SPEAKERS CONTENTS INSERTS
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66–211
2000
STATUS OF REGULATIONS IMPLEMENTING THE AMERICAN COMPETITIVENESS AND WORKFORCE IMPROVEMENT ACT OF 1998
HEARING
BEFORE THE
SUBCOMMITTEE ON
IMMIGRATION AND CLAIMS
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
MAY 25, 2000
Serial No. 113
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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
LORA RIES, Counsel
CINDY BLACKSTON, Professional Staff
LEON BUCK, Minority Counsel
C O N T E N T S
HEARING DATE
May 25, 2000
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OPENING STATEMENT
Smith, Hon. Lamar S., a Representative in Congress From the State of Texas, and chairman, Subcommittee on Immigration and Claims
WITNESSES
Brehm, Frank, Programmer's Guild
Fraser, John, Deputy Administrator, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor
Spotila, John T., Administrator, Office of Information Policy and Regulatory Affairs, U.S. Office of Management and Budget
Templeton, John, co-convenor, Coalition for Fair Employment in Silicon Valley
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Brehm, Frank, Programmer's Guild: Prepared statement
Fraser, John, Deputy Administrator, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor: Prepared statement
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Jackson Lee, Hon. Sheila, a Representative in Congress From the State of Texas: Prepared statement
Smith, Hon. Lamar, a Representative in Congress From the State of Texas: Prepared statement
Spotila, John T., Administrator, Office of Information Policy and Regulatory Affairs, U.S. Office of Management and Budget: Prepared statement
Templeton, John, co-convenor, Coalition for Fair Employment in Silicon Valley: Prepared statement
APPENDIX
Material submitted for the record
STATUS OF REGULATIONS IMPLEMENTING THE AMERICAN COMPETITIVENESS AND WORKFORCE IMPROVEMENT ACT OF 1998
THRUSDAY, MAY 25, 2000
House of Representatives,
Subcommittee on Immigration and Claims,
Committee on the Judiciary,
Washington, DC.
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The subcommittee met, pursuant to call, at 9:30 a.m., in Room 2226, Rayburn House Office Building, Hon. Lamar Smith [chairman of the subcommittee] presiding.
Present: Representatives Lamar Smith, Edward A. Pease and Sheila Jackson Lee.
Also present: Representative John Conyers Jr.
Staff present: George Fishman, chief counsel; Kelly Dixon, clerk; Leon Buck, minority counsel; and Nolan Rappaport, minority counsel.
OPENING STATEMENT OF CHAIRMAN SMITH
Mr. SMITH. The Subcommittee on Immigration and Claims will come to order.
First I want to say that the Ranking Member Ms. Jackson Lee of Texas is at the White House for a bill signing ceremony and will be here in a few minutes. She has encouraged us to start.
I am pleased that Ed Pease, the gentleman from Indiana, is here today. He is the most conscientious member of this subcommittee and has attended more hearings and more markups than any other member.
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This hearing, before I make my opening statement, is, to me, an especially important one. We are talking about the jobs of American workers, we are talking about their wages, and I don't think anything can be more important to those of us in this room or other Members of Congress.
I am going to recognize myself for an opening statement, and then we will get on with the work at hand.
The American Competitiveness and Workforce Improvement Act of 1998 increased the annual quota of H–1B temporary visas for foreign professional workers while it also protected American workers from those employers who abuse the program to the detriment of American workers. The act represented a negotiated compromise that balanced these two interests.
The act placed new requirements on job shops, employers who bring in large numbers of aliens under the H–1B program and contract them out to other employers, often at substandard wages. Some job shops actually use the program to replace American workers with foreign workers.
The act responded to these practices by prohibiting job shops or the employers to whom they contract H–1B aliens from laying off American workers and replacing them with foreign workers. And the act required job shops to take steps to recruit American workers before hiring from other countries.
Eighteen months have passed since the 1998 act was signed by President Clinton, yet job shops can continue to bring in foreign workers to replace laid-off American workers and can continue to ignore American job applicants. Why? Because the administration has never issued regulations implementing crucial protections for American workers. The Labor Department issued proposed regulations in January of 1999, but the White House has yet to approve the final regulations.
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This nonaction by the Clinton administration creates the impression that it doesn't care about American workers, that it doesn't care if American workers are fired and replaced with foreign workers, that it doesn't care if employers ignore qualified American workers.
This impression is only heightened by the White House's own H–1B proposal. President Clinton proposed that the H–1B cap almost be doubled to 200,000 per year, but he did not include a single safeguard for American workers, not a single word addressing lost jobs and depressed wages. In addition, the proposed bill contained no antifraud provisions, despite the INS's assurances that it wanted to combat massive fraud in the H–1B program.
Public opinion polls consistently show that most Americans do not want the H–1B program expanded. A poll by the Wall Street Journal and NBC News found that only 20 percent of Americans supported an increase in American high-tech workers; 80 percent were opposed.
Clearly, we need some balance to ensure that the H–1B program does more good than harm. We owe that to the American people. And we need to start by ensuring that the protections for American workers enacted 2 years ago are enforced.
I hope today to hear that the regulations will be implemented immediately, and that the White House will no longer turn its back on American workers.
[The prepared statement of Mr. Smith follows:]
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PREPARED STATEMENT OF HON. LAMAR SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
The American Competitiveness and Workforce Improvement Act of 1998 increased the annual quota of H–1B temporary visas for foreign professional workers while it also protected American workers from those employers who abuse the program to the detriment of American workers. The Act represented a negotiated compromise that balanced these two interests.
The Act placed new requirements on ''job shops'', employers who bring in large numbers of aliens under the H–1B program and contract them out to other employers, often at substandard wages. Some job shops actually use the program to replace American workers with foreign workers.
The Act responded to these practices by prohibiting job shops or the employers to whom they contract H–1B aliens from laying off American workers and replacing them with foreign workers. And the Act required job shops to take steps to recruit American workers before hiring from other countries.
Eighteen months have passed since the 1998 Act was signed by President Clinton. Yet job shops can continue to bring in foreign workers to replace laid-off American workers and can continue to ignore American job applicants. Why? Because the Administration has never issued regulations implementing crucial protections for American workers.
The Labor Department issued proposed regulations in January of 1999, but the White House has yet to approve the final regulations.
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This non-action by the Clinton Administration creates the impression that it doesn't care about American workers, that it doesn't care if American workers are fired and replaced with foreign workers, that it doesn't care if employers ignore qualified American workers.
This impression is only heightened by the White House's own H–1B proposal. President Clinton proposed that the H–1B cap almost be doubled to 200,000 per year but did not include a single safeguard for American workers, not a single word addressing lost jobs and depressed wages.
In addition, the proposed bill contained no anti-fraud provisions, despite the INS's assurances that it wanted to combat massive fraud in the H–1B program.
Public opinion polls consistently show that most Americans do not want the H–1B program expanded. A poll by the Wall Street Journal and NBC News found that only 20 percent of Americans supported an increase in American high-tech workers, 80 percent were opposed.
Clearly, we need some balance to ensure that the H–1B program does more good than harm. We owe that to the American people. And we need to start by ensuring that the protections for American workers enacted two years ago are enforced.
I hope today to hear that the regulations will be implemented immediately and that the White House will no longer turn its back on American workers.
Mr. SMITH. The gentleman from Michigan and Ranking Member of the Judiciary Committee has just arrived, and we appreciate his attendance as well.
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Any further opening statements? If not, we will go to the first panel.
Mr. CONYERS. Mr. Chairman, might I just briefly welcome the Coalition for Fair Employment in Silicon Valley, John Templeton and Kevin Hinkston. I will be looking forward to hearing their testimony, and I thank you for allowing me a few minutes before I go to another subcommittee hearing.
Mr. SMITH. Mr. Conyers, you are always welcome, and I concur with your comments about our witnesses as well.
The first panel, I will introduce the two witnesses who are here. John Fraser, Deputy Administrator to Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor; and John Spotila, Administrator, Office of Information Policy and Regulatory Affairs, U.S. Office of Management and Budget. Again, we welcome you, and, Mr. Fraser, if you will begin your testimony.
STATEMENT OF JOHN FRASER, DEPUTY ADMINISTRATOR, WAGE AND HOUR DIVISION, EMPLOYMENT STANDARDS ADMINISTRATION, U.S. DEPARTMENT OF LABOR
Mr. FRASER. Thank you, Mr. Chairman. I will briefly summarize my written statement and ask that it be included in the record.
Mr. Chairman, I would like to start by responding to your opening statement and concerns that this administration is unconcerned about the impact on U.S. workers of our immigration policy and programs. I think fairness dictates that the subcommittee recognize that this administration has since 1993 vigorously advocated strong worker protections both for U.S. workers affected by our immigration policy as well as foreign workers who are admitted. It was Secretary Reich, the Secretary of Labor in 1993, who asked Congress to implement protections for American workers against layoffs and displacement by foreign workers, and it was Secretary Reich who asked Congress to implement protections requiring H–1B employers to recruit in the U.S. work force. This administration has vigorously advocated for worker protections for all 7 1/2 years of its existence.
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We certainly regret any impression or misperception that the process that has ensued in implementing the 1998 amendments has taken too long and is any kind of signal that we are not interested in implementing those worker protections. We very much are, and we are anxious to move ahead as much as anybody in getting those worker protections in place.
Let me just briefly summarize that we have been very busy working on implementing the amendments since they were enacted in October 1998. On the regulatory front we and INS have both been very active in trying to implement the various provisions. We did an awful lot of outreach with interested parties and stakeholders to get input and carefully consider their input. We have been perhaps too successful in that process.
In November 1998, INS published an interim final rule establishing the new fee, the $500 filing fee, and in January 1999, just a couple of months after the new amendments were enacted, the Department published a notice of proposed rulemaking to implement the worker protection provisions. In response to the outreach that we did and in response to the proposed rule on which we extended the comment period for a couple of weeks, we received more than 90 comments from various stakeholders, almost 600 pages of input, and in many cases commenters dealt with the whole range of issues presented under the worker protection provisions. So we had a fairly unusually large task in going through those comments, integrating and collating the comments to try to deal with them.
