Legislation, Intergovernmental and Veterans Relations Committee
Board of Commissioners of Cook County
September 18, 2007
Jessica M. Vaughan
Senior Policy Analyst, Center for Immigration Studies
Thank you for the opportunity to appear before this distinguished body to discuss the H-1B and L-1 professional guestworker programs and their effect on employment opportunities for current and future workers in certain key employment sectors. While the federal government is ultimately responsible for formulating visa policy, the effects are felt keenly at the local level. It is local government that must contend with the economic and labor market impact of these programs, and local officials have a duty to let federal officials know how federal policies affect the lives of individuals in their jurisdiction.
Our research has shown that continued heavy reliance on the H-1B and L-1 guestworker programs by employers in certain sectors especially information technology, but also higher education, nursing, teaching, and other professional jobs diminishes opportunities for U.S. workers in those fields, and may be discouraging young people from considering some of those careers. In some of the job sectors where guestworkers are prevalent, such as information technology and higher education, the availability of guestworkers means that employers have little incentive to improve compensation or boost representation of women, blacks, and Hispanics, who are already noticeably less numerous in those occupations.
H-1B (Specialty workers)
The professional guestworker program known as H-1B was established to give U.S. companies access to foreign talent on a temporary basis as a supplement to the U.S. workforce and to provide a means for companies to attract uniquely skilled or qualified workers. It was sold to Congress and the public as a way to alleviate shortages of workers in certain sectors. The visas are good for a period of up to three years, with possible renewal for a second three-year period.
However, the law does not require the employer/sponsor to demonstrate that there is a shortage of U.S. workers for that job, or that it tried and failed to find a qualified U.S. worker. Many openings are never advertised or offered to U.S. workers. Even more startling, as documented by the advocacy group Bright Future Jobs, some companies are openly conducting H-1B-only recruiting campaigns -- literally advertising that U.S. citizens and legal immigrant workers need not apply. The Labor Department maintains that this practice is legal.
H-1B workers must have and must be filling a job that requires at least a bachelor's degree or the equivalent experience. However, they need not demonstrate any special expertise nor fill any exotic need. In fact, more than half of the jobs filled by H-1B workers in 2005 were classified as entry level or trainee by the employer on the application. Though they are often described by industry representatives as the best and the brightest, in fact, most H-1B workers are relatively young. Since sixty-five percent are aged 25-34, few of them realistically can be considered to have demonstrated exceptional professional accomplishment. Forty-five percent have no more than a bachelor's degree, while only five percent have a doctorate. The median salary offered is $55,000 per year. (See Characteristics of Specialty Occupation Workers (H-1B): Fiscal Year 2005, Department of Homeland Security, http://www.dhs.gov/ximgtn/statistics/.) Positions for which Chicago-area employers recently sought H-1B workers include such ordinary job titles as Account Executive, Client Service Associate, Copywriter, Financial Services Sales Representative, Loan Officer, and so on. No one can credibly claim that these are jobs Americans can't or won't do.
The law does require companies to promise that they will pay the guestworker what is known as the prevailing wage a salary that is supposed to be comparable to what a U.S. worker would earn. This regulation is intended to discourage employers from hiring guestworkers at lower salaries.
Yet these regulations have proven to be ineffective. Department of Labor data show that employers are offering to pay H-1B workers an average of $16,000 less per year than U.S. computer workers in the same location and job. (See Low Salaries for Low Skills: Wages and Skill Levels for H-1B Computer Workers, 2005, by John Miano, Center for Immigration Studies, http://www.cis.org/sites/cis.org/files/articles/2007/back407.html.)
Employers need only promise on their application that they will pay the prevailing wage and that the workers they sponsor are not replacing laid off U.S. workers. No one is checking up on these claims. The Department of Labor has no authority to investigate applications, unless they receive a complaint from a worker. They do not check to see if the business really exists, if the job opening exists, or if the salary offered is actually paid. The process is automated; as long as the employer signs the form and includes a check, the application is approved.
One regulatory mechanism that does help to control use of the program is the statutory cap on the number of visas that can be issued to guestworkers sponsored by private companies. The cap is now set at 65,000 per year. Employers that are institutions of higher education, non-profits or government research organizations are exempt from the cap. Visas sponsored by those employers make up 44 percent of the total. In addition, a recent amendment to the law provides for an additional 20,000 visas each year for graduates of U.S. master's and Ph.D. degree programs, effectively providing that many more visas to private employers subject to the cap. The total number of applications approved for 2005 (the most recent year for which statistics are available) was nearly 117,000.
