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H-1Bs: Talent or low-cost labor?
Area employers seek foreign skills

Sacramento Business Journal
January 28, 2005

Greater Sacramento employers, from schools to staffing firms to multinational tech giants, have applied for thousands of visas over the past three years that would allow foreign workers to take jobs here.

UC Davis, Intel Corp.'s Folsom site, Sacramento City Unified School District, Hewlett-Packard Co. in Roseville and a handful of companies that supply tech and medical labor were the top 10 local applicants for the H-1B visas, according to federal records for the period from Oct. 1, 2001 to Sept. 30, 2004, covering applications from Sacramento, Roseville, Folsom and Davis.

Companies seeking the three- to six-year visas for foreign labor say they're filling jobs that can't be filled by Americans because U.S. applicants lack education or qualifications.

Critics howl that the H-1B visa is simply a tool that allows employers to get cheap labor from other countries. They say the visas come at the expense of U.S. techies, teachers and others who are being bounced out of their careers.

The applications cited in this story were certified by the U.S. Department of Labor, a finding that there were no Americans available or willing to do the jobs listed, said spokesman Chad Aleshire. Not every certified application will necessarily lead to the hiring of a foreign worker; once certified, the applications are sent to the Department of Homeland Security, which conducts additional reviews, he said.

UC Davis, Intel lead

Topping the list was University of California Davis with 636 applications, primarily for postgraduate researchers or professors, according to H-1B applicant data the Business Journal obtained from the Labor Department.

"We depend quite heavily on international research, and almost all of the H-1B applicants have a Ph.D.," said Wesley Young, director of services for international students and scholars. "Many of the best-qualified are not U.S. citizens."

Some on the faculty speculated that increased enrollment and grant funding in recent years has spurred a need for more researchers and teachers, in turn igniting the rising demand for H-1B sponsored workers. For the 2002-2003 school year, UC Davis was awarded $426 million for research from federal and other sources, up from $357 million the previous year. For 2003-2004 its research awards total sank slightly to $421 million, according to data posted on the school's Web site.

At least one UC Davis computer science professor says H-1B visas give the university a way to get research done cheaply.

Other local schools making the top 10 were Sacramento City Unified School District, sixth with 73 applications for math, science, chemistry and special-education teachers; and California State University Sacramento, tied for eighth on the list with 53 visa applications for assistant and associate professors or lecturers.

Intel's Folsom campus -- one of the region's largest employers at 6,500 workers -- was second on the list with 485 H-1B visa applications over the three-year span, most of them for electronics, design and software engineers. The company's immigration specialist in Folsom also filed for hundreds more visas for engineering jobs at many of Intel's other sites in the West, including Santa Clara; Fremont; Hillsboro, Ore.; Austin, Texas; and Rio Rancho, N.M.

"We do hire a limited number of employees under H-1B visas, after a vigorous search doesn't find qualified workers available," said company spokesman Dan Francisco. In 2003, Francisco said, 1,273 of the 2,027 engineers who were awarded doctorate degrees from U.S. universities were foreign nationals, and more than 9,000 of the 15,000 master's degrees in engineering went to foreign students.

Of Intel's 48,000 employees in the U.S., said Francisco, "less than 5 percent are on a H-1B sponsorship. ... The real issue is the lack of highly qualified U.S. candidates."

H-P apps filed from Sunnyvale

Hewlett-Packard Co. in Roseville was tied for eighth on the local list, but the applications were filed from Sunnyvale, not the local campus. Department of Labor data for federal fiscal year 2004 showed 17 visas for the Roseville site, while data compiled on the Web site showed 36 more Roseville visas for the previous two years., which opposes H-1B labor as a threat to U.S. jobs, said it obtained those data from the Department of Labor via a Freedom of Information Act request.

Hewlett-Packard's Roseville site has cut staffing from 6,000 to 4,000 in recent years. In 2003, after its merger with Compaq, the company moved 500 manufacturing jobs from Roseville to Houston for efficiency.

Digital GlobalSoft Ltd., which placed seventh with 59 visas for Roseville, made its federal applications from Marlboro, Mass. That India-based company was bought out last year for $378 million by Hewlett-Packard. It had been Compaq Computer Corp.'s partly owned Indian subsidiary. Now known as HP Globalsoft, it has become part of H-P's global software delivery system.

Techies, nurses in demand:

Sacramento-based Teksoft Inc. is the biggest local tech labor supplier, and ranked fourth with 116 applications over the previous three years. Also placing were Folsom-based Cognitim Inc., fifth with 82; and Folsom-based EA Consulting Inc., 10th with 34.