As we have told you before, Mr. Chairman, because of the volume and nature of those comments, it took us much longer than we had hoped to get a final rule prepared. I would point out as well that there was a period last fall when there was a considerable amount of legislative activity going on with respect to this program, and one of the concerns at the time, of course, was that any new legislation would affect what we had proposed in the rulemaking and what we would do in finalizing that rule.
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In addition to the Department's rulemaking, INS has now published a final regulation implementing the fee and notifying H–1B employers and petitioners that they must submit revised forms along with their H–1B petition so that INS can continue to collect the kind of demographic and work force characteristic data that is mandated under the 1998 amendments.
Very briefly, Mr. Chairman, my written statement also deals with three other aspects of activity following the 1998 amendments. One is the H–1B Technical Skill Training Grant Program. In August of 1999, we solicited the first round of training grant solicitations; that competition closed in November 1999, and nine first-round winners were announced in February 2000 with grants totaling $12.4 million. In March of this year we announced the availability of an estimated $40 million for a second round of H–1B Training Grant Program awards. Proposals for the second round are due in early June, and awards are expected to be announced in August. We plan to announce the third round of grant competition in September, with submissions in October and plan to award in November.
I also provided some information for the subcommittee about the impact on Department of Labor workloads subsequent to the 1998 amendments. I think the subcommittee would be interested in knowing that the number of labor condition applications filed with the Department increased very substantially in 1998 and 1999.
Last year our Employment Training Administration received and processed more than 300,000 application, and, as you know, there are only 115,000 visas available under the program. Those labor condition applications sought permission to employ H–1B workers in almost a million jobs.
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Finally, Mr. Chairman, I have provided some information in the written statement with respect to the demographic characteristics of H–1B workers. That is information that has only recently become available from INS data collection efforts. I will be happy to answer questions about that or these other issues following Mr. Spotila's testimony.
Mr. SMITH. Thank you, Mr. Fraser.
[The prepared statement of Mr. Fraser follows:]
PREPARED STATEMENT OF JOHN FRASER, DEPUTY ADMINISTRATOR, WAGE AND HOUR DIVISION, EMPLOYMENT STANDARDS ADMINISTRATION, U.S. DEPARTMENT OF LABOR
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to appear at today's hearing on the H–1B visa program. As requested, I will discuss the current status of the regulations to implement the H–1B program amendments in the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA). I will also describe implementation of the Department of Labor's worker training responsibilities under the 1998 amendments. I would also like to highlight for the Subcommittee some of the latest information we have about trends in the Department's H–1B workloads, and the demographics of current H–1B workers.
With the enactment of the 1998 amendments, the Administration moved forward on three fronts. First, there has been a significant new commitment to address skills shortages—particularly in the information technology sector—with both H–1B fee revenues and appropriated funds. Second, the Department has used the new resources available to assure the timely processing of employers' applications and the investigation of complaints alleging violations affecting H–1B visa holders. Third, we have engaged in a complex and multi-faceted rulemaking to implement the various provisions of the amendments. Let me address this undertaking first.
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STATUS OF REGULATIONS
The ACWIA was signed into law on October 21, 1998. Immediately after enactment, the Department of Labor and the Immigration and Naturalization Service (INS) began the process of developing regulations to implement the new provisions of the Act. From the beginning, we reached out to involve and obtain the views of all interested parties, and carefully considered their views.
We began the process in November 1998, by meeting with employers, the immigration legal community, labor union representatives, and various groups representing employees to discuss the new amendments and issues that needed to be addressed through rulemaking. These groups included the American Council on International Personnel (ACIP), the National Association of Manufacturers (NAM), the American Immigration Lawyers Association (AILA), the Information Technology Association of America (ITAA), the AFL–CIO, the Institute of Electrical and Electronic Engineers (IEEE), the American Physical Therapy Association (APTA), the American Occupational Therapy Association (AOTA), the American Nurses Association (ANA), the College and University Personnel Association (CUPA), American Businesses for Legal Immigration (ABLI), and the National Association of Computer Consultant Businesses (NACCB).
On October 7, 1999, the INS revised its petition form (Form I–129W) and requested approval under the emergency procedures of the Paperwork Reduction Act to collect the additional information needed to comply with the new statistical and reporting requirements mandated by the 1998 amendments.
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On November 30, 1998, the INS published an Interim Final Rule (IFR) establishing the ACWIA $500 filing fee effective December 1, 1998, and developed the form (I–129W) to be used by those H–1B employers eligible for exemption from the fee. On January 5, 1999, just two-and-a-half months after enactment, the Department of Labor published a Notice of Proposed Rulemaking (NPRM), the public comment period for which was extended upon request through February 19, 1999.
The Department received more than 90 comments pertaining to the NPRM. Several commentors expressed views on all aspects of the proposed regulation, resulting in submissions of up to 60 pages. Significant comments were provided by many of those groups mentioned above as well as by Senator Spencer Abraham. The comments received comprised more than 550 pages of input.
Throughout January 1999, we met with many of the same groups to discuss the rulemaking. Numerous other meetings with stake holders were held throughout 1999 and into 2000, including an August 1999 meeting with information technology industry representatives at OMB to discuss the rulemaking.
Mr. Chairman, because of the volume and nature of the comments received and our commitment to carefully weigh all of the comments, it took us longer to prepare the final rule than expected. On January 10, 2000, we submitted a draft final rule to OMB for review.
In February of this year, the INS published a final regulation implementing the $500 fee and notifying H–1B petitioners that they must submit the revised form I–129W along with their H–1B petitions effective March 30, 2000.
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On March 31, 2000, INS published for public comment proposed revisions to the H–1B petition (Supplement H) in compliance with the 1998 amendments' mandate to improve its forms.
H–1B TECHNICAL SKILL TRAINING GRANT PROGRAM
While DOL regulations were being developed, the Department of Labor also took steps to implement its responsibilities under the 1998 amendments to design and implement a technical skill training grant program for U.S. workers financed with some of the proceeds of the new H–1B fees. The ACWIA authorized the Secretary of Labor to use a portion (56.3 percent) of the H–1B application fees that went into effect December 1, 1998, to finance an ''H–1B Technical Skill Training Grant Program.'' This investment is designed to help American workers—both employed and unemployed—acquire the requisite skills in occupations that are in demand—particularly in industries such as information technology and health care.
These grants provide funds through local, business-led Workforce Investment Boards to consortia of business, labor, schools, and community-based organizations. Similar to the development of other new competitive grant programs, the Department of Labor used the time before the first grant announcement was published to consult with key stakeholders, including businesses, trade and industry groups, labor organizations, Congressional staff, community-and faith-based organizations, community colleges and others on the use of the H–1B training funds.
The employer fees used to administer each skills training grants competition are provided to the Department of Labor by the Treasury Department, which distributes these fees to the Department of Labor on a quarterly basis. By July, 1999, the Treasury Department distributed sufficient funds to the Department of Labor for the first-round competitive solicitation for H–1B technical skills training grants. The Department announced this competition on August 16, 1999, in the Federal Register. This competition closed in November 1, 1999, and nine first round winners were announced on February 10, 2000, totaling $12.4 million.. For the Subcommittee's information, I've attached to my written statement a description of some of the successful grant proposals.
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On March 29, 2000, the Department announced the availability of an estimated $40 million for a second round competitive solicitation. We have incorporated a number of lessons learned from the first round grant solicitation and award process into the second round. For example, since the first round we have extended the grant period from one to two years and increased the maximum award from $1.5 million to a total of $3 million over two years. In addition we have done a great deal of community outreach, informing the public about the grant program to increase the number of applications received. Proposals for the second round are due June 5, 2000, and awards for technical skills training will be announced in August 2000. The Department will announce a third round of grant competition by September. Proposals for this round will be due in October 2000, and the Department plans to announce awards for this round in November 2000. Additional rounds of competition for H–1B technical skill training grants will continue as funds become available.
In addition, the bipartisan Workforce Investment Act (WIA) of 1998 becomes effective on July 1, 2000, and provides the framework for the new workforce preparation and employment system. The Department of Labor is helping States and local communities implement WIA. As part of this function, the Department is building and strengthening partnerships among State and local Workforce Investment Boards, businesses, schools, labor unions, public agencies, and community-based and faith-based organizations that can help meet local and regional demands for high-skilled workers using WIA formula funds, H–1B training grant resources and other resources as appropriate and necessary. By working through the WIA framework, business leaders have the opportunity to develop strategies to address local and regional skill shortages through their leadership positions on State and local workforce investment boards.
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DOL H–1B PROGRAM WORKLOADS
I would now like to briefly discuss changes in the Department's H–1B program workloads since enactment of the 1998 amendments.
The number of H–1B labor condition applications (LCAs) received by the Department's Employment and Training Administration (ETA) has increased significantly every year since the program's inception. While there is a statutory cap on the number of H–1B nonimmigrant visas each year, there is no such cap on the number of LCAs that may be certified by the Department, nor on the number of job openings that may be certified on such applications. Since 1993, the number of LCAs and job openings certified has exceeded the H–1B visa cap. Nonetheless, the volume has grown quite significantly since the 1998 amendments. For example, in FY 1999, ETA processed over 300,000 LCAs—an increase of about 25 percent over FY 1998; 60 percent over FY 1997. This surge in workload under the H–1B program is also reflected in the number of job openings certified on LCAs by ETA. In FY 1998, ETA certified nearly 600,000 job openings, and in FY 1999 it certified an estimated one million.
In February 1999, a system was implemented nationally which allowed employers to transmit H–1B applications via electronic facsimile and to receive a certification decision on their application by a return fax. As a result, over half of the H–1B applications in FY 1999 were handled via the new facsimile process (LCA fax). This electronic processing allowed many of the regional staff that had been required to process H–1B applications to ensure compliance with the statutory seven-day H–1B processing requirements to return to processing permanent employment-based immigration cases.
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In terms of the types of jobs employers seek to fill with H–1B nonimmigrant workers, requests to certify job openings for computer-related occupations predominate; since FY 1996, computer-related positions have consistently comprised approximately one-half of the number of such requests. Other high-volume occupations include physical and occupational therapists, which account for about 25 percent of all LCAs, and then much smaller portions for accountants, electrical and electronic engineers, physicians and surgeons, and college and university faculty.
