THE INDUSTRY STANDARD, May 8, 2000 

Huddled Masses Yearning to Write Java 

By KARL SCHOENBERGER 

Rob Sanchez, a 45-year-old programmer in Phoenix, says he was replaced by an H-1B visa holder at a major tech company a year ago. He's been unemployed ever since. As an outlet for his rage, he has created the H-1B Hall of Shame, a Web site dedicated to advocacy against the controversial H-1B visa program, which allows U.S. tech firms to employ skilled foreign workers. "H-1B is used to bring foreign indentured slaves here to replace YOU!" shrieks the site. 

Sanchez believes he's been denied employment because of his age and because of the influx of younger, cheaper information technology workers from abroad. "Some of my friends think I'm one of those weirdos who believes he's been abducted by aliens," says Sanchez, who is a competitive amateur tennis player when he's not typing code at his keyboard. "But I don't think people really want to know what's going on, that their own companies are hiring H-1Bs and what that really means. To tell you the truth, if I were an Indian programmer I'd be the first to line up for that H-1B train. But that shouldn't mean an American like me has to lose his job."  

Employers credit the H-1B visa, which has allowed more than 600,000 skilled technology foreigners to work in the U.S. since 1990, with breaching the labor shortage gap in the technology sector - a gap that business leaders say might have stunted the growth of the new economy in the U.S. In 1998, Congress responded to industry demand by increasing the annual H-1B visa cap of 65,000 visas to 115,000 for a three-year period. Lawmakers overcame critics who denied the existence of a high-tech labor shortage and highlighted cases of fraud and abuse by unscrupulous recruitment agencies. 

In mid-March, the program reached its application limit for the fiscal year - six months ahead of schedule - adding momentum to the push to expand the pool of H-1Bs. 

Congress is now preparing to enact bipartisan legislation that would double and possibly even remove the cap on foreign high-tech laborers entering the country. President Clinton is expected to sign the bill soon after it makes it through the political horse-trading, which should be some time later this month. Lawmakers commissioned the National Science Foundation to determine whether a critical shortage in the high-tech labor market exists - the rationale behind the H-1B program. But the study won't be complete until October - too late to be used as evidence in the current policy debate. 

For a while, critics seemed to be swaying political leaders with the argument that H-1B visas are a short-term fix to a complex problem. But under the spell of a formidable high-tech lobby, key congressional opponents of H-1B have either softened their views or reversed their positions. House Minority Leader Richard A. Gephardt (D-Mo.), who had sided with organized labor in opposing the program's expansion, suddenly changed his mind. And Federal Reserve Chairman Alan Greenspan weighed in on the issue with remarks that favored opening the borders to alleviate the tight labor supply. In early April, the Information Technology Association of America, or ITAA, announced the results of a survey of IT employers: Almost 850,000 IT jobs will "likely go unfilled" this year due to a lack of qualified professionals.

"I think at the end of the day, only members of the flat-earth society will maintain there is not a shortage of IT workers," says Harris Miller, president of the ITAA. Miller, a veteran Washington lobbyist before he joined the association, dismissed arguments by critics of H-1B that the tech labor shortage is caused by employers unwilling to train U.S. tech workers, particularly older ones. Says Miller, "I think that's a myth that three unemployed programmers have generated "themselves"." 

But it isn't just graying and disgruntled computer programmers who are challenging the H-1B visa program. Mark Krikorian, executive director of the Center for Immigration Studies in Washington, is one of many who believes a dislocation exists in the domestic labor market - a mismatch of skills and jobs, not a shortage of tech workers. Importing labor to meet short-term needs only perpetuates the problem, he contends. 

"Mendacity" is the word Krikorian uses to describe the view of corporate lobbyists who advocate the increase in H-1B visas. "Their claims are false and they know them to be false - specifically, the claim that their need for imported workers is temporary," he says. 

"There's a national security problem here," Krikorian adds. "We're becoming dependent on the importation of minds, rather than the development of our own. What does that say about the viability of our future?" 

