I-TEAM: Cuomo Jobs Program Allows Firms to Count Foreign Workers as New Hires

Gov. Cuomo's much-hyped job creation program, START-UP NY, makes a simple pledge: If a company creates jobs, it can qualify for a decade of tax-free treatment. 

But don't assume New York citizens are always the ones getting the new jobs. 

Federal data shows some START-UP NY participants have applied to hire non-citizen guest workers through the H-1B visa program. According to Empire State Development Corp., the agency that doles out the tax breaks, there is no requirement that companies hire U.S. citizens to qualify. 

Jason Conwall, a spokesman for ESD, defended the hiring of guest workers by companies enjoying tax-exempt status. 

"If the individual is employed by a START-UP NY company, they’re filling a full-time job and contributing to the local economy like any other employee," said Conwall.  "Additionally, while H-1B visas last for three years (and can be extended to six) – making them, in a sense, 'temporary' jobs – having a full-time job can help to provide a pathway to citizenship for the employed individual." 

It is not clear how many guest workers have been counted as new jobs in the START-UP NY program because participating companies are under no obligation to disclose that information. 

So far, 55 START-UP NY participants have reported creating net new jobs under the program. By sifting through U.S. Department of Labor data, the I-Team was able to determine eight of those firms have applied to hire at least one non-citizen guest worker. Liazon, company that has pledged to create the most jobs -- 500 in five years -- is also the company that has applied to hire the most guest workers. 

Liazon, a health benefits company with offices in Buffalo and New York City, has petitioned the federal government to hire at least 20 H-1B guest workers since 2014, the year START-UP NY began. The company would not say how many of its new jobs reported under START-UP NY are guest workers. 

"We’re proud to be part of the movement to create jobs in Buffalo and grow the New York economy," Liazon said in a statement. "With the support of our community, we’ve created 112 jobs under START-UP NY and more than 340 in total. Together, we’re all working hard to continue building our business and investing in the state." 

Economic policy experts have long criticized the H-1B visa program as being wrought with fraud and abuse. Guest workers under the program are supposed to have unique skills that are in short supply in the US labor market, but federal auditors have found companies often use the visa program to import workers with common skills who are willing to labor at lower wages. 

"It’s not about bringing in people with skills that can’t be found in the American workforce. It’s about bringing in people who can be paid less to do work that Americans would otherwise do," said Ross Eisenbrey,  vice president of the Economic Policy Institute, a think tank focused on labor issues. 

Steven Malanga, a senior fellow at the Manhattan Institute, a think tank focusing on free market issues, said hiring non-citizen guest workers could actually foster a tougher job market for citizens of New York. 

"I think that it would be inevitable in this case that some H-1B visa holders are in fact taking jobs away from New Yorkers who would be qualified for these jobs," Malanga said. 

Earlier this month, the state released an annual report detailing how many jobs companies have reported creating in exchange for START-UP NY tax breaks. Two years into the program, the report tallied 408 new jobs. With $53 million already spent on marketing the tax break program, that adds up to about $130,000 in advertising dollars spent per job so far. 

Conwall stressed that START-UP NY firms have so far paid a total of $32 million in wages under the program and the companies still have three more years to meet their job creation goals. 

"This is only the beginning for START-UP NY, as participating businesses have committed to creating more than 4,000 new jobs within five years,” Conwall said. 

He also suggested a more accurate way to measure the cost of each new job is by tallying the $1.2 million in tax breaks that START-UP NY companies have so far enjoyed. Using that math, each of the 408 new jobs would so far cost about $3,000. Participating companies will continue to get those tax benefits for a total of 10 years. 

Cuomo declined to answer the I-Team’s questions about whether non-citizen guest workers should be counted as new hires under his START-UP NY program. His office referred all questions to ESD. 

"If I were in New York state, I would prefer to have a New Yorker doing a job rather than somebody imported temporarily from India or China,” Eisenbrey said.