Does Silicon Valley Need More Visas for Foreigners? - WSJ.com

1 of 7 3/19/2007 1:54 PM March 19, 2007 REPLY ALL Does Silicon Valley Need More Visas for Foreigners? March 19, 2007 Technology companies' recruitment of foreign workers for highly skilled jobs in the U.S. continues to create a great deal of tension within the industry. Central to the issue are H-1B visas, which allow U.S. companies to temporarily hire college-educated foreign workers in fields like engineering JOIN THE DISCUSSION DOW JONES REPRINTS This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit: www.djreprints.com. See a sample reprint in PDF format. Order a reprint of this article now. and physical sciences. The federal government currently awards 65,000 of these work permits a year, but American employers are lobbying Congress to lift the cap. Tech executives, like Microsoft Corp. Chairman Bill Gates, believe 2 the current system is too restrictive and complain they can't hire the workers they need. Critics say there are already too many American engineers and programmers out of work, and want to keep, or reduce, the H-1B quota. What do you think? Can the U.S. visa program accommodate Silicon Valley's need for more skilled foreign workers without crowding out Americans? Join the discussion 1. The Wall Street Journal Online invited Robert Hoffman, an Oracle Corp. executive who heads a tech-lobbying group that includes Microsoft, Intel Corp. and Hewlett-Packard Co., to debate the issue with outsourcing critic and author Ron Hira, an engineer and a professor at Rochester Institute of Technology. Their conversation, carried out via email, is below. Mr. Hoffman begins: America's economy grows and jobs are created when the world's brightest minds are put to work here in the U.S., but our immigration laws are literally pushing or keeping this great talent offshore. More than half of those who will graduate with Masters and PhDs from America's leading universities in math, science and engineering are foreign-born, but this year's graduates are almost certain to find themselves unable to apply their knowledge here in the U.S. It's not due to a lack of jobs -- it's because America is expected to run out of its 2008 allotment of temporary (H-1B) visas for highly educated professionals in April -- before these future innovators even graduate. Meanwhile, many of the world's brightest that are here working under H-1B visas have been stuck in legal and professional limbo for roughly six years waiting for permanent visas. Many become frustrated with extensive delays and are moving home, or to work in the EU and Asia. This is good news only for our competitors overseas. It's time for Congress to reform our temporary and permanent visa programs for highly skilled professionals for one simple reason: to secure America's innovative position in the global economy. Mr. Hira responds: I agree with Robert that we should "capture" the best and brightest from overseas as immigrants. But he's simply wrong in both his diagnosis of the problems and

2 of 7 3/19/2007 1:54 PM proposed solutions. First, Robert is implying two misleading things about the H-1B program: 1) It is only used as a bridge to immigration; 2) that all H-1Bs are the best and brightest. As Business Week pointed out in an article 3 last month, the employers using the overwhelming number of H-1Bs are offshore outsourcing firms. These firms' whole reason for being is to ship work overseas, not to use the H-1B program as a bridge to immigration. They shuttle foreign workers into the U.S. to get trained so that they can then take that work back home. And the numbers bear this out. According to U.S. Department of Labor data, Wipro, the second largest IT offshore outsourcing firm, applied for 19,450 H-1B positions in FY06 but only for 69 green cards. It is clear that Wipro has no interest in using the H-1B program as a bridge to immigration. THE PARTICIPANTS Ron Hira is a professor of public policy at Rochester Institute of Technology, and co-author of the book, "Outsourcing America 4," about the impact of moving U.S. jobs overseas. Mr. Hira spent 10 years working as a control systems engineer at various organizations, including Sensytech Inc. He is also a vice president at IEEE-USA, a professional group for engineers. Robert Hoffman is Oracle's vice president of government and public affairs and co-chair of Compete America 5 -- a tech-industry lobbying group seeking to facilitate the hiring of overseas workers. Before joining Oracle in 2001, Mr. Hoffman served on the staffs of several U.S. senators, including Pete Wilson of California and Mike DeWine of Ohio. So, Robert's first premise, that the H-1B program is a bridge to immigration doesn't hold up. By citing the Masters and PhD degree statistics, Robert is implying that all or most H-1Bs are advanced degree holders and thus the best and brightest. Again, this is simply not supported by the government data. About half of the H-1B holders have just a bachelors degree, and more importantly H-1B wages tend to be very low. According to the latest government statistics, the median wage for new H-1B holders in computer occupations was only $50,000. This is far below the median