U.S. to Sharply Cut Number of High-Tech Work Visas

Reuters ^ | September 22, 2003 | Alan Elsner

[AntiGuv]

WASHINGTON (Reuters) - The United States is about to cut the number of employment visas it offers to highly qualified foreign workers from 195,000 to 65,000, immigration experts said on Monday.

Unless Congress acts by the end of this month -- and there is little sign it will do so -- the change will automatically take effect on Oct. 1. Employers, especially technology companies, argue the move will hurt them and the economy.

The change will affect the number of H1-B visas that can be issued each fiscal year. The visas are mostly used to bring high-tech experts from Asia, especially from the Indian sub-continent, to work in the United States for up to three years.

"The fact that Congress doesn't seem anxious to act reflects the political climate, with a lack of jobs for Americans," said New York immigration lawyer Cyrus Mehta.

"The pressure to change the limit will build up again when the economy picks up."

The Senate Judiciary Committee held a hearing on the issue last week. Republican chairman Orrin Hatch of Utah noted that many U.S. high-tech workers are unemployed and the committee needed to find ways of helping them without hurting the country's ability to compete globally.

Vermont Democratic Sen. Patrick Leahy said: "Given the weakness of our current economy, and the rising unemployment we have experienced under President Bush's stewardship, many who supported the increase in 2000 now believe that 65,000 visas are sufficient."

But Patrick Duffy, Human Resources Attorney for Intel Corporation, said finding the best-educated engineering talent from around the world was critical to his company's future.

"We expect that we will continue to sponsor H-1B employees in the future for the simple reason that we cannot find enough U.S. workers with the advanced education, skills, and expertise we need," he said.

Elizabeth Dickson, director of immigration services for the Ingersoll-Rand Company, speaking on behalf of the U.S. Chamber of Commerce, said: "In the near-term, we simply must have access to foreign nationals. Many of them have been educated in the United States. By sending them home, we are at best sending them to our own foreign plant sites, and at worst to our competitors."

Immigration attorneys expect the new rules to set off a scramble by companies to fill their slots early before the ceiling is reached. How quickly that happens depends on the state of the economy, they said.

[Southack]

"Come on now. The level of devaluation in the dollar required for such an act would be economic suicide. When you devalue the dollar, you increase inflation. When you increase inflation, my savings and 401(k) is worth less."

It's not linear. Devaluing the Dollar doesn't make American goods cost more, certainly not in proportion to how such a devaluation makes foreign goods and services increase in price.

This is due to America being primarily an internalized economy, whereas most of our imports come from export-based economies which are far more succeptable to currency devaluations.

The U.S. GDP is 85% domestic, 9% imports (and more than half of that is traded in Dollars due to oil), and 6% exports.

Devaluing the U.S. Dollar has a negligible effect on the 85% domestic internal economy, an enormous impact on the 9% of imports (or at least those imports that aren't already traded in Dollars), and makes our 6% exports vastly more competitve on the world stage.

The simple fact is that the U.S. Dollar has been the LARGEST SUBSIDY of most foreign economies since WW2.

For decades we have winked and nodded at the over-valuation, remaining chivalrous by keeping a propped-up valuation in order to boost the economies of developing nations.

But there is nothing that says that we must continue with this charade.

It is time for the over-valuation of the U.S. Dollar to cease.

And with the notable exceptions of those companies that are going to get BURNED for their ill-advised risky investments in offshore outsourcing, your 401(k) will do just fine.

[Chief_Joe]

It really seems that FR is for knee-jerk protectionists.

The labor market is currently in the process of correcting the global imbalance in IT wages... Why develop software here in the US, where wages run on average $80K, when the same software can be developed overseas at wages of $8K? Americans are not genetically 10x more intelligent or productive than their foreign born counterparts.

As with any government initiative... penny-wise but pound-foolish.

Are your gripes limited to the imbalance in IT wages only? What about the imbalance in CEO wages: do you think we should outsource CEO jobs also? American CEOs are not genetically 10x more intelligent or productive than their foreign born counterparts.

[risen_feenix]

Please refer to the America's experience with rather modest inflation (peak was 13%) back in the 70s/80s. There was a snowball effect that effected the entire country, and quite severely too. We had almost 10% unemployment.

When you devalue the door, you decrease demand. As with any sudden decrease in demand, there is always a wild swing past the realistic value. An unaswerable question is, will we ever bounce back? Is that a risk worth taking.

