John W. Steadman, Ph.D., P.E.
The Institute of Electrical & Electronics
Engineers – United States of America (IEEE-USA)
To The Committee on the Judiciary
United States Senate
Examining the Implications of the H-1 Visa for the American Economy 16 September 2003
My name is John Steadman and I am testifying today in my role as the President-Elect of the Institute of Electrical and Electronics Engineers – United States of America (IEEEUSA).
Until recently, I headed the Department of Electrical Engineering at the University
of Wyoming in Laramie. Last month I became the Dean of Engineering at the University
of South Alabama in Mobile.
The Institute of Electrical and Electronics Engineers is a transnational professional
society made up of more than 382,000 individual electrical, electronics, computer and
software engineers in 150 countries around the world. IEEE-USA was established in
1973 – in the midst of another economic downturn – to promote the professional careers
and technology policy interests of IEEE’s 235,000 U.S. members, approximately 2% of
whom are H-1B visa holders.
Nearly 70% of IEEE-USA’s members work for private businesses, primarily in the
aerospace and defense, biomedical technology, computers and communications, electrical
and electronics equipment manufacturing and electric power industries. Ten percent (10%) are employed by Federal, state and local government agencies. Another 10% teach at American colleges and universities or work for non-profit research organizations. Most
of the rest are self-employed and/or work as consultants to business and government.
Employment-Based Admissions Programs
Responding to speculative predictions that America faced critical shortages of engineers,
scientists and other highly skilled professionals, Congress made several important
changes to the nation's employment-based immigration laws beginning in 1990.
The Immigration Act of 1990 revised permanent employment-based visa programs and
authorized increases in the admission of foreign nationals seeking legal permanent
resident status in the United States. It modified temporary work visa programs and
created new ones for foreign professionals and other skilled workers. And it expedited
admissions processing for foreign visitors coming temporarily to conduct business or to
study in the United States.
Proponents argued that these changes were needed to enable businesses and educational
institutions to compete for people with specialized knowledge and skills deemed to be in
short supply in the United States. Opponents insisted that there was no compelling
empirical evidence of shortages that could not be met by improving education and
training opportunities for U.S. workers. Others raised concerns about the potentially
adverse effects of substantial increases in the supply of temporary foreign workers on
employment opportunities and compensation for U. S. citizens and legal permanent
residents, especially during periods of flat or declining economic growth.
Among the most important of the new temporary admissions programs - as a source of
skilled professionals for U.S. employers and transitional visas for foreign students who
intend to apply for legal permanent resident status - is the H-1B visa program.
Key Features of the H-1B Visa Program
To qualify for an H-1B visa, a foreign national must have at least a baccalaureate degree
(or equivalent experience) in an occupation requiring the theoretical and practical
application of specialized knowledge and skills and a job offer from a U.S. employer.
Employers who plan to hire H-1B workers must file labor condition applications (LCAs)
at the U.S. Department of Labor and agree to pay H-1B workers prevailing wages in their
intended areas of employment.
H-1B dependent employers (where more than 15% of all employees are H-1B workers)
must also attest that they have tried and been unable to recruit U.S. workers and have not
displaced and will not displace U.S. workers in order to hire H-1B workers.
These labor condition application requirements are intended to ensure that the admission
of foreign professionals on H-1B visas will not adversely affect job opportunities, wages
and working conditions for similarly qualified U.S. workers.
As soon as the Department of Labor approves their Labor Condition Application, all
petitioning employers must submit an H-1B visa application to the Bureau of Citizenship
and Immigration Services (formerly the Immigration and Naturalization Service) in the
Department of Homeland Security along with an application-processing fee of $130.
Private sector employers must pay an additional $1,000 fee to help fund technical skills
training programs for U.S. workers administered by the Department of Labor, a special
educational grants and scholarships program administered by the National Science
Foundation and improvements in H-1B program administration and enforcement.
H-1B Visa Ceilings and Admissions Trends
In 1998 and again in 2000, Congress substantially increased the numbers of foreign
professionals legally authorized to enter the United States on H-1B visas - from 65,000 a
year to 115,000 a year for 2 years beginning in 1999; and to 195,000 a year for 3 years
beginning in 2001.
The current 195,000 H-1B visa ceiling will fall back to 65,000 at the end of this month.
