STATEMENT OF 

MICHAEL W. GILDEA, EXECUTIVE DIRECTOR

DEPARTMENT FOR PROFESSIONAL EMPLOYEES, AFL-CIO

FOR THE HEARING RECORD OF THE HOUSE JUDICIARY SUBCOMMITTEE ON IMMIGRATION  

REGARDING THE H-1b VISA PROGRAM 

Submitted April 4, 2006 

 

Chairman Hostettler, Representative Sheila Jackson Lee and members of the Committee: 

Thank you for the opportunity to present the views of our organization on the matter of the H-1B visa program. The Department for Professional Employees, AFL-CIO is a consortium of 22 national unions representing nearly 4 million professional and technical employees in both the public and private sectors.  

Today under U.S. immigration law there is a near alphabet’s soup of professional visas under which foreign professional and technical workers can come to our shores. The H-1B, L-1, TN,  I, O, P and other such visas all have one thing in common—each operate under different standards, limitations and rules of accountability and no interconnectivity exists between any of them.  

Given the adverse impact that most of these programs are having on U.S professionals--many of whom are either unemployed or underemployed--as well as on the non-immigrant workers themselves, now is the time for Congress to develop a more comprehensive, coordinated federal policy in this regard.

What is particularly baffling about these programs, especially H-1B, is that none of them correlate to the realities of the U.S. labor market. There exists no nexus between the current rates of occupational unemployment among professional and technical workers—which as of the end of 2005 is 40% higher than in 2000—and the fact that, according to some estimates, the total professional guest worker population is probably close to 750,000 when former H-1Bs who are illegally out of status are included. Programs like H-1B in effect force well qualified, American professionals to compete against foreign workers here in the U.S. for domestic jobs.  In our opinion, there’s something seriously wrong with that picture.  

As members of the Committee will recollect, H-1B was initially designed to address small, “spot” labor shortages of minimum duration. Our affiliated organizations have no problem with that basic concept. But we vehemently object to how this program has over time contorted into something completely contrary to its original intent and that now victimizes large numbers of highly skilled, American professionals.  

As Congress contemplates major changes in immigration law enforcement and perhaps new guest worker initiatives, now is the time to be asking tough questions and to consider real reforms in H-1B. Chief among them are:

·         What is the total number of guest workers that should be allowed into the U.S. under all such programs in periods of high and low unemployment?

·         To what extent should there be some uniformity across all programs with regard to worker protections, employer eligibility, visa duration and fees, guest worker qualifications and credentials, enforcement and penalty protocols, etc?

·         Should U.S.-based employers each be limited in the total number of temporary foreign workers that they can have on the payroll from all guest worker programs?

·         Are these programs contributing to the off-shoring of American jobs?

·         What impact, if any, are they having on the national need to attract the best and the brightest American students into critical undergraduate and graduate disciplines?

·         Can multiple U.S. government agencies be reasonably expected to manage, control and enforce the few standards that apply to H-1B when the entirety of the nation’s immigration policy is a train wreck? 

A failure to dig deeply, to ascertain and fix existing problems within current programs will risk repeating the policy failures that now plague immigration law and perpetuate abuses that hurt American workers. We sincerely hope that this Committee will address these overarching issues before any consideration is given to raising the annual limits—“caps”—on H-1B visas.  

What follows is a brief summary of what we consider to be some of the more blatant abuses that have evolved under H-1B along with some suggestions for reform. 

1. REPLACEMENT of U.S. WORKERS

Background: At the hearing on 3/31/06, IT professional David Huber spoke eloquently about how an American company replaced him with H-1B workers and how difficult it has been for him to find other IT work. Sona Shah, a young well educated, highly skilled, Indian-American tech worker, told a similar story at 2004 hearings before the House International Relations Committee about her former company—a body shop where misuse of all kinds of visas was a daily exploit. Other statements will be submitted to the subcommittee by professionals recounting similar experiences. Often the indignity of losing they’re job is compounded by the demand of the employer that the U.S. worker(s) train their replacements, sometimes as a pre-condition to receiving their severance pay or getting a good reference.  

This victimization of American workers is being played out everyday as domestic corporations shed their American workers here in the U.S. to hire lower cost visa workers. It should be a fundamental principle of immigration law that no professional worker in this country should ever have to live in fear of losing their livelihoods because federal law allowed a foreign guest worker to come here and take it away from them. Ironclad protections to guarantee that outcome are long overdue.  

Reforms:

• The 90 day, no layoff protections that now exist in law but only for so-called “H-1B impacted” companies (defined as having 15% or more of their workforce as H-1B visa holders) should instead be applied to all companies.
• The 90 day standard should be extended to 180 days and applied before and after the hiring of an H-1B visa worker.