I should also mention trends we have seen in complaints and enforcement workloads since enactment of the 1998 amendments. H–1B complaint workloads have always been relatively modest—we believe in large part due to the fact that H–1B workers face powerful disincentives to lodge complaints against their employer. However, since the enactment of the 1998 amendments, the Department has seen an increase in the number of complaints and a shift in the nature of complaints filed.
Through FY 1998, we received an average of about 50 H–1B complaints each year. But the number of H–1B complaints more than doubled after the 1998 amendments—to 135 in FY 1999 (and to 96 through April in FY 2000). While most complaints still pertain to wage issues, the more recent complaints also commonly allege new categories of violations established by the 1998 amendments, such as:
Failing to pay when no work is offered (benching);
Imposing an early-termination penalty; and,
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Requiring payment of the employer's $500 fee.
We have been able to respond to the increased complaint workload in part because of the designation of a portion of the fee revenue for enforcement. Comparing the 18-month period after the 1998 amendments to the prior 18-month period, our efforts have resulted in:
Double the number of H–1B investigations completed;
Double the number of investigations finding back wages due (about three-quarters of the total); and
Triple the amount of back wages due (more than $1.5 million).
DEMOGRAPHICS OF H–1B WORKERS
Let me conclude by briefly summarizing recent data compiled by the INS on the demographic characteristics of approved H–1B workers for FY's 1999 and 2000 (through February). I have attached six charts to my testimony that provide this information in the detail available. These data on approved H–1B workers reveal interesting distributions along age, educational, occupational, wage, and national origin lines.
In the area of educational attainment, almost 57 percent of approved H–1B workers held a bachelor's degree in FY 1999; 56 percent in FY 2000. Over 40 percent of H–1B workers held a master's degree or higher in both 1999 and 2000. Just under two percent do not have at least a bachelor's degree.
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Consistent with our own LCA data, H–1B workers are predominantly—though by no means exclusively—sought in computer-related occupations, and predominately in systems analysis/programming occupations. Just over 53 percent of approved H–1B workers were in the Systems Analysis/Programming occupations in 1999; in FY 2000 that figure is a little over 44 percent.
The median wage for all H–1B occupations was $45,000 in FY 1999 and $47,000 in FY 2000. The median wage for H–1B workers employed as systems analysts and programmers in 1999 was $47,000. As a point of reference, this compares—based on BLS data on median weekly earnings (annualized) for 1999—with a median wage for all ''computer systems analysts and scientists'' employed in the U.S. of $52,400 and for all ''computer programmers'' employed in the U.S. of $46,700.
Approved H–1B workers tend to be quite young. In stark contrast with the U.S. workforce, 83 percent of H–1B workers are under age 35 and fully 92 percent under age 40. Less than 16 percent are age 35 or over (compared to nearly 62 percent of the U.S. workforce).
In terms of country of origin, almost half of approved H–1B workers were from India in 1999; for the first five months of FY 2000, about 38 percent are from India. In both years, the next largest source country is China, with about ten percent of the visas.
FY 1999 INS sample data also reveal some interesting information about the previous immigration status of H–1B workers: 60 percent of H–1B visa recipients entered from outside the United States in 1999; the other 40 percent adjusted from other non-immigrant status. Of the latter group, nearly six-of-ten adjusted from F–1 student status.
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Mr. Chairman, this concludes my prepared statement. I will, of course, respond to any questions you or the Members of the Subcommittee may have.
ATTACHMENTS
SUPPLEMENTAL INFORMATION ON SUCCESSFUL TRAINING GRANT PROPOSALS
The following are examples of successful grant proposals from among the 9 first-round Technical Skills Training Grant Awards totaling $12.4 million:
The Workplace, Inc. (Bridgeport CT)—This project proposes a system of employer-certified skills centers in southwestern Connecticut to train people in identified occupations that are high-skill and in short supply. Workplace, Inc. views the current ''Emerging Technologies Model'' of jobs as very different from the traditional ''Business Model.'' In the traditional pyramidal model, entry-level low-skill jobs at the bottom rung predominated. In the newer model, there are far more high-skill jobs with relatively few lower-skilled workers to upgrade into the higher levels of employment. The objective is to measurably reduce the need for H–1B visas in the southwest Connecticut area. The project proposes to use skill standards established under the aegis of the National Skill Standards Board (NSSB) and will formally certify individuals meeting those standards. A number of area businesses, community organizations and educational institutions are involved; in particular, Pitney Bowes will provide classrooms, instructors, materials and equipment. (Grant award of $1,500,000.)
Regional Employment Board of Hampden County, Inc. (Springfield MA)—The grantee, with twelve core partners—including two One-Stop Career Centers, two Community colleges, Telitcom Development Corporation (a business-led economic development entity) and Northeast Center for Telecommunication Technology (designed and funded by the National Science Foundation)—is establishing an information and telecommunication technologies workforce development project called IT Squared. Training will occur in IT occupations such as Telecommunications Software Engineers, Cable and Installation (Teledata) High-Level Technicians, and Systems Developers. Creative approaches to the delivery of training will include distance learning via creation of a ''virtual'' campus for on-demand technical training courses. This method will be combined with campus classroom training and work site internships. (Grant award of $1,500,000.)
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NOVA (CA) Private Industry Council (Sunnyvale CA)—The consortium of business, training, and service organizations includes NOVA, two community colleges, Opportunities Industrialization Center West, University of California Santa Cruz Extension, Joint Venture: Silicon Valley Network, California Employment Development Department, Sun Microsystems, and Cisco Systems. The goal is to equip about 200 individuals with high level technical skills to bridge the ''digital divide.'' A diverse population from some of the poorest neighborhoods in Silicon Valley, participants will receive one-on-one assistance from counselors/training coaches. A new program called STEP (Systems Administration Training and Employment Program) designed by a team including representatives from Sun Microsystems, Cisco Systems, NOVA and local community colleges will enable individuals to become certified systems administrators in less than one year. (Grant award of $1,320,938.)
The Philadelphia Workforce Development Corp (PWDC)—In partnership with 60 health care employers, 25 nursing schools, the One Stop Career Center system, and the largest union-based trainer in the country (District 1199C Training and Upgrading Fund of the National Union of Hospital and Health Care Employees, AFSCME, AFL–CIO.), PWDC is launching a comprehensive training initiative designed to address a growing shortage of skilled nurses in the Philadelphia area. In addition to training, the project will offer the full range of supportive services—such as career counseling, testing, assessment, and job placement—provided by the Training and Upgrading Fund and other funding sources. (Grant award of $563,057.)
Mr. SMITH. Mr. Fraser, I thought that the additional demographic information that you gave us was just fascinating, and I want to ask you a number of questions about it.
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Mr. Spotila.
STATEMENT OF JOHN T. SPOTILA, ADMINISTRATOR, OFFICE OF INFORMATION POLICY AND REGULATORY AFFAIRS, U.S. OFFICE OF MANAGEMENT AND BUDGET
Mr. SPOTILA. Good morning, Mr. Chairman and members of the subcommittee. I am appearing on behalf of the administration at today's hearing on the H–1B visa program.
The administration supports the H–1B program. We need sound and balanced approaches to address the need for additional skilled workers within our economy. Of course, the most important way to increase the availability of skilled workers should be to increase the skills of U.S. workers. Employers should always seek U.S. workers first and train them to be more effective. The President has long been an advocate of improved worker training and enhanced opportunities for American workers. We recognize, however, that U.S. businesses sometimes need access to the international labor market to maintain and enhance their global competitiveness, particularly in high-growth, new-technology industries and during tight labor markets. Achieving a proper balance between the needs of U.S. workers and those of U.S. businesses has been an important focus of administration policy.
This background is important in understanding the administration's ongoing efforts to implement the American Competitiveness and Workforce Improvement Act of 1998. The act made significant changes to the H–1B program, imposing new requirements on employers who extensively use H–1B workers. These requirements seek to provide better protection for U.S. workers. Mr. Chairman, we recognize your leadership role in this area. We regard these protections as a crucial part of the act.
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The act requires the Department of Labor to issue regulations to implement these worker protection provisions. On January 5, 1999, just 2 1/2 months after enactment, the Department of Labor published a notice of proposed rulemaking, an NPRM, seeking public comment on its implementation proposal. This NPRM did not include regulatory text. My understanding is that the Department received 92 comments, including several that encompassed up to 60 pages and addressed all aspects of the proposed regulation. The commenters included individuals, a union, employee associations, lawyers, businesses, business and trade associations, educational facilities and associations, and U.S. Government agencies. They also included submissions from Senator Abraham, who cosponsored the act in the Senate, Senator Graham and 23 Members of Congress who joined in a written comment.
The Department took these comments very seriously, analyzing them in detail in light of the legislative history of the act. Many of the commenters raised complex issues that required a great deal of thought and consideration. For example, the statutory requirements for H–1B-dependent employers only apply to nonexempt H–1B workers. An exempt worker is one who either receives wages, including cash bonuses and similar compensation, at an annual rate of $60,000 or who has attained a master's or higher degree or its equivalent. Defining phrases such as ''at an annual rate'' or ''its equivalent'' provoked considerable comment, with a variety of definitions suggested.
In the proposed rule, the Department had interpreted ''at an annual rate'' to mean that a worker must actually receive $60,000 each year. Others argued strongly that the statutory language meant that part-time workers were exempt if their rate of pay, when extrapolated to full-time work, would equal $60,000 per year. For the equivalent of a master's degree, the Department proposed that only degrees obtained from an accredited educational institution outside of the United States could be used. Several trade associations and employers disagreed, voicing a belief that appropriate work experience should also count as equivalent to a master's degree.
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The act authorizes the Department to impose administrative remedies as the Secretary deems appropriate. In the proposed rule, the Department indicated that such remedies could include ''make whole relief''; that is, relief sufficient to restore affected workers to the position they would have been in given compliance with the law. A number of commenters stated that the authority to seek such relief is beyond the authority granted by the act.
Many commenters expressed concern that the documentation requirements in the proposed rule would create too much of a burden on employers. They pointed to the requirement for employers to document their actual wage systems and their recruiting methods. Some of these documentation requirements apply only to H–1B-dependent employers, while others apply to all employers. Indeed, documentation issues arise as to many provisions of the proposed regulation. Examining where documentation is required in order to achieve the statutory goals is a complicated task.
