Date: Sat, 31 Mar 2007 14:01:52 -0700 From: Norm Matloff To: Norm Matloff Subject: AeA "study," H-1B and age, Sun Microsystems To: H-1B/L-1/offshoring e-newsletter The Merc ran two brief articles on H-1B this week, both enclosed below. The first article is about the latest "study" by the American Electronics Association (not to be confused with the American Engineering Association, a group of engineers who have been active in opposing the H-1B program). As usual, it is couched in terms of benefit to the U.S., but all of this is nothing more than a vehicle to get Congress to give the industry special benefits--primarily cheap labor for H-1Bs, but also special tax breaks and so on. I had stated to the reporter, "These same firms that are claiming that the K-12 educational system isn't producing enough engineers are laying off engineers." I was thus pleased to see this passage: # Of the shortage of engineers in the United States, Matloff called it # "baloney. We have plenty of engineers. All you have to do is look at # starting salaries. They're not going up, and they would be if there # were a shortage." # Indeed, asked if Pipeline had ever laid off any engineers, Sundling # said the company has. "We went through the dot-com ramp-up and down # the other side, and we did lay off engineers." Still, he said, "We've # also faced repeated challenges in recruiting capable talent in the # United States. That's not an imaginary problem." And the "challenges" he claims at the new-graduate level are belied by, again, the lack of growth in starting salaries for new graduates. This part is not phrased very well: # While Matloff agreed that "huge" visa reform is needed, he said the # biggest problem for foreign-born workers is that they are often subject # to "legal wage" requirements, which are often lower than what Americans # receive for the same work. First of all, we are not talking about "foreign-born" workers. There are many foreign-born U.S. citizens and permanent residents, but they obviously are not here on visas and thus not subject to any wage requirements. In short, they are not exploitable. For those on work visas, H-1B does require that the employer pay "prevailing wage," but the law is set up in such way that an employer can meet the prevailing wage, i.e. comply with the law, and yet still pay the H-1Bs far less than what the Americans are making. The AeA study is available at http://www.aeanet.org/Publications/idjj_CompetitivenessMain2007.asp The second article concerns the "land rush" for the new fiscal year's H-1B visas. They are sure to be all snapped up immediately, which the industry lobbyists will then present as "proof" that employers are experiencing a labor shortage; instead, of course, it is a reflection of the employers' greed. I was surprised, both during the reporter's interview of me and in seeing her piece, that she was so interested in the innovation issue, and my pointing out that it is the industry lobbyists' chosen buzzword for this year's congressional lobbying campaign. I suppose that Ms. Wong's interest is a confirmation that their tactics work, i.e. this is a major point that she got out of her interviews with the industry lobbyists. In any event, the CIS (formerly INS) data show that the median wage for computer-related H-1Bs is $50,000, compared to $80,000 for Americans. It ought to be quite clear that the H-1Bs aren't being hired for their innovative abilities. Concerning the article's profiling of Gene Nelson, the situation can be summed up in a nutshell: If he were 27 years old, with a fresh PhD in biophysics and good IT background, he'd be snapped up by the biotech companies faster than you can say "Jack Robinson." That combination of skills would be dynamite. And if he were a foreign student, he would be courted by employers even more, albeit with a lower salary. But he is 55, not 27, and that is the core issue. He's perceived as too expensive (not just in salary but in health insurance benefits etc.). Even most critics of H-1B ignore the fact that the age issue is central. It allows employers to hire young H-1Bs instead of older (age 40+) U.S. citizens and permanent residents. That's the dirty little secret, folks. When the employers run out of young Americans to hire, they hire young H-1Bs (in addition to the many employers who don't even hire the young Americans). As to Sun Microsystems, quoted in this article, they've pretty much admitted to wanting a supply of young new graduates in order to avoid hiring the older, more expensive workers. Here is what they wrote in a Web page for a training program at a local community college (was at http://www.mission-online.org/sun/hist.html until 2003, and archived at web.archive.org): * Costs continue to rise....At Sun we clearly feel the hiring pinch. * Qualified SA professionals have thinned out in the Silicon Valley * over the years. This smaller pool of candidates has driven salary * expectations even higher than they are in other parts of the * country...Contractors continue to inflate local salary expectations. Translation: "Those older workers cost too much, and so we want you young people at Mission College, Ohlone College and San Jose State University to train for those jobs so we can hire you cheap." Sun laid off SA (system administrator) Guy Santiglia around the same time it had this college training program going, while retaining H-1B SAs. Santiglia brought action with the Dept. of Labor, but since Sun has the legal right to give H-1Bs employment priority over Americans, there was not much that could be done. Sun stated, both in that DOL hearing and in the San Francisco Chronicle, that it does not give Americans priority over H-1Bs, and correctly stated that the law does not require such priority. But that shows that Sun severely misled Congress when it testified to the Senate that "Sun gives employment priority to U.S. workers" (Testimony of Kenneth M. Alvares, Vice President, Human Resources, Sun Microsystems, Inc., before the Committee on the Judiciary, U.S. Senate, Hearing on The High Tech Worker Shortage and Immigration Policy, February 25, 1998). As a reader of this e-newsletter once said to me in frustration, "Where is the outrage?" Good question. Norm http://www.mercurynews.com/business/ci_5537306?source=email Tech group says U.S. loses ground to rivals By Constance Loizos Mercury News Article Launched: 03/28/2007 01:46:07 AM PDT The United States' position of leadership in science and technology is steadily being eroded by a series of missteps, a Washington-based high-tech industry group warns in a report being released today. Using member testimonials and U.S. government data, the AeA - formerly known as the American Electronics Association - paints a disquieting picture in its 32-page, six-month-long study. Largely, the report highlights the heightened competition facing the United States as "other countries catch up," including South Korea, which according to data cited in the report from the U.S. National Science Foundation, has passed the United States in the numbers of engineering undergraduate degrees that it is awarding, along with China and Japan. Indeed, while the issues highlighted in this report were first examined by the AeA two years ago in a study titled "Losing the Competitive Advantage?" the group wanted to "better emphasize possible courses of action" in its newest report, according to one of the study's two authors, Matthew Kazmierczak, a vice president of research and analysis at the AeA. Among its suggestions: lowering barriers for high-skilled individuals to receive temporary work visas and giving green cards to all U.S.