Article 43


Saturday, April 22, 2006

Corporate Tax Giveaway

The $104 Billion Refund
The most absurd corporate tax giveaway of 2005.

By Michelle Leder
Slate Magazine
April 13, 2006

Feeling flush because you’re getting a nice tax refund this year? You’re not alone. Some of America’s largest corporationsa virtual who’s who of the Fortune 100 - have been reporting their own hefty tax windfalls, thanks to an absurd provision of a law designed to create jobs.

IBM, for example, is banking a $2.8 billion refundwell, better to call it a “tax savings” - because instead of paying the normal corporate tax rate of 35 percent on $9.5 billion in profits it earned overseas, the company paid only 5.25 percent. That’s the magic of the AMERICAN JOB CREATIONS ACT, a piece of legislation that passed with comfortable margins in both the House and the Senate and was signed into law by President Bush just two weeks before the 2004 elections.

The AJCA, which was pushed through during the last fit of panic about outsourcing, was ostensibly designed to encourage companies to add jobs here. It gave a small tax deduction to American manufacturers, and it offered a one-time tax holiday in 2005 when corporations could repatriate their foreign income at a massively reduced tax rate. This repatriation, the theory went, would encourage R & D and capital investment in the United States, leading to new positions down the road. But, like President Bush’s creatively named Clear Skies initiative and Healthy Forest Restoration Act, the American Jobs Creation Act has not lived up to its title.

Take IBM. According to its annual report for 2005, the company added fewer than 400 jobs worldwide last year to its workforce of 329,000 people. At the same time, IBM shed 5 million square feet of space in the United States, making it highly unlikely that any of those jobs were added in the U.S. Indeed, numerous news reports, including THIS Business Week article, put IBM’s head count in India at close to 40,000 at the end of 2005, more than a fourfold increase over the 9,000 reported at the end of 2003.

Analysts anticipate that American companies will have repatriated around $350 billion in 2005 as a result of the law. While it’s hard to make a straight calculation because of the vagaries of the tax code, that works out to a savings of roughly $104 billion on corporate America’s tax bill. At Pfizer, the pharmaceutical giant that announced the single largest repatriation$37 billionחthe one-time windfall works out to approximately $11 billion. That kind of tax savings buys a lot of $600-an-hour lobbyists, though not, apparently, many scientists and salespeople. In its annual report, Pfizer doesn’t list employees by region. But the company’s total head count dropped to 106,000 at the end of 2005, about 8 percent fewer jobs than at the end of 2004.

“It basically gave money to corporations in return for corporate contributions,” says Bob McIntyre, director of CITIZENS FOR TAX JUSTICE. As for the law’s name, McIntyre says that Congress was “just kidding.” One of the few groups that believes the legislation has led to the creation of jobs is the AMERICAN SHAREHOLDERS ASSOCIATION, a spinoff of AMERICANS FOR TAX REFORM, led by conservative activist Grover Norquist. In a REPORT LAST MONTH, the American Shareholders Association said that stock buybacks, dividends and mergers, and acquisitions were up sharply because of the legislation and that this in turn had led to the creation of 500,000 high-paying jobs in the United States.

Not so far. Some companies taking advantage of the generous tax break haven’t even tried to hide their layoffs. In January 2005, on the same day it announced it was cutting 6 percent of its workforce, National Semiconductor said that it was repatriating $500 million under the American Jobs Creation Act. Colgate-Palmolive, which in December 2004 announced plans to cut more than 4,000 jobs, brought back $800 million in overseas profits last year. The Wall Street Journal reported in December that the combination of repatriation and job cuts prompted AMALGAMATED BANK, which owns Colgate shares, to file a shareholder resolution arguing that the company’s brand and reputation would be damaged by such moves. Julie Gozan, director of corporate governance for Amalgamated, said the resolution was withdrawn before Colgate filed its proxy on March 31 because the company agreed to provide more information to investors on the impact of the AJCA later this year. But Gozan said that Amalgamated is considering similar resolutions at several other companies where it owns stock.