The Department of Labor has now drafted a suggested interim final regulation. In accordance with Executive Order 12866, the Department submitted its draft to the Office of Information and Regulatory Affairs, OIRA, at OMB for review on January 10, 2000. Under this Executive Order, OIRA must ensure that agency regulatory actions are consistent with the regulatory principles set forth in the order and that they did not conflict with other administration actions or policies.
Upon receiving the draft, my staff began reviewing it and coordinating a process to solicit interagency views. We received interagency comments and began working with the Department of Labor to resolve issues raised during the comment period. As described above, the issues raised by commenters are varied and complex. Resolving them properly requires extensive effort and discussion. In accordance with the Executive Order, we extended our review process beyond the initial 90 days referred to in the order. We continue to work with the Department to complete the process.
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Final decisions have not yet been reached on the content of this rule. We are working steadily, but cannot predict precisely how long it will take to complete the review process. Once our review is complete, the Department will finalize the rule package and submit it to the Federal Register for publication.
This concludes my formal testimony.
Mr. SMITH. Thank you, Mr. Spotila. I appreciate your testimony.
[The prepared statement of Mr. Spotila follows:]
PREPARED STATEMENT OF JOHN T. SPOTILA, ADMINISTRATOR, OFFICE OF INFORMATION POLICY AND REGULATORY AFFAIRS, U.S. OFFICE OF MANAGEMENT AND BUDGET
Good morning, Mr. Chairman and members of the Subcommittee. I am appearing on behalf of the Administration at today's hearing on the H–1B visa program.
The Administration supports the H–1B program. We need sound and balanced approaches to address the need for additional skilled workers within our economy. Of course, the most important way to increase the availability of skilled workers should be to increase the skills of U.S. workers. Employers should always seek U.S. workers first and train them to be more effective. The President has long been an advocate of improved worker training and enhanced opportunities for American workers. We recognize, however, that U.S. businesses sometimes need access to the international labor market to maintain and enhance their global competitiveness, particularly in high-growth new technology industries and during tight labor markets. Achieving a proper balance between the needs of U.S. workers and those of U.S. businesses has been an important focus of Administration policy.
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This background is important in understanding the Administration's ongoing efforts to implement the American Competitiveness and Workforce Improvement Act of 1998 (''the Act''.) The Act made significant changes to the H–1B program, imposing new requirements on employers who extensively use H–1B workers. These requirements seek to provide better protection for U.S. workers. We regard these protections as a crucial part of the Act.
The Act requires the Department of Labor to issue regulations to implement these worker protection provisions. On January 5, 1999, just two-and-a-half months after enactment, the Department of Labor published a Notice of Proposed Rulemaking (NPRM) seeking public comment on its implementation proposal. This NPRM did not include regulatory text. My understanding is that the Department received 92 comments, including several that encompassed up to 60 pages and addressed all aspects of the proposed regulation. The commenters included individuals, a union, employee associations, lawyers, businesses, business and trade associations, educational facilities and associations, and U.S. government agencies. They also included submissions from Senator Abraham, who cosponsored the Act in the Senate, Senator Graham, and 23 Members of Congress who joined in a written comment.
The Department took these comments very seriously, analyzing them in detail in light of the legislative history of the Act. Many of the commenters raised complex issues that required a great deal of thought and consideration. For example:
The statutory requirements for ''H–1B dependent employers'' only apply to ''nonexempt H–1B workers.'' An exempt worker is one who either receives wages (including cash bonuses and similar compensation) at an ''annual rate'' of $60,000 or who has attained a master's or higher degree ''or its equivalent.'' Defining phrases such as ''at an annual rate'' and ''or its equivalent'' provoked considerable comment with a variety of definitions suggested. In the proposed rule, the Department had interpreted ''at an annual rate'' to mean that a worker must actually receive $60,000 each year. Others argued strongly that the statutory language meant that part time workers were ''exempt'' if their rate of pay, when extrapolated to full time work, would equal $60,000 per year.
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For the ''equivalent'' of a masters degree, the Department proposed that only degrees obtained from an accredited educational institution outside the United States could be used. Several trade associations and employers disagreed, voicing a belief that appropriate work experience should also count as equivalent to a master's degree.
The Act authorizes the Department to impose ''administrative remedies as the Secretary deems appropriate.'' In the proposed rule, the Department indicated that such remedies could include ''make whole relief,'' that is, relief sufficient to restore affected workers to the position they would have been in given compliance with the law. A number of commenters stated that the authority to seek such relief is beyond the authority granted by the Act.
Many commenters expressed concern that the documentation requirements in the proposed rule would create too much of a burden on employers. They pointed to the requirement for employers to document their actual wage systems and their recruiting methods. Some of these documentation requirements apply only to ''H1–B dependent employers,'' while others apply to all employers. Indeed, documentation issues arise as to many provisions of the proposed regulation. Examining where documentation is required in order to achieve the statutory goals is a complicated task.
The Department of Labor has now drafted a suggested interim final regulation entitled, ''Labor Condition Applications and Requirements for Employers Using Nonimmigrants on H–1B Visas; Labor Certification Process for Permanent Employment of Aliens—29 C.F.R. Part 655 & 29 C.F.R. Part 656.'' In accordance with Executive Order 12866, the Department submitted its draft to the Office of Information and Regulatory Affairs (OIRA) at OMB for review on January 10, 2000. Under this Executive Order, OIRA must ensure that agency regulatory actions are consistent with the regulatory principles set forth in the Order, and that they do not conflict with other Administration actions or policies.
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My staff then began reviewing the draft rule and coordinating a process to solicit interagency views. We received interagency comments and began working with the Department of Labor to resolve issues raised during the comment period.
As described above, the issues raised by commenters are varied and complex. Resolving them properly requires extensive effort and discussion. In accordance with the Executive Order, we extended our review process beyond the initial 90 days referred to in the Order. We continue to work with the Department to complete the process.
Final decisions have not yet been reached on the content of this rule. We are working steadily, but cannot predict precisely how long it will take to complete the review process. Once our review is complete, the Department will finalize the rule package and submit it to the Federal Register for publication.
This concludes my formal testimony.
Mr. SMITH. Mr. Fraser, you mentioned that the administration has supported safeguards for American workers since 1993, and you have listed all kinds of individuals, Cabinet members or Cabinet heads, that supported them. Yet in the administration's H–1B bill introduced a few weeks ago, I don't think that there is a single safeguard in that H–1B bill, is there?
Mr. FRASER. I would suggest that there are several, Mr. Smith. First of all, the administration feels strongly that the worker protection provisions that were enacted——
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Mr. SMITH. I understand that. Since you said that the administration favors safeguards for American workers, point out one safeguard in their H–1B bill that it just introduced.
Mr. FRASER. That is what I was trying to do.
Mr. SMITH. You were talking about regulations from 2 years ago.
Mr. FRASER. No, I was referring to Mr. Sperling's letter where he laid out provisions in H–1B reform legislation which the administration advocates.
Mr. SMITH. I am talking about the White House itself introducing a bill 2 or 3 weeks ago that, to my knowledge, does not have a single worker protection or worker safeguard in it. If you know differently, I would be happy to hear, but I don't think that there is a single one in it.
Mr. FRASER. Mr. Smith, I am not aware that there is an administration bill. I am aware that the White House sent a letter to the Hill outlining provisions of H–1B reform that it feels strongly about, and that outline included several provisions that constitute worker protections: insistence on a cap, the insistence that any increase in the cap be temporary. Some of the worker protections in the law must be extended with the increase in the cap. There is a requirement for a set-aside within the cap for higher-skilled workers going from 40 to 45 to 50 percent, master's or higher degree. In the administration's view, those are all important worker protections, along with increased resources for job training.
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Mr. SMITH. Apparently the administration doesn't consider it important enough to put in its bill that American employers need to advertise for American workers before they hire from abroad, nor does it see fit to put in its proposal other safeguards from 2 years ago such as that American employers should not fire American workers and replace those American workers with foreign workers.
Mr. FRASER. I believe, Mr. Smith, that the administration has advocated strongly for extending those new protections that were in the 1998 amendments for whatever period of time the cap is——
Mr. SMITH. I want to go over the chronology here. It took the Department of Labor 2 months to draft the proposed regulations; is that correct?
Mr. FRASER. About 2 1/2 months to get it drafted and published.
Mr. SMITH. After that it took a year to turn the proposed regulations into proposed final regulations?
Mr. FRASER. Almost a year, yes, sir.
Mr. SMITH. And they had 90 comments comprising something like 550 pages to consider during that year's time. That comes out to about 2 pages a day, which doesn't strike me as being heavy lifting or particularly burdensome to have to process that amount of information and make some decisions. In fact, I am not aware of any legislation that has received only 90 comments that took a year to get from the proposed to the final regulations. Are you aware of any other legislation that has taken so long given the 550 pages of comments?
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Mr. FRASER. Not off the top of my head, Mr. Chairman. It is a very large volume of input through the comment process. There were several submissions that were 50, 60, 70, pages.
Mr. SMITH. I am used to other immigration legislation where thousands and thousands of pages are received, and they are able to come up with the regulations in far less than a year. Taking a year to process an average of 2 pages a day sounds to me like it is a pretty slow process.
Mr. FRASER. It certainly did take us much longer than we wanted.
Mr. SMITH. Let me complete this chronology. It took a year to turn the proposed to final regulations, and last January you gave the final regulations to the Office of Management and Budget, where it has been a little over 4 months; is that correct?
Mr. FRASER. Yes, sir.
Mr. SMITH. Okay. And so as we sit here today, there are no safeguards in effect to prevent American employers from firing American workers and hiring from overseas, nor are there any safeguards requiring American workers to advertise for American workers before they hire from overseas; is that correct?
Mr. FRASER. That is correct.
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Mr. SMITH. And it is also correct that these regulations expire in October 2001. So over half the time that we expected the regulations to be in effect has already expired, and even if they were implemented today, we would only have them in effect for a little over a year, is that correct, if they are not extended?
Mr. FRASER. If there is no increase in the extension of these provisions through further legislation, that is correct, yes, sir.
