[At this point the shortage, according to the ITAA, is 340,000]

San Jose Mercury News
Posted at 8:21 p.m. PDT Friday, June 25, 1999

High-tech visas problem not over yet

BY JIM PUZZANGHERA
Mercury News Washington Bureau

WASHINGTON -- After an exhaustive battle last year, Silicon Valley
thought it had solved one of its pressing problems by persuading
Congress and the White House to nearly double the number of visas
granted to high-tech foreign workers over the next three years.

But last week -- just eight months into the 1999 fiscal year -- all
115,000 of the so-called H-1B visas in the new annual allotment had
been issued. Although more than 42,000 applications are still pending
before the Immigration and Naturalization Service, no new visas can be
granted until the next fiscal year begins in October.

So for the second straight year, high-tech companies that want to hire
engineers and other highly skilled foreign workers from countries such
as India must wait months to fill those key openings. Such waits in
the fast-paced high-tech industry can cause delays in development of
new products, companies say. That, in turn, can prevent a company from
making additional American hires, which further hits the local
economy.

``Everybody knows when that cap is hit, and that just puts further
restrictions on an already extremely tight labor force and that means
its even harder to get the people you need,'' said Dan Burton, vice
president for government relations with Novell.

This year's cap was reached June 15, while last year, the 65,000
allocation was reached May 11. And the unexpectedly fast distribution
of the expanded number of visas this year has two influential
Republican members of Congress planning to propose nearly doubling the
number of visas again -- this time to about 200,000 a year. And this
time permanently. The current expansion of the program will ratchet
down to 107,500 visas in 2001 before reverting back to the 65,000
level in 2002.

But high-tech executives aren't sure they can muster the political
might again to push a visa increase through Congress and the White
House this year, especially after expending a lot of energy and
political capital on pending Y2K liability legislation and the
loosening of export controls on computers. Indeed, one of the main
backers of last year's visa increase, Rep. Lamar Smith, R-Texas, has
charged that the Clinton administration is not maximizing the number
of available visas because it has failed to address an increase in
fraud within the system.

A recent INS and State Department investigation of 3,200 H-1B visas
issued by the U.S. Consulate in Chennai (formerly Madras), India --
where 15,000 such visas were issued in 1998 -- found that 21 percent
were outright fraud and 45 percent couldn't be authenticated, Smith
said.

A coalition of high-tech executives plans to meet in Washington on
Tuesday to discuss how to to solve the overall visa problem.

``Clearly if we thought we could get an increase in the limit, that's
the way we'll go,'' said Mary Dee Beall, government affairs manager
for Hewlett Packard. ``Politically, we think it's probably pretty
difficult.''

Instead of focusing on another quick-fix increase, the industry might
try to push for a comprehensive overhaul of the visa program next
year, said Jenifer Eisen, manager of government affairs for Intel.

``Just adjusting arbitrary numbers is not the best road to take,'' she
said, noting the industry is in the same position again this year that
it was last year.

In fact, last year's problems contributed to this year's situation,
Eisen said. Roughly 30,000 visa applications stacked up at the INS
after the cap was reached in spring of 1998, leading to a large number
of visas being issued last fall. In addition, many companies applied
for visas early in the 1999 fiscal year, which began Oct. 1, to avoid
getting shut out if the cap was reached again.

``Employers were not going to get caught in the same situation,'' she
said. ``The number that was magically derived by the powers that be
may very well have been enough if we didn't have a backlog and people
filed as they normally would have filed.''

Silicon Valley says the H-1B program is crucial to filling specialty
jobs in a tight labor market. A study last year estimated there were
340,000 vacancies in the information technology industry, and the
high-tech industry says filling such vacancies is crucial to America's
economic health. The visas are for three years, and may be extended
for another three years.

But critics, including an organization representing American engineers
and computer programmers, say there is no real shortage of workers.
They note that high-tech companies have laid off engineers and say
that those firms prefer to hire foreigners because they are paid less
and because employees become beholden to the companies that obtained
the visas.

The Clinton administration tried to address some of those concerns in
last year's legislation, using a veto threat to insert several
provisions.

Companies now must pay $500 for each visa, for example, with the money
funding training and scholarship programs for American students and
workers. The Labor Department also was to enact regulations forcing
some companies to attest they did not layoff American workers to
create the vacancies for the foreign workers, and the National
Research Council was to do a study of supply and demand in the
information technology job market.

Such provisions haven't been given a chance to work, said Paul Kostek,
president of the Institute of Electrical and Electronics
Engineers-USA, which represents 220,000 engineers and computer
programmers. The Labor Department regulations, for example, haven't
even gone into effect yet, and the study has not begun, he said.

``No one's had a chance to make the system work under the legislation
passed less than a year ago,'' Kostek said. ``To go off and say let's
jump the number again is very premature.''

But that's exactly what Sen. Phil Gramm, R-Texas, said earlier this
month in a speech at Texas Instruments headquarters in Dallas. Gramm
is drafting legislation, called the ``New Workers for Economic Growth
Act,'' that would increase the annual number of visas permanently to
about 200,000 a year, a spokeswoman said. Rep. David Dreier, R-Covina,
is working with Gramm on a similar measure to be introduced in the
House of Representatives.

White House officials could not be reached for comment Friday on their
position regarding such legislation.