Saturday, February 11, 2006

The Global Challenge - Fairness for All (Part 1 of 2)

How does one create a trade and immigration policy that is fair for foreign workers, American workers, and still doesn't stifle global trade and harm business?

This is a tough question but the answer is based upon a simple concept: fundemental fairness. In this post I will tackle the big picture because this is what we most often lose sight of.

First, let's start with the guest worker programs. There are two major programs which are popular in the IT profession: the H1-B and L1 visas. The H1-B is a company sponsored skilled worker visa and the L1 is an intra-company transfer.

The H1-B was created in the early 90s for the purpose of meeting a demand not met by the local workforce. This is a skilled worker visa that has transformed into a "cheap-labor" visa, however that is not to say that the workers who arrive on this visa are not skilled. Recent studies show that H1-B workers are paid dramatically less than American workers with similar skills. This visa currently has a cap of 85,000 per year, 20,000 of which are reserved for graduates of U.S. universities.

The L1 visa is an intra-company visa and is intended to allow multi-national corporations the ability to move employees to where they are most needed. This visa has some problems and had become an alternative to the H1-B which has a cap. Although not intended to be a tool for "body shops" or companies that contract out labor, it has become that.

Fixing the H1-B and L1 visa sytems are a simple task. First, let's recall their purpose: meet a demand not met by American workers. The IT lobby was projecting 2.5 million new IT jobs in the late 90s. Since 2000, we have lost 2.6% of all IT jobs. We have lost nearly 7% of all software development jobs. Additionally, unemployment in IT has been above average for the past five years as well. Can we reasonably argue a shortage of local talent given a net loss of jobs and higher than average unemployment? I would argue the answer is a clear and resounding no.

Given the purpose of the H1-B and L1 and how the visas have been used to offshore jobs to cheap foreign markets we should make sure that American companies benefit from the program as opposed to foreign companies, while at the same time add protections for the American workers. The following five steps are simple and would help level the playing field:


  • Prohibit companies from using the L1 and H1-B visa to outplace workers; Guest workers should work within the facilities of the company which sponsors them. In short, no body-shops.
  • Limit the number of H1-B and L1 visas available to a single employer. The H1-B and L1 visas should supplement and not replace American workers. Companies like Infosys and other contractors have virtually zero American employees and this is not fair.
  • The H1-B and L1 visa should have more restrictive wage requirements. They should be used, once again, for skilled labor as opposed to cheap labor. The average pay for Americans in the IT occupation is $62,000 per year. This should be the "minimum wage" for H1-B and L1 workers in the IT field.
  • The H1-B and L1 visa should have more restrictive experience requirements. The vast majority of H1-B visa holders are in their early twenties and just out of college with no work experience. I can't imagine that they are able to fill jobs that American college graduates and entry level IT workers are not able to. Five years of experience in the same occupation should be the starting point, or in lieu of that a graduate level degree or higher from an accredited U.S. university.
  • Enforcement. Currently there is very little enforcement and companies are free to abuse the system, foreign guest workers, and displace American citizens with very little risk. The corporations with the highest number of H1-B and L1 visas should be required to conduct independent audits by a licensed firm and attest that they are following the law. This enforcement should be paid for by higher processing fees.

These are five simple steps based on fundemental fairness. These steps will allow more companies to have access to H1-B workers, and will insure that guest workers are treated more fairly because of enforcement of current laws protecting them. Additionally, this plan would shift the program back to what it was designed for and fill a demand not met by American workers. It also addresses the issue of offshore outsourcing; although we can't ban that practice our guest worker programs certainly should not subsidize it.

To summarize the five point plan, it would ban outplacement of H1-B and L1 visa holders, limit the numbers of H1-B and L-1 visas a single company may sponsor, have tighter restrictions on wages and experience, and finally provide for enforcement of the law which is paid for through higher processing fees. I welcome your comments.

I have reached my one-day word limit for my blog. Stay tuned for my take on trade.

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