Mr. SMITH. Aside from the fact that you have a number of comments that you had to address, is there any good explanation why we are increasing the number of H–1B visas dramatically, but not protecting American workers at the same time?
Mr. FRASER. We certainly believe we should be doing both. As you said in your opening statement, Mr. Chairman, the 1998 amendments were a negotiated compromise to balance increased access to the international labor market for professional workers with effective protections for U.S. Workers and investment in training U.S. workers to meet these needs. We have to balance increases in the cap with effective protections for U.S. workers and an extension of those protections that exist.
Mr. SMITH. We had the increase in numbers in H–1B visas, but we don't have the corresponding protections for American workers.
Mr. FRASER. That is why we need to move ahead as quickly as we can.
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Mr. SMITH. Mr. Spotila, when are you going to implement the final regulations that have been sitting over at OMB now for more than 4 months?
Mr. SPOTILA. Of course, it will be the Agency that issues the regulations to implement them. We are not in a position to predict when the issues will be resolved. I can assure you that the regulations are not just sitting at OMB.
Mr. SMITH. After 18 months you can't tell us when they are going to be approved, and after 4 months at the desk of OMB, you can't tell us when they will be approved?
Mr. SPOTILA. They have been at OMB for 4 months after a year of work at the Department in preparing them. I cannot tell you precisely when the review will be completed. People are working, attempting to resolve them.
Mr. SMITH. But that doesn't do American workers any good.
Mr. SPOTILA. I concur completely in the need.
Mr. SMITH. If you concur, why aren't you approving the regulations? What is the holdup?
Mr. SPOTILA. The regulations are not yet ready, and final decisions have not been made on the complex issues that I referred to in my testimony.
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Mr. SMITH. It is your job to make those final decisions. You have had 4 months to decide on them. Why don't you decide and approve the regulations?
Mr. SPOTILA. The deliberative process involves a full discussion internally as to particular alternative approaches and how the balance should be struck. A large part of my job is to help maintain this process and to make certain that there is a full and complete discussion and ultimately a consensus as to how to proceed.
Mr. SMITH. But you have to agree with me that the appearance is that as long as those regulations are not issued, that apparently it is not a priority to the administration to have these safeguards in effect and protect American workers, otherwise you would have issued them and you would have approved them some time ago. And to come today and say you don't have any idea when they might be approved is not only appalling to me, but I would think would be insulting to American workers who are relying on the administration to see that they are implemented as quickly as possible.
Mr. SPOTILA. I am certainly concerned that any perception or misperception, as John indicated, might arise that we are not interested in protecting U.S. workers, but that couldn't be further from the truth. I am also aware of the importance of trying to complete this task, Mr. Chairman.
Mr. SMITH. Actions speak louder than words. We have gotten no corresponding actions to the words. You still can't tell us when they might be implemented. So for all you know, we may not see them until the regulations maybe expire—or for many months?
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Mr. SPOTILA. It would be my hope that the regulations could be completed as quickly as possible. And certainly as Mr. Fraser indicated, the administration is supportive of extending the effective date of those aspects of the act that are designed to protect U.S. workers. Part of the difficulty here is that it is important in implementing regulations that we protect U.S. workers without having done harm in other areas, including harm to U.S. businesses and other employers. It is important to get this right, and it is a complex task, which is why it is taking as long as it is.
Mr. SMITH. I hope the regulations are extended, but meanwhile these safeguards are not in effect, and workers can be fired and replaced by foreign workers, and foreign workers can be hired without advertising for American workers as we sit here right now?
Mr. SPOTILA. I would agree. I am concerned we get these protections——
Mr. SMITH. By ''as soon as possible,'' are you talking about days or weeks or months?
Mr. SPOTILA. I can't predict, and I wouldn't want to send a signal which might be misleading.
Mr. SMITH. And your lack of actions is a clear impression that you don't care, or you would have done something by now, I would think.
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Mr. SPOTILA. Clearly we do care, Mr. Chairman, about protecting workers.
Mr. SMITH. If you care, why haven't you approved the regulations?
Mr. SPOTILA. It is my expectation that the regulations will be approved and issued, but I can't predict when that will occur. The final decisions on how to strike the balance have not been made.
Mr. SMITH. I am clearly not going to get a precise answer, but I think that gives an impression as well.
Mr. Spotila, let me go to your reference to the Executive Order which was signed by President Clinton in September 1993, which requires that OMB ''shall waive review of draft regulations or notify the Agency in writing of the results of its review within 90 days.'' Ninety days has long since passed since the receipt by OMB of the Department of Labor regulations. You chose to extend them, but under our reading of the statute, you can extend them once for 30 days, and that time has long since passed. It appears to me that you are in violation of the Executive Order that was signed by the President.
Mr. SPOTILA. Mr. Chairman, the Executive Order contemplates that the review process can be extended either by the Director of OMB for 30 days, as you mentioned, or at the request of the Agency head. There was a discussion with the Agency prior to the expiration of the 90-day review process, and the Agency concurred that we needed to extend that process in order to allow additional time to resolve these issues. So an extension was approved on that basis.
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Mr. SMITH. Doesn't the statute allow for only one 30-day extension, or am I wrong on that?
Mr. SPOTILA. It does allow an extension along the lines that I have indicated.
Mr. SMITH. And that one 30-day extension has long since passed?
Mr. SPOTILA. The extension, as a result of the discussion with the Agency, is not limited to 30 days. It is for such additional time as needed in order to complete the process. So in other words, the Executive Order includes two bases for an extension. One is the 30-days one that you indicate, but there is a second basis for an extension which involves requests from the Agency, and that can be for a different period.
Mr. SMITH. I will take your word for it.
Who requested the extension?
Mr. SPOTILA. My understanding—and, again, the discussions were held at the staff level—is that our staff spoke with representatives of the Agency, and the Agency concurred that the extension was needed.
Mr. SMITH. The Agency being the Department of Labor?
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Mr. SPOTILA. The Department of Labor, yes.
Mr. SMITH. Mr. Fraser, why did you request the extension?
Mr. FRASER. Mr. Chairman, after transmitting our proposed final rule over to OMB, we had extensive discussions on the staff to staff level. We had extensive discussions with staff in the months preceding. We understood and, as Mr. Spotila indicated, concurred that OMB needed more time to go through these issues.
I don't know personally who was involved in those conversations, but I know those conversations did exist and that agreement took place.
Mr. SMITH. Okay. Mr. Fraser, I want to go to some of the comments you made in your opening statement and then also go to some of the information you supplied us with the attached material.
Let me go, first of all, to the demographics of H–1B workers, which, as I mentioned, I thought were very interesting. On the way there let me ask the question to you, and it was either in your testimony or in someone else's testimony today, that the—it is another individual's testimony saying that the Department of Labor has found no evidence of a shortage of high-tech workers. Is that an accurate statement? What has the Department of Labor done to study whether or not there is a shortage of high-tech workers?
Mr. FRASER. We have tried to collect information about the shortage question, looking both at supply and demand. We have had some independent work done in that arena, which I believe is in process, trying to assess the supply side of the equation.
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There is very little dispute that there is an increasing demand, a growing demand, for high-tech workers. BLS projects from 1998 through 2008, there will be a need for about 200,000 new high-tech jobs each year: about 170,000 new jobs, and about 30,000 replacement jobs—about 2 million over that 10-year period. All of the fuzziness, Mr. Chairman, is on the supply side.
How are high-tech jobs filled? We know that about 25 percent of high tech jobs are filled by individuals without college degrees. And there is not real good data about the output from our college and university systems, both in the principal feeder—computer science—majors, but also recognizing the fact that a large portion of high-tech jobs are filled by college graduates with other kinds of degrees in science and engineering, even social sciences and other majors. So the difficulty in assessing whether there is a high-tech labor shortage is getting good information about the supply side.
We have been working on that. As I said, we have tried to get some outside folks looking at that. That work is in progress, and hopefully we will get information that gives us a better handle on what the gap is for the high-tech sector.
Mr. SMITH. In your demographics, you mention that about 53 percent of approved H–1B workers were in the systems analysis or programming occupations in 1999, but in fiscal year 2000 the figure dropped to 44 percent. Why was that?
Mr. FRASER. We are looking at that and asking that question. Part of the difficulty, Mr. Chairman, is that some of these high-tech jobs are filled or categorized in some of these other occupational classes as electrical or electronic engineers or other computer-related occupations. One of the things that we are trying to do is get comparability in those high-tech occupations. We don't have a sense why the drop-off in that one particular category.
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Mr. SMITH. You also mentioned, and this goes to the wage question, that the median wage or H–1B workers employed as systems analysts and computer programmers in 1999 was $47,000. Let's see, as a point of reference this compares with the median wage for all computer systems analysts and scientists employed in the U.S. of $52,400 and all computer programmers employed in the U.S. Of $46,700. Does that indicate that foreign analysts and foreign programmers are paid less than American programmers and American systems analysts?
Mr. FRASER. I think it is much safer to say that the wage data indicator here is that the H–1B workers used in these high-tech jobs are normal, average workers. I know that you have heard a lot about how this program is used primarily to bring the ''best and the brightest'' from the international labor market. The Department has always contended that this program is intended to bring in folks who are journey-level and in many cases entry-level workers.
There is not direct comparability between the BLS categories and the categories that INS is using at this point. The BLS category computer systems analysts and scientists and computer programmers are kind of lumped together in the INS data.
Mr. SMITH. There is no breakdown or comparison that is available?
Mr. FRASER. We are looking to see if there can be.
Mr. SMITH. You say the median wage for all computer systems analysts and scientists employed in the U.S. is $52,400, but we don't know what the median wages is for H–1B workers employed in that category?
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Mr. FRASER. We are trying to ascertain whether we can know that. Right now the data we have includes both programmers and systems analysts, whereas in the BLS data, those are broken out into separate categories.
Mr. SMITH. That would be an interesting comparison, to see how much less the foreign workers are paid than American workers. It looks like it is going to be less, but we just don't know how much.
Mr. FRASER. It is hard to tell.
