U.S. corporations no longer have to outsource your high-tech or information technology (IT) job to China or India. They just bring your replacement here on an L-1 visa.
L-1 visas get around the legal technicalities that Congress placed on the H-1B visa program. Employers are not supposed to use H-1B visas to bring in foreigners to displace U.S. employees or in order to cut costs by paying low wages. H-1B visas are supposed to be utilized only when there is a shortage of particular skills, and the visa holder is supposed to be paid prevailing U.S. wages.
Of course, as any economist can tell you, a shortage is always at a price. H-1B visas were used to keep employers from bidding up U.S. wages and calling forth a larger supply of the needed skills. Instead of allowing the price system to work in the U.S., H-1B visas simply enlarged the U.S. labor supply to include the entire world. Many American students who invested in obtaining software and IT skills graduated only to discover that their careers had been given to foreigners or outsourced abroad.
Several hundred thousand educated and formerly high income Americans were displaced by the H-1B program. Complaints were rising, but before the scandal could break, L-1 visas took over.
L-1 visas were created to facilitate intracompany transfers within multinational corporations. Corporations use them to hire Asians at one-third the salary of their U.S. employees. Then the Asians are transferred to the U.S. where the "downsized" U.S. employees spend their last employed months training their replacements.
Loopholes in the L-1 visa law or negligence in its enforcement allow U.S. corporations to contract with foreign companies to supply them with IT workers. This keeps the foreign workers off the U.S. corporations' payrolls and permits the corporations to confine their dealings to the foreign "consulting" firms that provide the replacements for U.S. employees. This allows U.S. corporations to claim that they are paying "prevailing wages" to all employees.
According to Business Week, there are now about 350,000 foreigners on L-1 visas who have displaced U.S. IT and high-tech employees. Put this number together with the number of H-1B visas, and Americans have lost 750,000 high income jobs in the last few years. [March 6, 2003, A Mainframe-Size Visa Loophole]
L-1 visas allow employees to remain in the U.S. for seven years. The program creates an ever greater source of foreign IT workers who, on their return to their homelands are productively employed in training their fellow citizens in the business cultures of blue-chip U.S. companies.
The L-1 visa program is especially attractive to U.S. corporations, because it allows them to tap low-paid skilled labor without having to construct facilities abroad. Instead of moving to China and India in order to hire engineers and scientists at a small fraction of U.S. prevailing wages, the companies can simply import the labor.
As a significant proportion of foreign engineers are U.S. trained or trained by their fellows with U.S. educations, the supply is sufficient to replace every American engineer and IT employee with low-cost foreigners.
Free traders, who ceased to think two centuries ago, will accept the displacement of U.S. employees with equanimity as the beneficial workings of free trade. The bonuses of cost-cutting corporate CEOs will soar with their companies' profits, while the living standards of native-born Americans will fall. Increasingly, Americans will find that even domestically produced goods and services are supplied by foreigners. Americans will become an occupied underclass in their own country.
No other country in the world, with the partial exception of the U.K., dispossesses its own citizens in this way. Will a people who feel betrayed by their own government and corporations support the foreign adventures of American empire, or will American identity dissipate, dissolving the country?
Paul Craig Roberts is the author with Lawrence M. Stratton of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice. Click here for Peter Brimelow's Forbes Magazine interview with Roberts about the recent epidemic of prosecutorial misconduct.
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