INDIANS, STUDENTS AND LINUS TORVALDSJust who are these high-tech braceros? The stereotype of an H-1B holder is a young man from India - and that's not far off the mark, according to statistics released by the Immigration and Naturalization Service in February. Of the some 134,00 foreigners granted H-1Bs from May 1998 to July 1999, about 48 percent came from India, a nation whose population is approaching the 1 billion mark and which has a booming government-backed IT industry that trains and educates workers in cutting-edge tech skills. China, which accounted for the lion's share of visa applications in the early years of the H-1B program, ranked No. 2 at 9.3 percent, followed by the U.K. at 3.2 percent and Canada at 3 percent. 

One of the more prominent H-1B visa holders is Linus Torvalds, the brilliant programmer from Helsinki, Finland, who became an industry cult hero after writing the kernel code for Linux, the open-architecture operating system. (Torvalds, 31, who took up residency in Santa Clara, Calif., in 1997, didn't return phone calls.) 

At one level, the visa program succeeds at bringing in the cream of the crop from the global technology labor market. Yet there are some anomalies in the INS data that suggest that geniuses may be the exception, not the rule: although 30 percent of H-1B applicants claim to have master's degrees, fewer than 5 percent work as electrical engineers. More than half are programmers and system analysts, earning a median salary of $49,000. Consider the fact that some 83 percent of these workers are under the age of 35, and a statistical profile of a typical H-1B visa holder emerges: a skilled software programmer from India in his late 20s, who earns moderate wages in a midlevel job. 

About one in every four of these H-1Bs originally entered the U.S. as a student or participated in an exchange program, then changed visa status to H-1B in order to stay in the country and work. This reinforces already accepted wisdom: The nation's educational system has become a significant gateway to the domestic job market. Critics like Krikorian point out that under the proposed H-1B bill - dubbed the "American Competitiveness in the 21st Century Act" by its sponsors, Senators Spencer Abraham (R-Mich.) and Orrin Hatch (R-Utah) - the cap of 195,000 visas would be exceeded by the provision allowing an unlimited number of visas to those earning advanced degrees in technology from U.S. academic institutions. Krikorian's staff calculates that if the legislation passes it would open the floodgates to an estimated 1 million tech guest workers over the next tree years - many of whom, he believes, will eventually reside in the U.S. on a permanent basis. 

Most of the visa applicants, however, currently come directly from abroad - 81,100 of them, or 60 percent of the total during the time frame studied by the INS. Once the visa is issued, the INS and the U.S. Department of Labor, the two primary agencies administering the program, have little idea who is working where and what they're doing. Two years ago, the INS issued a controversial list that identified the top three H-1B employers as Indian-owned contractors Tata Consultancy Services; the software arm of India's largest industrial conglomerate, Mastech of Oakdale, Pa.; and Syntel in Troy, Mich. Industry giants in the U.S. such as Intel, Lucent Technologies and Oracle also ranked high on the list. But INS spokesperson Eyleen Schmidt cautions that the agency no longer backs the ranking because it may not reflect the current deployment of H-1B visa holders. 

Industry sources suggest that the big U.S. companies are sponsoring and employing the high-skilled end of the H-1B spectrum, particularly foreigners who hold advanced degrees in computer science from elite U.S. universities. Many of these companies also hire midlevel H-1Bs via outside consultants and contractors - "job shops" that function as high-tech temp agencies - to work on special projects or fill temporary vacancies. Conventional wisdom holds that H-1B temp workers roved the country with software patches to kill the millennium bug, playing a critical role restoring mainframe computers to Y2K compliance. 

"The U.S. owes a lot to the people in the H-1B program," says Shambhu Rao, director of the Indo-American Community Service Agency in Santa Clara. "The country was salvaged from the Y2K problem because these guys churned it out." 

EFFICIENCY OR INTRUSIONIt's impossible to determine whether the older, more staid and highly compensated U.S. tech workers would have risen to the occasion and learned all the necessary skills - or tolerated the long hours and travel - to put out the Y2K fire, without "temp help" from India and other foreign countries. In one sense, this is a classic example of the tide of economic globalization; the unrelenting force of the free market has broken down national barriers and driven the unregulated flow of capital, goods - and increasingly, people. To economic conservatives, and most business leaders, the legal aliens of the H-1B program are just one piece of the trend in global efficiency. But organized labor and some policy analysts view H-1B holders as intruders crossing political boundaries, interfering with the natural balance of supply and demand within a contained system. 

