Immigration in the High Tech World: The H-1B Controversy
Final Paper for Information Studies 246, Fall 1999, Prof. Howard Besser
by Karen Chiang

The computer industry has been booming for the past two decades, so it only makes sense that the job market for computer scientists, programmers, and engineers is hot. We have witnessed the speed at which the current technologies have been developing and it is no wonder that there is a high demand for people with the skills necessary to work in this field. High tech companies are constantly looking for people to fill job openings, but it does not seem like there are enough people with the right training in this country. Therefore, it can be said with much confidence, that most high tech companies recruit internationally to find employees with these highly sought-after skills. With an H-1B visa, U.S. employers can legally employ foreign nationals - and almost all major high tech companies do. This, of course, is not without controversy. The battle over high tech immigration has become heated over the last few years over issues such as age discrimination, undercutting American employees, and caps on the number of temporary work visas give out each year.

It can be stated without much argument that we are living in a very technologically-oriented society. A great percentage of the job advertisements in newspapers are looking for computer engineers, systems analysts, programmer/analysts, software developers, database administrators, the list goes on and on. The Sun Microsystems website claims to currently have over 3000 job openings - and that is just one of thousands upon thousands of high tech companies looking to fill their company rosters. Therefore it makes sense to hire foreign nationals, who are more than willing to come to the United States. This controversy has existed for many years, but has recently been ignited due to the introduction of bills in Congress to increase the number of H-1B visas given out each year.

THE H-1B VISA: DEFINITIONS & PROCESSES

Before delving into the major issues and battles, it is important to define the terms and processes. The H-1B visa is the type of visa given to temporary workers in "specialty occupations." According to the United States Immigration and Naturalization Service website (http://www.ins.usdoj.gov), the H-1B is given to temporary workers with "specialty occupations" admitted on the basis of professional education, skills, and/or equivalent experience. Therefore, H-1B visas can be given for persons of any occupation. However, in recent years, a great percentage have been given to those with backgrounds in computer programming and other similar skills. Up until recently, 65,000 H-1B visas were given out each year by the Department of Justice, Immigration and Naturalization Service's parent agency.

In order to obtain an H-1B visa, the employer seeking to hire the foreign national must file what is called a Labor Condition Application with the United States Department of Labor (www.dol.gov) on behalf of the worker. This application states that the employer is willing to comply to certain conditions regarding the hiring of a foreign national. According to 20 CFR 655.730, the employer must pay the foreign national the same wage as he would to other employees at the worksite with similar experience and qualifications or the prevailing wage for the occupational classification of the position. The employer must also comply to providing work conditions for such temporary workers that will not adversely affect the working conditions of workers similarly employed. The LCA also ensures that there is not a strike or lockout in the course of a labor dispute in the occupational classification at the place of employment, as well as provide the notice of LCA filing to the company's bargaining representative, if applicable. Once the Department of Labor has approved the Labor Condition Application, another form needs to be filed with INS in order to obtain the H-1B visa. As long as the employer and worker are not in violation of INS rules and regulations and the annual cap has not been reached, the visa, in all likelihood, will be granted. [back to top]

CONTROVERSY REVISITED: RECENT H-1B LEGISLATION

A number of legislative bills have been passed through Congress over the last 2 years regarding the state of the H-1B visa. All of them address the shortage of computer professionals in the high tech industry. The following is a short summary of each bill.

S. 1723 - American Competitiveness Act

S. 1723, otherwise known as the American Competitiveness Act, amends the Immigration and Nationality Act, 8 USC 1101, by increasing the cap on the number of H-1B visas given out per year, creating the H-1C visa category for health care workers, and allowing unused H-2B visas to be used. (An H-2B visa is for those coming into the U.S. for nonagricultural employment which is seasonal or intermittent). The bill also makes provisions for a study by the National Science Foundation on the labor market of high tech workers, reforms the current prevailing wage program, and creates stricter penalties for the violations of H-1B and H-1C visas . This bill was sponsored by Spencer Abraham (R-MI). It was passed in the Senate on May 18, 1998. It is supported by high tech companies with labor shortages.