Inflation is a bad thing. The fed has done everything it can to avoid it, and for good reason.

[risen_feenix]

Are your gripes limited to the imbalance in IT wages only? What about the imbalance in CEO wages: do you think we should outsource CEO jobs also? American CEOs are not genetically 10x more intelligent or productive than their foreign born counterparts.

Wow, and I only thought liberals engage in "but what about" debating (when they can't defeat an idea, the unavoidable change of topic mosey's along).

If you have data on foreign CEO salaries so that we can compare the imbalance, or links to such data, we can debate. Until such data is available, we're just speculating.

In case that was a rant about CEOs being paid too much and how unfair that is, please. If it's not an American CEO that is going to make the money through outsourcing, it'll be an Indian CEO that makes the money through competition.

American citizens have proven EVERY TIME THEY HAVE HAD THE CHANCE that they will buy whatever is cheapest, American made or not. American CEOs listen to American consumers.

[Southack]

"When you devalue the door[sic], you decrease demand."

Rubbish. 85% of the U.S. economy is internalized. Thus, 85% of your life cares nothing about whether the Dollar is trading at 8 or 80 Yuans to the Dollar, nor at 120 or 12 Yen to the Dollar.

Instead, when you go to buy something in the U.S. you care only about the price in Dollars, never at how the Dollar is trading versus another currency. Is your hamburger $5 or $15, that's what Americans care about.

And whether the Dollar is devalued against the Yuan or Yen or Euro, that same $5 hamburger will still be what we care about, and it is still what we will be able to get.

However, the costs will increase on all of our imported goods and services (like offshore outsourced programming), and THAT will drive down demand...for those imports (to be replaced somewhat by demand for comparable American competition).

Likewise, it will make our exports to foreign countries CHEAPER, the complete opposite of inflation, enabling us to sell even more goods and services overseas.

---

Moreover, you are operating under a fundamental misconception that the Dollar is already fairly valued. It isn't, and this is evident by examining our quantity of imports versus our domestic unemployment.

Whenever you have 5% or more unemployment simultaneous with an import surplus, you've got yourself a currency valuation problem.

And while such a massive imbalance can be maintained for brief periods of time, it won't be propped up forever. Eventually the currency will adjust until there is either a lower unemployment domestically or that the import surplus dries up.

[Southack]

"American citizens have proven EVERY TIME THEY HAVE HAD THE CHANCE that they will buy whatever is cheapest, American made or not. American CEOs listen to American consumers."

That's all fine and well, but if foreign imports are cheaper only because of an over-valued U.S. Dollar, then the situation can be considered ripe for fast and furious change.

The Dollar can easily be devalued, after all, and that can quickly make foreign products vastly more expensive than domestic American goods and services.

[risen_feenix]

While your analysis seems coherent, you are taking a very narrow view of the effects of currency devaluation. You make it sound as if inflation is some magical cure-all for the economy. If currency devaluation is so great, why doesn't every country do it?

Well, for starters:
US gov't bonds would require higher rates of interest. If you ask to borrow $100 today at 4% interest, and inflation is at 10%, I would have to be an idiot to lend you the money at such a rate. You'd have to up the interest rate to 20% before I lent you the money. Can we say runaway budget deficits? Look at South American today, or Germany post WWI. Once you hit that ciritical mass where a country's economic growth rate becomes unable to sustain the country's borrowing, inflation becomes an epidemic.

The same holds true for all kinds of borrowing. Mortgage, student loans, etc. Pretty soon, the housing market busts, people stop taking out loans, etc. Currency speculation is rampant and the chaos that ensues kills economic activity of all kinds. If no one knows what a dollar will be worth in five years, there is no way to invest.

During the 70s, OPEC raised the price of one commodity in our economy, which relative to the entire US economy, and imports in general, is small. However, the after-effects and subsequent monetary policy mismanagment (ie currency devaluation and inflation) proved disastrous to the US economy. Carter got dumped, Reagan came in and fixed the problem. To say just a little tampering with the valuation of the dollar is harmless shows either malice or a complete ignorance of history.

Increases in the money supply should correlate to the amount of economic growth in the economy. This keeps inflation/devaluation and deflation/icreased valuation in balance. Stability is the key to a healthy economy, not overly aggressive monetary interference.

