Foreign Worker Programs: Assessing the impact of S.2611 on American Workers and Their Workplaces
Education And The Workforce Committee — U.S. House Of Representatives
Testimony Of Jack Martin, Special Project Director, Federation For American Immigration Reform
July 19, 2006
Mr. Chairman, Ranking Minority Member and members of the committee, on behalf of the more than 200,000 members and activists of the Federation for American Immigration Reform (FAIR), thank you for this opportunity to share with you our concerns about temporary worker visas as currently authorized and administered and about the proposed expansion of those visa programs contemplated by S. 2611.
I am Jack Martin, FAIR”s special projects director. FAIR is a national, non-profit public interest organization working to end illegal immigration, to restore moderate legal immigration and to reform our immigration laws to bring them into accord with long-tem national interests.
First, I would direct your attention to the fact that temporary worker visas have been enormously increased in recent years and the fact that those increases will continue if nothing is done to limit them. Second, I will describe why the large-scale admission of foreign workers as currently authorized and with currently inadequate oversight is harmful to American workers. Third, adding insult to injury, the current harmful situation would be made even more of a threat to the American worker if the provisions of S.2611 were adopted. Finally, I would like to share with you a series of recommendations that we think are essential to bringing foreign worker programs into accord with the nation”s long-term interests.
Background: Enormous Increases In Recent Years
In fiscal year 2004 the federal government recorded more than 1.3 million entries of foreigners with visas that allowed them to work in the United States. This was two-and-one-half times as many entries as in 1995. The 1995 entries more than doubled the number of work-related entries recorded in 1985.1 So, it is clear that there is an ongoing very large expansion of foreign temporary workers in the U.S. workforce who legally have been admitted into the country.
Temporary foreign workers and trainees (H visas) numbered 74,869 in FY-85. They rose to 152,460 in FY-95 and to 506,337 in FY-04. Those represented increases of 104% and 232% respectively — overall a 576% increase.
Intra-company transfer entries (L visas) numbered 65,349 in FY-85. They rose to 112,124 in FY-95 and to 314,484 in FY-04. Those represented increases of 72% and 181% respectively — overall a 381% increase.
Exchange visitor entries (J visas), which allow temporary employment and are increasingly used for workers who shuttle between summer season and winter season jobs, numbered 110,942 in FY-85. They rose to 201, 095 (81%) in FY-95 and to 321,975 (60%) in FY-04 — overall a 190% increase.
Those were the only three programs that existed in 1985 for foreign nonimmigrant workers. Ten years later those three programs had been augmented by several additional programs created in 1990 to provide visas for workers of “extraordinary ability,” athletes, artists, religious workers, NAFTA treaty workers, etc. These additional categories accounted in FY-95 for an additional 68,204 entries, and by FY-04 these programs accounted for 178,044 entries, an increase of 161%.
There are annual limits for some of these temporary worker programs, i.e., H-1B professional workers (65,000) and H-2B unskilled workers (66,000). However, the H-1B visa category allows workers without limitation to enter outside the limit if they are working for universities, or for a non-profit organization or a governmental research center. A further exemption exists for aliens who have earned an advanced degree from a U.S. school — up to an additional 20,000 workers. H-2B unskilled workers who had received visas in prior years were also exempted from the ceiling by a provision proposed by Sen. Mikulski that was enacted this year.
Because of the exemption from limits for some H-visa temporary workers and the absence of limits on other categories of temporary workers, it may be assumed that admission of foreign workers will continue its rapid escalation without changes in the law. In addition, the limit on the entry of Mexican professionals under the NAFTA treaty ended in 2004, and it is likely that a surge of entries under that provision will occur. In FY-04, only 2,100 of the 66,200 entries were by Mexicans, with the rest by Canadians. With the limit on Mexican entries now expired, entries from that country could surge to the Canadian level or still higher.
