High-Tech Migrant Labor

Guest workers: They're not just picking vegetables anymore. A new class of "migrant workers" is taking shape in America's Silicon Valley and other technology centers. These immigrants are not sneaking over U.S. borders—they arrive by jet from India, the Philippines, China, and Taiwan to take jobs in computer programming, software design, and information services.

And America's information technology industry wants more of them. "Forget the Huddled Masses," a recent BusinessWeek article proclaimed. "Send Nerds." Industry leaders claim they face a shortage of skilled high-tech professionals—a problem they fear will only get worse. A 1997 Bureau of Labor Statistics study projected there will be 1.3 million new info-tech jobs over the coming decade.

Lobbyists representing Microsoft, Texas Instruments, and Sun Micro systems have taken their case to Congress. The industries want to import more foreign workers through the H-1B visa program, which allows temporary guest workers into the country. This fall, California Representative David Dreier and Texas Senator Phil Gramm introduced bills to almost double the number of H-1B visas granted annually, raising the ceiling to 200,000. "If cutting-edge technology companies do not have access to growing numbers of highly skilled personnel," said Dreier, "it will threaten our nation's ability to maintain robust economic growth."

Nobody is sure just how severe or real the info-tech labor shortage is. A report by the Wash ing ton, D.C.-based Com puting Research Association in May concluded, "We cannot state conclusively that there is a shortage or quantify how large it might be."

Meanwhile, abundant anecdotal evidence indicates that some American technology workers, especially older ones, have a hard time finding steady work in their fields. William Spence, one of several workers contacted for this story, told of getting cut from his Stanford University job when a government grant expired. A 49-year-old research scientist, Spence entered the Silicon Valley job market thinking that his signal processing and programming experience would transfer easily into the cell-phone industry. But after putting out more than 500 resumes, he got only two interviews, and no offers. "And I have another 15 years to work," said Spence. Gene Nelson, 47, found it just as difficult in Dallas. Nelson worked on cutting-edge pin-based computing, which is used in "Palm Pilot" technology. Nelson says high-tech firms have given him the cold shoulder even though he has enrolled in retraining programs to keep his skills up to date. For a while, he answered phones for Microsoft from inside a six-by-six-foot cubicle. But the job didn't last. "It's good you're calling me on your nickel," he said. "Because right now, I'm out of a job."

The H-1B program depresses industry's incentive to retrain and hire workers like Nelson. America's technology sector understands that generally tight labor markets make it difficult to keep labor costs down, and the industry likes to be choosy. Increasing the supply of foreign workers could be just the ticket. And the industry has powerful friends in Congress.

Republicans to the rescue

A consensus in favor of the high-tech guest-worker program has emerged among Republicans in Congress—a noteworthy development in light of past clashes in the GOP over immigration. Traditionally the party divides between closed-border restrictionists, who fear that too much immigration will drive up welfare spending and overpopulate the country, and open-border libertarians, who prefer perfect labor mobility across nations.

Yet last year, Congress increased the cap on H-1B guest workers from 65,000 per year to 115,000 with overwhelming Republican support. In the final Senate vote, only one Republican, Tim Hutch inson from Arkansas, opposed the bill (with Alfonse D'Amato from New York and Lauch Faircloth from North Carolina sitting out). Even Texas Republican Lamar Smith, an anti-immigration hard-liner, voted for the House version of the bill. "There used to be a lot of bad blood," says James Gimpel, an associate professor at the University of Maryland who has studied the politics of immigration reform. But in light of the guest-worker vote, Gimpel sees GOP tensions easing.

Why the easy support? The consensus hinges on calling H-1B workers "tem porary." This gives Congress the oppor tunity to take a pro-business stand that is—technically—not a vote for increased immigration. Speaking in San Francisco this summer, Republican presidential candidate John McCain waxed enthusiastic about importing foreign workers. "I say that we should eliminate these artificial [H-1B] limits altogether," McCain said. Texas Governor George W. Bush has also supported raising the limit on H-1B visas.

In reality, the distinction between temporary workers and immigrants is largely semantic: Many foreign temps end up staying in the country permanently. "From working with my clients, [I'd say] the vast majority of H-1Bs want to stay," says Stephen Yale-Loehr, an immigration lawyer at Cornell Law School. "Is it 60 percent? Ninety percent? I don't know, but I would say it's the vast majority."

"There is nothing more permanent than a temporary worker," concurs Philip Martin, a professor of agricultural and resource economics at the University of California, Davis. The Institute for the Study of International Migration at Georgetown University estimates that nearly 40 percent of those who hold temporary guest-worker visas end up adjusting their status to permanent resident.

