SPEAKERS CONTENTS INSERTS Tables
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63–314
2000
H-1B TEMPORARY PROFESSIONAL WORKER VISA PROGRAM AND INFORMATION TECHNOLOGY WORKFORCE ISSUES
HEARING
BEFORE THE
SUBCOMMITTEE ON
IMMIGRATION AND CLAIMS
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
AUGUST 5, 1999
Serial No. 31
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Printed for the use of the Committee on the Judiciary
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
LINDSEY O. GRAHAM, South Carolina
MARY BONO, California
SPENCER BACHUS, Alabama
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JOE SCARBOROUGH, Florida
DAVID VITTER, Louisiana
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
THOMAS E. MOONEY, SR., General Counsel-Chief of Staff
JULIAN EPSTEIN, Minority Chief Counsel and Staff Director
Subcommittee on Immigration and Claims
LAMAR S. SMITH, Texas, Chairman
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BILL McCOLLUM, Florida
ELTON GALLEGLY, California
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
JOE SCARBOROUGH, Florida
SHEILA JACKSON LEE, Texas
HOWARD L. BERMAN, California
ZOE LOFGREN, California
BARNEY FRANK, Massachusetts
MARTIN T. MEEHAN, Massachusetts
GEORGE FISHMAN, Chief Counsel
JIM WILON, Counsel
LAURA BAXTER, Counsel
CINDY BLACKSTON, Professional Staff
LEON BUCK, Minority Counsel
C O N T E N T S
HEARING DATE
August 5, 1999
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OPENING STATEMENT
Smith, Hon. Lamar, a Representative in Congress from the State of Texas, and chairman, Subcommittee on Immigration and Claims
WITNESSES
Cleveland, Alison, Associate Manager of Labor Policy, U.S. Chamber of Commerce
Foster, Charles, Tindall & Foster
Fragomen, Austin, Chairman, American Council on International Personnel
Kostek, Paul, President, Institute of Electrical and Electronics Engineers
Miano, John, The Programmer's Guild
Neiswonger, Crystal, Immigration Specialist, TRW, Inc.
Nelson, Gene
Smith, David A., Director, Public Policy Department, AFL–CIO
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LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Cleveland, Alison, Associate Manager of Labor Policy, U.S. Chamber of Commerce: Prepared statement
Foster, Charles, Tindall & Foster: Prepared statement
Fragomen, Austin, Chairman, American Council on International Personnel: Prepared statement
Jackson Lee, Hon. Sheila, a Representative in Congress from the State of Texas: Prepared statement
Kostek, Paul, President, Institute of Electrical and Electronics Engineers: Prepared statement
Miano, John, The Programmer's Guild: Prepared statement
Neiswonger, Crystal, Immigration Specialist, TRW, Inc.: Prepared statement
Nelson, Gene: Prepared statement
Smith, David A., Director, Public Policy Department, AFL–CIO: Prepared statement
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Smith, Hon. Lamar, a Representative in Congress from the State of Texas, and chairman, Subcommittee on Immigration and Claims: Prepared statement
APPENDIX
Material submitted for the record
H-1B TEMPORARY PROFESSIONAL WORKER VISA PROGRAM AND INFORMATION TECHNOLOGY WORKFORCE ISSUES
THURSDAY, AUGUST 5, 1999
House of Representatives,
Subcommittee on Immigration
and Claims,
Committee on the Judiciary,
Washington, DC.
The subcommittee met, pursuant to notice, at 1:50 p.m., in Room 2237, Rayburn House Office Building, Hon. Lamar Smith [chairman of the subcommittee] presiding.
Present: Representatives Lamar Smith, Edward A. Pease, Sheila Jackson Lee, and Zoe Lofgren.
Staff present: George Fishman, Chief Counsel; William Griffith, Pearson Fellow; Judy Knott, Staff Assistant, and Leon Buck, Minority Counsel.
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OPENING STATEMENT OF CHAIRMAN SMITH
Mr. LAMAR SMITH [presiding]. The Subcommission—that was not a good start—the Subcommittee on Immigration and Claims will come to order.
What I started to say was that we are slightly late, because, as you all I hope noticed, had two votes on the House floor. If you didn't know, the last vote we just had was on the tax cut that has been getting so much attention, and, so far as I know, that passed. But, in any case, that is the reason for our late start.
The good news about getting those two votes out of the way is we now expect to have an uninterrupted hour and a half or 2 hours, and, so perhaps we can get through this hearing, which is so important, without additional interruptions.
But thank you for your patience, and I thank our witnesses for being here, as well.
I am going to begin with an opening statement. Our ranking member is on her way back from the floor, and then we will get to our first panel.
No one publicly questions whether immigration should serve national interests, such as maintaining America's world-leading status in technology fields.
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Few question the fact that skilled workers from foreign countries, many of them educated in the United States, can help us maintain our international technological edge.
There is another side to this public policy equation: The American high-tech workforce is growing rapidly, and we should never pit Americans against foreign workers. We do know there is a growing demand for temporary skilled worker visas. All else, right now, of course, is still open for discussion.
The American Competitiveness and Workforce Improvement Act of 1998 increased the annual 65,000 quota for foreign professional workers under the H–1B Temporary Visa Program to 115,000 in 1999 and 2000 and 107,500 in 2001.
It is rare for Congress to revisit a significant issue, such as increasing the overall number of foreign workers admitted to the U.S. less than a year after enacting major legislation. But something funny happened since the Congressional debate last year.
Even after almost doubling the number of H–1B visas, the INS reported that the new cap of 115,000 visas would be reached well before the end of Fiscal Year 1999. In fact, we reached the cap earlier with 115,000 visas than we did the year before when only 65,000 visas were available.
One of the purposes of today's hearing is to evaluate why, contrary to expectations, so many H–1B petitions were submitted since the passage of this bill. A related question is whether established users of the H–1B Program have increased the number of aliens they petition for, or whether there is a new universe of users.
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Some say that the increased demand is caused by an ongoing and worsening shortage of information technology workers and that in fact the high demand for H–1B visas is proof in itself of a shortage. Others respond that there is no such shortage and that the high demand is merely reflective of a preference for foreign workers and their perceived advantages over American workers.
I am disappointed, I have to say in passing, that none of five information technology companies asked to provide witnesses for today's hearing was willing to do so, especially since they are so outspoken on the subject.
Another possible reason the cap has been reached could be called the ''bubble.'' After the 65,000 cap was reached in May 1998, the INS kept receiving petitions, and kept approving them with the stipulation that the petitioned-for aliens could not start work until the beginning of the next fiscal year on October 1, 1998. In all, the INS approved 19,000 petitions before that October 1 date.
These aliens were counted against the 1999 quota, not the 1998 quota. So an argument can be made that before Fiscal Year 1999 even started, the 115,000 quota approved by Congress for this year had in effect already been reduced to the 95,000. Without this reduction, we might have finished the fiscal year without coming up against the cap.
I should point out that there will be another bubble that will develop between now and the end of September, one that might be even larger than last year's.
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A last possible reason for the cap being reached is visa fraud. Every H–1B visa that is obtained through fraudulent means, means one less for legitimate employers. Unfortunately, fraud seems to be prevalent, as was shown at a hearing held before this subcommittee in May.
William R. Yates, Acting Deputy Associate INS Commissioner for Services, reported that through the first 5 months of this fiscal year, service-wide presentations of fraud cases for prosecution had ''already exceeded mid-year levels.''
A deputy assistant secretary of State for Visa Services, spoke of the vulnerability of the H–1B process to fraud and the need to target anti-fraud efforts ''up front before the petition is approved.''
This strategy was employed by INS and State when they undertook a review of more than 3,000 pending petitions at the U.S. Consulate in India. India, by the way, is the country that provides the most information technology foreign workers. The results were astounding. India's anti-fraud unit was able to verify the authenticity of only 45 percent of the petitions—21 percent were found to be outright fraudulent.
On May 26, I wrote to INS Commissioner Doris Meissner and specified steps that she should take to reduce the loss of H–1B numbers to fraud, and I have yet to receive a reply.
A point often overlooked in the H–1B debate is that it affects more than high-tech workers. A large share of H–1B visas is used by physical and occupational therapists, and we must consider the impact of any increase on these professions.
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I have confidence that today's hearing will provide the subcommittee with valuable information on the H–1B program. Armed with this information and more insight into the state of the information technology job market, we can make a judicious decision as to the ultimate question that I would guess is on the mind of many in the audience today, which is whether or not Congress should again raise the annual quota of H–1B visas.
We should remember, though, that H–1B is just the tip of the workforce iceberg. We are talking about approximately 100,000 visas per year, while ignoring the fact that we admit almost one million legal immigrants every year with no regard to skill or education level. Approximately 35 percent of legal immigrants, who will be our major source of new workers during the next century, lack a high school education. But 90 percent of new jobs will require more than a high school education.
We will debate H–1B visas, but we cannot address looming workforce problems if we turn a blind eye to immigration policies that do not serve national interests.
That concludes my opening statement.
[The prepared statement of Mr. Lamar Smith follows:]
PREPARED STATEMENT OF HON. LAMAR SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS, AND CHAIRMAN, SUBCOMMITTEE ON IMMIGRATION AND CLAIMS
No one publicly questions whether immigration should serve national interests such as maintaining America's world-leading status in technology fields.
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Few question the fact that skilled workers from foreign countries, many of them educated in the U.S., can help us maintain our international technological edge.
There is another side to this public policy equation: The American high-tech workforce is growing rapidly. And we should never pit Americans against foreign workers.
We do know there is a growing demand for temporary skilled worker visas. All else is open to discussion.
The American Competitiveness and Workforce Improvement Act of 1998 increased the annual 65,000 quota for foreign professional workers under the H–1B temporary visa program to 115,000 in 1999 and 2000 and 107,500 in 2001.
It is rare for Congress to revisit a significant issue such as increasing the overall number of foreign workers admitted to the U.S. less than a year after enacting major legislation. But something funny happened since the Congressional debate last year.
Even after almost doubling the number of H1–b visas, the INS reported that the new cap of 115,000 visas would be reached well before the end of fiscal year 1999. In fact, we reached the cap earlier with 115,000 visas than we did the year before when 65,000 visas were available.
One of the purposes of today's hearing is to evaluate why, contrary to expectations, so many H–1B petitions were submitted since the passage of the bill. A related question is whether established users of the H–1B program have increased the number of aliens they petition for, or whether there is a new universe of users.
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Some say that the increased demand is caused by an ongoing and worsening shortage of information technology workers and that in fact the high demand for H–1B visas is proof in and of itself of a shortage.
