Date: Sat, 23 Jun 2007 21:33:22 -0700 From: Norm Matloff To: Norm Matloff Subject: Cohen & Grigsby and the prevailing-wage scam To: H-1B/L-1/offshoring e-newsletter I've constantly harped on the fact that the reason employers are so anxious to hire foreign workers is that they use those workers as cheap labor. I've also repeatedly stressed the fact that the crux of the abuse of the H-1B and employer-sponsored green card programs is the LEGAL LOOPHOLES in the prevailing wage requirement which both of those programs have. These loopholes enable employers to pay their foreign workers well below what they would have to pay Americans. In short, the legally-defined prevailing wage is typically well below the real market wage. Here I will give readers a further look at how Cohen & Grigsby, the law firm in the YouTube scandal, makes use of these legal loopholes. You'll see some intriguing data, with big implications. You'll also see another egregious example of public statements by the firm which are exactly the opposite of their private actions. I looked at all the PERM (green card) applications filed in 2004 by Cohen & Grigsby for Software Engineer positions. (This is from a Dept. of Labor Web site, http://www.flcdatacenter.com/CasePerm.aspx Note that this is NOT the LCA data. The salaries here are guaranteed to be the actual salaries for specific workers.) Here are the results, showing the actual salary, claimed prevailing wage and employer name, sorted by salary: 45000.000000 42390.000000 "Algor Inc." 45150.000000 44762.000000 "Bayer Corporate and Business Services LLC" 49504.000000 44762.000000 "Bayer Corporate and Business Services LLC" 60980.000000 64189.000000 "Hexware Technologies 60980.000000 64189.000000 "Marconi Communications 60980.000000 64189.000000 "Medrad Inc." 61000.000000 64189.000000 "UBICS 61000.000000 64189.000000 "UBICS 64189.000000 64189.000000 "Marconi Communications 64240.000000 67621.000000 "Bayer Corporate and Business Services LLC" 64240.000000 67621.000000 "CM Technologies Corporation" 64240.000000 67621.000000 "COMPUNETIX 64240.000000 67621.000000 "KEMMA SOFTWARE" 64240.000000 67621.000000 "LogiXguru" 64240.000000 67621.000000 "LogiXguru" 64240.000000 67621.000000 "Marconi Communications 64240.000000 67621.000000 "Marconi Communications 64240.000000 67621.000000 "UBICS 64240.000000 67621.000000 "UBICS 64240.000000 67621.000000 "UBICS 64240.000000 67621.000000 "UBICS 64240.000000 67621.000000 "UBICS 64240.000000 67621.000000 "UBICS 64240.000000 67621.000000 "UBICS 64240.000000 67621.000000 "Union Switch & Signal Inc." 64240.000000 67621.000000 "Union Switch & Signal Inc." 65000.000000 67240.000000 "FreeMarkets Inc." 65000.000000 67621.000000 "ENTIGO" 66730.000000 70242.000000 "Ansoft Corporation" 66730.000000 70242.000000 "Ansoft Corporation" 66730.000000 70242.000000 "ANSYS Inc." 66730.000000 70242.000000 "ASE Edge 66730.000000 70242.000000 "ASE Edge 66730.000000 70242.000000 "Bayer Corporate and Business Services LLC" 66730.000000 70242.000000 "Global Transcription Ltd." 66730.000000 70242.000000 "UBICS 66730.000000 70242.000000 "UBICS 66730.000000 70242.000000 "UBICS 66730.000000 70242.000000 "UBICS 66730.000000 70242.000000 "UBICS 66730.000000 70242.000000 "UBICS 66730.000000 70242.000000 "UBICS 66730.000000 70242.000000 "UBICS 66730.000000 70242.000000 "Union Switch & Signal Inc." 66731.000000 70034.000000 "People.com Consultants 66731.000000 70034.000000 "People.com Consultants 66731.000000 70034.000000 "People.com Consultants 66903.000000 70242.000000 "FreeMarkets Inc." 67000.000000 70242.000000 "Algor Inc." 68905.000000 72530.000000 "Westinghouse Electric Company" 69378.000000 59940.000000 "Marconi Communications 70000.000000 64189.000000 "PrintCafe Systems 70000.000000 67621.000000 "Ansoft Corporation" 72000.000000 51355.000000 "Marconi Communications 72000.000000 67621.000000 "Union Switch & Signal Inc." 73448.300000 77314.000000 "Emergent Systems Corporation" 75000.000000 67621.000000 "MultiModal Technologies 75524.000000 67621.000000 "Union Switch & Signal Inc." 75524.000000 70242.000000 "FreeMarkets Inc." 75524.000000 79498.000000 "ASE Edge 75524.000000 79498.000000 "ASE Edge 75524.000000 79498.000000 "ASE Edge 75525.000000 79498.000000 "PNC Financial Services Group" 76000.000000 79798.000000 "Union Switch & Signal Inc." 76471.200000 77667.000000 "Hexaware Technologies 77250.000000 67621.000000 "FreeMarkets Inc." 77308.000000 79498.000000 "Union Switch & Signal Inc." 78100.000000 70242.000000 "THE PNC FINANCIAL SERVICES GROUP 78111.000000 82222.000000 "SolutionNET International Inc." 78114.000000 54542.000000 "SolutionNET International Inc." 78942.000000 83096.000000 "Global Knowlege Network Inc" 78945.000000 83096.000000 "PNC Financial Services" 82712.000000 70242.000000 "PNC Financial Services Group" 85000.000000 71032.000000 "Sonic Foundry 88000.000000 67621.000000 "Ansoft Corporation" 110000.000000 70242.000000 "Ansoft Corporation" Now, first of all, let's confirm what we already know. Of the 83 entries, 74 are less than the OES mean for 2004, $77,330, for Software Engineers, Applications, and 79 are less in the case of Software Engineers, Systems Software. Remember, this is perfectly legal, but it certainly shows that these people are hired as cheap labor. But I want to call your attention to something different. I sorted the data by salary in order to highlight the fact that there are a lot of DUPLICATE ODDBALL SALARIES--for different employers. In other words, you have several employers offering exactly the same salary, in fact, the same non-round-number salary. For instance, 8 different companies, ranging from Bayer Corporate and Business Services LLC to Union Switch & Signal Inc., ALL "coincidentally" were paying their Software Engineers the SAME salary of $64,420! How come? Well, prior to the law enacted in December 2004, employers were allowed to pay 5% below prevailing wage. And if you look at the prevailing wages, in the second column above, you will see that that $64,420 figure is exactly 5% below prevailing wage! And if you look at the other applications listed above, you'll see that most are also exactly 5% below their prevailing wage. Now, don't jump to conclusions here. THIS 5% IS NOT AN INTERESTING LOOPHOLE in its own right. I'm not pointing to the fact that Cohen & Grigsby was taking advantage of that extra 5%; that's nickel and dime stuff. No, look a little deeper. What this data shows is a lack of a competitive market, with two interesting implications: 1. We have a bizarre situation in which "the tail is wagging the dog." The law firm is telling the employers how much to pay their workers! And it's telling them all to pay the same amount. 2. The Americans hired by these companies undoubtedy vary from each other in their salaries, because they can negotiate. In other words, you see that THE FOREIGN NATIONALS ARE IN NO POSITION TO NEGOTIATE. This shows yet another way in which the employers can get away with paying foreign workers less than Americans. Please recall that the prevailing wage is typically a lowball figure to begin with, well below the market wage. Though the press accounts have focused on the firm's comment in video 9 on how to avoid hiring Americans, video 12 is just as damning, as the law firm talked about how to get a prevailing wage that can be, in the Cohen & Grigsby attorney Jennifer Pack's own words, "$10,000 to $15,000" below the market. Yet the foreign nationals accept this lowball salary, because in the deal they are getting a form of nonmonetary compensation which is highly valuable to them--a U.S. green card. I love exposing hypocrisy. Recall that in my original analysis of the TubeGate videos, at http://heather.cs.ucdavis.edu/Archive/YouTubeVideosH1B.txt I pointed to the rank hypocrisy of the Cohen & Grigsby firm. One of the firm's attorneys, Matt Phillips, told the Pittsburgh Post-Gazette that employers do their best to try to find Americans to fill a spot before resorting to hiring foreign workers--when in the videos, in which Phillips speaks, the firm is telling employers how to AVOID finding Americans. Well, I'm including below an even more outrageous example of the firm's hypocrisy below, this one on the prevailing wage issue. This is an op-ed by Larry Lebowitz, a partner in the firm who served as the MC in the YouTube videos. I'm including the full text below, but here are the highlights: First, Lebowitz again claims that employers do their best to find American workers: # U.S. companies that bring in foreign professionals usually do so as a # last resort By now you know that there are a number of statements in the videos which show that to be a lie. Next, Lebowitz assures readers: # To hire H-1Bs, a company must: Guarantee the H-1B will be paid the # prevailing wage