Critics say guest-worker programs amount to a back-door immigration policy. "They want to promote the influx of people from overseas but deny them the respect that a republic ought to accord to them," said Mark Krikorian, director of the Center for Immigration Studies, on National Public Radio in 1998. It's as if a method has been found to separate human capital from the humans who provide it. The labor of guest workers is imported, but their potential citizenship is not acknowledged as part of the deal.

Over a barrel

That guest-worker policy rests on the premise that labor can be separated from the laborer is reflected in the very design of the program. While legal resident status is attached to the immigrant, the H-1B visa is attached to the job, expiring the moment the worker quits or is fired. Under Immigration and Naturalization Service (INS) rules, such an employee must leave the United States within a month or risk deportation—unless a new job can quickly be lined up. In that case, a new application for H-1B status must be submitted. While such an application is pending, neither the worker nor the immediate family members (who are typically admitted on a separate nonworker visa) are authorized to work.

It's also harder for some temporary workers with H-1B visas to pick up and leave the country. In guest-worker programs for other industries—mainly agriculture—the visa is for a seasonal stay, usually lasting six weeks to six months. But high-tech workers with H-1B visas are allowed to work in the United States for as long as six years. Over that span, friendships are fostered, children are enrolled in school, homes are furnished—and the desire to put down roots can be strong.

The way it often plays out is that the temporary worker applies for a green card—permission to be a permanent resident. In this case, losing a job and leaving the country can be a major setback; it jeopardizes the green card application, which in most cases requires an employer's sponsorship. "The application process takes about five years," says Douglas Kretzmann of Littleton, Colorado, who arrived on an H-1B visa and has since become a legal resident.

The employer's sponsorship often gives companies added leverage over the immigrant worker. "This was always a well-understood part of the unspoken contract. The company paid less than the going rate because they were sponsoring us," says Kretzmann, who was able to almost double his salary upon leaving his company.

Reports of underpaid workers are not uncommon. "Dear Career Adviser," wrote an anonymous software consultant to an advice column in Computerworld in April. "My employer is underpaying me, because my pay is much lower than the figure he quoted on my H-1B application. What should I do about this?" The reply: "If you report your employer, you could be fired. And without a job, your H-1B visa becomes null and void."

"They wouldn't pay one of my friends his salary," says a computer programmer in North Carolina, who asked not to be named. "But he was scared that if he contacted the authorities, he would be on the next plane home." About one-fifth of employers illegally underpay foreign temporary workers, according to a Department of Labor study.

Officials also get reports of companies applying for guest workers they don't immediately need. "They come here, and there's no work," says John Fraser, the Department of Labor's acting administrator of the wage and hour division. "The employer can just bench them, so the workers are sitting here without pay, sometimes for weeks and months. There was a case where people were benched for a year and were either not paid or paid $50 a week to buy groceries." Between 1992 and 1998, the Department of Labor fined 87 employers for a combined $2.3 million in back wages.

In applying to hire guest workers, employers are required to attest that they will pay the "prevailing wage" and that they have tried but failed to find domestic workers. But the applications tend to be rubber-stamped. "It's pretty much guar anteed approval, unless someone has not filled in a box or something," says Fraser. "We can't look behind the application; we can't ascertain fraud." Who is to say, for example, that foreign applicants really have the educational background or work history they claim? One study by the INS and State Department reviewed pending H-1B applications in Chennai, India, and could verify only 45 percent of the forms. The officials found 21 percent of the applicants' credentials were fabricated.

The need for workers

While demand for H-1B visas has soared (INS approved 115,000 this year with a waiting list of 42,000), recent layoffs at companies such as Hewlett-Packard, Intel, Motorola, and Lucent Technologies have cast doubt on industry claims of a labor shortage. Last year, a study by the employment firm Challenger, Grey and Christmas calculated that 21 major high-tech companies had laid off more than 120,000 workers over a period of six months.

Skeptics point to the low hiring rate by information technology firms and only modest increases in high-tech salaries. "The fact that employers can be so picky in their hiring demonstrates an oversupply of labor," says Norman Matloff, a professor at the University of California, Davis. Technology industry salaries have increased about four to five percent per year, according to The Washington Post. By contrast, Matloff says, in 1998 the average real salary of surveyors and dieticians increased by 20 percent and 17 percent respectively.

