Dr. Norm Matloff on Kagan`s Newly Released Emails From The Clinton Era
July 11, 2010, 03:51 AM
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Dr. Norm Matloff writes on Elena Kagan's emails from the Clinton Administration—seems she's no good on H1B's, either:

Recently I commented on a Computerworld article on the newly-released e-mail messages of Supreme Court nominee Elena Kagan. See here.

At the time of the messages, Kagan was a domestic policy maker for President Clinton, and the 1998 bills proposing a big increase in the H-1B cap were the subject of much discussion. To me, the most important revelation was that Clinton's people were quite suspicious that the industry lobbyists were hoodwinking them on H-1B. At one point, one staffer even said, "Let's call the industry's bluff." But of course in the end, Clinton did sign the cap increase into law.

Since my last posting on this topic, I've looked through the messages further, and have found a couple of points I find worth mentioning.

The first point concerns prevailing wage. H-1B law requires that the foreign worker be paid at least the prevailing wage, but as I've often stated, the statute defining this wage has huge loopholes built into it. As a result, legal prevailing wage is well below the market wage, thus making this the absolute center of H-1B abuse.

In the message here we find that the original version of Senator Spencer Abraham's H-1B bill would have radically changed the legal definition of prevailing wage. The memo points out that "The bill stipulates that factors such as years of experience, academic degree, institution attended, grade point average, publications, and personal traits deemed essential to job performance be considered." Though this might on the surface seem reasonable, the effect would be that the employer could pick and choose what factors to base prevailing wage on, selecting the ones that gave the lowest figure. Worse, since there would be no data on many of these factors, the upshot would be that the employer would be able to simply set whatever wage he wanted. As the memo (by Julie Fernandes) succinctly put it, the original Abraham bill would have "weaken[ed] the existing program...by essentially repealing the prevailing wage determination requirement."

Such was the hubris that politicians "representing" the industry had in those days. Abraham did remove the provision, probably because as noted above there would be no data available with which to implement it, but the fact that he would dare "repeal" the prevailing wage requirement was startling even to me.

It's interesting that the memos show the Clinton people working quite hard to find ways to deal with abuses, such as with anti-layoff provisions, banning the hiring of H-1Bs by an employer soon after laying off Americans. They ran into numerous logistical problems on this, when in fact the simplest and most effective solution would have been to clean up the legal definition of prevailing wage.

The second message, here,is of personal interest to me, as some of the points I was making at the time show up here. For instance, I had pointed out that the ITAA industry lobbying group, in claiming university computer science enrollment was still falling, had conveniently omitted the data for the most recent two years, which showed that enrollment had almost doubled during that time. This fact shows up in the memo. I had also pointed out that nearly 3/4 of all software developers come from fields other than computer science anyway, thus making CS enrollment less of an issue. This too showed up in the memo.

This saddest aspect of these memos is the faith the participants show in retraining. As many of you know, the bill that was ultimately enacted featured an H-1B employer fee, the proceeds of which would be used for retraining of American workers, thus making the "need" for the H-1B increase only temporary. Several of us H-1B critics had pointed to the fact that, in the midst of the dot-com boom, many experience programmers and engineers over the age of 35 were having trouble finding work. The industry claimed that these workers simply were not up-to-date in their skill sets, while technology was moving at a lightning pace. The idea, then, was that the retraining funds would be used to bring these older workers up to speed, so that they would be hired instead of H-1Bs.

Retraining is a standard Democratic approach, and is especially big among organized labor, to whom the White House was talking at the time. So the idea of agreeing to the H-1B cap increase, in exchange for the user fee that would fund retraining, was natural and sensible from the point of view of the White House. But it was hopelessly, utterly and tragically naive.

The White House should have gone with its gut feelings, which were that there was no tech labor shortage and the industry simply wanted the H-1Bs as cheap labor. Knowing that, they would have realized that, retraining or no retraining, up-to-date skills or not, the employers simply did not want to hire the older (again, "old" at 35) workers. The older workers were just too expensive, both in salary and benefits.

The White House could have seen this if they had carefully read even the industry lobbyists' own report, by the ITAA, which said

Training employees in IT would seem to be a win-win for both worker and employer. And often that is the case. However, extensive training creates other issues. "You take a $45,000 asset, spend some time and money training him, and suddenly he's turned into an $80,000 asset," says Mary Kay Cosmetics CIO Trey Bradley. That can lead to another problem. New graduates trained in cutting edge technologies become highly marketable individuals and, therefore, are attractive to other employers.

It is clear that Bradley was not willing to pay the salaries paid by other firms. In other words, the real issue all along was cheap labor, not skills, and thus retraining wouldn't work.

The retraining scheme was thus doomed from the start. A later Dept. of Commerce study confirmed that the funds were not being used to train programmers and engineers, thus not impacting H-1B usage at all. Sun Microsystems, which had been in the vanguard of lobbying for the H-1B increase, even stated, in an innocent tone, that "of course" the training had not reduced Sun's usage of H-1Bs, as that had never been the intent of the law, a blatant revision of history.