And, unless they are extended by Congress, the recruitment and retention requirements
for H-1B dependent employers and provisions authorizing the use of application fees to
fund education and training programs for U.S. workers will expire at the same time.
Immigration and Naturalization Service data indicate that demand for H-1B workers
grew slowly during the early 1990's - from 52,000 visas issued in FY 1992 to 60,000 in
FY 1996 - and then spiked sharply upward, from 91,000 in FY 1998 to nearly 137,000 in
Since then INS has reported approving more than 200,000 initial H-1B petitions in FY
2001; 103,584 in FY 2002; and 141,520 in the first three quarters of FY 2003. 56,986 of
this year’s approvals to date count against the current 195,000 cap. The other 84,534
petitions that have been approved so far this year are for persons who are exempt from
the Congressionally mandated cap. Exempt workers include those employed by colleges
and universities as well as those who work for nonprofit and governmental research
organizations. An additional 47,813 petitions are currently pending adjudication, one
third of which will count against the cap if they are approved.
If this year’s 95% approval rate continues in the 4th quarter, as many as 238,995 could be
approved in FY 2003, more than twice as many as were approved last year.
According to INS data, more than two-thirds of the new H-1B visa petitions approved in
recent years have been for information technology workers and engineers, including
electrical, electronics, computer and software engineers. Most of the rest have been for
managers and administrators of various kinds and college and university educators.
The most common country of birth for new H-1B workers is India (with nearly 50%),
followed by China, Canada, the United Kingdom, the Philippines and Korea (with 20%).
Nearly 60% have Bachelors degrees; 30% have Masters degrees; and 8% have PhDs or
other professional degrees.
The median annual compensation for all new H-1B workers with Bachelors degrees in
recent years has been $50,000. New H-1B workers with Masters degrees in computerrelated
and engineering occupations earn $60,000 a year. Those with PhDs earn between
$70,000 and $75,000 a year.
Nearly 60% of all new H-1B workers in recent years came from overseas. 40% had been
previously admitted on other temporary visas. 24% held student visas.
1) The H-1B Visa Is Exacerbating the Problem of Engineering Unemployment
IEEE-USA is extremely concerned that current levels of engineering unemployment –
precipitated by the collapse of the Dot-Com and telecommunications sectors – are being
exacerbated by the continuing reliance of many employers on foreign-born professionals
admitted under the H-1B and other “temporary” work permit programs and by the global
outsourcing of engineering and other high paying manufacturing and service sector jobs.
Between FY 2000 and FY 2002, the INS approved almost 800,000 H-1B visa petitions
(540,000 new petitions and 250,000 renewal petitions).
During the same 3 year period, unemployment among electrical and electronics engineers
in the United States spiked sharply upward from 1.3% in 2000 to 4.2% in 2002. The
unemployment rate for computer scientists rose from 2.0% in 2000 to 5.0% last year.
And the unemployment situation has become even worse in 2003. According to the
Bureau of Labor Statistics, the unemployment rate for electrical and electronic engineers
reached an all time high of 7.0% in the first quarter of this year. 6.5% of U.S. computer
hardware engineers and 7.5% of all computer hardware engineers were out of work.
These were unprecedented levels for each occupation.
The impact of H-1Bs on the labor market is also compounded by a significant loss of jobs
in the high-tech sector. According to recent statistics from the American Electronics
Association, America’s electronics industry shed 560,000 high paying manufacturing and
service jobs between January 1, 2001 and December 31, 2002. Given contemporaneous
increases in the outsourcing of high-end, manufacturing and service sector jobs to lowercost
overseas locations, many of these “high wage/high value added jobs” may be gone
2) H-1B Worker Safeguards are Weak and Ineffective
The H-1B Labor Condition Application requirements were originally intended to help
balance U.S. employers’ needs for temporary access to specialized skills not readily
available in the United States with U.S. workers needs for safeguards against unfair
competition for jobs in domestic labor markets.
Employers who intend to hire foreign nationals on H-1B visas are required to attest that:
1) they will pay their H-1B workers the higher of the actual or prevailing wage in their
intended area of employment; 2) working conditions for U.S. workers will not be
adversely affected; 3) there are no strikes or lockouts at locations where H-1B workers
will be employed; and 4) that a notice of their intent to hire foreign workers on H-1B
visas will be posted at their intended place(s) of employment.
