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Greg Siskind on Immigration Law and Policy

NEARSHORING

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I've made the argument over and over again that a lack of H-1B visas will result in outsourcing and the significant loss of jobs by US workers. Employers who make the determination that the US labor market is to unreliable as far as producing enough qualified workers (either domestic workers or workers on visas), then they have three choices:



1. Raise salaries dramatically enough to steal workers from your competitors and either reduce profitability (which shareholders will disapprove) or pass the costs on to consumers (assuming you have enough influence in the marketplace to permit this).



2. Make do without the workers and risk operating unprofitably or becoming uncompetitive as foreign competitors take advantage of the lag in development by the US company.



3. Open up foreign operations and outsource the positions.



I've yet to hear a compelling response to this argument by the anti-H-1B crowd (and there are a few that like to post in the comments on this blog). Either they say that I'm being hysterical and that companies really won't outsource - it's just a bluff. Or they just condemn the patriotism of these companies and suggest that we punish such companies by barring government agencies from dealing with them, tax their products more, etc. Of course, no one complains about the thousands of foreign owned companies in the US who chose this country because of our workforce and who will sooner or later pull up stakes when our workforce no longer seems reliable or affordable.



And now a new shoe has dropped and it's one that will be heard loudly in Washington. Bill Gates has been BEGGING Congress to deal with the H-1B cap crisis and has warned over and over again that the situation cannot continue.



So Microsoft has done what I was expecting, but in a way that is a surprising. Rather than outsourcing to where the talent workers are (they actually do this already in India and Israel), they are just moving operations a two hour drive up the Interstate to Vancouver. Canada's much friendlier attitude toward tech workers could usher in an entire new era for that country if Microsoft's move marks the beginning of a trend.



Lest people think that H-1Bs were not at the heart of Microsoft's decision making, here is a quote from the company's statement announcing the new facility:

"[The new location] will allow Microsoft to continue to recruit and retain
highly skilled people affected by the immigration issues in the US," said a
Microsoft statement.

For the programmers who seem to spend more time complaining about H-1Bs than actually focusing on making American companies competitive enough to have jobs for Americans in the first place, here's a link to our Canada office if you want to look in to Canadian immigration. Of course, since you probably have been unwilling to move to where the jobs are in the US, you're not likely to move the Great White North.

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  1. annoyed (at the U.S. Immigration system)'s Avatar
    I am originally from Vancouver. Microsoft will do very well there, at least in terms of having lots of qualified people available for hire. They will, however, need to abide by the much stiffer Canadian labor laws. In the U.S., they avoid paying employees certain benefits by making most of their hires contract employees (not technically employed by Microsoft), and limiting the amount of time contractors can work before taking a forced break away from the company. This sort of sleight of hand will not be possible in Canada. I wish Microsoft had set up shop in Vancouver when I was there as I may never have been forced to leave to find work.

    Many of the Americans I have talked to believe that foreigners are taking their jobs in tech. This is untrue in my opinion, but if they force American companies to set up shop outside the U.S., then they can be sure foreign workers WILL be taking their job, and money will be flowing out of the country.
  2. annoyed at parochialism and redneck racists running this country's Avatar
    Finally, all immigrants can move to a better and more humane place. Let's leave the racist, narrow-minded rednecks to live in misery as the dollar keeps constantly devaluing and their economy spirals down.
  3. annoyed (at the U.S. Immigration system)'s Avatar
    I am originally from Vancouver. Microsoft will do very well there, at least in terms of having lots of qualified people available for hire. They will, however, need to abide by the much stiffer Canadian labor laws. In the U.S., they avoid paying employees certain benefits by making most of their hires contract employees (not technically employed by Microsoft), and limiting the amount of time contractors can work before taking a forced break away from the company. This sort of sleight of hand will not be possible in Canada. I wish Microsoft had set up shop in Vancouver when I was there as I may never have been forced to leave to find work.

