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Dr. Norm Matloff:Lofgren Bill A Big Step Backward
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June 15, 2011, 05:56 PM
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Dr. Norm Matloff writes

Lofgren bill a big step backward

You can find (an outline) of the text of the bill here.

As usual, "the devil is in the details," but even from the vague descriptions in the outline, it`s clear where the bill is going. And the details are probably even worse.

I`ve been writing for a while now that the thinking in DC (and, unfortunately, among some H-1B reform activists) is that the mainstream American firms (to be referred here as the "Intels") are the Good Guys while the Indian bodyshop firms (the "Infosyses") are the Bad Guys. In other words, the Infosyses abuse the H-1B system while the Intels are using it responsibly, so the argument goes.

Sen. Schumer put this thinking into action last year in a bill that the Indian firms felt targeted them, in a punitive manner. I sided with the Indian firms  here and here.

Among other things, I wrote that I`d previously "shown the irresponsible behavior in foreign labor programs of Microsoft, Cisco, the Bank of America etc." It`s not a Good Guy/Bad Guy dichotomy at all; basically, H-1B and employer-sponsored green cards are abused across the board.

Some readers here will recall the notorious Cisco case, for instance, in which an American network engineer responded to a Cisco job ad. The person the ad directed applicants to turned out to be a clerk in an immigration law firm (Fragomen, the nation`s largest), not Cisco HR. The point was apparently to screen OUT the American applicants, as Cisco was sponsoring a foreign worker for a green card. There was then a DOL investigation, which of course found that Fragomen had done nothing illegal. (This wasn`t corruption in DOL, but rather just a reflection once again of the huge loopholes in the law and regulations.)

My point, again, is that the Intels are just as culpable as the Infosyses.

I`ve been predicting that more and more legislation, though, would have this Good Guy/Bad Guy theme, and Lofgren`s bill in particular has this trait. It actually creates a formal Good Guy category, named "Established U.S. Recruiter." The bill would put such firms on a fast track, subject to fewer rules. It`s clear from the definition (Sec. 301) that this category is the Intels category, with the implication that the Infosyses are the ones who need rules.

So, here is the first sense in which the Lofgren bill would be a major step backward: The loopholes in the system are already bad enough as it is, but with Lofgren there would in effect be even more loopholes for the Intels to use. And the Infosyses would essentially be able to do business as usual.

Sec. 301 concerns Labor Certification, the process under which employers who sponsor foreign workers for green cards must show that no Americans were qualified for the job. Under the current policy, the term used is "minimally qualified," which Lofgren would change to the more stringent "equally qualified." See here. While this might at first seem reasonable to nontechies, the problem is that even under the current policy employers define "minimally qualified" to carry so many conditions that the foreign worker in question is the only one who meets the requirements. If the employer does this in too transparent a manner, the DOL will object, but it can be done subtlely. With Lofgren, employers and their immigration lawyers would find it even easier to do this. Thus, another step backward.

As many of you know, the H-1B visa, unless green cards, does not have any requirement to give U.S. citizens and permanent residents hiring priority. Lofgren`s bill claims to add such a requirement, but inspection of the provision reveals that it would wind up applying largely to the Infosyses, very similar to what those employers go through today as H-1B-dependent employers. So, not a step backward, but pretty much the status quo in terms of actual impact.

The Orwellian-named Title IV, Protecting American Workers, may be the most misleading part of the bill, particularly Sec.401, Strengthening the Prevailing Wage System to Protect American Workers. The current four-level prevailing wage system would become a three-level system under the bill. (Note by the way that the prevailing wage requirement is the same for both H-1B and green cards.)

Again, this is aimed at the Infosyses. Granted, they do currently make more use of Level I than the Intels do, but that is because the Intels tend to hire more people with Master`s degrees. But the Intels underpay Master`s people just like the Infosyses underpay Bachelor`s degree holders. So, reducing the number of prevailing wage levels to three does not in itself prevent abuse.

But even more interesting is the way Lofgren defines her new three levels. Her bill states that the current Level I is defined to be the mean of the bottom 1/3 of wages; she wants the new Level I to make that the mean of the bottom 2/3.

Actually, existing policy does NOT define the levels by position in the statistical distribution of wages. Instead, the definitions are in terms of degree of responsibility that the job entails.

In any event, I went to the OES government site used for these things,[AIP file] and did a quick calculation for software engineers. It turned out that the cumulative distribution almost perfectly fit a straight line, so I interpolated for the 2/3 point, and then found the mean of the bottom 2/3. We can only take this as a rough first estimate, but the number I came up with after all this was $55,935.

Let`s put this number in perspective, in three different ways:

  • The mean starting salary for new computer science graduates is currently $63,017. See http://www.naceweb.org/Press/Releases/ Top-Paid_Majors_for_the_Class_of_2011.aspx So, Lofgren would be happy to give an H-1B visa or green card to a foreign worker making less than the average for new grads; and remember, the foreign worker typically has a couple of years of experience in addition to the degree.
  • In 2009, the mean wage in the computer area EVEN FOR H-1BS was $74,000. See DOL`s "Annual Report on Characteristics of Specialty. Occupation Workers (H-1B) for Fiscal Year 2009." So Lofgren would be happy to give an H-1B visa or green card to a foreign worker whose wage is low even by foreign-worker standards.
  • The Durbin/Grassley bill, which I`ve endorsed, would require the employer to pay the foreign worker the overall median for the occupation, in this case $87,790 (same OES data), far higher than Lofgren`s Level I.

Any way you slice it, the Lofgren definition of prevailing wage would quite generous to employers, including the Infosyses. True, Lofgren`s bill might force a couple of mom-and-pop H-1B bodyshops to stop paying $35,000 for a programmer, but those cases are rare. The net effect is that Infosys, TCS, Wipro and so on would still conduct business as usual were Lofgren`s bill enacted.

The bill would grant automatic green cards to foreign students who earn advanced degrees in STEM at "certain U.S. universities." That might sound like MIT, but it turns out to mean first any research university, which is already extremely broad, and then adds others as well. Interestingly, it refers to any graduate of such university as "the best and the brightest." So any Master`s student from a bottom-tier school counts as "best/brightest," as long as the school does research. And of course once the industry lobbyists got through with it, the door would be wide open.

I know the autogreen card notion appeals to many anti-H-1B activists, on the grounds that with green cards these workers can`t be exploited. But they still would be YOUNG, and as I`ve often stated, H-1B is more than anything about AGE. The employers want autogreen as a way to swell the youth labor market, because younger workers are cheaper, both in wages and benefits. I`ve never understood why many of the activists cannot grasp this obvious fact. If you are age 35 and think that autogreen is going to result in more jobs being available to you, I`m sorry, but you are sadly mistaken.

Of course, the idea of giving an automatic green card for anything invites rampant abuse, creating its own demand. Among other things it would make U.S. grad programs even more disprortionately consist of foreign students than today. I`ve written that the current situation is itself due to the influx of foreign students holding down grad-degree salaries and also graduate student stipends, both of which have driven away American students from graduate study. To add this new incentive would be unconscionable.

There are some other provisions, including one or two that I actually do like, but they are lost in a vast array of smoke and mirrors of faux "reforms" that would not only not solve the problems, but actually make things worse. Lofgren`s creation is the worst major bill I`ve seen on this topic.