains information in CLAIMS 3 that could indicate whether 
an H-1B worker is no longer employed and possibly no longer in H-1B 
status, but the agency has faced challenges with collecting this 
information. When H-1B workers become unemployed before their visas 
expire, employers are required to submit a letter to DHS stating that 
these workers are no longer employed with them.[Footnote 24] DHS uses 
this information to revoke the H-1B petitions, and this is indicated in 
CLAIMS 3. However, agency officials do not believe that all employers 
are submitting these letters, because DHS officials believe they have 
not received an equal number of subsequent employment petitions as 
notices that the H-1B worker is no longer with a former employer. 
Agency officials said that they are not able to better ensure the 
collection of these letters because they do not have the resources to 
proactively monitor employers. In addition, since the agency is not 
currently concerned about reaching the H-1B worker cap on petitions, a 
6-month to a year lag time exists for entering data about revoked 
petitions.

DHS Is Developing New Data Systems to Obtain More Comprehensive 
Tracking Information:

DHS recognizes the need for a more integrated system to track 
information on foreign nationals and is currently developing systems to 
meet this need. DHS is mandated to develop an information system that 
will integrate arrival and departure information on foreign nationals 
from databases within DHS and across other government agencies, such as 
the Department of State and law enforcement agencies. DHS is currently 
working with State to develop this system, known as US-VISIT, which is 
mandated by Congress to be fully implemented by December 2005. DHS 
plans call for US-VISIT to have the capability to generate a single 
comprehensive record of an individual's entire immigration history, 
from the initial request to enter the United States (e.g., H-1B worker 
petitions) through departure and any re-entry. DHS's plans also call 
for individual records in US-VISIT to be updated almost immediately as 
users of the different component databases update their records. For 
example, if a DHS official updates a nonimmigrant's record to reflect 
that a person has changed visa status, that person's US-VISIT record 
should reflect this change almost immediately. Moreover, DHS plans for 
US-VISIT to be able to generate statistical reports on nonimmigrants. 
As required by law, these reports will include the number of 
nonimmigrants, including H-1B workers, who have entered, exited, and 
remained in the United States.

DHS Has Not Clarified the Status of Unemployed H-1B Workers through 
Guidance or Regulations:

In addition to information systems issues, DHS's ability to provide 
information on the status of the H-1B population is constrained because 
it has not issued consistent guidance or any regulations for 
implementing the visa portability provision of the American 
Competitiveness in the Twenty-First Century Act of 2000 (AC21). This 
has resulted in uncertainty about the extent to which unemployed H-1B 
workers can legally remain in the United States while seeking new jobs. 
Regulations have been in development for over 2 years, and interim 
guidance has not clarified this issue. For example, 1999 guidance 
stated that unemployed H-1B workers are out of status and should leave 
the United States or seek a change in status. However, in 2001, DHS 
issued guidance stating that AC21's visa portability provisions appear 
to include unemployed individuals and that it expected to issue 
regulations addressing their status.[Footnote 25]

Currently, BCIS officials are addressing this issue on a case-by-case 
basis,[Footnote 26] and decisions have been inconsistent, according to 
a few employers. These employers told us that in some cases, H-1B 
workers who were unemployed for more than 3 months were required to 
exit and re-enter the United States before beginning work with a new 
employer because they were considered out of legal status. Yet, 
overall, BCIS officials have not offered these employers clear 
directions about allowable timeframes for H-1B workers to be unemployed 
and remain in the country. This lack of clear guidance or any 
regulations can contribute to uncertainties in the circumstances facing 
these workers. Moreover, employers told us that this situation makes 
planning a worker's starting date for a new job difficult. In addition, 
if employers pay for the cost of re-entry, this process can impose an 
unexpected cost of hiring an unemployed H-1B worker.

The agency has been working to develop regulations related to visa 
portability since October 2000, but internal debates have prevented 
regulations from being issued sooner, according to a BCIS official. For 
example, the agency official told us that BCIS is concerned about 
immigration enforcement issues that may arise by allowing unemployed H-
1B workers to remain in the United States. Labor officials said that 
they were concerned about how unemployed H-1B workers in the United 
States might impact government programs for the unemployed if, for 
example, unemployed H-1B workers attempted to collect Unemployment 
Insurance. In addition, a U.S. labor representative said that another 
implication of allowing unemployed H-1B workers to remain in the United 
States is that they will be competing with unemployed U.S. workers for 
highly skilled positions.

