Date: Fri, 13 Feb 2004 12:46:57 -0800 From: Norm Matloff To: Norm Matloff , H-1B/L-1/offshoringe-newsletter@laura.cs.ucdavis.edu Subject: "feel good" editorial by the San Jose Mercury News About a week ago I received a call from Miguel Helft, an editorial writer for the San Jose Mercury News. He seems to be a nice, friendly guy (who volunteered that he is a former holder of the H-1 visa, which was the historical precursor to H-1B), but I really don't know why he bothered to call me, as his editorial says everything I urged him not to say. He began by saying "The Mercury's position on H-1B is well-known. We completely disagree with you [i.e. with NM] on H-1B. But we think there may be problems with L-1, and we'd like to write an editorial on it." I replied that I strongly objected to that premise, explaining that H-1B is no better than L-1, because H-1B's so-called "protections" are phony. In particular, I stated that the prevailing-wage requirement for H-1B is so riddled with loopholes as to be useless, and thus H-1B is no better than L-1, which has no nomimal prevailing-wage provision. I said, "Please don't run an editorial saying that H-1B is fine but L-1 needs some reform." Yet that is exactly what he did, as you can see in the enclosure below. Consider what he said here: In the most infamous case of L-1 abuse, Siemens Technologies laid off American high-tech workers in Florida who were paid about $98,000 a year and replaced them with foreign workers earning $36,000, far below the salary range for a basic programmer. The foreign workers were supplied by Tata Consultancy Services, an Indian company. What Miguel didn't know is THE SAME OUTRAGES OCCUR WITH H-1B. If he had bothered to read my H-1B/L-1 summary document which I referred him to, he would have seen the excellent example described by the Programmers Guild, on their Web page titled "How to Underpay an H-1B," at http://www.programmersguild.org/Guild/h1b/howtounderpay.htm There is a detailed analysis of how the Bank of America replaced its programmers by H-1Bs (not L-1s!) from Exult. The American programmers had been paid in the range $70,000-$90,000, and their H-1B replacements were paid $39,184. And the employers did this in full compliance with the law. So, the prevailing-wage law is basically useless. I began the above paragraph by saying, "What Miguel didn't know..." The sad fact is that the Merc journalists are paid NOT to know. As he said, the Merc's fundamental policy is to be pro-H-1B. They have not engaged in a 100% blackout of the overwhelming case against H-1B, but they are the only major paper I know of that has consistently been blatantly rah-rah for the industry point of view on this topic. Once in a while they've run a balanced article on H-1B, but from various pieces of information available to me it appears that these pieces have run because a couple of brave reporters have pushed for it. And even in those cases, their coverage of H-1B abuse has tended to focus on the "body shops," a criticism which is palatable to the industry (see below). Other Mercury reporters have not only run very biased pieces, but have actually browbeat and argued with the H-1B critics as they interview them--a flagrant breach of journalistic ethics. And the editorials have been consistently pro-H-1B, without exception. I also asked Miguel not to focus on the Indian "body shops," because it is racial scapegoating. The Silicon Valley firms that the Merc admires so much try to paint a picture of H-1B abuse being confined to the body shops. Rep. Lofgren, the Silicon Valley firms' biggest supporter, made a big deal out of that in her remarks in a House hearing. She belittled the body shops in a manner that I considered to be overly ethnicity-specific. The fact is that abuse of H-1B is the rule, not the exception, and this holds across the spectrum of employers. For a quick example, just take a look at the salaries Intel pays its H-1Bs (go to the Dept. of Labor H-1B database for this, or Rob Sanchez's FOIA database). No, they're not quite as bad as the Siemens and BofA examples, but the salaries definitely tend to be at the extreme low end of the normal engineering salary range. (See http://heather.cs.ucdavis.edu/Archive/GradDegrees.txt) Yet Intel claims that these satisfy prevailing-wage requirements, and indeed they do, due to the gaping loopholes I've mentioned. Miguel does mention the issue of loopholes too, but his implication is that only the body shops use them. Come on, Miguel, surely you must know that those big corporations make aggressive use of loopholes in the tax code; do you think they wouldn't