    Many of the Americans I have talked to believe that foreigners are taking their jobs in tech. This is untrue in my opinion, but if they force American companies to set up shop outside the U.S., then they can be sure foreign workers WILL be taking their job, and money will be flowing out of the country.
  4. oops's Avatar
    sorry for the double post. hit the reload button and it reposted it...
  5. LEGAL IMMIGRANT's Avatar
    Good post Greg, but I doubt you will change the minds of Lou Dobbs loonies.
  6. R. Lawson's Avatar
    You are mixing apples and oranges. Immigration and trade are two different issues. The offshoring firms would like to make them one issue - so that movement of humans can be bartered for just like livestock.

    In the case of Microsoft, they are trying to make political hay of this. What makes you think they didn't plan this move long before the immigration debate and are just doing this for show? They are trying to blackmail our government into changing immigration laws, and I find that discusting.

    In any event, I have never said that I oppose skilled foreign workers coming into this country "to fill shortages". I am not anti-immigrant, rather I am pro-worker. The sad fact is that the H-1b visa isn't being used in all cases to fill shortages, rather to provide (mostly IT firms) with underpaid and exploited labor.

    This is why, according to the GAO and independent studies, the H-1b workers in IT occupations are paid much less than American workers. This is why offshore outsourcing firms, mostly from India, are the top sponsors of H-1b visas. Then there are law firms like Cohen and Grigsby that openly flaunt the laws and intentionally harm the American worker.

    I believe there may be some middle ground that would enable companies like Microsoft to fill hard to find skills, and clients of Greg Siskind (mostly doctors I hear) to attract talent. But Bill Gates isn't looking for middle ground. Until he starts speaking out against the abuses that have occured in the IT industry and proposing ideas to curb such abuses, his argument has no validity. His argument serves his self-interests, and not the interests of our country.

    If Bill Gates and Microsoft wanted the best and brightest, they would be proposing a system that gives preference to those with the most skills and those paid the highest salaries. Currently, their proposal is to simply remove the cap. That would permanently harm American workers and make the IT occupation even less attractive.

    So when will the ILW sue on behalf of H-1b workers who have been denied overtime protections, who must give back their tax returns to the employer, and who are paid less than prevailing wages as required by law? Will the ILW ever represent an American worker who was being interviewed simply so that a company can pretend to be seeking a qualified worker? I wonder how much expenses American IT workers incur from travel and missed work as a result of this charade!
  7. Legal and waiting's Avatar
    First about R. Lawson attempt to equate labor to livestock. If R. Lawson had any exposure to labor economics (or to any part of economics, for that matter), he would be smart enough not to equate labor with livestock (product), but rather equate it with capital (resource required to make product). Just like attracting capital has been a big thing for inducing economic growth in the past, attracting labor is the new growth mechanism in the international economy, heavily employed by such countries as (gasp!) Canada, New Zealand, Australia, and EU countries, which bring new labor into the pool by adding whole new coutnries to the union. Labor infusion was also used widely by the good ol' USA, prior to creation of current highly restrictive immigration system. For a "pro-worker" garden variety economist, it would be very helpful if you could glance over some of the cornerstones of the worker-centric economic works that talk about the role of labor and capital in creating the product; even (gasp!) Karl Marx will do.


    Second, there is absolutely no scientific evidence that majority of H1B workers are underpaid or exploited. Even though some studies find that H1B workers are slightly lower paid than American workers, the difference is fully explained by foreign workers' young age and fewer years of experience. Please educate yourself on this topic before making such blatant statements.

    Third, the whole claim of H1 IT workers affecting American workers' salary hardly holds any water, as +0.07% increase of labor supply can not negatively impact overall level of prices in any economy, as changes to the pool are easily absorbed. It may, though positively affect prices, should this infliction of resource be in high demand and complementary to the general labor pool of the country, thus inducing higher levels of growth in the industry. That is generally the conclusion of economic research on this particular matter - positive, rather than negative impact of foreign high tech workers on the wages of Americans.