S. 1878 - High Tech Immigration and United States Worker Protection Act

S. 1878 was introduced by Sen. Dianne Feinstein (D-CA) and Sen. Ted Kennedy (D-MA). It offers an alternative to S. 1723 by emphasizing the protection of the American worker. The act would increase the cap on H-1Bs from 65,000 to 90,000 for the fiscal years 1998, 1999, and 2000. It also places more requirements on U.S. companies who seek to hire foreign nationals and gives the Department of Labor significantly more enforcement power. This bill was rejected by the Senate judiciary committee on a straight party line vote.

H.R. 3736 - Workforce Improvement and Protection Act of 1998

When first introduced by Rep. Lamar Smith (R-TX), HR 3736 IH would increase the annual cap on H1B visas from the current level of 65,000, to 95,000 in 1998, to 105,000 in 1999, and to 115,000 in 2000. After the year 2000, the cap would be returned to 65,000. It also require companies to recruit U.S. workers before recruiting foreign nationals, prohibit the displacement of U.S. workers, and increase the powers of the Department of Labor to enforce the rules of recruitment and impose penalties on violators.

Initially, President Clinton was against the bill and threatened to veto it. In response to that, House and Senate leaders negotiated and came up with a compromise bill, known as HR 3736 RH. The H-1B cap would be set at 95,000 in 1999, 105,000 in 2000, and 115,000 for 2001. After 2001, the cap would return to 65,000. The compromise bill would prohibit companies from laying off an American worker 90 days before and 90 days after filing an H-1B petition for a foreign worker. In addition, the hiring company must agree to not place an H-1B professional in another company to fill a position that was previously held by an American who was laid off. Lastly, if any company is found in violation of these rules, it must pay a fine of $25,000 per violation and is prohibited from participating in all employment immigration programs for 2 years. The House passed HR 3736 RH on September 28, 1998.

S. 1440 - New Workers for Economic Growth Act

Sponsored by Sen. Phil Gramm (R-TX), S. 1440 would once again amend the annual cap on H-1Bs. It would increase the number of H-1Bs awarded to 200,000 for the fiscal years 2000, 2001, and 2002. It also contains a statement that the H-1B annual limitation will not pertain to two types of H-1B groups. The first group is those who have master's degrees in the specialty occupation for which they were hired and that they make more than $60,000 annually. The second group is those who have bachelor's degrees and are working or have been offered a job at an institution of higher learning. This bill was introduced on July 27, 1999 and has been currently shelved.

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SUPPORTERS OF THE INCREASED H-1B CAPS

The most obvious supporters of raising the annual H-1B caps is the high tech industry. High tech companies are the big winners and are the ones that directly benefit from the skills of these highly skilled foreign workers. Without these workers, the industry would simply not be able to stay competitive. Currently, foreign workers are a powerful force in the Silicon Valley and other high tech hot spots. Microsoft Corporation claims that over 25% of all their new hires in 1999 will be foreign nationals. The industry claims that without skilled personnel, the U.S. will not be able to maintain the economic growth it has been experiencing over the last few years. Foreign workers are a necessary and vital part of the healthy economy, who have helped the U.S. maintain its status as having the top-rated, most competitive computer industry in the world. Industry representatives also argue that the shortage of skilled professionals is a problem felt worldwide and if the U.S. does not open its doors to the "best and brightest", other countries will gladly take them. Ultimately, the use of H-1Bs not only coincides with the "melting pot" theme of the American Dream, it is also an act of patriotism because it supports the health and wealth of the U.S. economy.

The rate at which the high tech industry continues to grow implies the increasing need to find qualified professionals to staff the thousands of companies in order to keep up with the technologies. According to the Bureau of Labor Statistics, more than a million job openings in the high tech industry, which includes the programmers, computer engineers, and systems analysts, will be created between 1994 and 2005 (Dreier, 1). In Rep. David Dreier's (R-CA) prepared testimony to the House Judiciary Committee, he states that the "high tech explosion experienced in the United States has created over 4.8 million jobs since 1993 and produced an industry unemployment rate of 1.4 percent. A study done by the American Engineering Association found that between 1990 and 1996 the number of high tech degrees awarded decreased 5%, from 219,000 to 208,000. There is increasing concern and documentation that the U.S. is not producing enough college graduates with high tech degrees. Every major high tech company, including Sun Microsystems, Microsoft, Oracle, and Intel, all attest to the shortage of qualified computer professionals and adamantly support the raising of the caps on H-1B visas.