do so concerning loopholes in the H-1B code? Whether coincidental or not, Miguel's focus on the body shops as the primary culprits in H-1B and L-1 abuse is in keeping with the Silicon Valley industry party line, as I said above. Similarly, his focus on L-1 won't offend those Silicon Valley firms, who generally use H-1Bs instead of L-1s. What the Merc is trying to do here is run a "feel good" piece which has the appearance of being sympathetic to American programmers and engineers while in actuality supporting the status quo of abuse. In the last 20 years, the Merc has developed into a major national paper of generally excellent quality. If it really cared to, it would have the resources to really get to the bottom of the H-1B mess, and do a major expose' of the fact that this program is simply rotten to the core. As former DOL official Demetrios Papademetriou put it, "Do you want me to call it a sham? Do you want me to call it a hoax? Sure it is. This program has never worked, and it never will." The fact that the program is FUNDAMENTALLY flawed, with abuse being the rule rather than the exception, has been documented over and over again, so the information would be available if the Mercury really wanted to do a REAL investigation of this issue, and the fact that they won't do so is a real shame. Norm http://www.mercurynews.com/mld/mercurynews/news/opinion/7945137.htm?template=contentModules/printstory.jsp Posted on Fri, Feb. 13, 2004 Now it's an onshore job threat L-1 VISAS ARE BEING ABUSED TO BRING IN FOREIGN WORKERS WITH AVERAGE SKILLS WHO RECEIVE LOWER WAGES Mercury News Editorial It's tough enough that technology workers in Silicon Valley have to compete with lower-paid rivals offshore. What's not as well known, and in some ways more insidious, is the fact that workers here are also forced to compete with lower-paid rivals right here. The competition comes from foreign workers who are brought to the United States under the L-1 visa, a relative of the H1-B visa. Reports suggest that misuse and abuse of the L-1 visa have become rampant in recent years. It's time for Congress to fix it. The L-1 visa serves an important purpose. It is intended to allow temporary intra-company transfers of workers with specialized skills from overseas operations to U.S. operations. A company such as HP or Intel, for example, would use an L-1 visa to transfer an executive, a high-level manager or an engineer with knowledge of a specific product from their facilities in Ireland or China to the United States. Increasingly, however, the visa has been used to import workers with run-of-the mill skills -- say accounting or programming -- but no specialized knowledge. The worst abuse of the L-1 visa comes from so-called ``body shops,'' outsourcing firms that import workers and then contract them out to other employers. Body shops are not new. In 2000, the Mercury News exposed various Valley body shops that were relying primarily on H1-B visas to bring in scores of foreign engineers for hire by third parties. But abuse of the L-1 visa by body shops presents a far greater threat to American workers. Under the H1-B visa, workers must be paid a "prevailing wage." Employers often exploited loopholes in that provision and paid H1-B workers less than their American counterparts. The L-1 visa, however, has no prevailing wage requirement. And unlike H1-B visas, which are currently capped at 65,000 per year, there are no caps on the number of L-1 visas allowed. About 112,000 were granted in 2002. In the most infamous case of L-1 abuse, Siemens Technologies laid off American high-tech workers in Florida who were paid about $98,000 a year and replaced them with foreign workers earning $36,000, far below the salary range for a basic programmer. The foreign workers were supplied by Tata Consultancy Services, an Indian company. Congress should consider a number of reforms to the L-1 visa, including: * Tightening the definition of ``specialized knowledge.'' * Limiting the subcontracting of L-1 workers to other firms. * Putting an annual cap on L-1 visas. * Setting requirements that L-1 workers be paid prevailing wages. To ensure that these reforms have teeth, Congress must make those provisions easily enforceable. Fixing the L-1 visa won't end the woes faced by tech workers here. But it would level the playing field a bit. -------------------------------------------------------------------------------- © 2004 Mercury News and wire service sources. All Rights Reserved. http://www.mercurynews.com Miguel Helft is an editorial writer for the Mercury News. He can be reached at mhelft@mercurynews.com.