Some have argued that support for the H-1B program is driven by a quest for cheap labor. "What if the IT work force shortage is nothing more than a ploy by Ameri- can IT-based industries to . . . reduce labor costs?" a recent Chicago Sun-Times editorial mused. Indeed, about 80 percent of H-1B applications are for positions paying $50,000 or less and requiring only a bachelor's degree. The H-1B program "has become a major means of circumventing the costs of paying skilled American workers or the costs of training them," testified then-Secretary of Labor Robert Reich in 1995.

Yet evidence of spot labor shortages is available, too. Some recruiters have, after all, gone to great lengths to hire IT workers: A recent story in The Wall Street Journal featured recruiters traveling to India to find computer programmers. And in Dallas, the company Texas Instruments is currently offering new, fully loaded Ford Explorers to employees who recruit the most workers. "The car hasn't been given away yet," says Matt McKinney, program manager. "It's parked in front of the cafeteria, so it's getting a lot of attention."

One possible explanation of the conflicting labor-market reports is that demand for workers does not necessarily prove a shortage. "If you said you needed electrical engineers who speak Mandarin and Swahili, then you could come up with a shortage too," says Terry Oldham, an electrical engineer in the Silicon Valley area who only recently found work.

Attrition and flux can account for up to 60 percent of the demand, according to Michael Boyd, a manager at the research company International Data Corporation. In other words, if workers move from job to job or leave the IT labor market for other fields, companies will register vacancies and demand workers, even if on an aggregate level no such widespread shortage exists. "If everyone stopped changing jobs, the demand would drop dramatically," Boyd says. Thus, if industries could reduce turnover, they would be solving some of their problem.

Just as important, the high demand could be the result of high-tech firms' tendency to recruit based on immediate skill level—rather than looking for talented workers who could be trained. "I was on the phone with a recruiter this morning," says Mark Mendlovitz, a computer professional from Santa Barbara, California. "He asked me some questions about skills, and he said, 'I want you to answer yes or no, and say yes only if you've been paid for this, not if you know it.'" In this way, getting a high-tech job is akin to applying for the first credit card when the prerequisite is a good credit history.

Since innovation in the IT sector is so fast (the average shelf life for a product is nine to 18 months, and just three months for an Internet product, according to Thom Stohler, director of work-force policies at the American Electronics Association), a recruiting process that focuses solely on skills rather than talent locks workers—especially older ones—out of the labor market prematurely. "A year ago, we were looking for COBOL people," says Andrew Jackson, president of an IT staffing firm in Dallas. "And now there are no requests for that at all. . . . A lot of them are looking for work."

The logic of the H-1B program—to see workers only in terms of their marketable skills and not as potential citizens—is similar to the industry's overall approach: looking for skills instead of for talented people who can acquire them. It may well be cheaper for industries to tap into the global marketplace for labor, but is that a policy government should encourage? A perceived shortage of domestic workers invites industry and public policy to get serious about training and re-training. Easy access to imported temps frustrates that approach, whereas greater public and private investment in edu cation and vocational training would show commitment to the available American work force.

Getting it backwards

As an unacknowledged immigration program, the H-1B visa program betrays what the bipartisan U.S. Commission on Immigration Reform, headed by the late Barbara Jordan, sought: a combination of strict and credible standards of admissions and a lenient and generous immigrant policy that accepts new arrivals as full members of society or as citizens in training.

The H-1B program does the opposite: It admits people haphazardly into the country, then fails to grant them full rights as potential citizens. The result is a vulnerable caste of workers laboring in the hope of getting green cards and serving as a base of cheaper labor to replace workers who companies don't want to pay to retrain.

A short-term solution would be to admit high-tech workers as legal immigrants and, by extension, free agents in the labor market. Although currently up to 140,000 workers per year can be admitted under this category, only about 77,000 entered last year, mostly because sponsorship under this program takes too long (up to 48 months), costs too much (up to $15,000 in potential legal fees), and is too strict (requires extensive background checks). In a letter to President Clinton this October, Paul Kostek, president of the Institute of Electrical and Electronics Engineers, summed up: "Green cards, not guest workers. That is the solution, Mr. President." This approach would reduce the opportunities of labor brokers and employers to import guest workers; it would also require employers to prove they face a labor shortage before sponsoring foreign professionals.

In the long run, reform depends on a more fundamental shift in recruitment mindset—one that looks for individuals who can acquire skills quickly and efficiently in a rapidly changing industry. This would require a renewed commitment to increased job training. It would mean seeing workers as long-term assets. "The new management mentality is that people aren't people," says Gene Nelson, the unemployed computer professional in Dallas. "They are just machines, and if you don't need them, you unplug them and wheel them out." And if you do need them, he might have added, you can find a way to import them at bargain cost.

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