The president of the Silicon valley lobbying firm TechNet argues that for every H-1B professional brought into the U.S., at least 3 new jobs are created in sales, marketing, and manufacturing. Ultimately, the hiring of foreign computer professionals does not take away jobs from American workers, bur rather creates more jobs. One of Microsoft's recruiting directors said in an article in Business Week, "We can cut off our immigration now, and blow away one of the best industries the U.S. has going for it" (Yang, 161). Proponents of the bill say that the influx of foreign professionals boosts U.S. economy as well as the standard of living. In a letter to Vice President Al Gore regarding Clinton's threats to veto HR 3736, Intel president Craig Barrett wrote:

          My simple interpretation of the current administration's requests is that the U.S. industry will move jobs out of the U.S.
          rather than attempt to satisfy the complex proposed requirements. This means that domestic jobs will be lost, domestic
          income will be lost, and the general standard of living will decline (Freedberg, 8).

Universities are also supporters of the increased cap. The number of foreign born science and engineering graduate students has risen rapidly over the last 10 years. The National Science Foundation reports that 49% of doctoral students in computer science in 1993 were foreigners. The talent and research potential of these students are valued assets to university campuses. Unlike temporary worker visas, there are no limits or caps on student visas. Foreign students enter the U.S. on a student visa, called an F-1. Upon graduating, the F-1 visa allows the student to stay in the country for an additional year to gain "practical training." During that year, many F-1 recipients find companies that want to hire them and are willing to sponsor an H-1B petition for them. Proponents argue that since these students are being trained in American universities, why not let them contribute their knowledge in the U.S. by working for American companies.

Politicians are also taking a stand on this issue. Of course, not all politicians are supportive of this measure, and in fact many oppose it, citing that it does not protect the American worker. However, the high tech industry is today what Hollywood was ten years ago: a huge source of monetary contributions for the election season. When President Clinton was threatening to veto HR 3736, California Governor Pete Wilson (R-CA) urged Clinton to pass the bill. He posed to the president "Your veto would be interpreted as nothing less than a betrayal of your oft-stated support of our high-tech industry." The Los Angeles Times also reported that "Craig Barrett, president of Intel, faxed a terse letter to Vice President Al Gore, who has spent much time courting the high-tech industry, accusing the administration of issuing a 'new veto threat along with a long list of demands' that would impose impossible bureaucratic obstacles." (Freedberg, A3). The pressure on the politicians seems to have worked. President Clinton eventually signed the bill. Politicians have a vested interest in the high tech industry, as it not only boosts the American economy, it also places the U.S. as the forerunner for high tech research and development.

Pallab Chatterjee, president of Texas Instruments calculator and personal notebook group, who also happens to be foreign born, sums up the industry's position on the issue of hiring foreign nationals. He said "We need to be able to compete with the best research minds in the world… Our primary consideration is the capability of the researcher, not his country of origin" (Yang, 161).

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OPPONENTS OF THE INCREASED H-1B CAPS

Some argue that the technology worker shortage does not really exist. The same people vehemently oppose the legislation allowing an additional 114,000 foreign workers into the country. They claim foreign workers undercut American workers - both citizen and permanent residents - by accepting to work for lower salaries. In addition, many foreign workers tend to be young and unmarried; therefore, they are able to work long hours and do not have many personal responsibilities outside of work, such as family obligations.

Dr. Norman Matloff, a professor of computer science at the University of California at Davis argues that a shortage of qualified workers does not exist, but a shortage of cheap qualified workers does. According to his testimony to the U.S. House Judiciary Committee, he says age discrimination against American programmers over the age of 35 is very common in the computer industry. He finds that companies do not want to hire older workers because they cost more (in salary, benefits, and options), they do not have experience in the newest "hot" skills, and they have more personal responsibilities that limits the number of hours they are willing to work. A study done by Harvard economist George Borjas found that "native workers lose $133 billion a year in lower salaries because of immigrant competition; employers pocket the money, and then some, as reduced expenses" (Nelson, 5).

