H1B Auction


Congress is about to try to repay all that corporate cash they are receiving by trying to give the corporations as much cheap labor as possible to lower our wages. Bill Gates just testified before Congress that the world will end if he doesn’t get a massive increase in H1B guestworker quotas:

Congress’s failure to pass high-skilled immigration reform has exacerbated an already grave situation. … Last year, for example, Microsoft was unable to obtain H-1B visas for one-third of the highly qualified foreign-born job candidates that we wanted to hire.

He claims he would be able to hire more Americans if only he could get those “highly qualified” foreign candidates. Of course those Americans might not be paid as much as the H1Bs:

These jobs are very, very, very high-paying jobs.

Wow! We must be paying H1Bs a whole, whole, whole lot for them to be “very, very, very high-paying”! (If he is telling the truth. Otherwise he is lying through his teeth.)

Let’s assume Bill is honest. One problem with the H1B program is that it is a lottery. If there are more applications that slots, then the slots are given away by random chance instead of allowing Bill to get the H1Bs he needs so desperately. And by random chance too many of those slots are given to H1Bs who are low-paid and untrained instead of to those who are “highly qualified” and “very, very, very” highly paid.

We can fix that! Easily. Just turn the H1B lottery into an auction. And I think we can simplify the process so that even poor Americans could administer it.

  • Each H1B application has an LCA (Labor Condition Application) filled out, many by email. This becomes the official application after the Department of Labor certifies it after looking for obvious errors.
  • Each H1B LCA must be placed online by the Department of Labor in a publically available place prior to the auction.
  • The LCA will have an Rate of Pay that will constitute what the employer is willing to pay the H1B.
  • The Rate of Pay must match or exceed the Level IV (Fully Competent) Wage Rate as determined by the Foreign Labor Certification Online Data Library. No other source for wage rates will be allowed. The FLC Data Center library has an updated list of prevailing wages for all appicable job classifications for all areas of the country. (It drastically understates wages that major employers actually pay, but it is a minimum standard until a better national standard can be determined.) If an H1B candidate is truly “highly qualified” and “very, very, very” highly paid, then surely they can reach the lesser standard of “fully competent”.

The only thing new so far is the demand that LCAs be made publically available before the H1Bs are given out, in order to make the process publically transparent to the taxpayers and voters. We now have all the information we need (Employer ID number, date of application, Level IV prevailing wage, offered wage, work location) to conduct an H1B auction. The auction part is the simplest part. I can write the code to conduct it automatically in five minutes:

UNTIL quota reached or run out of valid applications
    for each occupation_code
        eliminate occupation_code if no more applications left for occupation_code

        for each area_code
            eliminate area_code if no more applications left for area_code

            the winner is MAX(offered_wage above prevailing_wage)
            if there are ties
                winner is employer with fewest wins so far

                if there are still ties
                    winner is employer with earliest application_date

REPEAT until done


  • Easy: Little needs to be changed in the current process. The code to conduct the auction is incredibly simple and transparent.
  • Diversity: Currently the system is being gamed by IT groups flooding the process with applications and getting most of the H1Bs simply by filling up the lottery. Now each occupational category has a fair chance, and proportionately fewer IT jobs will be taken. And each geographical location will have a fair chance instead of just the major areas that pay most. So more of the country can see the wonderful benefits of H1Bs instead of just IT folks in major urban areas.
  • Transparent: With LCAs visible, anyone could duplicate the process to ensure it is operating correctly. With LCAs visible, anyone can see by auction time if an LCA is for a job where there are tons of available American applicants, ensuring that the Microsofts of the world are speaking the truth about the lack of Americans in that category, and whether the job classification and offered wage are appropriate. Even more transparency could be obtained if the resume of the H1B candidate were included with the LCA…)

If this modest suggestion were adopted, I wonder how many H1Bs would really be found to be needed.