Common Sense H-1B Reform

Over the last couple of years, the trend in the media has been to lament that we train foreign students in "advanced" STEM degrees here, and then send them home to compete against us, due to a shortage of H-1B visas. The fact that H-1B pundits are careful to use the word "advanced" instead of postgraduate has not escaped me.  In addition to the H-1B educational requirement being set too low, another source of H-1B lobbyist whining is the highly publicized H-1B lottery, which is likely caused by foreign outsourcing firms who suffer no financial penalty when attempting to game the system.

Adjust the H-1B educational eligibility requirement, not the yearly cap.

The logical thing to do is to raise the educational requirement for H-1B to a postgraduate degree.  According to the FY 2012, H-1B data, eliminating bachelors degree eligibility would free up 50% of new H-1B visas.

Data presented by Dr. Ron Hira, shows that legitimate US employers draw heavily from the postgraduate population, while offshore outsourcing firms favor undergraduate degrees.  Additionally, the offshore outsourcing firms have the unlimited Intra-company L-1 visa available to them, once the candidate has one year of experience with the firm.

By raising the H-1B educational requirement, citizen and permanent resident candidates would have a better chance at bachelors degree and associate degree level positions, which are the targeted positions to be moved offshore by the offshore outsourcing firms.  Restated, 50% more H-1B visas would be available to legitimate US employers.

According to the Institute of International Education, there were 311,204 foreign students enrolled in postgraduate programs in the United States in 2012-13.  This might seem like a large number until we factor in the Doctoral programs are four years, and masters and professional degree probably average two years. So the number likely to graduate in 2013 was roughly 126,157 for all declared and undeclared majors (not just STEM). Additionally, some students may not want to stay in the US and other might not graduate, but the 126,157 number is still less than the total number of H-1B initial employment approvals in FY 2012 (136,890),  

Work experience authorizations 

The IIE data also discloses that there were 94,919 international students gaining work experience on the Optional Practical Training (OPT), an unlimited cap, 12 month work permit with a 17 month extension available for STEM graduates.  While working on student visas, these employees are exempt from Social Security and Medicare tax, putting entry level citizens and permanent residents at a huge financial  disadvantage.

H-1B lottery and oversubscription

A second point of contention is the H-1B lottery, that is triggered when the number of applications exceed the 85,000 visa cap.  As reported by the Center for Immigration Studies, this phenomena is primarily caused by companies attempting to game the system.  Due to the fact that H-1B application fees are refunded to the applicant employer (unlike most other visa fees) there is no financial penalty for oversubscribing the H-1B category.

Gaming the number of applications

H-1B dependent employers, employers with a high percentage of H-1B staff, are eligible for something called a multi-slot  Labor Condition Application (LCA).  The multi-slot LCA allows, primarily outsourcing, firms to apply for an unlimited amount of H-1B visa on a single application -- without naming the candidate or providing credential for USCIS/DOL review.

The ability to apply for hundreds of H-1B visas, on a single application, with the knowledge that application fees will be refunded encourages these companies to oversubscribe the visa category, hoping that their consultant (possibly the same candidate) will be placed at the firms who could not attain the visa at a higher premium.  (I.e., if Microsoft doesn't win the lottery on a single LCA, the outsourcing firm, with the un-named H-1B LCAs, can provide the candidate as a consultant.)

Employment based (EB-3) permanent immigration oversubscription

Due to the dual-intent rules available in both the H-1B and L-1 temporary visas, employers can sponsor these employees for permanent residence.  Published figures estimate that there is a backlog of 500,000 workers in the EB-3 (bachelors degree level) employment based permanent residency program.  Due to country of origin limits, these immigrants are primarily from China and India and are on yearly AC21 extensions, taking them well beyond the 5 and 6 year limits of the L-1 and H-1B visas.

As such, bachelor degree permanent residency applicants from non-backlogged countries will gain permanent residency ahead of those on AC21 extension.  Raising the educational requirement for H-1B will reduce the intake of bachelors degree permanent residency applicants and vacant slots can be recovered and distributed to address the AC21 backlog.

The WTO GATS and H-1B Pundits Pandering in The Media

I've noticed an interesting phenomena lately, studies on skilled immigrants get quoted in other later studies until the the quoted material has largely a different meaning. 

Paraphrasing:  25% of new startup corporations had immigrant founders

The studies I've read on the immigrant founders appear to come from the same data, but the part left out is that the immigrant founder is generally one of five founders. From one of the early studies, I ran the numbers and found that when the four American founders are factored in, the likelihood of two immigrant founders in the same company would be low and that the performance of the immigrant founder reflected the immigrant population at large.

Some media and industry pundits have been quoting an NFAP study (Table 1) to infer that the H-1B visa is only .06% of the labor force and, from the omission of a footnote, infer that the numerical cap on H-1B visa has reverted to the 1998 levels of 65,000.  The 65,000 H-1B cap inference is far from the truth in the matter.


The “American Competiveness in the Twenty-First Century Act,” (AC21) created special carve-outs with unlimited cap exemptions for certain Nonprofit, University and Government entities. Additionally, the “H-1B Reform Act of 2004,” added 20,000 visas to the H-1B for postgraduates of U.S. Universities. Without the AC21exemptions and additional 20,000 visas for postgraduates, a 1998 temporary increase in H-1B numerical cap would have expired in 2002 subsequently, an average 43,441 per year (since 2005) nonimmigrants would have competed for visas within the numerical cap of 65,000.

Average Yearly H-1B Approvals since the H-1B Reform Act of 2004 (2005 – 2009)

Avg. Initial Employment Approvals (2005 – 2009) = 108,441
Avg. Continuing Employment Approvals (2005 – 2009) = 153,504

Note: AC21 also provided additional single year extensions for PERM dual-intent applicants; this is why H-1B continuing employment approvals consistently exceed initial employment approvals since FY 2003 – effectively extending the H-1B and L-1 temporary visas from 5 to 7 years, into the decade timeframe.

Very creative taglines tend to be sensationalized in the zeal to increase the foreign worker quotas during this recession, from the NFAP study, “With the annual flow of H-1Bs representing only 0.06 percent of the U.S. labor force in 2009, arguments that H-1B professionals overwhelm the American workforce are not supported by logic or the facts.” Beyond the data-banding use of only a portion of the H-1B caps, quoting the statement misleads the casual reader, ignoring the fact that the H-1B is a six year duration visa and implying that all occupations in the Labor force are open to the H-1B program. Looking at the H-1B in terms of the entire Labor Force is quite slanted. The Computer related occupations data displays the misuse and subsequent cause for resentment of the H-1B program.

(IT) Computer Related Occupations:

Growth in Employment (IT) Levels (2005-09) = 382,640 (12% emp. growth)
H-1B initial (IT) employment approvals (2005-09) = 258,870 (67.7% of emp. growth)
(Source: USCIS, H-1B Characteristics Series)

(IT) Assoc. thru PhD Degrees Conferred (2004-08) = 529,798 (138% of emp. growth)
(Excludes temporary residents -- citizen and perm resident degrees conferred only)
(Source: NCES, IPEDS Completions Survey)

From the growth statistics listed above, we can see that the U.S. is being far too generous with the employment opportunities granted to citizens of Least Developed Countries (LDC). It is not by accident that the highest percentages of H-1B and L-1 nonimmigrants come from LDC regions, LDC have preferential negotiating privileges in the GATS arena. Global Trade in Services, as a form of Direct Foreign Aid may be a noble cause, but the U.S. cannot afford to be so generous as to bankrupt its citizens.

