H-1B Foreign Workers: Better Tracking Needed to Help Determine	 
H-1B Program's Effects on U.S. Workforce (10-SEP-03, GAO-03-883).
                                                                 
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.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-883 					        
    ACCNO:   A08327						        
  TITLE:     H-1B Foreign Workers: Better Tracking Needed to Help     
Determine H-1B Program's Effects on U.S. Workforce		 
     DATE:   09/10/2003 
  SUBJECT:   Alien labor					 
	     Data collection					 
	     Employment 					 
	     Immigrants 					 
	     Immigration or emigration				 
	     Information technology				 
	     Internal controls					 
	     Labor force					 
	     Labor supply					 
	     H-1B Visa Program					 
	     INS Computer Linked Application			 
	     Information Management System 3.0			 
                                                                 

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GAO-03-883

United States General Accounting Office

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

September 2003

H-1B FOREIGN WORKERS

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

GAO-03-883

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

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.

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 [email protected].

September 2003

H-1B FOREIGN WORKERS

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

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.

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

Number of petitions 200,000

150,000

100,000

50,000

0 1997 1998 1999 2000 2001 2002 Fiscal year

H-1B petitions Annual limit

Source: Bureau of Citizenship and Immigration Services.

Contents

Letter 1

Results in Brief 3
Background 6
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 11
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 20

Little Is Known about the Status of H-1B Workers, but New

Systems Are Being Developed to Improve Tracking Information 27
Conclusions 32
Recommendations for Executive Action 33
Agency Comments 33

Appendix I Scope and Methodology 35

CLAIMS 3 Data on H-1B Petition Approvals 35
Current Population Survey Estimates 36
Salary Comparisons 38
Employers Selected for Interviews 39
DHS Current and Planned Tracking Systems 40

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 45

GAO Contacts 45
Staff Acknowledgments 45

Related GAO Products

46

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
12

20

26 37 38

42

42

Figures

Figure 1: H-1B Petitions Approved and Counted Toward the Annual Limit,
Fiscal Years 1997 through 2002 8 Figure 2: Median Age of H-1B
Beneficiaries Approved in 2002 and U.S. Citizen Workers in 2002 in
Selected Occupations 14 Figure 3: Percentages of H-1B Beneficiaries
Approved in 2002 and

U.S. Citizen Workers in 2002 with Graduate Degrees by

Selected Occupations 15 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 17

Figure 5: Countries of Birth for H-1B Petition Approvals, 2002 18 Figure
6: Total Initial and Continuing H-1B Petitions Approved Annually, Calendar
Years 2000 through 2002 19 Figure 7: L-1 Visa Issuances, Fiscal Years 1998
through 2002 25

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

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separately.

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
occupations1 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.

1A "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.

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 beneficiaries2 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)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-

2H-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.

3On 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.

  Results in Brief

related4 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.

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

4We 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.

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 nonimmigrants5 who employers sought
to work in specialty occupations and fashion modeling.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:

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

o  	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

5Nonimmigrants 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.

6This report will focus solely on the specialty workers.

prevailing wage level for the occupational classification in the area of
intended employment; and

o  	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:

o  	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;

o  	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

o  	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,7 an employer who wishes to hire an H-1B
worker can file two types of petitions with BCIS to obtain approval.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.9 "Continuing" employment petitions are
filed for: extensions of the initial petitions for another 3 years, the
maximum period

7In 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).

8Employers 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.

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

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.10

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

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

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.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

11See, 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).

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.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

13

2002.

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.

12Data 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.

13Because 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.

