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 themselves are not using any significant number of information technology workers or not using or demanding an increase. It is the other type businesses that are really putting a demand on that type of information worker.
Why do you think that is? Have we—you mentioned, I think, global markets. You mentioned world economies, but, to me, that is significant.
Mr. FRAGOMEN. Well, I think it tracks which industries are growing the most rapidly, and you have to look at it as an international phenomenon not just in the United States. And the fastest growing industries in the U.S. right now are frequently in the service sector, the professional service sector—financial services, consulting, et cetera—and that is where the greatest shortage lies.
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Now, within these companies, many of the persons that we are talking about, the individual jobs, are for persons who are in engineering, computer science, et cetera. So, it isn't—I mean, it may be a management consultant, but it might also be someone with a computer science background that does strategic consulting in information systems.
So, I think that the industry—you can't break down the industries exactly the same way you do the jobs. Within the——
Mr. LAMAR SMITH. But the increase in demand for information technology workers is not really coming from high-tech companies; it is coming from all these other sectors that you just mentioned.
Mr. FRAGOMEN. It is coming from a broad array of companies, but that my point was that is not just the software development companies or computer consulting firms that are resulting in a—or causing an increase in demand for, we might call them, technology workers. I mean, investment banks have large information technology staffs, for instance. In fact, I can tell you from my own experience the majority of H–1B petitions files by major financial institutions are actually for technology workers.
Mr. LAMAR SMITH. Mr. Fragomen, let me ask you and Ms. Neiswonger: What do you think the bubble—the backlog will be this year? Just make a guess to the nearest 10,000, say.
Mr. FRAGOMEN. Oh, probably 50,000—between 40,000 and 50,000.
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Mr. LAMAR SMITH. Would you agree with that——
Ms. NEISWONGER. I was going to say at a minimum 40,000.
Mr. LAMAR SMITH. Okay. I purposely did not ask Mr. Nelson that, but I am going to ask another question that is going to involve all of you. In fact, I have two questions I would like to ask all three of you before my time is up, if that is possible.
The one is: To what extent do the companies you represent use outsourcing, use job shops, and to what extent do you think that is a problem? And that last question may be more for Mr. Nelson. But, in others words, right now—just answer this question, and I will come back in a minute—the high-tech companies use relatively few as a part of their overall workforce, high-tech workers. I think it is something like less half a percent when it comes to the major high-tech companies, the larger corporations.
Does that hide their real use of information technology workers that are working for job shops or do they not use job shops significantly? Mr. Fragomen first.
Mr. FRAGOMEN. Well, I think that when you look at the term ''job shop,'' you have to really differentiate between different types of employers and the services they provide. The Immigration Service has done this very carefully in their H–1 petition program, and I think the importance of doing that is a job shop traditionally is an organization that acts almost as an employment agent, and persons actually are detailed to another employer where they are basically managed in that workforce.
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I do not think that companies use job shops in that way very often. What is more common is a company will outsource a particular function, let us say it is part of their information technology function. And the reason they do that is because the work is very project-specific, and they are not certain they will have a continuation of projects which will guarantee employment. But it is not a job shop situation.
A consulting firm is essentially hired to provide a group of people with their own management to do a turnkey project and then to deliver a system.
Mr. LAMAR SMITH. But is that group of people primarily IT workers or exclusively so, perhaps?
Mr. FRAGOMEN. Well, let us say, in this case that it is IT workers just as an example.
Mr. LAMAR SMITH. I didn't mean IT; I meant H–1B.
Mr. FRAGOMEN. No, no, not necessarily, no. Many of these companies—in fact, many of the major companies in the field aren't even H–1B dependent employers. They have very high percentages of U.S. workers.
Mr. LAMAR SMITH. Okay. Thank you, Mr. Fragomen.
I am taxing the patience of my colleagues.
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Ms. Neiswonger.
Ms. NEISWONGER. Sure. I would like to answer on behalf of TRW and not NAM at this point. But TRW, itself, does not use job shops hardly at all, and if we do go to a job shop, what we generally are going to do is they are going to send somebody to us, and what we would prefer to do is then to hire that person ourselves. So, we would—if it happened to be an H–1B worker, we would then transfer their H–1B to TRW. We try very hard not to keep them on our payroll. We would rather pay them ourselves.
Mr. LAMAR SMITH. Thank you.
Mr. Nelson.
Mr. NELSON. Well, there are a number of problems, but the basic one is that by this outsourcing, it is a way to evade the protections for the slightly older workers, which I think is harmful to everybody in the long run.
Mr. LAMAR SMITH. Okay. Thank you, Mr. Nelson.
Ms. Jackson Lee is recognized.
Ms. JACKSON LEE. I thank the chairman very much.
Let me make my earlier statement maybe clearer and indicate that I am sensitive to some of the difficulties of the industries that are in high-tech. TRW, in particular, views it from a different perspective, I think, than many of the residents of Silicon Valley and, as well, Austin, Texas, which we are very proud of the technology that is there, and, of course, Compaq in Houston.
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My position is that we should try to meet each other half way. For example, a GAO report noted that in accounting for the lack of an available pool of employees, that the numerical data for degrees and certifications in computer and information sciences, other than at the bachelor's level, were not counted when they quantify the total supply level, and maybe in the course of a question that I am going to ask, someone will respond to that.
College graduates with degrees in other areas that could be retrained is another pool of employees. Workers who have been or will be retrained for these occupations is another group, and they may not be degreed.
I also accept the premise—and I know that I will hear from a witness that I happen to know very well who will emphasize this point—I hope he will—that the efforts that are made by foreign nationals here in the United States keeps the companies here in the United States, and therefore generates jobs for Americans, and I applaud that, and that is going to be one of my questions; I want to see in what way. But I applaud that, and I think that is why I am interested in meeting half way.
But to Ms. Neiswonger—if I am near that or near the pronunciation, I wasn't listening to my chairman when he pronounced it; I know he did it very well——
Ms. NEISWONGER. That is okay; not a problem.
Ms. JACKSON LEE.—I would offer you one immediate solution. You have talked about job fairs and a variety of other options and opportunities that you have partaken of, and I know that that has happened. I would like you to promise me that you will go to every single one of the historically Black colleges with a job fair; that you will go to the Hispanic serving institutions in our Nation, college institutions, with a job fair, and that you will look for the pool of workers who are older workers who can be retrained. I know that maybe part of your answer will be maybe the length of time of retraining, but if you would just consider that factor, I am coming to a question. [Laughter.]
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But I believe that there are ways that we can be more focused in our recruitment efforts, because I have even found when I have done a job fair, if you can imagine, that many people sometimes don't get to where you are, and so I would offer that consideration.
Might I then form the question in this manner—and I will, Mr. Nelson, come to you, but let me form the question for Mr. Fragomen and Ms. Neiswonger—that how can we come half way, and what have you done in the areas of looking to applicants with different college degrees, which might be a shorter time of retraining?
And if you want to comment on what you have done or what proof you are going to give me that retaining or hiring the foreign nationals has in fact created jobs for Americans by keeping TRW's facilities—you mentioned the China example, but if you have an example of where you have kept an operation in the States because you have had someone to hire here, and it has generated jobs.
Mr. Fragomen, are you able to respond to that?
Mr. FRAGOMEN. Yes, thank you.
First of all, as I stated at the outset, I am speaking on behalf of a trade association comprised of large, multinational corporations, so what I would like to offer is to illicit information from our member organizations——
Ms. JACKSON LEE. Excellent.
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Mr. FRAGOMEN [continuing]. On these specific issues and to submit them to the subcommittee.
I can certainly tell you that depending upon the skill level necessary and how closely it matches education, there are certainly a number of our member companies, for instance, hire persons who do not have science-based degrees but rather general liberal arts degrees, put them through intensive training—even referred to in some cases as boot camp—and after several months of this intensive training, they are able to function, for instance, in the software development field.
Now, obviously, there are many fields where very specific and prolonged education as well as research is necessary, for instance, in computer hardware manufacturing where you would necessarily have a very strong background in electrical engineering, computer science, et cetera. So, someone couldn't be trained in several months with a history degree to do that kind of work. So, I think it varies by industry, and we will certainly get the committee specific information.
Ms. JACKSON LEE. I am also trying to reflect on the chairman's comments about suffering indulgence.
Mr. Chairman, I had asked a question, and I would like them to finish answering the question, please. Thank you.
Mr. LAMAR SMITH. To Ms. Neiswonger?
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Ms. JACKSON LEE. Yes, and Mr. Nelson.
Mr. LAMAR SMITH. Okay.
Ms. NEISWONGER. Thank you. I wish I had brought with me some of the different colleges in the areas of the country where we have been recruiting in, because I have been actually working with—we have a large workforce, as you know, here in Northern Virginia, and I have been working with them to develop some of their recruiting efforts, as well.
One of the unique things that they are really doing now, I think, is they are sponsoring what are called open houses. It is something that I had never seen before, and we actually advertise that right here in the Washington Post where we want these people to come to us. You know, you can't always get to us at a job fair, so come to our facility here in Northern Virginia or in California or wherever it happens to be and come in and see our place where you would be employed, and that goes out to all of the community to do that.
And getting to retraining, one of the things that we do is that if somebody happens to have a degree in something else, we will take a certificate program, if they have gone through a certificate program in engineering or in even those people that we have that are in the computer science area. If they have gone for specific Unix, or C++ or Java, those kinds of things are accepted, and what we try to do in our job offers is that we try to look for not just one specific degree, but we will often say ''or a related area'' that allows them to then come in from anther area and say, ''I have these certificates,'' or ''I would be willing to get those certificates,'' things like that. So, we are trying to be very broad-based.
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But to get to your question also about keeping jobs in the U.S., one particular H–1B person that we happened to hire came out of the University of Texas at Austin with a Ph.D. She is a wonderful lady, and she is a chemist. Now, instead of sending her to Mexico to our airbag facility in Mexico, we have sent her to our airbag facility in Arizona, and she is working on the Smart Restraint Program there with our airbags. So, by doing that, she is—you know, number one, we have kept her in the U.S. to develop that program here in the U.S., which will make more jobs in the U.S. on a going forward basis when we are able to really get the Smart Restraint system under control.
Ms. JACKSON LEE. Thank you.
Mr. Nelson, very briefly, your Ph.D. is in what?
Mr. NELSON. Biophysics.
Ms. JACKSON LEE. Biophysics. And, quickly—you are here publicly, so I imagine you don't mind us asking these questions—in listening to the two previous witnesses, can you give us any reason why you couldn't in the mix of any one of these multinationals or TRW with your background?
Mr. NELSON. I would in fact—excuse me—I have in fact applied at one point to TRW—I used to live in Cleveland, Ohio—and was summarily rejected. They didn't even have the courtesy to return an acknowledgement that I had applied, and that was after an on-site visit.
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Ms. JACKSON LEE. Let me——
Mr. LAMAR SMITH. Will you yield to me a minute?
Ms. JACKSON LEE. Oh, I will be happy to yield to the gentleman, yes.
You wanted to yield? [Laughter.]
Mr. LAMAR SMITH. Oh, yes, if you will, just for a minute.
Mr. Nelson, what I want to do is to ask you——
Ms. JACKSON LEE. The matchmaker?
Mr. LAMAR SMITH. No. [Laughter.]
Ms. JACKSON LEE. I thought you were going to get him to TRW.
Mr. LAMAR SMITH. You mention that and you came up with these figures showing that thousands of people had been laid off by high-tech companies. Why do they not—why do not other high-tech companies hire those individuals who have been laid off, like yourself?
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Mr. NELSON. I think it is simply they do not wish to comply with the 1967 Age Discrimination Act.
Mr. LAMAR SMITH. So, you think it is primarily just a matter of age as opposed to expertise or a lack of training?
Mr. NELSON. Well, the software refresher course that I am taking, kind of like the boot camp that Attorney Fragomen has referred to, is all of 4 months in duration, at which point I will be using such things as client server technology, Unix, and C++. So, industry claiming that it takes a tremendous amount of time to do this, certainly, it is not consistent——
Mr. LAMAR SMITH. Where do you think the age discrimination kicks in, 30 or 40 or 50 years old?
Mr. NELSON. I think that it actually kicks in before 40. In other words, looking at the age distribution of the people in my software refresher course, I see significant representation by people younger than myself, including another Ph.D.
Mr. LAMAR SMITH. Okay. I thank you for yielding.
Ms. JACKSON LEE. And thank you very much.
I will just close by saying I hope someone is listening to you, Dr. Nelson, today, and we may see some good things happening.
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I would just encourage the witnesses to take me up on my offer—I appreciate the efforts—but going to these campuses that I have mentioned one-on-one and particularly looking at workers that could be retrained.
And I yield back, Mr. Chairman.
Mr. LAMAR SMITH. Thank you, Ms. Jackson Lee.
Let me mention that one witness had to leave a few minutes ago, Mr. Smith, to testify before the Ways and Means Committee, and I expect him to be back. If he is not back by the time we finish this panel, we may make him an honorary member of the next panel just to ask a couple of questions.
Meanwhile, the gentleman from Indiana is recognized for a very generous 5 minutes.
Mr. PEASE. Thank you, Mr. Chairman.
Mr. Chairman, I do have a question of you and that is whether the Department of Labor was invited to participate, will participate at some future hearing, or was invited and chose not to be here?
Mr. LAMAR SMITH. I am turning to staff for the answer to that question.
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It is our understanding that because they have not conducted any studies on the subject, they were not invited.
Mr. PEASE. Well, all right. [Laughter.]
The reason I ask that question is because of Mr. Smith's testimony that the Department of Labor regs, which were required in the legislation a year ago, have not yet been put into place. And it seems to me that that is relevant to the discussion here.
Mr. LAMAR SMITH. If the gentleman from Indiana would yield? He actually anticipated one of my questions, and it is my understanding, according to our chief counsel, that it is stuck at OMB. But that was a question I had, too, is those regulations were supposed to be implemented and have not been.
Mr. PEASE. Well, at some point, it seems to me that that discussion needs to go forward as to why it hasn't happened and what the problem is, if we are going to look at a comprehensive——
Mr. LAMAR SMITH. Right.
Mr. PEASE [continuing]. Review of this subject.
And I guess the same question, Mr. Chairman, regarding INS, whether they had been invited to participate, chose not to participate?
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Mr. LAMAR SMITH. They were not invited is the answer that I was told.
Mr. PEASE. Okay.
Mr. LAMAR SMITH. Otherwise, we could have asked them why they didn't have the statistics.
Mr. PEASE. Well, that was my question.
Mr. LAMAR SMITH. Because they didn't have the statistics and have never had the statistics, we weren't optimistic that they would provide an answer.
Mr. PEASE. Okay, thank you, Mr. Chairman.
Mr. LAMAR SMITH. I am beginning to feel like I ought to go sit up at the table.
Mr. PEASE. Among my frustrations on this is that I really do believe there are a number of members of this committee and others who worked very hard to try and find an answer to this problem, and I understand it is a moving target. But among the frustrations we had was that we could not get information from INS about the numbers of these visas that were being issued and any background information about the kinds of professions that folks were going into once they did get H–1B visas, and according to what I think I heard Mr. Fragomen say, that is still the case.
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I guess, Mr. Fragomen, a question to you. If your review of your member companies and organizations indicates that the numbers that INS says are being used in H–1Bs is so dramatically different from what your members say are being used, how do we have any confidence in either the INS or your members—I assume you have a bias as to which we can rely on better——[Laughter.]
—but how do we deal with this issue?
Mr. FRAGOMEN. Well, we are quite confident that our members are easily capable of counting how many H–1B visas they use. So, we view those statistics as being very reliable.
We don't really know how to explain the disparity in terms of the attribution of H–1s to specific companies versus the overall cap. Now, it could be that there is some reason the numbers are far more distorted as they are attributable to specific petitioners than the mistakes that they may make or the errors in counting numbers against the cap. We are not sure, but it certainly gives one great cause for concern. I would certainly agree with you.
Mr. PEASE. Well, how can we even know the most fundamental question, which is whether we have reached the cap?
Mr. FRAGOMEN. Well, all we can——[Laughter.]
—I mean, what we did is we just out and polled our members, and so we know how many numbers they use, but in terms of what the total is, I don't know that there is any way we could—if there is any other methodology other than rely on the INS. I don't know that there is any way that that could be independently verified. I suppose we could have an outside auditor, one of the major auditing firms, come in and audit the way they count numbers. I mean, perhaps that is what needs to be done.
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Mr. PEASE. Ms. Neiswonger—Neiswonger——
Ms. NEISWONGER. Yes, sir?
Mr. PEASE [continuing]. Do you have thoughts on this subject?
Ms. NEISWONGER. Oh, yes, sir; I do. [Laughter.]
Mr. PEASE. Share them with us.
Ms. NEISWONGER. Sure. In my written testimony, one of the things that I state is that I think the way that the INS brings in the petition, they have contract workers who open up the package and take out the fee and pass it to another contract worker to go ahead and log it. I think a part of the problem is in the way they go ahead and log it.
Because if you look at what is called the I–129, which is the form that you have to fill out to get an H–1B visa, it has two sections. One is: Tell us about this worker. It is new employment; it is a continuation of already approved employment, or it is a change in employment. I think a lot of people get confused on which box to check. And then down below it says: Do you want us to notify a consulate? Do you want us to change the person's status in the United States, because they already hold that status or they hold a different status, or do you want to just to continue with what they already have?
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And I think a combination of checking those boxes and then the way the contract employees look at that form, I think we get a miscounting of the I–9. So, if I am transferring somebody from another company to my company who already has an H–1B, now that shouldn't count against the cap, as we all know. So, I think—but maybe the contract employee doesn't know that based on the boxes that someone checks.
And I think that if we—you know, one of the maybe quick fixes is to change that form where it says: Is this a new employee for you? Is this a transfer of an employee? Something like that might even be a real quick fix for this problem, but I think that is where we get into the counting problems, because they don't count it consistently and/or potential employers may not check the boxes the same way. That is one issue.
Mr. PEASE. I appreciate that.
Mr. Chairman, if I could——
Mr. LAMAR SMITH. Please continue, please continue.
