The American Prospect - Online
December 20, 1999


High Tech Migrant Labor
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Alexander Nguyen
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Guest workers: They're not just picking vegetables anymore. A new
class of "migrant workers" is taking shape in America's Silicon Valley
and other technology centers. These immigrants are not sneaking over
U.S. borders—they arrive by jet from India, the Philippines,
China, and Taiwan to take jobs in computer programming, software
design, and information services.

And America's information technology industry wants more of them.
"Forget the Huddled Masses," a recent BusinessWeek article proclaimed.
"Send Nerds." Industry leaders claim they face a shortage of skilled
high-tech professionals—a problem they fear will only get worse.
A 1997 Bureau of Labor Statistics study projected there will be 1.3
million new info-tech jobs over the coming decade.

Lobbyists representing Microsoft, Texas Instruments, and Sun Micro
systems have taken their case to Congress. The industries want to
import more foreign workers through the H-1B visa program, which
allows temporary guest workers into the country. This fall, California
Representative David Dreier and Texas Senator Phil Gramm introduced
bills to almost double the number of H-1B visas granted annually,
raising the ceiling to 200,000. "If cutting-edge technology companies
do not have access to growing numbers of highly skilled personnel,"
said Dreier, "it will threaten our nation's ability to maintain robust
economic growth."

Nobody is sure just how severe or real the info-tech labor shortage
is. A report by the Wash ing ton, D.C.-based Com puting Research
Association in May concluded, "We cannot state conclusively that there
is a shortage or quantify how large it might be."

Meanwhile, abundant anecdotal evidence indicates that some American
technology workers, especially older ones, have a hard time finding
steady work in their fields. William Spence, one of several workers
contacted for this story, told of getting cut from his Stanford
University job when a government grant expired. A 49-year-old research
scientist, Spence entered the Silicon Valley job market thinking that
his signal processing and programming experience would transfer easily
into the cell-phone industry. But after putting out more than 500
resumes, he got only two interviews, and no offers. "And I have
another 15 years to work," said Spence. Gene Nelson, 47, found it just
as difficult in Dallas. Nelson worked on cutting-edge pin-based
computing, which is used in "Palm Pilot" technology. Nelson says
high-tech firms have given him the cold shoulder even though he has
enrolled in retraining programs to keep his skills up to date. For a
while, he answered phones for Microsoft from inside a six-by-six-foot
cubicle. But the job didn't last. "It's good you're calling me on your
nickel," he said. "Because right now, I'm out of a job."

The H-1B program depresses industry's incentive to retrain and hire
workers like Nelson. America's technology sector understands that
generally tight labor markets make it difficult to keep labor costs
down, and the industry likes to be choosy. Increasing the supply of
foreign workers could be just the ticket. And the industry has
powerful friends in Congress.

Republicans to the rescue

A consensus in favor of the high-tech guest-worker program has emerged
among Republicans in Congress—a noteworthy development in light
of past clashes in the GOP over immigration. Traditionally the party
divides between closed-border restrictionists, who fear that too much
immigration will drive up welfare spending and overpopulate the
country, and open-border libertarians, who prefer perfect labor
mobility across nations.

Yet last year, Congress increased the cap on H-1B guest workers from
65,000 per year to 115,000 with overwhelming Republican support. In
the final Senate vote, only one Republican, Tim Hutch inson from
Arkansas, opposed the bill (with Alfonse D'Amato from New York and
Lauch Faircloth from North Carolina sitting out). Even Texas
Republican Lamar Smith, an anti-immigration hard-liner, voted for the
House version of the bill. "There used to be a lot of bad blood," says
James Gimpel, an associate professor at the University of Maryland who
has studied the politics of immigration reform. But in light of the
guest-worker vote, Gimpel sees GOP tensions easing.

Why the easy support? The consensus hinges on calling H-1B workers
"tem porary." This gives Congress the oppor tunity to take a
pro-business stand that is—technically—not a vote for
increased immigration. Speaking in San Francisco this summer,
Republican presidential candidate John McCain waxed enthusiastic about
importing foreign workers. "I say that we should eliminate these
artificial [H-1B] limits altogether," McCain said. Texas Governor
George W. Bush has also supported raising the limit on H-1B visas.

In reality, the distinction between temporary workers and immigrants
is largely semantic: Many foreign temps end up staying in the country
permanently. "From working with my clients, [I'd say] the vast
majority of H-1Bs want to stay," says Stephen Yale-Loehr, an
immigration lawyer at Cornell Law School. "Is it 60 percent? Ninety
percent? I don't know, but I would say it's the vast majority."

"There is nothing more permanent than a temporary worker," concurs
Philip Martin, a professor of agricultural and resource economics at
the University of California, Davis. The Institute for the Study of
International Migration at Georgetown University estimates that nearly
40 percent of those who hold temporary guest-worker visas end up
adjusting their status to permanent resident.

