NEWS ANALYSIS
White-Collar Visas: Back Door for Cheap Labor?
By William Branigin
Washington Post Staff Writer
Saturday, October 21, 1995; Page A1

A large New York insurance company lays off 250 computer programmers in
three states and replaces them with lower-wage temporary workers from India.
A Michigan firm sends underpaid physical therapists from Poland to work at
health care facilities in Texas. A company in California advertises that it
can supply employers with "technical workers" from the Philippines at low
pay.

Even the White House resorts to cheap technical help, using a company that
imports most of its workers from India to upgrade the president's
correspondence-tracking computer system.

As Congress considers major changes in immigration law, the Department of
Labor and a number of professional associations and private citizens are
citing cases such as these in urging an overhaul of a little-known
immigration program designed to meet shortages of highly skilled workers in
certain "specialty occupations." The debate highlights much broader dilemmas
that the nation faces as it tries to decide how many foreigners to admit and
what qualifications to demand of them.

Each year, tens of thousands of such workers from around the world are
brought into the United States under the H-1B visa program, which admits
computer programmers, engineers, scientists, health care workers and fashion
models under "nonimmigrant" status.

Businesses say they need the program to obtain quick, temporary professional
help that cannot be found in the U.S. work force. They say the visa category
enables them to hire people with "unique" skills -- the "best and brightest"
that the world has to offer - and to compete in an increasingly tough global
market.

Advocates of this and other employment-based visa programs cite numerous
cases in which foreign professionals with special expertise have made
valuable contributions to American science and technology and have helped
create jobs in the American economy. But the Labor Department says the H-1B
program also has been widely exploited to bring in thousands of foreign
professionals and technicians whose chief attraction is that they are
willing to work for much lower salaries than their U.S. counterparts. Many
are imported by job-contracting firms known as "body shops," which recruit
the foreign professionals and hire them out to major U.S. companies at a
profit.

In many cases, "employment-based immigration is used not to obtain unique
skills, but cheap, compliant labor," said Lawrence Richards, a former IBM
computer programmer who formed the Software Professionals' Political Action
Committee last year after colleagues were laid off and replaced by
lower-paid programmers from India.

Richards and other critics of the H-1B visa program described the imported
professionals as "techno-braceros," the high-tech equivalent of migrant farm
workers.

They charged that the program is driving down wages in certain sectors,
displacing American workers and bringing in foreigners who often are
effectively "indentured" to their employers. In the long run, they
predicted, it will accelerate the flight of high-tech jobs overseas,
discourage American students from studying for those occupations and produce
the very shortages it was designed to alleviate.

In addition, some immigrants have used the program to set up lucrative
job-contracting concerns that discriminate against Americans in hiring,
sometimes even as they receive federal assistance for minority-owned
businesses.

To remedy what he says is a situation "fraught with abuse," Labor Secretary
Robert B. Reich is seeking major reforms under immigration legislation now
being debated in both chambers of Congress.

"We have seen numerous instances in which American businesses have brought
in foreign skilled workers after having laid off skilled American workers,
simply because they can get the foreign workers more cheaply," Reich said in
an interview. The program "has become a major means of circumventing the
costs of paying skilled American workers or the costs of training them," he
added.

"There is abuse of the current nonimmigrant system, but it is by no means
overwhelming," argued Austin T. Fragomen, an immigration lawyer who
represents major U.S. corporations. "To the extent there is abuse, {it}
occurs among small, relatively unknown companies" and should be "controlled
through more effective enforcement," he said in written Senate testimony
last month.

"It is minimally widespread," said Charles A. Billingsley, of the
Information Technology Association of America, a pro-immigration group. "Are
U.S. workers being put out of work by foreign workers? Probably. But the
occurrence is minuscule." In any case, he said, H-1B visa holders account
for only "a fraction of the U.S. work force."

Such arguments are not much comfort to John Morris, who owns a computer
consulting firm in Houston. He said he lost his largest customer, a major
oil company, when he refused to supply it with cheap foreign programmers.
"Greed is the reason they're doing this," Morris said. "Anybody who says it
ain't greed is smoking rope."

He said he also has turned down a Chinese company's offer to provide
programmers for placement at $500 a month in jobs that usually would pay
$5,000 a month.

"The Chinese are desperate to get in here," Morris said. "This is economic
warfare."

In 1990, Congress passed an immigration act that raised a cap on permanent
employment-based immigration from 54,000 to 140,000 a year in response to
fears of an imminent shortage of scientists, engineers and other highly
skilled professionals. A separate provision created the H-1B visa category,
which lets in as many as 65,000 professionals a year for stays of up to six
years. These workers are supposed to be paid "prevailing wages" and not used
to break strikes.

