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White-Collar Visas: Back Door for Cheap Labor?
By William Branigin
 Washington Post Staff Writer
 Saturday, October 21, 1995; Page A1

A large New York insurance company lays off 250 computer programmers in three states and replaces them with lower-wage temporary workers from India. A Michigan firm sends underpaid physical therapists from Poland to work at health care facilities in Texas. A company in California advertises that it can supply employers with "technical workers" from the Philippines at low pay.

Even the White House resorts to cheap technical help, using a company that imports most of its workers from India to upgrade the president's correspondence-tracking computer system.

As Congress considers major changes in immigration law, the Department of Labor and a number of professional associations and private citizens are citing cases such as these in urging an overhaul of a little-known immigration program designed to meet shortages of highly skilled workers in certain "specialty occupations." The debate highlights much broader dilemmas that the nation faces as it tries to decide how many foreigners to admit and what qualifications to demand of them.

Each year, tens of thousands of such workers from around the world are brought into the United States under the H-1B visa program, which admits computer programmers, engineers, scientists, health care workers and fashion models under "nonimmigrant" status.

Businesses say they need the program to obtain quick, temporary professional help that cannot be found in the U.S. work force. They say the visa category enables them to hire people with "unique" skills -- the "best and brightest" that the world has to offer and to compete in an increasingly tough global market.

Advocates of this and other employment-based visa programs cite numerous cases in which foreign professionals with special expertise have made valuable contributions to American science and technology and have helped create jobs in the American economy. But the Labor Department says the H-1B program also has been widely exploited to bring in thousands of foreign professionals and technicians whose chief attraction is that they are willing to work for much lower salaries than their U.S. counterparts. Many are imported by job-contracting firms known as "body shops," which recruit the foreign professionals and hire them out to major U.S. companies at a profit.

In many cases, "employment-based immigration is used not to obtain unique skills, but cheap, compliant labor," said Lawrence Richards, a former IBM computer programmer who formed the Software Professionals' Political Action Committee last year after colleagues were laid off and replaced by lower-paid programmers from India.

Richards and other critics of the H-1B visa program described the imported professionals as "techno-braceros," the high-tech equivalent of migrant farm workers.

They charged that the program is driving down wages in certain sectors, displacing American workers and bringing in foreigners who often are effectively "indentured" to their employers. In the long run, they predicted, it will accelerate the flight of high-tech jobs overseas, discourage American students from studying for those occupations and produce the very shortages it was designed to alleviate.

In addition, some immigrants have used the program to set up lucrative job-contracting concerns that discriminate against Americans in hiring, sometimes even as they receive federal assistance for minority-owned businesses.

To remedy what he says is a situation "fraught with abuse," Labor Secretary Robert B. Reich is seeking major reforms under immigration legislation now being debated in both chambers of Congress.

"We have seen numerous instances in which American businesses have brought in foreign skilled workers after having laid off skilled American workers, simply because they can get the foreign workers more cheaply," Reich said in an interview. The program "has become a major means of circumventing the costs of paying skilled American workers or the costs of training them," he added.

"There is abuse of the current nonimmigrant system, but it is by no means overwhelming," argued Austin T. Fragomen, an immigration lawyer who represents major U.S. corporations. "To the extent there is abuse, {it} occurs among small, relatively unknown companies" and should be "controlled through more effective enforcement," he said in written Senate testimony last month.

"It is minimally widespread," said Charles A. Billingsley, of the Information Technology Association of America, a pro-immigration group. "Are U.S. workers being put out of work by foreign workers? Probably. But the occurrence is minuscule." In any case, he said, H-1B visa holders account for only "a fraction of the U.S. work force."

Such arguments are not much comfort to John Morris, who owns a computer consulting firm in Houston. He said he lost his largest customer, a major oil company, when he refused to supply it with cheap foreign programmers.

"Greed is the reason they're doing this," Morris said. "Anybody who says it ain't greed is smoking rope."

He said he also has turned down a Chinese company's offer to provide programmers for placement at $500 a month in jobs that usually would pay $5,000 a month.

"The Chinese are desperate to get in here," Morris said. "This is economic warfare."

In 1990, Congress passed an immigration act that raised a cap on permanent employment-based immigration from 54,000 to 140,000 a year in response to fears of an imminent shortage of scientists, engineers and other highly skilled professionals. A separate provision created the H-1B visa category, which lets in as many as 65,000 professionals a year for stays of up to six years. These workers are supposed to be paid "prevailing wages" and not used to break strikes.