So-called “H-1B dependent” employers (where 15% or more of all employees are H-1B
workers) must also attest that: 5) they have tried and been unable to recruit U.S. workers;
and 6) they have not displaced and will not displace U.S workers in order to hire H-1B
workers. Employers of H-1Bs who are paid at least $60,000 per year or who have at least
a Master’s degree or the equivalent in a specialty related to needs of such employers are
not subject to these recruitment and retention requirements.
Currently H-1B dependent firms account for only about 2% of the companies that submit
H-1B applications (source). The remaining 98% of employers that petition for H-1B
workers are not required to try to recruit and retain U.S. workers before hiring H-1Bs.
3) H-1B Investigative Powers and Enforcement Authority Are Also Limited
Largely because the Departments of Labor and Homeland Security have very limited
investigative and enforcement authority, the attestation requirements that were enacted to
protect job opportunities, wages and working conditions for U.S. workers and help to
prevent H-1B workers from being exploited have proven to be weak and ineffective.
Most notably, the prevailing wage attestation requirement is riddled with loopholes.
Rather than having to pay current prevailing wages identified using standardized
procedures, employers are free to use a wide variety of acceptable sources to establish the
validity of the wages they intend to pay. Sometimes wage rates are based on surveys that
are two or three years old. In addition, proposed salaries meet the prevailing wage
requirement if they are no more than 5% lower than the actual or prevailing wage being
paid to similarly qualified U.S. workers in applicable areas of employment.
Several studies have found that many H-1B workers are paid substantially less than
similarly skilled U.S. workers (Sources). Others, most notably a 2001 National Research
Council report and a 2003 Federal Reserve Bank of Atlanta study, have concluded that
the magnitude of any effect that the H-1B program has on wages is difficult to estimate.
(Sources) Significantly, the NRC report notes that the H-1B effect may not be to depress
wages but rather to keep wages from rising as rapidly as they would if there were no
Because they have very limited authority to initiate investigations or enforcement actions
before receiving a complaint, the hands of the Departments of Labor and Homeland
Security are effectively tied when it comes to taking prompt and decisive action against
employers who abuse the program. Displaced Americans are likely to be long gone
before their foreign replacements show up for work. And H-1B workers, who are
virtually indentured to sponsoring employers for periods of six years or longer, are often
reluctant to complain to the government if their employers fail to live up to their labor
4) Fee-Based Skills Training Programs are Missing their Intended Targets
A key selling point that helped to persuade skeptical lawmakers to approve an expansion
of the H-1B program in 1998, was the imposition of a $500 fee (raised to $1,000 in 2000)
on petitioning employers to fund technical skills training programs for U.S. workers;
grants and scholarships to enable low income students to study math, engineering and
computer science at American colleges and universities; math and science educational
improvement projects in grades K-12; and improved H-1B program administration and
enforcement by responsible Federal agencies.
According to a recent report from the U.S. Department of Commerce (Education &
Training for the Information Technology Workforce, June 2003), very few of the
training providers who have received H-1 technical skills training grants from the
Department of Labor are preparing U.S. workers for the kinds of professional-level jobs
for which U.S. employers typically recruit foreign nationals on H-1B visas. This is due,
in part, to ambiguity about the types and levels of training that should be provided and
the traditional emphasis of most local Workforce Investment Boards on the provision of
entry-level training for unemployed and disadvantaged workers. Similar concerns are
noted in a 2002 General Accounting Office report (GAO-02-881).
5) Statistical Deficiencies Continue to Hamper Policy-Makers
The continuing lack of current statistical information seriously limits the ability of policymakers
in Congress and responsible agencies to effectively oversee and manage the
workings of the H-1B program.
Numerical and demographic information about H-1B workers and their employers as
well as statistics on the results of investigative and enforcement actions must be collected
and disseminated much more quickly than they have been in the past. To be optimally
useful to decision makers, they should provide more accurate estimates of the size of the
H-1B population, not just (as they do now) on variations in the levels of work performed
by various agencies (eg., labor condition applications processed by the Department of
Labor; visa petitions received and approved by the Department of Homeland Security:
and visas issued in the United States by the Departments of Homeland Security and at
overseas locations by the Department of State).
