Dr. Norm Matloff Vs. Industry Shills On Michael Krazny Forum
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Dr. Norm Matloff writes:
Michael Krazny, an English professor at San Francisco State University, has been the host for many years of Forum, a talk show on KQED-FM in San Francisco. Past Monday, his topic was H-1B. You can listen to the archived show here.

I was one of the guests, as were Robert Hoffman, a prominent industry lobbyist, venture capitalist and former tech entrepreneu Vish Mishra, and San Francisco Chronicle reporter Tom Abate. Hoffman made the usual industry claims, and Mishra, a pleasant man without an apparent axe to grind, didn't say much. I was quite surprised, though, to see Abate make a number of statements, in a very authoritative tone, that were quite counter to the facts. I will devote the majority of my commentary here to this point.

Abate is an asture veteran journalist. He covered H-1B for a while around 1998, but except for one piece in 2007, to my knowledge he has not been writing about the subject in recent years. Thus I was quite surprised that by his comments.

He made two main assertions:

1. He claimed that abuse of the H-1B program consists mainly of fraud by the Indian bodyshops, with the large mainstream firms using the program legitimately.

2. He also asserted that the large mainstream firms are legitimately rejecting older American applicants, as they lack crucial new skills.

Both of these statements are false.

Though the large mainstream firms in some cases hire a higher class of worker, i.e. Masters vs. Bachelors (PhDs are much less numerous in the computer industry) compared to the bodyshops, the mainstream firms are quite culpable in abusing both H-1B and employer-sponsored green cards. For example:

  • Until 2000, it was permissible to pay 5% below prevailing wage. Note that the prevailing wage itself is well below market wage, so that 5% is nickel-and-dime savings, but Intel LCAs of the late 1990s show that Intel was aware of this loophole and did use it.
  • Last year Cisco was running "U.S. citizen/permanent resident" job ads—but routing them to its immigration lawyer. It should be clear to anyone that Cisco was doing this to circumvent the green card requirement that U.S. applicants be given priority over foreign workers. The law has tons of loopholes to enable this; recall that Joel Stewart, one of the most prominent immigration attorneys in the U.S., has stated that "An employer who wants to hire a foreign national has an arsenal of legal means to reject any U.S. applicant.
  • The infamous YouTube videos, shot by an immigration law firm, show various loopholes the firm uses to reduce prevailing wage, by attorney Jennifer Pack's own words, "$10,000 to $15,000" below the market. This is again a prominent law firm, with very mainstream clients, e.g. Marconi and Westinghouse.
As I've said before, no one would be shocked to hear that Intel, for instance, aggressively takes advantage of loopholes in the tax code. So no one should be shocked by the mainstream firms' exploiting loopholes in the H-1B and green card code.

Ironically, Mishra brought up the analogy to loopholes in the tax code himself, but as a way to dismiss the whole issue. Yes, there are loopholes in H-1B, he said (possibly because he had used them himself in his CEO days), but there are also loopholes in the tax code and even in the motor vehicle code. Thus, he said, pursuing this argument would be "going down a rathole."

Krazny seemed rather interested in the loopholes issue, but ironically did not notice it when it arose. A listener from an immigration law firm sent him an e-mail message during the show, saying that the system includes strong guarantees that the legal prevailing wage is paid. Krazny commented, "Well, maybe so, but it doesn't seem to work that way in practice." He missed the point that the legal prevailing wage itself is full of loopholes that render that wage to be well below real market wage, so the "guarantees" are worthless.

Abate's second claim is incorrect too. This is a very complex issue, which I've analyzed in depth in my University of Michigan Journal of Law Reform article (PDF), but to give you a quick sound bite, I will cite the fact that a number of firms (again, in the mainstream) have laid off U.S. citizens and permanent residents, replaced them by H-1Bs or L-1s, and then forced the American workers to train their foreign replacements. That the Americans were training the imported workers shows that it was the foreigners who lacked the skills, not the Americans. There are plenty of older (age 35+) Americans who could fill the jobs taken by H-1Bs, but HR screens them out. And again, that's why hiring managers may never see the CVs of the older workers, leading the managers to mistakenly believe no one out there is qualified.

And for those older workers who do lack current skills, training in new ones does not help. Why hire a 40-year-old programmer who has learned XYZ technology on his own or via a course, when one can hire a 22-year-old who has learned XYZ technology on his own or via a course? Yes, experience should count, but HR and upper management see programmers and engineers as commodities.

Abate also stated that the retraining program associated with the H-1B user fees is "inadequately funded." Again, this is way off the mark. The program was established by the 1998 legislation that raised the H-1B cap. I pointed out at the time that the retraining funds would not reduce the usage of H-1Bs one whit, and sure enough, this is what happened. A Dept. of Commerce study confirmed this, and most importantly, Sun Microsystems publicly admitted that they had never expected retraining to reduce H-1B usage in the first place. (See "Failing Grades: H-1B Fees Fail to Lessen Reliance on Imported IT Skills," eWeek, September 18, 2000.)

Sun said that it was impossible to retrain older programmers and engineers for these jobs, and that the H-1B retraining funds were never intended for such usage. But of course Congress did have that intention, especially since Sun had stated in its 1998 testimony to the Senate, "H-1B workers [are a] stop-gap measure to help carry Sun through an interim period while we work to educate and train U.S. workers so they can fill needed positions."

A few years ago, the California Labor and Employment Report, a publication of the California State Bar Association, asked me to write about the connection between H-1B and the age issue. See http://heather.cs.ucdavis.edu/CLER.pdf I went into the skills issue in more depth there, but here is an especially relevant excerpt:

In fact, the industry's claim that the older workers' problems were due to skills deficits can be seen to be disingenuous in other ways. Consider a report by the Information Technology Association of America, one of the leading organizations lobbying for H-1B increases.9 The report complained that, while older program- mers and engineers could be retrained, this made them flight risks: "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...[the problem being that the retrained workers] become highly mar- ketable individuals . . . attractive to other employers. It is clear that Bradley was not willing to pay the salaries paid by other firms. The real issue was money, not skills. That last point sums it up: The real issue was money, not skills.
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