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Bloggings on Dysfunctional Government

by Angelo A. Paparelli

Editor's note: Here are the latest entries from Angelo Paparelli's blog.

February 26, 2009

Banking on Zombie Immigration

The talk in Washington, on Wall Street and across America is all about the problem of zombie banks.  These are financial institutions that appear to be alive and operating normally (if you can believe their advertising), but are all virtually dead from infections caused by toxic assets and undeclared losses on overvalued real estate and other credit interests. One prophet of financial gloom and doom, Nouriel Roubini -- an NYU Stern Business School professor -- favors the dreaded "N" word, the nationalization of failing banks ("Merging two zombie banks is like having two drunks trying to help each other to stand up," he says).

With talk of zombies in vogue, Congress ventured recently into the field of revivification when it enacted the stimulus legislation, the American Recovery and Reinvestment Act (ARRA).  Our legislators dug deeply into the cemetery of bad, but near-dead immigration laws to resurrect the notion of H-1B dependency, secreting it stealthily inside ARRA.  This provision in ARRA, Section 1611 -- a short but powerful three sentence, dubbed the "Employ American Workers Act" (EAWA) -- is a version of H-1B dependency on steroids. EAWA crams dependency down the throats of entities that received or will receive TARP (Troubled Assets Relief Program) funds, namely, several feeble financial institutions, two auto companies -- Chrysler and GM, the wobbly insurer AIG, and GMAC, GM's finance arm, as well as a host of financial institutions that availed themselves of credit from the Fed under Section 13 of the Federal Reserve Act.  

EAWA prohibits TARP- and Fed-funds recipients from hiring new H-1B workers (professionals in specialty occupations) unless the recipients first try to find and hire a U.S. worker who is at least as qualified as the H-1B candidate the employer wants to employ. EAWA allows refused American job applicants to file complaints with the Attorney General (AG) alleging unlawful refusal to hire or misrepresentation concerning a hiring decision, establishes a procedure for binding federal arbitration if the AG finds reasonable cause to believe that the statutory violations alleged in the complaint occurred, and permits imposition of unspecified “administrative remedies,” including civil fines and debarment from the employment-based immigration system, as the AG “determines to be appropriate.”

EAWA also prohibits TARP- and Fed-funds recipients from "displacing" (laying off) any U.S. workers and replacing them with an H-1B employee, whether at its own job site or at any worksite of a customer, for 90 days before and after (a) the filing of an H-1B petition (for work at the employer's own facility), or (b) the placement of the H-1B worker at the customer site.  

H-1B dependency had been an immigration zombie of sorts because it was almost a dead letter that expired for several years with a sunset clause and then once automatically reactivated, applied to very few businesses. H-1B dependency is easily avoided by employing only "exempt H-1B workers" who are paid at least $60,000 per year or those with a masters or higher degree.    Under EAWA, however, TARP- and Fed-funds recipients may not escape the burdens of H-1B dependency by hiring exempt H-1B workers.

So in short, Congress has engaged in a perverse form of necromancy by using an immigration zombie to help zombie banks try to stand up. 

I call EAWA what it is -- protectionist legislation that will anger our global trading partners and imperil the very businesses that the folks at TARP and the Fed are trying to save.  H-1B workers often are the bearers of bright ideas and innovation.  Why stifle their contributions?

For a more extensive treatment of EAWA and H-1B dependency, read my article, co-authored with Ted Chiappari, THE EMPLOY AMERICAN WORKERS ACT: PROTECTIONIST TURDUCKEN, IMMIGRATION STYLE, published on Feb. 23 in The New York Law Journal, courtesy of the copyright holder, IncisiveMedia.