Some of the employment categories for nonimmigrant workers allow the worker to stay for extended periods of time, e.g., H-1B workers for up to 6 years and intra-company transferees for up to 5-7 years. Other workers may enter for periods of less than one year. The Office of Immigration Statistics in the Department of Homeland Statistics (DHS) estimated the number of the temporary workers on average during 2004 at more than 1.5 million persons.2 Based on 2004 admission records, about 20% of that number is likely to be accompanying family members, so the number of workers would be about 1.2 million, although the OIS cautions that its estimate is probably understated — in effect they acknowledge that their records do not allow them to know how many temporary foreign workers there are in the country. Thus, about one percent of the entire civilian labor force is filled with legally admitted foreign workers. While the number of foreign-worker admissions has increased by 426% since 1985, the civilian workforce has increased by about 29%.
These estimates do not include the illegal alien population, which we estimate to be between 11 and 13 million persons, about 7.2 million of whom are in the workforce according to a Pew Hispanic Center estimate.3 That represents about an additional 5 percent of the workforce.
Large-Scale Admission Of Foreign Workers Is Harmful To American Workers
What is the impact of the rising influx of foreign workers on U.S. workers? The Washington Post reported on July 10 on the national trend of a widening wage gap which contributes to growing income inequality in our nation.4 The report noted that immigration is a factor contributing to this phenomenon, especially for the country”s low-wage workers. Of course, it is not just legal and illegal immigrants that compete for jobs and contribute to the pool of job applicants available to employers, but foreign nonimmigrant workers as well.
Just as the massive influx of illegal workers has depressed wages in regions and industries where large numbers of those workers are employed, so to is the current flow of legal foreign temporary workers already at a level where they too can affect overall wage conditions. As the Congressional Budget Office noted in a recent report, “Although the impact of an influx of foreign-born workers on the earnings of native-born workers is difficult to quantify, the presence of an increasing number of immigrant workers clearly reduces overall earnings growth.”5
A similar observation was made recently by a Teamsters Local spokesman in Hayward, California, “In our struggle to get higher wages for employees, our problem is probably magnified in occupations where there is an immigrant population work force. It is particularly a problem when there are undocumented workers in those occupations.”6 This observation was buttressed by a study by the Contra Costa Times. It reported that using occupations identified by the Pew Hispanic Center as having the largest share of foreign-born Latinos, it found that between 2001 and 2005 the area”s average wage in those occupations had fallen from 22 percent below the average wage to 27 percent below the average wage.7
The Pincer Squeeze
The American public has become painfully aware of the fact that workforce opportunities are increasingly constricted not just by competition from the increase in both foreign legal and illegal workers, but also by the export overseas, i.e., “outsourcing,” of a rapidly escalating number of jobs previously done at home. The American worker has to contend not only with the jobs exported abroad but also with foreign workers imported into the country — or not kept out of the country — who are taking American jobs.
This pincer squeeze may benefit American employers who strive to hold down labor costs as they attempt to maximize profits and justify multi-million dollar bonuses, but it is not appreciated by the American worker who finds jobs rebuilding New Orleans — his home city — denied to him because they are filled by foreign workers. It is not appreciated by unemployed high-tech workers who have been unable to find permanent jobs in their professional field since being laid off several years ago by high-tech firms, even though the employers have continued to hire tens of thousands of foreign high-tech workers since then. Those American workers wonder why foreign temporary workers are needed when highly-skilled American workers are laid off.
There is evidence that the L-1 visa is being used as a means to get around the H-1B numerical limit. Because L-1 visas have no numerical limit, and because there is no prevailing wage test for these visas, they offer a means to a company headquartered abroad or with foreign operations to circumvent the conditions in the H-1B visa program to protect American workers from unfair foreign competition.8 According to the DHS Office of Inspector General, “… the [approval criteria] is so broadly defined that adjudicators believe they have little choice but to approve almost all petitions.” 9
While U.S. employers argue that the H-1B program is essential to their competitiveness by allowing them to hire the “best and brightest” from wherever, their practices belie this claim. If employers were truly hiring the “best and brightest,” they would be sponsoring them for immigrant visas rather than letting them go. In FY-05, there were only about 19,500 professionals foreign workers holding advanced degrees — out of the hundreds of thousands currently working in the country — who changed status to permanent resident through sponsorship by an employer. It appears that U.S. employers are content to discard their supposed “best and brightest” foreign workers and hire new foreign workers at lower starting wages. Further, a large share of H-1B”s go to consulting companies, e.g. Tata, Infosys, HCL, that operate as “body shops” using the visas to bring in people from overseas and then rent them out to companies in the US as some sort of commodity.
