Are guest worker programs causing backlash amid IT downsizing?

Last week, I heard two guests on CNBC’s Kudlow Show discuss the American workforce and what was happening with various jobs. One gentleman was from the CATO Institute and the other was a Democratic representative (Pascrell) from New Jersey.

The inference from the CATO Institute director that there is a shortage of skilled people in IT in the U.S. is very questionable. He is putting forth propaganda to justify the erosion of a lot of middle-class jobs in this country that will only be the demise of non-related industries.

Cheaper (not better) workers are what many tech companies are pursuing. It’s all about reducing payroll with foreign workers for the last couple years and it’s surprising that the host could not pick up on that. Rep. Pascrell did.

There are countless IT people who have been either laid off or caught in an outsourcing frenzy that looks good for immediate corporate gains in cutting expenses but will impact other areas of the economy drastically as their $80,000 to $120,000 annual salaries dropped to $30,000 or $40,000 (if they can even find work).

You can see it in the economy already. It’s happening at GM and Ford as they’re not selling to as large a market any more. People who were making decent money are now trying to get into any job they can find. Middle-class people who have been caught in that crunch have had their purchasing power greatly diminished. New car? You can’t pay for a $100,000-a-year- lifestyle on a $25,000 or $35,000 salary. Others may not identify with this plight because they still live at home and don’t have mortgages or college tuition.

It will start to show further down the line as refinancing homes, taking out some equity and going to interest-only mortgages are the stopgaps that these people have taken. What do they do next year, though? No other industry is absorbing these people at salary levels anywhere near what they were making.

Like other Washington think tanks, the CATO Institute is another “position paper for hire” organization that sees what they want to see based on contributor visions rather than objective ones. Here is part of the testimony on the need for immigration reform from Daniel Griswold, director of the Cato Institute Center for Trade Policy Studies, before the Judiciary Subcommittee on Immigration, Border Security & Citizenship on May 26, 2005:

Thank you for inviting the Cato Institute to testify today on the subject of immigration reform and the U.S. economy. Our current immigration system is fundamentally out of step with the realities of American life and desperately needs comprehensive reform.

Immigrants play an important part in the success of America’s free-enterprise economy. Immigrant workers willingly fill important niches in the labor market. They gravitate to occupations where the supply of workers falls short of demand (typically among the higher-skilled and lower-skilled occupations).

That hourglass shape of the immigration labor pool complements the native-born workforce where most workers fall in the middle range in terms of skills and education. As a result, immigrants don’t compete directly with the vast majority of American workers.

Immigration provides needed flexibility to the U.S. economy [and allows] the supply of workers to increase relatively quickly to meet rising demand. When demand falls, would-be immigrants can decide not to enter and those already here can decide to return home. The result is a more efficient economy that can achieve a higher rate of sustainable growth without encountering bottlenecks or stoking inflation.

America’s recent history confirms that American workers can find plentiful employment opportunities during times of robust immigration. During the long boom of the 1990s and especially in the second half of the decade, the national unemployment rate fell below 4 percent and real wages rose up and down the income scale (including for the poorest one-fifth of American households during a time of high immigration levels).

Today, the U.S. unemployment rate has again fallen to levels consistent with full employment and without diminished levels of immigration. Obviously, immigrants and native-born Americans alike can all find work in our $11 trillion economy.

Low-skilled immigrants benefit the U.S. economy by filling jobs for which the large majority of American workers are overqualified and unwilling to fill. Large and important sectors of the U.S. economy – hotels and motels, restaurants, agriculture, construction, light manufacturing, health-care, retailing and other services – depend on low-skilled immigrant workers to remain competitive.

Sure, this is great rhetoric for Congress, but workers on visas don’t actually return home. Also, they aren’t all minimally skilled. Contrast his testimony with quick facts from the Web site of HireAmericanCitizens.org, a group for limiting visas and worker programs:

1. H-1B and L-1 visa holders are temporary non-immigrant foreign workers.

Last year, nine out of 10 American IT jobs went to H-1B and L-1 workers.

There are more than 1 million American IT workers on the street looking for work.

There are more than 1.5 million H-1B workers in the U.S.

In the next 18 months, one out of 10 American technology jobs will be moved offshore.

Offshoring requires the use of H-1B and L-1 visa workers.

About 40 percent of the workers in a typical offshoring project are H-1B and L-1 visa holders working in the U.S. The Indian offshoring firms have stated publicly that offshoring depends crucially on H-1B and L-1 visas.

These jobs will never come back. We must act now to save the future of American technology jobs.

The new Bush immigration proposal is yet another American worker replacement program in disguise. All American workers in all job categories and pay scales can be replaced by this program.

The addiction U.S. employers have for exploiting non-immigrant guest worker visa programs and sending jobs overseas has caused significant losses in wealth and prosperity to middle-class Americans and significant losses in wealth to our states, cities and communities.

American workers are fighting a daily battle to remain employed and earn an American wage in an environment that gives preference to cheaper foreign labor.

Somewhere there’s a disconnect between what’s talked about in Washington D.C. as lofty platitudes and what’s really happening in America. Whose facts are right or are they both inflated? By the way, as American car companies wallow in poor sales, Toyota looks like it will become the No. 1 car manufacturer in the world. Consumers are looking for quality.

“Until American car companies put out a quality product, they will continue to lose share of the market as more people can’t afford cars that don’t run as well as their competitors.” Is that perception or reality? With many salaries cut by two-thirds, no one wants to bet any more.

Carlinism: Contrary to some beliefs, outsourcing and offshoring aren’t universally positive approaches.


The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.