-educated students with master's and doctorate degrees. It also laments "waning commitments" to research and development by the government and the low math and proficiency scores of kindergarten through 12th-grade American students as reasons why the United States is falling behind - and why it needs to act quickly to reverse the trend. Charlie Sundling, chairman and chief executive of Santa Ana enterprise software company Pipeline Group, said the report's focus on the need for more and better visas for foreign-born workers is a subject that is particularly important to him. Pipeline, an AeA member, has "had several guys who haven't been able to get their green cards, including three or four who've been here for five years," said Sundling, who added that a couple of years ago, he "lost" one individual who visited his home in India and was denied entry back into the United States. "The irony is that after five or six years, we're sending these people back who immediately found their own companies and become our stiffest competition," he said. "They leave armed not only with intellectual property, but they gain material advantages, often operating in environments where labor costs are one-fifth what they are in the U.S." Tom Campbell, dean of the Haas School of Business at the University of California-Berkeley, echoed that point, saying, "It's crazy to educate (foreign-born workers) at taxpayer expense, with federal money, then see them go" back home to start or work for companies in other countries. Not everyone sees trouble ahead, however, including University of California-Davis computer science Professor Norman Matloff, who has written extensively about immigration and employment issues, as well as conducted his own research. While Matloff agreed that "huge" visa reform is needed, he said the biggest problem for foreign-born workers is that they are often subject to "legal wage" requirements, which are often lower than what Americans receive for the same work. Of the shortage of engineers in the United States, Matloff called it "baloney. We have plenty of engineers. All you have to do is look at starting salaries. They're not going up, and they would be if there were a shortage." Indeed, asked if Pipeline had ever laid off any engineers, Sundling said the company has. "We went through the dot-com ramp-up and down the other side, and we did lay off engineers." Still, he said, "We've also faced repeated challenges in recruiting capable talent in the United States. That's not an imaginary problem." _________________________________________________________________ Contact Constance Loizos at cloizos@mercurynews.com or (415) 613-9700. H1B visa window opens By Nicole C. Wong Mercury News Article Launched: 03/30/2007 06:39:11 PM PDT Tech companies have been scrambling for months to finish government forms and beat what may be their most intense postmark pressure of the year. It's not the April 17 tax deadline, but the April 2 start of the window to apply for coveted - and contentious - H-1B worker visas. The U.S. Citizenship and Immigration Services agency will process petitions for specially-skilled foreign workers on a first-come, first-served basis starting Monday. There are 85,000 visas available for the 2008 fiscal year, of which 20,000 are set aside for workers who hold a U.S. master's or doctorate degree. There are additional visas available for workers in higher education, nonprofits and government research. Last year the cap was reached in June. Hewlett-Packard mailed its applications Friday. "Having worked for several months to identify workers for whom we'll need to secure H-1B status, we are as prepared as we can be," said Leslie Nicolett, HP's immigration policy manager, in a statement. Silicon Valley companies have lobbied Congress to increase the number of H-1B visas doled out each year, arguing their innovative edge is at risk when they're unable to fill job openings. However, unemployed tech workers and grassroots organizations assert there are enough talented American workers ready to fill those slots - but they're not willing to accept the lower wages that companies can pay immigrants. "The PR people are preying on Americans' fear," said Norman Matloff, a professor of computer science at the University of California at Davis who's critical of H-1B visas, speaking of the tech industry's purported concern about the loss of innovation. "Just like we lost the electronics and manufacturing industries, the fear is we'll lose the tech industry as well." The Immigration Act of 1990 set the H-1B visa cap at 65,000 to help U.S. employers hire skilled foreign workers while protecting employment prospects for Americans. Applications first bumped against that limit in 1997 due to "the buregoning technology sector," according to agency spokeswoman Sharon Rummery. The cap was raised during the tech boom and bust years, but fell back to 65,000 in 2004. The government does not release data on how many H-1B visas individual companies receive, and Silicon Valley's major tech companies declined to disclose how many they want or obtained. But several Web sites have posted lists showing Intel, Oracle and Cisco Systems among the top 20 sponsors of H-1B visas in recent years. Intel and Oracle couldn't find spokespeople to comment Friday. Cisco spokeswoman Robyn Jenkins-Blum said in an email that the company's position "is to recruit and hire the best and most qualified individual for the position." But Gene Nelson, an unemployed 55-year-old veteran of the information technology industry, said because of H-1B visas, "We're just not getting a crack at the these jobs." Nelson holds a doctorate degree in biophysics. His most recent stint of employment, which ended in December, was as a seasonal worker at a winery, where he earned $12 an hour. "The bottom line is these are good American jobs that aren't going to Americans," he said. But tech companies say some of their specialized positions can't be filled by any American worker with the right degree and technical skills. And the "insufficient number of visas" creates problems when a company can't hire even a handful of workers, said Lowell Sachs, Sun Microsystems' senior manager for federal government affairs. "You're going to start losing your edge compared to competition." As a result, Sun pushes managers to anticipate more than a year in advance who they'll want to hire. "That's not great for a company to do," Sachs said. "There are always new developments coming up that you need to be able to jump on top of quickly." _________________________________________________________________ Contact Nicole C. Wong at nwong@mercurynews.com or (408) 920-5730.