6) The Impact of the H-1B is Compounded By Abuses of the L-1 Visa
In addressing the impact of the H-1B, Congress must also consider the implications of the
L-1 Visa. The L-1 (Intra-Company Transfer) visa was established by Congress in the
1950’s to enable multi-national companies to periodically relocate foreign executives,
managers and workers with specialized knowledge of their employer’s products and
services to branches and subsidiaries in the United States. It is currently being used by
non-U.S. engineering services firms to import significant number of technical workers, IT
professionals and engineers through their U.S. subsidiaries, who are outsourced to other
U.S. companies and subsidiaries, who in turn, lay off their U.S. workers. In many
instances, the displaced U.S. workers are being forced to train their non-U.S.
replacements in order to obtain a severance. The L-1 Visa has been exploited in this
fashion due to its lack of even minimal workforce protections and because it allows some
employers to avoid, at least for a time, the public scrutiny and negative publicity
associated with the H-1B visa program.
We don’t believe that Congress intended – or could have even anticipated – that the L-1
visa program would be used by some companies to import substantial numbers of
technical workers, IT professionals and engineers and then use those employees to
provide services under contract or lease arrangements with other U.S. based employers
who, in turn, lay off many of their U.S. workers. The practice of requiring displaced U.S.
workers to train their replacements in order to qualify for severance benefits is an
outrageous abuse and is clearly at odds with the purposes for which the L-1 visa program
was originally established.
7) Increasing Reliance on Guest-Workers Also Fuels Outsourcing
Another assertion that is often made by the proponents of high tech guest worker
programs is that they will be forced to send even more jobs overseas if their ability to
import foreign nationals in sufficient numbers without being burdened by any worker
safeguards or user fees is limited or otherwise compromised. IEEE-USA believes that
this threat rings hollow, because it greatly oversimplifies the economic forces that are
Even though U.S. employers continue to enjoy easy access to guest-workers through the
H-1B, L-1 and other work visa programs, the outsourcing of engineering design as well
as research and development functions to lower cost overseas locations has been
increasing so rapidly that some companies are getting nervous about the possibility of
unfavorable publicity and the attendant potential for political backlash. If reducing costs
and increasing short-term profits are the principal drivers, then global outsourcing will
continue to occur regardless of how wide we open the door to guest-workers, simply
because the comparative advantage of acquiring labor and facilities at overseas locations
so far outweighs the costs of labor and facilities in the United States that there can be no
effective competition. Paul Kostek, a former IEEE-USA President who currently chairs
the American Association of Engineering Societies, has said as much in a recently
published article entitled “How Can You Compete with an $800 a Month Engineer?”
To make matters worse, we believe that by continuing to import guest workers through
the H-1B and L-1 visa programs, U.S. based employers are actually facilitating and
expediting the transfer of manufacturing and service jobs to lower-cost overseas
locations. Foreign professionals are increasingly being brought to the U.S. specifically to
facilitate outsourcing by taking advantage of their connections, language skills, and
familiarity with offshore business partners. Also, as more and more guest-workers return
home, they take with them an acquired knowledge of the U.S. market and business
practices, a network of contacts, and exposure to U.S. technology and its applications.
With that knowledge, coupled with lower domestic labor costs, they are well positioned
to compete with U.S. firms for outsourcing work.
The net result is that the United States is making itself increasingly dependent on foreign
technical expertise both here and abroad. The best and brightest U.S. students who we
would hope are attracted to scientific and engineering careers are smart enough to see that
their career paths and earning potential is limited, and will choose alternative careers.
Ultimately at risk is America’s ability to innovate and to use technology to provide
competitive advantage and ensure our national security.
In order to restore the H-1B temporary admissions program to its original purpose; to
reduce its adverse effects on job opportunities, wages and working conditions for
citizens, legal permanent residents and foreign nationals who have been legally admitted
to work temporarily in the United States; and to address current high levels of
unemployment among high tech professionals in the United States, IEEE-USA urges
1. Reduce H-1B Admissions Ceilings and Limit Authorized Stays
• The H-1B visa quota should be reduced to its originally authorized level of 65,000
per year when the current level of 195,000 expires at the end of FY 2003.
