The Great Labor Shortage Lie

[donsu]

http://www.workingforchange.com/blog/index.cfm?mode=entry&entry=DC1A3A96-E0C3-F084-D94BE9DE00D18CA0


I've said many times before that the best place for information is the business press. The material is written for people who need cold, hard information in order to make money, rather than for the professional political pontificators who are aroused by Beltway spin. The only challenge when reading the business press is to get through the corporate PR. But if you have the patience, you will find out what's really going on and who is lying to you. This week's piece in Businessweek on the job market is a good example.
The article begins with a sensationalist headline that only Bill Gates and Tom Friedman could love: "Where Are All The Workers? Companies worldwide are suddenly scrambling to manage a labor crunch." This is the public rationale from corporate executives (especially in the high-tech industries) for massive job outsourcing and exploitation of the H-1B program: We can't find the workers we need.

We are expected, for instance, to ignore academic studies published recently by the National Academy of Sciences showing that, in fact, there is no shortage of high-tech engineers here in America. We are expected to ignore the data showing that companies are using the H-1B program to drive down domestic workers' wages by forcing them into competition with imported workers from impoverished countries. We are expected, in short, to believe that layoffs, wage stagnation and pension/health care cutbacks have absolutely nothing to do with corporate executives trying to line their own pockets, and everything to do with workers themselves - and we are expected to believe all this at the very same time new government data shows that the share of national income going to wages is at a record low, and the share going to corporate profits is at a record high.

Yet a few paragraphs into the Businessweek article, the real story starts to trickle out:

"A global labor crunch, already being felt by some employers, appears to have intensified in recent months. That's in spite of widely publicized layoffs, including Citigroup's plans to shed as many as 15,000 staffers... Corporations are determined to keep labor costs under control, so they're reaching deeper into their bag of tricks...Some are lowering their standards for new hires or moving operations to virgin territories other outsourcers haven't discovered... Economists, of course, will tell you there's no such thing as a labor shortage. From a worker's viewpoint, many so-called shortages could quickly be solved if employers were to offer more money. And worldwide, millions of people still can't find jobs. The strongest evidence that there's no general shortage today is that overall worker pay has barely outpaced inflation."

-snip-

So the next time you flip on cable TV and see a pinstriped executive bemoaning labor shortages or a craven right-wing politician portraying their bought-off positions on economic issues as the channeling of Cesar Chavez's agenda, just remember: Buried in the business press the real facts about the Great Labor Shortage Lie are right there for everyone to see.
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[tnlurker]

1. That is exactly right.

If there was a labor shortage wages would increase.

[NormanYorkstein]

20. why not cancel the H1B visa program?

Is there any legitimate reason for it? I can't see one?

[cascadiance]

23. If the rules were cleaned up so that they enforced completely what it is *supposed* to do...

... which is to offer companies an ability to hire certain individuals with a narrow range of specialized expertise from another country that we don't have here domestically, then I think it would be OK. I would think that it would be a very SMALL number of workers that are hired for that reason, and I think that domestic companies in those instances would be helped with certain kinds of expertise that they might not otherwise get. The problem is that it isn't used for that purpose, and the loopholes are too great and it is made to be used to just hire cheaper more "indentured servant" style labor here.

Perhaps threaten to cancel it altogether unless someone can get a set of rules (AND enforcement mechanisms) that would guarantee for the most part that the intent isn't abused, then it would be OK to stay on. I really can think of NO reason to raise the cap though, which is what they are asking to do, other than to increase the ability for companies to drive down wages with loopholes.

[NormanYorkstein]

25. yes, why not cancel it now

Regardless of what it's "supposed" to do all it really does is replace US citizens with foreign workers brought in cheap to lower wages. There's no need for it - plenty of American qualified workers need jobs. Anyone is free to apply for citizenship and have all the rights and privileges of anyone else.

So let's just cancel H1B period, it's pointless.

[hootinholler]

2. Absolutely...

I'm working for about 30% less than I made in 2002, commuting 100% farther (90mi/day) and happy to be employed enough to live paycheck to paycheck.

-Hoot

[earth mom]

9. They've got you exactly where they want you to be...

making just enough to survive, but not enough to break out and give em all the finger. I well know the feeling as do the majority of people in this country. :(

[hootinholler]

17. "they" really don't give a flying F about my situation.

Now if I knew who exactly they were I could kick their asses.

-Hoot

[earth mom]

24. That's why we need more Unions, so they can do the a$$ kicking for us all. nt

[musette_sf]

3. K&R

:kick:

[treestar]

4. It takes so much time, and expense, and trouble to get an H-1B

that there is no way they would prefer them to equally qualified Americans. You can hire an American without having to file the forms, pay the huge fees, and deal with the hassle of proving the case for an H-1B.

