Date: Wed, 4 Feb 2009 16:25:59 -0800 From: Norm Matloff To: Norm Matloff Subject: more on appts. to Obama admin. To: H-1B/L-1/offshoring e-newsletter Sen. Gregg has now been formally announced as Obama's choice for Secretary of Commerce. As I reported recently, in http://heather.cs.ucdavis.edu/Archive/ObamaPicks2.txt Gregg is a hard-core supporter of H-1B. I also noted that McKinsey's Diana Farrell, a promoter of offshoring, has also been appointed to the Obama administration. Enclosed below are several pieces on the details. It is interesting to compare the Computerworld take on this situation with the Hira op-ed. Both note that the Gregg and Farrell appointments bode serious trouble for H-1B critics hoping that the Obama administration would bring Change. But Computerworld's Pat Thibodeau sees Gregg as the bigger threat, while Professor Hira highlights Farrell. I must say that Farrell may well end up just as harmful as Gregg, maybe even more so. Gregg is very open in his view that business interests must take priority. By contrast, Farrell, though clearly of the same school of thought, cloaks her writings in terms dear to the hearts of the Democratic Party--jobs training. Yes, offshoring of tech work produces some American victims, Farrell concedes, but that can be handled via job retraining programs. This is exactly the pitch that got the first H-1B increase through in 1998. At the time, I and others (notably IEEE_USA, whith its excellent Misfortune 500 Web site) pointed out that many older (age 35+) highly-educated programmers and engineers could not get tech work despite the Dot-Com Boom. The industry claimed that this was due to a lack of up-to-date skills in those workers. In response, Congress imposed a user fee on H-1B employers, with the proceeds to go to retraining programs. I warned at the time that the skills issue was phony, just a pretext to replace the older workers by young H-1Bs, and that the retraining idea was thus a nonsolution: Given a choice between the older/more expensive American who has just learned the Java programming language, and a younger/cheaper American with newly-acquired Java skills--and an even cheaper young H-1B with Java--the 35-year-old American will not be chosen. Sadly, my analysis was later confirmed, both by a Dept. of Commerce study and a remarkably frank statement by Sun Microsystems to the press. My point, then, is that Farrell speaks exactly the language that the Obama people want to hear, so she may actually be given more credence than Gregg, and thus present more of a problem to H-1B critics. But Gregg will be pernicious from the viewpoint of H-1B critics too, of course, and not just in advice he gives to the president. Under Gregg the DOC study I mentioned above may not have been undertaken in the first place. Or it may have been suppressed by DOC, as DOC did to its offshoring study during the Bush years; see http://heather.cs.ucdavis.edu/DOCPoliticized.txt Gregg's speech in the Cato video came right out of the industry lobbyists' list of talking points. Among them is the notion that while there is some abuse in H-1B, "especially involving Indian-related companies and their basic flooding of the market in this area and then having people return to India with knowledge that they gained here...that can be corrected fairly easily with minor adjustments in the program." By "minor adjustments" he means beefing up enforcement, and probably some cosmetic special rules for the Indian bodyshops. This strategy--blame the Indians--has long been employed not only by the industry but also by their allies in Congress. Rep. Zoe Lofgren of Silicon Valley, for example, actually ridiculed the Indian shops during a House Immigration Subcommittee hearing in 1998. All of this is designed to give the false impression that the big mainstream U.S. firms are using the H-1B and green card programs properly, and most importantly, to distract attention from the core issue in H-1B and employment-based green cards, which is the loopholes in the law. I must say again that while emotionally I would like to see this young, inspiring president succeed, I've long predicted he would have a policy of Business As Usual on most major economic issues, and worse, he has a knack for symbolic gestures without substance. Every time I a remark of mine along these lines with "I hope I'm wrong," Obama makes another move that shows I'm right. Norm http://www.eetimes.com/news/latest/showArticle.jhtml;jsessionid=DFOR1WWH1LFYGQSNDLSCKHA?articleID=213001145 Opinion: The Obama administration promotes outsourcing Ron Hira (02/04/2009 9:30 AM EST) We know from a recent EE Times survey that offshoring is the No. 1 career concern for EEs. The Obama Administration has been in office just a few weeks now, but we already know how it will address the offshoring of engineering jobs. It will promote it. EE Times, the Wall Street Journal and InformationWeek all recently published important stories on IBM's layoffs and the company's links to offshoring. IBM is now using the euphemism, "resourced actioned" to describe layoffs. The most remarkable aspect of the story was IBM's ability to take the Fifth Amendment on questions about the geographic distribution of layoffs, and even refusing to publicly state the number of U.S. workers let go. Here's what the Journal published on Jan 27: "IBM Chairman Samuel Palmisano told workers in an e-mail last week that worldwide employment topped 400,000 at the end of 2008, up from 386,000 at the end of 2007. He didn't break out U.S. employment, and IBM spokesmen declined to do so." IBM's unwillingness to publicly disclose its massive offshoring operations is no surprise, especially as it lobbies Congress and the Obama Administration for billions in taxpayer handouts as part of the economic stimulus package now being debated by Congress. What is