Senator Schumer: H-1B use undercuts pay, discourages tech enrollments

Committee chair says visa program will be 'dramatically restricted' in immigration bill

Sen. Chuck Schumer (D-N.Y.) says that the H-1B program has created "multinational temp agencies" that undercut U.S. wages and discourage students from entering tech fields.

Schumer, speaking on the Senate floor in advance of its approval Thursday of $600 million for border security that includes an H-1B visa fee increase, said the H-1B program has morphed into program used to hire foreign tech workers "willing to accept less pay than their American counterparts."

Schumer broadly called these firms "body shops," correcting a characterization he made last week describing firms that use large numbers of H-1B visas as "chop shops."

The impact of the low-wage workers is also "discouraging many of our smartest students from entering the technology industry in the first place," said Schumer. "Students can see that paying hundreds of thousands of dollars for advanced schooling is not worth the cost when the market is being flooded with foreign temporary workers willing do to tech work for far less pay."

Schumer heads the Senate's Immigration, Refugees and Border Security Committee, and the person spearheading work on a comprehensive immigration bill. A bill isn't expected until early next year, after the November election, but Schumer warned on Thursday that H-1B visa was "likely to be dramatically restricted" in the bill.

The border security bill imposes a $2,000 fee increase on those firms that have 50% or more of their U.S. employees on H-1B and L-1 visas. That bill, which funds 1,500 new border officers and unmanned drones, awaits the president's signature.

The Senate had previously approved the border security bill, but when it included the visa fee increase further House action was needed, and the Senate had to act again.

Regarding Schumer's point on enrollments, the number of computer science graduates bottomed in the 2006-07 academic year, with only 8,021 students receiving bachelor degrees in computer science at the 170 Ph.D.-granting institutions tracked by the Computer Research Association.

But in the past two years enrollments have increased 14%. The enrollment declines have been blamed on many things, including the dot-com bubble bust and offshore outsourcing , but increasing enrollments may be help by the growth of computer science growth in emerging fields, such as computational biology.

It may also be seen as a safer choice today than finance.

Norman Matloff, a professor of computer science at the University of California at Davis, a longtime visa opponent who testified on Congress on this issue, said in a newsletter this week that Schumer's fee increase is a "a setback for reformers, as well as scapegoating and worse."

"This has long been a tactic of the industry lobbyists and their allies in Congress -- blame the Indians," said Matloff, who argues that every company that uses the H-1B visa is abusing the program by "hiring visa workers instead of U.S. citizens and permanent residents, in order to save money."

Schumer was careful today to separate offshore firms and other companies that use a high number of H-1B visas, from U.S. tech companies such as Oracle , Cisco , Apple , and Microsoft , which he named specifically.

He said their use of the H-1B visas "has greatly benefited the country."

In a clear sign that major interest groups are gearing up for a battle, the U.S. Chamber of Commerce released the American Council of International Personnel (ACIP)study this week supporting the use of H-1B visa.

The argues, "In the global economy, investment follows the talent and attempts to restrict the hiring of talented foreign-born professionals in the United States encourages such hiring to take place overseas, where the investment dollars will follow."

Randal Johnson, senior vice president for labor, immigration and employee benefits at the Chamber, said of the comprehensive reform effortthey, that the group would meet with the unions in the next two months to try to negotiate a worker program.

He said he isn't expecting any legislation to be introduced until early next year.

Lynn Shotwell, executive director of the ACIP, said of the visa fee increase: "It is little bit ironic to me that we're using fees from legal workers to fund enforcement on the border."

Although the legislation affects any offshore company, Indian IT companies are the most concerned about the fee increase. India's largest IT industry group, the New Delhi-based National Association of Software and Services Companies (NASSCOM), says the fee increase may be raising trade issues as well as spark counter protectionist measures.

Schumer has not released a comprehensive reform bill. If he includes new restrictions on the visa, one possibility may be inclusion of the so-called "50/50" provision that limits the number of H-1B or L-1 visas to 50% of the U.S. workforce.

That provision was introduced in legislation last year by Sens. Dick Durbin (D-Ill.) and Charles Grassley (R-Iowa).

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His e-mail address is .

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Copyright © 2010 IDG Communications, Inc.

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