Conclusions:

Much of the information policymakers need to effectively oversee the H-
1B program is not available because of limitations of DHS's current 
tracking systems. Without this information, policymakers cannot 
determine whether this program is meeting the need for highly skilled 
temporary workers in the current economic climate and how to adjust 
policies that may affect workforce conditions over time, such as the H-
1B visa cap, accordingly. Examples of needed information include the 
total number of H-1B workers in the United States at a given time and 
the numbers of H-1B workers employed in various occupations, the extent 
to which H-1B workers become long-term members of the labor force 
through permanent residency or other immigration statuses, and the 
occupations they fill as long-term members of the labor force. Such 
information could also assist policymakers in better determining 
program effects on workforce conditions such as wages and the 
proportion of jobs filled by H-1B workers. While DHS has long-term 
plans for providing better information on H-1B workers, policymakers in 
the interim need data to inform discussions of program changes.

Employers also have expressed concern about how BCIS determines the 
legal status of unemployed H-1B workers. BCIS determines on a case-by-
case basis whether an unemployed H-1B worker is allowed to stay in the 
United States while looking for another job. However, H-1B workers and 
employers are unsure about whether these workers can be hired for new 
positions without first having to exit and re-enter the country, which 
would be required if the workers' legal immigration status was 
determined to have expired. While this issue is no doubt a concern for 
H-1B workers who have become unemployed, it is also a growing concern 
to employers who may wish to hire these workers.

Recommendations for Executive Action:

To provide better information on H-1B workers and their status changes, 
we recommend that the Secretary of DHS take actions to ensure that 
information on prior visa status and occupations for permanent 
residents and other employment-related visa holders is consistently 
entered into their current tracking systems, and that such information 
becomes integrated with entry and departure information when planned 
tracking systems are complete.

In order to improve program management, we also recommend that the 
Secretary of DHS issue regulations that address the extent to which 
unemployed H-1B workers are allowed to remain in the United States 
while seeking other employment.

Agency Comments:

We provided a draft of this report to DHS and Labor for their review. 
DHS concurred with our recommendations and acknowledged the need for an 
improved tracking system to link information related to H-1B 
nonimmigrants among the State Department, Labor, and DHS. DHS also said 
that it is in the planning stages to make changes to CLAIMS 3, which 
will ensure that information on prior visa status and occupations for 
permanent residents and other employment-related visa holders is 
consistently entered. In addition, DHS said that issuing regulations is 
a priority and that the final rule for implementing the law authorizing 
visa portability for H-1B workers is undergoing revisions based on 
intra-agency comments. DHS's comments are reprinted in appendix III. 
Labor had no formal comments. DHS and Labor also provided technical 
comments that we incorporated as appropriate.

As arranged with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from its issue date. At that time, we will send copies of this report 
to the Secretary of Homeland Security, the Secretary of Labor, 
appropriate congressional committees, and other interested parties. In 
addition, the report will be available at no charge on GAO's Web site 
at http://www.gao.gov.

If you or your staff have any questions about this report, please 
contact me at (202) 512-7215. Other contacts and staff acknowledgments 
are listed in appendix IV.

Sincerely yours,

Sigurd R. Nilsen 
Director, Education, Workforce, and Income Security Issues:

Signed by Sigurd R. Nilsen: 

[End of section]

Appendix I: Scope and Methodology:

To obtain information on the occupations H-1B beneficiaries were 
approved to fill and demographic information and wage characteristics 
for H-1B beneficiaries and U.S. citizens, we examined the Bureau of 
Citizenship and Immigration Services' (BCIS) 2000-2002 H-1B petition 
approval data for five key occupations: systems analysis and 
programming; electrical/electronic engineering; economics; 
accountants, auditors, and related occupations; and biological 
sciences. In addition, we examined 2000-2002 Current Population Survey 
(CPS) data on U.S. citizen employment in similar occupations.[Footnote 
27]

CLAIMS 3 Data on H-1B Petition Approvals:

To obtain information on the occupations H-1B beneficiaries were 
approved to fill, we examined 2000-2002 H-1B petition approval data 
from BCIS's Computer Linked Application Information Management System 
Local Area Network (CLAIMS 3 LAN).[Footnote 28] These data provided a 
variety of information on the H-1B beneficiaries in each year, such as 
the age, education level, and annual salary expected for each 
beneficiary at the time the petition was filed.[Footnote 29] However, 
neither the CLAIMS 3 LAN data nor BCIS itself can provide information 
on how many H-1B beneficiaries approved for employment in a year are 
actually working in the United States in any particular year. The 
CLAIMS 3 LAN data may be informative about H-1B petitions approved in a 
given year and about some characteristics of those beneficiaries. 
However, these characteristics may not be indicative of the 
characteristics of all H-1B workers in a given year. For example:

* Of the H-1B beneficiaries approved in 2001, we do not know the 
proportion that began work in 2001. Some may not have started work 
until 2002; 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.

