The Sham High-Tech Worker Shortage
Statement Of Dan Stein, Executive Director, Federation For American Immigration Reform for The International Operations And Human Rights Subcommittee, Of The House Committee On International Relations
Wednesday, February 25, 1998
This statement is for the record of the hearing on a proposal to raise the 65,000 annual ceiling on H-1B temporary worker visas. It explains why this proposal is not based on actual need and is not in the national interest.
Last fiscal year, the 65,000 annual limit on nonimmigrant temporary worker (H-1B) visas was reached for the first time, and is likely to be repeated again this year. As a result, one of the big users of temporary worker visas, the information technology (IT) industry, is pushing for Congress to double the 65,000 limit by increasing the ceiling 20 percent per year for the next three years.
The fundamental question is: Is it in the national interest to turn the program into a major, ongoing source of skilled labor for U.S. employers' needs? FAIR believes that the answer to that question is no. Rather the H-1B program should be returned to its original purpose which was to provide employers with a temporary source of labor for acute, demonstrable, short term labor market needs.
- Raising the H-1B ceiling every time it's reached avoids finding a real solution to the problem that carries with it important benefits for American workers and American families. They are:
- greater job opportunities
- rising real earnings
- more on-the-job education and training.
- Rising real incomes sends an important signal to American labor market participants that is crucial to the development of long term domestic solutions.
- increased enrollment in colleges and universities
- increased entry by women, minorities, and lower skilled job seekers
- increased emphasis by employers on work force training and development
Despite the economic boom of recent years, average real household income is still 2.7 percent below the level it reached in 1989. (Source: U.S. Census Bureau) Economists from Laura D'Andrea Tyson to Alan Greenspan acknowledge that the size of current immigration has had a significant impact on the supply side of the labor market. According to the Joint Economic Committee of Congress, U.S. income inequality is now at the highest level since World War II. FAIR contends that high levels of immigration, including skilled immigration has played a significant role in these developments.
FAIR further believes the proposed increase in H-1B visa levels is unwise for the following reasons:
- The evidence presented to substantiate the claim that there is an acute shortage of skilled workers in the information technology industry is highly suspect.
- Government reports show that the H-1B program as it currently functions is being seriously abused and manipulated by employers and immigration system practitioners.
- There is no consensus in the information technology industry itself that the solution to worker shortages is increased immigration.
- Increasing the supply of foreign labor will seriously aggravate employment difficulties expected to flow from the Asian financial crisis and which are expected to be felt later this year.
- The solution to the problem of skilled labor shortages that is in the national interest is to increase the supply of labor qualified for these jobs from domestic sources through education, job training, and better recruitment.
- The existing ceiling of 65,000 visas in the temporary skilled worker program, if properly administered for the purposes for which the program was created by Congress, are more than adequate for the demonstrable, acute, short term labor needs of industry.
Fair's Analysis Of The Worker Shortage Claim
"We believe that the labor markets for IT [information technology] professionals have been artificially distorted by industry hiring practices. There is a reluctance to invest in re-education, instead of discarding old workers for new ones." Carol Iseu, V.P. of Int. Fed. of Professional and Technical Engineers, TechWeb News, January 13, 1998
Data supplied to Congress by the immigration-practitioner-dominated Information Technology Association of America (ITAA) to demonstrate that a skilled labor crisis exists is seriously flawed and widely disputed within the industry itself. It should be clear that the ITAA is not an impartial source of information.
One piece of evidence used is a university study commissioned by the ITAA that simply relied on asking employers how many high-tech job vacancies they had open and simultaneously tabulated employment ads. The results are seriously flawed for two reasons. The number of vacancies maintained by a company's employment office is frequently nothing more than a wish list of proposed hirings and openings based on a company's forecasted rate of employee turnover. Few companies operate on the basis that all such vacancies would suddenly be filled.
Secondly, employment ads frequently include positions for whom no employment action is intended. One source is the Department of Labor's certification process for foreign hires in which advertisements are crafted to meet the specific skills of a foreign employee already on the payroll. The absence of qualified applicants is then used as a basis for demonstrating to the Department of Labor that Americans with similar skills are unavailable. In other words, these are not true job openings. Another source is the quasi-permanent advertisements placed by many companies in the expectation of future growth or employee turnover. Again, these do not represent real job vacancies.