The next section explores areas where U.S. immigration policy exceeds negotiated trade commitments.

General Agreement in Trade and Services (GATS)

H-1B (Fashion Models and Specialty Occupations) and L-1 (Intra-corporate) visas are specifically named and committed in General Agreement in Trade and Services (GATS) trade commitments. Eliminating the H-1B and L-1 visa programs would be next to impossible. However, under GATS, the terms of these visas are considerably different from the terms in U.S. law.

 Under GATS: there are no dual-intent citizenship provisions for H-1B, or L-1 visa, this is considered “poaching” and is detrimental to Least Developed Countries

 Under (AC21) U.S. Law: The H-1B and L-1 visa durations may be extended into the decade timeframe: ”The Attorney General shall extend the stay of an alien who qualifies for an exemption under subsection (a) in one-year increments until such time as a final decision is made on the alien’s lawful permanent residence.”

 Under GATS, the H-1B is a three year visa with a 65,000 per year worldwide limitation.

 There is no GATS requirement or provision for extension of the H-1B beyond 3 years.

 Under GATS, the L-1 visa is allowed a single 2 year extension; under U.S. law the L-1A can be granted two 2 year extensions after the initial 3 year period.

 Under GATS, the no-layoff provisions are 6 month preceding and 90 days following a nonimmigrant employment application. Under US Law the layoff restrictions are 90 days – 90 days, but the 90/90 rule is only applicable for H-1B Dependent Employers.

Over a six year period (2004-09), Americans assumed about 101,000 of 600,000 new jobs in Computer related occupations (IT). for a matching period (2003-08) about 110,000 postgraduate IT degrees were awarded to American citizens and permanent residents.  This indicates that only Americans with postgraduate degrees are being hired and that the minimum educational level for H-1B in IT occupations should be raised to the postgraduate level.  Moreover, 2006 NSF data indicates that 31,000 of the 57,000 new H-1B awarded in IT had undergraduate degrees.

http://immigration-weaver.blogspot.com/2010/06/h-1b-visa-impact-on-computer-related.html


US GATS Commitment

d) the employer has not laid off or otherwise displaced workers in the subject occupation in the previous six months and will not lay off or displace any US worker during the 90-day period following the filing of an application or the 90-day periods preceding and following the filing of any visa petition supported by the application; e) the employer has taken and is taking timely and significant steps to recruit and retain sufficient US workers in the specialty occupation; and f) notice is given at the time of application by the employer to employees or their representatives at the place of employment.

US 20 CFR 655.738

(c) Direct displacement. An H-1B-dependent or willful-violator employer (as described in §655.736) is prohibited from displacing a U.S. worker in its own workforce (i.e., a U.S. worker "employed by the employer") within the period beginning 90 days before and ending 90 days after the filing date of an H-1B petition supported by an LCA described in §655.736(g). The following standards and guidance apply under the direct displacement prohibition:

I'm just saying, a lot of times what's written and what the truth is are sometimes a bit misleading.

Source:

N A T I O N A L F O U N D A T I O N F O R A M E R I C A N P O L I C Y

H - 1 B V I S A S B Y T H E N U M B E R S: 2 0 1 0 A N D B E Y O N D

http://www.nfap.com/pdf/1003h1b.pdf

GATS Conditions to Achieve Developing Country Objectives
http://www.southcentre.org/index.php?option=com_docman&task=doc_download&gid=109&Itemid=&lang=en


GATS -- THE UNITED STATES OF AMERICA - INITIAL OFFER

http://www.uscsi.org/pdf/USinitialoffer.pdf


GATS DATABASE of Commitments (Commitments have changed since initial offer)
http://tsdb.wto.org/default.aspx


TITLE I— AMERICAN COMPETITIVENESS IN THE TWENTY-FIRST CENTURY (AC21)
http://www.gpoaccess.gov/serialset/cdocuments/sd106-30/pdf/pl106-313.pdf

‘‘(5) The numerical limitations contained in paragraph (1)(A) shall not apply to any nonimmigrant alien issued a visa or otherwise provided status under section 101(a)(15)(H)(i)(b) who is employed (or has received an offer of employment) at— ‘‘(A) an institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a))), or a related or affiliated nonprofit entity; or ‘‘(B) a nonprofit research organization or a governmental research organization.

H-1B Dependent Employer
http://www.dol.gov/dol/allcfr/title_20/Part_655/20CFR655.736.htm

Displacement of US worker obligation for H-1B dependent and Willful Violators
http://www.dol.gov/dol/allcfr/title_20/Part_655/20CFR655.738.htm

Allocation of Additional H-1B Visas Created by the H-1B Visa Reform Act of 2004 [70 FR 23775] [FR 19-05]
http://www.uscis.gov/ilink/docView/FR/HTML/FR/0-0-0-1/0-0-0-102229/0-0-0-106136/0-0-0-106262.html

Immigrant Intent and the Dual Intent Doctrine
Written by Henry J. Chang
http://www.americanlaw.com/dintent.html


Appendix 1
Current subsection of GATS US Commitments concerning L-1 and H-1B visa

All Sectors: Temporary Entry And Stay of Natural Persons1

4) Unbound, except for measures concerning temporary entry and stay of nationals of another member who fall into the categories listed below:

4) Unbound

Services Salespersons - persons not based in the territory of the United States and receiving no remuneration from a source located within the United States, who are engaged in activities related to representing a services supplier for the purpose of negotiating for the sale of the services of that supplier where: a) such sales are not directly made to the general public and b) the salesperson is not engaged in supplying the service. Entry for persons named in this section is limited to a ninety-day period.


Intra-corporate Transferees - managers, executives and specialists, as defined below, who are employees of firms that provide services within the United States through a branch, subsidiary, or affiliate established in the United States and who have been in the prior employ of their firm outside the United States for a period of not less than one year immediately preceding the date of their application for admission and who are one of the following:

a) Managers - persons within an organization who primarily direct the organization, or a department or sub-division of the organization, supervise and control the work of other supervisory, professional or managerial employees, have the authority to hire and fire or recommend hiring, firing, or other personnel actions (such as promotion or leave authorization), and exercise discretionary authority over day-to-day operations. Does not include first-line supervisors, unless the employees supervised are professionals, nor does it include employees who primarily perform tasks necessary for the provision of the service.

b) Executives - persons within the organization who primarily direct the management of the organization, establish the goals and policies of the organization, exercise wide latitude in decision-making, and receive only general supervision or direction from higher-level executives, the board of directors, or stockholders of the business. Executives would not directly perform tasks related to the actual provision of a service or services of the organization.

c) Specialists - persons within an organization who possess knowledge at an advanced level of continued expertise and who possess proprietary knowledge of the organization's services, research equipment, techniques, or management. (Specialists may include, but are not limited to, members of licenced professions.)