* We do not know the proportion of H-1B workers in 2001 who obtained 
their H-1B petition approvals in 2001, 2000, 1999, or 1998.

* Characteristics of H-1B beneficiaries approved in 2001 and working in 
2001 may differ from characteristics of the H-1B workforce working in 
2001 who received their approval in 1998-2000. For example, H-1B 
workers approved in 1998-2000 could, on average, be older in 2001 than 
those workers approved in 2001.

Because of these uncertainties, we do not know how well the 
characteristics of the H-1B beneficiaries in any year would approximate 
the characteristics of the population of H-1B workers actually employed 
in that year.

Current Population Survey Estimates:

To obtain demographic information for U.S. citizens working in the five 
occupations we examined, we used the monthly CPS from 2002. The CPS is 
a monthly survey of about 50,000 households that is conducted by the 
Bureau of the Census for the Bureau of Labor Statistics (BLS). The CPS 
provides a comprehensive body of information on the employment and 
unemployment experience of the nation's population. A more complete 
description of the survey, including sample design, estimation, and 
other methodology can be found in the CPS documentation prepared by 
Census and BLS.[Footnote 30]

We used the 2002 CPS data to produce estimates of longest held job in 
the previous year, highest degree attained, citizenship, and age. We 
used the March 2002 Supplement of the Current Population Survey for all 
estimates of median wages of U.S. citizens working for private 
employers. This March Supplement (the Annual Demographic 
Supplement)[Footnote 31] is specifically designed to estimate family 
characteristics, including income from all sources and occupation and 
industry classification of the job held longest during the previous 
year. It is conducted during the month of March each year because it is 
believed that since March is the month before the deadline for filing 
federal income tax returns, respondents would be more likely to report 
income more accurately than at any other point during the year. 
[Footnote 32]

Sampling Error:

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 (e.g., plus or minus 4 
percentage points). This is the interval that would contain the actual 
population value for 95 percent of the samples that could have been 
drawn. As a result, we are 95-percent confident that each of the 
confidence intervals in this report will include the true values in the 
study population. We use the CPS general variance methodology to 
estimate this sampling error and report it as confidence intervals. 
Percentage estimates we produce from the CPS data have 95-percent 
confidence intervals of +/-10 percentage points or less. Estimates 
other than percentages have 95-percent confidence intervals of no more 
than +/-10 percent of the estimate itself. Consistent with the CPS 
documentation guidelines, we do not produce annual estimates from the 
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. The blank cells in table 4 identify the estimates that we 
do not produce because they are for small populations.

Table 4: Summary of Reportable Analyses:

Age; Electrical/electronic engineers: Yes; Systems analysts/
programmers: Yes; Biological/life scientists: Yes; Economists: Yes; 
Accountants/auditors: Yes.

Educational attainment; Electrical/electronic engineers: Yes; Systems 
analysts/programmers: Yes; Biological/life scientists: No; 
Economists: No; Accountants/auditors: Yes.

Median annual salary; Electrical/electronic engineers: Yes; Systems 
analysts/programmers: Yes; Biological/life scientists: No; 
Economists: No; Accountants/auditors: Yes.

Source: GAO analysis of CPS data.

Note: 'Yes' indicates that we could report findings.

[End of table]

We compared CPS estimates of the number of U.S. citizen workers, age 
distribution, and highest degree attained to comparable categories of 
H-1B beneficiary approvals for the five occupation categories we 
examined. While we attempted to produce CPS estimates of U.S. citizens 
for a population that would be similar to H-1B workers, we could only 
make comparisons to H-1B beneficiaries with petitions approved in a 
particular year.

In order to compare the H-1B beneficiary occupations to CPS U.S. 
workforce occupations, we combined some occupational categories in the 
CPS to better match those of the BCIS data, as shown in table 5.

Table 5: Crosswalk from BCIS to CPS Codes:

BCIS codes: 030; BCIS occupational title: Systems analysis and 
programming; CPS codes: 064, 229; CPS occupational title: Computer 
systems analysts, computer programmers.

BCIS codes: 003; BCIS occupational title: Electrical/electronic 
engineering; CPS codes: 055; CPS occupational title: Electrical and 
electronic engineers.

BCIS codes: 160; BCIS occupational title: Accountants, auditors, and 
related; CPS codes: 023; CPS occupational title: Accountants and 
auditors.