In addition to lowering the tax rate, the AJCA required companies to rewriteall sorts of employment contracts. Mike Melbinger, head of executive compensation and employee benefits at Winston and Strawn, a large Chicago-based law firm, estimated that the typical large company might have 30 employment contracts, 10 change-in-control agreements, and various severance plans, all of which had to be changed as a result of the 2004 law. “It was a ton of work,” says Melbinger. “As much as we like to get paid, it was terrible for the clients.”

So at least the American Jobs Creation Act benefited one group of American workers: corporate lawyers.


Posted by Elvis on 04/22/06 •
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Wednesday, April 19, 2006

Divine Strake

Is this a test of the what the US plans to use to BOMB IRAN

Global Strike Low-Yield Nuclear Simulation

The Department of Energy is readying [for June 2006] the Nevada Test Site for a large-scale, open-air, high explosive detonation on a tunnel complex. The Defense Threat Reduction Agency (DTRA), the DOE customer which is conducting the test, is stressing that the test is not a nuclear blast and the Russian government reportedly has been notified to avoid misunderstanding about the event. “The test is aimed at determining how well a massive conventional bomb would perform against fortified underground targets,” the Washington Post reported on March 31st.

No one - with the notable exception of Andrew Lichterman and John Fleck who first reported on this - seems to have tried to dig deeper than the press release from DTRA. I too have monitored the preparations for Divine Strake; It is much more than was reported (for media reports about Divine Strake after publication of this Nuclear Brief, click HERE).

Divine Strake is neither a bomb nor conventional. Instead, the test is a detonation of a pile of chemical explosives to simulate a “low-yield nuclear weapon ground shock” effect to “improve the warfighters confidence in selecting the smallest proper nuclear yield necessary to destroy underground facilities while minimizing collateral damage.”

Divine Strake, moreover, is an integral part of STRATCOM’s new Global Strike mission, which is otherwise said to provide mainly non-nuclear means of defeating time-critical targets. Divine Strake is the first nuclear effects simulation of this kind against underground targets since President George W. Bush in Summer 2004 directed STRATCOM to “extend Global Strike to counter all HDBTs [Hard and Deeply Buried Targets] to include both tactical and strategic adversarial targets.”

The Divine Strake Event

Divine Strake was approved in 2002 as part of the congressionally authorized DOD FY2002 Tunnel Target Defeat Advanced Concept and Technology Demonstration (ACTD). Since then, DTRA has prepared for the event under its Counterforce program. DTRA confirmed today that Divine Strake is the event described in the budget documents. The DTRA counterforce RDT&E (Research, Development, Testing and Engineering) budget for FY2006 described the experiment this way:

“Conduct the Tunnel Target Defeat Advanced Concept and Technology Demonstration(s) (ACTD) Full-Scale tunnel defeat demonstration using high explosives to simulate a low yield nuclear weapon ground shock environment at Department of Energy’s Nevada Test Site.”

The reference to low-yield nuclear weapons was omitted from the section in the FY2007 budget request, which instead describes the event like this: “Conduct the Tunnel Target Defeat ACTD large-scale tunnel defeat demonstration using high explosives to produce the desired ground shock environment at the Department of Energy’s Nevada Test Site.” Yet the nuclear reference is used elsewhere in the FY2007 budget:

“The Tunnel Target Defeat ACTD will develop a planning tool that will improve the warfighterҒs confidence in selecting the smallest proper nuclear yield necessary to destroy underground facilities while minimizing collateral damage.”

Divine Strake reflects a concern in the Pentagon over what is said to be an increasing number of a underground facilities in potentially hostile countries. The 2001 Nuclear Posture Review warned that the existing B61-11 nuclear earth-penetrator does not have sufficient capability against certain deeply buried targets. The Robust Nuclear Earth Penetrator was supposed to provide additional capability, but Congress has refused to fund the weapon due to concern that it could lower the nuclear threshold.