Critics say guest-worker programs amount to a back-door immigration
policy. "They want to promote the influx of people from overseas but
deny them the respect that a republic ought to accord to them," said
Mark Krikorian, director of the Center for Immigration Studies, on
National Public Radio in 1998. It's as if a method has been found to
separate human capital from the humans who provide it. The labor of
guest workers is imported, but their potential citizenship is not
acknowledged as part of the deal.

Over a barrel

That guest-worker policy rests on the premise that labor can be
separated from the laborer is reflected in the very design of the
program. While legal resident status is attached to the immigrant, the
H-1B visa is attached to the job, expiring the moment the worker quits
or is fired. Under Immigration and Naturalization Service (INS) rules,
such an employee must leave the United States within a month or risk
deportation—unless a new job can quickly be lined up. In that
case, a new application for H-1B status must be submitted. While such
an application is pending, neither the worker nor the immediate family
members (who are typically admitted on a separate nonworker visa) are
authorized to work.

It's also harder for some temporary workers with H-1B visas to pick up
and leave the country. In guest-worker programs for other
industries—mainly agriculture—the visa is for a seasonal
stay, usually lasting six weeks to six months. But high-tech workers
with H-1B visas are allowed to work in the United States for as long
as six years. Over that span, friendships are fostered, children are
enrolled in school, homes are furnished—and the desire to put
down roots can be strong.

The way it often plays out is that the temporary worker applies for a
green card—permission to be a permanent resident. In this case,
losing a job and leaving the country can be a major setback; it
jeopardizes the green card application, which in most cases requires
an employer's sponsorship. "The application process takes about five
years," says Douglas Kretzmann of Littleton, Colorado, who arrived on
an H-1B visa and has since become a legal resident.

The employer's sponsorship often gives companies added leverage over
the immigrant worker. "This was always a well-understood part of the
unspoken contract. The company paid less than the going rate because
they were sponsoring us," says Kretzmann, who was able to almost
double his salary upon leaving his company.

Reports of underpaid workers are not uncommon. "Dear Career Adviser,"
wrote an anonymous software consultant to an advice column in
Computerworld in April. "My employer is underpaying me, because my pay
is much lower than the figure he quoted on my H-1B application. What
should I do about this?" The reply: "If you report your employer, you
could be fired. And without a job, your H-1B visa becomes null and
void."

"They wouldn't pay one of my friends his salary," says a computer
programmer in North Carolina, who asked not to be named. "But he was
scared that if he contacted the authorities, he would be on the next
plane home." About one-fifth of employers illegally underpay foreign
temporary workers, according to a Department of Labor study.

Officials also get reports of companies applying for guest workers
they don't immediately need. "They come here, and there's no work,"
says John Fraser, the Department of Labor's acting administrator of
the wage and hour division. "The employer can just bench them, so the
workers are sitting here without pay, sometimes for weeks and months.
There was a case where people were benched for a year and were either
not paid or paid $50 a week to buy groceries." Between 1992 and 1998,
the Department of Labor fined 87 employers for a combined $2.3 million
in back wages.

In applying to hire guest workers, employers are required to attest
that they will pay the "prevailing wage" and that they have tried but
failed to find domestic workers. But the applications tend to be
rubber-stamped. "It's pretty much guar anteed approval, unless someone
has not filled in a box or something," says Fraser. "We can't look
behind the application; we can't ascertain fraud." Who is to say, for
example, that foreign applicants really have the educational
background or work history they claim? One study by the INS and State
Department reviewed pending H-1B applications in Chennai, India, and
could verify only 45 percent of the forms. The officials found 21
percent of the applicants' credentials were fabricated.

The need for workers

While demand for H-1B visas has soared (INS approved 115,000 this year
with a waiting list of 42,000), recent layoffs at companies such as
Hewlett-Packard, Intel, Motorola, and Lucent Technologies have cast
doubt on industry claims of a labor shortage. Last year, a study by
the employment firm Challenger, Grey and Christmas calculated that 21
major high-tech companies had laid off more than 120,000 workers over
a period of six months.

Skeptics point to the low hiring rate by information technology firms
and only modest increases in high-tech salaries. "The fact that
employers can be so picky in their hiring demonstrates an oversupply
of labor," says Norman Matloff, a professor at the University of
California, Davis. Technology industry salaries have increased about
four to five percent per year, according to The Washington Post. By
contrast, Matloff says, in 1998 the average real salary of surveyors
and dieticians increased by 20 percent and 17 percent respectively.

