State Unemployment Insurance Subsidizing H-1B Guestworker Program?

After watching, "Cohen & Grigsby's, Seventh Annual Immigration Law Update - Hot Topics in Immigration Law" -- a video presentation, which has enlightened us, as to how immigration attorneys feel about employment protections. (See InformationWeek Article) I realized that the H-1B industry is very sensitive to specific dates. In particular, April 1st, is the application date for new H-1B petitions, on October 1st, the approved H-1B candidates are granted admission into the United States to begin working.

The H-1B October 1st, employment commencement date, makes Fiscal Qtr1 (Oct. - Dec.) the most important time of the year for H-1B employers.

• The H-1B must be acclimated, a proficient knowledge-transfer in a technical field will run about 90 days.
• The domestic employee must be released before January 1st, to comply with Department of Labor 90 day severance rule when applying for new H-1B visas.

H-1B dependent employers and willful violator employers must attest to the following... "The employer will not displace any similarly employed U.S. worker within 90 days before or after applying for H-1B status, or an extension of status for any H-1B worker" http://www.dol.gov/compliance/guide/h1b.htm

Following this logic, Joe Sixpack, the Java slinging guru, is tasked with training his replacement on October 1, and is terminated effective December 31 (91 days before the April 1st.) Joe Sixpack was employed for Fiscal Qtr1, in its entirety. Therefore, Joe’s unemployment begins on the first day of the Fiscal Qtr2 (Jan. – Mar.)

In the following chart(s), I’ve downloaded BLS "Mass Layoff" data for the NAICS group, "Professional and technical services." Charts 1 - 4, are different views of the 1997 - 2006, mass layoff quarterly data.

This is as far as the BLS interface would allow me to "drill down" into Extended Mass Layoff data. I’ve posted the NAICS sub-codes to display that this category is the most vulnerable to H-1B replacement/displacement workers. (see Footnote 1)

Chart1 (click image to enlarge)

In Chart 1, we see a dramatic increase in Qtr2 yearly Layoff events for "Professional and Technical services." If we ignore the years 2001-2003, we observe a trend shift in persons involved in mass layoffs in Fiscal Quarter 2. Instead of returning to the pre-recession ratios, the Qtr2 layoffs persist. (If the 2001 recession ended in 2003-- layoffs should have normalized in 2004.)


Chart 2 (click image to enlarge)


Chart 2, groups fiscal quarters by year. Qtr2 layoffs remain stubbornly elevated, while other quarterly layoffs have returned to levels commensurate to pre 2001-2002 recession levels.

Chart 3 (click image to enlarge)

In theory, layoff events should be equally distributed throughout the year, 25% per Fiscal Quarter. The Qtr2 layoff data indicates that the layoff ratios were behaving normally, even through the 2001 recession, Qtr2 layoffs began to spike in Fiscal year 2002. (The disturbance in 2000 - 2001 (Qtr1 & Qtr4) may be the related to the climax of theY2K buildup and emergency rebuilding of infrastructure after 9/11.)

Chart 4 (click image to enlarge)

If the case that elevated fiscal Qtr2 layoffs events are expected in business practice, isolating the Qtr2 data provokes more thought.

Chart4 Graph-points = Qtr2 - ((Qtr + Qtr3 +Qtr4)/3))

The current departure from the pre-2001 recession data is notable:

Avg. additional Qtr2 layoffs 1997 - 2000 = 12,167
Avg. additional Qtr2 layoffs 2001 - 2006 = 26,566

If I’ve done my math correctly, current Qtr2 (2001- 2006) layoffs are 235% of pre 2001 levels, or an additional 16,388 layoffs per year, above the 1997 - 2000 avg.

Just for conjecture let’s imagine that these 16,388 layoffs are the direct result of worker displacement, we can then determine how much money the State Unemployment Insurance programs and their re-insurers may be subsidizing the H-1B and other guestworker programs yearly.

The BLS report, Series Id: LEU0252881500, tells us that the median wage (second quartile) in the U.S. averaged $671.00 per week in 2006. Generally, unemployment benefits are 40% of the worker's previous weekly earnings, which would be $268.40 per week.

Estimated Impact to Unemployment Insurance programs and re-insurers:

• $4,398,777.78 per week

(Assume displaced American workers exhaust 26 weeks U.I.)

• $114,368,222.22 per year
  

Footnote 1:

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?&series_id=MLUQS00NN0035003
Series Id: MLUQS00NN0035003 (1)Data Element: Layoff eventsIndustry/Reason/Characteristic: Professional and technical servicesData Series: Extended Mass LayoffsState/Region/Division: United States
NAICS 541000 - Professional, Scientific, and Technical Services consists of:
NAICS 541100 - Legal Services
NAICS 541200 - Accounting, Tax Preparation, Bookkeeping, and Payroll Services
NAICS 541300 - Architectural, Engineering, and Related Services
NAICS 541400 - Specialized Design Services
NAICS 541500 - Computer Systems Design and Related Services
NAICS 541600 - Management, Scientific, and Technical Consulting Services
NAICS 541700 - Scientific Research and Development Services
NAICS 541800 - Advertising and Related Services
NAICS 541900 - Other Professional, Scientific, and Technical Services

Data available on request: netmenders2000@yahoo.com

Preference in Hiring? (updated)

click on image to expand

Source: http://www.bls.gov/news.release/forbrn.t05.htm

When I posted this graph, I really thought that the data said everything about the employment picture for American wage earners. That was until the Programmer's Guild discovered a YouTube presentation called, "Cohen & Grigsby's Seventh Annual Immigration Law Update - Hot Topics in Immigration Law"

Programmer's Guild presentation here: http://www.youtube.com/watch?v=TCbFEgFajGU

http://www.cohenlaw.com/news-146.html
http://www.youtube.com/view_play_list?p=6BDB846548DA60F2

Apparently, this was a video (removed) of a lecture concerning the difficulties in obtaining H-1B visas, alternative Non Immigrant work-visas are discussed, and then we get to the process of transitioning current employees to PERM greencard status. In the labor certification portion of the PERM lecture, the various requirements are discussed including domestic worker protections.