Divine Stake is not an RNEP-type experiment because it simulates the use of a very low-yield nuclear weapon against an relatively shallow underground target. Divine Strake follows a previous 3D computer simulation conducted by scientists at Los Alamos National Laboratory in 2004, which examined the use of a 10 kt nuclear detonation inside the U16B tunnel as an agent defeat weapon. The experiment concluded that the relatively large yield was necessary for radiation to penetrate through the entire length of the tunnel “indicating that such yields might be necessary to guarantee agent destruction stored inside large tunnel complexes.”

Divine Strake, in contrast, does not simulate agent defeat destruction but simply envisions using the explosive yield of a small nuclear weapon to destroy or severely damage and underground structure. Also important is that the simulation is not directed against the tunnel entrances, but involves detonating the explosives on top of the surface above the tunnel.

The contract for collecting the seismo-acoustic data from Divine Strake was awarded to Southern Methodist University on March 16, 2006.

The “Weapon”

Contrary to most of the media reports, Divine Strake is not testing a conventional bomb but simply detonates a huge pile (700 tons) of Ammonium Nitrate and Fuel Oil (ANFO). For comparison, the largest conventional weapon in the U.S. inventory is the MOAB (Massive Ordnance Air Blast) bomb, which contains nearly nine tons of explosives with a yield of approximately 0.012 kt TNT.

The explosive power of Divine Strake will be approximately 593 tons of TNT equivalent, or roughly 0.6 kt. This is about double the lowest yield option on the non-strategic B61 nuclear gravity bomb, and suggests that Divine Strake may be intended to fine-tune use of the B61 bomb. There are three modifications of the non-strategic B61 bomb in the U.S. stockpile with yields ranging from 0.3 kt to 170 kt.

The Department of Energy is readying the Nevada Test Site for a large-scale, open-air, high explosive detonation on a tunnel complex. The Defense Threat Reduction Agency (DTRA), the DOE customer which is conducting the test, is stressing that the test is not a nuclear blast and the Russian government reportedly has been notified to avoid misunderstanding about the event. “The test is aimed at determining how well a massive conventional bomb would perform against fortified underground targets,” the Washington Post reported on March 31st.

No one - with the notable exception of Andrew Lichterman and John Fleck who first reported on this - seems to have tried to dig deeper than the press release from DTRA. I too have monitored the preparations for Divine Strake; It is much more than was reported (for media reports about Divine Strake after publication of this Nuclear Brief, click here).

The contract for collecting the seismo-acoustic data from Divine Strake was awarded to Southern Methodist University on March 16, 2006.

The B61 also exists in a strategic version (B61-7) with four yields up to 350 kt, but given the strategic mission of this weapon the lowest yield option may be higher than the non-strategic version. Finally, the B61-11 has a single yield of 400 kt.

Divine Strake is not the first large-scale, open-air, high explosive detonation conducted by DTRA. Such events apparently play an important role in fine-tuning the plans for using nuclear weapons against underground and surface targets. Since 1977, at least 10 similar events have been carried out at the White Sands Missile Range in New Mexico. The events have involved from 24 tons to as much as 4,744 tons of high explosives.

Other detonations have included an underground detonation of 1,410 tons in the U12n tunnel at NTS in 1993. In addition, Seven 120-ton detonations were carried out at Misers Bluff at Planet Ranch in Arizona in 1978. Finally, in 2002, an 18 tons explosion was set off at the Nevada Test Site.

Experience obtained from these detonations were used to develop the plans for Divine Strake scheduled for June 2, 2006, at the U16B tunnel complex at the Nevada Test Site.

The U16B Tunnel Complex

Divine Strake will be conducted at the U16B complex on the Nevada Test Site. U16B consists of a hook-shaped tunnel drilled through a limestone formation and connected to three portals and a vent hole. Each of the tunnel entrances are sealed by large steel doors 14x13 feet and 1.5 foot thick.

The target

The U16B target was “carefully chosen” for Divine Strake so that it “simulates the characteristics of important potential, global adversaries,” according to the DOE. The detonation will be conducted in a limestone bed with specific geological properties, according to the DOE’s draft environmental assessment for Divine Strake: “As a number of potential adversarial military targets are based in similar limestones, [Divine Strake] needed to be sited in a similar geological setting to actual military targets.”