BCIS codes: 050; BCIS occupational title: Economics; CPS codes: 166; 
CPS occupational title: Economists.

BCIS codes: 041; BCIS occupational title: Biological sciences; CPS 
codes: 078; CPS occupational title: Biological and life scientists.

Source: Monthly Current Population Survey, 2002, and BCIS.

[End of table]

In order to verify our estimates of the numbers of U.S. citizens in the 
key occupations and their average annual salaries, we compared the 
March Supplement employment statistics for 2001 to those reported in 
the Occupational Employment Statistics (OES) 2001 survey. We did not 
use the OES for our analysis because the survey collects data from 
employers and does not provide information about individual workers, 
such as age and education.

Salary Comparisons:

We compared the CPS median salary estimates for 2001 to median salary 
figures reported for the 2001 H-1B beneficiaries for several 
occupations, and for four age by education categories. For two of the 
occupations (biological/life scientists and economists), we did not 
produce CPS estimates due to insufficient data (see table 7). Although 
several of the comparisons we were able to make did show a 
statistically significant difference between the CLAIMS 3 H-1B 
beneficiary median salary and the "comparable" CPS estimate, it is 
difficult to interpret this result in terms of actual H-1B workers in 
2001. There are several limitations that lead to uncertainty in the 
interpretation of these results:

* Although reporting problems are an issue with any measure of income, 
we have additional concerns about the validity of the H-1B beneficiary 
salaries, because the frequency distributions of the salaries of H-1B 
beneficiaries 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.

* The measures of median annual salaries for U.S. citizens could 
include bonuses, but the median annual salaries listed on H-1B 
beneficiary petition approvals most likely do not. Neither median 
salary includes noncash benefits such as health insurance or pensions.

* CPS salary reported in March 2002 was for the longest held position 
actually worked in 2001, and reported by the worker himself (or a 
knowledgeable member of the household). In contrast, salaries reported 
in the CLAIMS 3 database for H-1B beneficiaries are provided by the 
employer requesting the petition approval in possibly 2000 or 2001 for 
an H-1B beneficiary likely beginning work in 2001 or 2002.

* The 2001 H-1B workforce includes not only a portion of those H-1B 
beneficiaries approved in 2001, but also those approved in prior years 
and beginning to work in the United States in 1999, 2000, or 2001. In 
2001, the more experienced H-1B workers may have salary patterns that 
differ from new recipients in 2001.

* The definition of education level used to create our four age 
categories by education level cells is somewhat different for the H-1B 
beneficiaries as compared to the CPS U.S. workforce estimates. H-1B 
beneficiary status requires the attainment of a bachelor's degree or 
higher (or its equivalent) in the field of specialty. In contrast, the 
education level recorded in the CPS is the highest degree attained - 
not necessarily related to any particular occupation.

In light of these limitations, caution should be used in interpreting 
differences found in comparing CPS 2001 median salary estimates and 
2001 H-1B beneficiary salaries.

Employers Selected for Interviews:

To obtain information about the factors affecting employer decisions 
about the employment of H-1B workers, we conducted site visits and 
telephone interviews with 36 H-1B employers in 6 of the 12 states with 
the largest number of H-1B petitioners--California, Maryland, New 
Jersey, New York, Texas, and Virginia--selected for their geographic 
dispersion. Employers were selected based on their number of H-1B 
petition approvals and occupations for which they requested H-1B 
workers in fiscal year 2000. Specifically, we selected a variety of 
large (100 or more H-1B workers), medium (30-99 H-1B workers), and 
small (29 or fewer H-1B workers) employers to participate in the study. 
To obtain a range of occupations for which employers hired H-1B 
workers, we also selected employers based on whether they hired H-1B 
workers for either IT-related or non-IT-related positions, such as 
those in accounting or life sciences. We used fiscal year 2000 BCIS 
data to select employers because we wanted to capture any changes in H-
1B worker staff since the economic downturn.

Through interviews with these employers, we collected qualitative 
information on the factors affecting employers' decisions in 
recruiting, hiring, and laying off both H-1B workers and U.S. citizen 
employees. Employer participation in this study was voluntary. We 
contacted 145 employers, and 25 percent, or 36, of these employers 
chose to participate; consequently, our results may be biased by this 
self-selection. In order to provide a broader perspective, we 
interviewed associations representing highly skilled workers and 
associations representing employers to obtain their views on how 
employers make decisions about their U.S. and H-1B workers. We also 
interviewed Labor WHD officials about the agency's enforcement 
authority and employer violations of the H-1B program requirements.