Various guestworker visas require that the positon be offered to "Qualified and Interested" candidates via advertising. In a dialog between the speaker and the host, we get off-hand, bombshell commentary...

Lawrence M. Lebowitz - Vice President of Marketing - Cohen & Grigsby (Bio).

"Our goal is clearly NOT to find a qualified U.S. worker ... our objective is to get this person a green card ... so certainly we are not going to try to find a place where applicants would be most numerous."

The lecture continues for a moment, explaining how important it is to use the, Cohen & Grigsby checklist, of skills and requirements, to ensure that minimal time is consumed eliminating similarly qualified American candidates, while documenting the elimination process.

Later on, Mr. Lebowitz then interjects another bombshell...

"If someone looks like they are very qualified, if necessary schedule an interview, go through the whole process to find a legal basis to disqualify them."

Wow, I'm feeling a thousand percent better about my (chronically unemployed) self, this must be why employers keep repeating that there is a shortage of technically proficient Americans; they (employers) may have perjured themselves to the Department of Labor! These poor misguided employers have become addicted to labor-arbitrage and their attorneys are advising them to submit dubious DOL attestations to continue the addiction.

But wait... there's more, when we get to the prevailing wage portion of the lecture, free prevailing wage advice is offered on how to "deal with that issue."

Lawrence M. Lebowitz:

"Alright, prevailing wage, that was mentioned in Matt's presentation about H-1B visas, the same requirement applies in labor certification context, we need to make sure, that the person is being paid at or above, Uh-Hem, excuse me, the prevailing wage rate." "So Jen, what, how do we deal with that issue and where does it appear on the application form?"

Jen Pack (AKA Jennifer R. Pack?) responds:

Um' we submit a prevailing wage request to the State Department of Labor office, they will evaluate the job title, work location, job requirements and even supervisory duties and come back to us with a prevailing wage rate. We will then compare that wage rate to the employees salary, if the actual salary is higher that the prevailing wage, then we have no issues at all and we continue with the PERM process.

What do we do if the prevailing wage comes back and it is higher than the employees actual salary? Well, there are several things we can do. First, we have to remember that the wage offered to the employee is the wage that the employee will be earning when he gets, he or her gets his, he she get his greencard. Not the salary that they are making now. So if the prevailing wage comes back three, or four thousand dollars higher than the employee's actual salary, and we can estimate that it will probably be three, or four years, until he get his greencard, then if it's reasonable for that employee's salary to be increased by that amount at the time he gets his greencard, then we have no issues, we can proceed with the Perm application.

Um, Another, another option here is we can consider trying to locate an alternate wage survey, that meets the Department of Labor specific criteria, we can submit that to the Department of Labor and ask that they use that to interpret prevailing wage in place of their own prevailing wage survey.

If we still have not been able to meet the prevailing wage, um, let's say it is ten, fifteen thousand dollars higher than what the employee is going to be making, what can we do then? Well we may want to consider reworking our minimum requirements, maybe scaling them back our requirements from Master's degree to Bachelor's degree, or going from five years experience to two, and then asking the Department of Labor to evaluate that and they should come back with a lower prevailing wage.

This is one of the reasons why we normally like to get the prevailing wage survey before we even start any of the recruitment, in the event that we have to make these changes to the job PERM recruiting text, the job requirements, then we can do the recruitment afterwards.

End of Jen Pack quote.

On the one hand, the requirements are very rigid for the American candidates, then if you don't like the salary that the DOL requires, the requirements are adjusted for the foreign candidate to fit the employer's desired salary range. This in an entirely new paradigm in the recruiting process has me perplexed.

• First, find a foreign candidate for a job where the qualifications and salary have not yet been defined.
• Next, apply for a visa -- any visa will do -- reserving the candidate's services with an application fee/performance deposit, making sure to keep pressure on the H-1B annual cap(s).
• Then, if the guestworker is able to sustain himself in America on his meager salary, enlist the help of an "honorable" attorney to help apply for a greencard.
• In many cases, the greencard results in a five year Legal Permanent Status where the guestworker is required to sustain the relationship with his employing sponsor for those five additional years.

When I was in business, I must have been doing it all wrong. I had it all backwards, I didn't understand that you've got to hire someone with a compliant salary-requirement first -- and then find something for them to do.

By the way, the quotations above are true and correct, even though the law-firm in question has disabled the video on YouTube, the content of the lecture is cached (as required by Adobe Flash) in my browser's Internet Cache directory and I do regular backups.

Press coverage links of the Cohen & Grigsby's controversy:

YouTube Video On Avoiding U.S. Job Applicants Angers Programmers
By Mary Hayes Weier InformationWeek Jun 18, 2007 05:55 PM http://www.informationweek.com/news/showArticle.jhtml?articleID=199905192

Lou Dobbs commentary video link (hosted by http://forthecause.us)http://www.forthecause.us/media/ftc-video-CNN-H1B_Abuses_070622.wmv

Fox News Video link

Associated Press:

Pittsburgh lawyers' immigration talk ignites controversy Associated Press http://www.observer-reporter.com/OR/Story/06_23_Immigration_Pittsburgh

San Francisco Chronical:

Video raises concern about firms' H-1B abuses
2 lawmakers urge labor secretary to probe 'blatant disregard for American workers'
Tom Abate, Chronicle Staff Writer Friday, June 22, 2007 http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2007/06/22/BUGOOQJHN41.DTL