The Senate voted Friday to place restrictions on the hiring of H-1Bs by banks that accept government bailout money. The legislation, which was proposed by Senators Grassley and Sanders as an amendment to the economic stimulus bill, would in its original form have imposed a flat ban on hiring of H-1Bs by the TARP-aided banks. It was weakened somewhat (details below), and of course may not survive conference committee etc., but it certainly sends a strong message.The move was sparked by an AP story that ran in many major newspapers, investigating usage of H-1Bs by banks that had accepted bailout funds. The AP places restrictions on redistribution of its articles, so I will not enclose it here, but you can read it at, for instance, here.One of the good things about that article was that it noted that paying H-1Bs below-market rates can be done perfectly legally. Here is an excerpt from the article:Foreigners are attractive hires because companies have found ways to pay them less than American workers. Companies are required to pay foreign workers a prevailing wage based on the job`s description. But they can use the lower end of government wage scales even for highly skilled workers; hire younger foreigners with lower salary demands; and hire foreigners with higher levels of education or advanced degrees for jobs for which similarly educated American workers would be considered overqualified. "The system provides you perfectly legal mechanisms to underpay the workers," said John Miano of Summit, N.J., a lawyer who has analyzed the wage data and started the Programmers Guild, an advocacy group that opposes the H-1B system.I`ve explained elsewhere the details of these and other loopholes.Needless to say, the industry lobbyists were quick to react. Note that the vanguard of the industry lobbyists includes the American Immigration Lawyers Association (AILA), who have obvious vested interests. Indeed, according to the immigration lawyers newsletter Immigration Daily, for many law firms H-1B and employment-based (EB) green cards form the lion`s share of their business. I`m enclosing below the press release from the AILA.As always, the AILA press release cites work by the National Foundation for Public Policy, a one-man organization run by Stuart Anderson, who is hardly an unbiased researcher. He`s been making a living writing articles supporting the H-1B program since the mid-1990s, and was the author of the lengthy 1997 report by the industry lobbying group Information Technology of America that formed the basis for the doubling of the H-1B cap enacted by Congress in late 1998. Anderson later worked as a Senate staffer, and was the author of that 1998 legislation, and then of a second act increasing the cap in 2000. Though he does not say who his present employer (funder) is, the fact that the lobbyists who quote him the most are immigration attorneys would seem to point to the American Immigration Lawyers Association or their American Immigration Law Foundation is his main funder.Anderson`s job creation claim comes from a blatant statistical error. See here for details.The industry lobbyists love to portray any restriction on H-1B as blocking industry`s ability to hire "the best and the brightest" from around the world. But as I have shown in my writings, the fact is that only a tiny percentage of H-1Bs are of that caliber. And if a bank does find someone of outstanding talent, they can hire the person under the O-1 visa program.Now, what effect would the measure have if it survives the political process? I have not seen the exact text yet, but according to press reports the provision would extend to all TARP-aided banks the rules now in force for H-1B-dependent employers. The two main features of those rules are (a) that the employer must recruit Americans for a position before filling it with an H-1B and (b) employers may not hire H-1Bs during the period of 90 days before and 90 days after a layoff.Restriction (a) is not quite as strong as it sounds. A similar provision in EB green card law is full of loopholes, as the infamous YouTube videos demonstrated so dramatically; see here.However, there is a little-known technical difference between the American recruitment requirements in H-1B-dependent and EB law, with the H-1B-dependent version being somewhat more effective. It is certainly worthwhile, and the anti-layoff rule is quite worthwhile.The provisions here were part of the Durbin/Grassley bill in the last Congress. In addition, that bill addressed the real heart of the problems with H-1B and EB green cards, by setting a definition of prevailing wage that would reflect reality. Due to these provisions—U.S. recruitment, anti-layoff and prevailing wage—I strongly endorsed the bill. (It also had some other parts that I felt were not important.)A Computerworld article on today`s vote is enclosed below, in addition to the AILA press release. For the AP story on the vote, see here.NormSenate approves `strict` rules on hiring H-1B workers, Bill sought to bar firms receiving bailout money from hiring foreign workers but set restrictions instead, By Patrick Thibodeau, Computerworld, February 6, 2009Congress Takes a Wrong Turn on Way to StimulusThe American Immigration Lawyers Association (AILA) believes Congress took a disturbing step backwards today - to an era of employment protectionism.