If you have an H-1B, you have to pay the prevailing wage - if you don't you are liable for fines. You can pay an American below the prevailing wage if you can get them to work for it, but you can't do that to an H-1B without breaking the law. If you try to extend that H-1B you will be asked for proof (accounting statements, tax returns, etc.) that you paid them the prevailing wage. If you have too many H-1bs, you are deemed "H-lb dependent" and subject to a whole new raft of restrictions.

H-1b numbers for the year were used up overnight.

This article is simply false.

H-1bs don't hurt anybody. If they are in the U.S., they buy their cars, houses, etc. in the U.S. and that contributes to some American's job selling cars, selling real estate, etc. Further the expansion of the company caused by their employment would result in other jobs - those that support them, etc.

[stompk]

6. If you have an H-1B, you have to pay the prevailing wage

no, what they do is pay them far less than Americans would earn, and then claim that the Americans are overpaid. Paying $3500 for paperwork is nothing when you save $20-$30k a year on salaries and benefits.

[cascadiance]

11. They've had other tricks they've used for decades to combat this...

I was witness to this when working in Silicon Valley in the trenches well over 10 years ago. The way they work around this is that a contracting agency will hire exclusively H-1B visa workers. Then they don't have to worry about having any "comparable workers" in their employ that they have to use as a basis for what they have to pay H-1B visa people, so therefore the agency can pay whatever they want to get people over here. They then offer these workers to the Sun's, HP's, etc. of the world as a *service* not as "contract employees" and these companies then they feel there is less legal basis to "measure" these contractors' pay versus the pay of permanent workers at those companies. I remember managers talking about this and joking about it when they were trying to keep their budgets low by hiring these folks.

This "equivalent wage" crap is just window dressing and a rule that doesn't have useful teeth in it to allow it to have any real effect. If you look at other studies comparing cumulative statistics of what these people get paid versus American workers, there is a substantial lower amount they get paid! That's what shows what is really going on.

[WilmywoodNCparalegal]

21. Uh? Any business that employs

over a certain percentage of H-1B workers will have to go through many more hoops before it can file for additional H-1B petitions, as a previous poster described.

I am not disputing what you witnessed. I've been in business immigration for nearly a decade and I am now working for a large multinational IT company known by its acronym (eye bee am). The number of H-1B visas is very very small for our company. In fact, we have very few people who work in immigration for the company. My company prefers by a large margin the L visas: cheaper, no need to abide to a prevailing wage and easier to obtain.

[cascadiance]

22. Rules perhaps have changed since then somewhat...

But I'm sure there's just as many loopholes now as there were then. And the key words that they made a point of working around was "a business that employs over a certain percentage of H-1B workers". If the company needing the work done contracts out a *service* instead of contracting employees, they don't show up on their books as H-1B employees, since that company (say Sun or HP) hired company X to do a service for them, not hired a bunch of contractors from company X. That was the key way they used then to work around this language. That was over ten years ago. I don't know if they've cleaned up that loophole since then, but seeing graphs of recent data on comparative salaries of what these guys get with what domestic employees get, there still is quite a bit of difference, which is explained by loopholes like this or others that still exist.

And if some companies do pay really the equivalent to what domestic employees would get paid and do what the law intends them to do because they haven't been able to find experience in a certain area domestically, then I'm all for them doing that. The problem is that that sort of hiring I believe is a very small fraction of what is really going on with H-1B visa hires. The current cap limit on H-1B visas should be able to encompass that sort of hiring. But there is still too much abuse that causes the cap to get used up quickly at the beginning of the year. Most of these companies abusing it are doing it to try and artificially lower their labor costs. And that sort of abuse needs to be stopped instead of fueled by lobbyists buying off congressmen to raise H-1B caps.

[newyawker99]

18. Hi stompk!!

Welcome to DU!! :toast:

[MadHound]

12. Denial ain't just a river friend

H1-Bs are indeed forcing wages down in the US, especially in the highly skilled labor pool While there are the prevalent wage laws that you mentioned, those are gotten around in a number of ways. The most significant way that this is gotten around is by firing older, experienced workers, and replacing them with younger H1-B workers. Cost less in wages and benefits. That is why there is a glut of older and middle aged tech workers out there unable to find a job. They've been replaced by younger foreign tech workers who cost the company less in wages(since they are just entering the field) and benefits.

Oh, and don't think that a lot of these people are dropping a lot of their cash here in the states. I seriously doubt that many of them are going to buy a car, much less a house, since their visa expires in three years. Generally they rent apartments, with a roomie or two, use mass transit, buy few material goods, and send a lot of money offshore, back to home, where it does us little good. Compare that with an American worker who will indeed buy a car, house and material goods since this is his/her place of permanent residence.

Sorry but the H1-B visa merry-go-round only benefits corporate America, while screwing over everybody else.