remarkable is that the company is able to get away with it in the current job market with this President and this Congress. InformationWeek reported on a new initiative by IBM, called Project Match, which is supposed to connect displaced U.S. workers with job openings in low-cost countries like India. But the catch here is, of course, that U.S. workers would be paid Indian salaries. How many U.S. workers can take those jobs and still hope to retire back in the U.S.? The answer is none. So, where is President Obama, the politician who campaigned against outsourcing? The EE Times story that detailed the stealth layoffs and reactions of IBM workers, appeared on the same day that the President was chumming around with IBM's CEO Palmisano. Here's what President Obama said about why he invited to the White House Palmisano and nine other CEOs who are offshoring jobs: "They make things, they hire people," the President said of the meeting participants. "They are on the front lines in seeing the enormous problems in the economy right now. Their ideas and their concerns have helped to shape our recovery package in order to get this economy back on track." Can President Obama really be this naive? Or is it simply that he doesn't believe offshoring matters? There is clear evidence that the latter is the case. On the very same day he was meeting with "CEOs [who] outsource American jobs"--a phrase he repeatedly and derisively used during his campaign, he named McKinsey's & Co.'s Diana Farrell to his National Economic Council, the inner circle of economic advisors in the White House. Farrell has done more to promote outsourcing than nearly anyone else in America. Farrell was the lead author of the infamous "Offshoring: Is it a Win-Win Game?" Now she'll be operating at the highest levels of the Obama administration. Her phony "study" did more damage than any other in the debate over offshoring. And her propaganda was used to mislead the American public about the true impact of offshoring. Moreover, Farrell's firm made millions of dollars consulting with companies, advising them to accelerate their offshoring. And she publicly made the rounds to convince policymakers and the public that offshoring was good for them and the country. It's also no coincidence that the IBM and Nasscom, the Indian IT outsourcing industry association, were major McKinsey clients. They benefited from McKinsey's lobbying as well as its consulting services. This week (Feb. 3), President Obama nominated Sen. Judd Gregg (R-N.H.) to be the next Commerce Secretary. Gregg is a staunch proponent of outsourcing and expanding the H-1B visa program, destroying even more job opportunities for American engineers. During the campaign, then-Senator Obama pledged to put American workers ahead of corporate profits. Now we know that this was simply a bad joke. A joke that all of us, except the CEOs, will pay dearly for in the years ahead. The larger issue though is why President Obama can get away with these inexcusable and hypocritical actions? It's really quite simple: American workers have no real representation in Washington. While unions, like Alliance@IBM are doing yeoman's work on labor issues, it's simply not enough because their ranks, and therefore their resources, are too small. Think about it for a moment: Who represents American engineers' interests in Washington? Sam Palmisano? Diana Farrell? President Obama? Do you think the President even raised the issue of offshoring with Palmisano? Professional societies like IEEE are global institutions and are unwilling to do what's necessary to lobby on behalf of its U.S. members. I know, I've been active in IEEE's policy activities for years. It's time for each individual to do his or her part if real change on jobs is to be achieved. Our leaders, politicians, university presidents and CEOs have little or no interest in helping engineers. You must help yourself, and that means becoming politically active. The offshoring of U.S. jobs isn't a partisan issue; both Democratic and Republican politicians are actively working against your career interests. The first step is to begin communicating with your elected representatives about your interests and concerns. It's as simple as writing an e-mail. Then begin to organize and communicate in larger numbers through your local institutions, whether it is a professional society like IEEE or your place of worship. This is not a time to mourn, it's time to take action. --Ron Hira is an assistant professor of public policy at Rochester Institute of Technology and author of "Outsourcing America" http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9127276 Computerworld H-1B, offshoring supporters get key Obama Administration posts Commerce nominee Judd Gregg believes H-1Bs help create jobs for U.S. workers By Patrick Thibodeau February 3, 2009 (Computerworld) WASHINGTON -- President Barack Obama has filled some of his top White House posts with people who not only support expanding the H-1B visa program, but also see offshore outsourcing as a plus for the U.S. economy. That group includes the president's new pick to run the Commerce Department, Sen. Judd Gregg (R-N.H.). But another one of Obama's choices, Diana Farrell, may be just as important in shaping White House policy. The former director of the McKinsey Global Institute, McKinsey & Co.'s economics research arm, Farrell has been tapped to serve on the National Economic Council and as deputy economic adviser to the president. McKinsey, a management consulting firm, has published research that argues that offshore outsourcing to low-wage countries brings "substantial benefits" to the U.S. Its studies and reports have been cited by the tech industry in support of the H-1B visa program. Farrell may have the president's ear, but it's Gregg, as Commerce Secretary, who may well become