• Improved safeguards should be coupled with stiff penalties including civil fines and debarment for violations;
• Finally, any worker—U.S. or foreign—aggrieved by violations of any H-1B protections should be given a private right of action to sue an employer for such law breaking activity.

2. VISA CAPS

Background: Under current law, the annual statutory cap on H-1B visas is 65,000.  However, a previously approved exemption for educational institutions, non-profits and other entities allows another 27,500 foreign workers on average to come in to the U.S.  At the end of 2004 a Senate Committee initiated exemption—adopted as part of the Omnibus Appropriations bill—created still another cap loophole by adding on another 20,000 annual allotment for U.S. educated foreign workers with advanced degrees.  In addition, since the “temporary” H-1B visa is good for up to 6 years, according to government data some 125,000 existing visa holders renew annually. As a result, under current law over 230,000 foreign professionals get new or renewed guest worker visas—and American jobs—each year!    

There is absolutely no economic justification for expanding the H-1B program at this time.  Unemployment among professionals in H-1B occupations remains high.  For example, in Information Technology—the largest single business user of these visas—according to BLS data, joblessness for computer scientists/systems analysts, programmers, and software engineers is at 45%, 133%, and 115% higher respectively than in 2000¾the year before the tech bust.  Thus claims of labor shortages in key computer occupations are bogus particularly when weighed against wage data.  If the laws of supply and demand are to be believed, then alleged shortages would produce significant wage hikes as employers bid up the price for scarce labor.  In fact, real wages for computer scientists/systems analysts declined by nearly 7.5% from 2000-04 while income for IT workers in the other two categories barely grew above the rate of inflation.  None of these wage improvements are indicative of a labor shortage.  

Finally it is worth pointing out that industry apologists for off-shore outsourcing have long proclaimed that one of the benefits of globalization would be the creation of high end, high skilled technical and professional jobs for workers in the U.S.  These same industries now seek to contract the number of these very same high end job opportunities that should otherwise be available to highly skilled American workers by vastly expanding the H-1B visa program. 

Reforms:

• Set a “Hard Cap” on the H-1B program with no annual adjustment and eliminate all exemptions. Exemptions make a mockery of any annual numerical cap and should be eliminated.

3. OVER-ISSUANCE

Background: Twice in the last five years—once in FY 2000 and again in FY 2005—the INS/DHS over issued by a substantial amount the number of visas permitted under law. In 2000 the excess was some 23,000—an astounding 20% over the then annual cap of 115,000. And what was Congress’ response to a federal agency unable to enforce an elemental standard in immigration law—they forgave the violation by sanctioning it in new statutory language and then proceeded to increase the cap from 115,000 to 195,000 with a new exemption. The inability of government to first enforce a fundamental legal requirement in the H-1B program coupled with Congress’ eagerness to simply look the other way and ignore the transgression sent an unmistakable message to the private sector about compliance, oversight and enforcement. Then just last year, according to a Department of Homeland Security, OIG report requested by Chairman Hostettler and Senator Grassley and entitled USCIS of H-1B Petitions Exceeded 65,000 Cap in fy 2005, the over-issuance was 7,000 visas or nearly 11% more than permitted by the 65,000 cap. In its review the OIG cited these contributing factors:  

• CIS officials at all levels in Washington, DC and at the service centers were aware of and attempted to comply with the statutory limit on the number of persons granted H-1B status. 
• However, CIS had neither the technology nor an operational methodology to ensure compliance with the precise statutory ceiling. 
• Faced with the certainty of issuing either too few or too many approvals, it had been CIS’ explicit practice to avoid approving too few. 
• The CIS’ “business process,” of taking all petitions submitted before an announced cut-off date, guarantees that an inexact number of petitions will be approved. 
• The structure of DHS handicaps counting efforts; a complex adjudication process makes the count fluctuate;
• A complex counting process makes the cap a moving target; and, an unexpected influx of petitions in mid-September 2004 swamped the cap counting process. 

In other words DHS can’t count! And until the agency can guarantee to the Congress that it can and thereby enforce the law, there should be no increases in the H-1B yearly visa cap. 

4. DURATION

 

Background: A problem common to all of the professional guest worker programs including H-1B is the renew-ability of the visa. This issue was a major point of controversy regarding the misnamed “temporary entry” provisions of the trade agreements whose one year visa can be renewed forever. Initially H-1B visas were good for only 3 years. Now these guest workers can stay in the U.S. for at least six years (two, three year renewable visa terms) or longer if their paperwork to transition them to green card status is in the DOL pipeline. A program of six years duration does not anyone’s definition of “temporary” and the program should be more limited. 

