The H-1B visa debate: Pain and the politics

Sen. Sessions: Companies 'want more profits and lower pay for workers. That’s just what they do.’

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A senator responds

"People aren't commodities., they're human beings, they have families, they have hopes and dreams, they want stability in their life," said Sen. Jeff Sessions (R-Ala.), who heads the immigration subcommittee and believes the H-1B program is being abused.

The industry argument

Lobbyists for the tech industry will not acknowledge that U.S. workers are being replaced by H-1B visa holders. When the media report on such displacements, like the Edison layoffs, the industry curtly dismisses the reports as "anecdotes."

At the same time the Judiciary Committee released its excerpts from SCE workers' statements, major industry lobbying groups released a letter addressed to Senate Judiciary Committee Chairman Charles Grassley (R-Iowa) and ranking committee member Patrick Leahy (D-Vt.). The letter -- signed by the American Immigration Lawyers Association, BSA, the Compete America Coalition, the Computer and Communications Industry Association, the Consumer Electronics Association and many other groups -- said in part:

"Myth: Foreign workers displace American workers in the science, technology, engineering, and math (STEM) fields. Fact: Employment data show that there are not enough native born STEM workers to fill available STEM jobs and foreign STEM workers are not displacing their native-born counterparts."

The pro-H-1B strategy

The political strategy of the IT industry is to relentlessly position the H-1B visa as a tool for retaining foreign graduates of U.S. schools -- the "best and the brightest" meme. The fact that many H-1B workers are used to transfer work overseas is avoided as a topic.

But the business community -- particularly management consultants -- are enthusiastic supporters of shifting work overseas. McKinsey and Co., in a 2003 report, crystalized the argument for offshoring, and that argument is still used today.

It said jobs will go overseas and "the changes will be painful for many involved," but argued U.S. companies will ultimately benefit from reduced costs and from the fact that raising living standards overseas will create demand for products. The report also said U.S. companies could invest savings in higher-value aspects of their operations.

At the hearing, Ron Hira, an associate professor of public policy at Howard University who was invited to testify, summarized the McKinsey report's core assumptions in response to a question from Grassley.

Southern California Edison "said that they were cutting cost and making their business more efficient," said Grassley.

"With respect to what SCE and other companies have done, what do you say to those who say that cutting labor cost in this manner increases corporate efficiency and in the long run is good for American consumers?" he asked Hira.

Hira's response: "It definitely does cut wages and saves money, and certainly every executive is being pressured by shareholders to do so.... But it is a lose-lose situation for American workers. It is a lose-lose situation for the American economy. You're basically trading jobs away to bring a little bit of extra profit to SCE."

Middle ground?

Sen. Chuck Schumer (D-N.Y.), who was at the hearing, staked out a position aimed at appealing to both sides.

"For every 100 H-1B workers, an additional 183 jobs are created for American-born workers. Plain and simple, it's a myth that the H-1B visa program takes jobs away from Americans," said Schumer. (His reference to 183 jobs came from a report by the American Enterprise Institute and Partnership for a New American Economy. Partnership co-chairs include Steve Ballmer, former CEO of Microsoft; Michael Bloomberg, former mayor of New York; and Bob Iger, CEO of Disney.)

But Schumer also made a distinction concerning the H-1B visa's use in offshore outsourcing. In 2010, he said the visa had given rise to "multinational temp agencies" and he reiterated support for new wage requirements, "and new restrictions on hiring foreign workers to displace U.S. workers."

Another IT worker weighs in

Judiciary Committee statement from a laid-off SCE employee, excerpt No. 2:

"Over 400 hardworking, intelligent people have lost their jobs due to the H-1B visa program.... Many of us, and countless more like us, face enormous hurdles to find new jobs -- why would companies want to hire us when they can hire cheaper workers on the H-1B visa to do our jobs for us?"

Raise the visa cap

Sen. Orin Hatch, (R-Utah), who is leading a legislative push to increase the H-1B visa cap through the I-Squared bill, said tech businesses in his state "can't find enough engineers or enough highly educated people to keep up with the demand. We call Utah Silicon Slopes and it's competing pretty well with Silicon Valley... and the jobs that they create are monumental.

"We would be penny wise and pound foolish to not do the H-1B bill, which we worked on and worked and worked on to try to get so that it meets the needs at everybody at this table," Hatch said.

Hatch may oppose Grassley's efforts to reform the visa. In 2013, Hatch led an effort to win adoption of 19 pages of tech industry-sponsored amendments to the Senate's comprehensive immigration bill. Grassley was thwarted.

Grassley said raising the base H-1B cap from 65,000 to 195,000 a year, as proposed in the I-Squared bill, "only makes the problem worse.

"It doesn't make sure that American workers are put before foreign workers. It only increases the supply of cheaper foreign labor," said Grassley, at this week's hearing.

Among the reforms sought by Grassley and his Democratic ally, Sen. Dick Durbin of Illinois: A revision of prevailing wage determinations to increase wages of visa holders, required Internet posting of H-1B employment positions, and limits to the number of H-1B and L-1 visa holders an employer of 50 or more people may hire.

He has proposed setting a limit of 50%.

The Chamber of Commerce view

"There currently are insufficient numbers of qualified and available American workers in the STEM fields, which undermines the ability of U.S. employers to compete," wrote the U.S. Chamber of Commerce, in statement to the Judiciary Committee.

The counterpoint to the Chamber's view is offered by Hal Salzman, a professor at Rutgers who studies STEM workforce issues.

According to Salzman's testimony:

"The U.S. supply of top-performing graduates is large and far exceeds the hiring needs of the STEM industries, with only half of new STEM graduates finding jobs in a STEM occupation (and only a third of all STEM graduates in the workforce hold a STEM job).

