Infoweek explains Why We Need H-1B

Date: Wednesday, June 14, 2006 3:08 PM

<<<<< JOB DESTRUCTION NEWSLETTER No. 1502 -- 06/14/2006 >>>>>

The title of this article is "Why We Need The H-1B." We have to wait until
the end of her article to find out why we just can't survive without lots
of H-1Bs:

If the United States doesn't make it easier to welcome brilliant
minds into the country, while also making a more serious attempt
to produce its own crop of new talent, then the next big harvest
of technology innovation--and ultimately jobs--may be reaped
elsewhere.

Actually the H-1B program is essential for offshoring because companies use
the H-1Bs for what companies euphemistically call "knowledge transfer" - in
other words training your replacement. The statement above is a logical
fallacy called a "red herring", or false choice. As Norm Matloff pointed
out in a recent newsletter the typical ratio for a project being one H-1B
onshore for every two offshore.

(See Ron Hira, U.S. Immigration Regulations and India's Information
Technology Industry, Technological Forecasting \& Social Change, 71 (2004),
837-854.)

This article is sloppy and very biased. Contradictions are so obvious
that's what I will concentrate my criticisms on. Adding to the one-sided
nature of the article, there are three separate interviews with H-1Bs, but
not a single interview with an American who has been replaced with one.

Contradiction #1

The author, Marianne Kolbasuk McGee, doesn't deny that Americans are
displaced from the job market:

Many companies would rather hire disposable H-1B holders with
skills du jour than invest the time and money in enhancing
the skills of current employees.

The opening paragraph of the article completely contradicts the paragraph
above. It doesn't seem like H-1Bs are too good for our careers if all they
do is lower salaries, but she says that we just don't want to hear her
version of the truth.

Many American IT pros won't want to hear this, but importing
tech workers into the United States isn't just an economic
necessity; it might be critical to saving their jobs.

Contradiction #2

McGee tries to minimize the impact of H-1B by saying the numbers are low,
especially as compared to the entire U.S. workforce:

Two main proposals remain on the table: Leave the cap at 65,000,
or raise it to 115,000. That's a difference of only 50,000 jobs
in an economy that employs about 144 million people, yet
advocates maintain that the country's technological leadership
hangs in the balance.

What she fails to mention is that the cap allows 65,000 + 20,000 a year.
Not including exempts that's 85,000 a year and it is additive. She plays a
shell game here that anyone who reads that magazine should be smart enough
to figure it out. H-1Bs can't be compared against the entire working
population but instead against the workers that are directly affected.

My estimate is that there are about 850,000 H-1Bs in the U.S. but even if
her lowball estimate is correct, she just proved herself wrong! Assuming
there are 450,000 H-1Bs that affects about 12.5% of the tech workforce.
Perhaps it affects less than 12.5% because not all H-1Bs are used as tech
workers but either way the effect is very significant.

The following paragraph is such a blunder it makes me believe that she
wrote the article over a long period of time and simply forgot what she
previously wrote each time she started writing again. Apparently the
editors weren't smart enough to catch the error either.

There isn't an exact count of how many of the country's 3.6
million available tech workers are on H-1Bs. The visas can
go to any industry, but IT companies are by far the biggest
users. According to the National Foundation for American
Policy, a nonprofit that advocates raising the cap, as many
as 450,000 H-1B visa holders across industries may be in
the United States waiting for green cards.

LISTEN UP FOLKS!

USING HER FIGURES, WE CAN SHOW THAT THE UNEMPLOYMENT RATE OF TECHIES WOULD
BE 0% if the H-1B program was eliminated! That's because the official
unemployment rate for techies is about 5%, which is way below 12.5%.

DEPORT EVERY H-1B AND EVERY SINGLE ONE OF YOU WILL BE ABLE TO GET HIGH
PAYING JOBS IN YOUR CHOSEN CAREER.

THINK ABOUT IT!

Contradiction #3:

Now we are treated to the old prevailing salary argument. You know,
Americans are protected by law:

Under current laws, the government can fine employers $1,000
to $35,000 for not complying with H-1B pay regulations, and
it can impose other requirements, such as demanding payment
of back wages.

If companies are being prosecuted so much for underpaying H-1Bs, just why
are so many employers willing to admit they hire H-1Bs because they are
cheaper?