One of Matloff's most convincing claims is if the high tech industry is so desperate for workers, why are more older computer professionals not being hired. In fact, according to some case studies, many do not even get an interview with the companies. According to Matloff, such actions do not portray an industry so desperate for workers that it must recruit outside its own borders. Companies could choose to retrain older engineers. In an interview the author of this paper had with a current Sun Microsystems software engineer, the employee states that "any good - even decent - programmer can pick up a new language in a matter of week." However, more often than not, most companies completely discount the worker if he does not have the skill at the time of the job opening. The Sun employee also said however,

          If it was an older engineer looking for a new job, if his skills aren't very robust and cutting edge, chances are he'll be
          passed up… also, the older guys will have more experience, which equates to higher pay... so if you're going to train
          both, why bother with the old guy when you can get a young guy who'll cost a lot less and learn a lot faster?

This type of attitude is pervasive throughout the high tech industry. In another interview, this time with a human resources analyst at a medium-sized high tech firm in the Silicon Valley (which shall remain nameless at the request of the interviewee), the employee made the following remarks about hiring older engineers:

          The requirement for our company to put new products on the market is such that we need to hire people who already
          have the skill sets that we require. However, the industry-at-large wants people with the hottest skills and those people
          tend to be younger and recently graduated from college or graduate school - and many of them are not U.S. citizens.

In addition, the human resources analyst also added that older programmers tend to lose skills because many end up becoming managers after spending a few years at a particular company. Managers do not spend hours upon hours coding, but are instead in charge of overseeing projects and teams of engineers. According to the HR analyst, the problem is that as a manager whose job does not require them to do any programming or coding per se, they lose out by not gaining work experience in the hottest new skills. Instead, they are trained in management. If these managers start looking for new job opportunities, they are going to find that there are not as many jobs for managers as there are for programmers. For every one managerial position, there are at least five programming positions. Furthermore, managerial positions pay more and if a manager wants to take a job as a programmer, he will have to take a pay cut.

Several groups, including the Institute for Electrical and Electronics Engineers (IEEE) and the Software Professionals Political Action Committee (SoftPac), have been adamant opponents to the new H-1B legislation. As reported in Computer Magazine, IEEE-USA chair Joel Snyder is quoted as saying at a press conference:

          Such employers are not seeking a technical workforce in the Third World. They want a high tech workforce in the
          United States that will accept Third World wages and working conditions (Sterlicci, 10).

In 1996, the Washington Post reported that an audit by the Labor Department's inspector general found that there was rampant violations of hiring practices in the industry. In order to hire an H-1B professional, the company is required to hire any qualified American citizens or permanent residents before hiring a foreign national. Labor Department regulations dictates that if an American is qualified for the position, then he/she must be given an offer before an offer can be given to the foreign national. However, Catherine Yang reports in a Business Week article that "it's widely known that employers often get Labor Dept. approval by tailoring job descriptions to a particular foreign candidate to make sure that no U.S. candidate can fill the slot (Yang, 161). If this is indeed the case, then foreign nationals pose a serious threat to American workers. If there was indeed a shortage, there would be no need to custom-tailor job descriptions.

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ANALYSIS OF THE PROBLEM

Obviously, the two sides of the issue present two very contrasted pictures of the high tech industry. On one hand, we have the high tech companies crying out that there simply are not enough qualified professionals to fill all the open positions in the industry. On the other hand, there are aging engineers and labor groups crying foul, claiming the industry is discriminating against Americans because immigrants will work more hours for less pay.

The one thing both sides agree on is the role and importance of education. Both advocates and opponents of the current legislation regarding temporary work visas recognize that the U.S. needs to strengthen its science education program at the primary and secondary levels. However, where advocates agree with this statement, opponents are more likely to regard the issue of retraining older engineers as equally significant, if not more. In either case, the strengthening of the science education system at the primary and secondary levels and the retraining of American citizens or permanent residents seem to be a long term solution. However, the worker shortage is a problem of the present which , for the time being, needs short term solutions.

