H-1B is broken, but which candidate will fix it?

Over the years, I have written several articles about the overuse of H-1Bs and the false premise that there is a shortage of skilled technology workers in the United States. Those that bleat that the United States will not keep up with the global competition unless we get more critically skilled workers are more concerned about making sure they get a bigger bonus by cutting labor costs. If there was a real shortage, salaries would skyrocket and not fall down as they have done over the last several years.

In our economy, the real issue is the correlation of people losing good-paying jobs and how it all interrelates to the housing market, foreclosures and the 20-year low in buying new cars. (The "typical IT worker" which has been displaced by an H-1B is now at a much lower pay scale and his/her buying power has been acutely reduced).

The other observation is that this rush to hire H-1Bs has effected more than the IT industry. Some companies, like United Airlines, have used the H-1B program to fill jobs ranging from financial analysts and counter help to Directors of Fuel Supply which do not sound like jobs where there is a shortage of U.S. citizens or critical skills to fill them.

Stagnating economy

This is a real problem that has been growing for the last six years (at least) in the general economy. I have addressed job erosion in Illinois which has affected foreclosures as well as new car sales and state tax revenues (the state has a $1 billion plus shortfall). The great "cost savings" that companies realized in hiring cheap labor has been figured in to their profits across the last couple of years. If you notice, some of the same companies have now shown poor growth and lagging profits. Hiring cheap labor was "last year's solution" for many and they cannot make any great cost reductions on the salary side anymore.

In other words, the easy ways to look more profitable on paper than what you actually are, have been exhausted. Now some CEOs are faced with being creative and looking for new markets rather than implementing yearly cost cutting in order to justify an overly generous bonus that is not earned. (Cutting costs is a tactical function that can be accomplished by an analyst or even a sharp clerk, not a strategic initiative that a CEO should be given a multi-million dollar bonus for.)

Some high-tech companies are being looked at very differently by their once-loyal employees. At IBM, some are looking at a union - as are others in multi-national companies.

Plainly stated, many IT software engineers and analysts that were being paid $80,000 to $100,000 in the early 2000s have now taken jobs for significantly less. Those that are still working in the industry may have been bounced from an employee status to a contractor status where benefits and pensions are not part of the compensation equation.

Flushing out employees that are benefits and pension-eligible and hiring them back as consultants and part-time contractors for a flat hourly rate has been the strategy of many companies. I refer to that as the Wal-Martization of the industry.

These people are not going out looking at new cars or new houses, they are not buying a lot of high-tech things and for the most part have taken a lower lifestyle. The amount of money they used to spend on landscaping, house additions, vacations and other expenditures has dried up. Other industries and jobs have now been affected as well as more and more small business owners see a decline in their business and then their lifestyle.

Everyone is talking about sluggish growth at their companies because they cannot slash anymore to create the appearance of growth. The result is that the overall economy is stagnating and the buying power of the consumer has diminished. The great decisions of hiring a lot of H-1Bs are backfiring in the economy as money is being siphoned out of the U.S. economy and sent back to countries of origin where the H-1Bs came from (good for their economy, but bad for ours)

There is very little or no re-circulation of salaries into other segments of the United States economy. You do not have to be a Nobel Prize winner in economics to figure out the effects of that lack of circulation.

So if you are a non-IT person , business owner or someone in a totally different industry, you are now feeling the effects that have cascaded over the last couple of years from a couple of high tech industries into yours.

Typical scenario at car dealers: Want to sell that car? How many thousands do you want to knock off from the sticker price? The bargaining goes on and on while cars sit on lots. Dentists are another group affected as more and more people are losing dental benefits. Many already see more and more not coming in for regular check-ups as they are not being picked up anymore by dental plans that have been eliminated.

What needs to be done?

Can this downward trend be reversed? That's what many are looking for in this presidential election. As we look at both parties, their candidates and their campaign rhetoric of hope and change; there is a lot of talk about magically creating good jobs for people but no substance on how that is going to be accomplished.

Which one from either party talk about fixing the negative impact that the H-1B Visa program has made on the economy of this country? The Republicans? Jay Leno had an interesting observation on that.

Hillary Clinton is for expanding the H-1B Visa program which says she is willing to sacrifice more jobs and families' well-being. Funny how the unions haven't picked up on this.

Obama has not really addressed H-1Bs and McCain is not seeing it as a problem.

Here is what needs to be done

• We need to curb cheap labor coming into this country. The reality is that the vast majority of these people are not wizards and only have basic skills that have been overrated or over-hyped as critical for global competitiveness. The lack of managing this program correctly has added to the amount of illegal aliens in this country.

• Make higher education cheaper and hold universities to educating the work force here. Instead of investing in foreign ventures that may be good as a secondary or tertiary strategy, their primary strategy which should be to create a competitive workforce here (where they get their endowments, alumni gifts and state and federal funding from). Those that don't comply get their funding cut off. Some alumni that blindly give to their alma mater should look into where the schools are focusing their efforts.

• Create a more cohesive working relationship between state, school and business groups to tackle the problems that are in our states. So that all do not wind up like Michigan. The video in an earlier column made by a veteran TV reporter (Vince Wade) shows the problems in Michigan.

• Encourage global competition and a sense-of-urgency to educate the workforce by tightening up on curricula in higher education as well as public schools. Focus on programs that yield a crop of good graduates in areas that industries claim there is a shortage in, instead of cutting out programs that could have helped these areas.

• States should also focus on creating jobs-programs that take highly skilled people and transfer them into appropriate-level jobs instead of aiming low level jobs-programs for limited-skilled workers to those that have degrees, certificates, and critical experience. Taking someone with a master's degree in computer science and offering them some menial job opportunities at the local Home Depot or other retail enterprise is not solving the problem or adding to the economy. There is a lot of talent sitting on the sidelines and unemployment figures do not reflect this. Underemployment is skyrocketing while the politicians and business media point to “good numbers” in unemployment statistics.

All the presidential candidates talk about developing new jobs, but none seem to talk about specifics or fixing the H-1B issue. In listening to all, the best quote to keep in mind is Harold Geneen's (former ITT Chairman):

Words are words,

Explanations are explanations,

Promises are promises, but only performance is reality.

CARLINI-ISM If there is a shortage of IT people, wages should be through the roof and not in the cellar.

See James Carlini interviewed by the STRASSMAN REPORT out of California. The 30-minute video discusses the need for planning Gigabit network infrastructure today in order to be globally competitive tomorrow.

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