Others respond that there is no such shortage and that the high demand is merely reflective of a preference for foreign workers and their perceived advantages over American workers.
I am disappointed that none of five information technology companies asked to provide witnesses for today's hearing was willing to do so, especially since they are so outspoken on the subject.
Another possible reason the cap has been reached could be called the ''bubble.'' After the 65,000 cap was reached on May 11, 1998, the INS kept receiving petitions, and kept approving them with the stipulation that the petitioned-for aliens could not start work until the beginning of the next fiscal year on October 1, 1998. In all, the INS approved 19,431 petition before October 1.
These aliens were counted against the 1999 quota, not the 1998 quota. So an argument can be made that before fiscal year 1999 even started, the 115,000 quota approved by Congress for this year had in effect been reduced to 95,569. Without this reduction, we might have finished the fiscal year without coming up against the cap.
I should point out that there will be another bubble that will develop between now and the end of September, one that might be even larger than last year's.
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A last possible reason for the cap being reached is visa fraud. Every H–1B visa that is obtained through fraud means one less for legitimate employers. Unfortunately, fraud seems to be prevalent, as was shown at a hearing held before this Subcommittee on May 5.
William R. Yates, Acting Deputy Associate INS Commissioner for Services, reported that through the first five months of this fiscal year, service-wide presentations of fraud cases for prosecution had ''already exceeded mid-year goals.''
Nancy Sambaiew, Deputy Assistant Secretary of State for Visa Services, spoke of the vulnerability of the H–1B process to fraud and the need to target anti-fraud efforts ''up front before the petition is approved.''
This strategy was employed by INS and State when they undertook a review of more than 3,000 pending petitions at the U.S. Consulate at Chennai, India, the city that provides the most IT foreign workers. The results were astounding—Chennai's anti-fraud unit was able to verify the authenticity of only 45% of the petitions—21% were found to be outright fraudulent.
On May 26, I wrote to INS Commissioner Doris Meissner and specified steps that she should take to reduce the loss of H–1B numbers to fraud. I have yet to receive a reply.
A point often overlooked in the H–1B debate is that it affects more than high-tech workers. A large share of H–1B visas is used by physical and occupational therapists, and we must consider the impact of any increase on these professions.
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I have confidence that today's hearing will provide the Subcommittee with valuable information on the H–1B program. Armed with this information, and more insight into the state of the information technology job market, we can make a judicious decision as to the ultimate question that I would guess is on the mind of many in the audience today, which is whether or not Congress should again raise the annual quota of H–1B visas.
We should remember, though, that H1–b is just the tip of the workforce iceberg. We're talking about approximately 100,000 visas per year, while ignoring the fact that we admit almost one million legal immigrants every year with no regard to skill or education level.
Approximately 35 percent of legal immigrants, who will be our major source of new workers during the next century, lack a high school education. But 90 percent of new jobs will require more than a high school diploma.
We will debate H1–b visas. But we cannot address looming workforce problems if we turn a blind eye to immigration policies that do not serve national interests.
Mr. LAMAR SMITH. I notice that we have been joined by the gentlewoman from California. Does she have an opening statement?
Ms. LOFGREN. Mr. Chairman, I don't have a written statement. I obviously have viewpoints, but I would rather get directly to witnesses. They have been waiting a long time, and——
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Mr. LAMAR SMITH. Thank you, Ms. Lofgren.
The gentleman from Indiana, Mr. Pease.
Mr. PEASE. Mr. Chairman, I appreciate you holding this hearing. However, I don't appreciate the fact that we are having to revisit an issue that I think we all thought was resolved a year ago and were assured by the various parties was resolved a year ago.
Nevertheless, here we are, and I would like to hear from the witnesses.
Mr. LAMAR SMITH. Thank you, Mr. Pease.
We will then go to the first panel, and let me introduce them. Austin Fragomen, chairman, American Council on International Personnel; Mr. David Smith, director, Public Policy Department, AFL–CIO—and I have to say, Mr. Smith, I wish we had gotten your testimony a little bit earlier, so we would have been better prepared, perhaps, to discuss the issue with you—also, Ms. Crystal Neiswonger, immigration specialist, TRW, Inc., on behalf of the National Association of Manufacturers, and Mr. Gene Nelson.
Now, we welcome you all, and we will begin with Mr. Fragomen.
STATEMENT OF AUSTIN FRAGOMEN, CHAIRMAN, AMERICAN COUNCIL ON INTERNATIONAL PERSONNEL
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Mr. FRAGOMEN. Thank you very much, Mr. Chairman and members of the Subcommittee on Immigration and Claims. Thank you very much for the opportunity to testify on the issue of the H–1B Temporary Professional Worker Visa Program.
We, too, regret that we have to be here again. In seeking to raise the caps, I want to assure Mr. Pease that this is a most unfortunate and unforeseen situation, in part, which we will get to later.
The American Council on International Personnel is a not-for-profit trade association founded in 1972 with a mission to facilitate the movement of personnel across international borders. ACIP has 300 corporate and institutional members, including many of the largest corporations in the United States. Members file tens of thousands of nonimmigrant visa petitions each year and devote untold resources to complying with the immigration laws.
The three issues that I would like to briefly address: Why are U.S. employers using more H–1 visas? Who is using more visas? And, Do we need more visas?
First, why are employers using more H–1 visas? I think there are several simple answers to this question: a growing economy, tight labor markets and globalization. Unemployment rates are low causing a shortage of educated workers. Unemployment among college graduates is approximately 3 percent. The labor shortage is particularly pronounced in fields such as computer science and electrical engineering. In fact, a recent BLS survey cites unemployment of less than 1 percent for electrical engineers and less than 2 percent for computer scientists.
In addition, American companies continue to expand their global workforce. As they enter markets in Asia, Latin America, Europe, the Middle East, employees from all countries, including the U.S., are increasingly transferred from one country to another. In many cases, the H–1B is the only appropriate visas. Some of these workers are cutting-edge professionals and managers who are recruited by global headhunters; others are new graduates of U.S. universities who will receive formal training and experience in the U.S. before being transferred abroad.
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Finally, there is global competition for the brightest and the best among this new breed of worker, and U.S. employers need ready access to this pool even if U.S. workers are generally available. Frequently, foreign nationals might be Masters or PhD graduates from U.S. universities in the sciences, and they are highly sought after by employers.
H–1 professionals currently comprise less than one-tenth of 1 percent of the workforce but are vital to multinational corporations building a global workforce. The H–1B is just not just the high-tech worker shortage visa.
But let us take a look at who is using these visas. One thing we can be sure of is that we cannot derive much help from recent releases by the Immigration and Naturalization Service. Hopefully, the statistical tracking provision of ACWIA will be of help in the future.
INS recently released a list of the top 20 corporate users of H–1B visas for Fiscal Year 1998. Part of this widely circulated list was published in the Wall Street Journal. A number of the so-called top 20 users are ACIP members, so we had the opportunity to compare the INS data with the companies' own records in an effort to do a reality check. The results were disturbing.
INS grossly overestimated usage in all cases, by as much as 600 percent in some cases. For example, INS reported that Intel accounted for 2 percent of the visas when, in fact, they had only 297 new H–1Bs last year, which is approximately 0.4 percent. INS reported figures for another company in the information technology consulting field that were greater than its total U.S. workforce.
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When we raised these concerns with INS, we were informed the figures were drawn from a different and larger pool than the 65,000 visas approved. It is still not clear what INS was counting, and we have brought this to their attention and asked for them to reexamine the figures. Obviously, ACIP opposes releasing misleading and inaccurate data that can negatively impact on corporations.
As to our efforts, because we felt we could not rely on INS data, we tried to piece together our own usage statistics. ACIP conducted telephone interviews with our members in a variety of industries around the country about H–1B usage. We found most members are using on average only a few more H–1 visas than in previous years.
For example, traditional manufacturing in consumer goods companies use relatively few H–1 visas to begin with. They are using slightly more as they expand research requiring Ph.D.s in sciences and as they expand international marketing efforts requiring employees with global backgrounds. Major technology firms, such as those engaged in semiconductors, biotechnology, and software development are reporting a slight upswing in H–1B usage. Although these firms hire hundreds of H–1s per year, H–1Bs remain a small percentage of their workforce.
However, there were large increases in some industries, particularly where U.S. firms tend to dominate world markets. Significant increases were reported by large retailers, financial services and professional services firms due to increasing globalization of these businesses. Retailers and financial service firms need employees with language and cultural skills vital to success in new markets. Employees are trained and gain experience in the U.S. on H–1s and then are transferred abroad.
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The largest increases were in professional service firms, particularly consulting in such areas as engineering, communications, telecommunications, management, and strategic consulting as well as areas such as law and accounting. These employers are increasingly building international teams to work on discrete projects. Teams are transferred from one project to the next, often crossing international boundaries several times within a year.
One area we have actually noted a downswing in H–1B usage is among the major domestic computer consulting firms. However, at the same time, we are seeing a large number of spin-offs and start-ups in the computer consulting field. Firms specializing in e-commerce and the Internet whether providing service or manufacturing equipment for e-commerce and the Internet, didn't exist several years ago, and these companies have been hiring H–1B workers at a rapid pace.
Mr. LAMAR SMITH. Mr. Fragomen, let me intervene just for 1 minute. I want you to—because it's a, I think, very important and incisive testimony—I want you to, if you will, finish answering the three questions that you have raised, but after that, we are going to need to move on. And you are getting me worried, because if you read the whole written testimony that I have, it is going to go a little bit longer than we have, I think.
Mr. FRAGOMEN. Thank you very much, Mr. Chairman.
No, I wasn't planning on doing that.
Mr. LAMAR SMITH. Okay.
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Mr. FRAGOMEN. I was just—I wanted to focus on this particular issue of the usage, and——
Mr. LAMAR SMITH. Okay. Please proceed.
Mr. FRAGOMEN. Thank you.
You raised the issue of fraud, and I just wanted to make one brief comment on fraud. The Chennai incident, which you allude to, bear in mind that in that particular case, those were cases which were not approved subsequently, and, therefore, did not count against the cap.
Fraud from a practical standpoint takes place in a very small number of consular posts to any significant degree, because there are only a small number of consular posts issue most of the H–1B visas. And I think that the Immigration Service working together with State, has made a very significant change in the way they approach this by essentially investigating cases before they are approved and before they count against the cap. So, I don't think that fraud has a statistically important impact overall.
ACIP supports legislation such as that introduced by Mr. Dreier, H.R. 2998, and Senator Gramm, S. 1440, to increase the cap. We are very impressed with the new legislation introduced by Ms. Lofgren, H.R. 2687, which would create a new non-immigrant category, which would be exempted from numbers.