Sonia Seth, director of recruitment for People.com, a division of
Hudson. Seth, an Indian national, has been in the country for
six years with an H-1B visa and awaits her green card.

Lower cost is one of the attractions of using H-1B workers, Seth
says, especially for skills that are hard to find. "Finding
experienced people is getting more difficult. You pay the price,"
she says. While an experienced American CRM consultant might
fetch $110 per hour, a similarly experienced consultant with an
H-1B visa is paid only $70 per hour, she says. But depending on
experience level, Seth adds, some H-1B workers can be more
expensive than their domestic counterparts.

Contradiction #4:

This is the classic shortage shouting argument:

The country isn't cranking out enough of its own IT talent.
U.S. universities in 2004 granted 44% of their master's
degrees and 48% of their doctorates in computer science to
foreign-born students here on visas, according to the
National Science Foundation.

Well if we aren't cranking out enough IT people, then how could this be
true:

Amanda Poor, manager of application development at a large
multinational company, is looking to fill a junior Visual Basic
developer position in her group, which has about dozen people.
"A few years ago, I'd have to throw out 90% of the resumis we
received," she says. Now, at least half of the resumis are from
qualified applicants, and they run the gamut from mainframe
pros looking for a change to recent grads from nearby Virginia
Tech.

Pay close attention to the fact that she receives lots of resumes from
"mainframe pros" which are of course over the age of 40, and college grads
which are young. Guess which one she hires - the over 40 programmer or the
YOUNG college graduate? In case you can't guess, I provide the answer
below.

"You try to bring in someone at a junior level and train them,
and if they hang around three or four years, they become very
valuable," Poor says.

ANSWER: Ms. Poor is using code words. When she says she will hire someone
at a "junior level" that means young. Not surprisingly the author of this
article never thought that the issues of H-1B and age discrimination could
be connected.

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.informationweek.com/story/showArticle.jhtml?articleID=188703365

In Depth: Why We Need The H-1B

The U.S. IT industry needs a free flow of talent--probably more free than
we have. That'll take addressing the abuse, fear, and retraining problems
that stand in the way.

By Marianne Kolbasuk McGee, InformationWeek
June 12, 2006
URL:
http://www.informationweek.com/story/showArticle.jhtml?articleID=188703365

Many American IT pros won't want to hear this, but importing tech workers
into the United States isn't just an economic necessity; it might be
critical to saving their jobs.

Congress is giving its most serious consideration in years to increasing
the number of people who can work in the United States each year under H-1B
visas. Two main proposals remain on the table: Leave the cap at 65,000, or
raise it to 115,000. That's a difference of only 50,000 jobs in an economy
that employs about 144 million people, yet advocates maintain that the
country's technological leadership hangs in the balance.

Think the United States is the only place to work? Think again, Huang says.

Photo by Eric Millette

Set the visa number too low, and tech-driven U.S. companies won't get the
people they need (at least not at the salaries they and their shareholders
increasingly demand), so they'll be more likely to relocate those positions
abroad. Set the number too high, critics maintain, and U.S. IT
organizations will become glorified sweat shops, driving down salaries for
all tech pros and discouraging young Americans from entering the field.

The U.S. Citizenship and Immigration Services already has enough
applications for the 65,000 H-1B visas it will issue for the fiscal year
that starts Oct. 1--the fourth straight fiscal year the cap will be
reached. And with the U.S. tech unemployment rate hovering around 3%, near
its record low, and tech employment above 3.4 million, near its all-time
high, expect H-1B visa demand to far exceed supply unless the cap is
raised. For those U.S. employers turned away, offshoring the work to India,
China, and other counties remains an attractive option, despite recent
salary inflation in those countries. There's no arguing with the economics.

The H-1B cap has been moved three times since it was first set at 65,000 in
1992: up to 115,000 in 1999, up to 195,000 in 2001, and down to 65,000 in
2004. History suggests the demand for such visas isn't insatiable--the
195,000 cap was never hit, even in the boom of 2001, when companies
snatched 163,600. In 2003, when U.S. IT employment bottomed out amid
widespread cost-cutting, companies grabbed 78,000 H-1B visas, leaving
117,000 on the table.