Entry for persons named in this section is limited to a three-year period that may be extended for up to two additional years for a total term not to exceed five years.

Personnel Engaged in Establishment - A person who has been employed in the immediately preceding year by an entity described in Section II, receiving remuneration from that source, who occupies a managerial or executive position with that entity and is entering the territory of the United States for the purpose of establishing an entity described in Section II that will support employment of persons named in paragraphs a), b), and c) therein. The subject persons shall present proof of acquisition of physical premises for the entity that shall commence its business operations within one year of the date of entry of that person.

Fashion Models and Specialty Occupations - Up to 65,000 persons annually on a world-wide basis in occupations as set out in 8 USC. ' 1101 (a) (15) (H) (i) (b), consisting of (i) fashion models who are of distinguished merit and ability; and (ii) persons engaged in a specialty occupation, requiring (a) theoretical and practical application of a body of highly specialized knowledge; and (b) attainment of a bachelor's or higher degree in the specialty (or its equivalent) as a minimum for entry into the occupation in the United States. Persons seeking admission under (ii) above shall possess the following qualifications: (a) full licensure in a US state to practice in the occupation, if such licensure is required to practice in the occupation in that state; and (b) completion of the required degree, or experience in the specialty equivalent to the completion of the required degree and recognition of expertise in the specialty through progressively responsible positions relating to the specialty. Entry for persons named in this section is limited to three years.

Specialty occupation aliens and their employers must be in compliance with all labour condition application requirements that are attested to by the established employer. These requirements are: a) wages paid to the person are the greater of: 1) the actual wage paid by the employer to individuals in that place of employment with similar qualifications and experience, or 2) the prevailing wage for that occupational classification in the area of employment; b) conditions of work are such that they will not adversely affect working conditions for those similarly employed; c) there is no strike or lockout in the course of a labour/management dispute in progress at the place of employment affecting the subject occupation; labour/management dispute in progress at the place of employment;

d) the employer has not laid off or otherwise displaced workers in the subject occupation in the previous six months and will not lay off or displace any US worker during the 90-day period following the filing of an application or the 90-day periods preceding and following the filing of any visa petition supported by the application; e) the employer has taken and is taking timely and significant steps to recruit and retain sufficient US workers in the specialty occupation; and f) notice is given at the time of application by the employer to employees or their representatives at the place of employment.

U.S. College Degree: Return on Investment

Something got me wondering about the "Return on Investment" of a college degree the other day. I think the best way to look at ROI on education is to see how many years the College Graduate can expect to be employed before being replaced.

The yearly average shortfall in College Graduate employment is 451,824. Persons reaching retirement age is now at 16.12% (up from 15.69% end of 1992). This (16.12% retirement rate) would put the employment shortfall for college graduates at 378,986 per year. Assuming that all 1,493,000 new class of 2009 college graduates are interested in working, this would create an "non-emloyment" rate of 25.38%.

In 2006 Occupational shock to the economy from high-skill temporary visas are as follows:

H-1B Specialty occupations requiring bachelor’s equivalent = 135,421
L-1 Intracompany transfers = 72,613
O-1 People of extraordinary ability = 6,961
O-2 Workers assisting O-1 = 3,726
TN NAFTA high-skilled visa (most from Canada) = 2,972

Total high skill visas (generally require a Bachelors): 221,693
http://www.nsf.gov/statistics/seind08/c3/tt03-28.htm

If we remove these temporary visas, the "non-employment" rate would fall to
10.54%

Period 1993 to 2009 (Aug.)

Yearly
Avg. Increase in College Graduates = 1,418,588
Avg. Increase in College Grad Employment = 966,765

Totals:
Total increase in College Grads = 24,116,000
Total increase in CG employment = 16,435,000

Divide (increase in CG emp) by (yrly avg increase in CGs)

(16,435,000 / 966,765)

Avg Length of College Graduate (employment) career = 11.58 years

BLS - CPS Data:
College Degrees

Series title: (Seas) Population Level - Bachelor?s degree and higher, 25 yrs. & over
Series title: (Seas) Employment Level - Bachelor?s degree and higher, 25 yrs. & over

Retirement:

Series title: (Unadj) Population Level - 65 yrs. & over
Series title: (Unadj) Population Level

U.S. Employment Perfomance in 21st Century

Delta between growth in working age population (16 and over) and the growth in employment levels:

Click image to enlarge.

Delta between growth in Bachelor's degree (and higher) in population (25 and over) and the growth in Bachelor's degree (and higher) employment levels:

Click image to enlarge.

Data:

Downloaded from www.bls.gov/data (CPS) on July 21, 2009.

Series Id: LNU00000000
Not Seasonally Adjusted
Series title: (Unadj) Population Level
Labor force status: Civilian noninstitutional population
Type of data: Number in thousands
Age: 16 years and over

Series Id: LNU02000000
Not Seasonally Adjusted
Series title: (Unadj) Employment Level
Labor force status: Employed
Type of data: Number in thousands
Age: 16 years and over

Series Id: LNU00027662
Not Seasonally Adjusted
Series title: (Unadj) Population Level - Bachelor?s degree and higher, 25 yrs. & over
Labor force status: Civilian noninstitutional population
Type of data: Number in thousands
Age: 25 years and over
Educational attainment: College graduates

Series Id: LNU02027662
Not Seasonally Adjusted
Series title: (Unadj) Employment Level - Bachelor?s degree and higher, 25 yrs. & over
Labor force status: Employed
Type of data: Number in thousands
Age: 25 years and over
Educational attainment: College graduates

Petition to remove Computer-related occupations from employment based immigration

Problems, are sometimes not resolved to the lowest common denominator. The glaring problem in high-skill temporary immigration, is not the H-1B and L-1 programs, it is the gross over-subscription of H-1B and L-1 nonimmigrants in the "Computer-related occupations." One solution is to decertify Computer-related occupations from the DOJ list of "Specialty occupations."

A National Science foundation report shows that in 2006, 51% of all 113,593 H-1B visas granted were to Computer-related occupations. [57,932 visas]
http://www.nsf.gov/statistics/seind08/c3/fig03-62.htm

Here is what the law says about employment related immigration.

U.S. Code Collection
TITLE 8 > CHAPTER 12 > SUBCHAPTER II
> Part II > § 1182
§ 1182. Inadmissible aliens

(5) Labor certification and qualifications for certain immigrants
(A) Labor certification

(i) In general Any alien who seeks to enter the United States for the purpose of performing skilled or unskilled labor is inadmissible, unless the Secretary of Labor has determined and certified to the Secretary of State and the Attorney General that—

(I) there are not sufficient workers who are able, willing, qualified (or equally qualified in the case of an alien described in clause (ii)) and available at the time of application for a visa and admission to the United States and at the place where the alien is to perform such skilled or unskilled labor, and

(II) the employment of such alien will not adversely affect the wages and working conditions of workers in the United States similarly employed. (ii) Certain aliens subject to special rule For purposes of clause (i)

(I), an alien described in this clause is an alien who—
(I) is a member of the teaching profession, or
(II) has exceptional ability in the sciences or the arts.
(iii) Professional athletes
http://www.law.cornell.edu/uscode/uscode08/usc_sec_08_00001182----000-.html

First, we see that employment based immigration is the exception rather than the rule. Immigration "for the purpose of performing skilled or unskilled labor is inadmissible..." the exception is where the Secretary of Labor has certified insufficient workers at the time and place, but "the employment of such alien will not adversely affect the wages and working conditions of workers in the United States similarly employed." The current list of DOL certified occupations in "sciences or the arts" are generally called "Specialty Occupations. " The list of specialty occupations can be found on Form ETA-9035.