Mr. SMITH. The other statistic that I thought was interesting, 60 percent of H–1B visa recipients entered from outside of the United States in 1999. The other 40 percent adjusted from other nonimmigrant status. Of the latter group, nearly 60 percent adjusted from F–1 student status. If you take 60 percent of the 40 percent that adjusted from nonimmigrant status, you are talking about 25 percent, one-quarter, of the total number of H–1B workers who came to our American colleges where they were subsidized by American taxpayers. Then when they graduated, they competed with American students for those high-tech jobs; is that a fair statement?
Mr. FRASER. I don't know if it is fair to say that they are subsidized by U.S. taxpayers at higher education institutions.
Mr. SMITH. Having children in private and public universities, and the private universities say that tuition takes care of one-third of the total cost, and in the case of public universities it is roughly the same thing, although the tuition is less, maybe we should say technically that one-quarter of all foreign high-tech workers who graduate from public universities are subsidized by taxpayers and then compete with American students who graduate.
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Mr. FRASER. Again, Mr. Smith, you know something that I don't, not having young children in college.
Mr. SMITH. Let me make sure that I get the facts correct. Is it true to say that one-quarter of all H-1B workers, in fact, are graduating from American colleges and universities?
Mr. FRASER. Yes, sir.
Mr. SMITH. That is the main point there.
Let me go back. If I may ask you both this question: What changes have you made to the proposed regulations at the request of interested parties, either high-tech companies or immigration lawyers or others?
Mr. SPOTILA. Mr. Chairman, because we are still in the midst of the deliberative process in a predecisional phase, we don't discuss what the particular changes might be at any particular moment. Until the final decisions are made, we don't know what the final rule will look like. Although there are a variety of alternatives being considered and all of the comments analyzed and considered, we are not in a position to indicate what changes have been made yet.
Mr. SMITH. You mentioned some of the questions that you are considering in your opening statement. To me those are the kinds of questions that could be answered in one day by two or three people.
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Let me just end, if I may, by saying that I think the biggest disappointment today is that OMB cannot give us a date when it is going to approve final regulations despite the fact that the final regulations have been on OMB's desk for 4 months, and despite the fact that the process to date has taken over 18 months.
So for 18 months we have had American workers who have not been protected and the safeguards in effect to make sure that they were not fired and to make sure that they were hired in the first place. I know that is of concern to both of you. For reasons that you are clearly not stating, the regulations still have not been approved, I can only guess why, but to me there is no good explanation to leave American workers out there hanging when the administration could, it seems to me, approve those regulations and implement them very quickly.
As I say, at this point, even if they are implemented today, over half the time that they have been in effect has now passed us by, and we have less than a year and a half before the regulations are supposed to expire.
I encourage you all to let the President, the White House and other members of the administration know that the American workers are disappointed that the regulations have not been issued and are suffering as a consequence, and if the administration want to erase the impression that they don't care about American workers, the best way is to get those regulations implemented in the next few days.
Thank you for being here, and thank you for answering questions. I know that you are in a difficult position, but I also know that American workers are in a more difficult position, and I hope that you all will take appropriate action very soon.
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Mr. FRASER. Thank you, Mr. Chairman.
Mr. SMITH. We will now go to our second panel, and let me introduce them as they come forward: John Templeton, co-convenor, Coalition for Fair Employment in Silicon Valley, accompanied by Kevin Hinkston, co-convenor, Coalition for Fair Employment in Silicon Valley. The second witness is Frank Brehm from the Programmer's Guild.
We welcome you all and look forward to your testimony.
Mr. Templeton.
STATEMENT OF JOHN TEMPLETON, CO-CONVENOR, COALITION FOR FAIR EMPLOYMENT IN SILICON VALLEY
Mr. TEMPLETON. Chairman Smith and Ranking Member Jackson Lee, we appreciate the invitation to share our viewpoints on the topic of regulating protection for American workers through the American Competitiveness and Work Force Improvement Act. We also thank Representative Jackson Lee for her advocacy of provisions to require recruitment from a wide variety of educational institutions and through a wide array of media as part of H.R. 4200. It is our hope that the remainder of the committee and Congress will see the wisdom of creating more scientists and engineers like our presenters today.
I think in our previous testimony, it became very clear that the administration has failed in the regulations to even address the impact of the H–1B program on underrepresented minorities and other protected classes.
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So, this is a real issue that hopefully the subcommittee and the committee will get more answers on.
There are serious implications for the goal of increasing the supply of those groups in the professions of science and technology. We presented you a chart that is based on our report called the Silicon Ceiling, in which we got the EEO–1 forms of 253 high technology companies, and we found that from 1996 to 1997, that the employment of African Americans and Native Americans actually declined, and that on a percentage basis, the employment of Hispanics declined as well.
If you saw the news in the last day or so, you may have seen a report from the Educational Testing Service that shows for the next 20 years, that the proportion of blacks and Hispanics in American colleges will decline. So this is what we are talking about in terms of the impact of this program. And my colleague will help you understand that the basic premises behind the perceived needs for this program are actually part of why this program is so dangerous and so damaging to people.
We have an unparalleled opportunity to end income inequity, economic disparity in this country, and we are passing it by in the exact same way that we did at the beginning of the 1900's when we could have brought people from the South into the industrial age much quicker than the 60 years that it took.
But one other thing that I want to point out about the chart is that right now, there are about 770,000 African Americans and Latinos who are working in some aspect of high technology. And that is figures that we got from Tim Consedine with the Bureau of Labor Statistics. Now, compare that with the 660,000 who are in the Armed Forces right now who come from those same schools that high-tech says cannot teach math and science, but when you compare it to Silicon Valley managers and professionals in 263 companies, fewer than 2,000 from each of those groups.
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So to put it in a deeper perspective, if you look at that 770,000 group of people, it might remind you of a number that you have recently heard from ITAA about needing 800,000 people to work in these industries. So it is our contention that there is a clear supply of underutilized workers who often are working for government agencies or working for universities and hospitals, running the computer systems, but they do not get the high-paying jobs with stock options and the advancement opportunities because—directly because of this program.
We started to look just at the issue of fair employment in high technology, and it did not take us long to intersect with the H1–B. And so we had an anecdotal reference from a person who said, I went to my boss and said, why aren't you recruiting from historically black colleges and universities and black professional organizations? And the response was, well, the H1–B is easier, I need the body count. So after that we did a Freedom of Information Act request and got the entire list of labor condition applications for the Western United States. Out of that we selected 100 of the applications at random. Then we advertised those jobs through e-mail. We did not run ads in the paper or anything like that; we just posted it on several e-mail lists. We got a response from people.
So, for instance, a company like Netscape was applying for a network training instructor. So we had an African American woman who had a master's degree in instructional technology from San Francisco State who responded to that job, and so we sent that information in to Netscape. They did not respond. In fact, for all of the 100 jobs that we sent in, and we sent in people who had at least 20 years or graduate degrees in those jobs, none of the companies responded. So that kind of gives you an idea of the impact of not having regulations and not really having enforcement.
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The person that we reference in our testimony, Mr. Lindsey Brown, one of the other issues that is very important is retaliation. This is a gentleman who worked with us for several months while he was still on the job. We advised him to go through the complaint procedures at his company. Finally, he went to the Department of Fair Employment and Housing, filed a complaint, and was fired the next day.
And so we understand your frustration about the regulations because it is the same frustration that people who complain have in dealing with the Labor Department and the EEOC.
We have taken the case of Mr. Brown, starting with the regional offices of the EEOC, and the OFCCP. We have taken it to the Director of the OFCCP. We have taken it to the Secretary of Labor. We have presented it directly to Gene Sperling himself at the White House, and the response was 2 weeks later they gave the company that dismissed him an award for dealing with the digital divide.
So if you cannot get an individual complaint processed, then it raises a question as to the adequacy of the regulations, because the premise for the H1–B has been speed. Companies—we have to do it quickly so that the companies do not lose market opportunities. What about Mr. Brown who got dismissed right before the IPO for the company? Lost $100,000 in options because of that. Lost the $70,000-a-year salary and has been unemployed since September. He needs speed as well.
Maria Flores, who has been through the EEOC for 2 years, and Larry Campbell from Oracle, they need speed as well. They are working as contract labor as opposed to having full-time jobs.
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So if you can process an LCA in 7 days, and have a fax-back procedure, then to have just completely interminable delays in dealing with processes completely throws worker protections completely out the window. I mean, the individual worker has absolutely no chance in this situation at all. And all the economic incentives are in favor of bringing in people from overseas.
And as you adequately pointed out, many of the people who come in get free education, all the way up through higher education level. Then they come to the United States and get paid. I mean, NSF is probably paying somewhere between 600 million and 700 million in tuition reimbursements to foreign students as part of the grants programs. So when you compare that to the limited amounts that are talked about in terms of the 80 million for scholarships, it is just so far out of whack that it just makes the average American citizen wonder what Congress was thinking about.
But I would like to have my colleague Kevin Hinkston, who was the U.S. Black Engineer of the Year last year, talk about the demand that he sees in terms of young people who want these jobs, how quickly it is for them to attain the skills necessary for those jobs; also some of the practices inside industry that are used to actually come up with the justification for these jobs.
[The prepared statement of Mr. Templeton follows:]
PREPARED STATEMENT OF JOHN TEMPLETON, CO-CONVENOR, COALITION FOR FAIR EMPLOYMENT IN SILICON VALLEY
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We appreciate the invitation to share our viewpoints on the topic of regulating protection for American workers through the American Competitiveness Workforce Improvement Act.
We also thank Rep. Jackson Lee for her advocacy of provisions to require recruitment from a wide variety of educational institutions and through a wide array of media as part of H.R. 4200. It is our hope that the remainder of the committee and Congress will see the wisdom of creating more scientists and engineers like our presenters today.
There are serious implications for the goal of increasing the supply of underrepresented protect ed classes in the professions of science and technology.
Without effective regulation, this goal is likely to be retarded. ACWIA's hasty approval through a budget compromise caused us to wonder whether protections for American workers were clearly thought through. Several months earlier, the Coalition had asked Rep. Maxine Waters, D–CA and the Congressional Black Caucus why the Department of Labor had failed to enforce civil rights laws, executive orders and regulations in high technology.
As a result, we began the first of 17 meetings with officials of the Office of Federal Contract Compliance Programs, including with the director, The Honorable Shirley Wilcher, Esq. and the deputy director, Joseph Kennedy.