There isn't an exact count of how many of the country's 3.6 million
available tech workers are on H-1Bs. The visas can go to any industry, but
IT companies are by far the biggest users. According to the National
Foundation for American Policy, a nonprofit that advocates raising the cap,
as many as 450,000 H-1B visa holders across industries may be in the United
States waiting for green cards.

While the immediate point of debate is 65,000 versus 115,000, some
proposals go further. One would raise the cap annually by 20% if the
previous year's quota is met, and another would simplify the green-card
process, making it easier for temporary foreign workers to work permanently
in the United States.

While some argue passionately that these additional H-1B workers will only
take jobs away from American tech workers, the opposing view is that the
increase will actually create jobs. Smart foreign-born overachievers
allowed to work--and perhaps stay--in the United States could help provide
new ideas and expertise to drive technology innovation in this country,
creating more jobs for the future. Those new jobs might require different
skills than are needed today, but that's just the point: Technology is
evolving, and the U.S. workforce needs to make sure it can keep up with
changing demands.

The biggest long-term risk is that the United States will grow dependent on
imported engineering and other tech talent while not grooming its own.
That's a trend well on its way. The country isn't cranking out enough of
its own IT talent. U.S. universities in 2004 granted 44% of their master's
degrees and 48% of their doctorates in computer science to foreign-born
students here on visas, according to the National Science Foundation. That
compares with 47% of computer science master's and 44% of doctorates
awarded to students here on visas in 2001.
Too many tech pros further along in their careers aren't updating their
skills. It's not all their fault: Many companies would rather hire
disposable H-1B holders with skills du jour than invest the time and money
in enhancing the skills of current employees. Of the 5,456 IT staffers
surveyed for InformationWeek Research's 2006 Salary Survey, only 42% say
they receive further education or training, and only 30% receive tuition
reimbursement. Of 4,969 IT managers surveyed, 43% receive further education
and training and just 28% receive tuition reimbursement.

17 Lawyers

Microsoft is among a number of tech companies intensely lobbying Washington
to raise the H-1B cap. The company is one of the biggest volume employers
of H-1B visa holders, according to the Center for Immigration Studies, and
it has a staff of 17 lawyers working on visas and green cards for permanent
residency.

Microsoft is intent on hiring the cream of the crop regardless of
nationality, says Jack Krumholtz, director of federal government affairs,
who has testified before Congress about the issue. The competition among
U.S. tech companies to hire workers with doctorates or master's degrees in
computer science fields--whether they're U.S. citizens or foreign
nationals--is intense, he says. Microsoft is eager to hire people with
expertise in advanced search technology, speech and handwriting
recognition, mobile products, and software who can make devices more
intuitive and intelligent. Microsoft's competitors, including Google, also
are going after that talent, which Krumholtz contends is scarce in the
United States. With chairman Bill Gates mandating that 90% of Microsoft's
development work be done in Redmond, Wash., the company must widen its
search beyond U.S. citizens if it's to get the expertise it needs,
Krumholtz says.

"We've self-imposed an intellectual cap on ourselves," he says of the U.S.
limit on H-1Bs. In the past, the United States was the place to work, but
with opportunities growing in other countries, the best tech pros have more
choices. "We compete fiercely for brainpower, so why are we turning away
the smartest people?" Krumholtz asks.

Hewlett-Packard also is pushing to raise the H-1B ceiling. Of HP's 54,000
U.S. employees, 1% to 1.5% are on H-1B visas, a number that's stayed
constant even when more H-1B visas were available in the early 2000s, says
Leslie Nicolett, HP's immigration policy manager.

One common source for talented foreign nationals is U.S. universities.
Foreign students earning advanced degrees can apply to remain in the States
for a year after graduation to take jobs with U.S. employers, mostly for
training. Tech companies often hire these students and then help them apply
for H-1B visas. HP also sponsors H-1B workers who apply for permanent
residency via green cards, Nicolett says. For HP, recruiting foreign
students with advanced degrees helps the company build its bench strength.
"We don't use the immigration process right away, but it gives us a safety
net to convert these workers to H-1B," Nicolett says. "We use foreign
talent in situations where we can't find talent in the U.S." That can
include people with advanced degrees in engineering sciences and in
chemistry to help develop printer inks.