The only semblance of protection for American workers in the H-1B program is a requirement that employers pay the prevailing wage to their foreign workers. However, a recent study found that the Department of Labor (DoL) was approving Labor Condition Applications (LCAs) even though the wage offers were below the prevailing wage. In addition, according to the Programmers Guild, DoL uses as a standard for determining the prevailing wage the 17th percentile of the average U.S. worker. It is obvious that such a standard allows employers to use the visa program as a way to hire foreign workers at lower wages than American workers. 10 The Programmer”s Guild has assembled recent evidence of discrimination against U.S. high-tech workers by about employers who advertise jobs as “H-1B only.” 11
The widespread hiring of illegal alien workers in seasonal agriculture rather than using existing programs for temporary workers (H-2A visas) is not because those visas are limited. They are unlimited. The reason is that the employers are able to evade the protections in the visa program for both U.S. workers and for the foreign temporary workers. While it is understandable that agricultural producers want to minimize their labor costs, it is unconscionable to continue to permit the conditions that have driven down real wages today in seasonal agricultural labor to less that they were decades ago. It is not fair to U.S. workers including those who are legal residents of our country.
The exchange visitor program (J visas) has morphed into a program very different from what was intended when it was created. It was designed to provide foreign youth the opportunity to come here on vacation and work temporarily to defray the expenses of their travel and living costs. Some might work as au pairs in a family while others worked in resorts, but the idea was that these would be temporary seasonal jobs after which these visitors would return home. Instead, there is now a large foreign workforce using these visas to work here year-round moving from seasonal summer job to seasonal winter job.
Treaty Visas (TN)
The NAFTA Treaty provisions for mobility of foreign professional workers might make sense among countries of comparable economic development, such and the U.S. and Canada, but it makes little sense between the U.S. and Mexico. TN visas that were capped at a low level during the first 10 years after adoption of NAFTA became unlimited in 2004. We do not yet have evidence that this will lead to a large migration of Mexican professionals to the United States, but we do not need an infusion of Mexican professionals coming here to gain a larger income, and Mexico will not benefit from losing its professionals.
Adding Insult To Injury — S. 2611
As if there were not already enough foreign competition for U.S. jobs, the Bush administration has proposed and the Senate has passed legislation that would further increase the rate at which foreign temporary workers taking U.S. jobs. S.2611 would create a new temporary worker category (H-2C visas) that would annually admit an additional 200,000 foreign unskilled workers for stays up to 6 years. It would increase the ceiling for professional foreign workers (H-1B visas) by 50,000 per year and expand it much further both by broadening the exemption from the ceiling to cover any foreigner with a university degree and by providing for a potential annual increase in the ceiling by 20%. Increasing anything by 20% per year allows for a doubling in size in less than 4 years and an increase by ten-fold in less than 13 years.
The Senate bill would also expand the criteria for issuing visas for foreign athletes (P visas) and allow indefinite stays for intra-company foreign workers (L visas) if an employer has sponsored the worker for immigrant status. Finally, the Senate bill would increase work opportunities for foreign students studying in the United States and for up to two years after graduating, and it would expand the NAFTA categories under which workers from neighboring countries are allowed to take U.S. jobs without limit.
Just the increased H-1B ceiling and the new H-2C visa provisions alone, because they allow for stays of up to 6 years, could result in a foreign workforce that in six years could grow to more than 2.8 million workers — more than double the 2004 level. In effect, even if there continued to be an H-1B visa ceiling, which was established to limit the impact of foreign workers on job opportunities for U.S. professionals, it would become meaningless.
Fair’s Perspective And Recommendations
FAIR believes that foreign temporary worker programs make sense only if they are carefully circumscribed to prevent their use by employers as a means to undercut wages and working conditions for American workers. In general, we believe that with a population that will reach 300 million this year the talent and skills to meet any job requirement can be found or trained within our own labor force without importing foreign workers.