The H-1B provision requires no test of the U.S. labor market for the
availability of qualified American workers, and it does not bar businesses
from replacing U.S. workers with "temporary" nonimmigrants.

In practice, critics say, "prevailing wages" have been defined too broadly
to prevent many job contractors from significantly undercutting the salaries
usually paid to Americans. Moreover, the anticipated shortages did not
materialize, in part because defense industry cuts after the end of the Cold
War added to the ranks of an estimated 2.3 million Americans who have been
laid off so far this decade.

In Senate testimony last month, Reich called on Congress to prohibit
employers from hiring nonimmigrant workers in place of Americans who were
laid off. He said companies should be required to show they had tried to
"recruit and retain U.S. workers" in the occupations for which nonimmigrants
were sought. He also recommended that the permitted stay of these workers be
reduced to three years.

"Hiring foreign over domestic workers should be the rare exception, not the
rule," Reich said.

The labor secretary noted that although nonimmigrant workers are admitted on
a "temporary" basis, many stay for years, sometimes illegally. More than
half of foreigners granted permanent resident status in fiscal 1994
originally came in as nonimmigrant students or "temporary" workers, Reich
said.

In response to "abuse" of the nonimmigrant programs, over the past three
years the Labor Department has charged 33 employers with wage violations
involving more than 400 workers in physical therapy and computer-related
occupations.

In one case, the department found that an Indian-owned firm in Michigan
called Syntel Inc. had "willfully underpaid" its Indian computer
programmers, who came to the United States under H-1B visas and made up more
than 80 percent of the company's work force.

In November last year, American International Group, a large Manhattan-based
insurer, laid off 250 American programmers in New York, New Jersey and New
Hampshire and transferred the work to Syntel. Syntel assigned some of the
work to about 200 Indians it had brought in, reportedly at about half the
Americans' salaries, and gave the rest to much lower-paid employees at its
home office in Bombay. During their last weeks of employment, the laid-off
U.S. workers were even required to train their replacements, Reich said.
"It was clear that Syntel did not bring in any special skills that we did
not have," said Linda Kilcrease, one of the full-time programmers who lost
their jobs.

Another Michigan company, Rehab One, was found by the Labor Department to
have underpaid physical therapists it brought in from Poland. The workers,
who came in with H-1B visas, were assigned to U.S. health care facilities,
primarily in Texas, and were paid as little as $500 a month, the department
found.

In New Jersey, a major shipping company, Sea-Land Services, laid off 325
computer programmers this year and replaced them with Filipinos supplied by
Manila-based Software Ventures International. The Americans, who were paid
about $50,000 a year on average, also had to train the lower-paid Filipinos,
most of whom eventually returned to Manila to carry out the work even more
cheaply there.

"I was outraged," said Jessie Lindsay, one of the former Sea-Land
programmers. "These were highly paid technical jobs leaving the country. ...
What's the point of getting an education and technical training if companies
can get away with hiring at slave wages?"

Mastech Corp., of Oakdale, Pa., a company owned by two Indian immigrants
that has won millions of dollars in consulting contracts with the federal
government, has brought in about 900 of its 1,300 workers from India under
the H-1B program. From 1991 until Sept. 30, one of its contracts, obtained
under a set-aside program for minority-owned businesses, involved "computer
system integration, installation, maintenance and operational support for
the White House correspondence system," the presidential press office said.
"We have been lumped in with some other companies that allegedly underpay
their foreign workers," a Mastech executive said. "We are not a low-paying
company."

One of the latest controversies over the H-1B program erupted last month
after it was reported that the National Association of Securities Dealers
had laid off 30 contract computer programmers and hired an Indian firm, Tata
Consultancy Services, to do the work. The government- chartered association,
based in Rockville, Md., owns, operates and regulates the Nasdaq Stock
Market. Tata, which has a regional office in Silver Spring, is part of a
huge Indian conglomerate that company officials say produces everything from
tea to computer software.

An NASD spokesman, Marc Beauchamp, said Tata would employ about 40 people on
the project, half of them working here on H-1B visas and half at Tata's home
office in Bombay. He denied that any full-time NASD employees were fired and
said that "fewer than 20 outside contractors could possibly be affected" by
the move.

The Indians essentially would be maintaining "outmoded technology" so that
regular NASD programmers could "focus on new technologies" and perform "more
challenging work," Beauchamp said. "We found it made no business sense to
hire programmers that we would have to pay more than, or as much as, the
people we have on staff," he said.

Neither NASD nor Tata would disclose details of the contract. However, Tata
insisted that it follows all U.S. regulations and wage requirements.
"We are not a body shop," said A. Sruthi Sagar, the firm's personnel
manager. "We are not in the business of providing cheap labor to the United
States."