DHS Current and Planned Tracking Systems:

To obtain information available on H-1B workers' entries, departures, 
and changes in visa status, we examined DHS data from current tracking 
systems. However, we determined that these data had limitations that 
precluded them from meeting our reliability standards. As a result, we 
did not include them in our report. For example, we obtained data from 
DHS on the total arrivals and departures of H-1B workers for fiscal 
year 2000 and the number of permanent residents who reported previously 
being H-1B workers immediately before changing status in fiscal years 
2000 and 2001. According to DHS officials, these were the most recent 
automated data available. We also obtained data on the number of H-1B 
workers who changed from H-1B to other employment-related visa statuses 
from January 1, 2000 to December 31, 2002. In addition, we spoke with 
DHS officials about the limitations of these data, data on the 
occupations of employment-related visa holders, and current tracking 
systems.

We also obtained and reviewed reports on DHS's planned tracking 
systems. Among the documents we reviewed were the concept of operations 
for US-VISIT (formerly known as the entry/exit system), a report on 
system requirements for US-VISIT, the Data Management and Improvement 
Act Task Force's first annual report, and a report on the case 
management system that is planned to replace CLAIMS 3. We also 
interviewed DHS officials who are developing the new systems to learn 
more about the planned system capabilities.

[End of section]

Appendix II: Age Distribution and Salaries of H-1B Beneficiaries and 
U.S. Citizen Workers:

Tables 6 and 7 provide information on the age distribution and salaries 
of H-1B beneficiaries and U.S. citizen workers.

Table 6: Percentage Distribution of the Age of H-1B Beneficiaries 
Approved in 2002 and U.S. Citizen Workers in 2002:

Age (years): 20-24; Electrical/electronic engineers: H-1B: 2; 
Electrical/electronic engineers: U.S.: 5; Systems analysts/
programmers: H-1B: 2; Systems analysts/programmers: U.S.: 6; 
Biologists: H-1B: 1; Biologists: U.S.: 4; Economists: H-1B: 6; 
Economists: U.S.: 15; Accountants/auditors: H-1B: 4; 
Accountants/auditors: U.S.: 7.

Age (years): 25-29; Electrical/electronic engineers: H-1B: 27; 
Electrical/electronic engineers: U.S.: 11; Systems analysts/
programmers: H-1B: 37; Systems analysts/programmers: U.S.: 17; 
Biologists: H-1B: 12; Biologists: U.S.: 20; Economists: H-1B: 
34; Economists: U.S.: 16; Accountants/auditors: H-1B: 30; 
Accountants/auditors: U.S.: 16.

Age (years): 30-34; Electrical/electronic engineers: H-1B: 33; 
Electrical/electronic engineers: U.S.: 12; Systems analysts/
programmers: H-1B: 39; Systems analysts/programmers: U.S.: 19; 
Biologists: H-1B: 34; Biologists: U.S.: 14; Economists: H-1B: 
31; Economists: U.S.: 17; Accountants/auditors: H-1B: 31; 
Accountants/auditors: U.S.: 17.

Age (years): 35-40; Electrical/electronic engineers: H-1B: 22; 
Electrical/electronic engineers: U.S.: 21; Systems analysts/
programmers: H-1B: 16; Systems analysts/programmers: U.S.: 19; 
Biologists: H-1B: 37; Biologists: U.S.: 17; Economists: H-1B: 
16; Economists: U.S.: 15; Accountants/auditors: H-1B: 19; 
Accountants/auditors: U.S.: 18.

Age (years): 41+; Electrical/electronic engineers: H-1B: 16; 
Electrical/electronic engineers: U.S.: 52; Systems analysts/
programmers: H-1B: 6; Systems analysts/programmers: U.S.: 39; 
Biologists: H-1B: 16; Biologists: U.S.: 45; Economists: H-1B: 
13; Economists: U.S.: 37; Accountants/auditors: H-1B: 17; 
Accountants/auditors: U.S.: 42.

Source: GAO analysis of Bureau of Citizenship and Immigration Services 
and Current Population Survey data.

[End of table]

Table 7: Median Annual Salaries of H-1B Beneficiaries Approved in 2001 
and U.S. Citizen Workers in 2001 in Selected Occupations, by Age and 
Education:

Occupation: Electrical/electronic engineers; Educational attainment: 
Less than graduate degree; Age: 18-30; U.S. citizen median salary: 
$52,000; H-1B beneficiary median salary: $60,000; Statistical 
significance: H-1B higher.

Educational attainment: Occupation: Less than graduate degree; Age: 
Occupation: 31-50; U.S. citizen median salary: Occupation: $70,000; H-
1B beneficiary median salary: Occupation: $65,000; Statistical 
significance: Occupation: H-1B lower.

