Date: Mon, 16 Feb 2004 12:35:16 -0800 From: Norm Matloff To: Norm Matloff Subject: "the rest of the story" on Sherry Neal To: H-1B/L-1/offshoring e-newsletter Some of you have seen the enclosed piece from Business Courier of the Cincinnati-Northern Kentucy region, which Rob Sanchez posted today on his e-newsletter. The article features quotes from immigration attorney Sherry Neal on how "important" the H-1B program is to local businesses. Well, here is "the rest of the story" on Sherry Neal: Recall that H-1Bs are de facto indentured servants. If they are being sponsored for a green card, they're essentially immobile, unable to jump ship for another employer, until the very last stage of the multi-year green card process. That is a major reason why the employers can get away with paying them low salaries, and make them work long hours. Even more importantly, this immobility means that that the H-1B can't leave the employer in the lurch by leaving in the midst of an urgent project. Where does Ms. Neal fit in with this? Well, I'll always be grateful to Ms. Neal for unwittingly helping me, by giving me a public source to cite for the fact that one of the big reasons employers love hiring H-1Bs is their de facto indentured servitude. Here is an excerpt from the Dayton Daily News, July 11, 1999: [Attorney Sherry] Neal said foreign nationals may appear to be more loyal workers because they aren't as mobile as other in-demand tech workers. The Immigration and Naturalization Service must give approval before foreign nationals change jobs---a process that can take six weeks. "Some of the U.S. workers, they get a job offer and they are gone in a week," she said. Neal was referring to simply getting a new H-1B visa under a new employer (which has been expedited since she made that remark), not to the green card process, but the point is the same: Employers LOVE that immobility. John Wentworth said the same thing in Workforce Magazine, May 1999: ...There are two good things about H-1Bs. First, they allow you to travel the globe while you identify technical professionals who want to work in the United States. Second, the H-1B is valid only for the employer who arranges it. If you bring a technical professional into the country and he or she decides to jump ship, its likely that the ship he or she will have to jump on is the one thats going back to the home country. If the person wants to come back, he or she has to start the immigration process all over again. As a result, most H-1B visa holders demonstrate remarkable loyalty. Remember this "loyalty" as you read the string of articles you'll see in the press in the coming months on the "importance" of H-1B to employers, as the industry lobbyists ramp up for pushing Congress to increase the H-1B cap. One of the employers cited here, ITCube, exploits that "loyalty" to pay its H-1B programmers $43,795, which is below what even a new graduate makes, and far below the median programmer salary of $71K. At least this article does give more credence (though not all that much) to the other side of the story, unlike today's LA Times piece, which I'll post later. Also, note another article in the same paper, which I'm also enclosing below. Norm http://cincinnati.bizjournals.com/cincinnati/stories/2004/02/16/story1.html >From the February 13, 2004 print edition Visa limits could create new hassles Lance Williams Courier Staff Reporter Many local companies say a new cap on a controversial federal work-visa program could make it harder to find employees. In the past three years, about 700 Greater Cincinnati companies have added more than 12,000 foreign workers under the H1-B visa program. Several local companies -- including the University of Cincinnati, Cincinnati Children's Hospital Medical Center and Convergys -- have hired hundreds of workers, mainly to handle technology-related programming and other high-tech functions. However, there are more than 200 job categories that can use an H1-B visa. Other companies hired only a handful of workers, including nontechnology companies such as Cole + Russell Architects, Pronto Refund Tax Service and the Society of Jesus. But all that is expected to change. The number of H1-B visas issued nationally was slashed by two-thirds beginning in October 2003, to 65,000. And many experts believe that federal officials will soon announce that this year's cap has been reached. "Several companies have expressed concern about the H1-B cap and the impact it will have on business, especially since the cap will be reached so early in the year," said Sherry Neal, an attorney with the Hammond Law Group. "Some of my clients have expressed concern because they were anticipating growth in business this year and the hiring limitations caused by the H1-B cap will hinder their business growth." Debbie Youtsey, a partner with Thompson Hine LLP who specializes in immigration issues, said: "Everyone is surprised that we reached the cap so soon. Employers may be out of luck already." While local employers may face more limited hiring choices, others see the tightening of the work visa program as a good thing. Amid talk of a jobless recovery, Keith Adams, president of the local Communication Workers of America Local 4351, said the last thing the federal government needs to do is promote the growth of foreign workers coming to the United States. "All this does is slow down the flood," Adams said. "It's a small step in the right direction." Adams, who said he was laid off from AT&T in December because of outsourcing, is among a growing number of U.S. workers who say the H1-B is a front that allows companies to move more work overseas. He said there were a number of workers in Cincinnati who had to train an H1-B hire who would eventually return to their home country and replace them in an outsourcing deal. "The gun was literally put to their heads as they were told they would lose their severance packages if they didn't perform the training," Adams said. The H1-B program has had its share of controversy, largely because of opposition from pro-labor groups, but also from studies that showed that H1-B workers were underpaid compared to their American counterparts. Companies