Article 43


Friday, April 27, 2007

The $100,000 Lie

On Tuesday, March 7, 2007, BILL GATES TESTIFIED BEFORE THE SENATE. Unfortunately, no one was there to counter the inaccuracies he brought up. However, this past Sunday’s New York Times corrected Bill Gates’ lie about “$100,000 a year jobs,” so the truth is slowly trickling out. 

Parsing the Truths About Visas for Tech Workers
By Steve Lohr
NY Times
April 15, 2007

THE United States has benefited immensely from its role as a magnet for the best and brightest workers from around the world, especially in innovative fields like high technology. Bill Gates, the chairman of Microsoft, sounded precisely that theme in Senate testimony last month when asked about the visa program for skilled workers, the H-1B.

Mr. Gates said that these workers are uniquely talented and highly paid “taking jobs that pay over $100,000 a year - and that America should welcome as many of those people as we can get.”

But that is not how the H-1B visa program as a whole is working these days, according to an analysis by Ronil Hira, an assistant professor of public policy at the Rochester Institute of Technology. The median salary for new H-1B holders in the information technology industry is actually about $50,000, based on the most recent data filed by companies with the United States Citizenship and Immigration Services agency. That wage level, Mr. Hira says, is the same as starting salaries for graduating computer science majors with bachelors degrees.

Yet salaries, according to Mr. Hira, are only part of the story. He says that while Microsoft may be paying its H-1B visa holders well and recruiting people with hard-to-find talents, other companies have a different agenda. The H-1B visa program, Mr. Hira asserts, has become a vehicle for accelerating the pace of offshore outsourcing of computing work, SENDING MORE JOBS ABROAD. Holders of H-1B visas, he says, do the on-site work of understanding a client’s needs and specifications and then most of the software coding is done back in India.

“Information technology offshore outsourcing has just swamped the H-1B program in recent years,” he said. The list of the top 10 companies requesting H-1B visas in fiscal 2006, the most recent government data available, was dominated by Indian-based technology outsourcing companies like Infosys Technologies, Wipro Technologies and Tata Consultancy Services, and a few other companies that offer outsourced services and have sizable operations in India like Cognizant Technology Solutions, Accenture and Deloitte & Touche, according to a paper last month by Mr. Hira, which was published by the Economic Policy Institute, a liberal research group.

Over the years, the H-1B visa, which allows a person to work in the United States for three years and can be renewed for an additional three, has been used by many people as a steppingstone to becoming a permanent resident. Traditionally, about half of all H-1B holders eventually get green cards, immigration experts say.

Yet the major outsourcing companies, while seeking thousands of H-1B visas, are asking for relative handfuls of green cards, according to government figures.

The statistics marshaled by Mr. Hira are not absolutely conclusive. The reported company-by-company numbers are for H-1B visas requested, not granted, but that is because the government does not publish visa counts by company. Since the visas are granted on a first-come-first-served basis, it seems reasonable that the companies seeking the most visas would, proportionately, get the most.

It is not just critics like Mr. Hira who point to the crucial role that the H-1B visa program plays in the fast-growing global outsourcing industry. “It has become the outsourcing visa,” said Kamal Nath, the commerce minister of India.

But is that a bad thing? Many economists say that paving the way for more efficient global trade in technology services should be a policy goal, and that the American economy will be more competitive and create more jobs as a result. Technology services like software programming and maintenance, they say, are an input, in economic terms, in industries from banking to manufacturing.

It used to be that all the parts in a car or a computer were made in a single country; now they are manufactured wherever it is most efficient. The same thing is happening in technology services. “Were seeing this growing international division of labor in services just as we saw in manufacturing decades ago,” said Aaditya Mattoo, an economist at the World Bank.

Still, the issue behind the H-1B controversy is how a nation devises a policy to benefit from global trade in technology services while treating its own workers fairly. The proposals before Congress range from significantly expanding the visa quota to tightening rules to protect American workers.

This month, the government announced that it had received more petitions for H-1B visas in one day than it could grant in the entire fiscal year that begins in October. It received 150,000 petitions; the current visa cap is 65,000. Technology lobbying groups declared that the immediate overflow demand for H-1B visas was proof of the skills shortage in the United States and the need for a sharply higher visa limit. But some immigration policy experts and economists say that this argument fails a simple test of economics. It is not surprising, they say, that global companies including I.B.M., Microsoft and Oracle - that benefit from the H-1B program would like to see it enlarged. There is no labor market test, using technically sound criteria, to determine whether or not there is a shortage,Ӕ said David M. Hart, an associate professor of public policy at George Mason University. The measures, Mr. Hart suggests, would include recent wage trends and unemployment rates in specific professions.