Our experience offers some lessons as you conduct oversight on how your laws are enforced and as you craft legislation.
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Imagine if you will a group of volunteer citizens performing the first benchmarking analysis of EEO–1 forms submitted by high technology companies, crunching more than 50,000 data fields; conducting opinion polling to assess the extent of workplace discrimination; inducing employees afraid of retribution to come forward to submit discrimination claims and presenting the results to the relevant law enforcement and regulatory officials. And being ignored.
Or put yourself in the shoes of Mr. Lindsay Brown, who had built a 20-year history in technology prior to contacting us in March 1999. We advised him to exhaust his company's human resources procedures while we alerted federal officials that there might be a problem at his company. By July, he wrote us, ''I have been in this type of business, telecommunications, for over 20 years, have seen racism in Silicon Valley but never this bad. I have gotten to the end of my rope but I refuse to let them run me out.'' Mr. Brown exercised his rights in September 1999 by hiring an attorney and filing a complaint with the California Department of Fair Employment and Housing. The next day, 3Com dismissed Mr. Brown. They didn't even have the decency to tell him. He discovered his dismissal when his e-mail no longer worked and he went to technical support.
The absense of regulations under ACWIA and the recalcitrance of the Labor Department and Equal Employment Opportunity Commission to enforce such basic laws as the Civil Rights Act of 1964 undermines the foundation of immigration law. Economic incentives to employ foreign workers are so powerful in a global economy that individual workers have no opportunity to seek redress on their own.
Without an effective regulatory environment, the game takes a lop-sided tilt in favor of the employer and any legislation you create becomes suspect when viewed against the Constitutional protection for due process under law.
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The Ninth Circuit held in 1979 in Legal Aid Society of Alameda County vs. Brennan that agencies may not simply choose not to enforce regulations and laws because they might be unpopular. It also held that agencies may not use process to impede citizens from exercising their rights.
In our research, we learned that approximately 80 percent of Silicon Valley high tech firms had failed to file EEO–1 reports.
''Where an employer has a segregated labor force and uses recruitment methods which perpetuate it, it is fair to assume that he is aware of the consequences of his recruitment system. All employers required to file reports with the EEOC must be aware of the consequences of their recruitment system because they are required to state those consequences in numerical terms.''
(Rutgers Law Review, Vol. 22, No. 3, Spring 1968)
Through anecdotal reports, we were told that employers were consciously using the ACWIA's provisions instead of seeking employees from protected classes.
In January 2000, we received through Freedom of Information Act, a CD–Rom with each ACWIA non-immigrant visa labor condition application in the western United States. We selected 100 at random, advertised the jobs through e-mail and then submitted applications to the applicant companies after changing addresses so that we would receive responses.
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Not one of the companies responded to the resumes.
To give a graphic example, the National Conference of Black Physics Students met at North Carolina A&T State University in March and the National Organization of Black Chemists and Chemical Engineers met in Miami in April. Most of the universities that recruited at these conferences for graduate students were historically black colleges and universities. The second most numerous category was the U.S. military.
Indispensibility is the most effective spur to non-discrimination. The ACWIA's latitude to universities and government-sponsored research facilities to staff their research departments from overseas keeps those young people from achieving their full potential.
NSF is spending close to $1 billion for direct stipends and tuition reimbursements for foreign students, compared to $80 million in ACWIA scholarships.
But let's go closer to home in Silicon Valley. For the past 10 years, the Bay Area Chapter of B DPA–Information Technology Thought Leaders has conducted a six-month programming class for high schools students in Oakland and, for the last two years, San Jose.
Students learn programming, web page design, corporate etiquette and project management. They learn Visual Basic and HTML. There is no prerequisite for computer experience. More than 400 students have completed these courses. At least 80 percent go on to higher education, particularly those who participate in the training for several years. One has achieved a Ph.D. in forensic science. Some have masters degrees in computer science.
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If youth see professionals that they can identify with, then the students readily take to technology. It's just a matter of exposing them.
Dr. Philip Emeagwali has done a better job of exposing young people to science than anyone with his web site http://www.emeagwali.com which attracts 156,000 students per week.
He is recognized as one of the pioneers of the Internet for his world record-setting performance of the fastest computer program to that time in 1989. Emeagwali is the only individual winner of the IEEE Gordon Bell Prize because he used the NSFNet to deploy 56,000 individual processors to perform supercomputer calculations of oil field simulations. He is available to tell you about the depth of interest in scientific careers that he has observed among American young people.
ADDITIONAL STATEMENT OF DR. KEITH JACKSON, PHYSICIST
The Stanford Linear Accelerator Center (SLAC) which is managed for the Department of Energy does not have a single African-American physicist on its technical staff. This would not be so remarkable except for the fact that Stanford University has produced the largest number of African- Americans with Ph.D's in physics.
The exclusion of universities and non-profit research laboratories from the fees associated with the use of the H1–B workers would provide a financial incentive for these taxpayer-supported institutions to recruit from overseas.
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There should be an examination of the impact of H1–B workers in government-supported research and development laboratories, particularly with regard to the inclusion of underrepresented protected classes. The fees generated by the ACWIA generated $80 million for scholarship, but government agencies spent close to $1 billion for tuition reimbursements and fellowships.
Compare this to the free higher education provided to students in most European nations. The graduate can then pursue graduate education in the United States in a scientific field and receive tuition, fees and living expenses from the federal grant that his or her thesis advisor has received.
After completing your Ph.D with this subsidy, you can then be hired by a company who applies for an H1–B visa.
By comparison, the American student, particularly from underrepresented protected classes, must assume a debt approaching $50,000 beginning as an undergraduate. The combination of the end of affirmative action programs and the emphasis on loans instead of grants means that the American student must often work one or more jobs while studying.
The National Action Council for Minorities in Engineering has learned that two-thirds of the underrepresented minority students in engineering drop out of school because of the lack of financial aid.
You might have seen the section on young entrepreneurs in the Monday Wall Street Journal. The African-American entrepreneur on the last page had to start in community college, work and then get to a four-year institution for a bachelor's degree.
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Yet, students from abroad mentioned earlier in the section were able to go all the way to their terminal degree receiving a powerful boost into entrepreneurship.
The disincentives that Congress has created make it very difficult for young people energized by role models like Dr. Philip Emeagwali to pursue their dreams to become scientists.
The regulation of ACWIA must look carefully at federal agencies, universities and government-sponsored research institutions to correct these imbalances.
IN CONCLUSION
The demand from the H1–B program arises from the growth of practices that were found illegal by the Griggs vs. Duke Power and other precedents 30 years ago. The use of qualifications that bear no relationship to work performance, subjective hiring criteria and discriminatory recruitment practices lead to a tiny proportion of applicants being interviewed or hired.
Regulations must root out those practices to give American workers a fair shot.
Mr. SMITH. Mr. Hinkston, I am going to ask you to wait just a minute. I would like to get Mr. Brehm's testimony, and then I will ask you a question and give you a chance to respond and cover that subject. Thank you.
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Mr. Brehm.
STATEMENT OF FRANK BREHM, PROGRAMMER'S GUILD
Mr. BREHM. Mr. Chairman, and members of the committee, as the Northwest Regional Coordinator of The Programmer's Guild, I thank you for the privilege of addressing this hearing.
Ten years ago the high-tech lobby approached Congress with a request to create a special class of visas for foreign programmers, health care workers and engineers to compensate for what was ostensibly a shortage of suitable American workers. According to the Department of Labor, there is no credible evidence of a shortage of high-technology workers. Congress has, nonetheless, become convinced that it needs to act as America's largest temporary help agency and intervene in the supply and demand mechanisms of the U.S. labor market. Resulting H1–B legislation has been passed into law without the implementation of adequate safeguards for American high-tech workers.
No other work force in history has faced the antagonism inherent in congressional attempts to weaken the position of high-tech workers in American society. It is imperative that our Representatives avoid any further action on H1–B legislation until such time as worker protections and information-gathering provisions in the American Competitiveness and Workforce Improvement Act of 1998 have been implemented by the administration.
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Congressional attempts to manipulate the supply of labor on behalf of business interests have the potential to yield disastrous consequences. The H1–B legislation contains ominous parallels to the ongoing failing attempts by Congress to manipulate the availability and price of agricultural labor for the benefit of agribusinesses. Politicians use immigration legislation to influence labor markets as surely as the Federal Reserve uses monetary policy to influence the capital markets.
There is a saying popular on Wall Street among stock traders that the market does not lie. I might add that the labor market does not lie and will naturally produce high-tech workers according to the actual needs of the economy, not to the dictates of high-tech political action committees.
Contrary to the promises of the high-tech industry, as it becomes increasingly divorced from the realities of the U.S. labor markets, it will continue to insist on ever larger labor entitlements of foreign professionals. Unless you, our Representatives, gain the courage to wean high-tech CEOs from government dependence, America's software specialists will suffer the same unfortunate fate of U.S. agricultural and manufacturing workers.
Without the Documentation of the U.S. Worker Recruitment provision in the American Competitiveness and Workforce Act of 1998, American high-tech workers will continue to be denied opportunities which rightfully belong to them.
My first exposure to the disingenuous H1–B process occurred in the mid-1990's when a manager handed me a piece of paper with a listing of names of French citizens. A coworker and I were instructed to pick a name from the list of someone who was to become a programmer at our company. My protests to the effect that our firm seemed to have no difficulty finding American candidates, nor did we have any list of qualifications with which to make a recommendation, fell on deaf ears.
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Finally, in an effort to correct an underrepresentation of women in the Department, my coworker pointed to what appeared to be a female name and handed the list back to the manager. A few weeks later the new employee arrived, and attesting to our lack of understanding of French names, ''she'' in reality was a ''he.'' the company received a worker at less than market wages who was legally bound to the firm for many years. The domestic candidates who had submitted resumes for ordinary ''C'' language programming duties were suddenly found to be ''unqualified.'' without worker protections and recruitment documentation, such H1–B abuses will continue with alarming regularity.
Many in the business community say that the Documentation of Non-Displacement of U.S. Workers provisions places an unnecessary burden upon employers. This provision, far from being an encompassing worker safeguard, is a diluted substitute for the type of protections which technical workers deserve. The clause rightfully prevents an employer from uttering the infamous and often false sentence, ''Your position has been eliminated,'' in order to quickly offer the same position to a foreign laborer.