The occupational over-subscription is in the DOT defined, "Computer-Related Occupations."

COMPUTER-RELATED OCCUPATIONS
[Dictionary of Occupational Titles (DOT)]
030 OCCUPATIONS IN SYSTEMS ANALYSIS AND PROGRAMMING
031 OCCUPATIONS IN DATA COMMUNICATIONS AND NETWORKS
032 OCCUPATIONS IN COMPUTER SYSTEM USER SUPPORT
033 OCCUPATIONS IN COMPUTER SYSTEM TECHNICAL SUPPORT
039 OTHER COMPUTER-RELATED OCCUPATIONS

Over-subscription data comes the discontinued USCIS "H-1B Characteristics reports" from 2000-2005.[1] H-1B statistics for the (DOT) Computer-related occupations, are synonymous with the BLS - OES, "SOC" 15-1000 Computer Specialists. http://www.bls.gov/soc/soc_c0a0.htm

Guestworker over-subscription in Computer-related occupations.
From 2000-2006, employment growth (BLS-OES) in the (SOC) 15-1000 Computer Specialists, was 326,600. [2]

The National Science Foundation reports that 310,749 B.S. Computer Science degrees were granted to Americans from 2000 - 2006, with an additional 26,533 BS-CS awarded to temporary residents. [3] Domestic BS-CS degree production of 337,282 awards, exceeded "(SOC) 15-1000 Computer Specialist" employment growth of 326,600.

During a shorter period, 2001-2006, reflecting the six year H-1B duration, 328,968 H-1B visas were granted to "initial employment approvals" for Computer related occupations.[1][4] Computer-related occupations, H-1B initial employment approvals, also exceeded employment growth.

Factoid: 2000 to 2005 [1]
Computer related H-1B "Initial employment approvals = 348,691
Computer related H-1B "Continuing employment approvals = 390,506

Narrowing the scope to the 2000-02 recession, [2] the BLS-OES occupational statistics show an employment decline of 134,960 in Computer-related occupations, during 2001 (110,712) and 2002 (25,637) H-1B awards were added to the occupational group. Employment for H-1B is reserved as a condition of entry, therefore, the decline in the occupation and new H-1B are additive, bringing the job losses to 271,309.

The H-1B is only one of the high-skill non-immigrant visa program that has "...adversely affect the wages and working conditions of workers in the United States similarly employed." There are many high-skill nonimmigrant visa categories, the "O", "H-1", "L-1" and "TN" visas are all employment based temporary visas.[5] that can include Computer-related occupations.

High-skill temporary visas (H-1B, L-1,H-3, O-1, O-2, TN) [5]
1998 = 136,000
1999 = 165,930
2000 = 197,520
2001 = 230,400
2002 = 184,770
2003 = 165,430
2004 = 213,020
2005 = 203,320
2006= 224,060

Again, 271,309 workers were permanently displaced by the glut in computer-related H-1B awards, another 310,749 American BS-CS graduates entered the workforce. As a condition of employment, H-1B must have an employment offer, so 582,058 high skill workers were shut out of the Computer-related occupations. Additionally, 430,084 L-1 Intracompany visas were issued during the 2000-2006 period.[6] There are no statistics available to prove the L-1 subscription levels for Computer-related, but the OIG made the following statement:

"From 1999 to 2004, nine of the ten firms that petitioned for the most L-1 workers were computer and IT related outsourcing service firms that specialize in labor from India." [7]

Fraud estimate in Computer-related immigration:
The USCIS recently found a 31% violation/fraud rate in H-1Bs with Bachelor's degrees as the highest level of education.[8] Bachelor's degreed H-1B recipients are higly concentrated in Computer-related occupations. The NSF reports that roughly 47,300 of all new H-1Bs in 2006 did not have advanced degrees, in Computer-related occupations, 35,904 did not have advanced degrees (postgrad). 75.9% of all H-1Bs withless than a postgraduate degree were granted to Computer-related occupations in 2006.[9]

The most popular H-1B occupation also experienced the fourth highest rate of fraudulent conduct - computer-related occupations accounted for 42% (104 cases) of the sample. Among this sample, 27% (28 cases) were associated with some type of fraud or technical violation(s).[8]

Additionally, due to the AC21, H-1B and L-1 portability provisions,[10] it is reasonable to assume that similar violation/fraud rates exist in the Employment based green card PERM system, which is currently experiencing a backlog 500,000 applicants.

Overall, we estimate that the number of employment based principals (in the three main employment visa categories—EB1, EB2, and EB3) waiting for legalpermanent residence in the United States in 2006 was 500,040.
http://www.cggc.duke.edu/documents/IntellectualProperty_theImmigrationBacklog_andaReverseBrainDrain_003.pdf

America's high skill immigration policy has been completely insensitive to changing market conditions, even when employment creation has gone negative, America continues to import skilled workers without regard to available data. Other countries, such as Australia adjust their immigration intake by occupation.

"The economic circumstances in Australia have changed as a result of the global financial crisis," Senator Evans said. "It is prudent to reduce this year's migration intake accordingly."

The cuts will be coupled with deletions to the critical skills list,which specifies which jobs are open to migrants.

Senator Evans said Australia needs a more targeted list "so that migrant workers are meeting skills shortages and not competing with locals for jobs".
Government to cut immigration intake, 16 March 2009

Fortunately, Elaine Chao is no longer the Secretary of Labor, Hilda Solis has been sworn in, she has publicly stated that she is interested in reviewing the H-1B and other non-immigrant employment programs. http://www.dol.gov/_sec/welcome.htm

I suggest that we call the DOL (Telephone: 1-866-4-USA-DOL (1-866-487-2365)) or email ExecutiveSecretariat@dol.gov and ask that Ms. Solis decertify "Computer-related Occupations" from the H-1B, L-1 OPT and EB-3 employment based visa programs.