Other suggested changes include phasing out caps but holding auctions for H-1B visas in, say, lots of 30,000. After the first auction, the bidding for the next batch would begin at the high end of the initial sales prices. In 1994, a commission appointed by Congress recommended letting companies hire skilled foreign workers easily if the employers paid a $10,000-a-person fee that would go into a fund to train domestic workers. And there might be a limit on the number of visas that any one company can get.

“How to match policies to people in this emerging global labor market is something we really havent thought through yet,” said B. Lindsay Lowell, director of policy studies at the Institute for the Study of International Migration at Georgetown University. The current system, he said, tends to depend too much on the companies and how they use the complicated work-visa program.

Microsoft, it seems, is paying its H-1B holders quite well a median salary of $82,500 for new visa applicants, whose wages over the subsequent three to six years could well rise to about the $100,000 Mr. Gates mentioned. And in fiscal 2006, Microsoft applied for 1,181 green cards and 4,471 H-1B’s, a ratio of more than 26 percent. For the leading Indian outsourcing companies, the ratio was less than 1 percent.

“Microsoft may well be using the program to bring in the best and the brightest,” Mr. Hira said. But it’s definitely not representative of how the H-1B program is being used today.

Anand Giridharadas contributed reporting from Mumbai, India.



H1B & IT Workers - Fact Sheet 2007

Demand - Labor Market Conditions

FACT:  The U.S. Department of Labor (DOL) estimates that over the next eight years computer and mathematical science occupations will add 967,000 jobs and grow the fastest out of the eight main professional subgroups.

FACT:  According to the GAO, the Department of Homeland Security follows the H1-B cap, which is currently set at 65,000 but has been as high as 125,000 in the recent past.  However, a previously approved exemption for educational institutions, non-profits and other entities allows another 27,500 foreign workers on average to come in to the U.S.  In 2004, another exemption created still another cap loophole by adding an additional 20,000 annual allotment for U.S.-educated foreign workers with advanced degrees.  Furthermore, since the temporary H-1B visa is good for up to six years, according to government data some 125,000 existing visa holders renew annually.  As a result, under current law over 230,000 foreign professionals get new or renewed guest worker visas.

FACT:  DOL estimates that job openings in all the professional specialty occupations in the near future will average only 604,600 per year.  Yet they reviewed and certified more than 960,000 H-1B applications between 2002 and 2005, nearly one-third of which were for computer and programming related industries.

FACT:  DOL expects that job growth in the computer industry will decline as the software industry matures and moves overseas.

FACT:  The justification for a massive expansion of the H-1B program is industry claims of widespread and pervasive shortages of qualified workers.  Yet there exists no independent, unbiased, statistical evidence that substantiates their claims.  If such shortages existed, IT wages should have escalated sharply over the last few years.  In fact, they haven’t.

FACT:  Between 2000 and 2005, the median weekly earnings for computer systems analysts and scientists increased from $881 to $1,091 (in current dollars).  After adjusting for inflation, this represents a 9.2% change.

FACT:  For computer operations and systems researchers and analysts an occupational category that was 50.5% female in 2005, the median wages increased by from $929 weekly to $1,252, from 2000ז2005.  After adjusting for inflation, this is a 19% change.  While the current numbers increased overall during this period, the rate was unstable and fluctuated considerably.

FACT:  For computer programmers, the average weekly wage increased from $944 in 2000 to $1,086 in 2005, which after adjusting for inflation amounts to a 1.4% change.

FACT:  In a candid moment, Roger Cooker, director of staffing at Texas Instruments Company one of the nationגs largest high tech firms told U.S. News and World Report (August 30, 1999) that H-1B workers are part of their strategy to keep down the wages of engineers and other high tech workers.

FACT:  In a Congressionally-mandated study released soon after Congress passed S.2045, the National Research Council - the principal operating arm of the National Academy of Sciences and the National Academy of Engineering found that, “the current size of the H-1B workforce relative to the overall number of IT professionals is large enough to keep wages from rising as fast as might be expected in a tight labor market.” Further, it also found, “no analytical basis on which to set the proper level of H-1B visas, and that decisions to reduce or increase the cap on such visas are fundamentally political.”

Supply - The Educational Pipeline

FACT:  According to information available from the U.S. Department of Education and the Computing Research Association, U.S. colleges and universities are graduating over 300,000 students each year with bachelors, masters or PhDs in the core disciplines that are critical to this industry computer/information science, math and engineering.  At current graduating rates, the supply of graduates will exceed the Department of Laborגs projections for average yearly high tech job creation over the next eight years.