According to the DOE, such HDBTs are used by adversaries for command and control, storage of munitions (including weapons of mass destruction, and long-range missiles), modern air defenses, a variety of tactical weapons, wartime refuge for national leaders, and a multitude of other offensive and defensive military uses.

An example of such a target may be the Chinese airbase at Feidong, which includes what appears to be a large underground facility for hiding aircraft and potentially also other of the capabilities mentioned by DOE.


Posted by Elvis on 04/19/06 •
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eWeek Commentary on AT&T Bellsouth Merger

Just Say No to AT&T-BellSouth
By David Morgenstern
March 20, 2006

The news that AT&T WOULD PURCHASE BELLSOUTH for $67.1 billion triggered a flashback. In 1984, the government dismantled the Bell System, breaking it up into a pack of operating companies. A generation later, the pieces seem to be reassembling themselves.

But today’s telecommunications landscape is vastly different from that of 1984. There’s an established market for cellular communications that didn’t exist then, and consumers and businesses alike require broadband for Internet services, including voice and video over IP.

According to AT&T’s calculations, the cost savings are expected to top $2 billion two years after the deal closes and eventually total about $18 billion as a result of layoffs, lower advertising expenses and lower operating costs. Analysts expect the merger to sail through the antitrust and Federal Communications Commission regulatory reviews.

We’re not convinced. This deal should sound the alarm for small and midsize businesses and even large ones. Will we really be better off with just two telecom players: AT&T and Verizon? We don’t think so. A duopoly is not the robust field of competitors envisioned by Judge Harold Green in his 1984 breakup of the Bell System. Federal regulators must demand clear proof the merger won’t diminish competition and, therefore, reduce choices and keep rates high.

Click HERE to read more about the affect this acquisition could have on SMBs.

At the time of the breakup, the needs of enterprise customers were important to AT&T. Today, consumers rule. Advances in wireless, mobile applications, rich content delivery, and voice and video over IP are all driven by the demands of consumers. The narrowing of competition just makes it that much more likely that enterprise concerns will take a back seat or, worse, be ignored.

It’s likely that new technologies will find it difficult to penetrate a market dominated by an unregulated duopoly. It may not be possible to stop innovation, but it’s certainly possible to slow it. The deal will make it all too easy for the best technology to be squashed or for the wrong technology to be blessed.

Perhaps most ominously, the future of Internet neutrality could be imperiled. The pressure is already on to divvy up Internet bandwidth and make further progress dependent on toll fees. What position will AT&T take on the issue? With only two big players in the market and the barrier to new entrants insurmountable, it will be easier to push the notion of auctioning quality Internet service to the highest bidder.

To read more about Net neutrality, click HERE.

Sooner or later our government must take a stand. First, the benefits of competition must be fought forand that includes having the courage to stand up to powerful lobbying interests that benefit from consolidation. Second, Net neutrality must be upheld. Enterprise telecom customers deserve to have a wide choice of quality providers. They won’t be getting that with only two players in the market. The FCC and Department of Justice should block this merger.

Tell us what you think at .

Check out’s VOIP AND TELEPHONY CENTER for the latest news, views and analysis on voice over IP and telephony.


Posted by Elvis on 04/19/06 •
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Tuesday, April 18, 2006

Community Broadband Act

Sweet Victory: WiFi For All
Co-written by Sam Graham-Felsen.
The Nation
April 17, 2006

As corporate telecommunications giants accelerate their efforts to create a TWO-TIRED INTERNET, one of our greatest tools for democracy and equality is under assault. America already lags far behind other industrialized nations in Net access - paying “two to three times as much for slower and poorer quality service than countries like South Korea or Japan” - and if big telecom succeeds, the Internet may be slower and more costly than ever.

Fortunatrely, media rights activists are fighting - and winning - battles to ensure that more, not fewer, are given access to the web. One of the major fronts in the fight to equalize Internet access has been the effort to provide universal wireless service, and cities across the nation are rapidly embracing WiFi-for-all initiatives.

