Date: Thu, 18 Sep 2003 13:54:21 -0700 From: Norm Matloff To: Norm Matloff Subject: analysis of Tuesday's Senate hearing on H-1B To: age discrimination/H-1B/L-1 e-newsletter As many of you know, the Senate Judiciary Committee held a hearing on September 16, titled "The Importance of the H-1B Visa to the American Economy." The title itself is outrageous, as is the fact that the hearing panel was heavily stacked in favor of industry, with the industry side outnumbering the labor side by 3 to 1. (I'm told that CWA, an AFL-CIO union, asked to participate but was refused.) The hearing testimony is available at http://judiciary.senate.gov/hearing.cfm?id=913 except for the IEEE-USA testimony, which is somehow missing. (No accident?) You can get that testimony at http://www.ieeeusa.org/forum/POLICY/2003/091603.html I'm enclosing two articles on the hearing (more articles to come). Here are my comments. The first article below, by IDG (likely Computerworld) appears to seriously misquote the IEEE-USA testimony, assuming that Steadman did not depart from his written version. But Steadman urged Congress to look for a longer-term solution to the lack of qualified engineers and IT workers than raising the H-1B cap again. He encouraged Congress to invest more money in programs that encourage U.S. students to study engineering and science. He also asked Congress to strengthen the U.S. Department of Labor's ability to investigate H-1B abuses, as is required in the U.S. Jobs Protection Act, introduced in Congress in July. This makes it sound like Steadman is conceding that there is a labor shortage, which certainly is at odds with his statement about unemployment in engineering. It also makes it sound like Steadman believes the H-1B abuses are an enforcement issue, when in fact that central problem is the loopholes in the law. Most employers who underpay their H-1Bs (i.e. most employers of H-1Bs) do so in full compliance with the law, and Steadman's written testimony makes this point. I have not read Steadman's testimony in 100% detail, but I've done a "thorough skimming" of it, and it looks pretty good (though he's missed a couple of important points), and is not consistent with the reporter's quotes here. Steadman does cite the loopholes, for instance. Backers of the H-1B program argued Tuesday that the visas aren't taking away U.S. jobs, because some technology companies still can't find qualified workers for some positions. Ingersoll-Rand has searched for more than a year to fill a plastics engineer and an industrial robotics engineer position, finally settling on a Canadian resident in both cases, said Elizabeth Dickson, advisor of immigration services for the industrial equipment manufacturer. Anyone who believes that Ingersoll-Rand hires H-1Bs due to lack of qualified American workers rather than for cheap labor should go to the Dept. of Labor H-1B Web page. The firm hires a ton of H-1Bs, and the wages paid are in most cases low. There are a number of engineers listed there in the $40K range, and even some in the $30K range. Same situation for programmers. Intel attempts to find U.S. workers before bringing in a foreign worker with an H-1B visa, said Patrick Duffy, human resources attorney for Intel, but more than half of the graduate students in physical science programs at U.S. universities are from outside the country. No, Intel does NOT make such attempts. Here is what an Intel manager who is critical of the H-1B program said (see my updated congressional testimony for the citation): It's a matter of what are the mechanisms, how does a hiring manager in Silicon Valley get a hold of re'sume's? What happens is, you get a lot of H-1B re'sume's. I had to go out myself, instead of relying on the Personnel Dept., to go and advertise at several colleges where I thought I would be able to find some good employees. And lo and behold, I found a very good one at Cal Poly, Pomona. Second, the point about physical science graduate programs is a red herring. In preparation for an forthcoming article, I looked at the entries for Intel in the DOL H-1B database, at http://www.flcdatacenter.com/casesearch.asp Jenny Verderi, Intel's Manager of Education and Workforce Policy, said (Jim McKay, The H-1B Visa Debate, Government Technology Magazine}, December 2000), "We are not able to find enough qualified U.S. workers in certain disciplines year after year, particularly