A phony STEM shortage and the scandal of engineering visas -- how American jobs get outsourced

Disney Chairman and CEO Robert Iger, whose business lobbying group pushes to import more tech workers from abroad even as it lays off American IT workers by the hundreds.

By Michael HiltzikBusiness Columnist

Feb. 26, 2016 2:46 PM PT

Leo Perrero had worked for the Walt Disney Co. in Orlando for more than 10 years, helping to run the point-of-sale systems at Walt Disney World and its other local parks, until late 2014. That’s when he learned that his job, like 300 others, was going to be turned over to a foreign worker within 90 days, during which time he was expected to train his replacement.

“My co-workers and I felt extremely betrayed by Disney,” he told a Senate subcommittee Thursday. “They were going to simply cast us aside for their financial benefit.... I followed my dream of having a career in technology to have my very same desk, chair and computer all taken over by a foreign worker who was just flown in to America weeks before.”

My coworkers and I felt extremely betrayed by Disney. They were going to simply cast us aside for their financial benefit.

— Former Disney IT worker Leo Perrero

Perrero’s story is becoming woefully familiar -- in fact, several congressional committees have been hearing testimony like it for more than a year. It’s the story of how a visa program designed to allow high-tech companies to find foreign workers with advanced degrees and unique skills has been subverted by industries using it to replace American journeyman technology workers with lower-paid workers imported from overseas.

A year ago, the wholesale firing of IT teams at Disney, Southern California Edison, and other tech-dependent companies and their replacement by offshore workers with so-called H-1B visas caused a national scandal. We exposed this loophole at the time, and followed up by showing how Congress connived in the visa subterfuge.

What’s happened since then? Almost nothing. The visa program is still being misused and corporations are still lobbying to expand it, American workers are still being abused, and Congress is still holding hearings that lead nowhere. The latest such event took place Thursday before a panel of the Senate Judiciary Committee. The only rational conclusion one could draw from the testimony from Perrero, two experts on the H-1B visa program and other witnesses is that it’s time for Congress to stop talking and start fixing.

Corporate America has been pushing to expand the H-1B program by promoting the notion that the U.S. faces a critical shortage of graduates in the STEM fields -- science, technology, engineering and mathematics.

“There were more than 230,000 H-1B applications in the first week for just 85,000 spots in 2015,” laments the Partnership for a New American Economy, an industry group that lists Disney CEO Robert Iger among its co-chairs. “We should have enough temporary H-1B visas and permanent employment-based green cards to meet the talent needs of our companies and our economies.” (A measure introduced in 2015 by Sen. Orrin Hatch (R-Utah) and others would raise the cap to as many as 195,000 visa holders.)

That viewpoint was expressed at the Senate hearing by Chad Sparber, a Colgate University economist who told of a “gifted” foreign graduate in economics whose employment prospects were in limbo because of the unavailability of an H-1B visa, and Mark O’Neill, chief technology officer for the eCommerce company Jackthreads, who spoke of his difficulties finding homegrown software developers for an iPhone app.

Yet, as was documented in testimony by immigration experts Ron Hira of Howard University and Hal Salzman of Rutgers, most of the H-1B visas aren’t being used to hire people with specialized skills. “The vast majority of H-1Bs who are coming in have no more than ordinary IT skills,” Hira testified.

About half of all H-1B visas end up in the hands of outsourcing firms that use them to import workers, mostly from India, to replace Americans in middle-level IT jobs. The firms include Tata and Infosys, both of which helped Southern California Edison in its program to shed 500 domestic IT workers and replace them with foreign labor.

These workers aren’t uniquely skilled engineering grand masters, but are rank-and-file IT employees, often with bachelor’s degrees and supplementary on-the-job training. But their salaries often come to $100,000 or more, leaving them vulnerable to imports of lower-cost workers.

Employers are legally required to pay visa holders the “local prevailing wage” for their jobs, but enforcement is porous. “It is extraordinarily easy to pay an H-1B worker much less than an American worker,” Hira observed; the trick lies in how the job is defined.

In fiscal 2015, Hira testified, 41% of the jobs approved by the government for H-1B visas were at the lowest skill levels for the jobs, which applies to “beginning level employees who have only a basic understanding of the occupation [and] perform routine tasks,” such as those done under “internships.” Those workers typically are paid 40% below the average wage. Even better, from the employer’s standpoint, is that the workers know that their visas are tied to their employment, which makes them especially submissive employees.

How does that conform to the claim that H-1Bs are all about hiring the best and the brightest employees available globally?

Evidence is ample that the very claim of a STEM shortage in the U.S. is phony. Salzman noted that “overall, our colleges and universities graduate twice the number of STEM graduates as find a job each year.” The mismatch is especially stark in the biomedical field. There, according to a 2014 paper by experts from UC San Francisco, Harvard and Princeton, “the training pipeline produces more scientists than relevant positions in academia, government, and the private sector are capable of absorbing.”

As a result, “a growing number of PhDs are in jobs that do not take advantage of the taxpayers’ investment in their lengthy education.” As we reported last year, the same high-tech corporations that poormouth their ability to find skilled workers simultaneously lay them off by the thousands.

High-tech firms in the U.S. cut nearly 80,000 employees last year, according to the job placement firm Challenger, Gray & Christmas. That included 47,000 announced layoffs from Hewlett-Packard, Intel, Unisys and Microsoft. (The former CEO of the latter, Steve Ballmer, is also a co-chair of the Partnership for a New American Economy.)

The reality of the H-1B program is that it fails to serve as a conduit for the skilled and virtuous immigrant known for what Sen. Richard Durbin, D-Ill., described as “the entrepreneurial spirit, the determination to make a go of it.”

“That’s not the case here,” he said. “We’re talking about temporary guest workers who basically work at the mercy of their employers.” The solution, he suggested, is to make it flatly illegal for anyone on an H-1B visa to replace an American employee on the job.

That might transform the program back into what it was designed to be, and what its cynical exploiters in industry claim it still is. “Overwhelmingly, the H-1B program is working to speed up the offshoring,” Hira said, “rather than keeping [jobs] here in the U.S.”

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