 

Reforms:

·         Restrict H-1B visas to one, three year (non-renewable) term.

 

5. EMPLOYER ATTESTIONS

 

Background: At the hearing on 3/31, Rep. Lamar Smith, the former chairman of the subcommittee and an author of many past pro-worker reform suggestions, expressed hi view that employer attestations are “unenforced and unenforceable.” We concur.

 

A law which relies on something akin to “scout’s honor” for enforcement of the requirements that employers must make a "good faith" effort to recruit U.S. workers and not layoff Americans before applying for an H-1B visa is absurd. A decade ago, in a Department of Labor OIG Audit of ETA's Foreign Labor Programs Final Report" No. 06-96-002-03, US Department of Labor, 5/26/96 (No. 06-96-002-0), found that, more often than not, employers:

 

“specifically tailor advertised job requirements to aliens' qualifications. The jobs' education and experience requirements were based on the aliens' qualifications, not on the skills required to perform the work" and that "The special requirements identified on the application appear to be customized to fit the alien's qualifications rather than represent actual job requirements. This appears to be restrictive criteria to eliminate qualified U.S. workers."

 

Reforms:

·         Eliminate and replace attestation process.

 

6. Prevailing Wage Determination

 

Background: Although the H-1B program does have a prevailing wage requirement, it is ineffective because employers can fabricate a wage by supplying their own wage data instead of relying upon government wage information. The so-called "prevailing wage determination process", which is not subject to DOL rate setting and may or may not be based on a bona fide locally calculated wage rates, again provides employers with the ability to in effect set their own rates and pay far lower than the actual prevailing wage for a given professional occupation.

 

Several government reviews again have identified this area as one wide open for fraud and abuse. The DoL’s OIG audit referred to earlier found that: 

 

 "There is no certainty that U.S. workers' wages are protected by the LCA [Labor Condition Application] program's requirement that employers pay aliens the higher of the prevailing wage or actual wage paid to their employees who are similarly employed."

“For 75% of all cases where the non-immigrant worked for the petitioning employer, the employer did not adequately document that the wage level specified on the LCA was the correct wage.  In their review of LCAs, the DOL regional Certifying Officers do not verify or question if a public file [on the method of determining the wage and the impact of the wage rate on similar workers] actually exists.  8 U.S.C. 1182(n)(1) does not give them the authority to do so.  "The Labor Condition Application Program is being manipulated beyond its intent of providing employers the best and brightest in the international labor market while protecting the wage levels of U.S. workers."

“Even where the employer adequately documented the wage paid, 19% of the aliens were paid less than the wage specified on the LCA.”

Four years later, The U.S. General Accounting Office in its May 2000 report H1B Foreign Workers, Better Controls Needed to Help Employers and Protect Workers found wage chiseling in over 4 out of 5 cases it investigated:

“WHD (DoL’s Wage and Hour Division) is significantly more likely to find violations in H-1bB (back wage) complaints than in complaint cases under other (wage and hour) laws….over the last four and a half years, 83% of the closed H-1B investigations found violations—compared to about 40 to 60 percent under other labor laws” 

Requiring the payment of a real and enforceable prevailing wage to H-1B workers would discourage those who would try to use the program as a back door to cheap labor.

 

Reforms: 

• Employers petitioning for H-1B workers must pay the higher of:
  • the locally determined prevailing wage level for the occupational classification in the area of employment;

o        the median average wage for all workers in the occupational classification in the area of employment; or

o         the median wage for skill level two in the occupational classification found in the most recent Occupational Employment Statistics survey;

·         In order to better keep track of H-1B workers and insure that they are paid the appropriate pay, employers should be required to file a copy of the workers' yearly W-2 form with the DOL/INS.

·         Penalties—Subject employers who violate prevailing wage requirements to both double back pay awards common in other labor laws to aggrieved foreign workers coupled with employer debarment from the program. These kinds of punitive remedies will make employers think twice about using H-1B for purposes of worker exploitation.