Unfortunately, this provision offers no protection against a more subtle and perhaps larger form of displacement called ''offshoring.'' when a corporation offshores workers, the firm brings on site one or more H1–B representatives from a foreign programming business, sometimes referred to as a ''job shop.'' and after the foreign programmer achieved competence, he or she begins to channel programming projects to his or her overseas coworkers at the parent firm. The U.S. corporation is then able to lay off what may be an entire department of American technical specialists. It is unconscionable that the non-displacement rule, inadequate as it is, has yet to become implemented as rule of law.
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Congress in its H–1B haste to provide the private sector with an artificially high number of technical personnel vis-a-vis the market, has been proceeding from the assumption that the dynamics of a knowledge-based industry are similar to that of the commodity-producing sector. Complex software is not a commodity, as it requires continuous updates after being sold.
Since 1991, H1–B legislation and its accompanying offshoring led to a significant reduction in the costs to software firms of remedying software defects. Where once every software bug was fixed by a highly paid American programmer, today many of the same defects are handled by low-paid Asian programmers. In the year 2000, software defects in a product are far less injurious to a firm's return on investment than was the case 15 years. The consumer suffers accordingly. Where once society feared the proverbial four horsemen of pestilence, plague, famine and war, we have added a fifth called new software, or the dreaded ''dot oh'' release. Increasing H1–B quotas are fast taking us from the digital age to the age of unexpected consequences.
At the same time that the U.S. high-tech employers allege a shortage of available skilled workers, this country has amassed a surprising surplus of programmers over the age of 40 who are no longer practicing their craft. The requirement of a Report on Older Workers in the Information Technology Field will help to focus Congress' attention on the reasons why workers have left what would otherwise appear to be well-paying jobs. As a Nation, we need to determine where these skilled workers have gone and whether they left the profession voluntarily or under the duress of age discrimination. We have available many credible studies documenting age discrimination in the software industry. The solution to the problem of age discrimination is fewer, not more, H1–B workers.
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And I will summarize here that it is clear that the American high-tech works and students face a triple threat from the H1–B program. First, foreign students, many of whom receive a taxpayer-subsidized education at our finest universities, provide low-paid labor as teaching assistants and arrive on our shores with the full intention of converting their student visas to H1–B visas upon graduation. Their presence in our universities, regardless of their academic aptitude, adds an extra burden to American students attempting to gain access to high-tech degree programs and classes.
Second, in violation of the intent of Congress, H1–B personnel compete directly with domestic workers for entry-level and advanced positions in high-technology companies.
Third, the process of using H1–B employees as Trojan horses to offshore jobs is no different than the process which has devastated American manufacturing industries. Offshoring took years to decimate the American manufacturing industry. Thanks to the H1–B program, offshoring has the potential to happen with much greater speed in the high-tech field.
Before we unknowingly surrender our prosperity and jobs in the high-tech industry, it is vital that our elected Representatives ensure that worker protections in the American Competitiveness and Workforce Improvement Act become implemented as law.
Thank you for allowing me to participate on today's panel.
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Mr. SMITH. Thank you, Mr. Brehm.
[The prepared statement of Mr. Brehm follows:]
PREPARED STATEMENT OF FRANK BREHM, PROGRAMMER'S GUILD
Mr. Chairman and Members of the Committee:
As the Northwest Regional Coordinator of The Programmer's Guild, I thank you for the privilege of addressing this hearing.
Ten years ago the high-tech lobby approached Congress with a request to create a special class of visas for foreign programmers, healthcare workers, and engineers to compensate for what was ostensibly a shortage of suitable American workers. According to the Department of Labor, there is no credible evidence of a shortage of high-technology workers. Congress has, nonetheless, become convinced that it needs to act as America's largest temporary help agency and intervene in the supply and demand mechanisms of the United States labor market. Resulting H1–B legislation has been passed into law without the implementation of adequate safeguards for American high-tech workers.
No other workforce in history has faced the antagonism inherent in Congressional attempts to weaken the position of high-tech workers in American society. It is imperative that our representatives avoid any further action on H1–B legislation until such time as the worker protections and information gathering provisions in the American Competitiveness and Workforce Improvement Act of 1998 have been implemented by the Administration.
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Congressional attempts to manipulate the supply of labor on behalf of business interests have the potential to yield disastrous consequences. The H1–B legislation contains ominous parallels to the ongoing failing attempts by Congress to manipulate the availability and price of agricultural labor for the benefit of agribusiness. Politicians use immigration legislation to influence labor markets as surely as the Federal Reserve uses monetary policy to influence the capital markets.
There is a saying popular on Wall Street among stock traders that ''The market doesn't lie.'' In might add, ''the labor market doesn't lie,'' and it will naturally produce high-tech workers according to the actual needs of the economy, not to the dictates of high-tech Political Action Committees.
Contrary to the promises of high-tech industry, as it becomes increasingly divorced from the realities of the U.S. labor market, it will continue to insist upon ever-larger labor entitlements of foreign high-tech professionals. Unless you, our representatives, gain the courage to wean high-tech CEO's from government dependence, America's software specialists will suffer the same unfortunate fate of U.S. agricultural and manufacturing workers.
Without the Documentation of U.S. Worker Recruitment provision in the American Competitiveness and Workforce Improvement Act of 1998, American high-tech workers will continue to be denied opportunities which rightfully belong to them.
My first exposure to the disingenuous H1–B process occurred during the mid-1990's when a manager handed me a paper with a listing of the names of French citizens. A co-worker and I were instructed to pick a name from the list of someone who was to become a programmer at our company. My protests to the effect that our firm seemed to have no difficulty finding American candidates, nor did we have any list of qualifications with which to make a rational selection, fell upon deaf ears.
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Finally, in an effort to correct an under-representation of women in the department, my co-worker pointed to what appeared to be a female name and handed the list back to the manager. A few weeks later the new employee arrived, and attesting to our lack of understanding of French names, ''she'' was in reality a ''he.'' The company received a worker at less than market wages who was legally bound to the firm for many years. The domestic candidates who had submitted resumes for ordinary ''C'' language programming duties, were suddenly found to be ''unqualified.'' Without worker protections and recruitment documentation, such H1–B abuses will continue with alarming regularity.
Many in the business community say that the Documentation of Non-Displacement of U.S. Workers provision places an unnecessary burden upon employers. This provision, far from being an encompassing worker safeguard, is a diluted substitute for the type of protections which technical workers deserve. The clause rightfully prevents an employer from uttering the infamous and often false sentence ''your position has been eliminated,'' in order to quickly offer the same position to a foreign laborer.
Unfortunately, this provision offers no protection against a more subtle and perhaps larger form of displacement called ''offshoring.'' When a corporation ''offshores'' workers, the firm brings on-site one or more H1–B representatives from a foreign programming business, sometimes referred to as a ''job shop.'' After the foreign programmer achieves competence, he or she begins to channel programming projects to his overseas co-workers at the parent firm. The U.S. corporation is then able to layoff what may be an entire department of American technical specialists. It is unconscionable that the Non-Displacement rule, inadequate as it is, has yet to become implemented as rule of law.
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Congress, in its H1–B haste to provide the private sector with an artificially high number of technical personnel vis-a-vis the market, has been proceeding from the assumption that the dynamics of a knowledge-based industry are similar to that of the commodity producing sector. Complex software is not a commodity, as it requires continuos updates after being sold.
Since 1991, H1–B legislation and its accompanying ''offshoring'' has led to a significant reduction in the cost to software firms of remedying software defects. Where once every software bug was fixed by a highly-paid American programmer, today many of the same defects are handled by low-paid Asian programmers. In the year 2000, software defects in a product are far less injurious to a firm's return on investment (ROI) than was the case 15 years ago. The consumer suffers accordingly. Where once society feared the proverbial four horseman of pestilence, plague, famine, and war, today we've added a fifth called new software, or the dreaded ''dot oh'' release. Increasing H1–B quotas are fast taking us from the digital age to the age of unexpected consequences.
At the same time that U.S. high-tech employers allege a shortage of available skilled workers, this country has amassed a surprising surplus of programmers over the age of 40 who are no longer practicing their craft. The requirement of a Report on Older Workers in the Information Technology Field will help to focus Congressional attention on the reasons why workers have left what would otherwise appear to be well-paying jobs. As a nation we need to determine where these skilled workers have gone, and whether they left the profession voluntarily, or under the duress of age discrimination. We have available to us many credible studies documenting age discrimination in the software industry. The solution to the problem of age discrimination is fewer, not more, H1–B workers.
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Recently, while enrolled in a programming class at a local college, I saw first-hand the difficulties American high-tech college students face when attempting to gain the necessary education for access to information technology careers. Many students were denied admission because a great many seats had been claimed by foreign students who were in our country on student or H1–B visas. The requirement in the American Competitiveness and Workforce Improvement Act for a Report on High Technology Labor Market Needs includes an analysis of the ''needs of United States students.'' It is no secret that American colleges encourage large foreign enrollments in science, engineering, and computer disciplines. Our universities often deny American students admission to computer science study in favor of non-citizens, only to have industry subsequently claim ''Americans don't want to work in high-tech!''
It is clear that American high-technology students and workers face a ''triple threat'' from the H1–B program. First, foreign students, many of whom receive a taxpayer-subsidized education at our finest universities, provide low-paid labor as teaching assistants, and arrive on our shores with the full intention of converting their student visas to H1–B visas upon graduation. Their presence in our universities, regardless of their academic aptitude, adds an extra burden to American students attempting to gain access to high-tech degree programs and classes.
Second, in violation of the intent of Congress, H1–B personnel compete directly with domestic workers for entry-level and advanced positions in high-technology companies.
Third, the process of using H1–B employees as Trojan horses to ''offshore'' jobs is no different than the process which has devastated American manufacturing industries. ''Offshoring'' took years to decimate the American manufacturing industry. Thanks to the H1–B program, ''offshoring'' has the potential to happen with much greater speed in the high-technology field.
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Before we unknowingly surrender our prosperity and jobs in the high-tech industry, it is vital that our elected representatives ensure the worker protections in the American Competitiveness and Workforce I