    Fourth, if anything, over-regulation is generally the source of inefficiencies of the system. If you look at the H1 disaster of past Apri, you will see that no respectable company can hire a wanted worker, even with a year-long wait - thus, next year, hardly any respectable company will attempt. It becomes quite clear that the longer this situation is in place, there is more possibility of abuse. The recipe for fixing this problem is not more, but rather less regulation, by allowing the market forces eliminate any inequalities. Mr. Gates's proposal to dramatically increase the cap (I would suggest eliminating it altogether) would get you about 60% there. More companies will be sponsoring H1 workers should there be no threat of the cap, thus competing for these workers in the open market, thus, eliminating any possibility of abuse and exploitation. If you really cared about workers, R. Lawson, you would not only be on Mr. Gates's side, but also be suggesting full portability of H1 visa, thus making it independent of employer sponsorship, so that the workers could more freely move around. Increasing (or better yet eliminaitng) green card quota for EB category, and untangling the ever-complicated application process, will do wonders for labor mobility and increasing strength of the worker position, too.

    Thus, R. Lawson is trying to over-represent perseived problems with the H1 visa only to promote measures that will make sure these problems will occur in reality. If anything, such a position may only stem from his own insecurities and inability to compete in the open marketplace.
  8. R. Lawson's Avatar
    "Second, there is absolutely no scientific evidence that majority of H1B workers are underpaid or exploited. "

    Greg, you are wrong on this. There is overwhelming evidence - via the LCA database - that H-1b workers are paid much less than American workers when comparing that data with BLS data.

    If the data isn't "scientific" enough for you - because I admit that the LCA database is a bad source of data - the reason is that the government won't release accurate data on this program so that we can't really understand the true impact.

    We suspected that the greatest users of the H-1b visa program were Indian IT outsourcing firms. We didn't know for sure until two Senators requested the data. Prior to the Grassley and Durbin requests, we relied on LCA data to assert that Indian IT firms get the lion's share of the visas. Now we know for sure.

    We would know so much more about this program if only the data were released. I would welcome academic and/or independent studies on this subject.

    "+0.07% increase of labor supply can not negatively impact overall level of prices in any economy, "

    In software engineering the numbers are much higher - double digit percentages. If you look at IT as a whole, which includes jobs like data entry, you may be right. But once again, without reliable data we can't say for sure the exact percentage and the impact.

    Labor groups have begged for this data. Corporate groups like the ITAA have pushed hard to keep it a secret.

    "R. Lawson is trying to over-represent perseived problems with the H1 visa only to promote measures that will make sure these problems will occur in reality. "

    That is wrong - an unfair statement - I genuinely want this visa to work as designed - to fill hard to find positions like doctors and people with advanced skills (not entry level Java developers barely old enough to drink).

    The problems are real, and are documented. There is no question that the top sponsors of H-1b visas are Indian outsourcing firms. There is no question that these firms pay lower salaries than the prevailing wages. There is no doubt that these companies rarely hire American software engineers. There is no question that companies place "H-1b only need apply" advertisements. There is no question that firms have been fined by the DOL because they withheld the tax returns of H-1b workers.

    Then there is a ton of anecdotal evidence of abuse as well, but I won't even go there. The abuse is so well documented Greg, that I can't believe you would still be saying this. We have very recent cases substantiating this.

    Please - ILW - file the FOIA requests for the aggregate data from the BLS and USCIS. If that fails sue. Has the ILW even tried? Groups I associate with have tried, and were stonewalled.
  9. R. Lawson's Avatar
    Apologies to Greg Siskind. I thought that I was replying to him in my last post - the reply was a response to a comment by "Legal and waiting" which I mistakenly believed to be by Greg.

    Even though Greg and I don't always see eye to eye on this issue, I am glad that he has been patient in debating this and allowed me to, within reason, comment on his blog.
  10. Legal and waiting's Avatar
    R. Lawson, can you provide any facts to support your arguments?

    I believe, in this conference Greg already provided numebr of H1 visas used by the outsourcing companies - and those are NOT majority of the H1-B.

    Here is some information on real H1 wages. This paper also addresses some allegations of underpayment that you picked up from anti-immigration Center for Immigration Studies "research".

    http://www.competeamerica.org/resource/bibliography/nfap_policy_brief_h1b.pdf

    - A study by Madeline Zavodny, a research economist at the Federal Reserve Bank of Atlanta, found that the entry of H-1B professionals neither lowers the contemporaneous earnings of natives, nor has "an adverse impact on contemporaneous unemployment rates."