"The predominant function of IT guest worker visa programs is to facilitate the offshoring of IT work," said Salzman.

More men than women

The U.S. Immigration and Naturalization Service has never published data -- despite being asked to do so -- showing the gender of H-1B workers. With that context in mind, Karen Panetta, an engineer with a Ph.D., submitted testimony on behalf of the IEEE-USA.

"I have sources in the outsourcing industry, since I teach students in these fields. They tell me that 85% of H-1Bs working for outsourcers are men. After 20 years, that kind of accumulating bias against American women adds up," Panetta said.

An anecdote supporting the H-1B program

Industry groups are dismissive of the anecdotes used by the critics of the H-1B visa program. But supporters use them as well.

Bjorn Billhardt, the founder and president of Enspire Learning, an Austin-based company that creates learning development tools, testified in support of raising the H-1B cap.

"Just last week, I spoke with a recent Ph.D. in chemistry from Notre Dame University who was hired as a management consultant in my home state of Texas. He told me that through government-sponsored scholarships and grants, the U.S. had invested approximately half a million dollars into his education here in the states. As a foreign national, he was excited to accept a job offer in Houston, and bring his expertise to bear helping U.S. energy companies succeed in the global marketplace," Billhardt said in his testimony.

"Yet, despite his brilliance, his Ph.D., and his strong desire to stay in the United States, he pegged his chances to win a slot in this year's H-1B lottery system at less than 60%," Billhardt added. "If he cannot stay, he said he will move to London, Shanghai or somewhere else where his talents are valued -- and we will lose out on those skills for our own economy."

Another IT worker, same story

"This was one of the most humiliating situations that I have ever been in as an IT professional.... We had jobs and there was no shortage of skilled labor that would make it necessary to bring in H-1Bs. We were let go and replaced by foreign workers who certainly weren't skilled to take our position," wrote a former IT worker at Northeast Utilities in Connecticut who trained his replacement.

The committee released his statement anonymously.

The role of OPT

The Optional Practical Training program, or OPT, may be bigger than the H-1B program in helping foreigners get jobs in the U.S., said John Miano, a programmer who became an attorney and is representing the Washington Alliance of Technology Workers. Miano testified as well.

Students still in school, or recent graduates, can use their student F-1 visas to take jobs through the OPT program. Until 2008, the program was available for 12 months, after which the student had to get an H-1B visa. But in 2008 President George W. Bush's administration extended the program by 17 months, or 29 months total, for science, technology, engineering and math students. (Miano says students can remain employed for as long as 35 months under the OPT program.)

Then, in 2012, President Barack Obama boosted the number of eligible fields by about 90 to a total of 400. The number of OPT workers has grown from 28,000 in 2008 to 123,000 in 2013. These workers have no labor protections nor do they have to pay Social Security or Medicare tax, "so this makes OPT workers inherently less expensive to hire than Americans," Miano said.

An Infosys whistleblower speaks

Jay Palmer, the whistleblower in the Infosys case that resulted in a $34 million settlement with the U.S., was critical of the skills of visa holders.

"I cannot emphasize enough that the H-1B workers that are replacing the U.S. workers have minimal skills and little to no business knowledge. The idea of knowledge transfer is absurd; Americans are training these people on how to do their job," said Palmer, at the hearing.

Palmer's remarks struck a nerve in India.

B V R Mohan Reddy, vice president of Indian technology industry group NASSCOM, was quoted in the New Indian Express responding to Palmer. He said, in part, that Indian H-1B workers have saved U.S. companies billions of dollars -- but "not by being a cheaper workforce, but in terms of increasing efficiency and productivity."

Another IT worker

Judiciary Committee excerpt No. 3, from a laid-off SCE employee:

"Through no fault of my own, my job was just given to someone else with a lot less experience, knowledge and skills, lowering my standard of living and raising theirs so Edison could save a few dollars and reward stock holders with a few more pennies on their dividends."

Business blamed

Norm Matloff, a University of California computer science professor and longtime critic of the H-1B visa program, believes the issue is being mischaracterized as a problem entirely created by the offshore companies. U.S. tech companies are also abusing the system, he said, and that has turned the debate into an argument that can be summarized as "Intels are good, Infosyses are bad."

But in a post on his blog, Matloff argues that "Both are underpaying for their respective levels of workers." 

Moreover, he said, foreign workers are desirable because of the difficulty they face in changing jobs. "The immobility of the foreign workers is much more important than saving in wages. If you are an employer, having an engineer leave you in the lurch during an urgent project is disastrous," said Matloff, who was also invited to submit a letter to the committee.

Intel's views

Intel published a statement on the day of the hearing offering its views.

"Intel and similar companies do not typically use H-1Bs to bring foreign nationals to the U.S. on a temporary basis. The goal is instead to keep graduates from U.S. universities here permanently -- innovating in American companies or starting new ones," the company said.

"Our foreign professionals often make up a majority of the talent coming from top U.S. STEM programs," Intel added. "Like so many U.S. companies, Intel recruits foreign professionals on H-1Bs as a pathway to a green card or permanent status."

Final words from Sen. Sessions

Sessions said he sees a pattern from history at work.

"This Congress represents the people of the United States, and yes, bringing in talent to America is a good thing. But we have no obligation to yield to the lust of big businesses, and these big businesses -- the new ones in the high-tech world -- are the same moguls that used to run the oil and steel industry," Sessions said at the hearing. "They want more profits and lower pay for workers. That's just what they do."

Copyright © 2015 IDG Communications, Inc.

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