The H-1B provision requires no test of the U.S. labor market for the availability of qualified American workers, and it does not bar businesses from replacing U.S. workers with "temporary" nonimmigrants.

In practice, critics say, "prevailing wages" have been defined too broadly to prevent many job contractors from significantly undercutting the salaries usually paid to Americans. Moreover, the anticipated shortages did not materialize, in part because defense industry cuts after the end of the Cold War added to the ranks of an estimated 2.3 million Americans who have been laid off so far this decade.

In Senate testimony last month, Reich called on Congress to prohibit employers from hiring nonimmigrant workers in place of Americans who were laid off. He said companies should be required to show they had tried to "recruit and retain U.S. workers" in the occupations for which nonimmigrants were sought. He also recommended that the permitted stay of these workers be reduced to three years.

"Hiring foreign over domestic workers should be the rare exception, not the rule," Reich said.

The labor secretary noted that although nonimmigrant workers are admitted on a "temporary" basis, many stay for years, sometimes illegally. More than half of foreigners granted permanent resident status in fiscal 1994 originally came in as nonimmigrant students or "temporary" workers, Reich said.

In response to "abuse" of the nonimmigrant programs, over the past three years the Labor Department has charged 33 employers with wage violations involving more than 400 workers in physical therapy and computer-related occupations.

In one case, the department found that an Indian-owned firm in Michigan called Syntel Inc. had "willfully underpaid" its Indian computer programmers, who came to the United States under H-1B visas and made up more than 80 percent of the company's work force.

In November last year, American International Group, a large Manhattan-based insurer, laid off 250 American programmers in New York, New Jersey and New Hampshire and transferred the work to Syntel. Syntel assigned some of the work to about 200 Indians it had brought in, reportedly at about half the Americans' salaries, and gave the rest to much lower-paid employees at its home office in Bombay. During their last weeks of employment, the laid-off U.S. workers were even required to train their replacements, Reich said.

"It was clear that Syntel did not bring in any special skills that we did not have," said Linda Kilcrease, one of the full-time programmers who lost their jobs.

Another Michigan company, Rehab One, was found by the Labor Department to have underpaid physical therapists it brought in from Poland. The workers, who came in with H-1B visas, were assigned to U.S. health care facilities, primarily in Texas, and were paid as little as $500 a month, the department found.

In New Jersey, a major shipping company, Sea-Land Services, laid off 325 computer programmers this year and replaced them with Filipinos supplied by Manila-based Software Ventures International. The Americans, who were paid about $50,000 a year on average, also had to train the lower-paid Filipinos, most of whom eventually returned to Manila to carry out the work even more cheaply there.

"I was outraged," said Jessie Lindsay, one of the former Sea-Land programmers. "These were highly paid technical jobs leaving the country. ... What's the point of getting an education and technical training if companies can get away with hiring at slave wages?"

Mastech Corp., of Oakdale, Pa., a company owned by two Indian immigrants that has won millions of dollars in consulting contracts with the federal government, has brought in about 900 of its 1,300 workers from India under the H-1B program. From 1991 until Sept. 30, one of its contracts, obtained under a set-aside program for minority-owned businesses, involved "computer system integration, installation, maintenance and operational support for the White House correspondence system," the presidential press office said.

"We have been lumped in with some other companies that allegedly underpay their foreign workers," a Mastech executive said. "We are not a low-paying company."

One of the latest controversies over the H-1B program erupted last month after it was reported that the National Association of Securities Dealers had laid off 30 contract computer programmers and hired an Indian firm, Tata Consultancy Services, to do the work. The government- chartered association, based in Rockville, Md., owns, operates and regulates the Nasdaq Stock Market. Tata, which has a regional office in Silver Spring, is part of a huge Indian conglomerate that company officials say produces everything from tea to computer software.

An NASD spokesman, Marc Beauchamp, said Tata would employ about 40 people on the project, half of them working here on H-1B visas and half at Tata's home office in Bombay. He denied that any full-time NASD employees were fired and said that "fewer than 20 outside contractors could possibly be affected" by the move.

The Indians essentially would be maintaining "outmoded technology" so that regular NASD programmers could "focus on new technologies" and perform "more challenging work," Beauchamp said. "We found it made no business sense to hire programmers that we would have to pay more than, or as much as, the people we have on staff," he said.

Neither NASD nor Tata would disclose details of the contract. However, Tata insisted that it follows all U.S. regulations and wage requirements.

"We are not a body shop," said A. Sruthi Sagar, the firm's personnel manager. "We are not in the business of providing cheap labor to the United States."

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