STATEMENT OF JOHN R. FRASER
WAGE AND HOUR DIVISION
EMPLOYMENT STANDARDS ADMINISTRATION
U.S. DEPARTMENT OF LABOR
SUBCOMMITTEE ON IMMIGRATION AND CLAIMS
OF THE JUDICIARY COMMITTEE
UNITED STATES HOUSE OF REPRESENTATIVES
May 25, 2000
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to appear at today's hearing on the H-1B visa program. As requested, I will discuss the current status of the regulations to implement the H-1B program amendments in the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA). I will also describe implementation of the Department of Labor's worker training responsibilities under the 1998 amendments. I would also like to highlight for the Subcommittee some of the latest information we have about trends in the Department's H-1B workloads, and the demographics of current H-1B workers.
With the enactment of the 1998 amendments, the Administration moved forward on three fronts. First, there has been a significant new commitment to address skills shortages--particularly in the information technology sector--with both H-1B fee revenues and appropriated funds. Second, the Department has used the new resources available to assure the timely processing of employers' applications and the investigation of complaints alleging violations affecting H-1B visa holders. Third, we have engaged in a complex and multi-faceted rulemaking to implement the various provisions of the amendments. Let me address this undertaking first.
Status of Regulations
The ACWIA was signed into law on October 21, 1998. Immediately after enactment, the Department of Labor and the Immigration and Naturalization Service (INS) began the process of developing regulations to implement the new provisions of the Act. From the beginning, we reached out to involve and obtain the views of all interested parties, and carefully considered their views.
We began the process in November 1998, by meeting with employers, the immigration legal community, labor union representatives, and various groups representing employees to discuss the new amendments and issues that needed to be addressed through rulemaking. These groups included the American Council on International Personnel (ACIP), the National Association of Manufacturers (NAM), the American Immigration Lawyers Association (AILA), the Information Technology Association of America (ITAA), the AFL-CIO, the Institute of Electrical and Electronic Engineers (IEEE), the American Physical Therapy Association (APTA), the American Occupational Therapy Association (AOTA), the American Nurses Association (ANA), the College and University Personnel Association (CUPA), American Businesses for Legal Immigration (ABLI), and the National Association of Computer Consultant Businesses (NACCB).
On October 7, 1999, the INS revised its petition form (Form I-129W) and requested approval under the emergency procedures of the Paperwork Reduction Act to collect the additional information needed to comply with the new statistical and reporting requirements mandated by the 1998 amendments.
On November 30, 1998, the INS published an Interim Final Rule (IFR) establishing the ACWIA $500 filing fee effective December 1, 1998, and developed the form (I-129W) to be used by those H-1B employers eligible for exemption from the fee. On January 5, 1999, just two-and-a-half months after enactment, the Department of Labor published a Notice of Proposed Rulemaking (NPRM), the public comment period for which was extended upon request through February 19, 1999.
The Department received more than 90 comments pertaining to the NPRM. Several commentors expressed views on all aspects of the proposed regulation, resulting in submissions of up to 60 pages. Significant comments were provided by many of those groups mentioned above as well as by Senator Spencer Abraham. The comments received comprised more than 550 pages of input.
Throughout January 1999, we met with many of the same groups to discuss the rulemaking. Numerous other meetings with stake holders were held throughout 1999 and into 2000, including an August 1999 meeting with information technology industry representatives at OMB to discuss the rulemaking.
Mr. Chairman, because of the volume and nature of the comments received and our commitment to carefully weigh all of the comments, it took us longer to prepare the final rule than expected. On January 10, 2000, we submitted a draft final rule to OMB for review.
In February of this year, the INS published a final regulation implementing the $500 fee and notifying H-1B petitioners that they must submit the revised form I-129W along with their H-1B petitions effective March 30, 2000.
On March 31, 2000, INS published for public comment proposed revisions to the H-1B petition (Supplement H) in compliance with the 1998 amendments' mandate to improve its forms.
H-1B Technical Skill Training Grant Program
While DOL regulations were being developed, the Department of Labor also took steps to implement its responsibilities under the 1998 amendments to design and implement a technical skill training grant program for U.S. workers financed with some of the proceeds of the new H-1B fees. The ACWIA authorized the Secretary of Labor to use a portion (56.3 percent) of the H-1B application fees that went into effect December 1, 1998, to finance an "H-1B Technical Skill Training Grant Program." This investment is designed to help American workers -- both employed and unemployed -- acquire the requisite skills in occupations that are in demand - particularly in industries such as information technology and health care.
These grants provide funds through local, business-led Workforce Investment Boards to consortia of business, labor, schools, and community-based organizations. Similar to the development of other new competitive grant programs, the Department of Labor used the time before the first grant announcement was published to consult with key stakeholders, including businesses, trade and industry groups, labor organizations, Congressional staff, community- and faith-based organizations, community colleges and others on the use of the H-1B training funds.