[TahitiNut]

16. Amen. And the mantra is "you're overqualified."

I've lived this firsthand for over 20 years and have seen it practiced in all its forms in Silicon Valley, both as a job-seeker and as a hiring manager. The abuses of the H-1B (and other) visa 'system' are legion and the loopholes make it look like Swiss Cheese with gas.

[cascadiance]

13. There are ways to get around the "prevailing wage" rule... Read my other post here.

Also, when you have someone from India here who's feeding and taking care of their family back home in India that is paying a 10th of the cost of living expenses we have here, it is NOT an equivalent situation, no matter how much they themselves pay to live here.

We have people that have to pay living expenses for their families HERE! People that are citizens and here PERMANENTLY have to plan for living here for the long haul and be able to live in this environment when they retire. If these folks working for H-1B visas are working here temporarily at their working prime, they are still getting a windfall for themselves that they build up a large savings for a few years here (as well as experience) which they take back with them and live quite well as they prepare to retire there at a fraction of the cost of what it would take to live here.

The same is going on with Mexican illegal immigrants here. Statistics show that the majority of the money that fuels their gross national product in Mexico is transfer payments from those working up here that gets sent down to their families in Mexico. Same equation, even if they aren't trained in the same way that Indians are for high tech jobs on H-1B visas here.

It IS rather interesting that the McCain immigration bill, in addition to giving us a guest worker program seeks to remove caps on the H-1B Visa program. I'm sorry, but I DON'T buy that there aren't enough people here that would be interesting a career in high tech purely for sentimental reasons. They see the writing on the wall of how much is being outsourced both with overseas operations and underpaid H-1B visas and don't feel it is worth their time and effort to invest in a college education in that arena. If I had to face the decisions kids have to face today, I might also have second thoughts about entering the profession, much as I like what I'm doing now.

And also, our education systems are NOT equivalent in terms of opportunity for our kids. Indians get their education fully paid for all the way through an UNDERGRADUATE DEGREE in college. Their big decision is whether or not to pursue a graduate degree. If you are a company, who would you hire? Someone with an undergraduate degree in computer science (even if it is in India), or someone with just a high school education here? Kids here are already behind the eight ball when they leave high school!

[FormerDem06]

14. When you fire a 90K/year software architect and replace him with a Programmer 1

The prevailing wage for a Programmer 1 is 55K a year. But they are bringing in an Indian with a masters and then handing him all of the work of the laid off architect.

This is how my clients (mostly banks) have been handling this for years.

The good news is that Indian wages are rising at about 30% a year. 10 years from now an Indian architect will make 70K and it will all level out. Then they will look to China where their government will FORCE their folks to work for 25K a year and then the corporatists will be happy.

Our consulting firm employs the brightest of the bright, most make 6 figures for what we do. BUT our clients are jettisoning their American folks so fast we can't even hire them all, and L and H class visa folks are rapidly filling their ranks.

[TahitiNut]

15. So sayeth the newsletter from corporate Disneyland.

Your faith in the law is heartwarming ... it's really too bad that it's not enforced and actually has little chance of being enforced.

[NormanYorkstein]

26. nonsense - it's easy for big companies to do it

I know of a company with 300 employees - that's small - who has about 40 H1Bs. If a small company of 300 can get those, how much easier for the big companies?

H1B should be canceled, there is no legitimate reason for it.

[DAMANgoldberg]

5. K&R

in my industry, the * administration is trying to drive down wages and load rates by allowing Mexican trucks to run OTR (Over The Road 48 states), knowing that most of them would be running afoul of the HOS (Hours of Service) laws, CVSA (Commerical Vehicle Safety Alliance) regulations, and who knows what else.

http://www.thetrucker.com/News/Stories/2007/3/30/SpendingbillpassessecondbilltoblockMexicantruckpilotprogramsurfaces.aspx

If you are a safe driver with 2+ yrs OTR, there is currently a "bidding" war for you, or at least the appearance of such.

[newyawker99]

19. Hi DAMANgoldberg

Welcome to DU!! :toast:

[warren pease]

7. Shockingly, the official story is horseshit

See Malthus for a more accurate view of how things really work, and how things are in the labor market today.

wp


edited for tpyos

[midnight]

8. They have been using this strategy against nurses for at least

two decades that I'm aware of. My five sisters that are nurses are tired of doing the very nice foreign nurse's job and their own. Well it is not that bad for the simple nursing things, but it does get overwhelming over the duration of the shift. I have also known for years that even Doctors in the Radiology field are having their job out sourced to India. The films are sent via the internet, and then read much cheaper. Between Nafta and the insurance company's those in the health care field are getting from all over.

[cascadiance]

10. Add one word for the truth: The Great SLAVE Labor Shortage!

Of course these slime don't want to be truthful about their concerns. As long as we still have a democracy where we can vote, they still have to play their games!

[Kurovski]

27. K&R. (nt)