Greenspan's interests in the H-1B program are as self-evident as those of high-tech employers: Without foreign tech workers, the tight labor market will likely foster wage-push inflation, as employers are forced to pay a premium for qualified workers. The Fed chairman's job, after all, is to slay the dragon of inflation, while the high-tech CEO's job is to hold down labor costs and provide value for shareholders. 

On the other side of the debate, H-1B critics say even if there is a high-tech labor shortage, the problem will correct itself because employer demand should generate higher wages and motivate domestic workers to acquire the skills they need to earn that money. They believe the intrusion of relatively low-paid foreigners impedes that natural correction. 

Do low unemployment figures in a tight labor market necessarily translate into a labor shortage of crisis proportions? Efforts to get to the bottom of this question ran aground in 1998 when the current law on H-1B visas went into effect. So Congress looked to the National Science Foundation, which assigned the task to the National Academy of Sciences, which assembled experts and held hearings. It will begin analyzing its findings at the end of April in a closed session. 

The 15-person committee charged with conducting the NAS' "Workforce Needs in Information Technology" project is divided along philosophical lines, perhaps to the point of stalemate, reminiscent of earlier attempts to seek objective conclusions. The panel, made up of corporate executives, labor economists and immigration specialists, won't reveal its deliberations to the public until the study is revised, vetted and published in October. Herb Lin, an NAS staff officer, hints that members disagree on the fundamental premise of whether the rules of supply and demand should function within U.S. borders or globally. The result of the panel's equivocations won't be available to lawmakers when they vote on H-1B expansion, but Lin says the study will have "enduring value" for the next round of debate. 

To Norman Matloff, a computer science professor at the University of California at Davis, the high-tech labor shortage is a figment of the industry's imagination. He has expressed his views on the matter in testimony before Congress and documented his argument in his 1998 report "Debunking the Myth of a Desperate Software Labor Shortage." His research suggests that employers generally hire a fraction of the people who apply for job openings - about 2 percent is typical for companies in the software industry. (That figure couldn't be independently verified, but industry sources say it sounds credible.) The upshot is that computers scan and filter applicant resumes to "profile" candidates for specific skills. If the resume doesn't highlight a skill the company is seeking at that time - say, writing code in the Java programming language - the resume might get discarded without considering whether the applicant can learn the necessary skills or add value to the company in other ways. 

"By having a mindset for hiring that is obsessively skills-oriented, it means they're not getting the best and the brightest," Matloff says. "There's uniformity in what these companies look for. It doesn't matter if it's an Internet startup or a big company like Hewlett- Packard, in the Bay Area or in Idaho." In the summary of his "Debunking the Myth" report, Matloff wrote: "Insincere employers use the skills issue as a pretext for hiring cheap H-1B programmers and for not hiring older programmers. Age discrimination is rampant in this field." 

"We think the H-1B program is being abused," says Art Pulaski, general secretary general of the California Labor Federation AFL-CIO. "The employers aren't doing enough to continue to train and educate programmers for work here. A lot of these companies consider that when you hit age 40 - or now it's even 35 - you become expendable and disposable. People are being put out to pasture, unable to improve their skills." 

KILLING THE CAP SOFTLYRoberta Katz is CEO of Palo Alto, Calif.-based TechNet, a lobbying group. Before that, she was general counsel for Netscape. "Companies are definitely feeling the pinch," she says. Going the H-1B route, Katz believes, is not necessarily an easier or cheaper alternative to hiring local people because delays and bureaucratic snafus often bog down the application process. "Here's this perfect person "overseas", and we can't hire him," she says. "I think this is very important to the Internet sector. When a company has trouble filling these openings, business slows down." 