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And we also would very much like to thank Representative Lofgren for the Spousal Equity Act, H.R. 2662, which is very important to multinational corporations.
Companies need access to skilled workers from around the globe now than more than ever. We are competing with other nations to attract skilled workers in biotechnology, semiconductors, information technology, et cetera, and we are most anxious to see the cap raised and for the U.S. to consider skilled foreign workers as important as Australia, Canada, and other companies, which welcome them through special programs.
Thank you.
[The prepared statement of Mr.Fragomen follows:]
PREPARED STATEMENT OF AUSTIN FRAGOMEN, CHAIRMAN, AMERICAN COUNCIL ON INTERNATIONAL PERSONNEL
Good afternoon, Mr. Chairman and members of the House Subcommittee on Immigration and Claims. Thank you for the opportunity to testify on the H–1B Temporary Professional Worker Visa Program.
The American Council on International Personnel (ACIP) is a not-for-profit trade association founded in 1972. Our mission is to facilitate the movement of personnel across national borders. We do this through educational seminars and publications aimed at helping human resource professionals understand and comply with our complex immigration laws. ACIP also works with Congress and the Administration to develop policies which help U.S. employers compete in today's global economy by ensuring access to needed professionals. ACIP has over 300 corporate and institutional members, each with at least 500 employees worldwide. Our members file tens of thousands of nonimmigrant visa petitions each year and devote untold resources to complying with our laws.
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There are three issues I would like to address today: Why are U.S. employers using more H–1B visas? Who is using these visas? And, Do we need more H–1B visas?
First, why are employers using more H–1B visas? There are several simple answers to this question: a growing economy, tight labor markets and globalization. The U.S. economy is as strong as at any time since World War II. Unemployment among college graduates is less than 3 percent. The shortage of highly educated workers reaches across all fields but is especially profound in engineering, science and technical fields. Because a high percentage of new graduates in these fields are foreign nationals, companies can either seek H–1B visas for these workers or open facilities abroad.
In addition, American companies continue to expand their global workforce. As they enter markets in Asia, Latin America, Europe and the Middle East, companies are putting together international teams to engage in marketing and manufacturing. Employees from all countries, including U.S. citizens, are increasingly transferred from one country to another on a project basis. Some of these H–1B workers are cutting-edge researchers and managers who are recruited by global headhunters; others are new graduates of U.S. universities who will receive formal training and experience in the United States before being stationed abroad. H–1B professionals currently comprise less than one-tenth of one percent of the U.S. workforce but are vital to multinational corporations building a global workforce. There is global competition for the best and brightest among this new breed of worker, and U.S. employers need ready access to this pool even if U.S. workers are generally available. The H–1B is not just the ''high tech worker shortage visa.''
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Having identified why we are using more H–1B visas, the question becomes: Who is using these visas? Unfortunately, statistics are sorely lacking. Although ACWIA requires INS to track the occupation, country of origin, salary, education and other biographical information about H–1B workers beginning in FY2000, we are skeptical about their ability to provide accurate information. INS recently released a list of the top 20 corporate users of H–1B visas for FY98. Part of this widely circulated list was published in the Wall Street Journal. A number of the so-called ''top 20 users'' are ACIP members so we had the opportunity to compare INS' data to the companies' own records. The results were disturbing. INS grossly overstated usage in all cases; by up to 600 percent in some cases. For example, INS reported that Intel accounted for two percent of the visas when, in fact, they had only 297 new H–1B approvals last year. INS reported figures for another company that were greater than its total U.S. workforce. When we raised these concerns with INS, we were informed that the figures were drawn from a different and larger pool than the 65,000 visas approved under the FY98 cap. It is still not clear what INS was counting and we have requested that they reexamine their figures. ACIP opposes the release of such misleading and inaccurate data. Concern about a company's H–1B dependence can negatively influence stockholder decisions.
Such gross errors in the numbers we can verify independently lead us to question the accuracy of the count against the cap that we cannot confirm. Most immigration experts believe INS continues to inappropriately allocate petitions against the cap. Since INS first thought the cap was reached in FY96, the business community has engaged in discussions with them about the appropriate means of counting petitions against the cap. Granted, their forms and computer systems are not set up to make this an easy task, but it has been three years and the same issues remain unresolved. On December 30, 1997, INS published a proposed regulation on counting H–1B petitions. ACIP submitted comments at that time pointing out several errors in the proposed methodology. That regulation still has not been finalized. It is apparent that the cap will continue to be reached each year, and we ask for Congress' help in ensuring the count is accurate.
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Because we cannot rely on INS for data, we have tried to piece together our own usage statistics. ACIP has conducted telephone interviews with our members in a variety of industries across the country about their H–1B usage. We found that most of our members are using only a few more H–1B visas than in previous years. Usage trends, however, vary by industry with large increases in the sectors in which U.S. companies dominate the global market. For example, traditional manufacturing and consumer goods companies use few H–1B visas to begin with. They are using slightly more as they invest in research and expand international marketing activities. Major technology firms such as those engaged in semiconductors, biotechnology and software development report a slight upswing in H–1B use. Although these firms hire hundreds of H–1Bs per year, H–1B workers remain a very small percentage of their workforces. Significant increases in H–1B usage are reported by large retailers, financial services and professional services firms due to the increasing globalization of these businesses. Retailers and financial services firms need employees with language and cultural skills vital to success in new markets. Their employees gain experience in the U.S. on H–1B visas and then are transferred abroad. The largest increases are in the professional services firms, including consulting, law, engineering and telecommunications, which are building international teams to work on discrete projects. Teams are transferred from one project to the next, often crossing international boundaries several times within a year. The short-time, high learning curve and technology-sensitive nature of the projects prohibits companies from putting together and training domestic teams for each new project. If the U.S. wants to maintain its lead in these fields, our immigration policy must accommodate these activities.
One area where we have noted a downturn in H–1B usage is among the major domestic computer-consulting firms. At the same time, we are seeing large numbers of spin-offs and start-ups in this field. Firms specializing in e-commerce and the Internet which either did not exist several years ago or which had few employees have been hiring H–1B and U.S. workers at a rapid pace. These companies need cutting-edge technological expertise as well as language and cultural skills to get a foothold in the U.S. and global markets. This growth fuels our economy and we expect it to continue.
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Now that we've answered why companies are using more H–1B workers and who is using them, the question is: Why aren't 115,000 visas enough? If we examine the facts, it is not surprising that we have used 115,000 visas this fiscal year. As demonstrated in Appendix A, H–1B usage has fluctuated with the economy since the arbitrary cap was implemented in fiscal year 1992. This is the third year in a row that we have reached the H–1B cap. Although we appreciate the increase in the cap which Congress passed last year, we have created a situation of rolling backlogs that will only worsen. Approximately 5,000 visas were rolled over from FY97 to FY98, 20,000 rolled over from FY98 to FY99 and we project more than 40,000 will roll over into FY 2000. Congress recognized this issue last year during the intense negotiations over the H–1B bill and allocated extra numbers to take care of the FY98 rollover. Unfortunately, because the bill was not passed until after the beginning of FY99, this backlog reduction did not occur. Thus, we 20,000 visas rolled over from FY98 to FY99. Examined in this light, we have used only 95,000 visas this fiscal year—not 115,000. Appendix B projects usage for the next five years. Based on these figures, we have dug ourselves into a hole.
ACIP members unequivocally believe the cap must be raised but we are also committed to broader reform of the employment-based immigration system. We strongly support the bill (S.1440) introduced in the Senate by Senators Phil Gramm, Trent Lott and Mitch McConnell. This bill would increase the cap to 200,000 visas per year for fiscal years 2000, 2001 and 2002 and would exempt two categories of workers from the cap: persons with at least a master's degree who earn at least $60,000 annually and person's with at least a bachelor's degree who work for an institution of higher education. We think this legislation recognizes the value H–1B workers bring to our economy and we hope the House will consider similar legislation. We have recently become aware of another proposal in the House to provide badly needed work authorization to certain students graduating from U.S. universities. This is an important concept which should be further explored. At a minimum, we need legislation to address the backlog problem. We recognize that any of these measures is only a stopgap while broader reform of the employment-based immigration system is debated.
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We appreciate the allegations of fraud and abuse in the H–1B program as well as the allegations that H–1B foreign workers have negatively impacted U.S. workers. While ACIP believes that visa fraud is an important issue we do not believe it has a statistically significant impact on the availability of H–1B visas. Most fraud is concentrated in a few consular posts. Some of the fraud is illegitimate companies using the H–1B visa to accommodate relatives or friends but the numbers are small. Other fraud relates to fake credentials. In cooperation with U.S. employers, INS and the State Department have made significant strides at ferreting out fraudulent credentials. ACIP strongly supports the expansion of such efforts. At the same time, we oppose increasing scrutiny of all employers or restricting the availability of H–1B visas as these will have little impact on fraud. As we testified before this Subcommittee in May, ACIP believes INS must work smarter by distinguishing and giving expedited processing to companies with proven track records.
Not only is the fraud issue overstated, there is no evidence that companies are violating the H–1B wage and working condition requirements. The Department of Labor has found a few companies to be underpaying H–1B workers or otherwise violating the regulations. These companies should be and have been sanctioned. We strongly believe that the threat of debarment from all immigration programs is sufficient deterrent for the vast majority of the companies to take extreme pains to ensure they are in compliance with these complex laws.
There have been some allegations that H–1B workers adversely impact U.S. workers. These anecdotes are inconsistent with the statistical evidence of shortages in many occupations. In our opinion, the H–1B program has become a scapegoat for other phenomena in the workplace, mainly corporate reengineering. Companies have been selectively downsizing to shed units made obsolete or unprofitable due to technological change and globalization. They have outsourced many non-core competencies, particularly in the information technology arena. At the same time that U.S. workers are being laid-off because of this restructuring, firms are hiring and retraining workers, including H–1B workers, for their other business units. Most allegations of abuse arise in the context of outsourcing. There is almost no evidence of one-to-one displacement elsewhere. We do not mean to make light of the difficulties laid-off U.S. workers face, but we would not blame it on the H–1B program.