We accept that there is a legitimate role for intra-company exchanges in a global economy, but those foreign assignments should be only for management personnel, not for run-of-the-mill employees who could be hired from within the U.S. workforce. There is substantial indication that U.S. and foreign companies are using the L-visa program to train foreign workers in the United States as part of a strategy to use them abroad in order to facilitate the off-shoring of U.S. jobs. 12 We do not believe that facilitating the trend in off-shoring is essential to U.S. competitiveness. We note the effort of some Members of Congress to correct abuses in the L-visa program — for example H.R.3322 and H.R. 4378 introduced last year — and the former also aimed at correcting H-1B abuse.
- Temporary foreign workers should be admitted only to take temporary jobs. Visas should not allow entry for multi-year periods — those jobs are not temporary jobs, and they should be reserved for U.S. workers. Temporary foreign workers should not be allowed to bring accompanying family members, thereby underscoring their temporary nature. Exceptions to this principle are appropriate for the H-1B program, because it is used as a precursor for permanent residence, and for intra-company transfers, because those jobs in theory are generated by international investment.
- The test of a need for temporary foreign workers should be based on market forces. Only if the wages offered are rising significantly faster than inflation, can it be assumed that a shortage exists. Rising wages are the signal that employers are attempting to encourage more Americans to enter that job field.
- Temporary foreign workers should never be admitted during a period when similarly qualified U.S. workers are being laid off, as was done during the high-tech melt-down and is currently occurring in the automobile industry. The H-1B visa program as well as other temporary worker provisions should be amended to tie admissions to changing employment conditions. As long as employers continue to be able to substitute foreign workers willing to work for lower wages than comparable American workers, there will be an incentive for them to discriminate in favor of the lower wage worker.
- Numerous studies have documented that the “comparable wage” criteria in the H-1B visa program is violated on a wide-scale basis.13 This is possible because of the lack of any systematic follow-up monitoring by the Department of Labor to assure that employers are abiding by the terms of the Labor Certification Application that led to the issuance of the visa. Employers of temporary foreign workers should be required to submit periodic reports to the DoL that identify the wages paid to such workers as they are reported to the SSA and to the IRS. Those reports should then be compared by the DoL with the LCA to assure that employers are in compliance with the approved employment conditions.
- Temporary foreign workers should be laid off before U.S. workers are laid off during any company down-sizing. The foreign workers should not be available to employers to use as a means to lower U.S. wages and working conditions. While it is possible that reforms might lead to some employers off-shoring jobs, the U.S. should compete internationally on the basis of productivity rather than depressing wages in the United States towards Third-World levels.
- The number of unskilled foreign workers — both legal and illegal — should be decreased to create greater opportunity for our unemployed workers to find jobs that pay a living wage. The large number of unskilled, unemployed Americans belies the need to continue the increase in admission of foreign unskilled workers, let alone further increase their numbers as proposed in S.2611. The shrinking opportunities for American high-school drop outs increasingly consign them to permanent under-class status.
- The Intra-company transfer program (L visas) should be restricted to only foreign management personnel. Other workers that they wish to train or serve as trainers in this country should be admitted only as temporary workers, i.e., for periods of less than a year rather than the current 5 year period that demonstrates that the position is not temporary.
- The religious worker program is riddled with fraud, as documented in a recent report by the DHS Office of the Inspector General. 14 Not only is there widespread use of false documents to obtain R visas, the loophole is being used by persons with potential links to terrorist organizations. The federal government should not be required to judge whether persons calling themselves religious workers are bona fide members of a legitimate religious organization. A hands-off approach would result in a natural test based on whether a religious movement is able to grow from within its domestic supporters.
- The NAFTA Treaty has opened a door for an unlimited flow of Mexican professionals to enter the United States in search of improved working conditions. This is in the interest of neither American professionals, whose earnings could be diminished by this flow, nor the Mexican people, who can be stripped of important human resources in their efforts to develop their country. Congress should call on the administration to negotiate a modification to the treaty that would establish that the reciprocity provision be interpreted to limit the number of visas issued to nationals of any of the parties to no more than the number issued reciprocally to Americans applying to work in that country.