in the science and engineering areas...there has been a shortage in the areas that we hire at for quite some time--and that's primarily Master's and Ph.D. design engineers.'' Well, for the year 2000, for instance (the pattern is similar for other years), only 73 of 218 LCAs filed by Intel were for design engineers (under a liberal interpretation of the term)--the job category Intel said was its "primary" usage for H-1Bs. Furthermore, in its Senate testimony on Tuesday, Intel said that it hires H-1Bs mainly as design engineers and process engineers. I discussed design engineers above, so let's look at process engineers. There is one entry for that job title in the LCA database, and is for a wage of only $63K--and that is for a SENIOR process engineer! In other words, Intel is paying only $63K, less than a San Francisco bus driver makes, to SENIOR ENGINEERS with GRADUATE DEGREES in a job category in which Intel claims there is a severe shortage of qualified people. Meanwhile, the LCA database is full of jobs at Intel with titles like test engineer (salary $42K), Web applications developer ($43K), planning analyst ($48K) and so on. And I strongly object to the underlying assumption that a graduate degree is important anyway. Even a lot of the (non-techie) critics of the H-1B program buy into that false notion, sad to say. The fact is that Intel itself has said, for example, that it doesn't have much work which is appropriate for Ph.D.s. Steadman and Senator Diane Feinstein, a California Democrat, pointed to abuses of H-1B visas and of a related program, the L-1, which allows companies to transfer employees from outside the U.S. to fill high-level positions. Some companies have used the L-1 visas to import IT workers who are then hired out to other companies, Steadman charged, and Feinstein questioned whether some companies employing H-1B workers were paying the prevailing wage as required. Numerous workers in California have complained to Feinstein that they've been replaced by foreign workers paid a third of their salary, she said. Again, the hiring out to other companies is NOT a central issue. What is the difference whether, for instance, Siemens hires L-1s from India via Tata Consultancy Services or via Siemens' own Indian subsidiary? (It's done both.) Either way, it's cheap labor, and critics who fall into this "secondary employer" trap are basically doing the industry lobbyists' work for them by allowing the discussion to get sidetracked. Feinstein's statement, though well meaning and highly appreciated, once again shows that she doesn't really understand the issues. Those firms she's citing as using H-1Bs as cheap labor are doing this fully legally. It's the LAW that has to be changed, and by treating it as an enforcement issue she is (wittingly or not) passing the buck to the Executive Branch, when it is a Legislative Branch problem. It certainly would be nice if she were open to being educated on this. Senator Saxby Chambliss, a Georgia Republican, said he plans to introduce legislation this week to close loopholes in the L-1 visa program. I'm told that Chambliss' bill is essentially the Mica bill. If so, it is worthless, a cruel hoax on the public. Committee Chairman Orrin Hatch, a Utah Republican, noted that the sunset of his legislation to expand the H-1B cap to 195,000 will also result in the loss of a $1,000 fee per H-1B application, which has been used for training and scholarship programs in the U.S. How gullible does Hatch think the American public is? [Don't answer that question. :-) ] If they really think that fee is important, they could extend the fee WITHOUT extending the 115,000 cap. And the training funded by the fee, as I've pointed out before (and as does Steadman) is basically useless; the employers want cheap labor, not trained Americans. Remember, the employers are laying off Americans and forcing them to train their foreign replacements! So who's the one who needs training? Norm http://www.infoworld.com/article/03/09/17/HNh1bhearing_1.html H-1B hearing: Companies say foreign workers needed Visas for foreign IT workers will drop by two-thirds for 2004 unless Congress acts By Grant Gross, IDG News Service September 17, 2003 WASHINGTON -- The yearly number of foreign visas for IT workers and professionals coming into the U.S. will drop by two-thirds for 2004 unless the U.S. Congress acts, and an immigration