The H-1B visa debate: Pain and the politics

This week's hearing by the Senate Judiciary Committee on the H-1B visa program offered both insight and friction

This week's hearing by the Senate Judiciary Committee concerning the H-1B visa program offered a compendium of thought, insight and friction.

Based on reporting from that hearing, official testimony and information from other sources, here is a look at some of the emotion and analysis around the controversial issue.

This report begins in the hurricane's eye, at Southern California Edison (SCE), which has cut some 500 IT workers and replaced them with H-1B workers hired by offshore contractors. In many cases, Edison workers had to train their replacements.

At the Senate

The Judiciary Committee wanted a recently displaced worker to testify, but doing so could mean lawsuits for the workers because of severance agreements. Even so, the committee heard from SCE workers privately and collected written comments them. It then released some of their statements.

Here's is an excerpt of the first one:

"I am an IT professional and worked for Southern California Edison for over two decades. I was a loyal employee and always received outstanding reviews. A foreign worker with a[n] H-1B visa recently replaced me....

"I am the sole provider of my children. Due to a disability, finding employment at the same wage and with a work modification will be very difficult.... It is an ominous possibility that in 5 years or less, I may have no assets, suffer from severe pain and will need to go on full disability with a catastrophic decrease in income. The loss of my job may rob me of a secure retirement.

"My layoff has made my children fearful of their future and the security of their home. If I stay in the IT field, I run a high risk of again being replaced by a foreign worker.

"It's a farce teaching our kids STEM [science, technology, engineering and math] when the government is permitting U.S. companies to abuse the H-1B visa program, which allows foreigners to take these future jobs from them. My young son already knows two computer-programming languages. He now has firsthand knowledge of the H-1B visa abuse and may choose not to use his natural gift and work in the IT field...."

A Senator responds

"People aren't commodities., they're human beings, they have families, they have hopes and dreams, they want stability in their life," said Sen. Jeff Sessions (R-Ala.), who heads the immigration subcommittee and believes the H-1B program is being abused.

The industry argument

Lobbyists for the tech industry will not acknowledge the replacement of U.S. workers by H-1B visa holders. When news reports arise of offshore displacements, such as the Edison layoffs, the industry curtly dismisses these reports as "anecdotes."

At the same time the Judiciary Committee released its excerpts from SCE workers, major industry lobbying groups released a letter. The statement signed by the American Immigration Lawyers Association, BSA, the Compete America Coalition, the Computer and Communications Industry Association, the Consumer Electronics Association and many other groups said in part:

"Myth: Foreign workers displace American workers in the science, technology, engineering, and math (STEM) fields. Fact: Employment data show that there are not enough native born STEM workers to fill available STEM jobs and foreign STEM workers are not displacing their native-born counterparts."

The pro-H-1B strategy

The political strategy of the IT industry is to relentlessly position the H-1B visa as a tool for retaining foreign graduates of U.S. schools -- the "best and the brightest" meme. The fact that many H-1B workers are used to transfer work overseas is avoided as a topic.

But the business community -- particularly management consultants -- are enthusiastic supporters of shifting work overseas. McKinsey and Co., in a 2003 report, crystalized the argument, one still used today, for offshoring.

It said jobs will go overseas and "the changes will be painful for many involved," but argued U.S. firms will ultimately benefit from reduced costs and by raising living standards overseas will create demand for products. The report also said U.S. firms could invest savings in higher-value aspects of their operations.

At the hearing, Sen. Chuck Grassley (R-Iowa), the chair of the Judiciary Committee, asked a question of Ron Hira, an associate professor of public policy at Howard University invited to testify, who summarized McKinsey's core assumptions.

Southern California Edison "said that they were cutting cost and making their business more efficient. With respect to what SCE and other companies have done, what do you say to those who say that cutting labor cost in this manner increases corporate efficiency and in the long run is good for American consumers?" said Grassley.

Hira's response: "It definitely does cut wages and saves money, and certainly every executive is being pressured by shareholders to do so.... But it is a lose-lose situation for American workers. It is a lose-lose situation for the American economy. You're basically trading jobs away to bring a little bit of extra profit to SCE."

Middle ground?

Sen. Chuck Schumer (D-NY), who was at the hearing, staked out a position aimed at appealing to both sides.

"For every 100 H-1B workers, an additional 183 jobs* are created for American born workers. Plain and simple, it's a myth that the H-1B visa program takes jobs away from Americans," said Schumer.

But he also made a distinction concerning the H-1B visa's use in offshore outsourcing. In 2010, he said the visa had given rise to "multi-national temp agencies" and he reiterated support for new wage requirements, "and new restrictions on hiring foreign workers to displace U.S. workers."

*The reference to 183 jobs comes from a report by the American Enterprise Institute and Partnership for a New American Economy. Partnership co-chairs include Steve Ballmer, former CEO of Microsoft; Michael Bloomberg, former mayor of New York; and Bob Iger, CEO of Disney.

Another IT worker weighs in

Judiciary Committee statement from a laid-off SCE employee, excerpt No. 2:

"Over 400 hardworking, intelligent people have lost their jobs due to the H-1B visa program.... Many of us, and countless more like us, face enormous hurdles to find new jobs -- why would companies want to hire us when they can hire cheaper workers on the H-1B visa to do our jobs for us?"

Raise the visa cap

Sen. Orin Hatch, (R-Utah), who is leading a legislative push to increase the H-1B visa cap through the I-Squared bill, said tech businesses in his state "can't find enough engineers or enough highly educated people to keep up with the demand. We call Utah Silicon Slopes and it's competing pretty well with Silicon Valley...and the jobs that they create are monumental.

"We would be penny wise and pound foolish to not do the H-1B bill, which we worked on and worked and worked on to try to get so that it meets the needs at everybody at this table," Hatch said.