- The creation of a plethora of new special visa categories in 1990 was, in effect, simply a means to increase the number of foreign workers taking U.S. jobs. All of the additional categories, except for visas created by treaty, should be abolished, and the foreign applicants for U.S. jobs should be required to enter the country with either an intra-company transfer visa (L) — narrowed to managerial personnel, or a temporary worker visa (H) — with a market-based test, or an exchange visitor visa (J) — limited in duration and non-renewable.
After all, if visas for fashion models can be accommodated within the H-visa category, there is no reason a special visa category is required for professional athletes or any other specialized workers.
It will be clear from the above analysis that FAIR views the various current visa programs that allow aliens to work temporarily in the United States as excessive, poorly conceived, subject to abuse, and in many ways unfair to the American worker. It should also be clear that FAIR finds the expansion of foreign temporary worker programs provided for in S.2611 unwarranted, and injurious to the American workforce.
It must be noted H.R.4437, passed by the House last December, while essential in gaining control over the enormous flood of illegal immigrants entering the U.S. workforce, does not attempt to deal with the reforms to foreign worker programs that we have identified. Therefore, while we commend this committee for focusing on the potential harmful effects of S.2611, if its provisions were enacted, we call on the House of Representatives at an early opportunity to take up the issue of reforming the existing temporary foreign worker programs to provide better safeguards to both American workers and foreign temporary workers. FAIR would welcome the opportunity to work with Congress in this process.
- These visa admissions data and those following are compiled from the Immigration Statistical Yearbook annual reports of the Immigration and Naturalization Service and currently by the Department of Homeland Security.
- Grieco, Elizabeth M., “Estimates of the Nonimmigrant Population in the United States: 2004,” Office of Immigration Statistics, DHS, June 2006.
- Passel, Jeffrey S., “The Size and Characteristics of the Unauthorized Migrant Population in the U.S.: Estimates Based on the March 2005 Current Population Survey,” Pew Hispanic Center, March 2006.
- “Well-Paid Benefit most As Economy Flourishes,” Washington Post, July 10, 2006 (A01).
- “The Role of Immigrants in the U.S. Labor Market,” Congressional Budget Office, November 2005.
- “Analysis finds that industries with a large number of foreign-born workers experience depressed wages,” Contra Costa Times, July 16, 2006.
- Wasem, Ruth E., “Immigration Policy for Intracompany Transfers (L Visas): Issues and Legislation, Congressional research Service (RS21543), June 12, 2003.
- “Review of Vulnerabilities and Potential Abuses of the L-1 Visa Program,” (OIG-06-22), DHS Office of Inspector General, January 2006.
- See “The H-1B Prevailing Wage is Substantially Below the Median Wage of U.S. Workers,” Programmer”s Guild website at http://www.prweb.com/releases/2006/7/prweb407549.htm, consulted July 13, 2006.
- “Programmers file federal complaints over “H-1B only” ads,” The Computer World, June 19, 2006.
- Brian Grow, “A Mainframe-Size Visa Loophole,” Business Week, March 6, 2003.
- The State of Asian Pacific America, Paul Ong, LEAP Asian Pacific American Public Policy Institute and UCLA Asian American Studies Center, 1994, pp. 179-180; Balancing Interests: Rethinking U.S. Selection of Skilled Immigrants, Stephen Yale-Loehr and Demetrios Papademetriou, Carnegie Endowment for International Peace, 1996; Debunking the Myth of a Desperate Software Labor Shortage, Norm Matloff, testimony to the U.S. House Judiciary Committee, Subcommittee on Immigration, April 21, 1998 (as updated, September 10, 2002); Characteristics of Specialty Occupation Workers (H-1B), Immigration and Naturalization Service, July 2002; Building a Workforce for the Information Economy, National Research Council, 2001; The State of Working America 2000/2001, Economic Policy Institute, Cornell University Press, January 2001.
- “Fraud Found in Visas for Churches,” The Boston Globe, July 11, 2006.