• Authorized stays should normally be limited to a single, 3-year, non-renewable
• Additional reforms that will facilitate the permanent admission of foreign
professionals with highly specialized knowledge and skills, including foreignborn
recipients of Ph.D. degrees in Science and Engineering should also be
2. Strengthen Essential Safeguards for all Affected Workers
• Mandate that all H-1B workers be paid a prevailing wage that is not less than the
median salary paid to similarly qualified U.S. workers in their intended area(s) of
• Extend the applicability of the recruitment and retention attestation requirements
that currently apply only to H-1B dependent employers to all employers of H-1B
3. Improve H-1B Program Administration and Enforcement
• Increase visa processing efficiencies and reduce backlogs and delays by
centralizing key administrative responsibilities that are currently shared by the
Departments of Labor, Homeland Security and State.
• Enhance compliance and reduce fraud and abuse by authorizing random audits of
labor condition applications and related H-1B visa applications.
• Add a credentials verification component to the application process to help ensure
that H-1B workers meet minimum educational requirements.
4. Increase the Availability and Effectiveness of H-1B Technical Skills Training
• Give employers and affected individuals greater flexibility in the choice of
qualified training providers than exists under current law.
• Consider the use of training vouchers to enable individuals to better meet
specialized, short-term instructional requirements.
5. Improve the Timeliness and Utility of Statistical Reports
• Mandate publication of timely reports on numbers of visa applications received
and visas issued as well as demographic information on temporary visa recipients,
including their age, occupation, educational attainment, level of compensation and
country of origin as well as the names and industry sectors of their sponsoring
• Commission detailed analyses of the impact of temporary work visa programs and
global outsourcing of research, design and manufacturing jobs on national,
regional and local labor markets for highly skilled professionals in the United
6. Address Immigration Reform: Another important and often ignored issue that
Congress must consider when assessing the advantages and disadvantages of the H-
1B, L-1 and other temporary admissions programs is the impact of these programs on
foreign guest-workers themselves. Most are all too willing to accept relatively low
wages and substandard working conditions in order to enter or remain in the United
States. Many come seeking an opportunity to obtain permanent resident status, to
become citizens and realize the American dream.
IEEE-USA shares the long-held belief that welcoming foreign nationals with the
knowledge, skills and determination needed to succeed and making them citizens has
helped to make America great. To the extent that demand for high tech professionals
exceeds the current domestic supply, we urge Congress to make needed reforms in
the nation’s permanent, employment-based admissions system in the belief that an
immigration policy based on the concept of “Green Cards, Not Guest-workers” will
do far more to help America create jobs, maintain our technological competitiveness,
and ensure our economic and military security than continuing to rely on temporary
admissions programs ever will. American policy should be to bring the best and
brightest to the U.S. and keep them here.
7. Pass the U.S. Jobs Protection Act (S.1452/H.R. 2849): Congress should actively
support the prompt enactment of the USA Jobs Protection Act. This bill was
introduced on July 24th by Senator Chris Dodd (D-CT) as S. 1452 and in the House
by Representative Nancy Johnson (R-CT) as H.R. 2849.
If enacted, this critically important legislative proposal will plug loopholes and
prevent abuses of both the H-1B and L-1 temporary visa programs. More
specifically, it includes provisions that will:
• Prohibit displacement of U.S. workers by L-1 visa holders,
• Require employers to pay L-1 workers prevailing wages,
• Prevent companies from leasing L-1 workers to other (secondary) employers,
• Require all employers of H-1B and L-1 workers to make U.S worker recruitment
and retention attestations. This requirement currently only applies to a handful of
so-called H-1B dependent employers, and
• Strengthen the Secretary of Labor’s authority to investigate abuses of the H-1B
and the L-1 temporary work visa programs
The bottom line is that U.S. employers are continuing to import significant numbers of
skilled foreign professionals on H-1B and other temporary employment-based visas at a
time when U.S. engineers, computer scientists and other information technology workers
are experiencing sustained and historically high levels of unemployment.
Our collective ability to create and sustain high wage/high value added jobs for U.S. high
tech professionals, including women and other traditionally underrepresented minorities,
and ensure viable careers that will attract future generations into technical fields are the
fundamental issues in the current debate about temporary, employment-based admissions
and the global outsourcing of high-end manufacturing and service sector jobs. In this
regard, it is critically important that Congress and this Committee maintain the broadest
possible perspective and take a comprehensive look at the current and future health of the
nation’s high tech workforce and not limit its focus to the narrow issue of H-1B visas.
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