    - Research by Paul E. Harrington, associate director of the Center for Labor Market Studies at Northeastern University, shows foreign-born and native professionals earn vitually identical salaries in math and science fields. National Science Foundation data show foreign-born scientists and engineers actually earn more than natives in some fileds.

    - Even emong the highly stratified sample of the small number of employers whose actions warranted investigation and government-imposed penalties between 1992 and 2004, the average amount of back wages owed by even those employers is small - less than $6,000 per employee, no more than the typical government and legal fees paid by most employers to hire H-1B visa holders. And among those employers, few if any are well-known companies. Generally, of the small number of violations no more than 10 to 15 percent of H-1B violations in a year
    are found to be "willful" by the Department of Labor, indicating the extent of abuse is limited.
  11. Greg Siskind's Avatar
    FYI - I deleted a comment directed to Roy by another poster which was largely fine, but took a personal shot at him toward the end. I really want to foster free discussion in the comments, but expect all comments to steer clear of becoming personal attacks.
  12. R. Lawson's Avatar
    Compete America is an industry group. In short - you can't trust their findings. These industry groups are notorious for releasing flawed data. For example, the ITAA (another industry group) in 2000 predicted 2,000,000 IT jobs would be created over the next 10 years. Well, 7 years later we are slightly ahead or slightly behind the 2000 employment levels, depending on what data you buy into. Either way, the IT labor market has remained rather stagnant.

    Additionally, the IT labor market has not seen wages grow in proportion to inflation. If the IT labor market were so tight, as the industry groups want you to believe, wages would be soaring.

    John Miano (of the PG) released a report based on LCA data indicating that wages are in fact lower: http://www.workpermit.com/news/2005_10_26/us/us_h1b_visa_holders_earn_less.htm


    Because the source of that report is the LCA database, it is subject to any errors in the LCA database. Unfortunately our government won't release adequate data on this program so we cannot predict with certainty the impact. However, the LCA database was correct in identifying the companies that sponsored the most H-1b visas.

    "- Research by Paul E. Harrington, associate director of the Center for Labor Market Studies at Northeastern University, shows foreign-born and native professionals earn vitually identical salaries in math and science fields."

    Many foreign born scientists have naturalized - and are not on the H-1b/L1 visa. I would expect their wages to be on par with national averages.

    "Greg already provided numebr of H1 visas used by the outsourcing companies - and those are NOT majority of the H1-B."

    Greg is right. If you look at totals - there are more non-outsourcing. However, the outsourcing companies are concentrated in the IT occupation and, when compared with other companies (not as an aggregate) the outsourcing companies sponsor the most H-1b visas. Here is the data for both H-1b and L1 visas - data comes from Senators Grassley and Durbin:

    H-1b list: http://www.informationweek.com/news/showArticle.jhtml?articleID=199601616

    L1 visa list: http://www.informationweek.com/showArticle.jhtml;jsessionid=EZ2S2VP4NSVV4QSNDLRCKHSCJUNN2JVN?articleID=200000857&queryText=h-1b

    Senator Grassley interview on the H-1b visa: http://www.informationweek.com/showArticle.jhtml;jsessionid=EZ2S2VP4NSVV4QSNDLRCKHSCJUNN2JVN?articleID=200900110&queryText=h-1b

    Now infamous YouTube video depicting how one firm is circumventing immigration law: http://www.youtube.com/watch?v=TCbFEgFajGU

    In short, the program is not being used as intended. Although Bill Gates misspoke when he said that most of Microsoft H-1b workers are earning about $100,000 (in reality only a handful are) Microsoft does pay better than the outsourcing firms. These outsourcing firms are actually preventing the best and brightest from gaining H-1b visas and harming legitimate users of the program.