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Further, we dispute the notion that U.S. companies are using more H–1B visas because they are failing to train U.S. workers. While we acknowledge that there is an enormous skills gap in this country, we would assert that U.S. companies are taking steps to meet this challenge. I am awed by the array of education and training efforts ACIP member companies have in place. Programs range from K–12 partnerships to scholarships and tuition reimbursement to on-site retraining. Our members spend billions of dollars each year on these efforts. Many of ACIP's member companies have also been recognized for their outstanding commitment to diversity in the workplace. As the labor market tightens, their efforts to reach out to minorities, women, the disabled and the disadvantaged have intensified. These efforts are aimed at addressing workforce needs that are much larger than what the H–1B program could ever meet. ACWIA attempted to aid these efforts through the $500 training fee. While we did not oppose that fee, it is important to understand that education and training will have little impact in the near term therefore we should not too closely link the H–1B program with opportunities for U.S. workers.
Companies need access to skilled workers from around the globe now more than ever. We are competing with other nations to attract skilled workers in biotechnology, semiconductors, information technology, consulting, retail and many other sectors. It is not hard to understand why we are using more H–1B visas. What is hard to explain is why the United States is making it more difficult to recruit and retain skilled foreign workers when Australia, Canada, Germany and other countries are welcoming them. We need to consider how the H–1B program fits into our broader employment-based immigration system and that it meets the needs of employers in the 21st century.
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Thank you for this opportunity to present ACIP's views. I would be happy to answer any questions you may have.
Austin T. Fragomen, Jr., is a partner of Fragomen, Del Rey, Bernsen & Loewy, P.C. a national law firm practising exclusively in the area of immigration and nationality law. Mr. Fragomen is resident in the New York office. He attended Georgetown University (B.S., 1965) and Case Western Reserve University (J.D., 1968).
Mr. Fragomen served as Staff Counsel to the U.S. House of Representatives Subcommittee on Immigration, Citizenship and International Law from 1968 to 1970 and as an Adjunct Associate Professor of Law at New York University School of Law from 1975–1986. He serves as Vice-Chairman of the Board of Directors of the Center for Migration Studies, and an Editorial Board Member of the CMS publication International Migration Review; is Chairman of the Board of Directors of the American Council on International Personnel; and Chairman of the Practising Law Institute's Annual Immigration Institute.
Mr. Fragomen is editor-in-chief of the semi-monthly publication Immigration Law Report, and co-author of the publications Immigration Procedures Handbook, Immigration Employment Compliance Handbook and Immigration Fundamentals as well as the treatise Immigration Law and Business.
He serves as a member of the steering committee of the business coalition American Business for Legal Immigration (ABLI) and has testified before congressional committees on numerous occasions.
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Mr. Fragomen is a member of the District of Columbia Bar Association, The Association of the Bar of the City of New York, the American Bar Association and the American Immigration Lawyers Association.
Mr. LAMAR SMITH. Thank you, Mr. Fragomen.
We're going to pause, and I'm going to recognize the ranking member for 5 minutes for her opening statement.
Ms. JACKSON LEE. I thank the chairman very much. I thank you for holding this hearing and to the witnesses for your presence.
The H–1B Visa Program is an important one, and I have supported it in the past. This has been an important one throughout the legislative session of the 105th Congress. I voted last year for the bill that would do this in full committee and on a floor as it was attached to the omnibus appropriations bill. However, like many members, I have concerns about this program, and I still do.
Last year, while considering H.R. 3736, The Workforce Improvement and Protection Act of 1998, during full committee markup, many democrats took the position that although it is true that in recent years the high-tech industry has fueled enormous growth in the United States and has benefited the corporate information technology, any raising the caps on these types of specialty workers should include an increased commitment to training U.S. workers.
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The growing workforce of our country and the strength and growth of the high-tech industry in particular can be met effectively by fully developing the skills of our own workers as a first priority before hiring highly specialized foreign workers.
I believe that the current high demand market for certain technical specialties is that it should encourage us to retrain displaced workers, attract underrepresented women and minorities, better educate our young people and recommission willing and able older workers who have been forced into unemployment.
Now, I recognize the urgency of the plea of some of our large corporations, and I will remain open-minded to ensure that our economy and the work that we are engaged in is not stifled and undermined because of the need of trained employers—or trained employees.
But I believe H–1B visas are available to workers who are coming temporarily to the United States to perform services in a specialty occupation. It would be helpful if we could, if you will, search the Nation to ensure that we have not missed one individual who could fulfill those responsibility in that position who are now here in the United States.
This is an occupation that requires a theoretical and practical application of, a, body of highly specialized knowledge, and, b, attainment of a bachelor's or higher degree in the specific specialty or its equivalent as a minimum for entry into the occupation to the United States. This is of course who deal in a specialty occupation.
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Although this hearing is limited to high-tech workers, I believe, Mr. Chairman, other groups of employees also receive H–1B visas. According to the Labor Department data, for Fiscal Year 1996, 41.5 percent of the visas were computer-related occupations—which are considered the high-tech workers—19.5 percent were for therapists, 4.9 percent were for other medical and health professionals, and 2.9 percent were for college university faculty, 2.5 percent for registered nurses, 2.4 percent for accountant auditors, and 2.3 percent for physicians.
A raise in the form of working with the American workforce is important, and, as I close, let me consider the following—or let us consider the following fact: To my knowledge, not one Silicon Valley firm recruited during the 1998 Conference of the National Council of Black Scientists and Engineers in Oakland, California, 60 miles away from the heart of Silicon Valley. Only two Silicon Valley firms found scholarships—fund scholarships through the National Action Council for Minorities in Engineering, which provides assistance to 10 percent of all underrepresented group students in engineering. And the National Society of Black Engineers of Silicon Valley has only four corporate sponsors.
In addition to the failure to recruiting young people from minority groups, there is a general failure to fully utilize older, more experienced workers. The suspicion is that high-tech companies hire young foreign workers instead of recruiting more experienced people, because the experienced people require higher salaries.
I know that we have a long way to go in the training of many of our young students in math and science. I realize that we have a lot to do in promoting in our institutions of higher learning the commitment to math and science and the technologies. I do know, as a member of the Science Committee, however, that this is exciting work.
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And, so I would look forward to remaining and retaining—remaining open and retaining an open mind on the question of H–1B visas. Having voted for it last year, believing, Mr. Chairman, that we can come to a recognized and valuable compromise that will answer the concern of industry but as well will answer some of the concerns of the many talented American workers and young people that we have in this Nation.
With that, Mr. Chairman, I would ask that my entire statement be submitted into the record.
Mr. LAMAR SMITH. All right. Without objection, the complete opening statement will be made a part of the record.
Thank you, Ms. Jackson Lee.
[The prepared statement of Ms. Jackson Lee follows:]
PREPARED STATEMENT OF HON. SHEILA JACKSON LEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Good Morning Mr. Chairman. The H1–B visa program is an important one and has been one throughout this past year as we voted to raise the cap last year in the 105th Congress. I voted last year for the bill that would do this in the Full Committee, and on the floor as it was attached to the Omnibus Appropriations bill. However, I like many Members did have some concerns about this program and still do.
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Last year while considering H.R. 3736, the ''Workforce Improvement and Protection Act of 1998'' during full committee mark-up, many Democrats took the position that although it is true that in recent years the high tech industry has fueled enormous growth in the United States and has benefitted the corporate information technology, any raising the cap on these types of specialty workers should include an increased commitment to training by U.S. workers. The growing workforce of our country and the strength and growth of the high tech industry in particular can be met effectively by fully developing the skills of our own workers as a first priority, before hiring highly specialized foreign workers.
I believe that the current high demand market for certain technical specialties is that it should encourage us to retrain displaced workers, attract underrepresented women and minorities, better educate our young people and recommission willing and able older workers who have been forced in to unemployment H–1B visas are available to workers who are coming temporarily to the United States to perform services in a specialty occupation. This is an occupation that requires (A) theoretical and practical application of a body of highly specialized knowledge, and (B) attainment of a bachelor's or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States.
Although this hearing is limited to high tech workers, other groups of employees also receive H–1B visas. According to Labor Department data for fiscal year 1996, 41.5% of the visas were for computer-related occupations, which are considered the ''high tech workers, 19.5% were for therapists, 4.9% were for other medicine/health professionals, 2.9% were for college/university faculty, 2.5% were for registered nurses, 2.4% were for accountants/auditors, and 2.3% were for physicians. A raise in the number of H–1B visas would increase immigration in all of these occupations, not just in the high tech occupations.
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Prior to the passage of the American Competitiveness and Workforce Improvement Act of 1998 (''ACWIA''), the number of H–1B visas that could be issued during any fiscal year could not exceed 65,000. The ACWIA raised this cap to 115,000 for fiscal year 1999, and this cap was reached in July.
Chairman Smith called this hearing to find out why the cap was reached so quickly and to determine whether Congress should raise it again.
According to studies by the Information Technology Association of America (''ITAA''), in 1997 and 1998, and a 1997 report from the Commerce Department, we do not have a sufficient number of people skilled in information technology to meet the needs of United States companies. These reports were criticized in March of 1998 by the General Accounting Office (''GAO''). Among other things, GAO pointed out that the reports did not consider (1) the numerical data for degrees and certifications in computer and information sciences other than at the bachelor's level when they quantified the total available supply; (2) college graduates with degrees in other areas; or (3) workers who have been, or will be , retrained for these occupations.
Similarly, in a recently published report, the Commerce Department concluded that while there is no evidence pointing to a tight labor market for highly skilled information technology occupations, due to limitations of available data, there is no way to establish conclusively whether there is, or is not, an overall information technology workers shortage.
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It is not necessary to determine whether or not there really is a shortage of high tech workers in the United States. Whether or not there is a shortage in fact, it is a certainty that the American companies are not doing enough to meet their needs with people from the American workforce. Let's consider the following facts:
Not one Silicon Valley firm recruited during the 1998 conference of the National Council of Black Scientists and Engineers in Oakland, California (only 60 miles from the heart of Silicon Valley). Only two Silicon Valley firms fund scholarships through the National Action Council for Minorities in Engineering, which provides assistance to ten percent of all under represented group students in engineering. And the National Society of Black Engineers of Silicon Valley has only four corporate sponsors.
In addition to the failure to recruiting young people from minority groups, there is a general failure to fully utilize older, more experienced workers. The suspicion is that high tech companies hire young foreign workers instead of recruiting more experienced people because the more experienced people require higher salaries. While many companies do need people with highly specialized skills, these skills can be learned by the older, more experienced people as well as by people just graduating from school.
In conclusion Mr. Chairman, we need to approach the H1–B visa specialty program with two eyes wide open. One eye focused on looking out for our American workers to ensure proper training, and the other eye focused on the underrepresentation of minorities and women in the high tech industry who currently comprise our American workforce.
Thank-you Mr. Chairman.
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Mr. LAMAR SMITH. We will now go to Mr. Smith.
