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IMHO: IT Labor Shortage?

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Last summer, Sen. Phil Gramm, R-Texas, proposed increasing the number of H-1B temporary labor visas issued each year from the current 95,000 (which was already due to increase to 115,000 in 2000) to 200,000. The majority of H-1B visa holders have technical degrees and are employed as software contractors in the IT field. The Information Technology Association of America (ITAA), a high-tech industry trade association, has already achieved its goal of increasing the H-1B quota from the old level of 65,000. The cause of this push for increases is the false perception of a high-tech worker shortage. Recent investigations into the reasons for the supposed IT shortage are disturbing.

Dr. Norman Matloff (professor of computer science, University of California at Davis) has amassed a large amount of material on the issue (visit heather.cs.ucdavis.edu/itaa.html). He is considered an expert on the subject and has testified before Congress. Here are some of his more interesting findings:

• Only about 2 percent of those applying for high-tech jobs are hired. If there were a true labor shortage, companies could not be so selective.

• The number of H-1B visas that the industry requested for computer programmers increased by 352 percent from 1990 to 1995, while the number of jobs increased by only 35 percent.

• Companies are relying on cheaper labor. Many companies admit this when they refuse to provide real retraining for employees. (“If John learns Java, he’ll leave us to get a better-paying job.”) This is a not-so-subtle admission that they do not want to pay the market rate for the skills to begin with.

• Age discrimination is rampant. Computerworld magazine reported a 17 percent unemployment rate for programmers over age 50.

I hope this last point startles you; it startles me. Age discrimination is such a problem that a Web site (www. seniortechs.com) has sprung up. The site caters exclusively to programmers 35 and older and has more than 16,000 resumes on file. What it boils down to is that a company would rather pay $40,000 a year for a recent college graduate or H-1B visa holder than pay $80,000 a year for someone with years of experience. The recent college graduate or single immigrant can spend 60 to 80 hours per week working for the company. An older worker has unattractive time encumbrances, such as family commitments.

Another concern is exploitation of H-1B laborers. Chief among the exploitation methods is paying the individual wages far less than the market would allow if the

individual had a choice of employment. It is important to note that contracting firms try to farm out this person at the higher market rate; however, because of ignorance or entrapment in an unfortunate situation, the individual will be paid a substandard wage. Because employers sponsor visa holders and control, to some extent, the issuance of greencards, many H-1B visa holders must work for the same company for an average of five years before they receive a green card. Therefore, the company has a “captive” employee who must accept the company’s terms of employment.

Indeed, the unstated purpose of the H-1B visa is to provide companies with a cheap form of labor. The law of supply and demand dictates that if there were a true labor shortage, companies would pay more than the average 7 percent salary increase. In fact,
U.S. companies have consistently laid off high-tech workers over the past year. I searched for articles on high-tech layoffs and found there were 32,000 layoffs last year from a wide variety of companies. In some cases, these layoffs occurred so that companies could backfill the positions with cheaper H-1B labor. Unless these H-1B laborers acquire a green card, they can remain in the United States for only six years.

To realize our aspirations for continued growth and advancement of the economy, we need a stable, long-term base of high-tech workers, native and naturalized, to proceed into the next century. Don’t ignore this issue. The overall impact of the H-1B program on the IT labor force is quite significant. Companies are motivated to practice age discrimination because of access to a cheaper foreign labor pool. Research and decide for yourself how you want your congressional representative to vote on this issue.

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