 

7. Fraud

Background: Falsified immigration documents, bogus credentials, sham employer attestations, phony applications, forged petitions on behalf of unknowing employers, wage chiseling and other scams are just some of the litany of illegalities uncovered by investigators at four federal agencies. According to the Semiannual Report of the Office of Inspector General (OIG) to the Congress" April-September 30, 2000:

 

"The OIG [DOL Office of Inspector General] continues to identify fraud in the labor certification program, particularly in the H-1B temporary work visa program. These cases involve fraudulent petitions that are filed with DOL on behalf of fictitious companies and corporations; individuals who file petitions using the names of legitimate companies and corporations without their knowledge or permission; and increasing numbers of immigration attorneys and labor brokers who collect fees and file fraudulent applications on behalf of aliens. Based on prior investigative and audit work that found programmatic weaknesses and vulnerabilities in the program, the OIG remains concerned about the potential for increased fraud in this area." 

“The OIG has averaged 14 indictments and 11 convictions per year for labor certification fraud over the prior [1996] five-year period."

And in the DoL’s 1996 OIG audit:

"Some aliens are themselves the petitioning employer, thereby filing petitions on their own behalf."

Many of these abuses have been traced to outsourcing companies, a.k.a. “body shops” who bring in foreign workers by the tens of thousands and then subcontract them out to other businesses. We doubt that the Congress envisioned the likes of Tata Consultancy Services, Wipro Technologies, and Infosys Technologies—all Indian owned firms--when it created this program. These firms are now among the biggest users of H-1B supplying Indian IT talent to a who’s who of the fortune 500 corporations. Some of these firms and others like them have had a troubled history under the H-1B program. In fact, prior legislation relating to H-1B has specifically addressed abusive practices by them such as benching.  

Reforms:

• Ban “body shop” access to the program--Congress should apply the same restrictive language it adopted in 2004 to the L-1 visa program and prohibit access to this program by anyone other than the primary employer.
• Require employers to file electronically with the DOL key information about each H-1B hire--name, country of origin, academic degree, job title, start date, salary level. The DOL shall then make such data available on the Internet.

 

8. QUALIFICATIONS AND CREDENTIALS

Background: H-1Bs are supposed to be highly skilled professionals with the requisite academic degree. But even this standard is undercut by language that allows a vague degree equivalency, such as work experience, to suffice.  In addition there is no system in place to verify that those with degrees have valid credentials or that they are equivalent to a U.S. degree. 

 

As far back as 1999, the accusations that H-1B applicants falsify job experience and education were exposed. In testimony on May 5^th of that year before the Subcommittee during hearings on Nonimmigrant Visa Abuse:

·         Jacquelyn Williams-Bridgers, State Dept. Inspector General, stated that attempts to falsify, alter, or counterfeit U.S. visas or passports and attempting to obtain false documents to obtain visas is a "constant problem both within the U.S. and overseas."

·         Jill Esposito, State Dept. Post Liaison Division, Visa Office, Bureau of Consular Affairs, backed up Yates' statement that documents are routinely falsified. She said that, although many foreign workers in the U.S. on nonimmigrant visas are here legally and properly, there are "thousands of marginally qualified applicants (who) are also entering the United States in the H-1B and L-1 categories."

Ms. Esposito also detailed a year-long  joint INS and Department of State initiative which focused on the American Consulate in Chennai, India, which issued more than 20,000 H-1B visas in Fiscal Year 1998 -- more than any overseas post. The investigation found that 45 percent of the 3,247 work experience claims made to the INS were fraudulent.

Reforms:

·         Current law allows H-1B applicants to have a college degree or the "equivalent".  This sets a highly subjective standard that is most difficult to apply and often abused.  Work experience should not be a substitute for the required academic credentials. This vaguely-worded equivalency standard should be eliminated.  

·         At present there is no procedure in place for checking on the validity of a college degree cited to support an H-1B petition.  The Secretary of State through its consular offices that issue the visas (or another appropriate federal agency) should determine whether such a degree has been granted by a bona fide institution of higher education (authenticity) and is equivalent to college degrees obtained in the U.S.  

·         To assure that H-1B visas are mainly allocated for use by the most highly skilled and educated, a "carve out" beginning at 40% and increasing to at least 50% of the total number of visas should be reserved for "guest workers" possessing a master degree or higher. 

 

9. ENFORCEMENT AND OVERSIGHT REMEDIES

Background:

According to the DoL's own Inspector General as well as the GAO, federal enforcement mechanisms are woefully inadequate to compel employer compliance with even the weak safeguards that exist under the H-1B program that are supposedly designed to protect American workers. Penalties for violations and outright fraud are too meager to induce compliance. 

 

In this regard, the 2000 GAO study referenced earlier in this statement included the following findings:

 

"Labor's [U.S. Department of Labor] limited legal authority to enforce the program's requirements and weakness in INS' program administration leave the program vulnerable to abuse.  Under the law, in certifying employers' initial requests for H-1B workers, Labor is limited to ensuring that the employer's application form has no obvious errors or omissions.  It does not have the authority to verify whether information provided by employers on labor conditions, such as wages is correct." 