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

                                   2000 2002

                                    Percent                           Percent 
                                      of                                   of 
                        Occupation     total              Occupation    total 
              Systems analysis and              Systems analysis and 
                     a programming        54           a programming 
             Electrical/electronic            College and university 
                      aengineering         5               education 
          Computer-related, othera            Accountants, auditors, 
                                           4 and related occupations 
            College and university             Electrical/electronic 
                         education         3           engineering a 
                                                   Computer-related, 
            Accountants, auditors,                            othera 
           and related occupations         3                         
               Architecture, other         3     Biological sciences 
                         Economics         2 Physicians and surgeons 
            Mechanical engineering           Miscellaneous managers  
                                           2    and officials, other 
           Physicians and surgeons         2               Economics 
                     Miscellaneous                     Miscellaneous 
                                                       professional, 
          professional, technical,                        technical, 
                    and managerial         2          and managerial 
              All other IT-related              All other IT-related 
                      occupationsa         2            occupationsa 
             All other occupations        19   All other occupations 
                   Total approvals       100         Total approvals 

Source: GAO analysis of BCIS data.
Note: The percent totals for the occupations above do not sum to 100
percent due to rounding.
aIT-related occupations.

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).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.

14For 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.

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

Age (years)

45

41

40

35

30

25

20

15

10

5

0 Electrical/ Systems analysts/ Biological/life Economistsa Accountants/
electronic programmersa scientists auditorsa engineersa Occupation

H-1B beneficiaries

U.S. citizen workers

Source: GAO analysis of BCIS and CPS data.

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

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.15 Insufficient data precluded us
from analyzing the education levels of U.S. citizen biological/life
scientists and economists.

15H-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.

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

Percent

100

90

80

70

60

50

50

40

30

20

10

0 Electrical/ Systems analysts/ Accountants/ electronic programmersa
auditorsa engineersa Occupation

H-1B beneficiaries

U.S. citizen workers

Source: GAO analysis of BCIS and CPS data.

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.

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

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.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

16We 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.

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
yearolds 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
yearolds 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

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.

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

bIndicates those with bachelor's degrees, or less education.

cIndicates those with graduate degrees.

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

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.

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

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

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 1,577,427.17

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

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

Change from 2000-2001

Change from 2001-2002

                                   Occupation

H-1B petition approvals

                                             U.S citizen employment estimates

H-1B petition approvals

U.S citizen employment

estimates

            Electrical/electronic                                  
                        engineers   2,840     16,868        -8,426    -54,031 
                          Systems                                  
             analysts/programmers  17,513    -62,852    -106,671     -147,005 
                  Biological/life                                  
                       scientists   1,685     14,448          -233    -10,840 
                       Economists   1,534     -8,700        -1,467     -7,868 
             Accountants/auditors   3,677     15,099        -3,082      5,701 

  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

Source: GAO analysis of BCIS and CPS data.

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).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.

18L-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.

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

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,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

Number of Investigations showing a

investigations violation as a percentage Investigations Number of Fiscal
Investigations showing of total investigations where back Amount of back
employees due year finalized violation finalized wages found due wages
found due back wages

         2000            58        51        88%       49       $1,629,173    
         2001            60        54        90%       48       $1,335,147    
         2002           134        112       84%       94       $4,211,209    
      2003 (thru                                             
         3-03)           71        62        87%       56       $2,126,881    

Source: Department of Labor, Wage and Hour Division.

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.20

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

20GAO/HEHS-00-157.

  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.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,22 data from fiscal years 1998 through 2000 indicate that
departure information for foreign nationals is missing in about 20 percent
of the cases.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.

21We 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.

22DHS 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.

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

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.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.

24Employers 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.

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.25

Currently, BCIS officials are addressing this issue on a case-by-case
basis,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-

25A 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.

26Under 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.

Conclusions

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.

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

Agency Comments

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.

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

                       Appendix I: Scope and Methodology

  CLAIMS 3 Data on H-1B Petition Approvals

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.1

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).2 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.3 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:

o  	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.

o  	An individual H-1B worker could be represented in multiple petitions
filed by different employers in the same year.

1We 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.

2We assessed the reliability of the CLAIMS 3 LAN data through interviews
with agency officials, electronic data testing, and review of related
documentation.

3Annual salary is based on full-time employment for 12 months, even if the
beneficiary actually worked for fewer than 12 months.

                       Appendix I: Scope and Methodology

o  	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.

o  Characteristics of H-1B beneficiaries approved in 2001 and working in

  Current Population Survey Estimates

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.