[Southack]

"While your analysis seems coherent, you are taking a very narrow view of the effects of currency devaluation. You make it sound as if inflation is some magical cure-all for the economy. If currency devaluation is so great, why doesn't every country do it?"

They already did.

That's why the U.S. Dollar is over-valued. You've got foreign central banks that are buying and hoarding Dollars in order to keep the U.S. Dollar artificially propped up (i.e. they are devaluing their own currencies).

In fact, the foreign banks have been doing os much buying and hoarding of Dollars that we aren't worried about inflation so much as about DEFLATION.

Well, they can't keep the Dollar at those insane valuations forever, and when the Dollar falls to its fair value, offshore outsourcing is going to become cost prohibitive.

And because 85% of the U.S. economy is internalized, we will feel very little domestic inflationary effects of that devaluation (especially since our one required import of oil is traded fortuitously in Dollars already).

[risen_feenix]

Of course, if the point you were trying to make is that currency devaluation does not, in fact, cause inflation, then we clearly do not have anything further to say to each other.

Regardless of the size of our imports and exports (which, by the way, accounts for almost 20% of the country's economic activity, and since gov't spending accounts for another 25%, we're left with very little of the economy unaffected), I don't see how you could propose that devaluing the value of the dollar only devalues it overseas. While not an economist, I have never read anything in my studies of economics that has ever suggested ANYTHING like that. In fact, time and time again I have read the opposite.

[Jamten]

And they have no intention of learning English or be part of the American culture. Don't forget that we are a multi-cultural country now and the grand old USA is no more.

[risen_feenix]

I think we are coming to some common ground, although we clearly still have much to disagree about.

Central Banks are hoarding dollars to stabilize their economies during transitional periods (marxists to markets). Neither the US nor any those countries want a sudden devaluation in the value of the dollar because:
(1) devaluation means inflation, and we're trying to recover here ourselves
(2) we need countries to convert over to free market economies successfully. Nothing breeds peace better than prosperity.

The Fed will work with other banks to ensure that the transition to a global free market is as smooth as we can.

We benefit from stability as much as anyone else (being the world's policeman/fiscal bail out partner, it costs us less to help this migration than it does to send in troops or loan out money we don't have).

Eventually, labor markets will equalize, but it will be in the best interest of everyone if that is a gradual process globally. The effect on the US economy of losing a few hundred thousand jobs (which our economy is replacing, despite the liberal media's attempts to convince us otherwise) is minimal, as opposed to a contry like India or China losing several million jobs that represent a substantional part of that country's economy and tax base.

[Southack]

"Eventually, labor markets will equalize"

That's far too vague of a platitude.

If you mean that salaries will equalize globally, then no, they won't.

If you mean that salaries will adjust somewhat for various import/export imbalances, then yes, salaries will adjust globally.

[Southack]

"devaluation means inflation, and we're trying to recover here ourselves"

Again, such a statement is too broad and too vague.

Devaluation DOES inflate the prices of imported goods and services, but it also DECREASES the prices of our exported goods. Goods that are produced here and consumed here will notice only a marginal (i.e. sub 10%) inflationary effect from even the most extreme currency devaluations (simply because most of our economy is internalized, unlike export-based economies).

[Southack]

"we need countries to convert over to free market economies successfully. Nothing breeds peace better than prosperity."

Or at least so says the old "conventional" wisdom.

Ironically, nations such as China are embracing free market economies only in order to finance the modernization of their militaries...

[Southack]

" We benefit from stability as much as anyone else (being the world's policeman/fiscal bail out partner, it costs us less to help this migration than it does to send in troops or loan out money we don't have)."

The U.S. is currently pursuing an ideal path made possible by our great wealth, but no one is forcing us to choose such an ideal path.

And be cautious, if mere **finances** are the only thing to question, then it is cheaper to simply nuke the rest of the entire planet with our existing arsenal and hit any survivors with our remaining chemical and biological weapons.

So perhaps we are considering more things than just money or stability, both of which could be gained by simply wiping out the rest of the planet with your thinking above about what costs less to achieve global stability.

[Jim Cane]

Just because I, as a programmer, want $100K a year does not mean I deserve it. Especially not if there are 20 million starving people a T-1 line away who will do it for $10K/year.

Sure, just because I, as a business owner, want high end six figures a year does not mean I deserve it. Especially not if there are 20 million starving people and another company's CEO will do it for low end six figures a year. ~ end barf.