STATEMENT OF DAVID A. SMITH, DIRECTOR, PUBLIC POLICY DEPARTMENT, AFL–CIO
Mr. DAVID SMITH. Thank you, Mr. Chairman, Ms. Jackson Lee.
Let me begin by echoing what Mr. Pease said. Although I am delighted to be here and have an opportunity to offer the AFL–CIO's views on the question before you, I think it is regrettable that we are here only slightly less than a year after we took a very unusual step of increasing the number of H–1B visas. We are now considering it again. I think that's unfortunate and—for reasons I will try to elaborate—inappropriate.
I will summarize my testimony, Mr. Chairman. You have it, and I would appreciate it being included in the record in full, but let me focus on four issues.
When I testified before this subcommittee a little more than a year ago, I raised questions about what we knew and what we didn't. Mr. Chairman, in your opening statement, you echoed some of those questions. Unfortunately, we didn't know the answers to some of those questions then, and, today, we still don't.
The American Competitiveness and Workforce Improvement Act of 1998 asked for some very important information to be collected. It asked for information from the INS. It asked the National Academy of Sciences to conduct some studies. Those studies have just barely begun. The INS has been unable to give us a reasonable count, breakdown or description of current H–1B visa entrants; and the work that the Department of Labor was to have done in terms of putting together a system to improve our ability to ensure that there is a truly a need for these workers, that firms seeking to hire them had to meet a series of tests of good faith search and attestation to that search. None of those regulations are in place.
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So, I think, not only do we not know enough to answer your questions but we know even less than we did 15 months ago. I wish I could take a stab at answering the questions you raised, Mr. Chairman, but I can't, and it seems to me that is a terribly good reason on its own for your not going ahead.
Let me pick up on something that Ms. Jackson Lee raised. You have, attached to my testimony, a simple chart, and what the chart shows is the rate of growth in employment for math and computer scientists since 1989, and that is the line that is going up. The second line on the chart shows what has happened to wages for men and women with those skills. That line is flat.
Now, many of you have often invoked the market as the most sensible and useful arbiter of how things ought to operate, and you are often right; it is a very powerful mechanism. But if this labor market were operating the way markets ought to operate, these lines would be moving up together. They are not.
Now, that suggests that one of two things are true; I don't know which. Either the availability of H–1B workers is artificially depressing wages in this marketplace, which ought to be rising as demand increases, or the argument that there is scarcity in the market isn't true. One or the other of those things must be true or we would see the bottom line on this chart following the top line up.
It suggests either that the labor market isn't working and therefore isn't inducing young men and women—the young men and women that Congressman Lee talked about—to enter these fields, because wages aren't attractive enough, or that they don't need to be more attractive in order to fill their vacancies.
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There are two other things going on in this market that suggest that we ought to have a healthy dose of skepticism about whether or not now is the time to yet again increase the number of visas. One of them is the continuation of industry layoffs. Since January 1 of this year, almost 28,000 people—at IBM, at Compaq, at EDS, Packard Bell, and other high-tech employers—have been laid off. Those 28,000 people remain part of the workforce and perhaps if the industry were more interested in looking in Houston or Dallas to fill its vacancies than in Madras or Bonglore, they would find American men and women qualified, ready to work, and anxious to do so.
And a third labor market phenomena that we ought to pay attention to—and I think Mr. Nelson will talk more about it later—so I will just mention it briefly—is the unemployment rate for information technology workers who are 40 or more. Today it is almost 5 times the unemployment rate for information technology workers who are younger. That suggests both discrimination, and the desire to use the H–1B Program in order to hold wages down.
I talk, in my prepared testimony, about fraud. We know a lot that makes us suspicious. We don't know what is going on at some of the consulates where large numbers of visas have been issued, but we do know that the Inspector General of the State Department thinks it is serious enough to take a look. We do know that the Department of Labor is beginning to examine these questions. Again, we ought to be cautious before we expand this program.
And let me conclude with my fourth point and, again, echoing all of you. The answer is at home. The answer is making the investments in education, in training, in skill upgrading, and making sure that we link those who lose their jobs at EDS and elsewhere to IT firms that are expanding. It is making those linkages, making this labor market work, so these very exciting and important future jobs find their way to Americans who can't do them.
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And, again, I can't help but ending where Congressman Jackson Lee did. If the industry looked as hard for tomorrow's employees in Oakland and the rest of the East Bay as we look in central India, I doubt very much that we would be here today.
[The prepared statement of Mr. David Smith follows:]
PREPARED STATEMENT OF DAVID A. SMITH, DIRECTOR, PUBLIC POLICY DEPARTMENT, AFL–CIO
Mr. Chairman and Members of the Committee:
On behalf of the AFL–CIO, I thank you for the opportunity to address this hearing on the H–1B Temporary Professional Worker Visa Program before the Subcommittee on Immigration and Claims of the House Judiciary Committee. It is premature to even consider another increase in the number of H–1B visas. We know little more about the H–1B program today than we did upon the enactment of the American Competitiveness and Workforce Improvement Act of 1998, especially the effects of H–1B workers on the U.S. workforce. What we do know is that there is no substantial proof of a widespread worker shortage as claimed by the information technology (IT) industry. We know that the wages of IT workers have not escalated as would be expected in a tight labor market, and that the industry continues its pattern of laying off tens thousands of workers, a practice that has profound effects on older IT workers.
The AFL–CIO repeats its call for policymakers to focus their attention on the true solution to current and anticipated skills shortages in the IT sector: training of current workers, investment in education, and enforcement of labor laws, rather than discussing yet another expansion of the H–1B program. The primary focus for policymakers and industry should be the determination of the steps the U.S. should take to ensure that our workers are prepared for job demands of today, predict future skills needs, and that government, industry and labor work together to ensure that our workforce is fully prepared to meet those needs. The H–1B temporary foreign worker program answers none of those compelling questions, but instead shifts attention to a program readily susceptible to fraud and abuse, that works to deny U.S. workers job opportunities, devalues the skills of experienced IT workers and deters our young people from pursuing promising careers.
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We know little more about the H–1B program, its effect on U.S. workers or the alleged IT skills shortage than we knew in 1998.
The American Competitiveness and Workforce Improvement Act of 1998 required that the Immigration and Naturalization Service (INS) take steps to maintain an accurate count of H–1B workers, their countries of origin, educational background, occupations, and compensation . The law also required INS to track H–1B employers and the number of foreign workers they employ. Less than a year after enactment of the law, we know nothing more about the employers who bring these workers into the country, the positions they fill, how long the workers remain in the country, their wages and benefits, and most importantly, a thorough understanding of their effect on the U.S. workforce. It is irresponsible to even discuss the possibility of another expansion of the H–1B program with an incomplete frame of reference regarding the short-term and long-term effects of the H–1B program. The Department of Labor (DOL) is unable to give current information on the employers who have filed Labor Condition Applications (LCAs). Even if this information were available, it would be somewhat misleading because an LCA can be used to bring in multiple workers for up to two years. There is no information about the identity or percentage of employers who are ''H–1B dependent'' and to whom the new good faith recruitment and nondisplacement attestations apply. Likewise, INS has not made available any of the information Congress mandated the agency to track in last year's bill, and there appears to be no sense of urgency from the agency that this information be made available prior to the deadline imposed by the legislation. The National Academy of Science has only recently convened its committees to research, analyze and report its finding to Congress as required by under the law.
Any attempt to raise the annual caps on the number of H–1B visas must be made only in the context of responses to questions that remain unanswered from last year's debate: What is the effect of H–1B workers on U.S. workers? Have government and the industry alleging a skills shortage invested in the resources of the current U.S. workforce? Have government and the industry acted with due diligence in predicting its future worker needs and invested in the education of U.S. students at all levels? Is the industry claiming the shortage one that has a record of adhering to U.S. labor laws to protect U.S. workers, or is there reason to believe that the industry seeking to avoid those lawful obligations by the importation of foreign workers? Is the temporary foreign worker program narrowly tailored, closely monitored, well documented, and proven not to shortchange qualified U.S. workers? As was the case in 1998, these questions have not been answered, nor their solutions explored. Until there is a full debate with complete information, Congress should not consider increasing the number of H–1B workers.
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Available information offers conflicting conclusions on IT workers, wages and their employers.
IT wages—Proponents of an expanded H–1B program claim that there is a dangerous shortage of labor. If so, IT wages should have escalated as desperate employers offered higher and higher wages to attract and maintain scarce workers. However, this is simply not the case. Despite fast growth in employment, indicating an expanding labor market, real median weekly wages for IT workers have barely increased, as shown in chart 1. Real salaries for IT workers were, in fact, less in 1998 than in 1995. Moreover, young college graduates entering the IT labor market have not seen their wages bid up either, as should be expected to happen in an industry with a labor shortage. This leads to a conclusion that either the IT labor supply is adequate, or that the prevalence of H–1B workers in the IT labor workforce has resulted in depression of wages. Wage information does not support allegations of a labor shortage, or the need for an increase in H–1B visas.
Finally, even minimal IT wage increases may merely reflect a general trend that the earnings of workers with college degrees have increased faster than those without. H–1B workers certainly are not garnering high wages. According to DOL, in FY 97, 80% of the LCAs certified by the agency were for jobs paying less than $60,000. These irregularities in the IT labor market strongly suggest that either the presence of H–1B workers and/or the behavior of the IT industry has contributed to the anomaly of a tight labor market with sluggish wage growth.
IT industry layoffs
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Since January 1, 1999, IT companies have been responsible for the layoff of over 28,000 U.S. workers. Examples of these layoffs include 5,180 workers who lost their jobs at Electronic Data Systems, 2,150 at Compaq, 3,000 laid off at NEC-Packard Bell and 1,100 at IBM. We fully expect mass layoffs to occur within the first few months of 2000, as Y2K problems are resolved. These numbers indicate either that the IT skills shortage is not of the magnitude alleged by the industry, or that IT employers prefer to hire a new worker with the hot ''skill of the minute'' rather than invest in training current workers who are easily and readily qualifiable for the same job. Either conclusion in untenable and results in a reckless disregard for the potential of U.S. workers.
There is evidence of age discrimination against older IT workers.
According to February 8, 1999 edition of Computerworld magazine, U.S. Census Bureau data reveals that the unemployment rate for IT workers over age 40 is more than 5 times that of other workers in the same age group. The older the IT worker, more likely that worker is to be unemployed. These statistics support allegations of older IT workers that they lose jobs to younger, cheaper H–1B workers, and that once they have lost their jobs, older IT workers face a seemingly insurmountable task of finding another job in the IT industry. This behavior on the part of the IT industry may violate federal law and does not conform to that of an industry in the midst of a skills shortage.