The definition of Computer-related Occupations would include:
(DOT) "Computer Related Occupations"
(SOC) "15-1000 Computer Specialists"
(NCES - CIP) COMPUTER AND INFORMATION SCIENCES AND SUPPORT SERVICES

And the occupations listed under the following NAICS Industries:
54151 Computer Systems Design and Related Services
541511 Custom Computer Programming Services
541512 Computer Systems Design Services
541513 Computer Facilities Management Services
541519 Other Computer Related Services

References:
[1] Source: USCIS
Report on Characteristics of Specialty Occupation Workers (H-1B): Fiscal Year 2000
Report on Characteristics of Specialty Occupation Workers (H-1B): Fiscal Year 2001
Characteristics of Specialty Occupation Workers (H-1B): Fiscal Year 2002
Characteristics of Specialty Occupation Workers (H-1B): Fiscal Year 2003
Characteristics of Specialty Occupation Workers (H-1B): Fiscal Year 2004
Characteristics of Specialty Occupation Workers (H-1B): Fiscal Year 2005

[2] Source: Occupational Employment Statistics
15-1000 Computer Specialists Employment May 2000 = 2,642,910
15-1000 Computer Specialists Employment May 2006 = 2,969,510
Employment growth = 326,600

[3] Source: National Science Foundation
Division of Science Resources Statistics, special tabulations of U.S. Department of Education, National Center for Education Statistics, Integrated Postsecondary Education Data System, Completions Survey, 1997–2006.

[4] Source: National Science Foundation
"Chapter 3. Science and Engineering Labor Force"

An estimate (avg. of prior years) was used for 2006 computer-related H-1B awards 54,828, new data from the NSF indicates that 51% of 110,000 visas (over 56,100 H-1B visas) were computer related.

"In 2006, 51% of new H-1B recipients were in computer-related occupations..."

"Over two-thirds of the slightly more than 110,000 recipients of H-1B visas in 2006 are in S&T occupations..."

[5] Source: Immigrant Visa Control and Reporting Division administrative data, special tabulations.

[6] Source: Classes of Nonimmigrants Issued Visas (Detailed Breakdown), (Including Crewlist Visas and Border Crossing Cards), Fiscal Years 1989 - 2008*

[7] Source: DHS, Office of Inspector General, "Review of Vulnerabilities and Potential Abuses of the L-1 Visa Program"

[8] Source: U.S. CITIZENSHIP AND IMMIGRATION SERVICES, "H-1B Benefit Fraud & Compliance Assessment"

[9] Source: National Science Foundation, "Chapter 3. Science and Engineering Labor Force"

[10] Source: TITLE I—AMERICAN COMPETITIVENESS IN THE TWENTY-FIRST CENTURY

Appendix A.

COMPUTER-RELATED OCCUPATIONS DEFINED:

Dictionary of Occupational Titles (DOT)
030 OCCUPATIONS IN SYSTEMS ANALYSIS AND PROGRAMMING
031 OCCUPATIONS IN DATA COMMUNICATIONS AND NETWORKS
032 OCCUPATIONS IN COMPUTER SYSTEM USER SUPPORT
033 OCCUPATIONS IN COMPUTER SYSTEM TECHNICAL SUPPORT
039 OTHER COMPUTER-RELATED OCCUPATIONS

North American Industry Classification System (NAICS)
54151 Computer Systems Design and Related Services
541511 Custom Computer Programming Services
541512 Computer Systems Design Services
541513 Computer Facilities Management Services
541519 Other Computer Related Services

Standard Occupational Classifications (SOC)
15-1011 Computer and Information Scientists, Research
15-1021 Computer Programmers
15-1031 Computer Software Engineers, Applications
15-1032 Computer Software Engineers, Systems Software
15-1041 Computer Support Specialists
15-1051 Computer Systems Analysts
15-1061 Database Administrators
15-1071 Network and Computer Systems Administrators
15-1081 Network Systems and Data Communications Analysts
15-1099 Computer Specialists, All Other

Classification of Instructional Programs (NCES-CIP)
11.0101 Computer and Information Sciences, General.
11.0102 Artificial Intelligence and Robotics.
11.0103 Information Technology.
11.0201 Computer Programming/Programmer, General.
11.0202 Computer Programming, Specific Applications.
11.0203 Computer Programming, Vendor/Product Certification.
11.0301 Data Processing and Data Processing Technology/Technician.
11.0401 Information Science/Studies.
11.0501 Computer Systems Analysis/Analyst.
11.0701 Computer Science.
11.0801 Web Page, Digital/Multimedia and Information Resources Design.
11.0802 Data Modeling/Warehousing and Database Administration.
11.0803 Computer Graphics.
11.0901 Computer Systems Networking and Telecommunications.
11.1001 System Administration/Administrator.
11.1002 System, Networking, and LAN/WAN Management/Manager.
11.1003 Computer and Information Systems Security.
11.1004 Web/Multimedia Management and Webmaster.

Memo to Lou Dobbs -- Fixing Immigration

Mr. Dobbs,

Lou, let's fix immigration, so those movie-stars can quit picking on you. I believe that this proposal is a fair compromise for most interested parties.

Immigration is a lot like borrowing... borrowing against future job growth and future housing growth. The banks now realize that America has borrowed too much.

Overview:

Virtually all of U.S. immigration is financially motivated. The presence of 20 million illegal immigrants has financially destroyed the blue-collar workforce. Temporary worker programs are now destroying white-collar workforce, who have an even higher likelihood of servicing a mortgage. To address the plight of the all residents, legal and illegal, in a financially responsible manner, we must borrow against future immigration quotas to selectively adjust the status of illegal aliens who will help us destroy the job magnet.

Reserving future visas to adjust the status of those persons already here: The reduction in future new-arrival immigration will help the blue collar worker. Business related immigration must also be conducted in a fiscally responsible manner, business related immigration (temp. and perm.) must be performance based and limited to a small percentage of the prior year's employment growth. (Performance based business immigration quotas would discourage offshoring.)

Our global competitiveness issues are imposed upon us by our inflated housing costs. Inflated housing costs inflate salary requirement and the tax burden on higher salary, the result is the movement of existing jobs overseas. The government's attempts to place a floor under U.S. housing valuation is destroying the world's economic engine.

Fixing Illegal Immigration:

Fixing the job magnet is as simple as allowing illegal immigrants to testify against illegal employers in exchange for documentation. The recent sting operation against Boston Port Director, Lorraine Henderson, is an example of the long term solution to the job magnet. Witness testimony against illegal employers will forever fix the job magnet, if there are substantial penalties for the employer and reward for the employee. I would suggest an IRS audit to discover and retroactively recover illegally deducted wage expenses -- i.e. wages paid to undocumented aliens should be taxed as profit. A simple civil action -- no proof of foreknowledge required.

Perhaps, a short amnesty period for illegal employers who turn themselves in promptly, but after that, let the ACLU and U.S. Chamber of Commerce argue the fairness of recovering back taxes with the IRS.

Illegal employers have home addresses and assets to seize, why do we chase nomadic workers all over the countryside? With enforcement directed at the illegal employer, opportunities will dry up, those illegal immigrants without an employer to violate, will self-deport. Those who help with these prosecutions are the hard working migrants we want to keep.

The impact of mass-immigration is hyper-inflation in housing, 309.4% (1980 to 2007) and flat wages. America can not sustain this rate of inflation because the American salary-requirement and tax burden becomes globally uncompetitive and jobs move offshore.