Third place went to Professional Medical Staffing Home Care Inc. of Sacramento, previously known as Professional Medical Co., which sought a total of 136 visas for certified nurses, nurse assistants and other caregivers over the three years.

A continuing shortage of nurses to meet population growth in the state and new staffing regulations have driven up demand and led some hospitals and other medical providers to seek help abroad.

Teksoft's Tami Tangasmay said the demand for H-1B visas among his clients has been "flat, actually." He supplies foreign workers to H-P and to various Bay Area information technology companies.

"Many of the (U.S. technology) jobs are being outsourced. I'm talking to people in India, (and) they're not much interested to come here," he said. "The market in India is really going up, with a more favorable exchange rate" with the U.S. dollar.

But Tangasmay said most foreign workers getting H-1B visas end up getting permanent resident status, commonly called a green card, because they want to stay and work in the United States.

Kim Berry, a local engineer activist, contends that the proliferation of H-1B visas to sponsor foreign-born tech workers is eliminating jobs once filled by higher-paid Americans.

He alleges that some companies hire lawyers to craft newspaper want ads matching the exact qualifications of the foreign worker they want to hire, and that when job applications come in, they can make a technical claim that none of the responding applicants have the right skills.

That tactic, he said, opens the door for the argument that no qualified Americans are available for the work and an H-1B visa should be granted. He has said some local companies use the ploy.

State technology contracts are competitive, said Berry, and companies using H-1B workers win those contracts because the lower pay for foreign employees allows them to cut their bids. "This is just displacing more and more Americans out of their careers," he said.

Last year, Gov. Schwarzenegger vetoed legislation limiting state agencies' ability to hire foreign labor for their contracts.

Needed visa to stay

Catherine Yang, a UC Davis professor who teaches business data information management, is from China. Upon completing her doctorate degree at the University of Pennsylvania's Wharton School, she wanted a teaching job in this country.

"Without the visa I wouldn't be able to teach," she said. She's on the first year of a three-year H-1B visa, and can get it renewed for three years. Within that six-year period, she can apply for a green card.

Joel Stewart is a Miami-based attorney who has written extensively about federal law governing corporate use of foreign labor. The federal cap for H-1B visas is 65,000 a year, and Stewart said the cap for this federal fiscal year -- which began in October -- was reached in December.

Stewart said the system is backlogged with applications, but for an extra $1,000 "premium processing" fee paid by an employer, a visa can be approved in a few weeks. Filing fees have risen from $1,000 to $1,500, he said, but companies of less than 25 employees pay $750.

He attributed the high number of H-1B visa applications at Davis to "rotating" professors, who come from other countries for schooling, then return home to work.

Stewart supports the H-1B/green card system, and says federal officials make sure prevailing wages are paid to foreign workers by employers sponsoring them. He's convinced U.S. workers are protected by the regulations on the visas, by the cap, and by prevailing-wage requirements.

"There are a lot of protections," he said. "The only way to go from here is to say you don't want anybody foreign working here.

"You might ask why the U.S. companies want to hire foreign workers. I think the answer is clear. They bring a lot of new ideas, freshness, intellectual power and work ethic to the U.S.," he said. "Most of the great American thinkers, inventors, were foreigners themselves. Just imagine if we had banned Einstein from the U.S."

'H-1B is about cheap labor'

UC Davis computer sciences professor Norm Matloff couldn't disagree more. "In almost all cases, H-1B is about cheap labor," he said.

The only exception he cites is visas given to the "best and brightest" from other countries. "For people who are of truly outstanding talent, I think we should roll out the red carpet for them," said Matloff. "I have a pretty high bar for that."

But he has a problem with the school bringing in foreign nationals to do post-graduate research, the research not done by professors. Salaries for those jobs are set too low to attract Americans, he said.

Matloff doesn't necessarily dispute Stewart's contention that foreign workers on H-1B visas get the same pay Americans would for the same job. "They set the salaries so low, they're more attractive to foreign nationals than they are to Americans," he said.

Matloff also argues that there is no shortage of qualified candidates in America. "In the computer science department, we get 50- to 100-to-one ratios of (professor) applications to openings."

He likens the technology industry's wage issues to those at hamburger chains. He's found that chains paying higher wages employ U.S. teen-agers and old folks, while those paying lower wages employ foreign nationals.

Meanwhile, computer science enrollment at UC Davis, Stanford and MIT is "way down, about 35 percent or so in the last few years," added Matloff. He theorizes that students see the program like a liberal arts degree -- nice to learn, but nothing that will lead to a high-paying job.

Low pay for tech work "is absolutely a mindset" among employers, Matloff said. "It's cheap labor, period."