High-Tech Skills Shortage

High-Tech Skill Shortage or Low-Cost Labor Policy?
Are skill shortages so severe in America that we must import labor from abroad?
By: Franklin D. Latin

In 1991 The U.S. Department of Labor’s Labor Condition Application (LCA) Program was created to provide U.S. businesses with timely access to the best and brightest in the international labor market. It was intended to serve the urgent but generally temporary business needs of U.S. employers. Foreign workers who possess a theoretical and practical application of a body of highly specialized knowledge and who have attained at least a bachelor’s degree or equivalent in the specific industry are eligible for H-1B visas. These visas are good for three years and are renewable once which allows a foreigner to remain employed in the U.S. for up to six years.

American Competitiveness and Workforce Improvement Act Increased the Number of H-1B Visas for Foreign Workers

In 1998 Congress passed the American Competitiveness and Workforce Improvement Act which substantially increased the number of H-1B visas granted each year. The cap was nearly doubled from 65,000 to 115,000 for fiscal years 1999 and 2000. The 1999 quota was reached in April which left employers with thousands of job vacancies in areas critical to growth. In fact, the cap was reached quicker this year than when there were just 65,000 visas available. In an attempt to satisfy the increasing demand for foreign workers, Congress recently considered raising the cap to 200,000. Senator John McCain, R-Ariz, wants to go even further. “I say we should eliminate these artificial limits altogether and allow the technology industry’s leaders to work with the Department of Labor to set an appropriate level of visas to meet their needs.” The question arises: Why are U.S. businesses so dependent on foreign workers to fill high-tech jobs? Are skill shortages so severe in America that we must import labor from abroad?

Throughout the extended economic boom most economic indicators have shown signs of a vibrant and expanding economy: The unemployment rate has remained below 5.0 percent for nearly two years signaling tight labor markets; in October 1999, the nation’s rate dipped to 4.1 percent, its lowest in nearly 30 years. Equally impressive is the fact that the economy has been able to expand steadily without triggering inflation. And due to recent advances in technology, productivity growth has accelerated so sharply that it now rivals that of the 50s and 60s. All this while the stock market continues to soar to new heights.

America’s high tech firms are among the most dynamic and innovative in the world today. Much of the growth in productivity can be attributed to advances in information technology. These advances have allowed for changes in inventory management and distribution systems which have began to fundamentally change the way we do business. Employers insist that there are extreme shortages of information technology (IT) professionals in the U.S. They argue this prevents U.S. firms from growing to their full potential and also weakens their competitiveness in today’s global economy. In his testimony to Congress, Austin Fragomen, Chairman of the American Council on International Personnel, stated: “There is global competition for the best and brightest among the new breed of worker, and U.S. employers need ready access to this pool, even if U.S. workers are generally available.”

The H1-B program has been a political tug of war between Congress, which wants to expand the program, and the White House, which wants to limit H-1B visas and train U.S. workers for high tech jobs.

Opponents of the H-1B program disagree with the notion that we face skill shortages in the IT fields. They argue that there are numerous experienced professionals who are overlooked in favor of younger college graduates. Gene Nelson, a 47 year old IT professional with a doctorate in biophysics, testified before Congress that he is constantly told that he is overqualified. Nelson believes employers simply find it easier to hire young employees who are willing to work long hours without adequate compensation or to use H1-B workers rather than train older workers. An AFL-CIO official who also testified before Congress noted that the unemployment rate for engineers over 40 years old is five times higher than for their younger counterparts.

Another opponent of the H-1B program stated, “If there were really a major shortage of IT professionals we would expect wage rates to soar, companies to offer on-the-job training programs, and very little unemployment among software engineers. Instead we find very modest growth in wages for programmers and other IT professionals, virtually no company-sponsored training and extraordinarily high unemployment among specialists over 40.”

The H1-B program has been a political tug of war between Congress, which wants to expand the program, and the White House, which wants to limit H-1B visas and train U.S. workers for high tech jobs. Billy E. Reed, President of the American Engineering Association, expressed concern that “many of the same companies asking for increased access to foreign labor have had massive layoffs in the past year.” Representative Lamar Smith, R-Texas, Chairman of the Immigration Subcommittee, also expressed skepticism over how such a massive increase in the H-1B cap has failed to satisfy the soaring demand for foreign workers. His concern is that firms may be laying off U.S. workers in order to import foreign professionals as a way to cut costs.

While industry leaders decided to halt their attempts to raise the FY 2000 cap to 200,000 H-1B visas, opponents of the measure were not quick to celebrate. Many feel that the issue will again surface in the next session of Congress. As the debate intensifies, advocates on both sides continue to garner support for their cases.