FACT:  According to the Department of Labor, a bachelors degree is the most significant source of postsecondary education or training for many high-tech workers.  Among computer software engineers (both applications and systems software) and computer systems analysts, a bachelor’s degree is more significant than an associate degree, masters degree, or on-the-job training.

FACT:  These graduation statistics do not include any of the tens of thousands of community college students who either:  1) graduate with two-year, Associate degrees in IT disciplines (out of the 500,000 who yearly complete their studies), or 2) are enrolling in IT-certification courses as well as other continuing education curricula designed to help them transition into high tech careers.  Both of these talent pools would certainly seem to qualify for employment in a significant number of professional, entry-level high tech jobs, yet they appear to be largely ignored by the industry.  To illustrate:  in Virginia one of the nations high tech hotbeds ח the final 1999 report of the Governors Commission on Information Technology, which was composed of many industry leaders, took the Commonwealth’s IT industry to task for not fully utilizing this source of qualified IT workers.

FACT:  The supply of U.S. graduates qualified to work in high tech occupations has increased significantly over the past five years.  The pattern of bachelors degrees conferred shows an increase in the number of degrees conferred in technical fields.  Between 199394 and 2003-04, the number of engineering degrees conferred declined by eight percent and then rose again by eight percent, and the number of mathematics degrees declined by 16 percent and then rose by 11 percent.  Meanwhile, degrees in computer and information sciences first increased 25 percent from 1993֖94 and 1998-99 then grew by 95 percent from 199899 and 2003-04.

FACT:  Undergraduate and graduate enrollment in computer science and engineering programs have increased over the past ten years.  According to the Department of Education, in 2003֖04, nearly 998,000 students were enrolled in undergraduate and graduate programs for engineering and computer science.  In addition, graduate enrollment increased by 62.2 percent between 1990 and 2002, from 34,257 to 55,559 students.

FACT:  These statistics indicate that the current supply of college graduates is sufficient to satisfy future high tech industry needs.

Supply - Incumbent Workers

FACT:  This industry has an abysmal record of hiring minority workers.  Presently, a paltry 5.3% of this industry consists of Hispanic Americans ֗ less than one-half their rate of total employment in the U.S. economy and only 7% are African Americans.

FACT:  The high turnover caused by the industryחs extensive use of short-term personnel requires workers to constantly move from job to job.  This churning in the workforce creates reports of job openings that are cited as proof of shortages.  But most of these reported job opportunities remain open for only short periods of time before they are filled.

H-1B - In Need of Repair & Reform

FACT:  In 2006, the GAO issued yet another report entitled ”H-1B VISA PROGRAM: LABOR COULD IMPROVE IT’S OVERSIGHT AND INCREASE INFORMATION SHARING WITH HOMELAND SECURITY.” This report focused on the need for quality assurance controls within the program:

“Labor’s oversight of the H-1B program is limited, even within the scope of its existing authority.  Labors review of employers’ H-1B applications is limited by law to identifying omissions and obvious inaccuracies, but we found that it does not consistently identify all obvious inaccuracies [] For example, although the overall percentage was small, we found 3,229 applications that were certified even though the wage rate on the application was lower that the prevailing wage for that occupation in the specific location.”

“Additionally, Labor does not identify other errors that may be obvious҅ We found 993 certified applications with invalid employer identification number prefixes.  In other programs, Labor matches the applications employer application number with valid employer identification numbers.  However, they do not formally do this match with H-1B applications because it is an attestation process, not a verification process.”

FACT:  The H-1B program is out of control and unmanageable.  U.S. professional and technical workers have made great personal sacrifices to gain the education and training necessary to compete for the knowledge jobs in the new American economy.  They deserve better than to be victimized by guest worker programs like H-1B.  Congress can make a long, overdue start in cleaning up the guest worker visa mess by implementing badly-needed reforms.  Until then, there should be no increase in the H-1B annual visa limits.

For further information on professional workers, check out DPE’s WEB SITE.

The Department for Professional Employees, AFL-CIO (DPE) comprises 23 AFL-CIO unions representing over four million people working in professional, technical and administrative support occupations.  DPE-affiliated unions represent:  teachers, college professors and school administrators; library workers; nurses, doctors and other health care professionals; engineers, scientists and IT workers; journalists and writers, broadcast technicians and communications specialists; performing and visual artists; professional athletes; professional firefighters; psychologists, social workers and many others.  DPE was chartered by the AFL-CIO in 1977 in recognition of the rapidly-growing professional and technical occupations.


Posted by Elvis on 04/27/07 •
Section News • Section Dying America
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