Mr. PEASE. I am wondering, all three of the witnesses, if you have an opinion on the argument that some make, which is that the need in this area is temporarily artificially inflated by Y2K problems, and once that is over, ''the pig will be through the python,'' and we don't need to worry as much about this subject? Do you have any feel for whether there is any truth in that or not, and, if so, to what degree?
Mr. FRAGOMEN. From my experience, I do not think that it has a significant impact. It certainly has some impact but not a significant impact on the number of H–1B workers. And what I base that upon is that a lot of the work to comply with Y2K actually has taken place. Companies that had installed whole new software systems, some of these major enterprise solution softwares like SAP and things like that, that already happened. The tail end of it is sort of a, quote, ''mop-up job'' in tying systems together and dealing with the phenomena.
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Now, to that extent, many companies have contracted out that work rather than doing it with their own internal staff, because they don't want to add permanent head count, and we know from going around and polling these computer consulting firms who provide these services, they actually find that their business is quite soft right now. And, therefore, I can't see that there is a particularly significant impact as a result of the Y2K.
Ms. NEISWONGER. Well, and I think, speaking both on behalf of NAM and on behalf of TRW, while TRW does have a component of the company that is systems integration, as you may all know, I think that, as Mr. Fragomen had said, that Y2K is kind of behind us. Everybody is still worried about it, but with NAM and with the bigger part of TRW, 70 percent of our company is not IT-based. I mean, we provide technology services and products, and I think that is the same way with a lot of the NAM members is that we may provide technology services and products, but we are not really an IT-based, and so Y2K doesn't really propel us into the H–1B categories.
Mr. PEASE. Okay. Mr. Nelson?
Mr. NELSON. I first want to comment about something that you just talked about, this—basically, this claim to cumbersome bureaucracy from the U.S.—the ETA, I am referring to an item that appeared in ASIP News on the ASIP web site, and it says in a bulletin dated 6–16–99 that the new LCA fax system benefits to employers with an expected return times of three to 4 days or less, and no mail processing. This doesn't sound like a great bureaucratic bottleneck.
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And, furthermore, with regards to Y2K, I think that it was basically very much overblown.
Mr. PEASE. Thank you. Thank you all. Thank you, Mr. Chairman.
Mr. LAMAR SMITH. Thank you, Mr. Pease.
The gentlewoman from California, Ms. Lofgren, is recognized.
Ms. LOFGREN. Thank you, Mr. Chairman.
This is, as usual, an interesting panel, and one of the statements I think we all know is there is lies, dang lies, and statistics, and it is really challenging for all of us to kind of sort through the massive data and understand such a dynamic economy, as is the American economy, and, indeed, we talk about the global economy.
I noted, and I actually agree with Mr. Smith's analysis that you shouldn't see a wage depression, if there were—in a situation where there is shortage. I mean, I think that is pretty clear. He has a chart and cites the Bureau of Labor Statistics. I also have the American Electronics Association. They have a chart. They say they are also quoting the Bureau of Labor Statistics, and they have completely opposite information——[laughter]——indicating a 25.7 increase, for example, in wages in I think the same time period for software and computer-related services.
I am not going to say that AEA is right or that Mr. Smith is right, because they are both citing the same source, but I do intend to, and I think it would be helpful, to have the Bureau of Labor Statistics come in at some point and put some clarity into this so that we can really understand with some confidence what is going on in that era and that angle of it.
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I would note also that another factor that needs to be looked at—I mean, there is layoffs and there is hirings, and the layoffs always get printed on the front page of the paper, but the hirings rarely do unless there is a lot. For example, Cisco is going to do a billion dollar expansion in my district and plans to hire 20,000 additional kind of bachelor's, master's degree individuals in the next couple of years. That made the headlines.
But one factor you can look at is overall unemployment rate, because unlike the time when I graduated from college in 1970, people don't work for one company for all their lives anymore, whether we like that or not. And the Bureau of Labor Statistics—at least what I have from AEA, and I wish they were here, and I hope that they can come here—seems to indicate that the unemployment rate for engineers overall at the end of last year was 1.6 percent; for chemical engineering, it was 0.5 percent; for mechanical engineering, it was 1.3 percent; for math and computer scientists, it was 1.2 percent from the Bureau of Labor, and that is a very tight—I mean, that is—it used to be that we said full employment was 4 percent. I think a lot of us think that it is not 4 percent anymore, but that is hard to find people to hire at that level.
So, I guess I would urge the chairman that if we move forward, we ask the experts from the Bureau of Labor Statistics to come in and help us get a really good grasp of this, and I would urge also that there are bureaus, both private and also in States, for example, California, that have very good data. It may not be captured in the same time-frame by the Federal Bureau of Labor Statistics, and that might also be a very useful thing.
Now, getting into—my colleague, Mr. Pease, was talking about the numbers, and I was interested in, Ms. Neiswonger, in your comments on what seems to be happening. We have asked the Immigration Service repeatedly about the list trying to understand the dynamic of what is going on, and I am wondering if you or Mr. Fragomen have seen this?
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It appears to me that there is kind of an Oklahoma land rush element to this H–1B Program, because there is a limitation that, I might add, was put in without reference to any economic or any factors. It was put in as a device at the initiation of the project just to make sure that the Immigration Service kept count and has now become a magic number.
But, it seems to me that there are lawyers for companies who are filing a lot more petitions than the companies ever intend to hire, because they don't want to get caught short, and if they are in the pipeline come sometime when they might really want a person next year, their time will be up in the pipeline. Is that—that is what I have been told, anyhow, by people, lawyers in this field. Does that strike you as credible? Either one of you?
Mr. FRAGOMEN. Well, I would make a couple observations about that. Most H–1Bs are for persons who are hired by companies as students on practical training, and then they are converted to H–1Bs, and because the H–1B has to be for a specific employee, not for, quote, ''a slot,'' most H–1Bs are for specific employees who actually already work for the employer. And, therefore, I don't think that that would be a factor.
There is——
Ms. LOFGREN. But for the 40 percent—60 percent of the backlog are F–1 students, but the other 40 percent are not.
Mr. FRAGOMEN. Right.
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Now, with regard to the rest of the pool, a large number of those are lateral hires, persons already in the U.S. on H–1s who want to change employers, which is a very active market. I mean, anyone who thinks that H–1B workers are involuntary servants, the number of persons who change employment in H–1Bs in every industry is mind-boggling. It is really almost hard to believe.
Now, once again, those are for specific people, for specific jobs. The only place I have seen in my experience where that takes place is where companies do overseas recruitment, and a particular person may have offers from more than one company and not yet have decided where to work, and more than one company files petitions.
Now, the Immigration Service basically within their system, they basically do a check of duplicate names where they can pick up whether multiple petitions have been filed for the same person, and they back out those cases allegedly when they make their adjustments and come up with the final number.
So, that is supposed to be taken into account.
Ms. LOFGREN. One final question, if I may, Mr. Chairman.
In Mr. Smith's testimony—and I know he will be back; unfortunately, I have a meeting that started 10 minutes ago, so I may not be here when he returns—but on page 4 of his testimony, he indicates, citing the Department of Labor, that in Fiscal Year 1997, 80 percent of the LCAs certified by the agency were for jobs paying less than $60,000. Now, that would seem to indicate that the top 20 percent of H–1B holders are in the excess—you have to be in the top 20 percent of your class to be cum laude, so the cum laudes of the H–1B Program are being paid more than $60,000. Is that consistent with what you are seeing in among your companies?
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Mr. FRAGOMEN. Well, I think that the Labor Department, currently, unlike your bill, only counts salary that is guaranteed and does not include bonuses, stock options, or any other kind of——
Ms. LOFGREN. So, the signing bonuses and the year-end bonuses and stock options are excluded.
Mr. FRAGOMEN. Right. None of that counts. None of that counts. So, if you take, let us use the wildest example, which is an investment bank. A senior trader at an investment bank may have a base salary of $75,000 a year and get a $500,000 bonus; that is fairly common. But because the bonus isn't, quote, ''guaranteed,'' that doesn't count as part of the compensation. So, there are many industries——
Ms. LOFGREN. But it would be reportable income on your W–2.
Mr. FRAGOMEN. Oh, yes; absolutely, absolutely.
So, I think that that is where you get that distention that the Labor Department's way of calculating wages results in there being a mismatch there.
Ms. LOFGREN. Thank you very much, and thank you, Mr. Chairman.
Mr. LAMAR SMITH. Thank you, Ms. Lofgren.
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Thank you all for being here. We appreciate your testimony on such an important subject, and we will now go to our next panel.
[Pause.]
We have four witnesses on our second panel. I am going to turn to the ranking member to introduce our first witness. Ms. Jackson Lee is recognized.
Ms. JACKSON LEE. Thank you very much, Mr. Chairman, and I do want to welcome the second panel, and I am delighted to be able to welcome Mr. Charles Foster of Tindall & Foster. He wears many hats, and I believe that he will provide us with very instructive testimony dealing with issues of the H–1B visas. Mr. Chairman, he is a well-renowned balanced immigration attorney that deals with immigration issues from a variety of perspectives. Might I also add that he has given great insight into reform issues dealing with the INS. He wears another hat in our community as a civic activist, and though he does not perform ballet himself, I will say to you that he is fortunate enough to be married to a very lovely lady who is enormously supportive of the Houston Ballet, and he and his family, along with his law firm, have been enormously supportive of many charitable issues. And I am very much delighted to be able to introduce Mr. Charles Foster of Tindall & Foster.
Mr. LAMAR SMITH. Thank you, Ms. Jackson Lee.
I am sure he has performed many of the same—I won't go into that. [Laughter.]
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Ms. JACKSON LEE. I yield to the gentleman.
Mr. LAMAR SMITH. In politics, we use all the skills we can, and sometimes it might even involve ballet.
Ms. JACKSON LEE. That is correct.
Mr. LAMAR SMITH. Let me introduce the rest of the panelists. John Miano, The Programmer's Guild; Ms. Alison Cleveland, associate manager of Labor Policy, U.S. Chamber of Commerce, Mr. Paul Kostek, president, Institute of Electrical and Electronics Engineers.
Mr. Miano—oh, I take it back. We are going to reverse order, because Mr. Foster has to catch a plane, if you will forgive a slight delay here.
Mr. Foster.
Ms. JACKSON LEE. And would you yield just a for a moment?
Mr. LAMAR SMITH. Sure.
Ms. JACKSON LEE. To the witnesses, I am in a conference meeting, which may begin very early or very soon, so if I have to leave, accept my apologies; a conference committee between the House and the Senate, and I apologize for that.
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Thank you.
Mr. LAMAR SMITH. Okay, Thank you.
Ms. JACKSON LEE. Juvenile Justice. I thank you.
Mr. LAMAR SMITH. Mr. Foster, if you will proceed.
STATEMENT OF CHARLES FOSTER, TINDALL & FOSTER
Mr. FOSTER. Okay. Mr. Chairman, Ranking Member Sheila Jackson Lee, and other distinguished members of the committee, I thank you for this opportunity. I appreciate your remarks Ranking Member Jackson Lee, and it is good to see you again. Chairman Smith, I was asked to give you George Strakes regards, because he had called me on an immigration inquiry, and right before I got off to the airport, he told me if I saw you to say hello.
I also appreciate this opportunity to go ahead, but with the passage of time, because we started late, I could stay later, but since I have got the floor, I will go ahead.
My name is Charles Foster. I would like to use my 5 minutes to both summarize and expand upon my prepared remarks.
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The last 25 years—and I thought this was the approach I would take—I have spent almost every day of my professional career answering inquiries from your constituents—from companies, U.S. employers, Fortune 500 companies, small companies, start-up companies—and they all basically had the same question, and that was: How can we legally hire a particular individual?
And what is remarkable is what they all had in common. Almost they all assumed and expected just automatically that there was a legal way to do it. Not one thought it was going to be a complicated process unless they were already experienced with the process. They all wanted to do it legally. Almost inevitably they would say to me, ''We don't want to do it like those other people. We want to comply with the law,'' and they assumed there was a legal mechanism to do it.
And I might also say that they were always surprised at what they saw was the complexities. They just assumed by that stage in the process that they would just go have their respective employee go get their visa somewhere, and they were calling often because they couldn't get through to the Immigration Service. But they were surprised when they learned that it was not just a quick process; that it could take 8 to 10 weeks. You had, effectively, to get the approval of 4 different agencies—the State employment agency, the U.S. Department of Labor, the United States Immigration Service, and sometimes the American consulate abroad.
And, of course, in the last couple of years, they have been very surprised to learn, depending upon when they called, that for the last 6 months of the fiscal year, we are effectively out of H–1B numbers, and it was impossible to comply with the law. Many of them had actually virtually went into what you could call shock. They had already spent considerable time, from their point of view, recruiting a particular individual. It started with the recruitment process, the interview process.
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They, again, had determined in their best business judgment that this was the best person for the job or they would often say the only applicant for the job. That would either be because, as we referred to earlier, because of broad shortages or perceived shortages in certain professions. And we have concentrated here today on the IT industry, but there are a lot of other industries involved.
Speaking of Houston, I would like to say, for example, in the Houston Independent School District, the largest independent school district in the Nation, at any given time, they have 300 vacancies in their classroom in the area of bilingual teachers, special ed teachers, math teachers, science teachers. So, they are competing for those same people in math and science, and the Houston Independent School District has to recruit. They recruit in Canada; they recruit in Mexico, particularly for bilingual teachers, because they have to. If they don't have a body in the classroom, then they are not providing the education they need to. They have job fairs.
I might also say the salaries that they pay—we have talked about whether or not they are paying competitive salaries—they are just like a lot of employers. They are sort of stuck at a certain wage level. The school districts cannot arbitrarily just pay more.
And this cap, for example, has particularly affected them, because school districts start around August, and yet the cap the last 2 years has run out in April. So, they have had to go into a lot of different emergencies and fill difficult—be faced with difficult situations in how to fill classrooms.
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They also wanted, as I said—I also want to comment on the fact a little bit further about salary levels, whether that is a motivating factor. Taking literally tens of thousands of phone calls from U.S. citizens, employers, small and large, I don't think I can ever remember one time when I ever talked to anyone that were motivated by salary. They were always motivated by the perception that the person that they were going to hire was the best person of often is the case the only person they could get for that job.
Another example—for example, right out of Ms. Jackson Lee's district, there are lot of service companies in the oil and gas industry. There is one service company we represent. They were bringing over four engineers from abroad that had the technology to build a particular sub-sea submersible vehicle used in the connection of laying of deep sea pipelines. These were the only four people they could find in the world that had the experience for the construction of that particular vehicle. They were going to do the entire construction project right in the United States, but because of the cap, they could not bring those people in directly. They had to delay the project, and that project would have brought about the employment of a significant number of U.S. workers.
Ms. Jackson Lee asked me to comment, I think, earlier, in an earlier reference about the fact that H–1Bs actually create jobs. I know through my own experience—I have had this conversation with large numbers of employers, and they are calculating whether or not they can get a certain mix of H–1B workers in the United States, and if they cannot do so, then the conversation rapidly shifts to whether or not that particular project should be focused abroad. And we are focused on not whether we are qualifying U.S. workers—foreign workers to work in the United States but how we are going to qualify U.S. workers to work abroad, to work in another country, and they are going to shift that project over there.
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In response to the number of suggestions, for example, that there is some kind of a preference or that U.S. employers favor foreign nationals, I would like to respond to that. Again, it is just the opposite. I cannot think of a single situation where anyone started with the premise that they wanted to hire a foreign national just for that sake. They got to that situation because they felt like they had no other choice, because this was the particular person or precisely because the foreign national was going to bring something to the table that the U.S. worker could not.
I thought you were going to say something.
Mr. LAMAR SMITH. I was actually leaning forward, because I was looking at that red light. But I want you to finish that thought, Mr. Foster.
Mr. FOSTER. Well, let me finish that one thought.
Mr. LAMAR SMITH. Sure.
Mr. FOSTER. For example, there are major law firms in Houston; there is the University of Houston. They will want to hire a particular H–1B worker precisely because they are going to have an overseas operation and that foreign worker will bring something to the table.
In conclusion, I am glad that my fellow Texans on this committee in a bipartisan fashion are bringing leadership to this issue of H–1B, and hopefully they will join our other Texans, Senator Phil Gramm and Governor Bush, in supporting an extension of the cap.
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Thank you, Mr. Chairman.
[The prepared statement of Mr. Foster follows:]
PREPARED STATEMENT OF CHARLES FOSTER, TINDALL & FOSTER
Mr. Chairman, Ranking Member Jackson Lee, and distinguished Members of the Subcommittee:
My name is Charles Foster, and I am pleased to be here today to testify on the importance of, and continuing demand for, the temporary foreign professional visa program (commonly known as H–1B visas). This visa program allows vitally needed foreign professionals to enter this country to fill urgent business needs in a global economy. The increased need for these professionals, as we now know, was not adequately addressed by the recent passage of the American Competitiveness and Workforce Improvement Act. We must do more. The continuing demand for these visas should be viewed in the context of a robust U.S. economy and the lowest unemployment rate in 40 years. More specifically, the expanding economy, the tremendous growth in high-tech jobs throughout the entire business sector, combined with decreasing enrollment by U.S. students (BA, MA, and graduate students) in high tech fields (65,000 in 1983 v. 35,000 in 1997) has resulted in an increased demand for foreign professionals in many specialty occupations. Our current inability to satisfy this demand will harm both our economy and our ability to compete globally.
The H–1B visa was created in the 1950s to help the U.S. obtain and retain competitive superiority in many sectors of the economy, higher education, research and other fields. It still fulfills this purpose, allowing U.S. companies to remain competitive in an increasingly global marketplace. However, the original H–1B cap of 65,000 annually, and the current cap of 115,000, were set arbitrarily during debate first in 1990 and most recently last year. Both numbers were randomly chosen, and have little, if any, basis in the economy. Unfortunately, because this fiscal year's cap of 115,000 already has been reached for the last six months of this fiscal year, it will be impossible to bring into the country needed engineers, researchers, professors or computer and other professionals—in spite of shortages in these fields and the lowest levels of unemployment in decades. Worse, the cap could be reached next year within the first 2–3 months of fiscal 2000. Yet as the U.S. economy continues to grow and becomes increasingly global, the need for skilled professionals throughout all business sectors will continue increasing as well.