wages for those occupations. And they are even below what a brand new graduate gets as a starting salary. So, H-1B workers are paid even below rank-and-file workers. So, his premise that the H-1B program is only used for the best and brightest is simply not supported by the facts. We need to have a discussion based on how the H-1B program operates in reality based on facts as a first step. Sensible solutions require good problem diagnosis, and Robert simply has his diagnosis wrong. I do agree with Robert that the green card system is broken and that something needs to be done to relieve the interminable backlogs that leave workers in limbo. But this was caused by a mismatch between the H-1B and green card programs. That's why reform of both is necessary. Mr. Hoffman: I am pleased Ron supports the tech industry's efforts to reform our permanent visa (green card) program. Ron is correct that one of the central reasons why we have so many frustrated skilled professionals waiting in limbo for green cards is that Congress has failed to calibrate the supply of green cards for the highly skilled to our nation's demand, especially with respect to H-1B professionals. The last time Congress made significant reforms in green cards was in 1990, well before the innovation revolution in info-tech, bio-tech, nano-tech, and the coming revolutions in energy-tech and green-tech. So, if the H-1B program is not being used as a path to immigration, as Ron claims, then we wouldn't have this huge backlog in green cards. We know that's not the case. Companies like Cisco, Oracle, Microsoft, Intel, and Sun [Microsystems] would not be calling for reforms in the green card process unless our foreign-born professionals were using their H-1B status as a path to a green card. It is ironic Ron is concerned about offshoring, since denying all U.S. companies access to talented foreign-born professionals for more than a year due to a lack of H-1B visas contributes to the build up of talent overseas. Ron is missing the point -- his complaints are symptomatic of our overall immigration system, which explicitly discourages foreign-born students from coming to the U.S. for study, discourages those who do come from applying their knowledge here in the U.S. once they graduate, and discourages innovators

3 of 7 3/19/2007 1:54 PM overseas from bringing their talents to the U.S. The solutions proposed by the U.S. high-tech industry are designed to change this dynamic and make both the H-1B and green card programs work well to encourage the best and the brightest to stay, innovate, and grow our economy here in the U.S. Mr. Hira: I'll state once again that the principle of bringing in the best and brightest and encouraging them to stay is almost universally supported, and it is certainly supported by me. But Robert and his group have been conflating the H-1B program and immigration. The two are very different. The H-1B is a non-immigrant guest-worker visa, a work permit if you will, that an employer holds, not the foreign worker. On the other hand, a green card entitles the individual permanent residency and work privileges with most any employer. The individual holds the immigrant visa in that case. While some employers use the H-1B program as a bridge to immigration, many do not. In fact the heaviest users of the H-1B program have no interest in sponsoring their workers for green cards. See my earlier post. We also know that the H-1B program is very poorly implemented and full of loopholes. In practice it is largely a system of self-regulation. Employers can and do pay below-market wages and many workers are exploited. The regulations in place are worse than deficient. They provide almost no protection for U.S. workers' jobs and wages, and allow H-1B workers to be exploited. How do we know this? The GAO [Government Accountability Office], the President's OMB [Office of Management and Budget], Department of Labor IG [inspector general], and DHS IG [Department of Homeland Security inspector general] have all documented the deficiencies in the H-1B program. Employers have admitted to the GAO that they use the H-1B program to pay below-market wages even though they comply with the law. The system of self-regulation simply doesn't work. The OMB has called the labor condition application process, the primary means of safeguarding the program, as simply a rubber stamp of what an employer fills out. It shouldn't be any surprise that many employers legally take advantage of the system loopholes. The biggest misconception about H-1B is the widespread perception that H-1B workers are only used as a last resort. In fact, H-1B workers can be preferred over U.S. workers and can even displace U.S. workers. As the Department of Labor recently stated 6 it in its strategic plan, "H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of the foreign worker." Robert mentions Intel, Cisco, and Microsoft, but it's important to keep in mind that Robert's group, Compete America 7, also represents all of the major offshore outsourcers such as Wipro, Infosys and Cognizant. Mr. Hoffman: It's great to see Ron acknowledging that employers like Cisco, Sun, Oracle and Microsoft do use H-1Bs as a bridge to keep skilled professionals here in the U.S. These companies, and many other U.S.