Educational attainment: Occupation: Graduate degree; Age: Occupation: 
18-30; U.S. citizen median salary: Occupation: [A]; H-1B beneficiary 
median salary: Occupation: $66,500; Statistical significance: 
Occupation: [A].

Educational attainment: OccupationSystems analysts/programmers: 
Graduate degree; Age: OccupationSystems analysts/programmers: 31-50; 
U.S. citizen median salary: OccupationSystems analysts/programmers: 
$88,000; H-1B beneficiary median salary: OccupationSystems analysts/
programmers: $77,000; Statistical significance: OccupationSystems 
analysts/programmers: H-1B lower.

Occupation: Systems analysts/programmers; Educational attainment: Less 
than graduate degree; Age: 18-30; U.S. citizen median salary: $45,000; 
H-1B beneficiary median salary: $54,500; Statistical significance: H-1B 
higher.

Educational attainment: Occupation: Less than graduate degree; Age: 
Occupation: 31-50; U.S. citizen median salary: Occupation: $60,000; H-
1B beneficiary median salary: Occupation: $60,000; Statistical 
significance: Occupation: No difference.

Educational attainment: Occupation: Graduate degree; Age: Occupation: 
18-30; U.S. citizen median salary: Occupation: [A]; H-1B beneficiary 
median salary: Occupation: $59,500; Statistical significance: 
Occupation: [A].

Educational attainment: OccupationAccountants/auditors: Graduate 
degree; Age: OccupationAccountants/auditors: 31-50; U.S. citizen 
median salary: OccupationAccountants/auditors: $87,000; H-1B 
beneficiary median salary: OccupationAccountants/auditors: $65,000; 
Statistical significance: OccupationAccountants/auditors: H-1B lower.

Occupation: Accountants/auditors; Educational attainment: Less than 
graduate degree; Age: 18-30; U.S. citizen median salary: $33,280; H-1B 
beneficiary median salary: $40,000; Statistical significance: H-1B 
higher.

Educational attainment: Occupation: Less than graduate degree; Age: 
Occupation: 31-50; U.S. citizen median salary: Occupation: $39,014; H-
1B beneficiary median salary: Occupation: $39,000; Statistical 
significance: Occupation: No difference.

Educational attainment: Occupation: Graduate degree; Age: Occupation: 
18-30; U.S. citizen median salary: Occupation: [A]; H-1B beneficiary 
median salary: Occupation: $46,500; Statistical significance: 
Occupation: [A].

Educational attainment: OccupationEducational attainment: Graduate 
degree; Age: OccupationAge: 31-50; U.S. citizen median salary: 
OccupationU.S. citizen median salary: $50,000; H-1B beneficiary median 
salary: OccupationH-1B beneficiary median salary: $55,000; Statistical 
significance: OccupationStatistical significance: No difference.

Source: GAO analysis of Bureau of Citizenship and Immigration Services 
and Current Population Survey data.

[A] Indicates that there were insufficient observations to make a 
determination.

[End of table]

[End of section]

Appendix III: Comments from the Department of Homeland Security:

U.S. Department of Homeland Security:

Mr. Sigurd Nilsen:

Director, Education, Workforce and Income Security Team:

U.S. General Accounting Office 441 G Street, N.W. Washington, D.C. 
20548:

Dear Mr. Nilsen:

We have received the General Accounting Office draft report GAO-03-883, 
entitled H-1B Foreign Workers: Better Tracking Needed to Help Determine 
H-1B Program's Effects on U.S. Workforce. We appreciate the opportunity 
to comment on the report.

The Department of Homeland Security (DHS) generally concurs with the 
report recommendations and acknowledges the need for an improved 
tracking system to link information related to H-1B non-immigrants 
between the Department of Labor (DOL), DHS, and the Department of State 
(DOS). All three Departments are involved in the processing and 
tracking of H-1B non-immigrants. The DOL certifies an employer's Labor 
Condition Application, which may include the employer's acknowledgement 
of certain responsibilities and benefits to be provided to the H-1B 
non-immigrant. The DHS adjudicates the petition submitted by the 
employer for the foreign worker. In many instances the foreign worker 
is outside of the United States and must be issued a visa by DOS based 
on the approved petition. However, DOS may choose not to issue the visa 
and send the approved petition back to DHS for revocation.