To avoid more immigration driven, hyper-inflation in the housing market, we must borrow against future (non-business) immigration visa quotas to normalize the status of the otherwise law abiding illegal immigrants. (Selected by their willingness to participate.) Eventually, these migrant's (citizen) children will become of age to sponsor the parent(s) for citizenship. The end result is identical, with the exception of housing equity they might have attained (a hedge against rental inflation) to help them in their old age.

Growth from immigration would be cut in half. Counting 50% of the visas granted annually, to those already in our country, would address America's declining job growth problem and undocumented resident problem at the same time.

Its most-recent-year data show that the U.S. granted:
• 744,531 permanent green cards to working-age adults ages 20-64, and
• 912,735 new employment authorization documents to temporary foreign workers.
Source: NumbersUSA

Addressing our immigration policy will instill confidence within the banking systems, indicating that we are not interested in risking America's hard assets (and economic meltdown) in 'bubble' economic scams.

Fixing Employment Based Immigration:

High skill, employment based immigrants are the most likely group to displace an American worker with a performing mortgage. If my understanding of the fractional reserve banking system is accurate, foreclosures in a declining market are exponentially harmful to the lending reserve ratio.

Employment based immigration (non-immigrant and immigrant) must have floating caps that are relational to employment growth. Some small percentage of the prior year's employment growth would become the employment based visa cap for the following year.

However, we can't allow 100% of the employment growth in the STEM occupations to be awarded to foreign nationals with loyalties lying elsewhere. The employment based immigration caps must be a percentage of prior employment growth in the individual occupations.

Instead of a lottery for visa awards, the highest salary offers, within each occupation would "win" these scarce visas. Additionally, this plan would discourage employers from sending jobs offshore -- if they are interested in obtaining employment based visas in the coming year. Occupations with no employment growth in the prior period would be "closed" to new immigration and temporary worker renewals.

Finally, dual-intent, non-immigrant visas (H-1B & L-1), have removed the requirement for the non-immigrant to maintain a foreign residence. This also removes the requirement for the employer to offer a travel and housing Per-Diem, or relocation expenses.

Without a home to return to, the non-immigrant is at a disadvantage and is financially motivated to apply for citizenship if she doesn't want to abandon her possessions. Additionally, the travel and housing Per-Diem stimulates the local service and hospitality industries. The foreign residence requirement assures property equity levels are sustained in the donor country.

Banking and Housing:

The banking industry pulled the plug on the economy precisely when it became apparent that the CIR (Comprehensive Immigration Reform) would fail for the second time. Confidence in Mortgage Backed Securities evaporated at the moment America refused to double the intake of legal immigrants. Banks and investors well understood that immigration was driving housing inflation and took corrective action immediately. America must take the fiscally responsible corrective action, in light of the 30% decline in employment growth over population growth in this decade.

To illustrate how important housing is to the economy, the home ownership rates declined only 4.2 % during the Great Depression (47.8% in 1930, to 43.6% in 1940).

Currently, home ownership rates have already declined 1.1% in 2 years, (69% 3rd Qtr. 2006, to 67.9% in the 3rd Qtr. 2008).

The basis of capitalism is private ownership, free trade was an afterthought. Home ownership is the wage earner's hedge against rental-housing inflation and is also a hedge against an undignified retirement.

Historic: Home ownership rates -- Graph:
http://www.census.gov/hhes/www/housing/census/historic/hograph.html

Historic: Home ownership rates --Tables:
http://www.census.gov/hhes/www/housing/census/historic/owner.html

Current: Home ownership rates -- Table (excel)
http://www.census.gov/hhes/www/housing/hvs/historic/files/histtab14.xls

Labor Authorizations in terms of years

Hard data is good to find, especially on nonimmigrant temporary workers.

A CRS publication reveals that 628,390 temporary workers were issued visas in FY 2006. These visas vary in duration, in terms of years; with extensions, the H-1B is a six year visa, the L-1b is five years and the L-1a is a seven year visa.

In 2006, 135,421 H-1B visas were issued and 72,613 L-1 visas were issued.
208,025 (33%) of the 628,290 temporary worker visas granted were H-1B or L-1 multi-year visas.

http://www.travel.state.gov/xls/FY07AnnualReport.xls Table XVI(B)

Assume for a moment that the average nonimmigrant temporary guest-worker is allowed (including renewals, extensions and those refusing to depart) to work in the U.S. for 3 years. In Project Management terms, the government has authorized work permits for 1,885,170 "man" years of work in 2006 alone.

The unadjusted growth in the BLS Employment Levels:

2006 = 2,697,000
2007 = 1,620,000

Two year total = 4,317,000 employment growth

Temporary worker assumption (3 yr. work status duration)

2006 = 1,885,170
2007 = 1,885,170

Total work authorizations (in work/man years) = 3,770,340

In terms of work authorization years, 87% of employment growth in the past 2 years has been granted to temporary workers.

Congressional Research for Congress (CRS) publication
Order Code RL31381
U.S. Immigration Policy on
Temporary Admissions


(Page CRS 13)
In FY2006, temporary workers accounted for 1,709,953 admissions into the United States (excluding admissions on laser visas), which constitutes a 69.2% increase over FY1998.

(Page CRS 16)
Each of these issuance categories has grown between FY2002 and FY2006, with the
student category increasing by 17.3% and the temporary worker category increasing
by 21.7%.25 The FY2006 level of the former category was 642,097, while the level
of the latter category was 628,390.


(Page CRS 3)
Temporary Workers. The major nonimmigrant category for temporary
workers is the H visa. Professional specialty workers (H-1B), nurses (H-1C)
agricultural workers (H-2A) and unskilled temporary workers (H-2B) are included.9
Persons with extraordinary ability in the sciences, arts, education, business, or
athletics are admitted on O visas, while internationally recognized athletes or
members of an internationally recognized entertainment group come on P visas.
Aliens working in religious vocations enter on R visas. Temporary professional
workers from Canada and Mexico may enter according to terms set by the North
American Free Trade Agreement (NAFTA) on TN visas.
http://www.ilw.com/immigdaily/news/2008,0604-crs.pdf

Skilled guestworker salay impact

If the highly skilled guestworker only stayed in the country for one year -- we would have the following yearly impact.

Year __ Guestworker Median compensation __ Guestworker Impact per yr.
2000 __ $52,000.00 __ $9,789,156,000.00
2001 __ $55,000.00 __ $12,156,485,000.00
2002 __ $53,200.00 __ $9,367,083,600.00
2003 __ $52,000.00 __ $8,550,932,000.00
2004 __ $53,000.00 __ $10,688,245,000.00
2005 __ $55,000.00 __ $10,425,635,000.00
2006 __ Not available

(* Known median compensation of H-1Bs assumed to be fair market value)

The problem is that H-1B and L-1 visas are not single year visas, they mature at five, six and seven years. Once the system is full of six year (avg. H-1B, L-1A, L-1B visas) the wage hole in the domestic economy is potentially $60,977,536,600.00 ongoing per year.

$61 Billion, per year in wages that are not available to Americans.

A Duke study indicates that 500,000 guestworkers who have applied for Employment based greencards -- in their 7th, 8th and 9th year of H-1B status more than likely offset any early guestworker repatriation. These 500,000 extensions amount to 34% of all (2000 - 2005) H-1B and L-1 visa issued, extending the wage impact beyond six years.