    In any event, I am sure you have reasonable complaints with the program in regards to the impact on immigrants. I don't disagree with anyone who would say the H-1b is a burden on immigrants. But you should also look at the other side of this, and see how the abuse of the program has become a burden to American IT workers - mostly software engineers/programmers.
  13. Legal and waiting's Avatar
    Tell me how Northwestern Unversity and Federal Reserve Bank of Atlanta are "industry sources"? Remember, the data and anlysis are not coming from CompeteAmerica, they just summarize the findings.

    That cannot be said about your "research", where all of the conclusions are coming from anti-immigrant sources.

    Here is a the independent piece that you stated:
    "Last year, the nine Indian firms collectively were issued 19,512 of the 65,000 H-1B visas granted, according to the list. (In addition to the 65,000 granted annually, the U.S. also issues H-1B visas to 20,000 foreign students who received advanced degrees from U.S. universities.) "

    That's 23% of H1 visas for nine companies - less than 3% average per one. Your statement that the overwhelming majority of H1 visas goes to Indian outsources is not true, on top of it. Not even mentioning that these companies will still hire same people, with H1 or without - they may just as well hire them in India. H1 abolishment will do nothing to them. But the remaining 87% of the visas that go to American companies and who are not even IT workers - who cares about them! They deserve nothing!

    In any case, Bill Gates should be your hero - he is taking all these undeserving temporary workers and taking them to Canada - finally! What a great idea! Now, nobody, not even employers, will mess with the ability of American workers to make what they deserve.
  14. Greg Siskind's Avatar
    Roy - Are you certain that the 19,000+ number you are mentioning is for actual H-1Bs granted or for labor condition applications filed? My understanding is that the FOIA information is only available for LCAs and this number far exceeds actual visas granted.
  15. R. Lawson's Avatar
    Greg, I didn't do the math so not sure where the 19,000 number comes from. Is that simply what the top 20 sponsors adds up to?

    The list is what was provided to Senators Durbin and Grassley by the USCIS (or DOL - can't remember off the top of my head). I would direct questions to their office as to the accuracy and source of data.

    I do know that the source of that list is not the LCA database, so I assume it to be the USCIS as they would know the actual numbers granted.

    I seem to recall an email where someone I know got access to the same data. I'll check later this afternoon when I have some spare time.

    I don't think the Senators got this from a FOIA request. If a Senator on the Judiciary committee asks, normally they get a response - well one would think.

    From what I understand these numbers are actual visas issued - not LCA petitions. Now you should understand why we are making so much noise about this issue - just by looking at the numbers provided by Grassley and Durbin.
  16. Greg Siskind's Avatar
    I don't have the facts, but this would be very surprising. If we assume that IT represents half of the H-1Bs (the number that is bantied about), that would mean about 33,000. I find it hard to believe that these companies control nearly 2/3 of the H-1Bs for high tech.
  17. R. Lawson's Avatar
    "I find it hard to believe that these companies control nearly 2/3 of the H-1Bs for high tech. "

    So do I. But according to the data we have, they certainly appear to have a large share. I'm not sure it is 2/3rds of total - I'll need to do the math first before I say that with any certainty. I thought it was closer to half, so 2/3rds would exceed my prior estimates.

    Of course previously I had LCA data to rely on - not as reliable as I would like it to be.
  18. R. Lawson's Avatar
    Here is the math - of just the top 20 sponsors of H-1b visas in 2006.

    Of the top 20, 11 companies are foreign owned firms or subsidiaries. 9 of 11 are from India. All of the firms have a technology focus - Intel and Cisco are the manufacturers while the other 18 firms are engaged primarily in IT consulting.

    Of the top 20 firms, the 11 foreign firms sponsored 22,648 H-1b visas and the 9 American firms sponsored 10,014 H-1b visas - for a combined total of 32,662 H-1b visas sponsored.

    In total, the top 20 H-1b firms hoarded a whopping 38% of the available H-1b visas (based on a cap of 85,000).

    Source: http://www.informationweek.com/news/showArticle.jhtml;jsessionid=ZD30JRLKZIR04QSNDLRCKHSCJUNN2JVN?articleID=199601616&pgno=2&queryText=

    The source of this information is government data that InformationWeek acquired - not Senators Grassley and Durbin as I originally thought - they in fact released the top 20 L1 visa sponsors list which is where the confusion came from. You can email the writer, Michelle McGee, if you want to know more details on the H-1b data: mmcgee_AT_cmp.com. I removed the ampersand to prevent her from being spammed.