lawyer group came to Congress Tuesday asking that the cap on H-1B visas not be allowed to slide back to pre-dot-com boom levels. Representatives of Intel Corp. and Ingersoll-Rand Corp. also argued that H-1B visas are needed to fill technical positions where they can't find qualified U.S. candidates, but one panelist told the U.S. Senate Judiciary Committee that the visa program is taking money from the pockets of U.S. workers. "The unemployment rate of electrical and electronic engineers has reached an all-time high," said John Steadman, president-elect of the Institute of Electrical and Electronics Engineers-USA. "This translates to hundreds of thousands of unemployed U.S. engineers. These are people who are degreed and capable U.S. engineers." Unemployment among electrical and electronic engineers reached 7 percent in early 2003, Steadman said. The annual H-1B cap went from 65,000 in the U.S. government's fiscal year 1998 to 115,000 visas granted a year in 1999 and 2000, then up to 195,000 in 2001 and 2002. The capped H-1B numbers don't include some workers, such as those employed at universities and some research organizations, but the caps do affect how many IT workers U.S. companies can bring into the country. The American Electronics Association noted, however, that the IT industry's reliance on H-1B visas was falling, from 65 percent of the capped number in 2001 to 34 percent in 2002. The number of H-1B visas, used by companies to bring IT workers from India, China and other countries to the U.S., would go back to a pre-1999 cap of 65,000 if Congress fails to act by Oct. 1. Stephen Yale-Loehr, the business immigration chairman of the American Immigration Lawyers Association, asked the U.S. Senate Judiciary Committee to allow 115,000 H-1B visas for the U.S. government's 2004 fiscal year. The H-1B visa program, popular with technology companies, also allows other U.S. businesses to recruit hard-to-find professionals such as accountants, lawyers and doctors. Backers of the H-1B program argued Tuesday that the visas aren't taking away U.S. jobs, because some technology companies still can't find qualified workers for some positions. Ingersoll-Rand has searched for more than a year to fill a plastics engineer and an industrial robotics engineer position, finally settling on a Canadian resident in both cases, said Elizabeth Dickson, advisor of immigration services for the industrial equipment manufacturer. "It is hard to displace U.S. workers when you don't have any U.S. workers to choose from," Dickson said. Intel attempts to find U.S. workers before bringing in a foreign worker with an H-1B visa, said Patrick Duffy, human resources attorney for Intel, but more than half of the graduate students in physical science programs at U.S. universities are from outside the country. About 5 percent of Intel's U.S. workforce are H-1B workers, Duffy said, and many of them eventually become permanent U.S. citizens. "This small percentage is comprised of individuals possessing unique and difficult-to-find skills which can only be acquired through advanced, university-level education," Duffy added. The U.S. technology industry will be in danger of falling behind other countries unless the country can continue to attract "the best and brightest" workers from around the world, Dickson said, "We are looking for a reasonable, market-driven H-1B policy," she added. The debate between Steadman and the three other witnesses translated into conflicts on the Senate committee, with senators sometimes even expressing conflict within themselves. "We don't want to be a country that turns down Einstein, but we also don't want to be in a situation where we flood the market," said Senator Jeff Sessions, an Alabama Republican. Steadman and Senator Diane Feinstein, a California Democrat, pointed to abuses of H-1B visas and of a related program, the L-1, which allows companies to transfer employees from outside the U.S. to fill high-level positions. Some companies have used the L-1 visas to import IT workers who are then hired out to other companies, Steadman charged, and Feinstein questioned whether some companies employing H-1B workers were paying the prevailing wage as required. Numerous workers in California have complained to Feinstein that they've been replaced by foreign workers paid a third of their salary, she said. "My view is (the H-1B cap) should go back unless