But Do They Pay A Fair Wage?

It's the competition for talent, coupled with government regulation, that
keeps wages for H-1B workers in line with what U.S. workers are paid, say
proponents of the program. Workers with the visas can apply to change
employers, so they aren't beholden to one employer. But making a change
isn't easy or cheap; the worker must find another employer willing to take
on the H-1B challenges.

Mostly for this reason, opponents of raising the cap say abuse of the
prevailing-wage rule is out of control. Companies that hire H-1B workers
are only looking for one thing: cheap labor, says Marcus Courtney,
president of WashTech/CWA, a union for high-tech workers. "There's no
evidence of a tech shortage," he says.
Today's low U.S. IT unemployment levels came about only because around
200,000 tech workers who lost jobs in the early 2000s dropped out of the IT
workforce, so they are no longer counted in Department of Labor figures,
Courtney argues. "Companies have dumped highly skilled workers," Courtney
says. "This is wholesale worker replacement." The current quota of 65,000
H-1B visas, he maintains, should be enough to fill companies' needs.

Courtney's right that the U.S. IT workforce has been put through a wringer
as the marketplace changes. As just one example, there were about 160,000
fewer people employed as programmers for the 12 months ended in March
compared with the same time in 2001. Those people left the IT workforce or
found work in a new IT role, as the number of jobs for managers and
software engineers rose. To put the blame on H-1B doesn't sound right.
About the same number of people are employed in IT today as in 2001--more
than 3.4 million. Yet there were far more H-1B visas issued back in 2001:
163,600, compared with 85,000 in 2006. This year's number includes 20,000
visas for U.S.-educated applicants that Congress exempted from the cap last
year.

The bigger problem is abuse of the H-1B holders who are working here. The
U.S. government requires that employers of H-1B workers pay prevailing
market wages based on Department of Labor schedules or market surveys.
Those regulations have no teeth, Courtney says, companies are audited only
when a complaint is filed, and many foreign workers are too afraid to
protest. Even HP's Nicolett says that the threat of a government audit
isn't enough to keep some shady employers from stretching the limits.

A December report by the Center for Immigration Studies--which describes
its vision as "pro-immigrant, low immigration"--found that loose
definitions of prevailing wages and ambiguities in job titles, experience
levels, and other factors let employers pay H-1B computer workers $13,000
less a year, on average, than U.S. citizens in the same states and
occupations.

Under current laws, the government can fine employers $1,000 to $35,000 for
not complying with H-1B pay regulations, and it can impose other
requirements, such as demanding payment of back wages. Employers guilty of
violating H-1B rules also can be banned from using that or other
immigration programs for up to a year. Even so, there are few documented
cases of fines being levied against companies, says Susan Cohen, an
attorney who manages the immigration sector of law firm Mintz Levin.

There are other ways to stretch the law.

Emily Huang, a database manager in the United States on an H-1B visa from
Taiwan, likes working and living here and hopes her employer eventually
will sponsor her for a green card. She says she has always been paid
fairly, but a few of her friends who also have H-1B visas haven't been as
lucky. "I have friends who work long hours with less benefits," Huang says.
A software engineer she knows works until 10 or 11 every night while
colleagues go home at 7. Many H-1B workers are hesitant to complain about
their employers, afraid they'll lose their jobs or be forced to go back
home. "H-1B means you have to have a strong work ethic, you need to prove
your worth in an organization," Huang says.

In Demand

Conversely, H-1B visa holders with skills in high demand can earn more than
what's considered the market norm. Juan Gutierrez, a senior programmer and
analyst from Colombia, has been working for IT services firm Information
Systems of Florida for about five years. He was recruited to work here when
the company opened a development center in Colombia; he's one of the
50-employee company's four H-1B visa holders. The U.S. schedule of
prevailing wages in his region calls for a programmer at level 4 to earn
$68,000 a year. "But my company pays me a few thousand dollars more," says
Gutierrez, who adds that his employer also has been supportive as he has
waded through the frustrating green-card application process. "Yes, there
are companies that exploit people, but those companies are at the far end
of the curve," he says.