Katz's TechNet defines itself as a "national political organization that builds bipartisan support for policies that strengthen America's leadership of the new economy." Its members are the CEOs of major U.S. tech firms, including such industry luminaries as Jim Barksdale, John Doerr, Jeff Bezos and Steve Case. TechNet, along with the ITAA, has been instrumental in advocating to expand the H-1B visa program, and it characterizes the enhanced influence the tech industry is having in Washington. Says Katz, "As technology has become more pervasive in our lives, largely because of the evolution of the economy, it's inevitable that you're going to see more dialogue "among" industry and policymakers." 

But there's more than just talk going on in the case of the H-1B issue, says the Center for Responsive Politics, a group that monitors political contributions. The center calculates that the high-tech industry made at least $8 million in soft money, political action committees and individual contributions to national politicians in 1999 - and recipients include key members of the judiciary committees in the Senate and House responsible for the pending H-1B legislation. Though the relatively modest amounts of these contributions were nothing to sneeze at - Spencer Abraham received $43,000 and Orrin Hatch got $36,000 - the CRP's Holly Bailey says they are indicative of the increasing influence of the tech industry in Washington. While H-1B legislation was dead in the water a year ago, "all of a sudden this year it's been reconstructed and has momentum to it," Bailey says. "It seems anything on the tech industry's wish list is going to get passed by Congress." 

There's no question that the nation's political leaders - from representatives of Silicon Valley to presidential candidates - have lined up in a bipartisan consensus on this issue, agreeing with the industry that the quota for H-1B applications must be expanded. Despite the opposition of the United Auto Workers and an embarrassing newspaper ad campaign launched by the Federation for American Immigration Reform in Sen. Abraham's home state of Michigan, support for the bill is a political no-brainer. 

Rep. Lamar Smith (R-Texas), chairman of the Immigration Subcommittee of the House Judiciary Committee, was one of the major exceptions, taking a skeptical view on whether the labor shortage is real - and raising concerns about fraud and abuse in the program and the effect on job security and wages for Americans. Smith wields considerable influence on the matter, as H-1B legislation must pass through his subcommittee before it goes for a vote on the House floor. 

In March, Smith floated his own bill, the Technology Worker Temporary Relief Act, which challenges the Senate's Abraham-Hatch legislation by proposing a lower cap on annual visas and stringent protections for workers. Within a month, however, Smith had revised his bill to eliminate the visa cap altogether. His explanation? He was persuaded to rethink the matter after seeing information from the INS that employer demand for the visas was running 50,000 applications over the limit last year, and that the agency had approved more than 21,000 visas over the legal cap of 115,000. 

"Such demand can indicate any of the following: an actual shortage, a spot shortage, a preference for cheap labor or replacement workers, or something else," Smith says. "Given the importance of the high-tech industry to our economy, I think we should give the industry the benefit of the doubt and accommodate the current level of demand." 

But while Smith's bill may give away the farm on the visa cap, it would also impose conditions on the expanded program - conditions that industry leaders find unacceptable. It would require companies that hire H-1Bs to prove they've hired an increase in U.S. workers and that they are raising wages. It would require companies to publicly disclose wages and job assignments and set floor wages of $40,000 a year for H-1B workers. The bill also would require the full implementation of the 1998 H-1B legislation before the visa caps are lifted, which means the Labor Department and the Office of Management and Budget have to enact the regulatory safeguards for workers imposed by the old law. 

Finally, Smith's bill would require antifraud measures, such as checking the educational records of visa applicants. It appears that provision was inspired by testimony made before Smith's subcommittee last year that related how the U.S. Consulate in Chennai (Madras), India, had conducted checks on some 3,000 H-1B visa applications submitted during a nine-month period. It found that 21 percent of the work experience claimed by the applicants was fraudulent; officials were unable to verify the authenticity of nearly 45 percent of the claims. Safeguards that survived the meat grinder of political negotiation before becoming law in the 1998 legislation probably would not be effective today, even if they're implemented as official regulations. Provisions that would significantly protect tech migrants from abuse only apply to "H-1B-dependent" employers - those with more than 15 percent of their workforce comprised of guest workers - meaning only a small number of the H-1B job-shop contractors would be covered. 