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H–1B visas also today constitute one of the very few viable options for U.S. companies to recruit highly skilled professional employees for work in the United States. That is, given the lengthy process and extraordinary long delays in obtaining lawful permanent residency which result from meltdowns in both the Immigration and Naturalization Service (INS) and the Department of Labor (DOL), the only viable option for a U.S. company to legally hire a foreign national in a reasonable period of time has been to qualify professionals for temporary H–1B visas. You can be sure that U.S. companies would not seek foreign professionals if Americans were available. Their first choice and option has been and always will be the U.S. labor force. When this is impossible, because of shortages or the unavailability of an American with a specific skill, companies must seek qualified professionals from abroad.
I. H–1B PROFESSIONALS ARE USED THROUGHOUT THE U.S. ECONOMY TO CONTRIBUTE NEEDED SKILLS AND TALENT THAT OTHERWISE WOULD BE UNAVAILABLE IN THE UNITED STATES
H–1B visas are important to U.S. companies from all sectors of the economy. H–1B professionals often are key employees in companies and organizations engaged in new and exciting development, expansion, and discovery projects. I personally know of large and small businesses in the manufacturing, services, high-tech, pharmaceutical, biotechnology, and other industries, as well as colleges, universities, our school districts in Texas, non-profit organizations, institutions and governmental entities that utilize the H–1B visas.
This hearing gives us the opportunity to highlight U.S. employers that are using and benefiting from the talents and skills of H–1B workers. For example:
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A government contractor in Colorado has hired several H–1B engineers with expertise in the decommissioning and decontaminating of former nuclear weapons facilities. Their expertise is being used in the clean up of several Department of Energy facilities that formerly were used in this nation's nuclear weapons complex.
A school in California devoted to teaching children with cerebral palsy has used the H–1B category to bring in several teachers from Hungary trained in a special technique (called ''conductive therapy'') that currently is unavailable in the United States. Parents of U.S. children helped by these teachers call their children's progress ''miraculous.''
Many of this country's leading pharmaceutical and biotechnology research companies and institutions hire H–1B scientists to work on projects ranging from cures for cancer and AIDS to developing safer and more effective drug delivery systems and surgical techniques.
H–1B physicians provide critical primary care medical services in some of this nation's most underserved areas, including inner cities and rural communities.
Manufacturing companies bring H–1B engineers to this country to introduce and train U.S. workers in technologies and manufacturing techniques currently not yet in use here, including the development of more environmentally-friendly thin-film coating techniques for locking products, and better catalytic converter systems for automobile exhaust, and many other important areas.
School districts in Texas not only use H–1B workers to fill large numbers of ongoing vacancies in the area of bilingual teachers, but also in the sciences, math and special education. For example, in Houston alone, the schools have 200 vacancies, only some of which they have been successful in filling with H–1B teachers.
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The Conrad Hilton School of Restaurant Manager at The University of Houston needs an H–1B worker not only because of the individual's professional qualifications, but because he or she is uniquely equipped to assist them in opening one of their first, if not the first, overseas branch. Without their unique knowledge of the local conditions in China, it would be impossible for The University of Houston to conduct such operations from Houston abroad.
One H–1B visa holder sponsored by a local university, trains teachers in inner city schools to utilize the Internet in the classroom. He developed learning websites for teachers and students and works with La Escuela Rice, which teaches primarily from web based curriculum. Through his efforts, he, the students and teachers of Rice University have gone on to develop learning websites that have won awards ranging from Texas Monthly's ''100 Best Websites in Texas'' to a very prestigious award from the Smithsonian Institution.
Another scientist sponsored by a Houston based oil company has gone on to become one of the world's foremost scientists in the field of geostatistical modeling.
One small Houston business currently employs a Swiss physicist with a Ph.D. in H–1B status who is working on a NASA-funded project for a small mass spectrometer, which will have a variety of applications including fuel leak detection.
Of course, H–1B workers also are employed in the computer industry, as well as in many critical computer-related positions in non-high-tech companies. Many of these individuals work on important projects in the areas of medical databases, solving the infamous Year 22K problem for local and state governments, and on implementing business re-engineering software, thus allowing some of America's largest companies to continue to compete globally.
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II. THE CONTINUED AVAILABILITY OF H–1B WORKERS IS ESSENTIAL TO THE GROWTH OF THE U.S. ECONOMY
Thousands of employers in all sectors of the economy utilize the H–1B category every day. While we have heard a great deal recently from high-tech companies, the examples previously cited demonstrate that U.S. employers use the H–1B category to hire foreign professionals with rare or unique skills, with the knowledge and/or experience that is needed by these employers to pursue new projects, expand into new markets, update their technology, and/or train their U.S. workers. There is no way that the government can outguess our free-market system, with the creativeness and genius of U.S. business. It comes up with thousands of different and better ways for it to compete locally and globally, to improve its services and products and occasionally in order to accomplish its business objectives it needs some special talent that just happens to be a foreign national. Of course, the H–1B category also is used to fill positions for which there is a shortage of available U.S. workers. However, whether or not such a shortage exists at any given time in any given industry, there always will be a need for employers to be able to bring into this country specially skilled individuals to fill specific niches in our economy. Furthermore, with the rapid growth of the U.S. economy and the increased expansion of U.S. companies into the global marketplace, the need for these individuals is likely to continue to increase in the near term.
In fact, H–1B professionals often already are here. They are graduates of our colleges and universities who are undergoing periods of ''practical training'' in their specialties in the U.S. If unable to get H–1B visas, these individuals would be required to go abroad, and would be unable to contribute their talents to U.S. companies. Instead, they would be hired by those companies' competitors outside of the U.S. Or, the U.S. companies that need their skills will move their operations or projects abroad, including the jobs that go with them, to where the individual can work.
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I talk to both large and medium sized companies every day that have to make a decision about whether to develop a project in the U.S. if they can get the right mixture of both U.S. and foreign workers, or whether to focus the project abroad where more foreign workers are hired abroad and U.S. workers are sent to supplement the foreign workers. Either way, as a law firm, we win because we represent the companies whether or not they bring the foreign workers to the United States or they send the U.S. workers abroad. But from a U.S. economic point of view, the U.S. economy loses. Jobs are created abroad and the taxes are paid abroad and the technology is developed abroad.
Despite all of this country's efforts and preferences, especially the business communities' enhanced education and training initiatives, we will continue into the future to need the H–1B category to hire foreign professionals, given the global nature of our economy and our need to compete on at least a level playing field.
Far from taking jobs away from U.S. workers, H–1B professionals actually spur job creation in this country, allowing U.S. companies to expand into new areas, both geographically and in terms of new products and services, and fill critical positions upon which many other jobs depend that are filled by Americans. In 1988, before the current labor protections were added to the category, a Booz, Allen and Hamilton study commissioned by the INS concluded that the admission of H–1B nonimmigrants did not result ''in any adverse impact on job availability for U.S. workers, nor does this result in depressing wage levels for these workers.'' Further, the only thorough Congressional study to date done on H–1B nonimmigrants in the U.S., was published by the General Accounting Office (GAO) in April 1992, although the research was completed prior to the labor protections that were added to the program in 1990. The GAO study, ''Immigration and the Labor Market: Nonimmigrant Alien Workers in the United States'', stated:
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One of the major purposes of the nonimmigrant work-related visas is to enable U.S. businesses to compete in a global economy. Increasingly, U.S. business find themselves competing for international talent and for the 'best and brightest' around the world. The nonimmigrant visa can be a bridge or a barrier to successful international competition by U.S. companies, depending on how the nonimmigrant visa categories are interpreted and administered'' (emphasis added).
As stated above, H–1B professionals are employed in many key positions in the United States. Because this year's cap of 115,000 has been reached well before the end of the fiscal year, not only will companies facing worker shortages be affected, it could cause serious harm to other U.S. employers, including this nation's education institutions and school districts. Companies are having to put important research projects on hold and delay product introductions and expansion plans. The inability to hire these foreign professionals could hamper employers' ability to keep a step ahead of foreign competition. And universities and school districts will be unable to fill needed positions.
III. CHALLENGES FOR THE H–1B PROGRAM
Opponents of the H–1B visa, along with those who assert that the cap could not have been reached as early as it was this fiscal year, allege that there is a great deal of fraud in the program. Fraud should not be tolerated. But allegations of widespread fraud are not backed up by fact. Where instances of fraud appear, they should be dealt with promptly. In fact, for example, the INS service centers and consulate in Chennai, India last year began jointly investigating the education and work experience claims on suspect applications submitted to the INS before the INS ruled on the petitions.
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However, I believe that fraudulent applications are a very small portion of the total number of H–1B visas. Even the Chennai investigation dealt with only a fraction of all H–1B filings. Even when a consular official or an INS office says ''fraud'' on inspection, often there is simply a difference over an interpretation of what may be viewed as a highly technical issue. For example, not long ago, the American Consul in China denied a business visa to a professional on the grounds that the professional could not demonstrate an intent to return. After lengthy discussions, the company, having no other choice, qualified the professional for an H–1B visa in order to facilitate the individual's entry into the United States. By the time the H–1B visa petition was filed, almost a year had passed, the company had been completely frustrated and resorted to the use of the H–1 visa not only to secure the entry of the individual, but with the passage of time, it's needs had changed and a decision had been made by the company to transfer the function from China to the U.S., given the impossibility of obtaining a B–1 business visa. Yet that American Consulate later charged unsuccessfully that the H–1B petition change of intent on the part of the company that occurred over a 12-month period was ''fraudulent.''
Fraud and misrepresentation are real issues that must be addressed in order to maintain the integrity of the H–1B program. Yet this issue must be addressed in proportion to the scope of the problem. We must balance the interests of enforcement and services in order to achieve efficiency, effectiveness, and fairness. This balance can be achieved by a careful review of decisions, informing applicants of investigations, and focusing on the most likely abusers. Given limited resources, agencies should investigate only the most likely targets. Untargeted investigations waste resources. Referral for a full-fledged investigation should be undertaken only where there are multiple indicators of possible fraud in a case. This is especially true since most cases turn out to be bona fide. Ultimately, we must recognize that H–1B applicants are customers of our immigration system and should to be treated respectfully.
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Thank you for the opportunity to present this testimony, and I am pleased to answer any questions you may have.
Mr. LAMAR SMITH. Thank you, Mr. Foster.
Mr. Miano.
STATEMENT OF JOHN MIANO, THE PROGRAMMER'S GUILD
Mr. MIANO. Thank you.
Mr. Chairman and members of the committee, I would like to express my thanks for having the opportunity to speak with you today, a rare honor for an average citizen like myself.
I am here to discuss how the H–1B Visa Program affects the programming profession. While H–1B extends beyond programming, programmers make up the largest number of H–1B workers.
My first education on the H–1B Program came while working as a consultant at an American company that had fired hundreds of employees and replaced them with H–1B workers. This is legal, because employers who hire H–1B workers through a third party, known in the business as a bodyshop, are immune under the program.
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While this company had fired employees in the hopes of saving money, that is not what happened. Rather than being highly skilled, collectively, these H–1B workers were incompetent. They made such a mess that the company had to discard them and bring in an army of consultants, including myself to do the best we could to patch things up so they could continue to run their business.
In the end, the company saved no money, but hundreds of Americans unnecessarily lost their jobs in the process. H–1B is not about skills; it is about cheap labor, and there are no effective protections for Americans against abuse.
Eighty percent of H–1B workers make less than $50,000 a year, significantly less than the average salary in the programming profession and certainly not what one would expect for people whose skills are claimed to be essential to the health of the Nation's economy. Because of their skill level, H–1B workers are not taking jobs from highly skilled Americans; they are taking away opportunities. Each H–1B visa is a lost opportunity for an older American who can't find work. Each H–1B visa is a lost opportunity for a laid-off American to move into programming. Each H–1B visa is a lost opportunity for some American to become a programmer. Because the industry refuses to train the value of an opportunity in the software industry cannot be overstated.
Last year, during the H–1B debate, industry told the country that they needed a temporary increase in the H–1B quota. One little increase to get them going after which they would start training Americans and do something about underrepresented groups in the engineering professions. A year later, they are back asking for me.
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The reason the H–1B quota is being used up is the huge supply of people who want to come to work in the United States and the establishment of a pipeline to bring them here. Each year, this pipeline gets bigger. Because H–1B workers are already here, brought over by the pipeline, getting H–1B workers is simple in the programming field.
The essential step Congress needs to take to clean up the H–1B mess is to ban the practice of using bodyshops to supply H–1B workers to other companies. H–1B workers should only be allowed to work in facilities run by the company that actually employs them. The widespread abuse in the H–1B Program will remain as long as Congress allows an H–1B worker to work for one company while technically being employed by another. If it were not for bodyshops consuming thousands of H–1B visas, there would be plenty of visas to go around for companies who need them to bring in foreign workers who actually have unique skills.
Last year, this body made a step in this direction. Unfortunately, the provisions of the bill that might have had some effect in curbing H–1B visa abuse were stripped out of the final law. Stop the foreign bodyshops from using the H–1B Program to turn the United States into a training ground, and there will be plenty of visas to go around.
There has been talk of removing the limit on H–1B visas for holders of graduate degrees. This would make no sense because graduate degrees have no added value in the programming job market, and if such a provision were to become law, you can expect quickie graduate programs to spring up in the United States and around the world. Removing the limit on H–1B visas for holders of graduate degrees is tantamount to removing the H–1B limit altogether.
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I urge Congress to make no expansion of the H–1B Program and to start cleaning up the abuse and to put an end to bodyshop usage of H–1B visas.
I thank you very much for your attention.
[The prepared statement of Mr. Miano follows:]
PREPARED STATEMENT OF JOHN MIANO, THE PROGRAMMER'S GUILD
1. SUMMARY
The H–1B quota is being reached because of the surplus of people who want to work in the U.S. and the establishment of a efficient pipeline to bring people here.
Removing the limit on the number of H–1B visas for people with graduate degrees is tantamount to removing the quota altogether. Graduate degrees have no added value in the job market.
Until the practice of placing H–1B workers placed through bodyshops(see footnote 2) is banned, Americans continue to have no protection from being fired and replaced by H–1B workers.
The H–1B program allows foreign companies to use the U.S. as a training ground for technology workers.
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H–1B is strictly a source of cheap labor. 80% of H–1B workers make less than $50,000 a year, significantly less than the average among programmers.
H–1B workers tend to have ordinary skills and do ordinary jobs.
Getting an H–1B visa is cheap. Hiring H–1B workers is simple because 3rd parties will take on all the paper work.
There is no great shortage of American programmers.
Discrimination in hiring is rampant in the software industry
2. INTRODUCTION TO H–1B
I became acquainted with the H–1B program in 1996 while working on a project at a company that had fired its entire programming staff and replaced them with imported workers on H–1B visas. There is a huge loophole in the H–1B program that allows employers to avoid any restrictions on the use of H–1B workers as long as a 3rd party bodyshop supplies the workers. This company boasted that they would save $11,000,000 by replacing their American workers with foreigners who were willing to take low pay in exchange for the opportunity to work in the U.S.
In the boardroom, the argument for using imported workers must have been compelling. They were probably presented with statistics showing American programmers made $50,000 per year while in some companies programmers made less than $5,000. Since getting large numbers of H–1B workers is simple and cheap, for those not familiar with the realities of software development, there were few inhibitions against taking the drastic step of firing hundreds of Americans and replacing them with H–1B workers.
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For those of us with experience in software development, the outcome was predictable.
The H–1B workers made such a mess that within a couple of years the company had to discard them and bring in an army of consultants, including myself, to do the best we could to patch things up so that they could continue support their business. Imagine a Fortune 500 company turning over its computer systems to a high school for a class project and that should give you an idea of the extent of the disaster.
This company learned the hard way that collectively these H–1B workers were not highly skilled, nor even marginally skilled. They were completely incompetent.
In this story everything worked out in the end. The experiment conclusively showed that using H–1B workers to replace Americans does not save money. The bodyshop was fined for illegally underpaying the H–1B workers.
The only problem was that hundreds of Americans lost their jobs needlessly in the process. The ease with which H–1B workers can be obtained and the laxity of the law governing their use makes experiments like this one easy for companies to try.
There are those who try to portray the H–1B-dependent bodyshops as the abusers of the system. Examples such as this one demonstrate that they are only part of the problem. The bodyshop did not callously discard hundreds of Americans so who is the real villain? Supporters of the H–1B point their finger at the bodyshops as the source of the abuse in the program while at the same time they want the bodyshops to be able to stay in business with a supply of H–1B workers to pass on to others.
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3. THE PROGRAMMER'S GUILD
I organized the Programmer's Guild in the Summer of 1998 in order to create an organization to represent the professional interest of computer programmers. The idea had crossed my mind many times over the past few years. Two recent events caused me to take action.
Last Summer PBS ran a series called ''Surviving the American Dream'' which described the hardships older workers who were laid off from the defense industry experienced. After seeing it, I felt that there ought to be some way to screen people with technical background for an aptitude for programming. However, I realized that even if such people were identified and trained no one would hire them.
At the same time PBS was airing this series, the H–1B battle was raging in Congress. The contrast between the images of highly-educated people not being able to find jobs and software industry leaders arguing that they were so desperate to find people that they needed to import them from other countries was striking.
I announced over the Internet (www.programmersguild.org ) that I wanted to form an organization with the following goals:
Address the declining prestige of the profession
Inform the public about software issues
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Improve Software Quality
Increase the representation of minority and older programmers
Influence Legislation
Improve Programmer Productivity
Help connect programmers to jobs
Assist people to enter the profession
About 400 programmers have joined us so far. We expect that H–1B will be a major issue for the 1.1 Million voters in the programming profession as well as members of their families during the 2000 election.
4. H–1B IS CHEAP LABOR
In many foreign countries factory workers earn less in a day than Americans make in an hour. Over the past couple of decades we have watched the nation's high-paying factory jobs vanish and go overseas to take advantage of these cheap workers. Advocates of the global economy claimed that these factory jobs would be replaced by technology jobs but we now see that industry wants to export the technology jobs as well.