-based firms and associations committed to recruiting and retaining skilled professionals, are members of Compete America. Of course, U.S. companies employ H-1B visa holders to work here and then relocate to advance U.S. business interests overseas. This makes sense given that many U.S. high-tech companies sell more overseas than at home. So the H-1B program also helps U.S. competitiveness abroad. The law is clear: All companies must pay H-1B professionals whichever is higher: the actual wage or the federally-established prevailing wage paid to similarly employed Americans. Studies by a research economist at the Federal Reserve Bank of Atlanta 8, the National Science Foundation 9 and the Center for Labor Market Studies 10 found very little evidence that H-1B professionals, as a whole, are either depressing wages or paid substantially lower than their U.S.-born counterparts. One study even found

4 of 7 3/19/2007 1:54 PM that the salaries for foreign-born professionals in computer or math sciences were actually higher among those with just bachelor's degrees or with doctoral degrees. Yes, abuses occur, but the research suggests they represent a very small proportion of H-1B holders. Ron's concerns suggest that he is seeking better enforcement of the H-1B program, but the members of Compete America want the kinds of improvements in the H-1B and green card programs that advance our economic and innovative capacity -- programs that respond to the following key facts: The U.S. Labor Department has projected there will be roughly 100,000 new computer and math science jobs in the U.S. annually between 2004-14, the fastest growing skills sector in the country. In the fields of math, science and engineering, more than half of those awarded masters or doctoral degrees from leading U.S. universities are foreign-born. This year, foreign-born graduates of U.S. universities, including those with masters and PhDs, could be denied the opportunity to immediately apply their knowledge in the U.S. because the 2008 allotment of H-1Bs is expected to run out before graduation. To meet these challenges, the H-1B and green card programs should exempt foreign-born Masters and PhD graduates of U.S. universities from arbitrary visa caps, and both programs should respond to changing market realities. Scaling back or maintaining the current H-1B program will force high-paying jobs offshore, make our universities less attractive to foreign students, and put U.S. long-term innovative leadership in jeopardy. Mr. Hira: The law on H-1B is indeed clear, but it simply doesn't meet the principles and values of the American people, who overwhelmingly agree with what Senator Kennedy said recently about the H-1B program, "We all agree Americans must be hired first." The facts are clear that current law doesn't even come close to meeting this principle -- H-1B workers can be preferred over U.S. workers and can even displace U.S. workers. Hopefully, the immigration reform bills that will soon be introduced will follow the straightforward principle that Americans should be hired first. Following this principle could lead to sensible reform of the H-1B program, something that Robert's organization, Compete America, has rigorously fought against. And unfortunately Compete America has been successful since this reform was not included in last year's immigration bill that passed the Senate. Robert also invokes legalese in an attempt to claim that the H-1B program's wage regulations work well. In a nutshell, "prevailing" wage is not the same thing as "market" wage. The former is a legal construct, the latter set by the market. One need only look at a few H-1B applications that have been "certified" by the U.S. Department of Labor (DOL) to meet the prevailing wage to understand the massive gap between the legally constructed "prevailing" and a "market" based wage. Tata Consultancy Services was certified by the DOL to hire 10 computer programmers at $8.22 an hour and Infosys was certified to hire 100 programmers at $9.15 per hour. I guess Robert is arguing that the market wage for the "best and brightest" 100 computer programmers is $8.22 per hour? It is important to note that the issue isn't enforcement or abuse, since these applications comply with the law. Instead, they illustrate the fundamental fatal flaws in the law itself that should be fixed. And Infosys and Tata are in the top 10 of H-1B requestors so their H-1B use is hardly an anomaly. In fact, it is more typical than Intel's or Cisco's use of the H-1B. Robert tries to wrap the American flag around his responses but we should recognize that the multinational corporations he represents do not exist to maximize America's wealth. Instead, they exist to maximize shareholder value. This is not a criticism of those companies or executives, just a statement of fact. While it is frequently the case that America's interests are aligned with multinationals, sometimes they are in conflict. The H-1B program is a perfect case where interests are in conflict. So it is no surprise that Robert offers a false choice: Raise the H-1B cap to infinity or lose U.S.