"The law says there are all sorts of protections, but nobody can really use them for their own defense. Every protection has something built into it that self-destructs," says a knowledgeable agency official who spoke on the condition of anonymity. "We couldn't make the regulations more than what the law intends, so we have nothing for protection." 

There's nothing on the table that addresses the problem of so-called indentured servitude among H-1B holders, a condition that labor activists and some policy analysts believe deprives guest workers of their fundamental right to act against unfair wages in the tech industry. These allegations arise because H-1B visa holders enter the country on labor contracts tied to specific employers, which makes them dependent on their sponsors' good will. This is where much of the fraud and abuse supposedly occurs, which has been documented as far back as 1996 when the Labor Department's Office of the Inspector General issued an audit report titled "Foreign Labor Certification Program: The System Is Broken and Needs To Be Fixed." 

More recently, an investigative series published in February by the Baltimore Sun highlighted a pattern of cases in which hapless H-1Bs seeking better wages at different jobs were sued by employers for breach of contract. These workers were held liable to harsh fines as high as $30,000. Though legal under U.S. law, the practice seems draconian. 

Krikorian, the policy analyst at the Center for Immigration Studies, adds that employers also wield tremendous power over their H-1B workers because companies hold the key to legal residency status. If an employee wants to obtain a green card, as Krikorian believes most do, he has to start the marathon residency test all over again if he's terminated and sent home, or even if he changes jobs. Pay raises and promotions can be put on hold during that extended probationary time. "What you end up with is basically an indentured servitude program," says Krikorian. 

LEARNING NEW TRICKSFor the high-tech worker in the U.S., there's a glimmer of hope: The debate over the H-1B program sheds light on the importance of educating and training people in skills needed for the Internet Economy - and whatever comes next once today's cutting-edge skills become obsolete. H-1B's boosters like to talk about this and how, as Lamar Smith concedes concerning the "labor shortage," the tech industry deserves the benefit of the doubt until proven wrong. 

Perhaps the industry has honorable intentions in regard to paying greater attention to the urgent need to educate and train workers. TechNet's Katz notes that the industry spends some $210 billion a year for "formal and informal" training of the IT workforce and contributes another $4 billion to schools and universities. Katz and her fellow tech lobbyists support a measure in the proposed legislation to hike the fees employers must pay to process an H-1B visa from $500 to $1,000 - money earmarked for training and educating Americans. But critics say only a fraction of the visa fees collected so far have been disbursed into training programs, possibly owing to bureaucratic ineptitude at the Labor Department, or possibly because the provision in the law is so vague and complicated nobody knows how to make it work. 

Dante Vignaroli, a 56-year-old programmer in Des Moines, Iowa, can tell you about his experience with retraining. It's anecdotal, but not unusual. Vignaroli says he was pulled off his job on a Y2K-compliance project in Florida late last year while younger and less experienced H-1B visa holders were kept working. His employer, Buffalo-based Computer Task Group, eventually terminated him claiming they didn't have work for someone with his skill set. He claims discrimination, and suspects his employer retained H-1B holders and dismissed him to save money. Under the law and the regulatory environment currently in place for high-tech guest workers, there's not much he can do about his complaint. 

"How come they aren't training us to write HTML? Why aren't we getting taught these new languages?" Vignaroli asks. "For 35 years I've been getting retraining, and I've kept up with the latest changes in computer technology. How come all of a sudden I'm too stupid to learn?" 

Meanwhile, H-1B Hall of Shame's Sanchez says he has trained himself in new technical skills such as database management and writing HTML code since he lost his job, but he still can't find work amid the Internet boom and the supposedly tight labor market. If he could just find a job he wouldn't put as much time into his Web site and his anti-H-1B crusade, admits the pugnacious programmer. "The worst thing for corporate America to do is to have me unemployed," says Sanchez. "It's in their best interests to hire me, because otherwise I'm going to continue to be a thorn in their ass." 

Contributing writer Karl Schoenberger writes frequently about business and culture.