August 1, 2003
The Honorable Saxby Chambliss
The Honorable Edward M. Kennedy
Dear Senators Chambliss and Kennedy:
The Institute of Electrical and Electronics Engineers - United States of America (IEEE-USA) commends you and the other members of the Immigration and Border Security Subcommittee of the Senate Committee on the Judiciary for holding very timely hearings on the L-1 Visa Program and America's Interests in the 21st Century Global Economy.
IEEE-USA is concerned that continuing reliance by employers on temporary work visa programs, including the H-1B (specialty occupation) and L-1 (intra-company transfer) visa programs, and the steady increase in the outsourcing of white collar jobs to lower cost, overseas locations may have very serious implications - not only for the employment of U.S. engineers and other high tech professionals - but also for the economic well-being, national security and technological competitiveness of the United States.
The Institute of Electrical and Electronics Engineers (IEEE) is a transnational technical and professional society made up of more than 382,000 electrical, electronics, computer and software engineers in 150 countries around the world. IEEE-USA was established in 1973 to advance the public good while promoting the professional careers and public policy interests of the 235,000 IEEE members who live and work in the United States.
Tough Times for U.S. High Tech Professionals
The past couple of years have been tough ones for many U.S. engineers and other high tech professionals. The unemployment rate for electrical and electronics engineers, for example, climbed from 1.3% in 2000 to an all-time high of 7.0% in the first quarter of 2003. Joblessness among computer scientists and systems analysts grew from less than 2.0% to more than 5.0% during the same period.
And, although the recession that has plagued the nation's economy since March of 2001 is supposed to have officially ended last November, it certainly hasn't ended for electrical, electronics, computer and software engineers. According to the Bureau of Labor Statistics, the unemployment rate for electrical and electronics engineers in the quarter just ended remains high at 6.4% - compared to 3.1% for all managers and professionals. The current jobless rate for computer hardware engineers (5.6%) and software engineers (4.1%) is also high.
Unemployment among high tech professionals in all parts of the country has been made much worse by the alarming rate at which U.S. manufacturers and service providers have been shedding jobs in recent years. A study released earlier this year by the AEA (formerly the American Electronics Association) indicates that 560,000 jobs in electronics manufacturing, computer software and communications services disappeared between in the 24 month period between January 2001 and December 2002.
The picture painted by these statistics is one of the worst employment markets for electrical and electronics engineers, ever - worse, even, than during recessions in the 1970's, 1980's and early 1990's. Whether this trend represents a short-term cyclical phenomenon that will correct itself when an economic recovery takes hold - or a more fundamental structural change in U.S. high tech labor markets - remains to be seen.
Impact of Temporary Visa Programs
Whatever the outlook, most of IEEE's U.S. members are understandably concerned about current unemployment levels. Many believe that job opportunities for American high tech workers are being reduced by the continuing admission of substantial numbers of foreign professionals on temporary work permits. They are outraged by reports that some employers have taken advantage of loopholes in the nation's immigration laws to displace citizens and legal permanent residents and then replace them with cheaper, foreign workers on temporary visas, including H-1B (specialty occupation) and L-1 (intra-company transfer) visas.
Although H-1B visas have received a good deal of attention in Congress and the news media, much less is known about the uses and abuses of the L-1 visa program. Until WKMG - TV6 in Orlando and Business Week publicized the firing of U.S. workers and their replacement by foreign nationals on L-1 visas at Siemens ICN in Lake Mary, Florida - a case in which U.S workers had to train their replacements to qualify for severance benefits - there had been no reason to question the integrity of the intra-company transfer visa program.
IEEE-USA supports the L-1 visa program as originally conceived by Congress, which was to enable multi-national corporations to periodically relocate executives, managers and workers with specialized knowledge of their employer's products and services to work temporarily in the United States. We don't believe Congress intended - or could have anticipated - that the L-1 visa program would be used by some companies to import substantial numbers of rank and file technologists for the explicit purpose of using them to provide information technology services under contract to other employers in the United States.
We urge Congress to take appropriate action to end this abuse of the L-1 visa program.
Congress should also mandate and provide the resources needed to facilitate the collection and timely reporting of better statistics on the numbers, current status and employment characteristics of foreign nationals who have been admitted to work temporarily in the United States on employment-based non-immigrant visas.
Without such vital information, the size of the non-immigrant population - and its impact on domestic labor markets - is difficult to estimate.
Based on research conducted on behalf of IEEE-USA, we estimate that there are currently close to 480,000 H-1B visa holders living and working in the United States.
Other than annual estimates of the numbers admitted and their countries of origin, there is little or no information on the current size, visa status and employment characteristics of the L-1 visa holder population in the United States.