that hired the foreign workers were not required to pay benefits and were not responsible for workers' compensation claims for those workers, Adams said. One university study found that H1-B workers often were paid 20 percent to 30 percent less than their native counterparts. Despite the controversy, there are plenty of success stories from the program. Lama Alrawas came to the United States from Lebanon in 1992 to study at Xavier University. Upon graduation, she went to work for Xpedx, which does work with International Paper, which has a location in Greater Cincinnati. "It has been wonderful ... to get experience like this," Alrawas said. And she said her perspective has helped her employer as well. "There's a real focus on diversity in the workplace now." The full effect of the lowered cap might not be felt for a couple of years. There are still nearly 1 million workers who have active H1-B visas still in effect from previous years. "I see the demand really increasing in 2005," said Hiten Patel, a senior consultant with ITCube, a small biotech software company that works with Children's Hospital. The effect might be greatest at firms, derisively referred to as "body shops," that hire workers and farm them out to larger corporations looking for short-term work, Patel said. Labor and immigration groups have taken many of these companies to task, saying workers are often overworked and underpaid when compared to their American counterparts. Still, proponents of the visa program say it has safeguards in place to protect both American jobs and foreign workers, and that there is still a real need for the program, particularly for companies outside the tech sector. The height of the need was during the dot-com boom, where companies resorted to recruiting on college campuses to find talent that could be targeted for H1-B visas. "Before the dot-com demise, and when Y2K concerns were rampant, software engineers were in very high demand throughout the industry, and there was a recognized shortage of available qualified engineers," said Steve Herzog, counsel for Cincom Systems Inc. "However, even though the technology industry continues to rebound, there appears to be no shortage of qualified engineers available as has been in the case in the past." Still, Herzog said there is one position at Cincom that will likely go unfilled because of the tightened quota for 2004. Neal said the change can impact companies in two ways: recruitment and retention. "A company will be unable to hire any foreign national who is not already in the U.S. on an H1-B visa (for 2004)," Neal said. The H1-B program was established in 1990 to supply American businesses with workers the companies said were not available in this country. In 2000, the high-tech industry lobbied to have the original cap of 65,000 visas tripled between 2001 and 2003. Recipients of the visa can apply for a three-year extension following their initial three-year visa. Plus, they can receive another year if they already have applied for permanent status before their visa expires. Youtsey said she expects the 65,000 cap to stay in place for a while, because pro-labor forces will be fighting hard against any attempts to raise the cap. And with a backlash growing against offshore outsourcing, the move probably wouldn't gain a lot of support, although Neal said thousands of U.S. companies are lobbying for the cap to be raised. "I don't think that would be a very popular position," Youtsey said. "When you have a downward economy, immigration is not a real popular thing to vote for at the moment." http://www.bizjournals.com/extraedge/washingtonbureau/archive/2004/02/16/bureau1.html February 16, 2004 Outsourcing abuses may spell visa restrictions Kent Hoover Washington Bureau Chief Business groups have pleaded with Congress not to restrict visas issued to company employees who are transferred from abroad, saying flexibility to move people around is crucial to competing in a global market. But critics of L-1 visas say companies are using the program to outsource jobs now held by Americans to foreigners who will work for less money. Pat Fluno was laid off as a computer programmer for Siemens ICN in Lake Mary, Fla., in 2002. The company outsourced her job to Tata Consulting Services, a company based in India. Tata then obtained L-1 visas so that some of its employees from India could move to Lake Mary to take over the work. "We lost our jobs and we had to train our replacements," Fluno says. "The visa holders who replaced us sit at our old desks, answer our old phones, and work on the same systems and programs we did -- but for one-third the cost." Fluno's case is just one example of an "outsourcing epidemic" that is decimating white-collar workers at U.S. companies, says Michael W. Gildea of the AFL-CIO's professional employees department. The number of foreigners transferred to the United States via L-1 visas has tripled since 1994 to more than 300,000 in 2002. These visas have grown in popularity because there is no limit on how many of them can be issued, and there are no restrictions against using them to replace American workers. Plus, companies are not required to pay workers with L-1 visas the prevailing wage for their occupation. The similar H-1B visa program, on the other hand, is restricted to 65,000 per year, and includes protections for U.S. workers. Critics of L-1 visas want Congress to impose similar curbs on L-1 visas. They have won support from both Republicans and Democrats. Business groups say abuse of the visas could be addressed by tightening the definition of what "specialized knowledge" the foreign worker needs to have. But they oppose legislation to impose caps or other restrictions on the visas. "Killing the L-1 visa program will not make more jobs available for American technology workers. It will do just the opposite," says Harris Miller, president of the Information Technology Association of America. "L-1 visas promote foreign direct investment in the U.S., and they allow U.S. companies to create better products and services, and achieve higher sales overseas." More information is available on the Committee of International Relations Web site.