L-1 Visas (Intracompany Transferees)
The L-1 visa was created to allow multinational companies to transfer key executives and managers from overseas offices to the United States for a temporary assignment. As usage of the H-1B visa grew in the late 1990s, putting pressure on the cap, employers began to use the L-1 visa as an alternative vehicle for guestworkers. Technology services companies commonly transferred employees from overseas to sites in the United States to perform routine work at the client's job site. Some U.S. companies replaced entire back office operations staffed by U.S. workers with contractors holding L-1 visas who were employed by service providers to work on the client's premises.
The L-1 visa program has no cap on issuances, no prevailing wage requirement, and no attestation as to working conditions or related layoffs. Recent reforms have prohibited the practice of sponsoring contractors to perform routine work at the client's location.
- 116,927 total H-1B applications were approved in 2005.
- 18,000 H-1B workers were admitted to Illinois in 2006 (not an exact proxy for individuals).
- 13,385 L-1 workers were admitted to Illinois in 2006 (not an exact proxy for individuals).
- It is estimated that there are roughly 500,000-700,000 H-1B guestworkers currently living in the United States.
- 43 % of H-1B workers hold computer-related jobs.
- 11 % of H-1B visas are for workers in higher education.
- 56% of H-1B visas in computer occupations were for positions classified as entry level or trainee in 2005.
Although the programs are open to employers in all sectors, H-1B and L-1 visas are most commonly used to fill information technology jobs. This important job sector has experienced significant job losses since the early part of the decade, with nearly 400,000 jobs evaporating nationwide between 2001 and 2004, with only modest recovery in recent months. In the Chicago metropolitan area, more than 10,000 IT jobs were lost, with only 2,000 recovered in the 2004-05 period. (See Information Technology Labor Markets: Rebounding, But Slowly, by Snigdha Srivastava and Nik Theodore, Center for Urban Economic Development, Chicago, Ill., June 2006.) Unemployment in this sector has been somewhat higher than unemployment overall. Over the same time period that so many jobs in IT disappeared, 2001-2005, more than 600,000 new H-1B visas were approved, with an estimated 250,000 going to IT workers.
Under current conditions, it is hard to justify continuing to operate a large-scale guestworker program that enables U.S. employers to fill the relatively limited number of new jobs without some incentive or outright requirement to cast down their bucket where they are, to borrow the phrase of Booker T. Washington. Guestworker programs may work as a short-term solution to real labor shortages. But they must be carefully crafted so as not to foster dependency on the part of employers. The long-term solution for critical industries has to be to enlarge the pipeline of home-grown workers, or to nudge employers to adapt in other ways.
If employers are allowed to bypass U.S workers in filling large numbers of jobs concentrated in certain sectors, young people will start to self-select themselves out of those markets altogether by choosing fields of study where the employment prospects seem brighter. While I am not aware of any large scale studies or analyses of enrollment data, certain universities have reported that enrollment of U.S. students in science and technology majors has dropped noticeably in recent years.
This phenomenon should be of real concern to anyone troubled by the fact that women and minorities are already significantly less numerous in science and technology occupations and university teaching slots. According to the latest Bureau of Labor Statistics data, women hold roughly 27% of the computer jobs, while blacks hold six to seven percent, and Hispanics hold five percent. Representation is even worse at the major research universities a 2005 study found that women made up 11% of the computer science faculty at the 50 largest U.S. research universities. There were only 4 black computer science professors (less than 1%) and 17 Hispanic computer science professors (about 1%). (See A National Analysis of Diversity in Science and Engineering Faculties at Research Universities, by Donna J. Nelson, University of Oklahoma, January, 2005.) While the presence of guestworkers and international faculty may not be directly causing displacement of underrepresented groups (and brings many benefits to the campus), it is surely not helping this problem either.
I believe that we should continue to have professional guestworker programs, though operated on a smaller scale and with better oversight and regulation, because they are very useful to U.S. employers and give them access to the best talent the world has to offer. The needed reforms are not complicated:
- Give the federal agencies the authority, tools and resources they need to eliminate fraud, so that illegitimate applications are more easily rejected at the stage of the employer petition, and unsuspecting applicants from overseas are less likely to be swindled.
- Provide the authority and resources for the Department of Labor to audit and investigate employers and applications to ensure compliance with prevailing wage and recruiting rules.
- Forbid employers from denying opportunities to U.S. workers. Merely posting a notice of an H-1B application at the job site, as per the current requirement, is not sufficient to attract qualified U.S. workers.
- The number of guestworkers each employer may sponsor should be limited, particularly for entry-level and trainee positions.
- The annual cap on issuances should not be increased without enacting oversight and enforcement reforms and per-employer limits.
- Guestworker provisions should not be included in international trade agreements, so that Congress can continue to exercise its authority over these matters with the interests of workers in mind.
- States and localities should ensure that employers in their respective jurisdictions are complying with state and local anti-discrimination laws.
Respectfully submitted by:
Jessica M. Vaughan
Senior Policy Analyst
Center for Immigration Studies