By the end of fiscal 2006, half a million foreign nationals living in the U.S. were waiting for employment-based green cards, according to the study, released by the nonprofit Kauffman Foundation. Titled "Intellectual Property, the Immigration Backlog, and a Reverse Brain-Drain," the study was based on research by Duke, Harvard and New York University. If spouses and children are included, the number exceeds 1 million. http://www.techcareers.com/content/article.asp?articleID=201802911&affiliate=iwk

Furthermore, the H-1B, Initial employment to Continuing employment approval rate was 99.8% (2000-2005.)

Year __ H-1B visa issued __ L-1 visas issued
2000 __ 133,290 __ 54,963
2001 __ 161,643 __ 59,384
2002 __ 118,352 __ 57,721
2003 __ 107,196 __ 57,245
2004 __ 138,965 __ 62,700
2005 __ 124,099 __ 65,458
2006 __ 135,421 __ 72,613
(travel.state.gov)

Median-wage data from DHS-USCIS: "Characteristics of SpecialtyOccupation Workers (H-1B)" publications

HireAmericansFirst.org

"New organization http://www.hireamericansfirst.org/ is gearing up to oppose Industry efforts to increase the H-1b visa cap in 2008, and to educate Congress on the harm caused by the H-1b program. Please join us."

This is a very interesting data collection experiment by the ProgrammersGuild. The lobbying agency CompeteAmerica (AKA trade-association) continues to press Congress for additional high-tech guest worker visas. So far, CompeteAmerica refuses to publish these "jobs" in a central location – to prove the existence and prove that these are not multiple instances (head hunter listings) of the same position.

HireAmericansFirst.org allows American workers to display their qualifications and talent anonymously so that the stigma of "anti-immigrant" is not attached to the activist’s name. One place HireAmericansFirst.org might look for membership is the pool of recent College graduates.
Employment prospects for America’s brightest and best continue to be bleak. (click on image to enlarge)

So far, I’ve been unable to determine if the surplus in American college graduates is a condition of new graduates unable to find work, or new graduates and guest workers displacing current workers.

One of the problems with the L-1 and H-1B temporary worker programs is that the Department of Labor is not required to advertise these open positions to American workers during the six month approval process (Apr. 1 to Oct. 1).

Instead of increasing the cap on guest workers, American should be more careful of the visas that are granted. Examination of Senator Grassley’s "Top 20 H-1B Employers" show the trend that the majority of highly-skilled guest workers are in the business of offshoring American jobs.

Top 20 H-1B Employer list 2006:
2006 H-1B and L-1 visas in Top 20 list -- Total visas = 48,159
Business Process Outsourcing Specialists (12) = 73.43%
Accounting Services (2) = 6.19%
Producers of Tangible Goods (6) = 20.38%

(sum may not total due to rounding)
The H-1B and L-1 Offshoring Visa

In effect, these positions are reserved for guest workers, there is no requirement that the "job" advertised to the American work-force prior to applying for, nor prior to the guest worker approval/employment unless the employer is H-1B dependant, or a willful violator.

On January 21, 2008, I received a newsletter from Immigration Weekly.

"The immigration community is bracing itself for a historical and unprecedented
exhaustion of the H-1B cap. Employers can petition H-1B workers for the October
1, 2008 start date beginning April 1, 2008."

"Because the filing date is approaching, and the quota is expected to be reached in the opening day of availability, H-1B petition preparation should start now. Those people looking for petitioners should intensify their job search right now to ensure sufficient time for an H-1B petition to be prepared for filing by the first day of April."
http://www.rreeves.com/news_article.asp?aid=497

Looking for petitioners? Shouldn't that read, "those with chronically unfilled positions..."

Here is a good overview of H-1B dependent employer requirements -- employers who are required to attest that they couldn't find a qualified American candidate.
http://www.usabal.com/visas/Detail_%20SummaryDOLregs.html

How to lie to Congress without really lying

Remember when Bill Clinton said, "I did not have sex with that woman" Bill was not lying because the definition of "sex" did not include oral sex. Bill Gates recently testified before congress, "Given the state of our educational system, it is not surprising that U.S. companies are reporting serious shortages of skilled workers." (PDF) Similar to former President Clinton's definition of "sex," the term "labor shortage" has multiple definitions.

Wouldn't it be refreshing, if Bill Gates could come right out and say that he is not interested in hiring aging technical professionals and state his reasons why? If age, and the inability to unlearn the technologies preclude Americans from the job market -- shouldn't we be able to have an honest dialog about it?



Cool little video -- good music:

Skilled worker shortage by the numbers:

Senator John McCain's letter of June 21, 2001, states: "…the Information Technology Association of America estimated that there were more than 346,000 unfilled positions for highly skilled workers in American companies." We can assume that these "unfilled" positions have been filled. The H-1B fiscal per year limit was not attained in 2002 and 2003 -- Over 180,000 H-1B visas went unused in 2002 and 2003 collectively.

Further, McCain's letter quotes a Bureau of Labor projection stating: "…the American economy would generate 1.3 million new jobs each year for a decade in the computer and information-technology industries, but that American universities would be able to supply only a quarter of the graduates needed to fill those jobs." Checking the Labor statistics, these 13 million high-tech jobs did not materialize. (McCain letter at zazona)

The AeA Cyberstates report places U.S. high-tech employment at 5.8 million in 2006, this is up from the up from 5.5 million in 2000. The AeA definition of "high-tech employment" is very broad and more than adequately covers a definition of "computer and information-technology industries."

According to National Science Foundation averages, 271,936 citizens and permanent residents earn Bachelors degrees in Computer Science every six years. Excluding Associate Degrees in Computer Science, there was a labor shortage of roughly 18,000 high-tech workers between 2000 and 2006. The Bureau of Labor projections missed the mark by almost 100%.

Common sense would dictate that a shortfall of 3000 high-tech workers per year does not justify importing 939,770 (L-1 & H-1B) guest workers for the years 2002 - 2006, according to the Department of Travel. In computer related occupations, the OIG reports that 90% of L-1 and 43% of H-1B visas are computer related. Using these averages computer-related absorbed 552,497 guest workers for the 2002-2006 period, the employment shortfall is over 500,000 jobs.


There is also evidence that wages are going down.

Effective January 1, 2008, the minimum [California] hourly rate
for exempt computer software professionals will be $36, down from this
year's minimum of $49.77. On an annualized basis (based on a 40-hour workweek), the new minimum salary will be $74,880 (down from $103,521.60). (HTML)

Note: this is the wage that California requires employers to pay exempt software professionals -- the 80 hour work week is not uncommon and the high rate discourages employers from avoiding overtime pay through exempt-salary compensation.

Variations in measuring Labor Shortages:

As is pointed out in the 1998 study, Skill Mismatches and Worker Shortages: The Problem and Appropriate Responses, there are at least five different definitions of the term "Labor Shortage." Depending upon the model of Labor Shortage you desire -- simply pick the definition that fits your desired conclusion.