The H–1B visa program must be reformed to prevent fraud and abuse.
A few months ago this subcommittee undertook examination of the extensive fraud and abuse of the H–1B visa program, along with other temporary foreign worker programs. The testimony revealed that inconsistent and lax monitoring and application of criteria by U.S. consulate offices, manipulation of the system by employers who seek to gain entrance for a family member, friend or cheap, low-skilled foreign worker, and at times, the H–1B worker themselves, have thwarted the goal of the specialty worker program. The initial evidence shows that much of the fraud involves employers seeking workers from China and India. These two countries supply the most H–1B workers. The level of scrutiny applied to the academic and employment background are of a foreign worker depends on the U.S. Consulate office where they present themselves for processing. Follow-up inspections of H–1B employers once workers enter the country are prohibited by law. The H–1B program allows anyone with a bachelor's degree, or claiming to have such a degree, admission to the U.S. if an employer describes the position for which the individual will be hired on the LCA in a manner that satisfies DOL's cursory, face of the document scrutiny.
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The H–1B program is not now, nor has it ever been, an information technology foreign worker program. The very broadness of the requirements governing a worker's eligibility for H–1B status, and the limitations of the DOL, INS and the Department of State facilitate the distribution of visas to anyone who can game the system, rather than limiting the program's reach to employers with valid applications for qualified foreign workers. Programmatic failings, rather than any alleged worker shortage, are responsible for the premature depletion of the annual allotment of H–1B visas. The refusal of advocates of the H–1B program to acknowledge the fraud and abuse is puzzling, because common sense indicates that tight controls on the program will make available H–1B visas for employers with legitimate need. Rather than clamor for more visas and a less restrictive (if that is actually possible) program than provided for in current law, the IT industry should support efforts by federal agencies to access the full extent of fraud and abuse in the H–1B program and implement effective strategies to deal with the problem, instead of taking the side of unscrupulous employers and job shops.
The real long-term solutions to meet IT skills demands: Training and Education.
In my testimony last year, I stated that the H–1B debate should not focus on an alleged skills or worker shortage, but instead focus on government and industry investment in the resources of U.S. workers. This readily available and qualified workforce remains neglected during this debate. Although the American Competitiveness and Workforce Improvement Act of 1998 created a small training program for incumbent workers, and even smaller scholarship programs for the study of math and computer science, as of this date none of those programs have been fully implemented. The record of the IT industry in training its own workers, and facilitating the training of others outside its workforce is pathetic. There is no evidence of a comprehensive training strategy targeted at current or future skills shortages that the IT industry has developed or implemented. . The industry has been conspicuously silent when job training policy and legislation has been proposed or debated by the Administration and Congress. Instead, the IT industry has invested its time and energy and wasted the time of policy and lawmakers by pursing the false solution of evermore H–1B workers. It is high time that we shift the focus of our national conversation to those workers with the requisite IT skills, or with skills that can be upgraded with limited training.
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While the IT industry has been quite vocal in blaming the U.S. education system as the cause of the alleged skills shortage, its neglect of the same system shows lack of faith in our young people. A few gifts of software cannot compensate for teachers who are trained in IT skills. Nor can research grants to a privileged few universities open the doors to a degree leading to a IT career, especially those groups under represented in the IT workforce, such as women and people of color. The IT industry should invest its own astronomical and ever-growing profits in higher education by providing educators and substantial scholarship opportunities.
The AFL–CIO has long placed its faith in the U.S. worker, and invested in the educational opportunities available to the America's children. We continue to believe, and strongly support, the concept of regional skills alliances as effective mechanisms to pool resources within industry sectors and regions in order address skills needs, through joint efforts in skills assessment, development of skills standards, training curriculum, and apprenticeship and training programs. It is essential that labor organizations be a vital part of these alliances, and that federal grants leverage private sector investments to address the training needs of workers, especially incumbent and dislocated workers.
Our affiliate unions are at the forefront of taking steps now to address labor needs of tomorrow. The Communications Workers of America (CWA) has entered into an apprenticeship program with U.S. West which will train workers as network technicians. CWA's commitment to training opportunities is so strong it has negotiated tuition reimbursement and other assistance for current workers to upgrade their skills and retraining in its collective bargaining agreements. In addition, CWA and the International Brotherhood of Electrical Workers (IBEW) have worked in collaboration with the Alfred P. Sloan Foundation and several telecommunications companies to develop a standardized two-year telecommunications Associate of Science degree program. Finally, CWA recognizes that the skills of military veterans are often readily transferable to the IT industry by developing an electronic screening process to assess their past military experience to determine their skills and needs.
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Earlier in my testimony, I noted the accelerated pace of layoffs in the IT industry over the past year. Tens of thousands of IT workers have lost their jobs with apparently little effort to direct them to employers with IT vacancies. Recognizing this gap between laid-off workers and good jobs, the Milwaukee Private Industry Council and the Milwaukee AFL–CIO Labor Education and Training Center have applied for a DOL grant to develop a pilot ''fast track'' training program for moving displaced workers into IT and other high tech jobs.
The Department of Commerce's recent report ''The Digital Work Force: Building Infotech Skills at the Speed of Innovation,'' strongly recommended that young people be introduced to skills they will need to pursue an IT career. The members of our affiliate unions, in particular CWA and IBEW, have invested their time and money in wiring over 1000 public schools across the nation as part of a project called Next Day. The majority of schools are in empowerment zones and all serve low income communities. It is our attempt to bridge the digital divide that especially effects children of color and their chances to successfully pursue IT careers. Next Day includes training of teachers and parents by the American Federation of Teachers and other volunteers. These efforts and others have all ready paid off as the Department of Commerce has found that the number of American students enrolled in computer-related classes has increased at colleges and universities.
The Department of Commerce is correct in its conclusion that U.S. workers can meet the need for the IT workforce of the future, if we invest and prepare today. This sage advice will never become a reality so long as our efforts and policies are centered on efforts to expand the H–1B temporary foreign worker program rather than investing in our workers and children today.
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Conclusion
The H–1B program and its expansions have proven to be the worst possible scenario for U.S. workers. As employers voraciously consumed 115,000 visas by the end of June of this year, no regulations enforcing labor protections for both U.S. and foreign workers, either interim or final, have been promulgated by the Department of Labor (DOL). Not one U.S. worker has been afforded the minimal labor protections of the additional employer attestations imposed by The American Competitiveness and Workforce Improvement Act of 1998 because DOL has yet to publish regulations governing their implementation, in either interim or final form. Attention and resources are diverted from the true solutions to a shortage skills, training programs, better educational programs, fair recruitment and diligent enforcement of strong labor laws, to a sham debate for a phony solution to an alleged shortage that is perpetuated by the behavior of an industry.
63314a.eps
Mr. LAMAR SMITH. Thank you, Mr. Smith.
Ms. Neiswonger.
STATEMENT OF CRYSTAL NEISWONGER, IMMIGRATION SPECIALIST, TRW, INC.
Ms. NEISWONGER. Thank you.
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Good afternoon Mr. Chairman and members of the subcommittee. I am Crystal Neiswonger, immigration specialist for TRW Inc., headquartered in Cleveland, Ohio. I am pleased to appear before this subcommittee on behalf of the National Association of Manufacturers.
TRW is a global company focused on supplying advanced technology products and services to the automotive, aerospace, and information services marketplace. We are in the process of merging our recently acquired group of LucasVarityCompanies into TRW to become a $19 billion company with 130,000 employees by year-end. I am honored to appear as a member of this panel to talk about the H–1B Program and its importance to our company.
Since the inception of the H–1B Program in 1952, TRW has selectively used H–1B visas. These visas are used to hire foreign nationals for specialty positions in our businesses and also for shortage occupations for which we cannot find U.S. workers with equivalent experience and academic qualifications. In 1998, we used 36 H–1B visas, and up until July 1999, we had used 28. TRW places a high priority on hiring from the U.S. workforce.
However, since 1995, it has become increasingly difficult for us to find U.S. candidates for positions requiring degrees in electrical, mechanical, industrial and software engineering. U.S. colleges and universities lack American-born students who choose these majors and students who choose to pursue advanced degrees in these areas.
TRW recruiters who visit college campuses estimate that only 3 in 10 resumes for our positions come from U.S. persons. Consequently, the labor pool that TRW and other global companies need to draw from is comprised overwhelmingly of foreign-born students attending American universities.
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Using traditional recruitment methods such as newspaper advertisements and professional journals, and now the internet, TRW recruiters are receiving no response to many of the ads placed or are receiving resumes from individuals whose skills and education do not match the job requirements. We received only three resumes for an ad we ran in the Sunday New York Times for a chemical engineer with expertise in injection molding. In addition, we use headhunters, open houses at our facilities, and recruitment fairs to attract potential new hires. Even with this outreach, we continue to have over 1,000 job openings in TRW.
TRW has used the financial resources of the TRW Foundation and corporate resources to train and retrain its current workforce and to finance a variety of educational initiatives to attract young people to the academic programs where workers are in short supply. Internally, we have a generous tuition reimbursement program, we offer fellowships to current employees, and we provide scholarships to children of TRW employees.
For the last several years, foundation support has been directed toward enhancing math and science curricula at the elementary and high school levels. For the past 5 years, TRW has sent over 300 disadvantaged children from its plant communities to a week of space camp at the U.S. Space and Rocket Center in Huntsville, Alabama. This program has documented that students who have experienced space camp improve their grades in math and science.
TRW has financially supported MATHCOUNTS, a unique nationwide program for middle school students since 1986. This program involves on-site participation of TRW engineers who coach students in developing an appreciation for the critical need for mathematics in the workplace.
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We have also sponsored high school teams to participate in the FIRST Competition, an international engineering competition designed to inspire young people to excel in math and science. This program partners high school math and science students with engineers to design and build a robot to perform particular objectives and to compete against other teams in Orlando, Florida. This has become such a popular program at some schools that last year, at East Technical High School in Cleveland, Ohio, we were told that more students competed to get on the FIRST Team than on the basketball and football teams combined. However, it will take several years to develop a pipeline of American students who pursue degrees in engineering, math, and science that are now in short supply. In the meantime, the H–1B Visa Program is needed until we have an adequate supply of American workers.
