Date: Fri, 2 Jul 2010 17:58:03 -0700 From: Norm Matloff To: Norm Matloff Subject: Computerworld peeks at Clinton WH H-1B actions To: H-1B/L-1/offshoring e-newsletter The enclosed article brings back memories, that's for sure. I agree with the author that 1998 was a pivotal year for H-1B politics, a major turning point. There had been rumblings before, but 1998 was indeed the watershed year, culminating in a doubling of the H-1B cap. In the newly-released e-mail records of Supreme Court nominee Elena Kagan, we are afforded a fly-on-the-wall view of internal White House discussions on H-1B. (Kagan's stance on H-1B is never seen in the memos, and I am implying none.) The industry lobbying efforts at the time, starting in mid-1997, could make a fine case study in any top business school. There was a masterful concerted effort aimed at all American corridors of power--government, academia and the press. They co-opted the Dept. of Commerce, getting DOC to release a report almost identical to the industry's own report "proving" a severe tech labor shortage. (DOC, to its credit, basically recanted later on, but the damage had already be done.) The industry got the New York Times to run a 3,000-word article, front page, above the fold, reporting on the "shortage," with absolutely no dissenting voices. And the pressure on the politicians was enormous. At the time, I heard rumors from fairly well-placed people that privately White House people thought they were being hoodwinked by the industry, but this is the first time I've seen confirmation. The passage in one of the messages to Kagan about "calling the industry's bluff," cited in the enclosed article, speaks volumes, a priceless line. Both major parties were quite anxious to curry favor with the industry at the time. An excellent account can be found in the book, "How to Hack a Party Line," by Sara Miles. Silicon Valley Democratic fundraiser Wade Randlett, the central figure in the book, is mentioned in the Kagan memos. The memos describe Intel as a primary lobbying and negotiating entity. Tom Kalil, previously a trade lobbyist with the Semiconductor Industry Association was working in the White House at the time, as Clinton's science and technology adivser. Kalil's degree is in international political economy, not engineering or science, so what kind of tech advice could he give Clinton, other than a pro-industry line? (Kalil is referencece in the memos too, though his SIA tie is not mentioned, since all parties were aware of it.) At that time, the Indian bodyshops were NOT the major political force that we see today. Indeed, Rep. Zoe Lofgren actually ridiculed them, some might say with with racial overtones, at the hearing at which I testified. Accordingly, the mainstream firms like Intel were putting forth the line that yes, there is some abuse of the H-1B program, but that the culprits were the Indian bodyshops, not Intel et al. The Intel crowd was claiming that it hires only high-priced PhD geniuses. That apparently is what Ms. Fernandes was alluding to in "calling the industry's bluff." The industry had been opposing the imposition of worker protections, chiefly in the form of requirements to recruit American workers first, so Fernandes was suggesting that the restrictions be applied only to workers making under $75K. Since the industry claimed it was only hiring people far above that level, surely they shouldn't object to Fernandes' proposal, right? But of course Fernandes' phrasing shows that she thought they would still object, and that the industry's claims about "geniuses" were phony. Throughout the memos there is a theme of the absolute intransigence of the industry. This echoes the complaint of then-Senate Immigration Subcommittee Chair Alan Simpson in 1996: "I was working with the business community...to address their concerns, [but] each time we resolved one, they became more creative, more novel." We're talking about sharks, folks. Some of you may have noticed that the city of San Francisco recently enacted legislation requiring sellers of cell phones to list for consumers the radiation levels of various makes and models of the devices. The industry lobbyists had extremely aggressively opposed the legislation, and after its passage they announced cancellation of their conventions in the city, and ceased campaign contributions to politicians who had supported the bill. Did you know that U.S. maximum allowable radiation standards are higher, allowing more exposure, than those of European countries and even China? Well, at the some time of "Simpson's lament" above, 1996, the industry, including HP, was successfully lobbying the FCC to weaken the standards. The industry also got Congress to pass a law forbidding municipalities from denying permits for the construction of cell towers out of health concerns. The industry lobbyists' scapegoating of the Indian bodyshops carried much currency, with the claim being that they were the only abusers of the program. I've shown in detail in the past that that is not true at all, that the big mainstream firms are just as culpable, but the interesting point here is that the Clinton White House knew it too. Yet in the end, they accepted a compromise that singled out the bodyshops, the H-1B-dependent employer provision. (Currently the Durbin/Grassley bill would extend those worker protections to all H-1B employers.) So, we now have an answer to the question, "What did the Clinton people know about H-1B, and when did they know it?" :-) In a sense, it is gratifying to know that they were that aware. They did presumably have input. For example, Labor Robert Reich was criticizing the program soon after its 1991 implementation, and there was a scathing 60 Minutes piece about H-1B abuse by HP in 1993. I was amused to see some memos refer to White House staffer Steve Warnath. As I've mentioned before, I seldom lobby, but I was invited to a meeting in 1996 with Warnath, along with Larry Richards of SoftPac (like today's Programmers Guild) and AFL-CIO official Paul Almeida. Warnath listened intently, asking some good questions. Yet my guess is that what really made people like Fernandes suspicious was the intransigence of the industry lobbyists. Like the old Beatles line says, "One thing you can't hide / Is when you're crooked inside." The main change today is the political power of the Indian bodyshops. In contrast to their being ridiculed by Lofgren in 1998, by the 2008 election year, Hillary Clinton was joking to an Indian-American audience that she was the "senator from Punjab." 