Dr. Norm Matloff: Vested Interests Decry "Protectionist" Grassley/Sanders
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Dr. Norm Matloff writes:
Enclosed below are an article from an HR magazine, and an editorial by the Washington Post, blasting as "protectionist" the recent legislation that placed restrictions on hiring of H-1Bs by TARP recipients.The "P-word" is always invoked in these contexts by the parties with vested interests, and thus might be dismissed as such, but really it's much ado about nothing. The fact is that any immigration policy of any major nation is protectionist.Moreover, that protectionist nature is fully accepted by the citizens of said nations.

For example, U.S. immigration policy disallows the immigration into the U.S. of people with criminal records or with tuberculosis.To my knowledge, no organization promoting immigration—not even the American Immigration Lawyers Association (AILA), not even MALDEF, not even the Southern Center on Law and Poverty, not even the ACLU, not even the Cato Institute—has ever advocated changing this policy.There may be an individual case here and there in which these organizations get involved, but none of them has ever advocated dropping laws barring these categories of people from immigrating.

My point is that these laws are protectionist—their purpose is to PROTECT the people who are already here (both natives and earlier immigrants).So we are all protectionists, yes, even the Cato Institute.

There of course is a question as to where to draw the protectionist line.We protect people's safety and health, so we might wish to protect people's economic well being too—or we might not.After all, barring criminals from immigrating protects virtually all of us, whereas at least in theory employment-based immigration might have substantial numbers of both winners and losers.

So yes, a discussion on employment-based immigration might be held—and in fact, it already has, with the conclusion that some protection for Americans' economic health is appropriate.That's why H-1B law, for instance, requires that employers pay the foreign workers prevailing wage.That law is riddled with loopholes, but the point here is that none of the above immigration-promoting organizations has argued that the prevailing wage requirement should be dropped.So we are all protectionists, even those who are now decrying the recent legislation on H-1B as protectionist.

Indeed, those objections constitute rank hypocrisy.The industry lobbyists on H-1B (including, as always, the AILA), have repeatedly stated that the current worker protections in H-1B law are proper. Just today Microsoft, in answering a letter from Sen. Grassley regarding Microsoft's layoff policy for H-1B workers, included the by-now obligatory statement that fraud in the H-1B program must be stamped out.Again, the problem is gaping loopholes, not fraud or other violations of the law, but the point is that Microsoft is tacitly agreeing that U.S. workers ought to be protected.Indeed, every major entity lobbying Congress for a higher H-1B cap has made such statements on numerous occasions.Given that, how can they use the word "protectionist" now? (I'll comment on the Microsoft letter tomorrow.)

Some in India have even claimed that the recent legislation violates international trade agreements.They may be surprised to know that the legislation, which merely applies the existing H-1B-dependent employer restrictions to TARP recipients, is actually part of the GATT.And that section in the GATT applies to ALL employers of H-1Bs.So Congress, by enacting the recent legislation, was not in violation of the GATT at all; on the contrary, the U.S. has been in violation of the GATT all these years, by not applying its rules to ALL employers.

I've mentioned before that personally, I believe we should not bar foreign goods or services of higher quality than we have in the U.S.My wife and I have bought nothing but Japanese cars, throughout our entire working lives, because we believe the quality is better.Similarly, I have always supported bringing in "the best and the brightest" from around the world.But only a small percentage of H-1Bs are in that league, and I don't support bringing in foreign goods or services simply because they are cheap.And that is precisely the reason why the vast majority of H-1Bs are hired—for cheap labor.

The enclosed article claims that the new law will in practice prevent the banks from hiring foreign "geniuses."Again, only a tiny fraction of H-1Bs are outstanding talents, but what about those few that are? Will the legislation effectively block the banks from hiring them?The answer is no.

First of all, that hypothetical new Stanford PhD in the article could be hired for 29 months—immediately, no questions asked—under the OPT program.Second, the bank could hire that Cardinal Einstein under the O-1 visa, which is specifically for those of outstanding talent.Third, PhDs and other top professionals have their own fast-track green card program.

Both the HR article and the editorial in the Post (a newspaper whose board includes Mrs. Bill Gates) are chock full of all the industry lobbyists' favorite lines, every single one of them false or misleading. As I've addressed all these lines many times in my writings, I'll limit myself to just one here—the claim that H-1Bs are not used for cheap labor.Here is an excerpt from the HR article:

"Congress buys the idea that these employees are brought in to workfor lower wages," Paparelli says. "That's a false perception.

"The vast majority of employers using these visas are law-abidingemployers who incur high fees and costs and additional risks andsubject themselves to criminal liability because they need theseworkers and cannot find suitable employee here."

Yes, the employers are indeed law abiding—but the law itself is full of huge loopholes that allow the employers to pay the H-1Bs lower wages in full compliance with the law, as even a GAO report found.Just as any firm, from the tiniest startup to the giants like Intel, will make aggressive use of loopholes in the tax code, they do the same for H-1B. And the employers pay Mr. Paparelli big bucks to exploit those loopholes.And of course there is no criminal liability for using a loophole, which is by definition legal.And the American Immigration Lawyers association, through their lobbying of both Congress and the executive branch, put those loopholes in the statutes and regulations. Mr. Paparelli, a very well-dressed man with a CEO-smooth personality, is dissembling to the n-th degree here.

As Sen. Grassley said, "No one should be fooled."


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