5 of 7 3/19/2007 1:54 PM innovation. The right choice is to fix the H-1B program so that we bolster U.S. innovation, invite the best and brightest foreign workers and students to stay and become citizens, improve the productivity of U.S. high-skilled workers, and induce U.S. students into the technology professions. Mr. Hoffman: I am surprised, given Ron's obvious knowledge of the H-1B program, that he failed to point out that the wage data he cites is the minimum requirement, and does not really tell what companies are actually paying H-1B workers. He knows that the actual amounts in many cases are higher, and that data, which factors in education level, qualifications and experience, is filed with Citizenship and Immigration Services and is not publicly available. Also, thanks to changes in the law, H-1B holders can and do seek other jobs, which works to their advantage in terms of wages. Let's get back to the bigger picture: Ron and I both agree that the system for employment-based green cards needs major reform. Very talented professionals in our industry, people who are here innovating, are justifiably frustrated with a system mired by delays and arbitrary caps that have created a talent bottleneck. Sadly, many are giving up, and taking their talents overseas. It is impractical to reform the green card program without advancing similar reforms in H-1Bs. Because of the green card timelines, H-1Bs are the only way foreign-born graduates of U.S. universities can seamlessly transition to the U.S. work force, and potentially, to permanent resident status. Given Ron's strong concerns with offshoring, I am surprised he has not acknowledged a 'here and now' crisis with the H-1B program: the arbitrary visa caps that will prevent U.S. companies from employing the best and brightest of this year's foreign-born masters and PhD graduates to work here, because the H-1B allocation for 2008 will be exhausted in April, before they graduate. If we want them, we will have to employ them overseas, even though they were educated in the U.S., and in many instances, with U.S. tax dollars. Ron has provided no solutions to how we can effectively keep in the U.S. what the Labor Department estimates will be 100,000 new math and computer science jobs each year through 2014, especially since more than half of the talent pool in major U.S. universities in these disciplines are foreign born. And if these students are forced offshore to fill these or find other jobs, what incentive is there for the best and brightest overseas to pursue higher education here in the U.S.? We are already seeing declines in the number of foreign applications to U.S. universities, which is of obvious concern to our U.S. higher education leadership, and why they strongly support the reforms we are seeking in the H-1B and green card programs. Fortunately, thanks to leaders like Senators Ted Kennedy, Arlen Specter and John Cornyn, we are getting bipartisan solutions from the U.S. Senate, which last year passed much-needed reforms in the H-1B and green card programs that are consistent with the "principles and values" of economic opportunity, job creation, and preserving innovation leadership in the U.S. It is in America's best interests that it be a magnet for innovators, regardless of their country of origin, and the Kennedy-Specter-Cornyn approach advances those very interests. Mr. Hira concludes: First, let me address Robert's comments on the wages I cited. I gave the $8.22 per hour wage example to demonstrate the "prevailing" wage, a legal construct, bears no resemblance to an actual market wage. Those companies can legally pay those ridiculously low wages because the prevailing wage regulations are written so poorly. And Robert cannot tell us for sure that those computer programmers are being paid any more than $8.22 per hour. Also, Robert is incorrect about what we do know about actual wages paid. Contrary to Robert's claims, the USCIS [United States Citizenship and Immigration Services] does publish actual wage data in its annual reports to Congress about the H-1B program. As I stated earlier, the median wage in FY05 for new H-1B computing professionals was $50,000. That actual wage is far below the median for U.S. computing professionals of $80,000. And it is even below the salary of an entry level bachelors degree