60 Minutes' old criticism of the H-1B program has been replaced by their fawning puff piece on the Indian Institute of Technology, with a refusal to run any opposing comments in viewer letters to the editor. President Obama made a point of mentioning Indian tech entrepreneurs in his speech on immigration at American University the other day. So, while the industry lobbyists continue to try to scapegoat the bodyshops (a view that unfortunately is largely shared even by those who oppose the H-1B program), it doesn't work so well today. The Computerworld article follows below. Norm http://www.computerworld.com/s/article/9178806/_Elena_s_Inbox_details_H_1B_battle_in_Clinton_White_House Computerworld 'Elena's Inbox' details H-1B battle in Clinton White House Memos to Supreme Court nominee Elena Kagan from Clinton administration opens door to battle over H-1B visa in critical year By Patrick Thibodeau July 2, 2010 06:00 AM ET Computerworld - The year 1998 was a pivotal one in the H-1B debate. One year earlier, the H-1B cap of 65,000 was reached for the first time, and demand for the visa was rising with the dot-com boom. Before that year ended, the high-tech industry would win its fight to raise the visa cap as President Clinton's White House gave ground on a push for visa reform. This story is revealed in memos that arrived in the White House mailbox of Elena Kagan, President Barack Obama's U.S. Supreme Court nominee. The U.S. Senate has been holding hearings this week on her nomination. Kagan was a Clinton White House policy adviser in the mid- to late-1990s, and then part of a circle of senior administration officials working on the H-1B visa policy. Although Kagan appears to be mostly a recipient and not an author of the various memos about this visa program, the debate over the administration's H-1B policy appears to unfold in her in-box. The Sunlight Foundation, a Washington-based open-government advocacy group, said on Thursday that it had completed making Kagan's memos from her White House years accessible -- some 13,000 files in a database it calls Elena's Inbox (http://elenasinbox.com/). The material is from President Bill Clinton's library, but what Sunlight did is to give this electronic correspondence a familiar "in-box" feel, and make it searchable. The issues that were raised in 1998 over the H-1B visa are still debated today, but in late winter of that year, Congress was moving to raise the cap despite Clinton White House skepticism. In March of that year, there was a White House meeting with "high tech + advocates," according to a memo sent to Kagan from another administration adviser, Julie Fernandes, that described a push by the tech industry for an increase in the H-1B cap. But it also noted, "Industry was reluctant to discuss long-term solutions and H1B reforms concurrent with our discussion of short-term solutions." The Clinton administration wanted a cap increase coupled with reform of the H-1B program, and in a note to Kagan, Fernandes wrote about including provisions that would require companies to first try to hire U.S. workers, if the position paid less than $75,000. Such a provision "calls industry's bluff re: their shortage of really highly skilled and desirable workers" (http://elenasinbox.com/thread/h1b-leg-update/?q=h-1b). At the time of this White House debate on H-1B, in April 1998, testimony titled "Debunking the Myth of a Desperate Software Labor Shortage" was presented by Norm Matloff, a professor of computer science at the University of California, Davis, before the U.S. House Judiciary Committee's subcommittee on immigration. Pointing to the White House memo about calling the bluff, Matloff said this meant that there was a belief among some in the White House that the tech companies weren't necessarily hiring "the best and brightest and they were not paying above $75,000 a year in many cases." "On the one hand [the White House] realized that they were being sold a bill of goods but on the other hand politically they had no choice but to go along with the [H-1B] increase," said Matloff, citing the industry's then-increasing political clout. In its push for reform, the White House saw a "press opportunity" to get its message out in July 1998, when The Washington Post began interviewing administration officials about H-1B visas for a story "from the worker's perspective," according to a White House memo (http://elenasinbox.com/thread/h-1b-and-washington-post/?q=h-1b). One question asked by the reporter to a U.S. Department of Labor official was: "Is it true that employers don't have to advertise for the jobs into which they hire the H-1B workers?" In response, Labor Department program chief John Frasier said, "Yes, that's why we're seeking the 'recruitment' attestation," according to retelling of the conversation in the memo. A recruitment attestation would have likely required an employer to affirm that a good-faith effort had been made to first hire a U.S. worker. A White House memo to then-Vice President Al Gore, written in part by Gene Sperling, the president's national economic adviser, outlined the administration's position as believing that "it may be necessary in the short-term to increase the number of visas" (http://elenasinbox.com/thread/h-1b-memo-for-vp/?q=h1b). But it wanted the increase coupled with educational assistance and reforms, including "requiring employers to attest to having attempted to recruit U.S. workers before applying for an H-1B worker and to having not laid off a U.S. worker in order to hire an H-1B worker," the memo to Gore said. The Clinton administration threatened a veto if it didn't get want it wanted. But later memos point to a change in White House direction on the issue and detail a period of negotiation with Congress. Instead of requiring employers to make a good-faith effort to hire a U.S. worker in all cases, a narrower provision was adopted (http://elenasinbox.com/thread/h1b-update-3/?q=h-1b). An increase in the H-1B cap was approved in October 1998, bringing it to 115,000. The compromise bill required recruitment attestation only to H-1B-dependent employers, defined as having 51 or more employees, at least 15% of whom were H-1B visa holders. Today, the H-1B cap is 85,000, with 20,000 visas set aside for advanced-degree graduates. Ron Hira, an assistant professor of public policy at the Rochester Institute of Technology, said, "The H-1B program's significant vulnerability to abuse was well understood by the Clinton administration, and initially it was worried about it. "In fact, the administration threatened to veto any cap increase unless it came with significant reforms that ensured that American workers weren't harmed by the H-1B program," said Hira. "But as we now know from these e-mails, the Clinton administration caved in to the special interests of industry, leaving American workers high and dry, and leaving the huge loopholes in the H-1B program in place." Even in a climate in which the IT employment market was exploding and unemployment in general was low, Hira said, "the flaws in the H-1B program were front and center in [Clinton White House] thinking." Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at Twitter @DCgov or subscribe to Patrick's RSS feed Thibodeau RSS . His e-mail address is pthibodeau@computerworld.com.