I'd like to tell you about a few of our most recent hires that have joined TRW pursuant to an H–1B visa. In 1997, our finance department determined the need for a TRW-trained controller to open an office in China that we were getting prepared to open up. Yihao Zhang was interviewed on the campus of Ohio Wesleyan where he was an undergraduate student with a double major in mathematics and economics management. As a native of China, he was studying toward his bachelor's degree on a student visa. Mr. Zhang graduated cum laude and was fluent in English as well as his native language of course. TRW hired him with the understanding that he would spend 2 years learning TRW's businesses and accounting procedures, and then go to China to assume the controller responsibilities. He spent 1 year in the U.S. rotating through various business units and 1 year in Canada with an automotive unit. Next month, he leaves for China to work with TRW's engine valves joint venture.
Kwen Hsu came to the United States in 1989 to get his Ph.D. in Aerospace Engineering from the University of Texas at Arlington. His unique work in the area of computational fluid dynamics was of great interest to the airbag division at a time when we were trying to develop the next generation of airbags in our occupant restraints division. He is currently working in Washington, Michigan developing a new instrument to be used for controlling the speed of airbag inflation. It is estimated that this product could create 250 American manufacturing and distribution jobs.
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These individuals, like other H–1B workers hired by TRW, fill vital roles that help us better compete in the global marketplace. Rather than taking American jobs, these individuals are creating jobs and growing our company.
Unfortunately, the cap on H–1B visas being reached again this year, some of our business has been placed on hold. We have three foreign nationals, including an epidemiologist, scheduled to work on a contract for the Center for Disease Control and Prevention, who have been identified as new hires by three different business units. Because of the cap that was reached in April, we must postpone the hiring of these individuals until October 1, assuming they are still available.
In my written testimony, I have made several recommendations for H–1B process improvements from a user perspective.
In summary, I believe that that H–1B Visa Program is a needed and valid Government initiative. It is helpful for American workers, companies, and the economy. It fills job vacancies for which there is no U.S. person available. However, the program has become overburdened by excessive regulation, an ineffective bureaucracy, and a lack of technology. The shortage of U.S. specialty workers will continue for the foreseeable future given the lack of U.S. students in our academic pipeline. This program must be improved and made more responsive to its customers in order for the U.S. companies to continue in the forefront of innovation and productivity.
Thank you.
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[The prepared statement of Ms. Neiswonger follows:]
PREPARED STATEMENT OF CRYSTAL NEISWONGER, IMMIGRATION SPECIALIST, TRW, INC.
Good afternoon Mr. Chairman and members of the subcommittee. I am Crystal Neiswonger, Immigration Specialist for TRW Inc., headquartered in Cleveland, Ohio. I am pleased to appear before this subcommittee on behalf of the National Association of Manufacturers (NAM). NAM is the nation's largest and oldest multi-industry trade association. NAM represents 14,000 members including 10,000 small and mid-sized companies and 350 member associations serving manufacturers and employees in every industrial sector and all fifty states.(see footnote 1)
TRW Inc. is a global company focused on supplying advanced technology products and services to the automotive, aerospace, and information services marketplace. We are in the process of merging our recently acquired group of LucasVarityCompanies into TRW to become a $19 billion company with 130,000 employees by year end. I am honored to appear as a member of this panel to talk about the H–1B program and its importance to our company.
Since the inception of the H–1B program in 1952, TRW has selectively used H–1B visas. These visas are used to hire foreign nationals for specialty positions in our businesses, and also for shortage occupations for which we cannot find U.S. workers with equivalent experience and academic qualifications. In 1998, we used 36 H–1B visas, and up until July 1999, we had used 28. TRW places a high priority on hiring from the U.S. workforce.
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However, since 1995, it has become increasingly difficult for us to find U.S. candidates for positions requiring degrees in electrical, mechanical, industrial and software engineering. U.S. colleges and universities lack American born students who choose these majors and students who choose to pursue advanced degrees in these areas.
TRW recruiters who visit college campuses estimate that only three in ten resumes for our positions come from U.S. Persons. Consequently, the labor pool TRW and other global companies need to draw from is comprised over-whelmingly of foreign-born students attending American universities. On August 3, 1999, TRW listed 1,023 career opportunities on its website, www.trw.com. Using traditional recruitment methods such as newspaper advertisements and professional journals, and now the internet, TRW recruiters are receiving no response to many of the ads placed, or are receiving resumes from individuals whose skills and education do not match the job requirements. We received only three resumes for an ad we ran in the Sunday New York Times for a chemical engineer with expertise in injection molding. Unfortunately, none of the applicants met the job requirements. In addition, we use ''headhunters'', open houses at our facilities and recruitment fairs to attract potential new hires. Even with this outreach, we continue to have hundreds of openings at TRW. These facts drive our increasing usage of the H–1B program in order to meet the needs of our growing automotive, aerospace and information services businesses.
TRW has used the financial resources of the TRW Foundation and corporate resources to train and retrain its current workforce, and to finance a variety of educational initiatives to attract young people to the academic programs where workers are in short supply. Internally, we have a generous tuition reimbursement program, we offer fellowships to current employees, and we provide scholarships to children of TRW employees.
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Since 1955, TRW's Foundation has donated approximately $100 million to non-profit organizations. For the last several years, Foundation support has been directed towards enhancing math and science curricula at the elementary and high school levels. The need for all students to reach higher levels of achievement in mathematics and science has become increasing urgent as the shift to an information and technology economy takes place.
For the past five years, TRW has sent over 300 disadvantaged children from its plant communities, who have the potential to be high achievers, to a week of Space Camp at the U.S. Space and Rocket Center in Huntsville, Alabama. This program has documented that students who have experienced Space Camp improve their grades in math and science. TRW also encourages employees to send their own children to this special TRW Space Camp week in conjunction with Foundation sponsored students.
TRW has financially supported MATHCOUNTS, a unique nationwide program for middle school students since 1986. This program involves the on-site participation of TRW engineers who coach students in developing an appreciation for the critical need for mathematics in the workplace. Recently, ''Mathletes'' and TRW engineers participated on a team to design the new MATHCOUNTS ''GoFigure'' website selection that debuted in December 1998.
We have also sponsored high school teams to participate in the FIRST Competition, an international engineering competition designed to inspire young people to excel in math and science. This program partners high school math and science students with engineers to design and build a robot to perform particular objectives and compete against other teams in Orlando, Florida. This has become such a popular program at some schools that last year, at East Technical High School in Cleveland, Ohio, we were told that more students competed to get on the FIRST Team than for basketball and football combined. TRW is delighted to support this kind of motivational activity because it is an excellent means to building an even more effective workforce.
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However, it will take several years to develop a pipeline of American students who pursue degrees in the engineering and math sciences that are now in short supply. In the meantime, the H–1B visa program is needed until we have an adequate supply of American workers.
I'd like to tell you about a few of our most recent hires that have joined TRW pursuant to an H–1B visa.
In 1997, our Finance Department determined the need for a TRW trained controller to be part of an office we were planning on opening in China. Yihao Zhang was interviewed on the campus of Ohio Wesleyan where he was an undergraduate student with a double major in mathematics and economics management. A native of China, he was studying towards his bachelor's degree. on a student visa. Mr. Zhang graduated cum laude and was fluent in English as well as his native language. TRW hired him with the understanding that he would spend two years learning TRW's businesses and accounting procedures, and then go to China to assume the Controller responsibilities. He spent one year in the U.S. rotating through various business units and one year in Canada with an automotive unit. Next month, he leaves for China to work with TRW's engine valves joint venture.
Kwen Hsu came to the United States in 1989 to get his Ph.D. in Aerospace Engineering from the University of Texas at Arlington. While at another company, he approached TRW about a job. His unique work in the area of computational fluid dynamics was of great interest to the airbag division at a time when we were trying to develop the next generation of airbags in our occupant restraints division. We transferred his H–1B visa and hired him. He is currently working in Washington, Michigan developing a new instrument to be used for controlling the speed of airbag inflation. It is estimated that this product could create 250 American manufacturing and distribution jobs.
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These individuals like the other H–1B workers hired by TRW, fill vital roles that help us better compete in the global marketplace. Rather than ''taking American jobs'', these individuals are creating jobs and growing our company.
Unfortunately, with the cap on H–1B visas being reached again this year, some of our business must be placed on hold. We have three foreign nationals, including an epidemiologist scheduled to work on a contract for the Center for Disease Control and Prevention, who have been identified as new hires by three different business units. Because of the cap that was reached in April—although we did not find out about this until June 15—we must postpone the hiring of these individuals until October 1, assuming they are still available. The inability to hire these people delays work on the projects for which they were identified, and now TRW managers must decide whether to re-recruit for these positions or wait until October 1. Either way, TRW is unable to move forward on the identified work.
Given the shortage of American workers in certain occupations, American companies should have a means to hire foreign workers in order to avoid losing their talent to overseas competitors. The H–1B visa program is a needed and valid government initiative. It was conceived as a means to allow companies to legally acquire the talents of foreign nationals but not at the expense of American workers. A process called the labor condition application (LCA) was the method Congress chose to protect U.S. workers and wages. The LCA assures the Department of Labor that companies abide by, pay and continue to pay the prevailing wage throughout the life of the LCA, which is a necessary component of the H–1B classification. However, the LCA process has, over time, become more and more burdensome and costly for U.S. companies.
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There are several reasons for this.
The Department of Labor (DOL) and the Immigration and Naturalization Service (INS) are unable to meet the time constraints that Congress has legislated for processing LCAs and non-immigrant petitions. While the DOL has instituted a new ''fax-back'' system, it still is not operating properly and deadlines continue to be missed. Increased fees have not helped alleviate systematic processing and technology problems. The problems begin at the in-take point when contract employees pull the check (application fee) from the package and send the other documents to another contract employee who categorizes the various cases, and inputs that data into the software system called ''CLAIMS''. Up to this point, an INS representative has not even seen the petition. Each of the four service centers is currently taking 40–90 days to adjudicate I–129 petitions. Timeframes for I–140s and I–485s are even worse.
Another problem is way the INS tracks H–1B applications. The INS never seems to know exactly what its numbers are. I find it unacceptable that it took them one and one half months to inform their constituents that the H–1B numbers for 1999 had been exhausted.
INS could easily implement some simple fixes to alleviate this problem. For example, the I–129 form could include a box where a petitioner could more clearly indicate whether a request is made for a new H–1B, a transfer, an amendment or an extension.
Another improvement would be to make the receipt number assigned by INS to each application better correspond to the type of H petition being filed. For example, one part of the number for the current year, another for the service center and yet another for the particular type of H–1B visa petition (new, amendment, transfer, extension). By doing this, the company could confirm that the INS has correctly classified a particular visa application.