In 2004, PHILADELPHIA became the first major city in the US to launch a universal, affordable wireless Internet service, creating a massive “wireless mesh network” which will reach 135 miles throughout the city. Philly’s plan, which is slated to be available in 2007, will cost around $20 per month and about half as much for low-income residents--far below the market rate for high-speed Internet access.

San Francisco already has a community wireless program in the works, and several other major cities, including Chicago and Boston have created task forces for universal Wi-Fi plans. Meanwhile, smaller towns and cities like Urbana, Illinois, are also passing “magnificent pro-wireless resolutions,” according to Sascha Meinrath of the media reform advocacy organization FREE PRESS.

Of course, big telecom lobbyists are fighting tooth and nail to eliminate these programs, and have already helped to create laws in 14 states making it illegal for cities to build their own wireless grids. Louisiana is one of these states, and in New Orleans - where free Wi-Fi access was made available in the wake of Katrina - big telecom is TRYING TO SHUT DOWN this critical source of communication for desperately needy residents.

“Whether you look at broadband penetration rates, service speeds, or basic costs of broadband provision, the US is pretty stagnant compared with the rest of the industrialized world,” says Meinrath, and community wireless initiatives “have the potential to address” many of these problems. (Meinrath warns that some of the municipal models, like San Francisco, are in danger of becoming “usurped by the same corporations that created such exorbitantly priced, substandard telecommunications services in the first place.")

To engage in the fight for fair and universal wireless access, check out Free Press, and urge your Senators to co-sponsor the COMMUNITY BROADBAND ACT, which would enable states and cities to legally build community wireless grids. In an age of deceit and misinformation, we need a robust, accessible, and affordable Internet more than ever.


Posted by Elvis on 04/18/06 •
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Monday, April 17, 2006

Illegal Immigrants


Myths And Lies Of Illegal Immigration
By Kathy McKee
The Sonoran News
January 4, 2004

Because the pro-illegal alien lobby has a bottomless pit of money and can hire PR people to spin (and fabricate) anything any way, there are an undue number of myths and lies that the public (and many politicians) has bought into. The FACTS are:

1. It is NOT racist to call these people “illegal aliens” In fact, “illegal aliens” is the only term used in federal laws and regulations to describe criminals (and they ARE criminals) who come into our country illegally. They are not illegal immigrants, not undocumented immigrants, not migrant workers, and not day laborers - they’re ILLEGAL ALIENS.

2. Mexico is NOT a poor country. It has the fifth richest economy in the world, and by sending its teeming masses to our country, that status keeps on rising. Mexico has more resources per square mile than the U.S. and plenty of money to take care of its own people. Why should the taxpayers of this country subsidize Mexico’s corruption?

3. Illegal aliens are NOT necessarily coming here to work. Lou Dobbs recently reported that 33 percent of our prison population is now comprised of non-citizens. Plus, 36 to 42 percent of illegal aliens are on welfare. So, for a good proportion of these people, the American dream is crime and welfare, not coming here to work.

4. Illegal aliens are NOT doing work Americans won’t do. What jobs won’t Americans do? In most states, Americans still clean their own houses, do their own landscaping, clean hotel rooms, work in restaurants and fast food places, paint houses, DO CONSTRUCTION WORK, work in airports, etc. - just like we have the past 200 years before “our” government allowed these people to invade our country. There are 18 million Americans who cannot find a job, so illegal aliens who are coming here to work do so at peril to American workers.

5. Illegal aliens absolutely do not contribute more than they cost. Certainly the millions in prison and on welfare aren’t contributing a dime to our economy, and the ones who are working often are paid in cash with no deductions for taxes at all. The ones who use fraudulent social security numbers and qualify to pay taxes and social security have so many deductions for dependents that they pay little if any taxes. We have seen them pay less than $100 in taxes and get back $4,000 refunds (thanks to earned income tax credits and multiple dependents). The CENTER FOR IMMIGRATION STUDIES estimates that the average Mexican illegal alien costs U.S. taxpayers a whopping $55,000 each. Some bargain, eh?

6. The economy does NOT depend on illegal aliens. Sure, greedy CEOs (making $50 to $150 MILLION a year) and business owners depend on illegal aliens, but due to #3, #4 and #5 above, the only thing illegal aliens are contributing to is the collapse of our economy and making the rich richer.

