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Staying Close To Home: Offshoring, Immigration And A High-Tech H Visa

by Gary Endelman

Gary Endelman The looming specter of a jobless recovery casts a pall over every new report of economic good news. Mounting unease over white collar unemployment has given enhanced credibility to political assaults on free trade. As America prepares to elect a President, who is going to defend substituting low-wage workers aborad for high-wage white collars at home? Lots of new jobs are being created, critics argue, but are they here in the United States? Politicians who have long wanted to change sides on the free trade issue now have the intellectual respectability to switch over and loudly champion the virtues of protectionism. The fact that America's unemployment level is still the lowest of any industrialized economy, that most workers displaced by technology and trade move on to new jobs, is quietly and conveniently ignored. Clive Cook writing in the December 17, 2004 issue of The National Journal puts the anxious headlines of the moment into perspective:

Much of the concern about America's jobless recovery is overdone--and to anybody living outside the United States difficult to comprehend. So far, the economy has weathered the slowdown that inevitably followed the boom of the late 1990's extraordinarily well.It is true that, by American standards, job creation is subdued. But to talk of jobs lost since the peak of the business cycle as a possible long-term trend is ridiculous. Much bigger losses might have been expected as the cycle wound down. The longer-term employment trend is fine.
Need some reassurance? How about a stiff dose of hard facts to stiffen your spine? Turn to a recent paper by Catherine J. Mann of the Institute for International Economics called "Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth" that can be downloaded from Having served at the Federal Reserve Board of Governors, the President's Council of Economic Advisers and the World Bank, maybe she knows a thing or two about economic policy. She predicts that a "deeper transformation and wider diffusion of IT throughout the US economy will bring about a second wave of productivity growth." While the productivity gains of the late 1990's are undeniable, there remain large chunks of the US economy that have yet to integrate IT into their core business operations . This is particularly true in those sectors where one might logically look for a rebound in hiring- health services, construction, retail trades and small business. Folks, that is about to change. We are now at a point where lower prices for IT software and services on a global basis will trigger both higher productivity and revived business investment. Projections that trumpet the coming loss of IT jobs in blaring headlines ignore the surge in job demand that is bound to come when the second phase of globalization reduces the cost and widens the acceptance of IT software and services in these key areas. Catherine Mann reminds us why all is not lost:
Frequently cited projections indicate that millions of jobs will be lost to offshore workers. What these projections ignore is that the globalization of software and IT services, in conjunction with diffusion of IT to new sectors and businesses, will yield even stronger job demand in the United States for IT-proficient workers.
It may disappoint the critics of free trade to know that IT employment in the US remains surprisingly robust. The 2002 Annual Occupational Employment Survey compiled by the Bureau of Labor Statistics should calm fears of a wholesale IT offshoring exodus. Employment in computer and mathematical occupations in October 2003 is 6% higher than in 1999 while business and financial jobs rose 9% over this same period; architecture and engineering remained stable. America's trade surplus in "other private services" such as financial services, business, professional and technical services, the very areas that one might suspect as being most likely to be shipped abroad, actually showed positive net balances. Our trade surplus in OPS increased from $42 billion in 1997, at the very cusp of the boom, to roughly $50 billion in the first quarter of 2003, in the early stages of recovery. Reports of the death of IT demand in the United States, to paraphrase Mark Twain, have been greatly exaggerated it seems. The Bureau of Labor Statistics Occupation Outlook Handbook forecasts that 3 of the 10 "hot occupations" in the first decade of the 21st century will be computer-related (computer support specialists; computer software application engineers and computer system software engineers). The BLS projects that 13% of the total jobs created in the economy by 2010 will be IT-related; an estimated 43% surge in jobs that were supposed to all be in India!

So what does any or all of this have to do with immigration? Is there a link with offshoring? Until now, advocates of more immigration have not made one. This has, by default, left the field to the immigrant bashers who claim that L-1 and H-1B visas accelerate the exodus of American jobs. Such a perspective, regardless of its merit, focuses almost entirely on those jobs that already exist, reflecting a static view of the economy that fails to anticipate the second phase of IT diffusion or its global impact. What do we who believe that immigration strengthens America have to say? So long as we remain mute, without any suggestion as to how immigration will keep good paying jobs close to home, we cannot expect, nor should we receive, the support of those Americans who feel themselves at risk Going forward, immigration advocates must realize that, more than anything else, immigration is something that happens to Americans, not just immigrants. It is a tool that can and must be wielded to promote the nation and strengthen its competitive posture against those who seek to challenge its dominance.

Restrictions on free trade weaken the American economy by depriving it of the flexibility that remains the irreplaceable engine of job creation. The American ecnonomy in January created only 112,000 jobs despite a continued drop in unemployment. As it was, even these relatively modest gains were disproportionately concentrated in retailing and construction. Economists told The New York Times that sustained economic growth of the kind recently experienced normally generated much more robust hiring.

"The labor market is like wet wood in a bonfire," said Edward McKelvy, senior economist at the Wall Street investment house of Goldman Sachs & Company. "It's working, but it's not working very well. "The unimpeded flow of investment, both in human and capital terms, is essential if the American economic system is to remain nimble and transparent."
That is why the critics who want to shut down the H-1B program are dead wrong. Truth is that this visa can provide the talent vital to keep good paying IT jobs close to home. Just as it does not make sense to quantify white collar IT job loss from the peak of the economic boom, or to ignore the drag of an overvalued dollar on the export of US high tech services, H-1B detractors only serve their own narrow partisan interests, and not those of the nation, by choking off talent, innovation and creativity.

The one thing that can put this emerging economic renaissance at risk is the severing of the American economy from its talent pipeline. "The point is not that no jobs will be done abroad," Catherine Mann explains, "but rather that higher-paid jobs demanding IT skills are projected to grow very quickly in the United States." America does not need to, and should not try, to preserve low-wage, low-skill IT jobs. We do need to fashion a coordinated national strategy to keep good paying IT jobs close to home. One way to do that is to create a new IT H-1B visa category that will not be subject to any numerical restrictions. This would enjoy a six year validity thus giving both employers and workers a sense of predictability that will facilitate, not frustrate, long-range planning. It would be open to visa applicants who earn at least $60,000 annually, thought adjustments must be made to reflect regional cost of living differences, or hold a Master's or Ph.D. level degree. These are precisely the same criteria now accepted by the USDOL in deciding who should be exempt from calculations to determine H-1B dependent employer status.

There would be two restrictions worth noting: First, the IT H-1B could not be extended since the shelf life of the technologies on which they work should not be longer than that. Second, a demonstrated inability to recruit equally qualified American workers should be a mandatory condition precedent to H-1B petition approval. Because the IT H-1B must move at the speed of business, no new advertisement or recruitment would be required. Sponsoring employers would be able to use the same ads and interview data that their managers looked at when deciding to extend the offer of employment in the first place. When filing the H -1B petition, the sponsoring employer would provide government adjudicators with evidence of such prior activity. This would go directly to US Citizenship and Immigration Service; USDOL would not be involved.

When the next waver of productivity hits, Uncle Sam better be ready. A new high-tech H-1B can help.

About The Author

Gary Endelman practices immigration law at BP America Inc. The opinions expressed in this column are purely personal and do not represent the views or beliefs of BP America Inc. in any way.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.