The Social Demand Model
The Blank-Stigler Model
The Arrow-Capron Dynamic Shortage Model
The "rate of return model"
The monopsonistic labor market model

Myself and other non-economists, including Congressmen, would probably assume the term "Labor Shortage" in the context of the Blank Stigler model.

One of the first major studies of occupational shortages was conducted by David S. Blank and George J. Stigler.11 Blank and Stigler define a shortage as follows: "a shortage exists when the number of workers available (the supply) increases less rapidly than the number demanded at the salaries paid in the recent past."

There are several problems with the Blank-Stigler model. First, as discussed below, an increase in demand is only one of the possible causes of a shortage. Thus, the Blank-Stigler model ignores other possible causes of occupational shortages. Second, Blank and Stigler indicate that a shortage can be identified by rising wages in the affected occupation. Wages may not rise, however, because of market imperfections such as controls on wages or imperfect information.

Controls on wages? Prevailing wage is a form of control on wages. Imperfect information? The Department of Labor missed their projections by almost 100%

A modified version of the Social Demand Model is the apparent definition that is expounded in the mainstream media.

This type of definition does not imply that the labor market is in disequilibrium; instead it describes a situation where the person who claims there is a shortage does not like the market's results. Arrow and Capron explain the problem with this definition as follows:

In particular, careful reading of such statements indicates that the speakers have in effect been saying: There are not as many engineers and scientists as this nation should have in order to do all the things that need doing such as maintaining our rapid rate of technological progress, raising our standard of living, keeping us militarily strong, etc. In other words, they are saying that (in the economic sense) demand for technically skilled manpower ought to be greater than it is -- it is really a shortage of demand for scientists and engineers that concerns them.

With the Social Demand Model definition, Bill Gates can, without lying to Congress, testify that there is a labor shortage. The underlying competitiveness message is not the shortage of qualified workers, it is the fact that competitors are not bound by age-discrimination statutes.

The key determinant of whether there can be shortages for some parts of an
occupation is whether all workers within the occupation are reasonable substitutes for each other. If not, a shortage can exist within an occupation while other subcategories are in equilibrium or even in surplus.

...a shortage may exist for the entire occupation or only for workers with selected
characteristics. For example, training for engineers has changed considerably
over the past 20 years, and older electrical engineers may not be good substitutes for new engineers who have more training in designing integrated circuits.

Let's suppose for a moment, the following:
Human Resources departments directed to seek out new graduates
Placement Agencies are prolonging commissions by placing guest-workers
H-1b Immigration Attorneys have developed a 200 million yr revenue source on initial visas.

In effect, we have created a personnel machine that shortens careers, this behavior will devalue the investment in the particular occupation -- through premature retirement/displacement.

The "rate of return model" is based on the application of internal rate of return analysis to alternative occupations. The costs of investing in a particular occupation are defined as the sum of the direct costs for higher education, training, and supplies, plus the indirect costs of foregone wages that are incurred during periods of training.

Harrington and Sum note that the rate of return approach is "beset with numerous methodological and measurement difficulties." One important problem is that we cannot observe the future earnings streams from various occupations.

This is where a disconnect in communications is occurring due to political correctness. The "Industry" is telling us that the optimal candidate is young, with a recent education, willing to relocate and pay regular attorney fees. The "Industry" is also telling us that they do not have career path for older workers being displaced by global access to the domestic employment pool.

Severity of the shortage. Unlike the two dimensions discussed above, it is not easy to develop good measures of the severity of a shortage. Conceptually, we can measure the severity of a shortage in terms of the magnitude of the changes in wages required to restore equilibrium or in terms of the number of workers added to the occupation to alleviate the shortage. There are several difficulties with these concepts. First, we do not generally observe the supply and demand curves for specific occupations. Thus, we cannot directly estimate the size of the labor or age gap of a shortage. Second, even if we could measure supply and demand, it would not be easy to classify a particular gap as large or small, especially when comparing across occupations -- occupations vary significantly in their normal vacancy rates and wage dispersion. Thus, a high vacancy rate for one occupation with a shortage may be characteristic of another occupation in equilibrium.

Labor shortage? Or are we witnessing an extremely dynamic occupation that is in a state of equilibrium? The perceived labor shortages have now existed for over twenty years. Are misidentified labor shortages simply characteristics of the high-tech occupations in equilibrium?

Political correctness eliminates the ability to candidly discuss age-discrimination and the hiring policies of Business Process Offshoring specialists also seems to be off-limits. President Bush tells us that the aging tech-worker problem can be resolved by sending the best educated workers in the world to community college. Perhaps there is a better idea.

Employment for Displaced Engineers and Computer Scientists:

From Senator Grassley's list of, "Top 20 H-1B Employers 2006," Business Process Outsourcing Specialists used 35,365 out of 48,159 (73.43%) of the L-1 and H-1B visas on the list.

Offshoring is a fact of life, however qualified Americans are being excluded from the domestic workforce by "rubber-stamp" processing of L-1 and H-1B visas to foreign interests. I contend that companies such as Intel and Microsoft, American producers of tangible goods, should be preferred customers of USCIS, while foreign based Business Process Outsourcing firms should have an extremely hard time procuring long term visas.

Department of Travel data shows a total of 315,737 L-1 Intracompany visas issued 2002 - 2006. The L-1A visa matures at 7 years, and the L-1B at 5 years.

Wage and Social Protections:

The intent of the 65,000 visa GATS agreement does not include the "brain-drain" of dual-intent citizenship provisions. Additionally, under the GATS agreement, H-1B visas are not required to be six year visas.

The H-1B guest worker should be encouraged to complete his/her assignment and return home, or concurrently enroll in post-graduate studies to qualify for an Employment Based green card visa. Moreover, a labor shortage should not exceed the first 3 year term of the H-1B visa. H-1B visas should be progressively more expensive and difficult to renew.

By restricting the foreign based offshoring firms ability to apply for guest worker visas, American companies will enjoy the benefit of the entire 65,000 H-1B visa allotment. The number of visas is determined by law, but the value of the visa should be determined by the free-market system through competitive bid. H-1B approvals and prevailing wage requirements should be determined by salary offers -- in round-robin competitive bid -- within NAICS occupational groups.

The L-1 visa should be eliminated in favor of the short term B visa -- the requirement of maintaing a foreign residence and per diem costs will alleviate labor arbitrage conditions.

The employee portion of Social Security contributions should be refunded at departure to H guest workers from non-totalized nations.

The Employment based (EB) family and spouse visa counts could be moved to count against family based immigration caps. EB green card visas could then made directly available to postgraduates of American colleges interested in citizenship -- Immigration policy should not subsidize foreign colleges.

Closing thought:

Generally, the guest worker loses the ability to vote and attain property equity. Moreover, the exodus of workers causes the destruction of property equity, while the importation of workers causes hyper-inflation. The current sub-prime mortgage crisis is the result of hyper-inflation due to excessive immigrant housing demand and dwindling employment opportunities in the U.S.

The "free movement of human capital" seems to cause instability in equity markets. I think mabye they shouldn't fool around with that.