The employer fees used to administer each skills training grants competition are provided to the Department of Labor by the Treasury Department, which distributes these fees to the Department of Labor on a quarterly basis. By July, 1999, the Treasury Department distributed sufficient funds to the Department of Labor for the first-round competitive solicitation for H-1B technical skills training grants. The Department announced this competition on August 16, 1999, in the Federal Register. This competition closed in November 1, 1999, and nine first round winners were announced on February 10, 2000, totaling $12.4 million.. For the Subcommittee's information, I've attached to my written statement a description of some of the successful grant proposals.
On March 29, 2000, the Department announced the availability of an estimated $40 million for a second round competitive solicitation. We have incorporated a number of lessons learned from the first round grant solicitation and award process into the second round. For example, since the first round we have extended the grant period from one to two years and increased the maximum award from $1.5 million to a total of $3 million over two years. In addition we have done a great deal of community outreach, informing the public about the grant program to increase the number of applications received. Proposals for the second round are due June 5, 2000, and awards for technical skills training will be announced in August 2000. The Department will announce a third round of grant competition by September. Proposals for this round will be due in October 2000, and the Department plans to announce awards for this round in November 2000. Additional rounds of competition for H-1B technical skill training grants will continue as funds become available.
In addition, the bipartisan Workforce Investment Act (WIA) of 1998 becomes effective on July 1, 2000, and provides the framework for the new workforce preparation and employment system. The Department of Labor is helping States and local communities implement WIA. As part of this function, the Department is building and strengthening partnerships among State and local Workforce Investment Boards, businesses, schools, labor unions, public agencies, and community-based and faith-based organizations that can help meet local and regional demands for high-skilled workers using WIA formula funds, H-1B training grant resources and other resources as appropriate and necessary. By working through the WIA framework, business leaders have the opportunity to develop strategies to address local and regional skill shortages through their leadership positions on State and local workforce investment boards.
DOL H-1B Program Workloads
I would now like to briefly discuss changes in the Department's H-1B program workloads since enactment of the 1998 amendments.
The number of H-1B labor condition applications (LCAs) received by the Department's Employment and Training Administration (ETA) has increased significantly every year since the program's inception. While there is a statutory cap on the number of H-1B nonimmigrant visas each year, there is no such cap on the number of LCAs that may be certified by the Department, nor on the number of job openings that may be certified on such applications. Since 1993, the number of LCAs and job openings certified has exceeded the H-1B visa cap. Nonetheless, the volume has grown quite significantly since the 1998 amendments. For example, in FY 1999, ETA processed over 300,000 LCAs--an increase of about 25 percent over FY 1998; 60 percent over FY 1997. This surge in workload under the H-1B program is also reflected in the number of job openings certified on LCAs by ETA. In FY 1998, ETA certified nearly 600,000 job openings, and in FY 1999 it certified an estimated one million.
In February 1999, a system was implemented nationally which allowed employers to transmit H-1B applications via electronic facsimile and to receive a certification decision on their application by a return fax. As a result, over half of the H-1B applications in FY 1999 were handled via the new facsimile process (LCA fax). This electronic processing allowed many of the regional staff that had been required to process H-1B applications to ensure compliance with the statutory seven-day H-1B processing requirements to return to processing permanent employment-based immigration cases.
In terms of the types of jobs employers seek to fill with H-1B nonimmigrant workers, requests to certify job openings for computer-related occupations predominate; since FY 1996, computer-related positions have consistently comprised approximately one-half of the number of such requests. Other high-volume occupations include physical and occupational therapists, which account for about 25 percent of all LCAs, and then much smaller portions for accountants, electrical and electronic engineers, physicians and surgeons, and college and university faculty.
I should also mention trends we have seen in complaints and enforcement workloads since enactment of the 1998 amendments. H-1B complaint workloads have always been relatively modest--we believe in large part due to the fact that H-1B workers face powerful disincentives to lodge complaints against their employer. However, since the enactment of the 1998 amendments, the Department has seen an increase in the number of complaints and a shift in the nature of complaints filed.
Through FY 1998, we received an average of about 50 H-1B complaints each year. But the number of H-1B complaints more than doubled after the 1998 amendments--to 135 in FY
1999 (and to 96 through April in FY 2000). While most complaints still pertain to wage issues, the more recent complaints also commonly allege new categories of violations established by the 1998 amendments, such as:
· Failing to pay when no work is offered (benching);
· Imposing an early-termination penalty; and,
· Requiring payment of the employer's $500 fee.
We have been able to respond to the increased complaint workload in part because of the designation of a portion of the fee revenue for enforcement. Comparing the 18-month period after the 1998 amendments to the prior 18-month period, our efforts have resulted in:
· Double the number of H-1B investigations completed;
· Double the number of investigations finding back wages due (about three-quarters of
the total); and
· Triple the amount of back wages due (more than $1.5 million).