or better... Again, remember in the video, the firm shows how the prevailing wage is typically lower than the market wage. And get this one! # These rules actually help U.S. workers, too, by keeping wages high, # ensuring that U.S. workers are not displaced and keeping corporate # productivity high. I'm trying not to constantly use the word "chutzpah" in my series of postings on Cohen & Grigsby, but what other word fits? I guess I can say, "unmitigated audacity." :-) Now, no lobbyist op-ed and planted article would be complete without examples of "poster child" companies that supposedly are desperate to hire, can't find American workers in spite of herculean efforts, and "must" hire H-1Bs. Well, one of Lebowitz's poster children here is Marconi Communications, a major firm you may have noticed in my PERM data list above. For instance, Marconi was one of the eight firms that were all paying their Software Engineers exactly the same oddball figure of $64,240. Some desperation, huh? Norm Pittsburgh Post-Gazette We need the best and brightest The growth of Pittsburgh technology firms is hampered by a freeze on visas for skilled foreign workers. Let them in. Sunday, May 21, 2000 By Lawrence M. Lebowitz CoManage Corp. is a Wexford-based developer of software packages for the telecommunications industry. Like many high-technology firms, here and elsewhere throughout the country, the company depends on high-quality talent to develop products and move them to market fast, before the competition. The problem: There's a shortage of domestic software engineering talent. Larry Lebowitz, a director with the Downtown law firm of Cohen & Grigsby, is a lawyer specializing in immigration law. He is also an adjunct professor of immigration law at the University of Pittsburgh School of Law. According to the U.S. Department of Labor, Bureau of Labor Statistics, the need for computer engineers will grow 108 percent nationwide between 1998 and 2008; for computer support specialists, the need will grow 102 percent; for systems analysts, 94 percent. "Previously, when we were in a startup phase, we were able to staff through employee referrals," said Phil Compton, chief financial officer of 70-person CoManage. "We reached that level in about 15 months. Now we recruit in all of the high-tech hotbeds -- Seattle, Silicon Valley, Houston, Boston, Austin -- and on the Internet. So the company started looking for talent overseas, and found several foreign workers with the precise skills to match open jobs. Unfortunately, like other U.S. companies, CoManage can't hire foreign workers until Oct. 1. That's because the federal government has set strict annual limits on the number of visas, called H-1B visas, offered to foreign professionals. H-1Bs enable foreign nationals to live and work in the United States on a temporary, three-to-six-year basis. The H-1B program allows U.S. businesses -- universities, hospitals, R&D organizations and high-tech companies -- to recruit and hire the best qualified candidates from around the world. In 1997 and 1998, the H-1B cap was 65,000, and the ceiling was reached in 11 months and seven months, respectively. While Congress raised the cap to 115,000 for 1999 and 2000, last year the ceiling was reached in six months. This year, it was reached on March 21 -- a full six months before the end of the fiscal year. This essentially places a foreign worker hiring freeze for all U.S. companies that desperately need highly skilled talent. Further complicating matters, the cap is scheduled to drop to 107,000 for next year, and to 65,000 for 2002. "We have been very much feeling the H-1B pinch," Compton said. Meanwhile, CoManage is stuck in a holding pattern. The pending offers it has to H-1Bs represent about 15 percent of its work force. The firm's product development has been delayed and it could potentially affect timing of product delivery. Dozens of other Pittsburgh companies are facing the same talent shortage. Quite simply, there aren't enough qualified U.S. citizens/permanent residents to meet the intense demand for these positions. And, unfortunately, it's not a new situation. According to a recent survey of 878 U.S. computer companies released by the Computing Technology Industry Association, nearly 10 percent of information service and support jobs are now going unfilled -- an estimated 268,740 positions. As a result, CompTIA