DHS is in the planning stages to make changes to the Computer Linked 
Application Information Management System 3 (CLAIMS 3), which will 
ensure that information on prior visa status and occupations for 
permanent residents and employment-related visa holders is consistently 
entered. There is also an on-going project to develop an interface 
between CLAIMS 3 and the United States Visitor and Immigrant Status 
Indicator Technology. When this interface is fully implemented, it will 
have the capability to track the arrival and departure of H-1B visa 
holders.

To improve program management, issuing regulations is a priority of 
U.S. Citizenship and Immigration Services under the direction of DHS. 
The final rule for implementing the portability provision of the 
American Competitiveness in the Twenty First Century Act of 2000 is 
undergoing revisions based on intra-agency comments. While GAO 
correctly noted that the Act was enacted almost 2 years ago, the rule 
combines four additional pieces of H-1B legislation, including the most 
recent H-1B legislation enacted in November of 2002.

Specific comments on the report are as follows:

Mr. Sigurd Nilsen Page 2:

* The DHS currently has a Systems Change Request 2679 for employment 
related visas that would require adjudication officers to resolve the 
visa class (class requested) on the I-129, Petition for a Nonimmigrant 
Worker, if it is different from the class granted at point of 
adjudication.

* The DHS also has a Systems Change Request 3280 that validates I-129W, 
Petition for a Nonimmigrant Worker Filing Fee, information when the 
petition is for an extension of stay.	In addition, the change will allow 
the system to ensure the current status is H-1 B. The occupation field 
is a mandatory field in CLAIMS 3 if the petition is H-1 B, however, for 
other employment-related visas, the system does not capture this 
information.

* The current class for the non-immigrant change of status is not a 
mandatory requirement in CLAIMS 3.

* The current status and occupation fields for permanent residents are 
already in CLAIMS 3, however, they are not a mandatory requirement.

Thank you again for the opportunity to respond to the draft report. If 
you have any questions, please contact Anna Dixon, DHS Audit Liaison, 
at (202) 772-9580.

Sincerely,

Signed by: 

Pamela J. Turner:

Assistant Secretary for Legislative Affairs:

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Andrew Sherrill (202) 512-7252 Mary Abdella (202) 512-5878:

Staff Acknowledgments:

In addition to the above contacts, Danielle Giese and Emily Leventhal 
made significant contributions to this report. Also, Shana Wallace 
assisted in the study design and analysis; Mark Ramage assisted in the 
statistical analysis; Julian Klazkin provided legal support; and 
Patrick DiBattista assisted in the message and report development.

[End of section]

Related GAO Products:

Information Technology: Homeland Security Needs to Improve Entry Exit 
System Expenditure Planning. GAO-03-563. Washington, D.C.: June 9, 
2003.

High-Skill Training: Grants from H-1B Visa Fees Meet Specific Workforce 
Needs, but at Varying Skill Levels. GAO-02-881. Washington D.C.: 
September 20, 2002.

Immigration Benefits: Several Factors Impede Timeliness of Applications 
Processing. GAO-01-488. Washington, D.C.: May 4, 2001.

H-1B Foreign Workers: Better Controls Needed to Help Employers and 
Protect Workers. GAO/HEHS-00-157. Washington, D.C.: September 7, 2000.

Immigration and the Labor Market: Nonimmigrant Alien Workers in the 
United States. GAO/PEMD-92-17. Washington, D.C.: April 28, 1992.

FOOTNOTES

[1] 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.

[2] H-1B beneficiaries are foreign nationals with approved petitions 
for H-1B visas. We use "beneficiary" as opposed to "worker" to refer to 
these nonimmigrants, because individuals approved for H-1B visas may 
not actually become employed in the United States.

[3] On March 1, 2003, immigration and citizenship services formerly 
provided by INS transferred over to the Department of Homeland Security 
under the Bureau of Citizenship and Immigration Services. For this 
report, we refer to BCIS or DHS, as appropriate, though the actions 
described might have taken place before the transition occurred.

[4] We include the following occupations in our reference to those that 
are IT-related: electrical/electronics engineering, systems analysis 
and programming, data communications and networks, computer system user 
support, computer system technical support, and other computer-related 
occupations. 

[5] Nonimmigrants are foreign nationals who come to the United States 
on a temporary basis and for a specific purpose, such as to attain 
education or to work.

[6] This report will focus solely on the specialty workers.

[7] In September 2000, we reported that due to legal limitations, 
Labor's review of the LCA is perfunctory and adds little assurance that 
labor conditions employers attest to actually exist. For more details, 
see U.S. General Accounting Office, Better Controls Needed to Help 
Employers and Protect Workers, GAO/HEHS-00-157 (Wash., D.C., Sept. 7, 
2000). 