Both sides present valid arguments and not so valid arguments - which is probably why this issue is so controversial. The high tech industry really is experiencing a difficult time hiring qualified professionals. Some would argue that they are being too picky and only want cheap labor. However, why would any corporation hire a person who does not possess the skills required for the position - shortage or not? In the 80s and early 90s, there was a nurse shortage in the U.S. (which resulted in the creation of the H1A visa category). It is fair to say that no hospital would hire a nurse who did not already have the skills necessary to do the job. The same argument can be applied to the high tech industry, or any industry for that fact. A field that hired untrained professionals is teaching - as documented by the emergency teaching credential introduced in the California. Such a program by no means has improved the education system in the state. High tech industries are indeed picky about who they hire because the market is so competitive and the technologies are changing so quickly.

Foreign workers undoubtedly contribute to the booming economy. This is one of the strongest arguments advocates have to support the current legislation. However, the United States government has a certain obligation to protect its citizens from being undercut. It is common in this day and age to see manufacturing jobs going to Third World countries because, quite honestly, it is much cheaper. This problem is pervasive throughout the business world. The U.S. government must balance out the profit-focused single-mindedness of the high tech corporations by protecting the livelihoods of it citizens who are overlooked in the name of profit.

Most high tech workers want to be in the U.S. As Theo Omtzigt, a Dutch born engineer at Intel, said "If you want to contribute to the knowledge of computer design, there's only one country where its leading-edge, and that's the U.S" (Yang, 161). The U.S. definitely has a monopoly of talent because it is a magnet for talent. This makes it difficult for other countries to compete with the U.S. when all the engineers flock to the U.S., knowing that most companies will sponsor an H-1B for them.

Who's to say which side is portraying the truth, or even if either side is? The underlying issues here is money: how to make more of it; how to spend less of it. When considering this issue, we must recognize that each side is attempting to vilify the other and that both sides are prone to exaggeration. The bottom line is this: Yes, these is a labor shortage of qualified high tech professionals. And on the other hand, yes, older, mid-level programmers tend to be excluded from being considered for the so-called plethora of jobs in high tech, as many insiders will admit. These are two truths which exist on opposite ends of the spectrum. Yet, both need to be considered if any attempt is to be made to resolve the situation.

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A PROPOSED SOLUTION

Raising the H1B cap is only a short term solution to a long term problem. The U.S. high tech industry has already tapped the programming talents of India and the Philippines. However, foreign nationals are still a vital part of this industry and will continue to be needed well into the next millennium. The U.S., however, is also sitting on a treasure trove of untapped talent in their older programmers. What has been proposed is the implementation of onsite retraining programs offered by the high tech firms themselves to retrain workers. By training these workers on site, the workers can then be integrated into the company once they have mastered the skills needed for the position sought. However, in return for training, the workers may have to take a pay cut. The Chicago Sun Times reports that Microsoft and the Department of Defense have started similar programs.

The other long term solution that has been proposed is improving science education in this country. By improving the science education program in this country, supporters and opponents alike hope that more people will be more likely to become scientists and engineers. According to Gay Vencill, Director of Human Resources for Dallas Semiconductor Corporation,

          An educated workforce is critical to the success of technology companies. And, motivation to enter a field starts at the
          K-12 level. We must convince our children that a career in high tech is an exciting and rewarding field. [Taken from
          "Valley firms give support to hiring legal immigrants" PR Newswire, 10 Feb. 1997]

Up to this point, however, the science program has been seriously lacking, as evidenced by the difficulty many schools have finding math and science teachers and the low scores American students receive on standardized tests.

The exclusion of immigrants, however, is not the answer. By refusing entry to these talented people, we may be closing the door on some of the greatest minds in the world. Case in point: Andrew Grove. He is a Hungarian immigrant and co-founder of Intel Corporation. Undoubtedly he is one of the greatest minds in the high tech industry and without his contributions, the high tech industry would not be where it is today.

The key to the success of this plan is that both the high tech industry and the labor groups work amicably to agree upon what is best for the American worker as well as the American economy. Both sides must be willing to compromise, be willing to take some hits, in order for any such plan to work. Without cooperation, this problem will continue to cause controversy as long as the high tech industry is riding the crest of success.

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BIBLIOGRAPHY [back to top]

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