says, the U.S. economy loses more than $100 billion in spending each year that would result from salaries and training. The CompTIA study further states that the problem is greatest among America's largest companies (with annual revenue of $1 billion or more), 60 percent of which said that finding qualified information technology staff was difficult. Several weeks ago, Marconi Communications announced an expansion plan that included a goal of hiring another 1,000 workers during the next several years. "The key to Marconi's success is its technological advantage," said Bill Wilson, Marconi's director of human resource services, "and that technological advantage is predicated on the technical expertise of our people." Finding those people, especially under the current H-1B freeze, has proven to be a challenge. "We're on a constant lookout for a significant number of software and hardware engineers," Wilson said. "We use all of the usual avenues. But domestic employment is such that engineers are in high demand. There simply are not enough of them." While Marconi hasn't been forced to slow project development due to the H-1B cap, the company has had to scramble to find the talent it needs from other sources. The H-1B cap has caused a lot of headaches at Marconi, forcing it to spend extra time at additional expense to find the skilled engineers it needs. U.S. companies that bring in foreign professionals usually do so as a last resort; it is a long and difficult process. To hire H-1Bs, a company must: [dot.gif] Guarantee the H-1B will be paid the prevailing wage or better. [dot.gif] Assure the H-1B will not "adversely affect" the working conditions of U.S. colleagues. [dot.gif] Give U.S. workers notice of the foreigner's presence. [dot.gif] Certify that there is no strike or lockout at the worksite. [dot.gif] Complete an eight- to 12-week process before being able to actually employ the foreign worker. These rules actually help U.S. workers, too, by keeping wages high, ensuring that U.S. workers are not displaced and keeping corporate productivity high. Additionally, visa application fees collected from U.S. companies are used to fund educational programs for American schools and universities. Making these guarantees, finding the right talent and bringing them to the United States is an expensive, sometimes months-long endeavor. Companies that violate these rules are subject to stiff penalties. But in a tight labor market, and with technological skills in high demand, employers have little choice. They'll put up with the extra time, expense and hassles to hire foreign workers . . . if they can. A native of India, Col. Vijay P. Reddy is all too familiar with the H-1B problems. Reddy is vice president of personnel for Southpointe-based UBICS Corp., a provider of information technology professional services. "As I speak, we have between 20 and 30 H-1B personnel requirements going unfilled for major clients," said Reddy. "This despite the fact that there are very capable people available and working in Europe or Japan who want to come to the United States to work. It's still considered to be 'the land of opportunity.' Unfortunately, we can't get people because the cap has been reached." In my opinion, the answer to this problem is twofold. First, in the long term, we must better prepare American students to go into these fields. The $500 fee companies must pay when applying for each H-1B visa now goes into a scholarship fund to train U.S. workers. Although it's still too early to tell how successful this program will be, it's a step in the right direction. This is, however, only part of the solution. Training junior high school students in math and science will not help high-tech companies who need computer professionals today. As things now stand, these companies have only one answer -- securing H-1B visas. Congress needs to pass a pro-business, pro-competition, pro-job-creating H-1B bill that increases the number of temporary foreign professionals annually into this country. The Senate and House both have bills pending. This month, the Clinton administration called for increasing the H-1B ceiling to 200,000. Yet, there's been no real action. The hiring freeze continues. The work force problems of Pittsburgh high-tech companies linger. And our local economy will suffer. The H-1B quotas are too low. For our own good, they need to be raised.