Staffing firm Hudson employs about 80 H-1B tech workers for a range of
jobs, including consultants with expertise in CRM, ERP, middleware, and Web
development. It mostly hires H-1B workers already in the United States by
applying for visa transfers, since the cap makes it difficult to obtain new
H-1B workers from overseas, and processing fees and legal costs are
expensive. Hudson looks for CRM deployment and other "domain knowledge,"
says Sonia Seth, director of recruitment for People.com, a division of
Hudson. Seth, an Indian national, has been in the country for six years
with an H-1B visa and awaits her green card.
Lower cost is one of the attractions of using H-1B workers, Seth says,
especially for skills that are hard to find. "Finding experienced people is
getting more difficult. You pay the price," she says. While an experienced
American CRM consultant might fetch $110 per hour, a similarly experienced
consultant with an H-1B visa is paid only $70 per hour, she says. But
depending on experience level, Seth adds, some H-1B workers can be more
expensive than their domestic counterparts.

Whatever Happened to Training?

While tech vendors may have difficulty finding specialized people with
advanced degrees, many companies don't have to look outside the country for
talent. There are plenty of people here, especially if a company is willing
to train. Amanda Poor, manager of application development at a large
multinational company, is looking to fill a junior Visual Basic developer
position in her group, which has about dozen people. "A few years ago, I'd
have to throw out 90% of the resumis we received," she says. Now, at
least half of the resumis are from qualified applicants, and they run the
gamut from mainframe pros looking for a change to recent grads from nearby
Virginia Tech. "You try to bring in someone at a junior level and train
them, and if they hang around three or four years, they become very
valuable," Poor says.

Not all IT managers think the way Poor does. One of the strongest arguments
against raising the H-1B cap is that it gives companies an excuse not to
develop and train their staff. IT pros, more so than most other
professionals, must constantly develop their skills and often are expected
to do it on their own dime and time.

"There's age bias and great pressure to keep up IT skills," says Rick
Flaviano, manager of information systems at Dofasco Tubular Products, a
maker of steel tube products. "If you spend 20 years in accounting, you're
supervaluable. Debits and credits haven't changed." Companies that hire
H-1B workers should be required not only to recruit American workers first,
but also to conduct training programs for their staffs to fill those
openings, he says.

In fact, when Congress raised the H-1B visa cap in 1998, it also raised the
processing fees, creating a training fund for American workers. Companies
have paid about $1 billion into that fund, which has financed National
Science Foundation scholarships for about 40,000 students and training
programs for more than 82,000 working professionals, the Department of
Labor says.

Rick Black, a senior systems analyst for utility company Scana, which
employs a number of H-1B visa holders from India, lives on both sides of
the issue. "By letting these workers into the U.S., they keep the money
here, with lodging, transportation, living expenses," says Black, a 25-year
IT veteran. "By increasing the number of visas, more of the money actually
stays in the U.S., and it's better for the economy."

But Black, who holds an MBA, also understands that it's critical for IT
pros to constantly improve their skills. "My MBA has helped me to get
different jobs and avoid being laid off," he says. "You can't stay put; you
have to keep up." That could be part of the reason some unemployed IT
workers still are finding it difficult to land jobs, he says.

As the nation continues to debate immigration and visa issues, there's an
unsettling reality bubbling below the surface that could impact U.S. tech
competitiveness: Not every highly skilled techie overseas considers the
United States the best place to work.

"The tech industry is booming in Taiwan," says database manager Huang.
"Most people there don't want to come to the U.S. because there are plenty
of good opportunities in Taiwan." The upshot: If the United States doesn't
make it easier to welcome brilliant minds into the country, while also
making a more serious attempt to produce its own crop of new talent, then
the next big harvest of technology innovation--and ultimately jobs--may be
reaped elsewhere.

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.informationweek.com/shared/printableArticle.jhtml?articleID=188703365

Profile: H-1B Worker Tells About Risks

Economic risks include paying into Social Security with the possibility of
not being able to stick around to receive a retirement check.

By Marianne Kolbasuk McGee, InformationWeek
June 12, 2006
URL:
http://www.informationweek.com/story/showArticle.jhtml?articleID=188703367

Make no mistake, Juan Gutierrez is excited about the possibility of getting
his green card and, eventually, U.S. citizenship. But H-1B workers like
Gutierrez, a senior programmer and analyst at IT services firm Information
Systems of Florida, take some economic risks, including paying into Social
Security with the possibility of not being able to stick around to receive
a retirement check. For married H-1B workers, spouses and children can't
work unless they obtain their own visas.