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Software development is one of the most labor-intensive businesses in existence today. In some parts of the world, programmers make less than $5,000 a year. With rising spending on software development there is increased pressure to reduce costs. The cost reduction method that is easiest for most people to understand is to user cheaper programmers. In recent years many companies have tried out overseas software development as a cost saving measure, urged on by glowing reports in trade newspapers.
Unfortunately companies only make their successes public, resulting in the press presenting a distorted view of offshore development. Instead of finding great success, companies are learning that doing software in countries with cheap labor is not really cost effective. Writing software is not like making sneakers.
There are many reasons the results from offshore development are generally poor. When you go to a 3rd world country to develop software you have to:
Deal with its communications infrastructure.
Endure poor quality software.
Do without face-to-face meetings.
Ship equipment half way around the world.
Do business in the middle of the night.
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There is a simple solution to these problems: If you can't move the factory to the low cost workers, why not move the low cost workers to the factory? For that we have the H–1B program.
Salaries are lower for H–1B workers
The median salary of an IT (Information Technology) professional is about $54–57,000.(see footnote 3)
80% of H–1B workers make less than $50,000.(see footnote 4)
If the majority of H–1B workers really were ''highly skilled'' and essential to the economic health of the republic, one would expect them to be at the high end of the salary scale.
Here a representative of Tata, a foreign bodyshop and one of the largest users of H–1B visas, explains why his company was paying an average of only $35,000 per year to engineers working in San Diego even though this was lower than the prevailing wage.
By Indian standards, $35,000 is a phenomenal salary, he [Saju James] said. At home, these programmers would make about $2,500 a year.
''With the money they save here, they can go back to India and build a house,''(see footnote 5)
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We hear companies tell tales of not being able to find programmers. However, suppose a company were to raise its programmer salaries to the level of one of the starting pitchers on the New York Yankees. Not only would such a company have no difficulty finding programmers but they also would have first pick of all the programmers in the country.
The reality is the companies cannot find American programmers at the price they want to pay.
This is an extreme example, but in reality it does not take a multi-million dollar salary to attract programmers. We are dealing with the difference between a $50,000 and a $35,000 salary when discussing H–1B workers.
The interesting thing about programmers is that money is not our prime motivator. Surveys in the trade press consistently show that factors like the work environment and flexibility are much more important. Low cost steps, such as dumping the office dress code, go a long way towards making a company attractive to programmers.
This year I contacted a broker about a consulting programming position advertised on the Internet. The requirements for the position closely matched the topics of one of my books. The broker immediately said ''Don't bother, they are looking for a foreigner.'' He explained that the hourly rate they would pay was so low that only H–1B bodyshops were intended to fill it. The company in question is one of the largest non-bodyshop users of H–1B visas.
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In theory, employers are supposed to pay the prevailing wage to H–1B workers but this is easy to circumvent. While there are a wide range of programming-related tasks, there is no standardization of job titles in the industry. Even the Department of Labor's computer-related job categories are meaningless to those of us in the profession.
People who do telephone support tend to make less than programmers. C++ programmers make more than Visual Basic programmers. People in network support functions often make less than all of the above. It is easy to lump different computer-related jobs together to produce a distorted wage to base a labor certification on. While government labor statistics are good for year-to-year comparisons and determining overall trends, they are not good sources for determining prevailing wages for computer jobs.
5. THE COST OF H–1B VISAS
Many companies protest that the high cost of H–1B visas prevents them from using them as a source of cheap labor. Compare:
A 5-day C++ Training Course costs $1,795.(see footnote 6)
A modest 6 column-inch advertisement in the employment section of the Sunday New York Times costs $5,094.
The fee to a recruiting agency for a $60,000 a year programmer is about $12,000.(see footnote 7)
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The legal and application fees for an H–1B visa are about $1,410.(see footnote 8)
The high cost of an H–1B visa is a myth.
Since you can get H–1B workers through a bodyshop, a company does not even have to deal with the hassle of making the visa application. The bodyshop handles all the visa processing.
6. H–1B IS NOW A BUSINESS
When Congress created the H–1B program in the early 1990's it could hardly have imagined that one of the unintended consequences would be that foreign companies would set up operations in the U.S. whose sole purpose is to supply workers on H–1B visas. The top users of H–1B visas are all bodyshops. Many of these bodyshops have few, if any, Americans in programming jobs. It is no coincidence that many of the studies alleging the existence of a huge shortages of programmers that are used to justify the expansion of the H–1B program are funded by organizations representing H–1B bodyshops.
7. HELPING OUR COMPETITORS WITH H–1B
While the practice of exporting software development to low-wage countries has generally been unsuccessful so far, our competitors are taking steps to change that. There would be no better way for another country to develop a software industry than to be able to send workers to the U.S. to have them trained in software development and the ways of U.S business.
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That is exactly what we are seeing with H–1B.
It should be no great shock that many of the largest users of H–1B visas are foreign companies. While the U.S. has embarked upon a policy of creating dependence upon foreign workers, including providing training for them, other countries are working at creating opportunities in technology for their citizens.
8. WHY THE H–1B QUOTA IS BEING USED UP
Many argue that the reason the H–1B cap was reached this year is because of the growing demand for programmers and workers in other technical fields. I offer a different explanation that I believe is more consistent with the facts.
The H–1B quota is being reached because of the huge supply of people who want to work in the United States and the establishment pipelines to bring them here.
One of the myths of the H–1B program is that companies have to go to foreign countries to find H–1B workers. In reality, the H–1B workers are already here in the United States looking for work just like the rest of us. Companies can choose from hiring an American or they can pick up an H–1B worker already sitting in the U.S. waiting for work. The H–1B pipeline has already brought the workers here.
One of these pipelines is the H–1B bodyshop. These are companies whose business is importing H–1B workers and peddling them to other companies. Many H–1B bodyshops are subsidiaries of foreign companies. Hiring an H–1B worker through a bodyshop is as easy as ordering a pizza and it has the added benefit that it insulates the company that actually employs the H–1B worker from legal liability.
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The top users of H–1B visas are all bodyshops. What should be surprising is that these companies tend to hire few, if any Americans for the types of positions where they use H–1B workers. There's no better way to avoid discrimination claims from Americans than by simply not hiring them.
Another pipeline for H–1B workers is the passthrough company. A passthrough company serves as the employer on the H–1B application but exerts no control over the H–1B worker whatsoever. The worker pays the legal fees and, once in the United States, he must find his own consulting job. The passthrough company takes a percentage of the H–1B worker's earnings. Passthrough companies have no managerial control over their ''employees''.
Yet another pipeline is American universities. In the software industry there are very few jobs that require a graduate degree in computer science. Job postings asking for a master's degree are rare and I have never seen an advertisement for a programming job that required a Ph.D.
Graduate degrees are most valuable for those looking for work in academia. Since the number of these jobs is extremely limited, there is little incentive for Americans to get graduate degrees in computer science.
At the same time, the focus of most universities is their graduate programs. Since the job market cannot support large graduate programs, universities are forced to recruit foreign students. In many schools the majority of computer science graduate students are foreign. One of the ways to attract foreign students is with the possibility of a job in the U.S.
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Immigration lawyers also have gotten into the act. Many of them advertise to foreign workers over the Internet and help match them up to bodyshops. The worker is expected to pay the legal fees and may have to pay an additional fee for job placement services.
9. NO LIMIT ON H–1B VISAS FOR PEOPLE WITH GRADUATE DEGREES
The press has reported on proposals that there should be no limit on the number of H–1B. While that may sound attractive to American universities who have become dependent on foreign students to support their bloated graduate departments and immigration lawyers who would collect the legal fees, Congress should keep in mind that no limit means just that: ''No Limit''.
The inevitable result of such legislation would be the explosive growth of quickie graduate degree programs all over the world. Having no limit on H–1B Visas for people with graduate degrees would be tantamount to having no limit at all on H–1B Visas.
10. THERE IS NO SHORTAGE OF PROGRAMMERS
Most of the evidence that suggests there is a chronic shortage of programmers falls into one of two categories: claims that companies can't find programmers and studies paid for by software industry groups. The former I address in Section 16. I only mention the studies produced by representatives of the H–1B bodyshop business because they have been so frequently quoted in the press. The flaws in these studies claiming chronic programmer shortage have been well documented elsewhere. As they are embarrassing examples of the junk science that passes as research these days I will consider them no further.
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After the Iranian revolution, the price of gasoline doubled in a matter of months. There are about 1,135,000 Computer and Math Scientists employed in the U.S.(see footnote 9) A shortage of 150,000 programmers (there are those who claim it is much larger) would mean 10% of computer positions are vacant. If a shortage anywhere near that large existed we would see programmer salaries doubling.
The Department of Labor's statistics show a moderate increase in salary for computer professionals (about 3–4% per year) over the past few years. This increase is higher than that of some professions and less than that of others. Overall programmers are only doing slightly better than other professional occupations. If there is a huge shortage of programmers, it does not show up in the salary data.
The low unemployment rate for programmers is frequently cited as a reason why we need more H–1B visas. However, the same is true with programmer unemployment rates as with salaries. The unemployment rate for programmers is low, but in the current economy this is true across the board.
In reality, it's not the unemployment rate among programmers we should be concerned with, but that among other fields and among older workers who have been forced out of the profession. As we move to more technology-based society, Americans need to be trained in technology fields. Each H–1B visa takes away an opportunity for someone outside the field to move into the programming profession.
10.1. Where a programmer shortage actually exists
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While there is no overall programmer shortage, there is a shortage of programmers who have experience in the skills that are currently in fashion. A job opening that requires 3 years experience in Java, HTML, CGI, TCP/IP, C++, Object-Oriented Development, PERL, XML, Oracle, Unix, Windows NT, IRIX, and SQL may require a salary of well over $100,000 to fill.
In the software business, resumes do not get past the gatekeepers in personnel unless they have all the requirements that have been listed for the job. A person with all the skills listed above except for PERL will be rejected out of hand even though it is something that can be learned in a week.
What this does is drive salaries sky high for people who have the skills that are in demand at the moment. While the average salary for a programmer is about $54,000, a position with Internet-related requirements, like the one above, could be $130,000.
Here is where the economics of H–1B comes in. If you have to pay artificially inflated salaries for high-demand skills, you can keep your overall costs the same by using H–1B workers to fill the low-skill programming positions.
10.2. The Skill Spiral
The software industry has created a dilemma for itself by its shortsighted hiring policies going back for many years. Collectively, the industry has refused to hire people without experience. Since people have to scrape to get the magic 2–3 years experience that industry demands before hiring, programmers have little incentive to stay put with a company once they get that experience. Couple that with the ending of corporate loyalty towards employees and the disappearance of retirement plans and you can see that there is a strong incentive for programmers to take the best deal that comes to them.
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Standard corporate yearly pay increases do not keep up with the artificially inflated market value of having experience using particular tools. Training employees on a hot tool over a year could add $20,000 to their value on the job market while, due to the corporation's compensation policies, the employees may only get a $2,000 annual pay increase. The result is that training employees increases the likelihood that they will leave the company.
Since training employees may make them more likely to change jobs, the simple solution is to only hire people who already have experience in the tools the company wants to use. This has the effect of driving the salaries of those who have experience in high demand tools even higher.
This expectation to hire people who need no training has resulted in a steadily increasing salary spiral for fashionable skills. For example, while many Internet-related skills (e.g. HTML and JavaScript) are easy to learn, in many cases the industry has bid up salaries for people with these skills to over $100,000 per year.
High turnover does not have to be a part of the programming industry. ''Computerworld'' recently did a feature on the 100 best places to work. ''Turnover rates at the Computerworld Best Places to Work are dramatically low compared with other companies—50% to 75% below the national average.''(see footnote 10)
When I worked for Digital Equipment, for several years in the period before the downturn I saw very few people leave. Currently I am working with a company where several members of the project team have been with the company over ten years and the rest have spent almost their entire careers there.
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One of the reasons companies have fallen in love with H–1B visas is that Americans and permanent residents can quit. If an H–1B worker loses a job, the next stop is the boat home.
Several years ago I was speaking with the personnel manager for a company I was working with while she was working on an H–1B visa application. She told me that her manager loved hiring H–1B workers because they could not quit.
11. WHAT ABOUT PRODUCTIVITY?
There are two important ways to reduce costs in a labor-intensive business: get cheaper labor and increase productivity.
In a capitalist system, efficiency improvements only come when there is an economic need. The gas guzzling turbojets on airliners were replaced by more efficient turbofans after the steep rises in fuel costs during the early 1970's. The next generation of more efficient jet engines will not show up on airliners until fuel prices rise.
While some companies have taken programmer productivity seriously (Microsoft deserves special mention), little progress is being made in the industry as a whole. Where software is unusual, if not unique, it is created by thinking. One example of where companies ignore programmer productivity is in the office environment.
What kind of environment is best for thinking? If your children needed to do their calculus homework you would have them do it in a quiet room and not in front of the television set. Likewise if you want to make programmers productive you would put them in enclosed offices to keep out noise. However, of all that has been written about the importance of the work environment for productivity, in the past 15 years I have seen quiet offices steadily being replaced by noisy cubicle environments within the industry.
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A couple of years ago I joined a project that was not making any progress. The company has placed the entire team of about a dozen programmers in a conference room. Each time the phone rang it disturbed the entire team. So did each conversation and knock on the door. The inevitable result was that very little got done.
The management's response to the lack of progress was to add more people. With twenty people there were twice the number of disturbances and still nothing got done. The management continued to add more people until there was no more space to add any more.
This was a project that could easily have been completed in the same period of time by six developers and many times that number were working on it. The point here is that at the senior management level, the view that speed is a function the number of bodies assigned to the project is very common. Cheap H–1B workers allow more bodies to be thrown at a task for less cost.
12. EDUCATION AND JOB TRAINING IS NOT THE ANSWER
Much ado has been made over the number of computer science graduates and how that relates to an alleged programming shortage. The reality is that most programmers do not have CS degrees and there is no evidence to suggest that those who do are better prepared to succeed in the profession. The only common factor I have found among most top programmers is musical ability.(see footnote 11)
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12.1. Areas of Programming Knowledge
I break the areas of knowledge used in computer programming into three categories (Languages, Business, and Engineering) and qualitatively rate their relative importance as shown in the following chart.
99
63314n.eps
Languages
This component consists of the ability to use various tools in software development, such as programming languages and databases.
Business
Business knowledge is the non-computer information and experience required for a particular application. If you are programming a retail banking application, you need to have some level of knowledge of how a bank works. Even developing hard-core programming, such as operating systems or games, requires business knowledge. There is a customer no matter what you are writing.
While you can't write programs without knowing a programming language, I believe business knowledge is more important that knowledge of programming techniques. A chemist who knows programming is in a better position to write a molecular modeling package than a programmer who knows chemistry is. This explains why people with so many backgrounds are in the programming profession.
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Engineering
The largest component of programming knowledge I call engineering. By this I mean knowing how to put together computer systems and, especially, who to do it the right way. The engineering component only comes from experience. There is no way to learn it in a classroom.
While I put a high value on engineering and experience, the industry considers languages most important in its hiring process. This is one of the reasons why older programmers have such a hard time finding jobs.
12.2. Programmers Are Out There
The programmers America needs are already out there. The programmer pool is not limited to those with computer science degrees. The number of discarded older programmers alone is enough to cover the entire gap that is alleged to exist. The makeup of the programmer population in this country clearly shows that there are untapped pools of talent that the industry has overlooked.
Last month I taught a programming class. The student who did the best was a former airline pilot who taught himself programming. If we need more programmers, we need to look at people with experience in other fields. For people with the aptitude, the training needed to bring them to a higher skill level than the typical H–1B programmer is very small.
Job training courses will not make this transition happen. I expect that the $500 job training fee added last year to the H–1B application fee will have absolutely no effect whatsoever. Putting people through courses in the hope that they will pick up jobs is futile. As the folks at Northern Virginia Community College discovered, unless employers are committed to expanding the opportunities to people outside the profession, job training will have little effect.
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12.3. Learning a Programming Language is Not Like Learning French
One of the arguments that employers use to justify the need for H–1B workers rather than training Americans is that because of the rapid pace of the industry, they need people who already have the skills. They would have you believe there is a university in the Himalayas where it never rains and the temperature is always 76 degrees F, that turns out programmers by the thousands who receive all the training they need to be productive in the American business world. The reality is that the majority of H–1B workers do not have all the skills required for jobs when they arrive and a lot of on-the-job training takes place.
Recently I was working on a project that was going to use a software tool that was relatively new so people who knew it were in short supply. The company I was working for announced they would hire an expert on the tool for the project.
Since the software I was writing depended on this tool, I bought a book to learn about it. As weeks passed, I learned how to use this tool and was able to write the software we needed with it.
Eventually the tool ''expert'' was hired who turned out to be an H–1B worker. However, he knew nothing about the tool he was hired for as an expert. He was learning from the same book I had used months earlier.
This position was an opportunity for someone to learn some of the latest in programming but it went to an H–1B worker rather than an American. Employers are willing to train H–1B workers because H–1B workers are bound to their employer.
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Notice that the training investment for learning this skill was a $35 book. Many programming skills can be learned easily. Even learning programming languages is not that difficult. No programming language is as complicated as French. The differences among common programming languages are not nearly as great as between French and Spanish, let alone Spanish and Russian.
Here are four examples of equivalent code written in four different programming languages.
if (balance < 0)
printf (''Get a loan/n'') ;
else
printf (''Pay the bills/n'') ;
C++
if (balance < 0)
cout << ''Get a loan/n'' ;
else
cout << ''Pay the bills/n'' ;
Pascal
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if balance < 0 then
writeln ('Get a loan')
else
writeln ('Pay the bills') ;
Ada
if balance < 0 then
put—line (''Get a loan'') ;
else
put—line (''Pay the bills'') ;
You can see that the similarities among programming languages are greater than their differences. Once you learn a couple of programming languages, the rest become pretty much a matter of learning where to put the semicolons.