The only valid and impartial barometer of acute labor shortages in an industry is rapid wage and salary inflation that outstrips inflation. There is no evidence to show that this is occurring on a widespread scale in the information technology industry today.
The ITAA itself, is a trade association dominated by immigration law practitioners and employment consultants. Their objectives are propelled by their interest in an ever larger pool of available immigration visas. Moreover there is reason to believe their preferred solution does not reflect the views of the industry itself. A survey of 400 top hi-tech industry executives attending a recent technology management conference in Dana Point, California found 56 percent opposed to the idea of increasing immigration as a solution to the industry's labor needs.(See: CIO Communications Press Release, Feb. 4, 1998)
Two industry groups, the American Engineering Association and the IEEE have expressed their doubts about the size of alleged shortage and their opposition to the solution of expanding H-1B visa levels as a remedy.
A 1996 audit of the H-1B program by the Department of Labor's Inspector General found that the program has already been turned into a virtual "rubber stamp" for the admission of skilled and unskilled foreign labor which become permanent additions to the U.S. labor supply. The study found 98.7 percent of temporary worker petitions were for aliens already in this country. The audit also found that 75% percent of temporary workers admitted worked for employers who did not adequately document their wages and another 13% were paid below the advertised prevailing wage. The report noted "The program has become a stepping stone to obtain permanent resident status not only for the best and brightest specialists but also for students, relatives, and friends."
In 1996 Secretary of Labor Robert Reich testified to Congress that nearly 570,000 temporary foreign workers were admitted to the U.S. between 1992 and 1994 and said the program was "displacing American workers and dragging down wages in important high-wage, high skill jobs." (See Rocky Mountain News, April 15, 1996) Nearly three-quarters were already working for the employer who filed the petition, and over one-eighth were working illegally. FAIR believes the evidence is conclusive that the H-1B program is subject to serious fraud and abuse, and that reforms should be made to return the program to its original purpose before any further changes are undertaken.
Opening the door to increased foreign labor at this time also carries a serious risk of aggravating the unemployment impact of the Asian financial crisis on skilled U.S. workers. The California State Finance Department estimates that the Asian slowdown could cost California alone up to 65,000 non-agricultural jobs this year which would come primarily from the state's hi-technology industry. (See The Washington Post, Feb. 10, 1998) In the current atmosphere of economic uncertainty and confusion stemming from the continuing crisis in Asia, it would be foolhardy for Congress to add to possible severe economic problems that are expected to arise.
The correct, long term solution that is in the national interest is to focus our attention on upgrading the education and skills of our domestic labor force, and refocus the H-1B program on its original purpose.
University enrollment in computer science curricula is increasing. This is the appropriate response in our job market to a present or future skills shortage. Further infusions of foreign labor as a solution will undermine the free market attraction of more American youth into the high technology employment sector. It will also deny high paying job opportunities to tens of thousands of older, experienced computer science professionals.
Current data on the H-1B program shows that only 42 percent of the labor market certifications under the program are computer related. The majority are for therapists, accountants, university faculty, nurses, and other health professionals. The Department of Labor's audit shows that many existing H-1B visas are being used for the admission of foreign workers that have no real relation with meeting critical short term labor market needs. If the program was reformed and properly administered in accord with the Dept. of Labor's recommendations, there would be no current need to raise the H-1B ceiling.
This is not a crisis that requires Congressional action. It is a challenge for the industry and an opportunity for America's universities and America's youth. Congress should not underwrite the industry's destructive reliance on foreign labor which is not in the nation's long-term national interest.
Fair's Policy Recommendations
Clean up the systemic fraud found by the Department of Labor in H-1B labor certifications (1996 Inspector General's Report).
Adopt Department of Labor recommended changes to protect American workers and stop H-1B's from undermining U.S. workers wages and bargaining positions.
Remove the key links in "chain migration" by enacting the important legal immigration reforms of the U.S. Commission on Immigration Reform.
Enact effective entry and departure controls for non-immigrant visas -- now virtually non-existent.