Do you realize that, in accusing IT workers of making too much money, you have just joined the ranks of all the lefties who call for caps on CEO compensation?

You deserve the compensation that the market will bear. What you don't deserve is to have your tax dollars used against you in the form of corporate welfare for your competitors.

If Free Traders want an end to tarrifs, then they need to be willing to give up their cheap imported labor perks. The market meddling goes both ways.

[AIC]

I don't think that I accused you or anyone of anything. You asked a question for someone to explain to you why it would be to your best interest to give americans jobs instead of to aliens or foriegners. I tried to do so in a limited way. I think that it is erroneous for anyone to think that aliens or foriegners are more intelligent or energetic than the american worker. I agree that there will be american workers that are lazy and withholding but really is that the norm? As far as cheaper labor to foreigners and aliens is it really so? If your company is not taking advanage of the training income from the federal Government or the Federal income tax credit, then I would be surprised. But who pays for these insentivies? The American tax payer. Who schooled the foreigners so that they could work in the high tech field? The American schools. Who paid for the schools (if they are not private schools)? The American tax payer. In a round about way, who is helping the American businesses obtain these lesser cost workers from another country? The American tax payer. Do they deserve something back? They want jobs, not hand outs. What has happened is that too many have come and the American work force can not accommodate as many as there are without suffering. America is the only country that lets as many foriegners into their country to work and displace the local citizens in the work place. Your quote,

"This country -- a country built by earlier generations of productive immigrants -- was founded on the principle that each person has the inalienable right to his own life, his own liberty, his own happiness. His own -- not someone else's. This freedom includes the freedom to hire the best, most productive workforce I can find for my business, without regard to irrelevant factors such as race or nationality."
Some of this quote is correct and some of it is not. I think your interpretation is wrong. I could prove it to you but instead I will let you prove it to yourself. When you get the chance, read the preamble to the Constitution of the UNITED STATES. Not the Constitution but the Preamble. Read it slowly, let the words sink in. Another thing is that if the U.S. went by your thinking, then the U.S. would not have any laws to protect the business person from foreign competition and would just let them dump all kinds of goods on the market, steal all copyrights and patents and bankrupt all American businesses. Ask yourself, could you stay in business (no matter what kind) if foriegn countries and businesses could come in and sell anything for as little as they wanted to? I think not. If they did start to come in and do this, just what would you think? What would you do? Would you write a letter or call your representative? I think you would.

I will leave you with something else to think about. There's a great big difference between an immigrant who immigrates to this country to work, live, settle and raise a family than an alien or foriegner coming to work in this country.
Example: One alien or foriegner comes to work in this country for 6 mos., leave, another one comes and takes their place and so on. Nothing given back in return.
An immigrant on the other hand will give all, pay taxes, become a citizen, give sons and daughters to the country and help fight for our way of life. Some have become representatives in congress and other forms of government. Others have went in business as your parents did. Still others went into the health field and have saved lives and given comfort to other people without always asking "What's in it for me". As always with human nature there will be those that give freely and there will be those that are selfish.

[kesg]

But who pays for these insentivies? The American tax payer. Who schooled the foreigners so that they could work in the high tech field? The American schools. Who paid for the schools (if they are not private schools)? The American tax payer. In a round about way, who is helping the American businesses obtain these lesser cost workers from another country? The American tax payer.

Now you are starting to talk my language. :) It is improper to require the American taxpayer (or any taxpayer) to pay for all of these things, up to and including public education. Socialized education, in all its various forms, has had its chance and has failed miserably. Let's give freedom and capitalism a real chance for a change.

Returning to immigration policy, I am also opposed to taxpayer-subsidized education or training of foreigners.

[Jamten]

And once you get the Green Card, the citizen process takes at least 7 more years. My first H1B visa salary was $50k so I just made it at the minimum wage level. $50k is not much here in Silicon Valley where an average house costs $400k+.

[Jamten]

Not only in the same company. You have to remain in the same job at the same location etc etc etc. It is the definition of insanity and of course you will be abused since you cannot move elsewhere for the next 4-5 years.
Then comes the recession and it will take another 3-4 years before you can move to another company so whoever sponsor you for the Green Card will have you for 9 years as he claims he is paying for your Green Card when the truth is he is paying you a sub market value since you cannot move.