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Media should focus on L-1 Visa Abuses by Large IT Outsourcing Firms

Unfortunately, in the mass media today, there are very few who see and are willing to report on the injustice, abuses and corruption that is behind the motivation of the movement to Outsource IT jobs Offshore. Lou Dobbs is one of the few that for years, has stood out of the crowd, defending the Middle Class of America.


Recently, an immigration law firm posted a video of their techniques to avoid hiring Americans, thus skirting the intent of the law, in order to bring in foreign workers on H1-B. The abuses of the H1-B Visa program has been going for years, and is just another dimension on this attack on the Middle Class of America. In the video below, Lou Dobbs takes on the H1-B issue:


While the H1-B abuses are real and truly harm opportunity for Americans, I would like for Lou Dobbs to open his eyes to another dimension that is more dangerous to the American Middle class, and that is the use and abuse of the L-1 Visa program. In my opinion the “Prefect Storm” that is currently attacking the IT Industry is the combination of the L-1 Visa and Outsourcing IT Jobs Offshore.

I have been in the business of providing IT Consultants for 20 years, so I have seen it all. One of the outrages is that a Foreign Corporation who is one of the largest Outsourcers of IT Jobs Offshore in year 2006 had approximately 4000 H-1B Visas and approximately 4000 L-1 Visas, for a total of 8000 new Visas in the USA for just year 2006. The majority of these Visas went to workers from India. While the H-1B Video shows clear abuse in terms of avoiding the “Intent” of the Law, the abuses in the L-1 Program, in my opinion, are more rampant than you’ll find in the H1-B program.


I am planning on requesting an Amendment to be added to the Immigration bill. I feel that my proposal should become America’s Proposal. I would like to have the Amendment referred to as the “H1-B and L-1 Visa Social Security and Medicare Recovery Amendment”.


In order to bring some equity back to the American tax paying workers, we at Peningo Systems would like to propose the following as the “H1-B and L-1 Visa Social Security and Medicare Recovery Amendment”:

- Any company that hires an H1-B or an L-1 Visa to work in the United States must pay a tax that is equal to 100% of the “Employer and Employee” portion of the Social Security and Medicare tax. This is important, since it takes away one of the “MAIN” incentives to fire an “AMERICAN WORKER” and replace them with an H1-B or L-1 Visa based worker. As it is, some of the H1-Bs, L-1s and their respective employers could be EXEMPT FROM PAYING SOCIAL SECURITY AND MEDICARE TAX! Also, many companies pay the employees on these Visas far less than an American, resulting in a lower tax overhead for the companies. Also by placing 100% of the FICA obligations on the company, even if the Visa holder is being paid less than the Americans, it gives some insurance that the hiring of such individuals is not strictly based on “Cost of Labor”. This Proposal is also very important, since it addresses an issue that is near and dear to every American, and that is, supporting Social Security.


- To combat the abuse of low pay to the H1-B and L-1 Visa holder, which results in the under cutting of the American based worker, which is a violation of the letter of the law, the Federal government must come up with a “Up To Date” Salary survey that would accurately reflect what an American actually would get in the free market place. Then the H1-B or L-1 Visa holder MUST be paid in the UPPER 10% of the Salary range…that’s right…. the H1-B or L-1 MUST be paid in the UPPER 10% of the Salary range. This would insure that H1-B and L-1s are treated, in terms of cost, the same as an American and that the H1-B and L-1 Visa holder is truly a talent that is needed! Also, to combat the “Tax Evasion” aspect of these programs, by paying the Visa Holder in the upper range of the Salary Survey, the “Tax” base that the Employee is being paid at would be in par with what Americans pay. Let’s remember the “Spirit” of these Visa programs is to bring talent that cannot be found in the USA marketplace. If this is truly the case, then in the free market, these individuals should command a higher salary than Americans, since they are “SO SPECIAL”. Unfortunately, they only special quality most of these Visa holders have over Americans is that they “ARE CHEAPER” than Americans.


If we implement these 2 proposals, then the H-1B and L-1 would compete with an American based worker on the merits of his/her abilities and not solely based on the fact that the H1-B’s or L-1’s resume looks good and the H1-B or L-1 is 10s of thousands of dollars cheaper than the American. This is a fair way to bring equity back into the US as well as protect our Tax Base from these Tax Evading scheme of hiring foreign workers and avoid paying for Social Security and Medicare tax.


With the Outsourcing IT Jobs OffShore and/or using employees who are H1-B Visa or L-1 Visa holders, many times the cost of “Services” to the “End Client” is slightly effected. Between huge markups by some of the Larger Outsourcers and/or the combination of multiple layers of subcontractors involved in providing the IT Services with their respective markups, the cost to the “End Client” is still high. All the Offshoring of IT jobs and hiring of H-1Bs & L-1 Visa holders offers is higher profit margins for the Outsourcers…….WHILE PROVIDING LOWER QUALITY OF SERVICE TO THE END CLIENT!!! It is very true the old saying that Power corrupts and that Absolute Power absolutely corrupts. It is time for the Consultant and the End Client to bypass these “Prestigious Ones” which every day are looking more like ruffians and knaves.


We founded Peningo Systems to combat this problem of multiple layers of markups that ends up in between consultant and the end client. Peningo’s solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client. Lou Dobbs is a hero, since he is one of the few who is willing to stand up a fight for the American worker. I think to complete the coverage of this circle of this attack on America, Lou Dobbs needs to focus on the IT Industry’s “Perfect Storm”, the combination of the L-1 Visa Program with Outsourcing IT Jobs Offshore and its effect on taking opportunity away from America and cheating every American. If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page