"There is not sufficient assurance that INS reviews are adequate for detecting program noncompliance or abuse." 

"However, as the program currently operates, the goals of preventing abuse of the program are not being achieved.  Limited by law, Labor's review of the LCA [labor certification application] is perfunctory and adds little assurance that the labor conditions employers' attest to actually exist.  Expanding Labor's authority to question information on the LCA would provide additional assurance that labor conditions are being met"  

Reforms:

• To protect American and visa employees who discover abuses, whistle-blower safeguards should be implemented so that either can report employer misconduct to the appropriate federal agency without fear of reprisal.

·         Department of Labor (DoL) enforcement authority should be beefed up to monitor L-1 usage through random surveys and compliance audits, investigate and adjudicate complaints and impose penalties where warranted. Automatic audits for employers with over certain number of guest workers should be mandated and DOL investigations of suspected misconduct should be allowed without the necessity of having to have a complaint as justification. 

• Strict timelines be imposed for the response, processing and administrative adjudication of complaints by DoL; Administrative and /enforcement functions should be centralized in one federal agency—DoL. 
• Disallow employers from forum shopping, e.g. appealing an adverse DOL decision on the LCA to the INS. 
• To allow for careful review of H-1B applications, the practice of submitting blanket petitions for multiple workers should be eliminated;
• Civil penalties should also be applied for misrepresentation or fraud related to the information submitted on the visa application;
• Congress should mandate appropriate data collection protocols and timelines for reports by the relevant federal agencies to assist Congress with its oversight of this program.

10. OFFSHORE OUTSOURCING

Finally, there is one last issue that the Committee should be cognizant of, and that is the likelihood that visa programs like H-1B are directly contributing to the outsourcing of U.S. professional and technical jobs overseas. This matter has been the focus of several hearings in the House Small Business Committee and we commend Chairman Manzullo for his past efforts in this regard.  

Every day in newspapers around the nation we read more articles about how U.S. firms are now exporting white collar jobs. The reason I raise it in the context of this review is that there is a connecting thread. And that is Tata Consultancy Services, Wipro Technologies, and Infosys Technologies—the Indian- owned firms I mentioned earlier.  

These firms are not just brokerage houses for H-1B, L-1 and other visas. They are among the primary culprits involved in the heist of hundreds of thousands of U.S. jobs and tens of millions in payroll. It goes something like this: First they contract with an U.S. based firm to perform a tech related service like software development or maintenance. Then they bring in the Indian guest workers by the thousands to do the work here at bargain basement rates. As committee members may already know, India is by far the largest user H-1B and L-1 visas. Once the team of temporary workers has the knowledge, and technical skills--sometimes after being trained by U.S. workers--as much of the work that is technically feasible to off-shore is then carted back to India. There, the same Indian firms that stoke the visa pipeline are facilitating the creation high tech centers that employ hundreds of Indian nationals to do the work formally done by American professionals. 

An earlier study by Forrester Research estimates that if current trends continue over the next 15 years the U.S. will lose 3.3 million high end service jobs and $136 billion in wages. Other recent studies predict the same or higher levels of jobs and salary losses. In one key segment of the tech industry, Jon Piot CEO of Impact Innovations Group in Dallas says that “software development in the U. S. will be extinct ……with gradual job losses much like the U.S. textile industry experienced during the last quarter of the 20^th century.” Today major U.S. firms from many sectors are falling all over themselves to climb on the outsourcing bandwagon.  

As they used to say in one of this nation’s’ greatest technology initiatives, the space program—“Houston we’ve got a problem”. And I would suggest it’s a big one. Only this time it’s not those textile, steel, machine tool and other manufacturing jobs; many of them are long gone. Now it’s the high tech, high end, high paying jobs that are headed out of town. These are the same jobs that we were smugly assured by free trade advocates the U.S. would retain as our manufacturing base was exported. The question for federal legislators is to what extent are the professional guest worker programs contributing to the outsourcing tidal wave. I would suggest that it is significant.  

In conclusion, professional and technical workers in this nation have made enormous personal sacrifices to gain the education and training necessary to compete for the knowledge jobs in the so-called new American economy. They deserve better than to be victimized by guest worker programs like H-1B. Congress can make a long, overdue start in cleaning up the guest worker visa mess by implementing badly-needed reforms. At a time when so many American professionals are out of work, from our perspective public policy inaction to clean up the H-1B visa mess is not an option. Until that is achieved there should be no increase in the H-1B annual visa limits.