we are able to produce some stronger safeguards," Feinstein added. "I'm elected to represent people from California, who are losing their jobs big time." Senator Saxby Chambliss, a Georgia Republican, said he plans to introduce legislation this week to close loopholes in the L-1 visa program. Committee Chairman Orrin Hatch, a Utah Republican, noted that the sunset of his legislation to expand the H-1B cap to 195,000 will also result in the loss of a $1,000 fee per H-1B application, which has been used for training and scholarship programs in the U.S. Since 1998, when the cap was expanded from 65,000 to 115,000, more than $692 million has been raised by the H-1B fee, providing training for 55,000 U.S. workers and scholarships for 12,500 students in science and engineering. Hatch said the Senate should not tolerate fraud and abuse in the H-1B program, but he questioned whether it alone was causing the U.S. unemployment problems. He questioned whether the facts supported accusations that companies are using the H-1B visa program to hire cheap labor. The average H-1B worker salary is $55,000, while the average salary of a U.S. worker with a bachelor's degree is $46,000, Hatch said. But Steadman said Hatch wasn't comparing similar numbers. Engineers typically earn a much higher salary than most other professions requiring bachelor's degrees, he said, and the presence of foreign workers is depressing wages. Yale-Loehr also noted that 22,000 H-1B applications are pending from last year, and close to 7,000 visa spots were set aside for Chile and Singapore in recent U.S. free trade agreements with those countries. If Congress doesn't raise the 65,000 cap, only about 36,000 new H-1B visas will be available in 2004, he said. But Steadman urged Congress to look for a longer-term solution to the lack of qualified engineers and IT workers than raising the H-1B cap again. He encouraged Congress to invest more money in programs that encourage U.S. students to study engineering and science. He also asked Congress to strengthen the U.S. Department of Labor's ability to investigate H-1B abuses, as is required in the U.S. Jobs Protection Act, introduced in Congress in July. Steadman also suggested the H-1B visa program contributes to companies outsourcing jobs and moving them outside the U.S. Some companies use the H-1B workers' contacts in their home countries to set up outsourcing deals, he said. "These are difficult times for IT and electrical engineering professionals in the U.S.," said Steadman, an engineering professor from Alabama. "But there is a lot more at risk here than jobs for our members. If we continue down this path, the end result is the United States will make itself increasingly dependent on foreign technical expertise, both here and abroad." >From matloff@laura.cs.ucdavis.edu Wed Sep 17 16:55:55 2003 Return-Path: Received: from laura.cs.ucdavis.edu (laura.cs.ucdavis.edu [169.237.6.113]) by laura.cs.ucdavis.edu (8.12.5/8.12.5) with ESMTP id h8HNts99004871 for ; Wed, 17 Sep 2003 16:55:54 -0700 Received: (from matloff@localhost) by laura.cs.ucdavis.edu (8.12.5/8.12.5/Submit) id h8HNtsBh004869; Wed, 17 Sep 2003 16:55:54 -0700 Date: Wed, 17 Sep 2003 16:55:54 -0700 From: Norm Matloff Message-Id: <200309172355.h8HNtsBh004869@laura.cs.ucdavis.edu> Mime-Version: 1.0 Content-Transfer-Encoding: 8bit Content-Type: text/plain; charset=iso-8859-1 To: matloff@laura.cs.ucdavis.edu Subject: Congress Reviews Foreign Worker Visa Programs X-URL: http://www.eweek.com/article2/0,4149,1271309,00.asp Status: RO Content-Length: 15891 Lines: 448 #eWEEK Technology News [ew_nav_logo_top.gif] [ew_nav_logo_bottom.gif] [ew_spacer.gif] [ew_nav_tagline.gif] [ew_nav_zdlogo.gif] News [ew_nav_break.gif] Reviews [ew_nav_break.gif] Opinions [ew_nav_break.gif] Case Studies [ew_nav_break.gif] Research [ew_nav_break.gif] Tools [ew_nav_break.gif] Discussions [ew_nav_search.gif] __________ [eWEEK....] [ew_nav_searcharrow.gif]-Submit [ew_nav_subcall.gif] My Account | [ew_spacer.gif] [ew_spacer.gif] [ew_spacer.gif] Home > News > Congress Reviews Foreign Worker Visa Programs [ew_spacer.gif] [ew_spacer.gif] Congress Reviews Foreign Worker Visa Programs By Caron Carlson September 17, 2003 WASHINGTON--In the boom times of the late 1990s, U.S. corporations widely turned to foreign workers to fill highly skilled jobs, particularly in the technology field. Now, in the continuing economic