13. FINDING A PROGRAMMING JOB ISN'T EASY
With all of the propaganda about programmer shortages, one might get the impression that anyone who can spell C can instantly get a programming job. Unless you are in the high demand 3–5 years experience range, it's tough out there.
When I started out in 1984, it was nearly impossible to get an interview for a programming job. Everyone wanted two years of experience, but no one wanted to give experience.
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I would have looked at another profession if it weren't for a lucky break. My father learned of a position in the company he worked for and I was able to get in. My first programming job paid $9 an hour. Even in 1984, that was not a lot of money.
Once I had reached three years of experience, things changed completely. At that point everyone wanted to hire me. For a period of six months I went to an average of 2 interviews a week and had the pick of jobs.
My next job search came after working for Digital Equipment for eight years. I, with tens of thousands of others, was laid off. Once you have been laid off companies look at you very differently. In the weeks before I was let go, I was talking to several companies about changing jobs. As soon as I was laid off, these companies suddenly were no longer interested.
Since then, I started my own consulting business and have worked on my one. While business is good, finding programming work is still very difficult. I can easily see how people who have been laid off and did not have my advantage of having written books and articles would have a terrible time finding a job, especially if they were over 40.
14. AGE DISCRIMINATION
One of the many disgraceful hiring practices in the software business is the treatment of older workers. The industry wants young. Recently I went through an Internet newsgroup and search for all the jobs that gave experience requirements. The highest number of years requested was 6. Positions specifying at least 3 years of experience were called ''senior''. In a survey taken by ''InformationWeek'' of information technology managers, only 2% of the respondents said they were likely to hire someone with more than 10 years of experience.
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I have no explanation for the rampant age discrimination in the industry. I have heard the theory that older workers have families and can't devote the hours but I see older worker in other fields putting in long hours. I do not believe that age discrimination in the software industry is entirely a question of money.
A couple of years ago I interviewed an over 50 worker for programming position. The candidate was a recent immigrant (which suggests he did not want a lot of money) who had trained himself in programming. My evaluation was that he would be suitable for an entry-level position. The management said that they thought he was too junior for the position and rejected him. However, they ended up filling the position with a 20-something programming with no more experience.
No one comes out and says ''He's too old.'' because of the legal problems. Here is a quote that comes pretty close.
''Unfortunately, a lot of the guys we interviewed who are ex-Gramman engineers were involved with the way things are done at a big organization,'' Otto said. ''They did one thing. That's all they did. I need an engineer who can work on three or four difference things and be part marketer, too.''
15. OLDER WORKERS AND THE DECLINE IN SOFTWARE QUALITY
Would you want to drive across a bridge designed by a 25-year-old senior architect? How about ride in an airliner designed by a 26 year old senior engineer?
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As I pointed out in the Section12, the most important ability required when designing large engineering systems requires experience. Unfortunately industry places very little value on experienced programmers.
One would expect to see poor quality in an industry that casts off experienced workers and that is exactly what is happening.
The steady decline in software quality has been the most disappointing aspects of the software industry for me. Ten years ago, the operating system on my desktop computer could go for months without a reboot. The one I have now cannot get through an afternoon without needing to be restarted. While writing this document, the word processor crashed (''Access Violation'') forcing me to undergo a serious recovery effort.
I am going to make a bold prediction here. I believe that the current level of quality in software development is so low that we will have a serious problem with computer systems that can't handle the year 2000.
Everyone, except for a few apocalyptic doomsayers, knew that the year 2000 was coming so there is no excuse other than incompetence for not being able to handle it. If software is being written that can't handle predictable events, such as the change of the millenium, you can be certain we are doing even worse with the unpredictable.
Remember how the software industry discards experienced workers the next time you read in the newspapers about a radiation treatment machine that fries patients, a funds-transfer system failing and costing a bank tens of millions of dollars, or an airliner crashing due to a software failure.
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16. WHY COMPANIES CAN'T FIND PROGRAMMERS
One area where I agree with advocates of the H–1B program is that many companies cannot find programmers. I am not saying the programmers are not out there, but rather that companies cannot find them. If you have ever seen how many companies try to hire programmers their lack of success would be no mystery to you.
Imagine someone from Europe coming to the U.S. for the first time. After searching the New York sewers for 2 weeks he goes home and announces to his friends ''The are no alligators in America.''
16.1. Not Making Jobs Known
Ever since it became clear there would be push for another H–1B expansion six months ago, I started to scan the New York Times each Sunday to look at the number of programmer jobs advertised. While each week there are usually a couple of pages of advertisements, almost all of them are from resume brokers and bodyshops. There are rarely more than a dozen advertisements from actual hiring companies.
The same is true on the Internet. Brokers flood the newsgroups but postings from hiring companies are rare.
The number of broker advertisements is deceiving indictor of the number of programming jobs that are available since many brokers are trying to fill the same jobs. Earlier this year I saw a consulting job posted on the Internet that used a tool I had written about in one of my books. I called the broker that made the posting and was told ''Sorry, that job was filled months ago but send us a resume anyway. '' That same job was posted regularly for six months after I called and may still be.
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If programmers do not know a company has jobs available, they are not going to apply for them. The next time you hear a company say that they have thousands of unfilled programming positions, ask them what newspaper they are advertised in.
16.2. Picky Requirements
It is traditional in the software industry to have a laundry list of requirements for job openings. Candidates are not considered for positions if they do not meet all of the requirements listed for a job. It is not uncommon to see the statement ''Candidates who do not have all listed skills will not be considered'' in a job posting.
Requirement lists are frequently absurdly long, often with over ten specific skills. It is even common for a job posting to have only a subset of the full list being used for screening. I often encounter job postings that include skills that are not even being used on the project.
At the extreme, such lists often contain requirements that are impossible to meet (e.g. requiring 3 years experience in something that has only existed for 2). I even encountered a case where a company had misspelled an acronym and would only consider people who misspelled it on their resume as well.
If you went on a search for a house and told the real estate broker that you wanted
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4 Bedrooms painted white, eggshell, pink and light blue.
Royal Blue Carpet throughout
Brass Electrical Fixtures
Designer Wallpaper in the bathroom
and refused to look at any houses without those features, your choices would be extremely limited. One might even say that a housing shortage existed. On the other hand, if you were willing to consider 4-bedroom homes in nice neighborhoods and were willing to redecorate before you moved in, you could meet your requirements and have a large number of houses to choose from.
Likewise, companies that expect candidates to meet all of their requirements have to expect to pay premium and endure long job searches. Companies that are willing to be more flexible in their requirements and training will have an easier time.
In June, I called a broker about a contract job he had posted on the Internet. The company had listed in their requirements 4 different operating systems, 3 programming languages, and a molecular design package.
By some coincidence I had experience in all the requirements listed so I called the broker. He said he would call the company and get back to me.
An hour later, the broker called back and said the company's personnel people wanted to know if I had experience with another product that I had never heard of before. I responded ''No''. He said he would get back to me again.
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The broker called back later that afternoon and told me that the personnel people would not even look at my resume if I did not have experience in the addition product as well. I searched for information on this particular product and found that it came from a company with nine employees.
In other words, this company had created a set of job requirements that no one in the world could possibly meet.
16.3. Not Having a Programming Friendly Environment
The workplace environment goes a long way towards attracting (and retaining) programmers. Inexpensive things, such as
Casual Dress
Flexible Hours
A Popcorn Machine
can make a big different in attracting programmers. Likewise, rigid dress codes, reserved parking spots and poor equipment are highly effective means pushing top programmers to other companies.
Executives cannot complain in public about how their corporate policies discourage programmers from wanting to work for them. They can complain in public about a an alleged programmer shortage.
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16.4. Personnel Department
Ask the people in any company why they cannot find programmers and the #1 answer will be the corporate personnel department. The existence of character of ''Catbert, The Evil Human Resources Director'' in Dilbert is no coincidence. I could write an entire book on rude treatment of candidates by personnel departments. Because of the frequent contacts between recruiters and personnel people and the frequent exchanges because recruiters and programmers, when companies have bad personnel departments their reputation gets spread widely.
Late last year someone I know at a large corporation asked me if I would do some consulting for him. After setting up the deal, he gave me the name and number of someone in personnel who was expecting me to call in order to finish the paperwork.
I called the personnel representative every day for two weeks until the Christmas holiday. I called every day for two weeks after the Christmas holiday. Each time I called I either was told she was not available or I left a message on the voicemail system. To this date, she has never returned my call.
That was a case where I had already been selected by the management to do the job. Imagine what happens to a regular candidate for a position.
Executives in corporations cannot complain in public that their personnel department causes problems in hiring. They can complain about an alleged programmer shortage. Getting H–1B workers through a bodyshop often means the hiring managers can bypass the personnel bureaucracy entirely.
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16.5. Company Reputation
Due to the Internet and the high turnover in the industry, a company's reputation as an employer of programmer gets spread widely. Not only do companies screen resumes, but applications also screen companies.
Consider this. When leaders of a corporation appear in public to announce that importing more H–1B workers is the only solution to their employment problems, how does that affect their reputation as a place for programmers to work?
17. HOW TO CLEAN UP THE H–1B MESS
The long-term solution to the problem with the H–1B program is to eliminate it and go back to a system with stricter requirements, something more along the lines of the previous H–1 program.
Our goal should be to have a program that is restricted to people who actually have unique skills. As the system is set up now, companies that want to bring in people that actually have exceptional skills are unable to due so because the H–1B quota is being consumed by bodyshops dumping low skilled people into the country. Realistically, the number of H–1B workers who are highly skilled is only on the order of 10,000 per year.
Failing in an overhaul of the system, there are some simple steps that Congress could take to reduce the abuse in the current system.
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17.1. Eliminate 3rd Party Usage of H–1B Visas
Bodyshops do not have a need for H–1B workers. The need for a worker exists only where the worker is placed. If a company needs an H–1B worker, it should make the application. It should make the labor certification and, most of all, it should take responsibility for obeying the law.
As long as one company can supply H–1B workers to another, the protections in the law will remain a sham.
17.2. Eliminate H–1B Dependent Employers
There is no reason the H–1B program should be used by foreign companies as a training ground for their workers. Companies with more than 15% (let alone 90%) of their workers on H–1B visas simply should not exist.
17.3. Raise the Application Fee
The application fee is absurdly low. It is so low, that that individuals can purchase their own H–1B visa and use the program as a backdoor route for immigration. Raise the fee to $20,000. $3,000 per year is a reasonable fee to bring in people who have skills that truly have exceptional skills.
17.4. Require Employers to Pay All Costs
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The employer should be required to pay all H–1B visa costs, including legal fees.
17.5. Set Minimum Salaries
Top computer programmers make over $100,000 year. To ensure that the H–1B program is only used to bring in highly skilled workers that will help advance the economy, there should be minimum salaries based upon those at the high end of the profession. A minimum salary of $100,000 for H–1B workers would not be unreasonable provided they actually were highly skilled.
17.6. Increase the Penalties
The penalties for violating the law are a joke. In the recent Exotic Granite & Marble case, the company was forced to pay back pay of $99,000 and a fine of $3,000 for underpaying H–1B workers. You can't get better odds than that in Atlantic City. With the potential savings so high and the fines so low, assuming you get caught, this is a clear signal to employers that it is OK to violate the law.
17.7. Let the Free Market Correct the Problem
If Congress does nothing, or abolishes the H–1B program entirely, the labor problem will correct itself. The H–1B abuses will continue, but the fate of the republic will not be threatened by the lack of foreign workers whose skills are so low they command less than $50,000 in a high technology field.
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18. SUMMARY
During last year's H–1B debate, the computer industry told us they only needed a temporary increase in the H–1B quota to get them over the hump until they could start training Americans. It's only a year later and they are back for another increase. The software industry has no intention of weaning itself off of the H–1B program unless it gets a big push.
It should be clear that we are dealing with an addict. The H–1B program is now the drug that allows the computer industry to avoid having to deal with its labor problems. The H–1B program is not the best solution to for bringing skilled workers into industry. H–1B is not even the least expensive in the long run. H–1B is simply the easiest. It is easier to ask Congress for more H–1B visas than for the industry to fix the problems it created for itself.
If American wants to increase the number of programmers, we need to make the profession attractive and provide opportunities for people to enter it. H–1B reduces the prestige of the programming profession and every H–1B visa takes away the opportunity for an American to take a technology job.
The computer industry did fine before the H–1B program. It will prosper without an increase in H–1B visas or even the program's end.
19. BIOGRAPHY
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John Miano earn his bachelor's degree in mathematics in 1984 from the College of Wooster. After working as a programmer for several companies, including eight years at Digital Equipment, he started his own software successful consulting business, Colosseum Builders, Inc. In addition to being the chairman of the Programmer's Guild, he is the author of two programming books and numerous articles for computer-related magazines.
APPENDIX A. PRICE LISTS FROM IMMIGRATION LAWYERS
63314b.eps
63314c.eps
63314d.eps
APPENDIX B. ADVERTISEMENTS FROM PASSTHROUGH COMPANIES
63314e.eps
63314f.eps
63314g.eps
63314h.eps
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63314i.eps
63314j.eps
APPENDIX C. ADVERTISEMENT FOR FOREIGN WORKERS
63314k.eps
63314l.eps
63314m.eps
Mr. LAMAR SMITH. Thank you, Mr. Miano.
Ms. Cleveland.
Ms. JACKSON LEE. Mr. Chairman. I am sorry, I have to depart, and I would just like to ask unanimous consent for the statement of the American Occupational Therapy Association on the H–1B Visa Program to be submitted to the record.
Mr. LAMAR SMITH. Without objection, that will be a part of the record.
Ms. JACKSON LEE. Thank you.
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Mr. LAMAR SMITH. Ms. Cleveland.
STATEMENT OF ALISON CLEVELAND, ASSOCIATE MANAGER OF LABOR POLICY, U.S. CHAMBER OF COMMERCE
Ms. CLEVELAND. Thank you, Mr. Chairman, members of the subcommittee.
The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector and region. In my testimony, I will try to give brief overview, while also showing how companies use the H–1B Program and how it benefits U.S. business in the overall economy. Obviously, this is not a new issue to the members of this subcommittee, as you are more than familiar with the contentious debate, which led to passage of the American Competitiveness and Workforce Improvement Act of 1998.
ACWIA increased the annual cap from 65,000 to 115,000 for Fiscal Year 1999. However, it should be emphasized that although there was an increase to 115,000 for this fiscal year, there was a backlog of 19,431 H–1B applications, which brought the actual number of available slots down to 95,569. For the third year in a row, business was unable to hire those skilled workers that they need, and the situation is only going to continue to get worse.
While the Immigration and Naturalization Service has not confirmed the figures, it is estimated that there could be at least 43,000 petitions pending as we approach the Fiscal Year 2000 cap, with petitions being accepted with an October 1, 1999 start date throughout the summer. If this is estimate is accurate, the Fiscal Year 2000 cap could be reached as early as March.
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Because of rapid growth in many sectors of the economy, it is unclear at this point as to who is actually using the H–1B Program. The chamber will be surveying our membership on their usage of the H–1B Program. As we are in the process of collecting data from a representative sample of our diverse membership, we are not able to provide results at this time to the subcommittee. We are, however, able to provide the subcommittee with examples of a few of our member companies use of this program and the impact of their respective operations and growth.
Employed at Microsoft is a Chinese researcher who received a BA in Computer Science from China and an MA and Ph.D. in Computer Science from France. He then went on to work for the French National Research Institute for 8 years. He was recruited by Microsoft Research to work in the Computer Vision group—enabling computers to see like humans. He has designed algorithms for 3D modeling of image sequences and creating 3D models from a few still images, allowing viewers to see virtual images and manipulate images as needed for given applications. Microsoft Research is very international in scope with researchers from Canada, India, France, UK, China, Germany, Brazil, and many other countries.
PricewaterhouseCoopers uses the H–1B Program in order to hire technical IT professionals who are ready to hit the ground running and who have the language skills that they need to service their international clients. PricewaterhouseCoopers' total workforce is 150,000 worldwide. In Fiscal Year 1998, they had 10,400 new hires and petitioned for 600 H–1Bs. After the merger with Coopers & Lybrand, the numbers increased for Fiscal Year 1999 to 13,000 additional new hires and 800 petitions for H–1B nonimmigrants. Of those hired in Fiscal Year 1999, 8,000 were experienced professionals. The H–1B nonimmigrants only make up 2 percent of their entire workforce.
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Ford Motor Company and all wholly-owned U.S. subsidiaries' use of the H–1B is not a big volume number—62 out of 155,000 U.S. workers. However, it is a critical piece of Ford's research into cleaner engines, optimal fuels, fuel cell and electric storage vehicles, safer vehicles, whether by structural integrity or use of passive restraints. Of the 62 H–1B employees of Ford, 60 have a Ph.D.
The Greater Omaha Chamber of Commerce in Omaha, Nebraska, developed a task force on behalf of its over 2,900 members to become better equipped to recruit H–1B nonimmigrants. The Greater Omaha area has hundreds of employees that are employed pursuant to H–1B visas. The need for workers, especially skilled workers, in Omaha is becoming greater. Currently, Omaha has approximately 1,200 H–1B nonimmigrants employed in the metro areas. There is room for considerable growth, and there are jobs to be filled. Omaha's unemployment rate is about 1.7 percent. It is one of the lowest in the Nation and has consistently been so for the past several years. It is estimated that the Omaha area currently has over 2,000 job openings in the field of information technology.
An Indian national at Oracle Corporation, the world's second largest software company, is working as a project leader in the Accounts Payable Group of the Oracle Financials Suite of Products. His role in this group has been to lead 80 engineers in developing functionality in this product that would make a difference in the sale of the entire Financials Suite as a whole. In particular, this individual has led the effort in integrating Oracle Purchasing and Oracle Payables. Companies will be able to match the invoices they receive in the payables department to the purchase orders and receipts generated in the purchasing department. This allows companies to track the cost of their materials and services easily and accurately.