Some have argued that support for the H-1B program is driven by a
quest for cheap labor. "What if the IT work force shortage is nothing
more than a ploy by Ameri- can IT-based industries to . . . reduce
labor costs?" a recent Chicago Sun-Times editorial mused. Indeed,
about 80 percent of H-1B applications are for positions paying $50,000
or less and requiring only a bachelor's degree. The H-1B program "has
become a major means of circumventing the costs of paying skilled
American workers or the costs of training them," testified
then-Secretary of Labor Robert Reich in 1995.

Yet evidence of spot labor shortages is available, too. Some
recruiters have, after all, gone to great lengths to hire IT workers:
A recent story in The Wall Street Journal featured recruiters
traveling to India to find computer programmers. And in Dallas, the
company Texas Instruments is currently offering new, fully loaded Ford
Explorers to employees who recruit the most workers. "The car hasn't
been given away yet," says Matt McKinney, program manager. "It's
parked in front of the cafeteria, so it's getting a lot of attention."

One possible explanation of the conflicting labor-market reports is
that demand for workers does not necessarily prove a shortage. "If you
said you needed electrical engineers who speak Mandarin and Swahili,
then you could come up with a shortage too," says Terry Oldham, an
electrical engineer in the Silicon Valley area who only recently found
work.

Attrition and flux can account for up to 60 percent of the demand,
according to Michael Boyd, a manager at the research company
International Data Corporation. In other words, if workers move from
job to job or leave the IT labor market for other fields, companies
will register vacancies and demand workers, even if on an aggregate
level no such widespread shortage exists. "If everyone stopped
changing jobs, the demand would drop dramatically," Boyd says. Thus,
if industries could reduce turnover, they would be solving some of
their problem.

Just as important, the high demand could be the result of high-tech
firms' tendency to recruit based on immediate skill level—rather
than looking for talented workers who could be trained. "I was on the
phone with a recruiter this morning," says Mark Mendlovitz, a computer
professional from Santa Barbara, California. "He asked me some
questions about skills, and he said, I want you to answer yes or no,
and say yes only if you've been paid for this, not if you know it.'"
In this way, getting a high-tech job is akin to applying for the first
credit card when the prerequisite is a good credit history.

Since innovation in the IT sector is so fast (the average shelf life
for a product is nine to 18 months, and just three months for an
Internet product, according to Thom Stohler, director of work-force
policies at the American Electronics Association), a recruiting
process that focuses solely on skills rather than talent locks
workers—especially older ones—out of the labor market
prematurely. "A year ago, we were looking for COBOL people," says
Andrew Jackson, president of an IT staffing firm in Dallas. "And now
there are no requests for that at all. . . . A lot of them are looking
for work."

The logic of the H-1B program—to see workers only in terms of
their marketable skills and not as potential citizens—is similar
to the industry's overall approach: looking for skills instead of for
talented people who can acquire them. It may well be cheaper for
industries to tap into the global marketplace for labor, but is that a
policy government should encourage? A perceived shortage of domestic
workers invites industry and public policy to get serious about
training and re-training. Easy access to imported temps frustrates
that approach, whereas greater public and private investment in edu
cation and vocational training would show commitment to the available
American work force.

Getting it backwards

As an unacknowledged immigration program, the H-1B visa program
betrays what the bipartisan U.S. Commission on Immigration Reform,
headed by the late Barbara Jordan, sought: a combination of strict and
credible standards of admissions and a lenient and generous immigrant
policy that accepts new arrivals as full members of society or as
citizens in training.

The H-1B program does the opposite: It admits people haphazardly into
the country, then fails to grant them full rights as potential
citizens. The result is a vulnerable caste of workers laboring in the
hope of getting green cards and serving as a base of cheaper labor to
replace workers who companies don't want to pay to retrain.

A short-term solution would be to admit high-tech workers as legal
immigrants and, by extension, free agents in the labor market.
Although currently up to 140,000 workers per year can be admitted
under this category, only about 77,000 entered last year, mostly
because sponsorship under this program takes too long (up to 48
months), costs too much (up to $15,000 in potential legal fees), and
is too strict (requires extensive background checks). In a letter to
President Clinton this October, Paul Kostek, president of the
Institute of Electrical and Electronics Engineers, summed up: "Green
cards, not guest workers. That is the solution, Mr. President." This
approach would reduce the opportunities of labor brokers and employers
to import guest workers; it would also require employers to prove they
face a labor shortage before sponsoring foreign professionals.

In the long run, reform depends on a more fundamental shift in
recruitment mindset—one that looks for individuals who can
acquire skills quickly and efficiently in a rapidly changing industry.
This would require a renewed commitment to increased job training. It
would mean seeing workers as long-term assets. "The new management
mentality is that people aren't people," says Gene Nelson, the
unemployed computer professional in Dallas. "They are just machines,
and if you don't need them, you unplug them and wheel them out." And
if you do need them, he might have added, you can find a way to import
them at bargain cost.
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Alexander Nguyen
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