downturn, foreign workers are being blamed for displacing their homegrown counterparts. Wednesday, Sen. Saxby Chambliss, R-Ga., will introduce a bill crafted to close loopholes in employment visa laws, which he says allow companies to hire foreign employees and outsource them to other companies. ADVERTISEMENT IFRAME: http://ad.doubleclick.net/adi/eweek.dart/news;sz=336x280;ord=456641793 3? [news;abr=!ie;sz=336x280;ord=4566417933?] [ew_spacer.gif] "We must make sure that our immigration policies don't have a backlash effect on displacing American workers," Chambliss said Tuesday. "[The bill] will end the practice of companies who are displacing American workers." The Senate Judiciary Committee Tuesday took a look at the role of temporary work visas in the current economy. The technology industry's use of H-1B visas dropped approximately 75 percent last year, with initial H-1B visa applications falling to 26,659 in 2002 from 105,692 in 2001, according to the Department of Homeland Security Office of Immigration Security. Despite the statistics, as unemployment rises in the United States, lawmakers are hearing from their constituents. "I cannot tell you how many workers came up to me [in August in California] and said, 'I've been replaced by somebody I trained, and they're getting a third [the salary] of what I got,'" Sen. Dianne Feinstein, D-Calif., said at a hearing of the Senate Judiciary Committee Tuesday. "Wherever I go, this program comes up and somebody tells me they've been replaced, and they are angry." Intel Corp., which employs close to 80,000 workers worldwide, hires individuals through the H1-B visa program when a position requires unique or difficult-to-find skills, Patrick Duffy, human resources attorney at Intel, told lawmakers. Beginning in 2001, Intel decreased hiring overall, but it continues to hire H-1B applicants when it cannot find qualified U.S. workers, Duffy said. The company has particular difficulty hiring U.S. citizens for positions in electrical engineering design and chemical engineering, he said. Duffy contended that the H-1B visa program does not displace U.S. workers and ultimately benefits the U.S. economy. Most of the company's H-1B visa employees studied at U.S. universities and earned masters degrees and doctorates. "These are not temporary workers to us. The H-1B visa is just one step in making these workers U.S. workers," Duffy said. "Hopefully they'll stay with Intel ... the rest of their lives." Large corporations that rely on skilled foreign workers are urging Congress not to pass short-term fixes that will later cause problems when the economy recovers. In the boom times of the late '90s, Ingersoll-Rand Corp. had to take people off the payroll when the H-1B hiring cap was lowered, Elizabeth Dickson, adviser for Immigration Services at Ingersoll-Rand in Woodcliff Lake, N.J., told lawmakers Tuesday. "When the [foreign worker hiring] cap reverts to 65,000, we are going to have a lot of problems that we experienced both in 1997 and 1998," Dickson said. "If we have a recovering economy, what are our needs going to be long term?" The root of the problem, according to the industry officials, is that Americans earn too few graduate degrees in the hard sciences, leaving the domestic pool of adequate engineering specializations too small. Contrary to some assertions, industry officials said they do not hire foreign workers to pay them less than they would pay Americans. Dickson told lawmakers that it is more expensive to hire foreign workers. "We are mostly looking to hire U.S. workers. They're cheaper, and there are a lot less problems," Dickson said. "In the near term we simply must have access to foreign nationals. If we want to maintain a global edge, we want to have the best and the brightest working for us in the United States." American engineers argue that corporate America's use of H-1B visas exacerbates the problem of engineering unemployment. Abuse of the visa program, in particular, leaves qualified Americans out of work, according to John Steadman, president-elect of the IEEE-USA in Washington, D.C. "If we continue down this path, the United States is making itself increasingly dependent of foreign technical expertise, both here and abroad," Steadman told lawmakers, urging the government to support programs that encourage more students--especially minorities and women--to go into the sciences.