7. Without illegal aliens, the price of agricultural products and other goods and services will NOT soar. The definitive study on this subject is the University of Iowa’s “How Much Is That Tomato?” The study concludes that ‘since labor is such a small component of the end-price of agricultural products (which includes price to the growers, transportation costs, processing /storage costs, grocers’ profit, etc.), using minimum wage workers instead of illegal aliens would increase prices of agricultural products by approximately 3 percent in the summer and 4 percent in the winter ... hardly the making of $10 heads of lettuce, $25 hamburgers, $1,000 per night Days Inn hotel rooms like the pro-illegal alien lobby claims.

8. Consumers are NOT benefiting from lower labor costs. Again, it’s CEOs and business owners who benefit from taxpayer subsidies for their illegal alien workers. The Big Three automakers say they moved so many jobs to Mexico because their labor costs are 80 percent less than in America. Anybody notice the price of new cars spiraling downward under NAFTA?

So, before you believe the prevalent pack of lies perpetuated by the illegal alien lobby, which makes billions off this government-sanctioned criminal activity, ask yourself who’s saying this garbage and look at what they have to gain. Citizens Against Illegal Immigration, just like Protect Arizona NOW, is an all-volunteer, totally grass-roots organization of citizens who are making nothing and have nothing personal to gain from their efforts to fight this corruption. Whose side are you on, and what are YOU doing to save your state and country from this evil?

McKee is the state coordinator of Citizens Against Illegal Immigration, as well as director of Protect Arizona NOW. A former Quaker Sunday School teacher and Volunteer of the Year in a large metropolitan area, she has a 35-year record of charity work and philanthropy largely benefiting minorities.


Arrival Of Aliens Ousts U.S. Workers
By Jerry Seper
The Washington Times
April 10, 2006

An Alabama employment agency that sent 70 laborers and construction workers to job sites in that state in the aftermath of Hurricane Katrina says the men were sent home after just two weeks on the job by employers who told them “the Mexicans had arrived” and were willing to work for less.

Linda Swope, who operates Complete Employment Services Inc. in Mobile, Ala., told The Washington Times last week that the workers—whom she described as U.S. citizens, residents of Alabama and predominantly black—had been “urgently requested” by contractors hired to rebuild and clear devastated areas of the state, but were told to leave three job sites when the foreign workers showed up.

“After Katrina, our company had 70 workers on the job the first day, but the companies decided they didn’t need them anymore because the Mexicans had arrived,” Mrs. Swope said. “I assure you it is not true that Americans don’t want to work.

“We had been told that 270 jobs might be available, and we could have filled every one of them with men from this area, most of whom lost their jobs because of the hurricane,” she said. “When we told the guys they would not be needed, they actually cried ... and we cried with them. This is a shame.”

Mrs. Swope said employment agencies throughout Alabama, Louisiana and Mississippi faced similar problems, when thousands of men from Mexico and several Central and South American countries—many in crowded buses and trucks—came into the three states after Katrina, looking for employment and willing to work for less money.

The number of foreign workers who flooded the area after the hurricane has been estimated at more than 30,000. Many of them have been identified by law-enforcement authorities and others as illegal aliens.

The Gulf Coast Latin American Association noted in a report that whether those workers will remain after the cleanup work is completed is not clear, but the longer those jobs last, the more likely it is that the workers will settle permanently. After Hurricane Andrew hit southeastern Florida in 1992, the association said, the construction boom attracted large numbers of Hispanic immigrants to several areas, including Homestead, Fla., where the Latino population doubled during the 1990s.

Many of the illegal aliens came into the Gulf Coast states not only from south of the border but also from California, Arizona and Texas, responding to the demand for workers. U.S. Border Patrol officials in the three states have reported an increase in the number of illegals apprehended.

Some of the migrants who did get jobs in the Gulf states also were mistreated, records show. Two class-action lawsuits are pending in federal court in New Orleans in which thousands of migrant workers said they never were paid, although many worked 12-hour shifts, seven days a week and were required to remove toxic contamination from hurricane-ravaged buildings.