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While the H–1B Program is not the only answer to addressing the issue of skill shortages, it is an important part. The other piece of this puzzle is the need to beef up our education system. Instead of focusing on whether this is an either/or situation, we should be addressing both problems simultaneously. Needless to say, employers have responded to the needs of our education system with billions of dollars in investments to training and educational efforts. They are doing so, and will continue to do so, to improve the current education system as well as to cultivate the qualified workers they need.
In order to pull American students into the hard and applied sciences, some believe that they need to begin focusing on math and science as early at the sixth grade. One of the problems we are seeing is that even with the money the companies are putting into education and training, there is still a long lag time before such students will be employable. If we are successful in enticing children to the math and sciences fields, there are still two problems: One, many of the best math and science teachers are being recruited into the private sector due to the workforce shortage, and, two, in a few years, there will not be enough workers available to compensate for the students that are in the pipeline.
There seems to be a misconception that it is easy to train workers to fill job openings in the current shortage occupations. It is possible to quickly train individuals on the fundamentals, yet it takes years to train them on the more intricate subtleties of the discipline. A good example of this is that most people would not want their podiatrist performing open heart surgery on them. While they are both doctors and have both graduated from medical school, they are experts in completely different areas.
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It is clear as we stand on the edge of a new millennium that in order to remain competitive, we must focus on education while at the same time embracing the benefits of a more enlightened immigration system. In order to move forward, we should have a more transparent, consistent, and efficient immigration system that will enable the United States to take full advantage of the benefits of the global economy.
I hope that the information I have shared in this testimony helps underscore the importance of the H–1B Program and the need for business to be able to obtain the workers that they need. The U.S. Chamber will continue to take an active role in addressing the importance of this program as well as the educational and training needs of the workforce and to work with State and local chambers, businesses, and educational institutions to meet these needs.
Thank you for the privilege of participating, and I look forward to any questions you have.
[The prepared statement of Ms. Cleveland follows:]
PREPARED STATEMENT OF ALISON CLEVELAND, ASSOCIATE MANAGER OF LABOR POLICY, U.S. CHAMBER OF COMMERCE
Mr. Chairman and members of the Subcommittee, good afternoon. I am Alison Cleveland, Associate Manager of Labor Policy for the U.S. Chamber of Commerce. The U.S. Chamber of Commerce is the world's largest business federation representing more than three million businesses and organizations of every size, sector and region.
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We have been asked to address the usage of the H–1B nonimmigrant visa category by the business community. In my testimony I will try to give a brief overview while also showing how companies use the H–1B program and how it benefits U.S. businesses and the overall economy. Obviously, this is not a new issue to the members of this Subcommittee as you are more than familiar with the contentious debate, which led to passage of the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA) (passed as part of the omnibus appropriations bill), which increased the annual allotment of H–1B visas. ACWIA increased the annual cap from 65,000 to 115,000 for fiscal year 99, 115,000 in fiscal year 2000, 107,500 in fiscal year 2001 and back down to 65,000 in fiscal year 2002. However, it should be emphasized that although there was an increase to 115,000 for this fiscal year; there was a backlog of 19,431 H–1B applications, which brought the actual number of available slots down to 95,569. We were aware that even under the new cap for FY99, the program would not be able to accommodate actual usage and again we would be faced with exceeding the 115,000 limit for fiscal year 1999 by mid-June. For the third year in a row, business was unable to hire those skilled workers that they need, and this situation is only going to continue to get worse. While the Immigration and Naturalization Service has not confirmed the figures, it is estimated that there could be at least 43,000 petitions pending as we approach the fiscal year 2000 cap, petitions being accepted with an October 1, 1999 start date throughout the summer. If this is estimate is accurate, the FY 00 cap could be reached as early as March.
Because of rapid growth in many sectors of the economy, it is unclear at this point as to who is actually using the H–1B program. Section 416(c) of ACWIA requires the Attorney General to submit to the House and Senate Judiciary Committees reports on an annual basis on the countries of origin, occupational classifications of, educational levels of, and compensation paid to, aliens issued H–1B visas. However, data collection for these reports is not required to begin until October 2000. We also understand that Representative David Dreier will be requesting a GAO report on H–1B usage. In the meantime, the Chamber will be surveying our membership on their usage of the H–1B program. As we are in the process of collecting data from a representative sample of our diverse membership, we are not able to provide results at this time to the Subcommittee. We are, however, able to provide the Subcommittee with examples of a few of our member companies use of this program and the impact on their respective operations and growth.
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Microsoft
A Jordanian software engineer received a BA in Computer Science from University of Arizona in 1986. After graduation he worked in Kuwait for 3 years on ''Arabizing'' various software products (i.e., dealing with Arabic text processing and layout issues) and developing Arabic software fonts. He came to Microsoft on an H–1B visa in 1990 to perform similar duties. At Microsoft, he worked on enabling Arabic/Hebrew versions of Word, Excel and other Office applications. Today these applications are the most common and popular software products in the Middle East market. Although his team started out small, working on enabling one or two products in Arabic and Hebrew, they now are responsible for many complex scripts including Thai, Vietnamese, Hindi, Farsi, and Urdu, in addition to Arabic and Hebrew. Today, the team has close to a dozen members with many engineers and experts from various countries of the world. And they're still looking for experienced developers in the multilingual field. Obviously, they rely on the H–1Bs to hire these highly qualified/specialized engineers. For Microsoft to succeed in overseas markets such as the Mid-East they need engineers with experience in solving localization issues, this may include language skills and/or knowledge of specific techniques.
Another example is a Chinese researcher who received a BA in Computer Science from China and an MA and Ph.D. in Computer Science from France. He then went on to work for the French National Research Institute for 8 years. He was recruited by Microsoft Research to work in the Computer Vision group—enabling computers to ''see'' like humans. He has designed algorithms for 3D modeling of image sequences and creating 3D models from a few still images, allowing viewers to see virtual images and manipulate images as needed for given applications. Microsoft Research is very international in scope with researchers from Canada, Indian, France, UK, China, Germany, Brazil, and many other countries. U.S. companies benefit from this international work force in obvious ways. In this case, the researchers have different cultures and experiences. Some researchers are more theoretically oriented; some others are more practical. Some are strong in 3D modeling; some others are strong in image-based rendering. This cross-fertilization allows the imaging group to tackle a problem better and more efficiently.
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PricewaterhouseCoopers
PricewaterhouseCoopers uses the H–1B program in order to hire technical IT professionals who are ready to hit the ground running and who have the language skills they need to service their international clients. PricewaterhouseCoopers' total workforce is 150,000 worldwide. In FY98 they had 10,400 new hires and petitioned for 600 H–1Bs. After the merger with Coopers & Lybrand, LLP the numbers increased for FY99 to 13,000 additional new hires and 800 petitions for H–1B nonimmigrants. Of those hired in FY99, 8,000 were experienced professionals. The H–1B nonimmigrants only make up 2% of their entire workforce. In order to train workers and keep up with demand, PricewaterhouseCoopers has training facilities in Tampa, FL and Philadelphia, PA.
Ingersoll-Rand
Ingersoll-Rand is a Fortune 200 company that employs 47,000 worldwide, with 28,000 employed domestically. The company is a diversified manufacturer of industrial equipment and components that serve the construction and industrial markets worldwide. Ingersoll-Rand and its subsidiaries employ relatively few H–1B workers; in fact, less than 100 foreign nationals are employed in their domestic workforce. However, these highly-skilled research and design engineers, information systems experts, and multinational marketing experts have made significant contributions to technical and innovative product development, streamlined development of business systems, and possess cultural business acumen regarding emerging markets which has resulted in increased sales throughout the world for our products.
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Ford Motor Company
Ford Motor Company and all wholly-owned U.S. subsidiaries' use of the H–1B is NOT a big volume number: 62 out of 155,000 U.S. workers. However, it is a CRITICAL piece of Ford's research into: cleaner engines, optimal fuels, fuel cell and electric storage vehicles, and safer vehicles—whether by structural integrity or use of passive restraints (air bags/curtains).
Of the 62 H–1B employees of Ford, 60 have a Ph.D. Many participated in Ford and (U.S. Government grants funded research in numerous fields. Ford needs the best and brightest minds to stay competitive against all competitors; not just the usual stereotyped Big Three. There is actually a ''cost penalty'' of hiring foreign nationals of at least 10% owing to the immigration costs associated with maintaining work authorization, ensuring the ability to travel to research facilities and conferences outside the U.S)
Greater Omaha Chamber of Commerce
The Greater Omaha Chamber of Commerce in Omaha, Nebraska, developed a task force on behalf of its over 2,900 members to become better equipped to recruit H–1B nonimmigrants. The Greater Omaha area has hundreds of employees that are employed pursuant to H–1B visas. The need for workers, especially skilled workers, in Omaha is becoming greater. Currently, Omaha has approximately 1,200 H–1B nonimmigrants employed in the metro areas. There is room for considerable growth, and there are jobs to be filled. Omaha's unemployment rate is about 1.7%. It is one of the lowest in the nation and has consistently been so for the past several years. It is estimated that the Omaha area currently has over 2,000 job openings in the field of information technology. The workforce shortage is at crisis level. The Greater Omaha Chamber of Commerce wants their employers to continue contributing to the steady, vibrant economy of the state. They know that employers will stay, if they have an educated, qualified workforce to stand behind them; H–1B nonimmigrants are an essential part of that equation.
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Oracle
An Indian national at Oracle Corporation, the world's second largest software company, is working as a Project Leader in the Accounts Payables Group of the Oracle Financials Suite of Products. His role in this group has been to lead 80 engineers in developing functionality in this product that would make a difference in the sale of the entire Financials Suite as a whole. In particular this individual has led the effort in integrating Oracle Purchasing (which is part of the Oracle Manufacturing Suite of Products) and Oracle Payables. Companies will be able to match the Invoices they receive in the Payables department to the Purchase Orders and Receipts generated in the Purchasing department. This allows companies to track the cost of their materials and services easily and accurately. Smooth integration between these products has been seen as a major enhancement in both the Financials and Manufacturing arena. Oracle Academic Initiative (OAI), a $50 million effort to address the worldwide Information Technology (IT) labor shortage, is designed to help universities attract and graduate skilled IT professionals. OAI provides academic institutions with software, support, curriculum, instructor education and certification to develop cutting edge technology education courses and programs. Over 400 campuses nationwide are participating.
Clearly the growth in high-technology fields will continue, as illustrated by a survey conducted by the Bureau of Labor Statistics, which found that occupations in the computer and data processing services industry were expected to more than double in employment size to 2.5 million workers by 2006.(see footnote 12) According to the latest ''Cyberstates'' study by the American Electronics Association, the high-tech industry has already added over 1 million jobs during the period of 1993–1998.(see footnote 13) The explosive growth of occupational categories in this industry and the immediate lack of high skilled workers to fill those jobs was covered extensively during last years H–1B debate. Echoing that debate, Laura D'Andrea Tyson, Dean of the Haas School of Business at the University of California at Berkley and previous chief economic advisor to President Clinton, said it is a ''mistake to conclude that the increase in demand for computer scientists, systems analysts, and computer programmers is temporary.''(see footnote 14) The booming economy, expansion in the technology fields, and the proliferation of companies into global markets are all factors that tie into a company's growing workforce and its need to obtain skilled workers.
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While I have explained the reasons companies utilize the H–1B program, I think it is important to address why this is becoming increasingly more difficult. Bureaucratic red tape, delays in processing times as well as unavailability of H–1B numbers are just a few of the roadblocks companies face. It is important for the H–1B program to be consistent and efficient in order to ensure that U.S. companies maintain their competitive edge in the ever-changing face of the global economy. Foreign nationals coming in to the United States are not only benefiting the companies that have hired them but also the country as a whole. A recent study conducted by Annalee Saxenian at the University of California at Berkeley for the Public Policy Institute of California establishes that in Silicon Valley the immigration of information—technology workers ''has been a major source of new job and wealth creation, bringing skills, creativity, capital, and links with global markets to the region.''(see footnote 15)
With unemployment at a 30-year low and the economy soaring, companies are finding themselves faced with the difficult task of filling their ever-expanding job openings. Companies are becoming more creative in their pursuit for workers to fill these jobs. A wide range of perks, including bonuses, cars and stock options, are being offered not only to the new hire, but also to those who refer qualified candidates.
While the H–1B program is not the only answer to addressing the issue of skill shortages, it is an important part. There are glaring flaws in the administration of our current immigration system, which are being addressed in the debate over the reorganization of the Immigration and Naturalization Service. The other piece of this puzzle is the need to beef up our education system. Instead of focusing on whether this is an either/or situation, we should be addressing both problems simultaneously. Needless to say, employers have responded to the needs of our education system with billions of dollars in investments to training and educational efforts. They are doing so, and will continue to do so, to improve the current education system as well as to cultivate the qualified workers they need.
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However, while companies continue to funnel money into education and training programs, the number of Americans graduating in the hard sciences continues to decrease. Data compiled by the National Center for Education Statistics (NCES) show that the number of degrees conferred in the computer sciences, mathematics and engineering or engineering related disciplines have decreased in the past couple of years. While the overall numbers have decreased, the number of foreign nationals in these disciplines is on the rise. According to recent NCES data published in November 1998, nonresident aliens made up 9.3% of Associate Degrees, 34.6% Bachelor Degrees and 44.0% of Masters degrees conferred in 1995–96(see footnote 16). Companies continue to recruit in American colleges and universities and are finding that many of the candidates are foreign born. The chart below illustrates the relatively high numbers of nonresident aliens in the areas of Computer and Information Services, Engineering and Mathematics, especially in the more advanced degrees.(see footnote 17)
With American colleges and universities graduating talented non-resident aliens in all disciplines, it seems counter productive for the United States not to allow U.S. companies to capitalize on this knowledge. The United States continues to fight to maintain its lead at all levels while at the same time making it possible for U.S. educated foreign talent to take vital knowledge back to their home country and our competitors.
In order to pull American students into the hard and applied sciences some believe that they need to begin focusing on math and science as early as the 6th grade. One of the problems we are seeing is that even with the money that companies are putting into education and training there is still a long lag time before such students will be employable. Moreover, the workforce will not grow quickly enough to meet the demands of the future and demand will continue to outpace supply. According to ''Workforce 2020,'' the workforce is likely to grow very slowly, noting that ''for the most part, 2020's workers have already been born; even substantial changes in birth rates will not now have much effect on the size of the workforce.'' Even if we are successful in enticing children into the math and science fields there are still two problems: 1) many of the best math and science teachers are being recruited into the private sector due to the workforce shortage; and 2) in a few years there will not be enough workers available to compensate for the students that are in pipeline.
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There seems to be a misconception that it is easy to train workers to fill job openings in the current shortage occupations. It is possible to quickly train individuals on the fundamentals, yet it takes years to train them on the more intricate subtleties of the discipline. A good example of this is that most people would not want their podiatrist performing open-heart surgery on them. While they are both doctors and have both graduated from medical school they are experts in completely different areas.
I would like to spend some time now outlining what the Chamber is doing in the work force development area and some of the specific problems facing our members.
One of the ways the U.S. Chamber has attempted to tackle this problem is through the establishment of its Center for Workforce Preparation. The Center's overall mission is to help ensure that U.S. workers are prepared with the knowledge, skills and attitudes to compete and succeed in the global economy of the 21st century.
One of the Center's efforts is being done through a Ford Foundation grant. The Center has provided seed money to four local chambers to strengthen their role in economic development. With a different group of five chambers the Center is participating in a national school-to-work partnership. These five chambers will receive technical assistance in order to learn how to accelerate their efforts to link schools and employers.
Further, the Center has developed, with the assistance of the Department of Labor, a school-to-work model that it hopes to field test in 25–30 chambers this fall. The Center is also working with the Virginia Commonwealth University in an effort to increase the employment of individuals with disabilities. And finally, the Center is looking to inform chambers about ways to have a greater voice in education reform and teacher quality at the local level.
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It is clear as we stand on the edge of a new millennium that in order to remain competitive we must focus on education while at the same time embracing the benefits of a more enlightened immigration system. In order to move forward we should have a more transparent, consistent and efficient immigration system that will enable the United States to take full advantage of the benefits of the global economy.
I hope that the information I have shared in this testimony helps underscore the importance of the H–1B program and the need for businesses to be able to obtain the workers that they need. The U.S. Chamber will continue to take an active role in addressing the importance of this program as well as the educational and training needs of the workforce and to work with state and local chambers, businesses and educational institutions to meet these needs.
Thank you for the privilege of participating in this afternoon's panel and I look forward to any questions you may have.
Mr. LAMAR SMITH. Thank you, Ms. Cleveland.
Mr. Kostek.
STATEMENT OF PAUL KOSTEK, PRESIDENT, INSTITUTE OF ELECTRICAL AND ELECTRONICS ENGINEERS
Mr. KOSTEK. Good afternoon, Mr. Chairman and members of the subcommittee.
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I am Paul Kostek, the president of the Institute of Electrical and Electronic Engineers-United States of America, or IEEE–USA.
IEEE–USA is a 225,000-member organization made up of electrical engineers, computer engineers, and electronics engineers who are part of a global organization called IEEE, which has over 350,000 members in 147 countries.
Mr. LAMAR SMITH. How many members do you have in the United States?
Mr. KOSTEK. Two hundred and twenty-five thousand.
In many cases, people who have come to the U.S. with IT (Information Technology) or electrical engineering backgrounds are members of our organization, which sometimes puts us in an odd situation, but more often than not these members are interested in long-term immigration. They want to live in the United States, and many are very concerned that the H–1B is a very temporary program and that they could be forced to return. So, even though it may seem we are diametrically opposed by having an international organization and a U.S.-based organization, we are actually working closely with all of our groups to ensure that those members who do want to move to the U.S. do get those opportunities.
My position in IEEE is actually a volunteer position. I work full-time as an electrical engineer and have for the past 20 years. I have worked for large companies and small companies. I presently work for a consulting firm in the Seattle area.
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I think the important things that we are seeing today that haven't been touched on are some of the changes that are taking place in technology. Many of the issues that other witnesses have raised are not new issues, and are not going to go away. This is not a problem but rather a challenge that will be ongoing. If we don't carefully deal with the H–1B visa issue, much to Mr. Pease's chagrin, we could be here every year for many years discussing where we are with the cap.