For Gutierrez's wife, that hasn't happened. Her background is in business
administration in the horse industry, niche expertise that doesn't have
U.S. employers racing to sponsor her. She's attending graduate school at a
U.S. university and isn't allowed to hold a job--not even as a professor's
assistant--to help offset tuition costs.

"I'm not in favor of or opposed to raising the cap on H-1B visas,"
Gutierrez says. "But I will tell you that being here as a foreign worker is
expensive, and we are penalized. I didn't know about all the restrictions
when I came here."

Because he's invested five years, not to mention the Social Security
contributions, he's sticking it out through the often decade-long process
of getting a green card. If that doesn't pan out, he might move to Canada
or the United Kingdom. Says Gutierrez, "Compared to the U.S., it's very
easy to go to the U.K. as a skilled worker."

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.informationweek.com/shared/printableArticle.jhtml?articleID=188703367

Profile: Where An H-1B Visa Holder Comes From Matters

This worker came from Holland, where he was already working for the Dutch
operations of a U.S. company.

By InformationWeek
June 12, 2006
URL:
http://www.informationweek.com/story/showArticle.jhtml?articleID=188703368

Getting into the United States to work depends a lot on where you're coming
from.

Robbert van der Bijl, a systems software engineer, came to the United
States from Holland several years ago and remembers a lot of waiting lists,
lawyers, and standing in lines. But as a Dutchman, he had it relatively
easy. Working for Phillips, he was able to come over on an L-1 visa for
employees of U.S. companies' overseas operations, then change jobs, and
gain permanent resident status.

People from China or India with bachelor's degrees will wait years for
green cards, says Susan Cohen, an immigration attorney at Mintz Levin,
because allotments are based on country, and it's largely first-come,
first-served. So H-1B visa holders from China with bachelor's degrees who
applied for a green card in July 2001 and are still working for the same
employer probably would be getting one about this month, she says.

The process is arduous and costly enough that companies wouldn't go through
it if there were people they could hire locally, contends Van der Bijl,
who's now working as a systems software engineer for a New Hampshire
company that tests semiconductor chips. That's why he thinks the United
States should eliminate the cap for H-1B and other skilled worker visas
altogether. Says van der Bijl, "I don't think companies will go through the
expense and trouble to bring someone here unless they have really good
reasons and a big need."

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.informationweek.com/shared/printableArticle.jhtml?articleID=188703368

Profile: One H-1B Visa Holder's Quest For A Green Card

The wait for a green card can last years, but this worker says it's worth
it.

By Marianne Kolbasuk McGee, InformationWeek
June 12, 2006
URL:
http://www.informationweek.com/story/showArticle.jhtml?articleID=188703388

For H-1B workers hoping to stay in the United States, the course is often
fraught with obstacles. H-1B visas are good for three years and can be
renewed once, for a total of six years. In the meantime, workers can apply
for green cards if a U.S. employer sponsors them. But the wait for a green
card can be years, causing some frustrated but talented professionals to
move elsewhere.

As maddening as the green-card process can be, H-1B holder Joty Bains is
anxiously waiting for hers. Bains works for staffing firm Hudson and is
contracted to one of Hudson's clients--a large bank--as an Oracle database
administrator working with financial data in online banking. She's been
working for the bank for nine months, and before that she worked for a
software development company for six years. She went to a U.S. college,
which meant she had one year she could work without an H-1B visa, and has
had her H-1B visa renewed once.

Bains is looking forward to staying in the United States, where she says
there are more opportunities for a woman IT pro than in her native India.
Her family is from northern India, but most of the Indian tech industry is
in the south. It's culturally more acceptable for Bains to be living in the
United States as a single career woman than it would be for her to stay in
India but move away from her family.

As a vocal and assertive Indian woman, Bains figures she has raised more
eyebrows among male Indian colleagues in the United States than she has
with U.S. workers, which is part of why she wants to stay here. Says Bains,
"I don't think I'll ever be limited in my career if I can stay in the U.S."

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