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.4

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)5 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

4See Technical Paper 63RV: Current Population Survey-Design and
Methodology, issued March 2002. Electronic version available at
http://www.census.gov/prod/2002pubs/tp63rv.pdf.

5We used the March 2002 Supplement data on income on U.S. citizens for
median salary estimates, for the most recent year measured-2001.

                       Appendix I: Scope and Methodology

likely to report income more accurately than at any other point during the
year. 6

                                 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

Electrical/electronic Systems Biological/life engineers
analysts/programmers scientists Economists Accountants/auditors

            Age               X          X          X         X             X 
        Educational                                                 
         attainment           X          X                                  X 
       Median annual                                                
           salary             X          X                                  X 

Source: GAO analysis of CPS data.

Note: `X' indicates that we could report findings.

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.

6See Technical Paper 63RV, page 11-4.

                       Appendix I: Scope and Methodology

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 BCIS occupational title CPS codes CPS occupational title    
              030                                            Computer systems 
                   Systems analysis and    064, 229                 analysts, 
                              programming           computer programmers      
              003   Electrical/electronic       055 Electrical and electronic 
                              engineering                           engineers 
              160 Accountants, auditors,        023 Accountants and auditors  
                              and related           
              050               Economics       166                Economists 
                                                          Biological and life 
              041     Biological sciences       078                scientists 

  Salary Comparisons

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

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.

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:

                       Appendix I: Scope and Methodology

o  	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.

o  	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.

o  	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.

o  	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.

o  	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 	To obtain information about the factors affecting
employer decisions about the employment of H-1B workers, we conducted site
visits and

for Interviews telephone interviews with 36 H-1B employers in 6 of the 12
states with the

                       Appendix I: Scope and Methodology

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.

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.

  DHS Current and Planned Tracking Systems

Appendix I: Scope and Methodology

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.

                 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

Electrical/electronic engineers

                               Systems                       
                  analysts/programmers Biologists Economists Accountants/auditors 
  Age                                                        
(years) H-1B U.S.            H-1B U.S. H-1B U.S.  H-1B U.S.             H-1B U.S. 
 20-24   2      5                  2 6    1 4           6 15          4           
 25-29   27    11                37 17   12 20         34 16          30          
 30-34   33    12                39 19   34 14         31 17          31          
 35-40   22    21                16 19   37 17         16 15          19          
  41+    16    52                 6 39   16 45         13 37          17          

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

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

U.S. citizen H-1B beneficiary Statistical Occupation Educational
attainment Age median salary median salary significance

Electrical/electronic engineers Less than graduate degree 18-30 $52,000 $60,000
                                  H-1B higher

Less than graduate degree 31-50 $70,000 $65,000 H-1B lower

a a

Graduate degree 18-30 $66,500

Graduate degree 31-50 $88,000 $77,000 H-1B lower

  Systems analysts/programmers Less than graduate degree 18-30 $45,000 $54,500
                                  H-1B higher

Less than graduate degree 31-50 $60,000 $60,000 No difference

a a

Graduate degree 18-30 $59,500

                                               Graduate degree 31-50         
                                             $87,000 $65,000 H-1B lower      
Accountants/auditors Less than graduate                                   
degree 18-30 $33,280 $40,000 H-1B higher                                  
                                              Less than graduate degree      
                                               31-50 $39,014 $39,000 No      
                                                             difference      
                                                                         a a 

Graduate degree 18-30 $46,500
Graduate degree 31-50 $50,000 $55,000 No difference
Source: GAO analysis of Bureau of Citizenship and Immigration Services and
Current Population Survey data.

aIndicates that there were insufficient observations to make a
determination.

                        Appendix III: Comments from the
                        Department of Homeland Security

Appendix III: Comments from the Department of Homeland Security

Appendix IV: GAO Contacts and Staff Acknowledgments

GAO Contacts 	Andrew Sherrill (202) 512-7252 Mary Abdella (202) 512-5878

Staff 	In addition to the above contacts, Danielle Giese and Emily
Leventhal made significant contributions to this report. Also, Shana
Wallace assisted

Acknowledgments 	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.

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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.

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