    A similar analysis of LCA data indicates that foreign firms get a lions share - but as I said earlier LCA data are applications, not visas issued. I don't believe the InformationWeek data to be LCA data because it is way too low - Infosys applied for tens of thousands of LCAs in 2006 according to the LCA database.

    They also reported on the top L1 visa sponsors in a subsequent article - and the results are similar in terms of outsourcing companies getting the largest percent. The article states that the source of this data is Durbin and Grassley (I wonder if that is where they got the H-1b data as well???): http://www.informationweek.com/showArticle.jhtml;jsessionid=W3442PFNUAVIOQSNDLRCKHSCJUNN2JVN?articleID=200000857&queryText=h-1b+visas

    In fairness, I think we need more information on the source and reliability of the data.

    If the data is accurate, Greg, does that change your perspective of the H-1b program at all, or do you believe that it is acceptable for 20 technology firms - mostly foreign owned outsourcing firms - to get 38% of the total cap when including graduate students? I think we should at least hammer down on what constitutes fair use of the program.
  19. Greg Siskind's Avatar
    First, there is no citation for the data other than to say it comes off of a government list. Which agency supplied the data? If it was DOL, it's a count of LCAs. If it was USCIS, it was I-129 approvals. If it was State, then it is counting visas. The reporter gives no source which makes it pretty hard to take this seriously. By the way, I still think the reporter is confused and counting labor condition applications because I know some of the employers on that list VERY well (take a guess how I would know) and the numbers here coincide with LCAs filed by the employer and not actual petitions filed or visas ultimately approved).

    But I really don't care about the data anyway, because I personally have ZERO problem with companies using contract workers. Companies use outside accountants, outside web design firms, outside lawyers, outside public relations outfits, outside cleaning companies, outside travel agents, etc., etc. Hospitals regularly use contract nurses (and I'm not talking about foreign nurses). Somehow outside computer industry contractors have gotten demonized (mostly by the disgruntled programmer community) but they're just like any other firm.

    You can quote statistics out the wazoo and deny, deny, deny, but you are advocating good old fashioned protectionism, something every reputable economist since Adam Smith has condemned. The fact that you misstate Milton Friedman's views only shows me that you want to try and pretend that you're not a protectionist. Friedman called the H-1B a subsidy because when you have a quota of H-1Bs and only some companies get access while others do not, the ones that get the H-1Bs have an unfair advantage. That's sort of the same as allowing only some companies to import steel while others are not granted access to the global market.

    If you were honest in labeling what you advocate as pure and simple economic protectionism, it would be easier to have a debate with you.

    By the way, it was nice how you manipulated the data in the middle.
  20. R. Lawson's Avatar
    I have a hunch that most Americans won't agree with you on this - and will agree with me that the program should be more balanced. If you want to call the cap protectionism, fine - that's your view. Would you also call sponsorship an unfair market condition? Or would it be better if immigrants could sponsor themselves?

    On the data, I don't dismiss the importance of good data. It is very important that we understand how the program is being used. You don't seem to think there is any possible use of the H-1b visa that is out of bounds - most Americans probably would side with me on this one. Nice tactic - calling them contract workers. That takes the edge off - so much better than outsourcing or offshoring firms. Who knows, it may fool a few people. Great spin doctoring.

    In any event, no matter your position or mine, we need to determine the source of the data used in that report. At the very least, we should agree to not manipulate the data.

    Speaking of, what exactly did you think I fudged the numbers on? I got the trusty calculator out and added up numbers in the top 20 list. I would never deliberately mislead - unlike some industry groups. In fact, I could have used the 65,000 cap as a baseline and claimed a much higher percentage had I wanted to mislead people.

    Funny how "your side" always seems to forget that extra 20,000 reserved for graduate students - and the other 100,000+ that are exempt from the cap. It never seems to make it into articles on the subject. Go figure. It's as if roughly 50% of the visas just don't exist.
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