[8] Employers must pay a fee of $1,000 for each H-1B petition, unless 
exempt under law. As of July 30, 2001, employers that wish to expedite 
the petition processing may pay an additional $1,000 for "premium 
processing," which will guarantee processing within 15 calendar days.

[9] H-1B petitions approved for initial employment with U.S. 
universities and nonprofit research organizations are not counted 
against the annual cap.

[10] Due to problems with computerized tracking systems, in fiscal year 
1999, BCIS approved a larger number of petitions than authorized by the 
annual limit.

[11] See, e.g., the Uniting and Strengthening America by Providing 
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 
2001. Pub. L. No. 107-56, 115 Stat. 272. For more information about 
legislation related to the entry/exit system capabilities, see U.S. 
General Accounting Office, Information Technology: Homeland Security 
Needs to Improve Entry Exit System Expenditure Planning, GAO-03-563 
(Washington, D.C.: June 9, 2003).

[12] Data limitations precluded a direct comparison of the 
characteristics and salaries of H-1B workers and U.S. citizen workers. 
See appendix I for more details.

[13] Because BCIS is unable to determine the actual number of H-1B 
workers who come to the United States once their petition is approved 
and because of uncertainty about what year beneficiaries begin working 
after approval, we cannot assess trends in H-1B employment, only in 
petition approvals.

[14] For a more detailed breakout of the age distribution of H-1B 
beneficiaries approved in 2002 and U.S. citizens in 2002, see appendix 
2, table 6.

[15] H-1B workers are required to have a bachelor's degree or its 
equivalent in order to meet the qualifications of their visa status. No 
advanced degree is required. 

[16] We used age as a proxy for experience, which is a factor that can 
affect earnings. Age was presented in two categories to maximize data 
available for estimation.

[17] From 2000-2002, about 4 to 6 percent of all H-1B petitions 
adjudicated were denied, according to BCIS. 

[18] L-1 visas can be issued to intracompany transferees who work for 
an international firm or corporation in executive and managerial 
positions or have specialized product knowledge. L-1 visa holders can 
stay in the United States for up to 5 or 7 years, depending on the type 
of services provided.

[19] Even if not yet working, employers must pay H-1B workers the 
required wage beginning 30 days after their arrival in the United 
States. 

[20] GAO/HEHS-00-157.

[21] We found that about 42 percent of workers approved for H-1B visas 
in 1999 were already in the United States when their visas were 
approved. See GAO/HEHS-00-157 for more information.

[22] DHS obtains the information in NIIS from Form I-94, the Arrival/
Departure Record, which nonimmigrants must submit to DHS when entering 
and leaving the United States. Nonimmigrants with visas that allow them 
to leave and re-enter freely, such as H-1B workers, will have completed 
multiple I-94 forms and have multiple arrival/departure records.

[23] DHS became aware of missing departure records when attempting to 
estimate the number of nonimmigrants who overstayed their allowed 
period of stay.

[24] Employers are not required to report the reasons why H-1B workers 
are no longer working for them, and when DHS receives information on 
causes of unemployment, DHS officials do not have to input this 
information into CLAIMS 3.

[25] A 2001 BCIS memorandum stated that the agency plans to address the 
legal status of unemployed H-1B workers in their regulations related to 
visa portability. Specifically, the memorandum stated that the agency 
expects to allow "some reasonable period of time such as 60 days" for 
an H-1B worker to be unemployed before being considered out of legal 
status.

[26] Under certain circumstances, BCIS officials are permitted by 
regulation to grant visa extensions or authorize classification changes 
to nonimmigrants, such as H-1B workers, who are no longer in status at 
the time a petition is filed. 

[27] We selected these occupations because they were among the top 10 
occupations filled by H-1B workers and were likely to have been 
affected by the economic downturn. In making comparisons between the 
occupations of H-1B beneficiaries and U.S. citizens, we used the CPS 
occupational codes. See table 5 for a description of the crosswalk used 
to compare occupations from the BCIS database and the CPS. 

[28] We assessed the reliability of the CLAIMS 3 LAN data through 
interviews with agency officials, electronic data testing, and review 
of related documentation. 

[29] Annual salary is based on full-time employment for 12 months, even 
if the beneficiary actually worked for fewer than 12 months.

[30] See Technical Paper 63RV: Current Population Survey--Design and 
Methodology, issued March 2002. Electronic version available at http:/
/www.census.gov/prod/2002pubs/tp63rv.pdf.

[31] We used the March 2002 Supplement data on income on U.S. citizens 
for median salary estimates, for the most recent year measured--2001.

[32] See Technical Paper 63RV, page 11-4.

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