H-1B and L-1 Visas Accelerate Offshore Outsourcing

By Chris McManes

The presence of guest workers in the United States on H-1B and L-1 visas has accelerated the offshore outsourcing of high-tech work and jobs, said Dr. Ron Hira, chair of the IEEE-USA Research and Development Policy Committee in June testimony before the House Committee on Small Business.

The trend has increased the “movement of work offshore as temporary workers in management positions outsource work to overseas colleagues, and as temporary workers who have returned home use their knowledge and connections in the U.S. market to competitively bid for outsourced work,” Hira said.

“A policy shift away from reliance on guest workers and toward permanent immigration would help minimize this problem.”

The hearing, chaired by Rep. Donald Manzullo (R-Ill.) and televised on C-SPAN, was held 18 June to help answer the question, “The Globalization of White-collar Jobs: Can America Lose these Jobs and Still Prosper?”

In a widely cited Forrester Research analysis, at least 3.3 million white-collar jobs and $136 billion in wages are expected to shift overseas by 2015. Lower labor cost is the principal reason. A comparison done by the World Bank showed that a $70,000 salary for a U.S. engineer has the same purchasing power as a $13,580 salary for an Indian engineer or a $25,690 salary for a Hungarian engineer.

“Global competition accelerates creative destruction, which can be good for innovative and market-based economies overall, but terribly difficult for displaced communities and individuals,” said Bruce Mehlman, assistant secretary for technology policy, U.S. Department of Commerce. “America must never compete in the battle to see who can pay their workers the least, and it will take sustained innovation to ensure we don’t have to.”

Testimony also included discussion of the H-1B and L-1 temporary visa programs.

L-1 visas, which have no annual limit, are designed to facilitate the transfer of multinational corporate executives and experts into the United States. H-1B visas are available to foreign workers entering the country to perform work in a specialty occupation, i.e. one requiring a theoretical application of a highly specialized body of knowledge and a bachelor’s degree or equivalent.

Rep. Nancy Johnson (R-Conn.) told the committee about meeting with constituents, all unemployed information technology workers, who spoke of being replaced by cheaper, foreign workers on H-1B and L-1 visas.

“In some cases, the American worker was instructed to train the new arrival only to be summarily dismissed and replaced by the foreign worker,” Johnson said. “If this is true, it directly contradicts the intention and spirit of our immigration laws.”

The annual H-1B visa cap of 195,000 will drop back to its historical level of 65,000 on 1 Oct. without further congressional action. IEEE-USA, in a position statement adopted in February, supports returning the cap to 65,000, and using the employer-paid visa fees to increase the availability and effectiveness of skills training for displaced U.S. high-tech professionals. The position statement is available at http://www.ieeeusa.org/forum/POSITIONS/h1b.html.

“Congress should see to it that more of the H-1B fee revenue is used to address the specialized instructional needs of unemployed engineers, scientists and other high-tech professionals,” IEEE-USA President-Elect John Steadman said. “In the long term, it should focus support on programs that help financially needy students complete degrees in computer science, engineering and mathematics.”

The H-1B visa cap was increased in 1999 because of purported shortages of U.S. high-tech workers during the dot-com boom and in preparation for Y2K.

“If that was true and the shortage no longer exists, then the justification for the inflated number of H-1B visa holders is moot,” Rep. Johnson said. “We have no public interest in keeping qualified American workers unemployed in order to accommodate guest workers.”

Since 2001, unemployment among U.S. high-tech professionals has increased to unprecedented levels. The U.S. Department of Labor, Bureau of Labor Statistics reported that in the first quarter of this year, joblessness among electrical and electronic engineers was 7.0 percent. Computer software engineers were unemployed at a rate of 7.5 percent, while the rate for computer hardware engineers was 6.5 percent.

“IEEE-USA is concerned that these increases in engineering unemployment may not be a short-term, cyclical phenomenon that will correct itself when the economy begins its long anticipated upturn,” Hira said. “Instead, current engineering unemployment is the result of much more fundamental structural changes in the U.S. economy that could have very serious, long-term effects …”

Hira, also a member of the IEEE-USA Career and Workforce Policy Committee, is a postdoctoral fellow at Columbia University’s Center for Science, Policy and Outcomes in Washington. His entire written testimony is available at http://www.ieeeusa.org/forum/POLICY/2003/061803.html.

Chris McManes is Sr. Marketing Communications/Public Relations Coordinator at IEEE-USA in Washington, D.C.