the White House lead for expanding the cap on H-1B visas, a position Gregg strongly supported in the Senate. Obama voiced support early in his campaign for increasing the 85,000-visa cap, which includes 20,000 visas set aside for advanced-degree graduates from U.S. universities. But he has not addressed the issue in recent months. In a talk last April at the Cato Institute, a libertarian policy research group, Gregg pointed to comments by Bill Gates that for every H-1B worker who comes to the U.S., five jobs are created. Gates, who was still Microsoft's chairman at the time, had made the comments the month before, during an appearance before a U.S. House committee. "It's not like... we are taking jobs from Americans, which is what you hear from labor unions. We're actually creating jobs by bringing bright people into this country," Gregg said in a video on the Cato Institute's Web site. Many in Congress are divided on the H-1B issue, Senate Republicans especially. For instance, Sen. Chuck Grassley (R-Iowa) believes H-1B workers are being used to displace Americans. Gregg acknowledged that there has been some abuse in the H-1B program, "especially involving Indian-related companies and their basic flooding of the market in this area and then having people return to India with knowledge that they gained here." But, he argued, that's an issue "that can be corrected fairly easily with minor adjustments in the program." Indian offshore firms are the largest users of H-1B visas and consider it critical to their delivery model for moving IT functions offshore. It's a point they have made repeatedly in U.S. Security and Exchange Commission filings. Some observers are critical of Obama's appointments. Ron Hira, an assistant professor of public policy at the Rochester Institute of Technology and author of Outsourcing America, said the Gregg and Farrell picks indicate that Obama "is either ignorant or naive about the real job market for American IT workers. He is doing his level best, with these appointments, to undermine American workers and their livelihoods." The IT job market has been shrinking, and most major IT vendors have announced layoffs. Among them is Microsoft, which is laying off 5,000 workers. The idea that five new workers are hired for each H-1B position came from a report by the National Foundation for American Policy in Arlington, Va. Released just before Gates' spoke last year, the report analyzed publicly accessible Web-based help-wanted ads and H-1B use. The five-jobs-per-H-1B-worker claim, said Hira, "is so absurd that Mr. Gregg should be laughed out of the room. This is the kind of thoughtful leadership that Mr. Obama is bringing us?" Tech industry groups praised Gregg's appointment in statements. TechNet, a bipartisan political network of tech-centric CEOs, said Gregg "will no doubt be a strong ambassador for America's workers, businesses and our dynamic economy." http://www.eweek.com/c/a/IT-Management/Commerce-Nominee-Favors-H1B-Visa-Expansion/ eWEEK Commerce Nominee Favors H1-B Visa Expansion By Roy Mark 2009-02-04 Sen. Gregg Judd would bring a record to the Department of Commerce that unabashedly endorses an expansion of H1-B workers for the technology industry. That support, though, doesn't necessarily mean either the U.S. House or Senate will move to expand the H1-B visa cap. In Sen. Judd Gregg (R-N.H.), President Barack Obama's new nominee to run the Department of Commerce, the tech industry has found their man when it comes to expanding the H1-B visa program. The 61-year-old senator is an unabashed fan of the program. A favorite of American technology companies, the H-1B program is a temporary work visa program allowing American companies and universities to employ foreign guest workers who have the equivalent of a U.S. bachelor's degree in a job category that is considered by the U.S. Citizenship & Immigration Services to be a "specialty occupation." The idea is to help companies hire foreign guest workers on a temporary basis when there is not a sufficient qualified American work force to meet those needs. Gregg co-sponsored the H-1B Visa Program Modernization Act of 2007, which would have increased the current H1-B visa cap of 65,000 to 150,000. The unsuccessful effort would have also authorized a 20 percent increase of that 150,000 cap in any fiscal year succeeding a year in which the cap was met. "One of the main concerns I hear from businesses in New Hampshire and across the nation is a need for more highly skilled workers and that current law is stymieing their ability to hire the workers they desperately need," Judd said when introducing the legislation. "In today's competitive global markets, the U.S. must be looking for ways to stay ahead and these bills offer effective, common sense ways to do just that." Gregg also voted against a bill introduced by Sen. Richard Durbin (D-Ill.) to ensure that employers make efforts to recruit American workers before hiring foreign workers in addition to opposing legislation by Sen. Bernie Sanders (I-Vt.) that would raise the fees from $1,500 to $10,000 for employers who wish to import H1-B high-skill non-immigrant workers. The increased funds would be dedicated to scholarships for American high tech students. "Helping the high tech industry tap into highly skilled talent from around the world and address well-documented labor shortages not only keeps our economy strong, but creates U.S. jobs and deters employers from sending work elsewhere," Judd said. Gregg's unabashed support of expanding the number of the H1-B workers in the United States, though, hardly means an increase in the current cap is in the offing from the 111th Congress. Sen. Charles Grassley (R-Iowa), a frequent critic of the tech industry's use of the H1-B visa system, has already staked out ground opposing the expanded use of H1-B visas.