Global Outsourcing, Economic Security and Technological Competitiveness
An even more formidable challenge facing U.S. engineers and IT professionals is posed by the outsourcing of scientific and engineering work, including research and development as well as related manufacturing functions, to lower cost, overseas locations in Eastern Europe, Russia, the Philippines, India and China. A July 2003 report by Gartner Research Inc. predicts that another 500,000 U.S. IT professionals will be displaced in the next 18 months and their jobs moved overseas. John McCarthy of Forester Research thinks that as many as 3.3 million white-collar jobs of all kinds and $136 billion in wages will be outsourced to low cost countries by 2015.
This trend has serious implications for America's economic security and technological competitiveness.
The United States has long been a leader in technological innovation - a major contributor to remarkable improvements in productivity, economic growth and living standards during the 1990's. And engineers are prime movers in the conversion of scientific discoveries into useful products and services through technological innovation. A nation's ability to innovate is critical to its economic health and social well-being and location matters because innovation feeds upon itself and generates enormous local spillover benefits. An obvious example is Silicon Valley.
Global outsourcing of high wage/high value added engineering jobs threatens to undermine this leadership for the following reasons:
Although employers argue that outsourcing is critical to the maintenance of U.S economic and military superiority in an increasingly competitive, technology driven global economy, and that related cost and quality improvements make it a win-win proposition for all participants, IEEE-USA is concerned that, absent enlightened government oversight, long-term costs may exceed short-term benefits for many individuals, businesses and the nation.
How Temporary Visa Programs Facilitate Overseas Outsourcing
Research being conducted by Dr. Ron Hira at Columbia University's Washington-based Center for Science Policy and Outcomes suggests that the increasing use of foreign professionals on H-1B and L-1 visas by some multi-national providers of information technology and business processing services facilitates and even accelerates the outsourcing of these services and related jobs from the United States to lower cost, overseas locations. Dr. Hira also chairs IEEE-USA's Research & Development Policy Committee and is an active member of our Careers and Workforce Policy Committee.
Such companies are taking advantage of the willingness and ability of many foreign engineers and IT professionals to work for less than prevailing wages in order to underbid their U.S. competitors for lucrative IT and business processing service contracts in the United States. As a result, these companies and their employees acquire invaluable experience in private/proprietary and mission critical/public sector software applications and a network of business connections that can be used to expedite the subsequent transfer of such knowledge, experience and connections to lower cost, overseas locations. The inevitable result - unless appropriate monetary and fiscal steps are taken to help employers create jobs, reduce unemployment and stem the loss of purchasing power by American workers - will be a continuing loss of high wage/high value added jobs in the United States, a hollowing out of the nation's intellectual and innovative capabilities and reduced economic and technological competitiveness.
Public Policy Recommendations
Amelioration of the complex economic and interrelated employment challenges facing the nation at the dawn of the 21st Century will require creativity and patience on the part of public policy makers in Congress and the Administration.
Reliable statistical information about the numbers and employment characteristics of non-immigrant workers and the current magnitude of global outsourcing by industry sector and their impacts on high tech labor markets in the United States is sorely lacking.
In addition to mandating the timely collection and publication of pertinent statistical information, we would also urge the Judiciary Committees in the House and the Senate to give serious consideration to the very modest reforms of the H-1B and L-1 temporary visa programs proposed in bills recently introduced by Representative Nancy Johnson (HR 2849) and Senator Chris Dodd (S 1452). And rather than continuing to increase our dependence on temporary guest-worker programs, IEEE-USA recommends that appropriate steps be taken to expedite the admission of limited numbers of engineers and other high tech professionals as legal permanent residents in order to help satisfy labor market needs that cannot be met through more effective utilization of available U.S. workers.
Other committees with jurisdiction should be encouraged to examine the need to provide transitional assistance to unemployed, underemployed and incumbent workers in the high tech and other sectors of the nation's economy. Such assistance could take the form of tax incentives to help pay for lifelong learning, including tax credits for employers that offer training or retraining in high demand technical, managerial and marketing skills; tax-favored savings accounts to help pay for job and career-related education and training expenses incurred by individual workers; and relocation accounts to help displaced workers move from low growth to high growth labor markets.
We appreciate this opportunity to share our views with your subcommittee on these very important engineering workforce issues.
Gregg L. Vaughn, P.E., Ph.D.
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IEEE-USA is an organizational unit of The Institute of Electrical and Electronics Engineers, Inc., created in 1973 to advance the public good, while promoting the professional careers and public-policy interests of more than 235,000 electrical, electronics, computer and software engineers who are U.S. members of the IEEE. The IEEE is the world's largest technical professional society. For more information, go to http://www.ieeeusa.org.
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Institute of Electrical and Electronics Engineers, Inc.