Hatch may oppose Grassley's efforts to reform the visa. In 2013, Hatch led an effort to win adoption of 19 pages of tech industry-sponsored amendments to the Senate's comprehensive immigration bill. Grassley was thwarted.

Grassley said raising the base H-1B cap from 65,000 to 195,000 a year, as proposed in the I-Squared bill, "only makes the problem worse.

"It doesn't make sure that American workers are put before foreign workers. It only increases the supply of cheaper foreign labor," said Grassley, at this week's hearing.

Among the reforms Grassley wants, along with his Democratic ally, Sen. Dick Durbin of Illinois: A revision of prevailing wage determinations to increase wages of visa workers, required Internet posting of H-1B employment positions; and limits to the number of H-1B and L-1 visa holders an employer of 50 or more workers may hire.

He has proposed setting a limit of 50%.

The Chamber of Commerce view

"There currently are insufficient numbers of qualified and available American workers in the STEM fields, which undermines the ability of U.S. employers to compete," wrote the U.S. Chamber of Commerce, in statement to the Judiciary Committee.

The counterpoint to the Chamber's view is offered by Hal Salzman, a professor at Rutgers who studies STEM workforce issues.

According to his testimony:

"The U.S. supply of top-performing graduates is large and far exceeds the hiring needs of the STEM industries, with only half of new STEM graduates finding jobs in a STEM occupation (and only a third of all STEM graduates in the workforce hold a STEM job).

"The predominant function of IT guestworker visa programs is to facilitate the offshoring of IT work," said Salzman.

More men than women

The U.S. Immigration and Naturalization Service has never published data -- despite being asked to do so -- showing the sex of H-1B workers. With that context in mind, Karen Panetta, an engineer with a Ph.D, submitted testimony on behalf of the IEEE-USA.

"I have sources in the outsourcing industry, since I teach students in these fields. They tell me that 85% of H-1Bs working for outsourcers are men. After 20 years, that kind of accumulating bias against American women adds up."

Anecdotes rejected

Industry groups are dismissive of the anecdotes used by the critics of the H-1B visa program. But supporters use them as well.

Bjorn Billhardt, the founder and president of Enspire Learning, an Austin-based company that creates learning development tools, testified in support of raising the H-1B cap.

"Just last week, I spoke with a recent Ph.D. in chemistry from Notre Dame University who was hired as a management consultant in my home state of Texas. He told me that through government-sponsored scholarships and grants, the U.S. had invested approximately half a million dollars into his education here in the states. As a foreign national, he was excited to accept a job offer in Houston, and bring his expertise to bear helping U.S. energy companies succeed in the global marketplace.

"Yet, despite his brilliance, his Ph.D., and his strong desire to stay in the United States, he pegged his chances to win a slot in this year's H-1B lottery system at less than 60%," said Billhardt, in his testimony. "If he cannot stay, he said he will move to London, Shanghai, or somewhere else where his talents are valued -- and we will lose out on those skills for our own economy."

Another IT worker, same story

"This was one of the most humiliating situations that I have ever been in as an IT professional.... We had jobs and there was no shortage of skilled labor that would make it necessary to bring in H-1Bs. We were let go and replaced by foreign workers who certainly weren't skilled to take our position," wrote an IT worker at Northeast Utilities in Connecticut who trained his replacement.

The committee released his statement anonymously.

The role of OPT

The Optional Practical Training, or OPT, may be bigger than the H-1B program in adding workers, said John Miano, a programmer who became an attorney and is representing the Washington Alliance of Technology Workers. Miano testified as well.

Students still in school, or recent graduates, can use their student F-1 visas to take jobs through the OPT program. Until 2008, the program was available for 12 months, after which the student had to get an H-1B visa. But President George W. Bush's administration in 2008 extended the program for science, technology, engineering and math (STEM) students by 17 months, or 29 months total. [Miano says the program can run for as long as 35 months.]

Then, in 2012, President Barack Obama boosted the number of eligible fields by about 90 to a total of 400. The number of OPT workers has grown from 28,000 in 2008 to 123,000 in 2013. These workers have no labor protections nor do they have to pay Social Security of Medicare tax, "so this makes OPT workers inherently less expensive to hire than Americans."

An Infosys whistleblower speaks

Jay Palmer, the whistleblower in the Infosys case that resulted in a $34 million settlement with the U.S., was critical of the skills of the visa workers.

"I cannot emphasize enough that the H-1B workers that are replacing the U.S. workers have minimal skills and little to no business knowledge. The idea of knowledge transfer is absurd; Americans are training these people on how to do their job," said Palmer, at the hearing.

Palmer's remarks struck a nerve in India.

B V R Mohan Reddy, vice president of Indian technology industry group NASSCOM, was quoted in the New Indian Express responding to Palmer. He said, in part, that Indian H-1B workers have saved U.S. firms billions, "not by being a cheaper workforce, but in terms of increasing efficiency and productivity."

Another IT worker

Judiciary Committee excerpt No. 3, from laid-off SCE employee:

"Through no fault of my own, my job was just given to someone else with a lot less experience, knowledge and skills, lowering my standard of living and raising theirs so Edison could save a few dollars and reward stock holders with a few more pennies on their dividends."

Business blamed

Norm Matloff, a University of California computer science professor and longtime critic of the H-1B visa, believes the issue is being mischaracterized as a problem entirely created by the offshore firms. U.S. tech firms are also abusing the system, he said, and that has turned the debate into an, "'Intels are good, Infosyses are bad' dichotomy.

"Both are underpaying for their respective levels of workers," wrote Matloff on his blog. The foreign workers are also desirable because of the difficulty they face in changing jobs.

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