Some of the named companies were working on contracts from the Federal Emergency Management Agency (FEMA) and other government agencies.

Government estimates put at 400,000 the number of jobs lost in the Gulf region as a result of Katrina, which displaced more than 1.5 million people, and many of those workers left the area to seek employment elsewhere because available construction, laborer and cleanup jobs in Alabama, Louisiana and Mississippi had been filled by foreign workers, including illegal aliens.

President Bush last week signed the Katrina Emergency Assistance Act of 2006, which extended for 13 weeks unemployment compensation benefits to more than 140,000 residents of the Gulf states who were displaced from their jobs by Katrina. Their benefits, funded by FEMA, had expired March 4.

Would-be employers in Alabama, Louisiana and Mississippi, awash in cleanup and reconstruction jobs, faced little in the way of legal problems in hiring the illegal aliens after Katrina because the Department of Homeland Security temporarily suspended the sanctioning of employers who hired workers unable to documenttheir citizenship

Mr. Bush also had suspended the Davis-Bacon Act, which requires local contractors to pay “prevailing” wages, in the areas hit by Katrina to encourage reconstruction and cleanup.

“The men we sent to jobs in Alabama were local fellows looking for work, men who needed jobs,” Mrs. Swope said. “After driving 50 miles to the work sites where they had been promised $10 an hour, they discovered the employers had found substitutes who were willing to work for less.”


Immigrants No Danger To Jobs In U.S.
By Jared Bernstein
Economic Policy Institure
April 26, 2006

As throngs of immigrants rally in scores of cities and Congress has to further debate an immigration bill, there still is one question that is not being considered.

Would natives have done much better had there been fewer immigrants in the job market? There’s no definitive way to know, but a hard look at the labor market suggests immigrant workers are not a threat to natives.

First, what’s changed in our job market over the past few years is not the growth of labor supply; it’s the lack of labor demand. Back in the late 1990s, immigrant inflows were larger than ever, yet we created enough jobs to absorb most of these workers, along with native job-seekers, and their wages and incomes grew significantly over these years. It’s no coincidence the debate over immigrant competition occurred at a much lower decibel level then.

In this decade, we’ve had the longest jobless recovery on record, followed by a job creation rate that’s tepid in historical terms. Were job creation occurring at the rate of the last recovery, we’d be averaging 300,000 jobs per month instead of 200,000. That difference of 1.2 million jobs per year would make a huge difference in terms of providing enough slots for all job-seekers.

Second, in some parts of the country, immigrants dominate occupations to the extent that they’re more likely to compete with each other than with native workers. For example, immigrants account for about half of non-managers in construction in New York and Washington. Moreover, the fact construction was one of the few industries to boom over the past five years is one reason immigrants’ net job gains have outpaced those of natives. Again, the role of labor demand and job creation is an overlooked determinant of outcomes in this debate.

Third, one area where there does appear to be some crowding out in recent years of native workers by immigrants is among high school dropouts. But there are mitigating factors to consider here as well. As would be expected in an advanced economy like ours, high school dropouts are a small and shrinking share of our workforce (11 percent of the adult workforce last year), and immigrants are a fast-growing share of this disadvantaged group, while the native share is contracting.

Basically, if you’re a native worker without a high school diploma, you face tremendous barriers in the job market, of which immigrant competition is only one. As the New York Times reported recently, 72 percent of young, black, male high school dropouts are incarcerated or jobless. But does anyone really think that were immigrant competition to let up significantly, their fate would be significantly altered?

Natives and immigrants alike reasonably worry about the ability of our job market to absorb seemingly endless flows of new workers. And all of us should question Congress’s rationale for adding hundreds of thousands of new temporary work visas as part of immigration reform.

But for all 140 million people in our job market, immigrant and native-born alike, the most important missing ingredient right now is a much more balanced economy, one where overall growth lifts the rowboats as well as the yachts, regardless of from which shore they hail.

Jared Bernstein is senior economist at the Economic Policy Institute in Washington, D.C.



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