What we really need to start looking at is the whole question of utilization of human resources in the U.S. I want to respond to one of the comments that was made about current low rates of unemployment for engineers—electrical engineers and computer scientists. I very frequently meet people who are electrical engineers or computer scientists who have been ''downsized'' by their employers, and have left the profession. There are many people available to fill positions.
An example—we talked about the Y2K problem and the number of people brought in with the H–1B. There are an amazing number of people who were forced into early retirement in the early nineties who returned to the workforce to work on the Y2K issue. Many of these people want to stay in the workforce. The challenge will be updating the skills that these individuals have. We must retrain people! In many cases, it is not a question of someone going back for another degree or spending months at school. In many cases, it is very short-term reskilling of people we already have available in the workforce.
Another key element that we have seen on the H–1B issue is not that an H–1B holder has replaced an American or prevented an American from getting employment, but they have sometimes prevented an American from moving up in an organization or taking on new responsibilities.
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We have seen many organizations saying, ''We have very strict criteria when we hire people.'' This lack of flexibility regarding qualifications puts many engineers and computer scientists in a very difficult position. They have closely related experience and the educational background, but they may not have the specific skill that an organization needs. What is frequently said is that because citizens don't have a particular skill, employers have to go outside of the U.S. to find people, and in many cases, there are individuals in the U.S. who, with very short-term training can fill the positions that employers have.
Based on 20 years of experience working for high-tech companies is, especially in the software world, these are the fastest-learning people I have ever seen. They work and learn as a great team where people can apply the knowledge they have, share it with others, and utilize that knowledge to develop new products and services.
Engineers use the term ''life-long learning,'' to suggest that people need to constantly be updating their skills, and what we are almost seeing now is a mode of operation in which we are saying, ''That is very nice. You may have taken training courses on this application, but we won't hire you, because you have no experience yet.'' That has been a comment I have received from several individuals who have had that experience. This practice sends a message, number one, that people are not valued or rewarded for maintaining their skills. At the same time, it is also going to make it even harder to recruit young people to go into engineering if they see a trend where careers are getting shorter and shorter.
And for all of the great stories about stock options and instant wealth, such cases are few and far between. For every person who started with Microsoft and made a gazillion dollars, there are cases and examples of people who started with other firms, and they have stock options that they can wallpaper their den with; they have no value. So, there are some real challenges there.
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I want to wrap up by stressing that the whole issue before us is the changes in technology; that we aren't going to solve this challenge today or tomorrow. We are going to have to constantly be updating people's skills, and the concept that we just bring people in every year to supplement that isn't really the solution. And, unfortunately, not being always an optimist, the question always becomes: What happens when things turn sour? What happens when there is a bust in the economy? What happens to the holders of H–1Bs when they are laid-off or their company fails? Where do these individuals go?
I think what we are really calling for is in design engineering, we don't start a design until we know what the requirements are, and we are talking about raising a cap right now, but we have no data. We have no data as to how many people are actually coming in. We have no data from the NRC as to what the supply and demand really is in the U.S. right now, what the utilization really is. And we don't have really the rules and regulations written from the Department of Labor. And until we have those, to talk about raising the cap without any of that information, puts us in a situation of being here a year from now and discussing again how high we should raise the cap to resolve the issue.
Thank you.
[The prepared statement of Mr. Kostek follows:]
PREPARED STATEMENT OF PAUL KOSTEK, PRESIDENT, INSTITUTE OF ELECTRICAL AND ELECTRONICS ENGINEERS
INTRODUCTORY REMARKS
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Good Afternoon, Mr. Chairman and Members of the Subcommittee. I am Paul Kostek, the 1999 President of the Institute of Electrical and Electronics Engineers—United States of America (IEEE–USA).
I am employed as a systems engineer for TekSci, a systems engineering and software development company headquartered in Seattle, Washington. I help companies in the aerospace and medical devices industries to develop hardware and software systems design requirements, test specifications and software standards. Since graduating from the University of Massachusetts with a Bachelor's degree in Electrical Engineering, I have also worked for Scitor Corporation (another Seattle-based systems engineering firm), Sundstrand Data Control, Boeing and the Grumman Aerospace Corporation.
I want to thank the Chairman and other members of the Judiciary Committee for holding these oversight hearings on the H–1B program. IEEE–USA also appreciates your determined efforts in the 105th Congress to fashion common sense legislation that would have authorized modest increases in H–1B admissions ceilings coupled with important safeguards for all U.S. workers, had it not been disregarded by the Congressional leadership this time last year.
1. IEEE–USA's Interest in the H–1B Specialty Occupation Visa Program
The Institute of Electrical and Electronics Engineers (IEEE) is a transnational technical professional society made up of more than 350,000 electrical, electronics and computer engineers in 147 countries. IEEE–USA promotes the professional careers and technology policy interests of IEEE's 225,000 U.S. members.
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The U.S. members of IEEE are individual professionals who, by virtue of their education, experience and employment, are vitally concerned about public policies and programs that affect opportunities to apply their specialized knowledge and skills to the solution of complex technological problems in an increasingly competitive global economy. IEEE–USA's perspectives on high tech workforce issues and continuing industry demands that Congress relax existing controls on employment-based admissions, both permanent and temporary, are the result of our members' personal experience with booms and busts in domestic engineering labor markets over the past 25 years.
2. Current Labor Markets for Engineers and Computer Specialists
The answer to the often-debated question of whether or not there is a shortage of core information technology workers (computer engineers and scientists, systems analysts and programmers) depends, in large part, on who you talk to.
Many employers in the public and private sectors—in academia and in industry—contend that the nation faces an endemic IT worker shortage of crisis proportions. They point to declining enrollments and degree trends in engineering and computer science in the early 1990's and the failure of our elementary and secondary schools to prepare more students for high tech careers to support their contention that the supply of workers is and will continue to be insufficient to meet increasing world wide demands for trained technical professionals.
Most IT workers, and their professional societies—while acknowledging increasing demand and tight labor markets for workers with very highly specialized knowledge and skills—argue that the existing supply of technically trained personnel is much broader and deeper than is generally assumed.
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Economists argue that tight labor markets and spot shortages of workers with very specific knowledge, skills and experience are inevitable short-term results of the information technology revolution that is sweeping the country and the world. Over the longer run, they insist that market forces will work to correct these imbalances.
Research by Carolyn Veneri, an economist at the Bureau of Labor Statistics, suggests that, although no single measure of occupational labor shortages exists, available data on unemployment rates, occupational employment growth and wage increases can be used to assess the existence of or the potential for shortages.
Writing in the March 1999 issue of the Monthly Labor Review, Ms.Veneri hypothesized that if shortages in an occupation were to develop during the current expansion, the occupation's employment growth would be strong; the occupation's wages would increase relative to other occupations, indicating determined efforts by employers to attract more workers; and the unemployment rate for that occupation would decline and remain relatively low.
For the purposes of this research, 68 occupations were evaluated to determine whether, for the 1992–1997 period, the occupation's employment growth rate was at least 50 percent faster than average employment growth; the wage increase was at least 30 percent faster than the average; and the occupation's unemployment rate was at least 30 percent below average.
Despite the remarkable increase in economic growth between 1992 and 1997, (much of which is attributable to advances in information technology) only seven of the 68 occupations met all three of these criteria: management analysts; special education teachers; dental hygienists; marketing, advertising and public relations managers; airplane pilots and navigators; purchasing agents; and mechanical engineers.
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Although unemployment rates for core IT occupations, including computer engineers and scientists, systems analysts and programmers, have been consistently lower than the national rates (for other occupations) over the 1992–1997 period, none exhibited higher than average employment growth or higher than average growth in wages when compared with all other professional specialty occupations.
IEEE–USA doesn't think this kind of evidence supports industry pleadings for another increase in H–1B admissions ceilings!
3. Responsiveness of Information Technology Labor Markets
None of this is to suggest that demand for core IT workers has not increased significantly in recent years and won't continue to grow in the years immediately ahead. But national labor markets are already responding to increasing demands.
After several years of declines, educational enrollments are increasing in IT related disciplines. Bachelor's level enrollments in computer engineering and computer science, for example, have more than doubled in the past three years.
Universities and community colleges are responding to employers' needs with specialized IT training programs and proprietary school and company-sponsored IT certification programs are growing in number and popularity.
Many employers are increasing on-the-job training and more IT professionals are taking steps to update their technical, managerial and communications knowledge and skills.
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Congressional proposals to extend the expiring income tax exclusion for employer-provided educational assistance and establish an information technology training tax credit will provide additional public support for these important educational activities.
Stakeholders from the public and private sectors are working together to organize innovative, industry-education-community partnerships and skills alliances to expand IT training opportunities for U.S. workers at the state, regional and local levels.
IEEE–USA believes that this robust labor market response mitigates the need for yet another increase in H–1 B admissions ceilings!
But what about the fact that the new 115,000 annual ceiling was reached in June of this year?
Nearly 20,000 of this year's visas are rollovers from 1998—visas issued to prior year petitioners whose employment was authorized to begin on October 1, 1998. Much of this year's early over-subscription is attributable to widespread publicity about the availability of the new, higher quota in this country and overseas. And recent evidence suggests that some of this year's allotment of visas may have been awarded on the basis of fraudulent applications
Based on all of this information, it's difficult to conclude that early over-subscription is due entirely to a substantial increase in demand for IT workers in 1999.
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4. Status of Mid-Career and Older Workers
In the midst of tight labor markets, many mid-career and older workers continue to be ''downsized.'' Others report increasing difficulty securing and maintaining employment in IT fields. A 1998 survey of IEEE's U.S. members, for example, revealed that it takes out-of-work engineers three more weeks to find new jobs for every additional year of age.
Unfortunately, there is a widespread perception in the new information economy, that the knowledge, skills and judgement that come with experience count for less and less and that mid-career and older workers lack the flexibility and adaptability as well as the willingness and ability to maintain their employability in such a fast-changing, technology-driven global economy.
IEEE–USA disagrees with and is committed to disproving this erroneous perception!
5. Opportunities for Under-Represented Groups
Despite modest gains since the late 1980's, women, certain ethnic minorities, the handicapped and economically disadvantaged Americans are seriously underrepresented in many scientific and engineering fields. And although the proportion of women, Blacks, Hispanics and Native Americans in high school graduating classes is increasing, such individuals continue to be much less likely than white males to pursue careers in these fields.
Among the impediments to greater participation by underrepresented groups include inadequate educational preparation in math and science at the elementary and secondary educational levels, low expectations and non-supportive attitudes on the part of many educators and a lack of opportunities for mentoring relationships in traditionally white male dominated professions and occupations.
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Increasing utilization of talented foreign nationals—to help fill classes and perform teaching and research functions at the nation's colleges and universities, as well as to work in industry—also limits opportunities for traditionally under-represented citizens to obtain the knowledge and skills needed for productive employment and advancement in the nation's high tech sector.
Another reason not to support another increase in H–1B admissions ceilings at this time!
6. The H–1B Program Should be Repaired Rather Than Expanded
Based on findings presented in a 1996 Inspector General's report and at recent hearings before this committee, IEEE–USA strongly recommends that Congress take steps to repair the badly-flawed H–1B and other employment-based admissions programs before it even thinks about another increase in visa caps.
In 1996, the Inspector General at the Department of Labor audited the Department's role in the administration of two important employment-based admissions programs: the permanent labor certification (PLC) and the temporary, H–1B labor condition attestation (LCA) programs.
He found that ''while the Employment and Training Administration is doing all it can within its authority, the PLC and the LCA programs do not protect U.S. workers' jobs or wages and that neither meets its legislative intent. DoL's role amounts to little more than a paper shuffle for the PLC program and a rubber stamping for LCA applications.''
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The IG concluded that annual expenditures in excess of $50 million for DoL's employment-based admissions programs do little to add value to a system that Congress established to protect American jobs and wages. He recommended the Secretary work with Congress to correct deficiencies in both programs.
To date, Congress has done little to remedy problems identified in the 1996 report.
Earlier this year, the House Judiciary Subcommittee on Immigration and Claims held hearings at which witnesses from the Immigration and Naturalization Service and the Department of State introduced evidence of pervasive fraud by petitioning employers and individual applicants in the H–1B and the L (Intra-Company Transfer) visa programs.
As Subcommittee Chairman Smith put it just last week, ''When 45 percent of H–1B visa applications examined at one consulate in India could not be verified and 21 percent were fraudulent, we have a serious problem in the H–1B program.''
CONCLUSIONS AND RECOMMENDATIONS
IEEE–USA believes that it is premature to consider increasing current limits on temporary, employment-based admissions under the H–1B (Specialty Occupations) visa program until the National Research Council completes and Congress has an opportunity to assess the results of the studies it mandated in the Omnibus Appropriations Act of 1998 (Public Law 105–277, Sec. 417–418).
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These studies are to include analyses of current and projected labor market needs for workers with high technology skills and an assessment of the status of older workers in the information technology field.
In the absence of reliable statistics to support industry's contention that there is a serious national shortage of core information technology workers, including computer engineers and scientists, systems analysts and programmers, there is insufficient empirical evidence to justify another increase in H–1B admissions ceilings at this time.
Our concerns are compounded by very credible evidence suggesting that the H–1B visa program and other employment-based admissions programs do not include appropriate, effective, enforceable safeguards for employment opportunities, wages and working conditions for U.S. workers, including citizens, permanent residents and foreign nationals who have been legally admitted to work temporarily in the United States. Until such time as these deficiencies have been corrected, there should be no further increase in employment-based admissions.
For its part, IEEE–USA will welcome an opportunity to work with other concerned employer associations, labor organizations and professional societies as well as with Congress and the Administration to promote needed improvements in laws and regulations governing the employment-based admission of foreign nationals to the United States. At the same time, we believe that such admissions continue be viewed as a supplement to—not as a substitute for—continuing public and private efforts to improve the nation's technological capabilities through more effective education, training and life-long learning programs and through better management and utilization of American workers, including engineers and computer scientists.
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Attachments
IEEE–USA Perspectives on H–1B Visa Legislation Enacted in 1998
IEEE–USA Employment-Based Admissions Reform Recommendations
Biographical Sketch for Paul Kostek
IEEE–USA PERSPECTIVES
THE AMERICAN COMPETITIVENESS AND WORKFORCE IMPROVEMENT ACT
PUBLIC LAW 105–277
On October 21, 1998 President Clinton signed the American Competitiveness and Workforce Improvement Act (ACWIA) into law (Public Law 105–277). ACWIA was passed in response to persistent claims from high tech businesses and educational institutions that the nation faces serious shortages of information technology workers, including engineers and computer specialists.
The new law makes important changes in laws and regulations governing the admission of foreign nationals to work temporarily in the United States. It provides for:
Temporary increases in H–1B admissions ceilings from 65,000 per year to 115,000 in FY 1999; 115,000 in FY 2000; and 107,500 in FY 2001. The ceiling drops back to 65,000 in FY 2002.
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A $500 application filing fee for businesses (educational institutions and non-profit organizations are exempted) to fund scholarships in math, engineering, and computer science; retraining for displaced workers; and improved program administration and enforcement.
An increase in monetary and civil penalties that can be imposed on employers of H–1B workers that file fraudulent H–1B visa applications or violate other provisions of the new law.
IEEE–USA and other professional societies and labor organizations actively supported the enactment of additional worker safeguard provisions including:
New domestic recruitment and retention (no-layoff) provisions intended to ensure that employers who wish to hire H–1B workers have tried and failed to recruit similarly skilled U.S. workers and have not laid off or displaced such workers before hiring H–1B workers. These safeguards were enacted but, unfortunately, only apply to a handful of so-called ''H–1B Dependent'' employers.
IEEE–USA also supported inclusion of the following provisions in last year's H–1B visa legislation:
No-Benching and Same-Benefits Requirements
Unconscionable Contract Provisions
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Whistleblower Protection Provisions
Enhanced Investigative Authority
Dispute Resolution Procedures
Statistical Reporting Requirements
Age Discrimination Study Provisions
IT Worker Needs Survey
IEEE–USA opposed enactment of the new law based on our belief that industry claims of widespread shortages of IT workers were seriously overstated and our conviction that the new worker safeguard provisions should apply to all employers who intend to hire H–1B workers.
It is IEEE–USA's position that ''the nation's interest in helping U.S. employers succeed in an increasingly competitive global economy must be balanced by an equally compelling national interest in safeguarding job opportunities for U.S. workers, including citizens, permanent residents and foreign nationals who have been legally admitted to work temporarily in the United States.''
IEEE–USA will continue to support balanced efforts to improve the nation's immigration laws and promote better utilization of the nation's engineering resources.
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IEEE–USA
EMPLOYMENT–BASED ADMISSIONS REFORM RECOMMENDATIONS
APRIL 1999
1. Expedite Admissions Processing—Substitute modified labor condition attestations for individual labor certifications for all employment-based admissions.
2. Strengthen Essential Worker Safeguards—Require all petitioning employers, including secondary employers, to make domestic recruitment, prevailing compensation and retention (no-layoff) attestations.
3. Improve Worker Notification Procedures—Require petitioning employers to post copies of their applications in easily accessible locations on company web sites as well as at the work-sites where foreign workers will be employed.
4. Centralize Administration and Enforcement—Assign major program administration and enforcement functions to a single Federal agency.
5. Permit Investigations Without a Complaint—Authorize routine audits and investigations (subject to due process protections) to ensure that petitioning employers comply with their attestations.
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6. Increase Penalties for Non-Compliance—Levy heavy civil and monetary penalties on employers for non-compliance and ban those found to have committed serious violations.
7. Assess User Fees—Impose application fees on all petitioning employers to help pay for improved program administration and enforcement.
PAUL J. KOSTEK
1999 PRESIDENT, IEEE-UNITED STATES OF AMERICA (IEEE–USA)
Professional Experience:
Presently a systems engineer associated with TekSci a systems engineering and software development firm. With TekSci, Paul works with companies in the aerospace and medical device industries. He provides support in defining system requirements, system design, test definition, and the generation of software development standards. This includes the implementation and interpretation of DO–178B. Besides TekSci, Paul has been with Scitor Corporation, Sundstrand Data Control, the Boeing Company, and the Grumman Aerospace Corporation. Paul is an FAA Designated Engineering Representative (DER)-in-Training for Systems and Equipment. Paul is also a member of the Seattle Section Consultants Network.