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The H–1B visa program is helpful for American workers, companies and the economy. It fills job vacancies for which there is no U.S. Person available. However, the program has become overburdened by excessive regulation, an ineffective bureaucracy and a lack of technology. The shortage of U.S. specialty workers will continue for the foreseeable future given the lack of U.S. students in our academic pipelines. This program must be improved and made more responsive to its customers in order for U.S. companies to continue in the forefront of innovation and productivity.
Mr. LAMAR SMITH. Thank you, Ms. Neiswonger.
Mr. Nelson.
STATEMENT OF GENE NELSON
Mr. NELSON. Good afternoon. Thank you to the subcommittee for bringing me to Washington, D.C. Thank you for focusing on real people.
I would like to dedicate this testimony to the memory of Ed Curry, a programmer who came with me last year to testify here in Congress. He died of a stroke in March of this year, leaving a widow and three children. His stroke, from what I have learned from talking with his wife, was related to the extreme stress that he was under trying to find work. And Mr. Curry was all of 40 years old.
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I am 47; earned my bachelor's degree from Harvey Mudd College in 1973 after winning a prize in high school at the International Science Fair in 1969. I earned my Ph.D. in biophysics in 1984 from SUNY-Buffalo. I have worked at NASA-JPL among other places. For 3 years, I have worked to obtain start-up capital to try to start up a software business with this new technology of pen-based computers. That was not successful.
Since 1980, I have been active in the areas of science and public policy with a focus on career issues. As I approached age 40, I was informed by prospective employers that I was ''overqualified.'' An article from the Wall Street Journal is included in my written testimony in this regard.
Since being in a JTPA Title III retraining program in 1995, which taught me to lower my professional expectations in order to be employed, I have held four telephone technical support positions. Since earning my doctorate, my position has been eliminated at eight different employers. I have just started a 1-year client-server technology training program with a risk sharing component, namely I have a potential $15,000 liability.
For the past 5 years or so, I have lived a precarious economic existence. Presently, I have no health insurance; I drive a 1983 car with 220,000 miles on it, and my retirement fund is all of $200.
Immigrant Harvard economist George Borjas was profiled in an article in the Wall Street Journal on April 26, 1996. Quoting from the article, ''In another study, Borjas calculates that native workers lose $133 billion a year in lower salaries because of immigrant competition. Employers pocket the money and then some, as reduced expenses. According to the Borjas view, immigration's akin to busing—a grand social experiment whose costs are borne by working class families who don't find the experiment so grand.''
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Contrast Borjas' empirical studies with a June 1 press release from Senator Phil Gramm, Ph.D. of Texas. Gramm's New Workers for Economic Growth Act would increase the number of special temporary visas, known as H–1B visas. And what we find out is, first of all, we look at high-tech job cutbacks last year, just in the first half of the year, at 155,000. We look at ITAA member AT&T. They announced a job cutback in 1998 of 18,000. We notice that ITAA member America Online announced a job cutback on March of this year of 1,000. And EDS in Texas had announced job cutbacks of over 8,000, and that was, again, another ITAA member. That just happened. And then we had Compaq Computer 8,000 cut. Now, these are organizations that belong to the ITAA, which is claiming there are such shortages.
The Conference Board reports that help wanted ads are down after the H–1B cap was raised in 1998. Again, the ITAA came to you and told you that they would be creating all of these new jobs, and the Conference Board reports quite the contrary.
Many firms underreport the H–1B usage by using bodyshops to actually employ the foreign national. We note that the total H–1B visas approved is about 534,000 to date. That is approximately one-sixth of the U.S. high-tech I.T. workforce.
A large portion of the approximately 50 pages in testimony in two parts (including a section on my due diligence to obtain employment), documents the profound U.S. science and engineer glut. All science and engineering degree holders have an in-depth, information technology background since it is an integral foundation for those disciplines. For example, there are about 13 million Americans who work in science or engineering or who have earned at least a bachelor's degree in science or engineering since 1960.
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According to the 1995 National Science Foundation's SESTAT surveys, only about one-quarter of these, or 3.83 million, have science or engineering jobs. These gluts exist at all degree levels and have existed since at least the late sixties. Observers note that the employer age discrimination has reenergized unionization drives.
The artificially shortened careers of scientists and engineers result in diminished incomes, hence diminished Federal tax revenues and higher welfare costs. Higher education funding consumes about 2.5 percent of the U.S. GDP, according to a Peter Brimelow article in Forbes, May 31, 1999. Professor Norman Matloff is quoted in the same article, ''Graduate education is a big waste of taxpayer money, is ruining people's lives, and is discouraging our best and brightest from going into the sciences.'' From the front page of the Dallas Morning News, the end of July, ''Despite the strong economy, the number of Americans filing personal bankruptcies reached a record 1.4 million last year, up more than 300 percent since 1980.''
In conclusion, we have to look also at the national security risk of the H–1B Program. They are substantial for reasons set forth in my essay, ''A Smile and a Handshake Won't do: Why the H–1B Program Needs a Counterintelligence User Fee.''
Not everyone is willing to work for reform within the system like me. The Nation is weakening the science and engineering infrastructure, hence the national defense, by discouraging entry into the field via employer's strong tampering with free market mechanisms. The H–1B Program contravenes two constitutional amendments: The 13th amendment—the foreign national has a 6-year period of indentured servitude—and the 14th amendment—the citizen scientist or engineer suffers an uncompensated taking of their livelihood.
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Best bet: Can the H–1B Program. When middle-class taxpayers who have invested in their children's college education learn how harmful the program is, they vote against H–1B Program promoters.
Thank you.
[The prepared statement of Mr. Nelson follows:]
PREPARED STATEMENT OF GENE NELSON
The 1990 H–1B Visa legislation, like the 1976 ''Eilberg Amendment'' cited as precedent, is an example of ''special interest politics'' at its worst. The common objective for both the H–1B Visa program and the Eilberg Amendment was to reduce employer wage and benefit expenditures for highly skilled labor. Almost all ''high tech'' workers have failed to see increases in real compensation over the decade of the 1990s. This wage stasis has reduced income taxes collected by the U.S. Treasury from these workers. Since the U.S. Government has ''invested'' in the future of virtually all ''high-tech'' workers through substantial postsecondary educational expenditures, the Government is failing to receive their anticipated ''return on investment.'' Instead, a small group that backs the lobbyists for these laws are capturing a large part of the value added by these highly skilled workers. Prime example: Bill Gates, III, now the world's wealthiest man. I estimate that for every dollar spent lobbying for this special-interest legislation, the employers have reduced salary and benefit expenditures by at least a hundred dollars. This amounts to a great economic incentive to deceive both legislators and taxpayers.
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Key deceptions include the National Science Foundation's repeated false claims in the late 1980s of a ''looming shortage of scientists and engineers.'' (S&Es) These false claims were used for the twin purposes of passage of the Immigration Act of 1990 (IMMACT–90) and the expansion of NSF's budget. The reality is a job shortage: For the nominal 13 million people that have been trained as S&Es since 1960, only about are actually employed as scientists or engineers (S+Es). Since Information Technology (IT) is an integral part of S&E, virtually all of these talented and skilled people demonstrate high aptitude and ability to perform IT tasks.
A second deception was that the provisions of the IMMACT–90 were to have negligible economic impact on working S&Es. The reality is that the relentless mass terminations and downsizings by ''high tech'' employers in the 1980s and 1990s have resulted in tremendous economic losses for S&Es. Employers are able to be callous to S&Es since they have insured unprecedented worker gluts. One of the employer's methods has been to import hundreds of thousands of younger foreign nationals through the H–1B program to fill the desks that were emptied in the earlier mass terminations.
A point that has been glossed over is that the nation is breaking its social contract with domestic and foreign-born S&Es. There used to be an incentive to make the sacrifices and investments necessary to become a S+E. The benefit to the individual S+E (and society) was that they would have a career of perhaps fifty years as a result of those sacrifices. No longer. They are fortunate to have a career that is about one fourth as long. [The colleges and universities benefit from this premature obsolescence since they quadruple the demand for their teaching services!] Society loses out, since many inventions take longer than 12.5 years to incubate. Those inventions will never see the light of day. Employer practices are discouraging our best and brightest young people from entering a S&E career. The tools that our society gives to S&Es are extremely powerful. It will require an extremely small fraction of exploited, embittered, S&Es to destroy our society. In one of my exhibits, I demonstrate the emergence of this trend, with the first scientist, Quian Xuesen making his appearance in 1955.
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The conclusions from this investigation are 1. A rollback to 15,000 per year (or elimination of) the H–1B Visa program. Independent of the annual visa level, counterintelligence resources are scandalously inadequate. Los Alamos is allocating $115.00 per year per foreign scientist or engineer for counterintelligence. A ''user fee'' of $5,000.00 per year per foreign national scientist or engineer should be paid by all employers, including colleges and universities. This user fee would be directly transferred to the FBI, without budgetary offsets, to enhance their counterintelligence resources. Based on documented employer abuses, enforcement mechanisms would be necessary to insure that the foreign national was not having their salary reduced from an accurately determined prevailing wage.
Mr. LAMAR SMITH. Thank you, Mr. Nelson.
Mr. Fragomen, you made a couple of points in your testimony that I would like to emphasize. The first point is one that I think Mr. Smith agreed with you on, and that is the fact that we simply lack the statistics that we need. You mentioned the INS; I think maybe the Department of Labor was mentioned. But, in any case, the fact of the matter is we really don't have the kind of data that we need to determine whether we have hit the cap or not hit the cap, and that puts us at a real disadvantage when we are trying to answer or respond to the workforce needs.
Do you think the lack of statistics is so bad that as a result of that, we really don't know whether we have hit the cap or not?
Mr. FRAGOMEN. Well, I would say regarding the specific issue of hitting the cap, the Immigration Service has a methodology which has improved over a period of time but unquestionably is not 100 percent accurate, and therefore as to at what point we hit the cap, there will be some deviation. I mean, we might be 5 percent off. I don't know what the percentage will be, but there will be some number that we are not really 100 percent sure of
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Mr. LAMAR SMITH. Okay.
Mr. FRAGOMEN. And there are a lot of policy decisions that go into what to count and what not to count.
Mr. LAMAR SMITH. You also made a point that, quite frankly, I think is particularly enlightening, because I haven't heard it before today. And you have made the point, and Ms. Neiswonger made the point, as well, and that is that the use of H–1B workers, the information technology workers, by high-tech companies is either flat or just going up slightly.
The real increase for high-tech workers is coming from other types of organizations. You mentioned, I think, financial services, Mr. Fragomen, in your testimony. That is a surprise, quite frankly, that the high-tech companies