Demographics of H-1B Workers
Let me conclude by briefly summarizing recent data compiled by the INS on the demographic characteristics of approved H-1B workers for FY's 1999 and 2000 (through February). I have attached six charts to my testimony that provide this information in the detail available. These data on approved H-1B workers reveal interesting distributions along age, educational, occupational, wage, and national origin lines.
In the area of educational attainment, almost 57 percent of approved H-1B workers held a bachelor's degree in FY 1999; 56 percent in FY 2000. Over 40 percent of H-1B workers held a master's degree or higher in both 1999 and 2000. Just under two percent do not have at least a bachelor's degree.
Consistent with our own LCA data, H-1B workers are predominantly--though by no means exclusively--sought in computer-related occupations, and predominately in systems analysis/programming occupations. Just over 53 percent of approved H-1B workers were in the Systems Analysis/Programming occupations in 1999; in FY 2000 that figure is a little over 44 percent.
The median wage for all H-1B occupations was $45,000 in FY 1999 and $47,000 in FY 2000. The median wage for H-1B workers employed as systems analysts and programmers in 1999 was $47,000. As a point of reference, this compares--based on BLS data on median weekly earnings (annualized) for 1999--with a median wage for all "computer systems analysts and scientists" employed in the U.S. of $52,400 and for all "computer programmers" employed in the U.S. of $46,700.
Approved H-1B workers tend to be quite young. In stark contrast with the U.S. workforce, 83 percent of H-1B workers are under age 35 and fully 92 percent under age 40. Less than 16 percent are age 35 or over (compared to nearly 62 percent of the U.S. workforce).
In terms of country of origin, almost half of approved H-1B workers were from India in 1999; for the first five months of FY 2000, about 38 percent are from India. In both years, the next largest source country is China, with about ten percent of the visas.
FY 1999 INS sample data also reveal some interesting information about the previous immigration status of H-1B workers: 60 percent of H-1B visa recipients entered from outside the United States in 1999; the other 40 percent adjusted from other non-immigrant status. Of the latter group, nearly six-of-ten adjusted from F-1 student status.
Mr. Chairman, this concludes my prepared statement. I will, of course, respond to any questions you or the Members of the Subcommittee may have.
Supplemental Information on Successful
Training Grant Proposals
The following are examples of successful grant proposals from among the 9 first-round Technical Skills Training Grant Awards totaling $12.4 million:
· The Workplace, Inc. (Bridgeport CT) - This project proposes a system of employer-certified skills centers in southwestern Connecticut to train people in identified occupations that are high-skill and in short supply. Workplace, Inc. views the current "Emerging Technologies Model" of jobs as very different from the traditional "Business Model." In the traditional pyramidal model, entry-level low-skill jobs at the bottom rung predominated. In the newer model, there are far more high-skill jobs with relatively few lower-skilled workers to upgrade into the higher levels of employment. The objective is to measurably reduce the need for H-1B visas in the southwest Connecticut area. The project proposes to use skill standards established under the aegis of the National Skill Standards Board (NSSB) and will formally certify individuals meeting those standards. A number of area businesses, community organizations and educational institutions are involved; in particular, Pitney Bowes will provide classrooms, instructors, materials and equipment. (Grant award of $1,500,000.)
· NOVA (CA) Private Industry Council (Sunnyvale CA) - The consortium of business, training, and service organizations includes NOVA, two community colleges, Opportunities Industrialization Center West, University of California Santa Cruz Extension, Joint Venture: Silicon Valley Network, California Employment Development Department, Sun Microsystems, and Cisco Systems. The goal is to equip about 200 individuals with high level technical skills to bridge the "digital divide." A diverse population from some of the poorest neighborhoods in Silicon Valley, participants will receive one-on-one assistance from counselors/training coaches. A new program called STEP (Systems Administration Training and Employment Program) designed by a team including representatives from Sun Microsystems, Cisco Systems, NOVA and local community colleges will enable individuals to become certified systems administrators in less than one year. (Grant award of $1,320,938.)
· The Philadelphia Workforce Development Corp (PWDC) - In partnership with 60 health care employers, 25 nursing schools, the One Stop Career Center system, and the largest union-based trainer in the country (District 1199C Training and Upgrading Fund of the National Union of Hospital and Health Care Employees, AFSCME, AFL-CIO.), PWDC is launching a comprehensive training initiative designed to address a growing shortage of skilled nurses in the Philadelphia area. In addition to training, the project will offer the full range of supportive services - such as career counseling, testing, assessment, and job placement - provided by the Training and Upgrading Fund and other funding sources. (Grant award of $563,057.)