6 of 7 3/19/2007 1:54 PM graduate would command. So, half of the 52,352 H-1B computing professionals who were admitted in FY05 earned less than entry level wages. And Robert keeps focusing on Masters and PhD graduates fully well knowing that they are not representative of H-1B workers. The H-1B guest-worker program isn't simply deficient, it is detrimental to America. The program, as it currently operates, doesn't fall short of reaching its goals, it actually works counter to them. As Robert mentions, last year the Senate passed an immigration bill 11 to vastly expand the H-1B program without including any reforms. If these H-1B provisions were to be signed into law, the consequences are obvious. It would directly lead to more offshore outsourcing of jobs, displacement of American technology workers, decreased wages and job opportunities for American technology workers, and discourage young people from entering science and engineering fields. This is the bill that Compete America is supporting. Instead of creating or keeping jobs in the US, the H-1B visa has become the outsourcing visa. The top 11, and 15 of the top 20, H-1B requestors are firms that specialize in offshore outsourcing. In fact there isn't a single major offshore outsourcing firm that isn't in the top 20 list of H-1B requestors. The leading offshore outsourcing firms -- who have no interest in creating jobs in the U.S. -- are swamping the program. They do not sponsor their H-1B workers for green cards. So, contrary to Robert's claims, expanding the H-1B program would result in shipping more work overseas. I can't imagine that destroying American jobs and opportunities is the intent of Congress, and I'm sure that the American people wouldn't support it. The H-1B program is clearly broken. But it can be fixed. The first step is for Congress and the Administration to complete a top-to-bottom review of the program to ensure that it is meeting the goals and principles stated by our elected leaders. Then they can reform the program so it meets, rather than works against, those goals. Some of the principles for reform should be: H-1B workers are paid market wages; U.S. workers should not be displaced by H-1B workers; employers should demonstrate they have looked for and could not find qualified U.S. workers; and, H-1B employers should be subject to random audits. The program currently meets none of these principles. America should have policies to encourage the best and brightest to come to the U.S. and stay. In order to meet this goal, we need to fix the H-1B and L-1 guest-worker programs as well as our Employment Based Greencard program. Groups like Immigration Voice 12, which represents foreign guest workers who want to stay in the U.S. permanently, have some good ideas on how to improve the green card process. But we should not confuse or conflate a guest-worker program, which the H-1B and L-1 visas are, with immigration. What do you think? Can the U.S. visa program accommodate Silicon Valley's need for more skilled foreign workers without crowding out Americans? Join the discussion 13. Write to the Online Journal's editors at replyall@wsj.com 14 URL for this article: http://online.wsj.com/article/sb117388283731536825.html Hyperlinks in this Article: (1) http://forums.wsj.com/viewtopic.php?t=362 (2) http://online.wsj.com/article/sb117328195388829568.html (3) http://www.businessweek.com/bwdaily/dnflash/content/feb2007/db20070208_553356.htm?chan=search (4) http://www.amanet.org/books/catalog/0814408680.htm

7 of 7 3/19/2007 1:54 PM (5) http://www.competeamerica.org/index.html (6) http://www.dol.gov/_sec/stratplan/strat_plan_2006-2011.htm (7) http://www.competeamerica.org/index.html (8) http://www.frbatlanta.org/filelegacydocs/wp0302.pdf (9) http://www.nsf.gov/nsb/documents/2003/nsb0369/nsb0369.pdf (10) http://www.businessroundtable.org/pdf/20040930002harrington.pdf (11) http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:s2611es.txt.pdf (12) http://immigrationvoice.org/ (13) http://forums.wsj.com/viewtopic.php?t=362 (14) mailto:replyall@wsj.com Copyright 2007 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.