Educational Background:
B.S. from the University of Massachusetts—Dartmouth in 1979
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Graduate work at Polytechnic Institute of New York and Long Island University, 1980
Certificate in Project Management—University of Washington, 1995
IEEE Activities:
Senior Member of IEEE
IEEE–USA President (1999)
President-Elect, IEEE Aerospace & Electronic Systems Society (1999)
Chair of Career Policy Council—USAB (1997)
Chair, IEEE–USA Workforce Committee (1990–1992)
Chair, IEEE–USA Career Maintenance & Development Committee (1993–1995)
Chair, Seattle Section (1990–1991)
Other Professional Activities:
Member, American Institute of Aeronautics and Astronautics (AIAA)
Member, International Council on Systems Engineering (INCOSE)
Puget Sound Career Development Association (PSCDA)
Member, Board of Trustees Municipal League of King County
Member, Board of Directors of the Washington Aerospace Alliance
Mr. LAMAR SMITH. Thank you, Mr. Kostek.
I have two or three questions that I would like to ask every witness.
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The first is this: There was a Harris Poll in September 1998, and it asked two questions. Let me read the questions and the responses—this was a national sample—and ask you what you make of this poll.
Question: Do you favor or oppose Congress' allowing U.S. companies to sponsor 190,000 additional foreign technical workers as temporary employees for up to 6 years? That is the more or less the H–1B Program.
Response: In favor, 16 percent; opposed, 82 percent.
The second question was: Do you agree or disagree that allowing companies to hire additional temporary foreign professionals reduces employment opportunities for U.S. technical workers.
Strongly or mostly agree, 86 percent; mostly or strongly disagree, 13 percent.
Mr. Miano, I will just work down and ask you to respond to those questions and answers from that Harris Poll.
Mr. MIANO. Well, I think that that is pretty much the feeling of the population as a whole, and certainly in the engineering fields. I mean, there is great anger toward this. For people in the programming profession, Congress' treatment of the H–1B Program has been like sticking a knife through our hearts. So, I don't think that that is a surprise.
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Mr. LAMAR SMITH. Okay. Let me—thank you, Mr. Miano. We have a vote that has just been called, so if you all can me brief answers, I am going to try to yield a couple of minutes to Mr. Pease before we have to go vote.
Ms. Cleveland.
Ms. CLEVELAND. I think if you ask that question again, explaining—given them information on how this has also helped and create new jobs in Silicon Valley and in other industries, I think that the answer might be a little different. I think if they realize that these people also create jobs and make things—create businesses that employ U.S. workers, they might have a different take.
Mr. LAMAR SMITH. Okay, thank you.
Mr. Kostek?
Mr. KOSTEK. I think that just reflects the natural insecurity that we have seen in the nineties where jobs tend to come and go away. People have a concern that their employer may—instead of moving the facility out of the country decide to bring people into the country. I think this is what that reflects.
Mr. LAMAR SMITH. Mr. Foster?
Mr. FOSTER. Yes. I think those kinds of questions also reflect something else. As long as you put it that way, the foreign national is an unknown quantity. If you can personalize it and you say, ''What do you think about hiring a bilingual teacher in your own school or Eckhard Pfeiffer, the former CEO of Compaq Computer?'' Then people say, ''Yes, those are the greatest people.''
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So, I have always found that if you ask, ''What do you think about aliens, broadly,'' the question is always negative. But then they will turn right around and will have a very positive view of those in the workforce.
Mr. LAMAR SMITH. Okay.
Mr. Smith, did you happen to hear my question?
Mr. DAVID SMITH. Sorry, Mr. Chairman.
Mr. LAMAR SMITH. Welcome back from your testimony over at the Ways and Means.
I basically read a poll—Harris Poll from 1998 in which, if I can summarize it, 82 percent of the national sample said that they opposed Congress' allowing U.S. companies to sponsor 190,000 additional foreign technical workers as temporary employees for up to 6 years.
The other question said, basically, that 86 percent of the American people disagreed that allowing companies to hire additional temporary foreign professionals reduces employment opportunities for U.S. technical workers. Actually, I framed that wrong—86 percent did agree that hiring additional temporary foreign professionals reduced employment opportunities for U.S. technical workers.
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Be brief, if you will, because I want Mr. Pease to——
Mr. DAVID SMITH. I will try to be very brief.
We need to be very careful here, it seems to me, not to let this become an issue of whether or not immigration is good for the United States. There is no question that it is. The question is whether or not we ought to use a temporary program. This isn't creating citizens; this isn't creating people who are going to raise their children here; this isn't creating people who are going to live their lives here. This is a temporary program which eliminates the need for all of us to do the kind of investing in the skills of the workforce who is going to be here 20 years from now. That is what we need to do.
So, I think it is important, Mr. Chairman, not to confuse the issue of whether or not a temporary program that has the effect of distorting the domestic labor market and reducing our investment in our future is a good idea. We don't think it is.
Mr. LAMAR SMITH. Okay. Thank you, Mr. Smith.
The gentleman from Indiana, Mr. Pease.
Mr. PEASE. Thank you, Mr. Chairman.
Mr. Miano, you said that it was your understanding that those here on H–1B visas have salaries that are lower than their American counterparts in the same positions. Is that anecdotal? Have there been studies on this?
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Mr. MIANO. I got that from testimony before this body. There were two places. John Fraser, Deputy Wage and Hour Administrator, U.S. Department of Labor.
Mr. PEASE. From our hearing a year ago?
Mr. MIANO. Yes.
Mr. PEASE. Okay. If you could give us the specific cite to that record, that would be helpful to me. You don't need to do it right this minute——
Mr. MIANO. Okay.
Mr. PEASE [continuing]. Just so that we have it.
Ms. Cleveland, has the Chamber or any of your members, that you know of, had any direct experience with the Department of Labor's promulgation—well, failure to promulgate regulations based on the legislation we adopted a year ago, and, if so, could you share that with us?
I guess, Mr. Smith, if you have some thoughts on that, I would appreciate it, too.
Ms. CLEVELAND. Sure. The chamber filed joint comments with ACIP and NAM on the proposed rule for the H–1B regs, and we have been talking with the Department of Labor and Department of Commerce on those and the problems that we have with them, the burdens added for companies to—the burdens and also just—I think they took the context of the ACWIA and took out of it more than I think Congress intended. So, we have been working with them to try and get something that the companies can live with.
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Mr. PEASE. Do you have a feel whether this is longer than normal in the promulgation of regulations? About normal? I mean, this is a program that is going to expire, supposedly, in 5 years, and we have now spent a year and still don't have regulations.
Ms. CLEVELAND. There are some bills that it takes years. I think that because there was a large number of people that commented on this and that it was in question and answer format and there was a lot of emphasis that was put on the debate last year, I think they are being very careful in what they do.
Mr. PEASE. Okay. Thank you.
Mr. Smith?
Mr. DAVID SMITH. Very briefly, Mr. Pease, we are frustrated that the regulations don't exist. On the other hand, we have had extensive conversations and communication with the Department of the sense that they are taking us and others seriously in the process of promulgating those regs.
Mr. PEASE. Do either of you have a feeling—and I know this should be directed to the Department—when we might see the rules put in place?
Ms. CLEVELAND. We have heard the same thing; that they are stuck at OMB.
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Mr. PEASE. Okay. Thank you, and thank you, Mr. Chairman.
Mr. LAMAR SMITH. Thank you, Mr. Pease.
You asked the question that I was going to ask next, so you saved me some time. Thank you for that.
One last quick question before we have to go vote, and that goes back to the matter of the tens of thousands of people who have been laid off. Not everybody who had been laid off is an information technology worker; that is a subset of that overall universe, and I don't know what percentage of the whole that is.
Let me ask you all if you think those individuals are being hired by other high-tech companies? If not, why not? And if so, what is the basis for thinking they are being hired?
Mr. Miano.
Mr. MIANO. I have been laid off, and I have described the experience briefly in my written statement and would just like to say that once you are laid off, companies look at you a lot differently. Lay-off implies that you can be hired back, but that is not what is happening.
Mr. LAMAR SMITH. There is a stigma attached even if it is not your fault.
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Mr. MIANO. Yes. It is very difficult; it is very tough.
Mr. LAMAR SMITH. Ms. Cleveland.
Ms. CLEVELAND. Well, I think we can see with the unemployment the way it is overall and then unemployment from the BLS statistics that these people that are getting laid off are getting absorbed within—maybe not the high-tech as in a software company—but other industries that use high-tech professionals, and I think they are being absorbed rather rapidly.
Mr. LAMAR SMITH. So, you think they are being hired.
Ms. CLEVELAND. Yes.
Mr. LAMAR SMITH. Okay.
Mr. Kostek.
Mr. KOSTEK. Well, as I mentioned in my statement, some are being hired, but many others are moving on into other areas, not necessarily in high-tech but moving into different fields.
Mr. LAMAR SMITH. Why aren't they being hired?
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Mr. KOSTEK. I think what many are running into is a question of skills. Employers are saying they have to move quickly and need people with specific experience in particular areas. Someone who spent 10 or 15 years with a company that may not yet have adopted that new technology, may be behind the power curve in terms of having the necessary experience with a particular programming language.
Mr. LAMAR SMITH. Even though they just came from a high-tech company.
Mr. KOSTEK. There are, in many cases, companies that are just saying, ''This is our exact need, and if you don't match it, we are not particularly interested in hiring or retaining you.''
Mr. LAMAR SMITH. Okay. Thank you, Mr. Kostek.
Mr. Foster?
Mr. FOSTER. One point I would like to make is in terms of when we do have lay-offs like that, I remember representing a very large construction company in Houston; that, often, the very first people that are laid-off are going to be your H–1B workers. So, there is an implication that those are all U.S. workers being laid off, and somehow that H–1B workers are maintained. Representing a company called MW Kellogg, when they had a significant lay-off, we had 400 H–1B workers that were working for them 1 day, and the next day, all 400 had been laid off. So, they are also losing their jobs in the same context.
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I often know that a lot of companies that we represent, when we talk to them about the lay-offs, they say, ''Well, it is not quite like it is portrayed in the press; that they are given early retirement; that they are given opportunities to move to other locations,'' and so the net impact often of the actual lay-offs, even of U.S. workers, is less than what the number is portrayed in the press.
Mr. LAMAR SMITH. Thank you, Mr. Foster.
Mr. Smith?
I don't want to miss this vote, so you will have to be brief.
Mr. DAVID SMITH. Too often, too many of us think about lay-offs as being painless, because they happen to somebody else. Mr. Chairman, the unemployment rate among IT professionals who are more than 40 years old is 5 times the rate of IT professionals who are less than 40. That suggests perhaps the skill issues that Mr. Kostek talked about, but I suspect a preference for cheaper, more malleable, and more disposable H–1B workers.
Mr. LAMAR SMITH. Okay.
Thank you all. Mr. Smith, thank you for that last answer. I appreciate your presence, appreciate your testimony, and the subcommittee stands adjourned.
[Whereupon, at 3:55 p.m., the subcommittee was adjourned.]
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A P P E N D I X
Material Submitted for the Hearing Record
PREPARED STATEMENT OF HON. DAVID DREIER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Chairman and Members of the Committee:
I come before you today to express my concern over the workforce skills shortages faced by the technology industry and in support of changes in immigration policy as one way to address this issue. I commend Chairman Smith for recognizing the important role technology companies play in our nation's economy, and holding this hearing to investigate the workforce shortage affecting this industry.
There is no doubt that our society has undergone a transformation from a time-consuming, paper-based economy to an efficient, fast-paced, digital economy. The size of the semiconductor industry, which produces the building blocks for information technology, has been doubling every eighteen months for the past thirty years. As a result, information technology has permeated every aspect of our society. The life of every American has been affected by this transformation; whether from enhanced telephone and banking services or from the way they shop for clothes. Everyday America is becoming more and more digitized.
In this new ''Information Age'' the demand for digital technologies and highly skilled workers to deliver these technologies has exploded. Excluding the biotechnology industry, the high-tech explosion experienced in the United States has created over 4.8 million jobs since 1993 and produced an industry unemployment rate of 1.4 percent. In California alone, this growth in technology has made the state number one in high-tech employment by creating 784,151 jobs and making up 61 percent of California's exports. As a result, our nation's economy has surged and the American people are enjoying the highest standard of living in history.
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Currently, the Bureau of Labor Statistics estimates that between 1994 and 2005, more than a million new computer scientists and engineers, systems analysts, and computer programmers will be required in the United States. That is an average of 95,000 jobs per year. While our economy is strong, we must recognize that if cutting edge technology companies do not have access to growing numbers of highly skilled personnel, it will threaten our nation's ability to maintain robust economic growth and expanding opportunities. Already this shortage of skilled workers is threatening to undermine our prosperity by forcing companies to cancel job-creating projects. That is why I introduced the New Workers for Economic Growth Act of 1999 as the House companion for S. 1440, introduced by Senator Phil Gramm. This legislation increases the level of temporary nonimmigrant H–1B visas available for highly-skilled scientists and engineers to 200,000 for the years 2000–2002.
As you know, Congress attempted to address this shortage in last year's American Competitiveness and Workforce Improvement Act (passed as part of the fiscal year 1999 Omnibus Appropriations bill) which increased the annual H–1B visa allotment from 65,000 to 115,000 for 1999–2000, 107,500 for 2001, and returning to 65,000 in 2002. While this was a great step in addressing the issue, this increase has already proved to be insufficient. Although the caps were raised this year to 115,000 there was a backlog of 19,431 visas which actually reduced the number of available visas for 1999. This year's cap was reached in June leaving 42,000 visas outstanding. Additionally, not all of the H–1Bs available are given to high-tech workers, as H–1Bs cover a variety of occupations.
The shortage of skilled workers is not being felt by the United States alone, it is a worldwide problem. Not only will United States companies face competition globally for sale of their products but also in the labor force to produce these products. Thus, the United States cannot depend on increased immigration to meet its long-term needs, we must focus on retaining and updating the skills of today's high-tech workers while educating and training new workers. It is clear that education reform along with worker training are essential to ensure that American citizens are able to take advantage of these positions.
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A strong math and science program within our education system would greatly reduce the workforce shortage pressure. Current programs are not meeting this demand as illustrated by the fact that in 1994, only 24,553 U.S. students earned bachelor's degrees in computer and information science. This is unacceptable, especially when half of the students graduating from American universities with doctorates in science, math and computer programming are foreign-born students. The lack of investment in educating Americans in these critical subject areas is a serious long-term problem that must be addressed. In the meantime, we must at least capitalize on the education being provided to foreign nationals here in the United States by enabling U.S. companies to hire these graduates. It simply makes no sense to educate these workers in the U.S. and then send them to work for our global competitors. As Congress works to address the education aspect of the workforce shortage, I believe that in the short-term a temporary increase in H1B admissions is warranted
In the spirit of responsible government, one would assume that acquiring the statistics on who is receiving H–1B and for what purpose would lend itself to an easy decision as to whether or not an adjustment to the caps is needed. Unfortunately, the inefficiency of our Immigration and Naturalization Service (INS) has once again been proven by its inability to provide such data. While the INS is required to begin collecting this data by October 2000 I am not confident the INS will sufficiently meet this requirement and provide accurate information. That is why I am preparing to request that the Government Accounting Office (GAO) conduct a study on who uses H–1B visas, for what occupations, and where the visas have gone. It is my hope that GAO will be able to provide Congress with the necessary information to better determine the direction of our workforce immigration policies.
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In the meantime, we are heading into the new millennium as the global leader of the digital information revolution. Skilled professionals are needed to continue our leadership and the development of new products in this ever-changing, competitive environment. Without these professionals, the prosperity we are enjoying today will be threatened by delayed projects that is sure to stifle industry and global economic growth. I commend Chairman Smith for exploring the current situation and look forward to working with the Committee so that a workforce shortage does not threaten our vibrant economy.
(Footnote 1 return)
Pursuant to House Rule XI, clause 2(g)(4), the NAM hereby discloses that it has not ever received any federal grant contract or subcontract.
(Footnote 2 return)
A bodyshop is a company that supplies workers to another company.
(Footnote 3 return)
''ComputerWorld'', ''InformationWeek'' and ''PCWeek'' Salary Surveys
(Footnote 4 return)
John Fraser, Deputy Wage and Hours Administrator, U.S. Department of Labor
(Footnote 5 return)
''A High-Tech Battle over Immigrants'' by Marcus Stern, Copley News Service, June 8th, 1998
(Footnote 6 return)
Hands On Technology Transfer 5-day C++ Training Course
(Footnote 7 return)
20% rate from various recruiting agencies
(Footnote 8 return)
See Attached Legal Fee Schedules from Various Law Firms
(Footnote 9 return)
''The Digital Workforce'', P. 18
(Footnote 10 return)
''No Wandering Eyes'' by Alice Leesch Kelly, ''Computerworld'', June 28th, 1999
(Footnote 11 return)
See the article ''Crazy Correlations'', by Kathleen Melymuka in ''Computerworld'', July 20th, 1998
(Footnote 12 return)
Silvestri, ''Monthly Labor Review,'' Nov. 1997, page 62.
(Footnote 13 return)
''Cyberstates v3.0,'' (American Electronics Association, 1999)
(Footnote 14 return)
Laura D'Andrea Tyson, ''Open the Gates Wide to High Skill Immigrants,'' Business Week, (July 5, 1999), p. 16.
(Footnote 15 return)
Saxenian, Regional Advantage: Culture and Competition in Silicon Valley and Route 128 (Cambridge: Harvard University Press, 1994).
(Footnote 16 return)
''Degrees & Other Awards Conferred by Degree-Granting Institutions:1995–96,'' (National Center for Education Statistics, November 1998), p. vi.
(Footnote 17 return)
''Degrees & Other Awards Conferred by Degree-Granting Institutions:1995–96,'' (National Center for Education Statistics, November 1998).