[Senate Hearing 106-929]
[From the U.S. Government Publishing Office]
S. Hrg. 106-929
AMERICA'S WORKFORCE NEEDS IN THE 21ST CENTURY
=======================================================================
HEARING
before the
SUBCOMMITTEE ON IMMIGRATION
of the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
on
EXAMINING WORKFORCE NEEDS IN THE HIGH TECHNOLOGY INDUSTRY AND AT
SMALLER COMPANIES, FOCUSING ON THE NEED FOR ADDITIONAL H-1B VISAS
__________
OCTOBER 21, 1999
__________
Serial No. J-106-54
__________
Printed for the use of the Committee on the Judiciary
U.S. GOVERNMENT PRINTING OFFICE
70-662 WASHINGTON : 2001
SENATE COMMITTEE ON THE JUDICIARY
ORRIN G. HATCH, Utah, Chairman
STROM THURMOND, South Carolina PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa EDWARD M. KENNEDY, Massachusetts
ARLEN SPECTER, Pennsylvania JOSEPH R. BIDEN, Jr., Delaware
JON KYL, Arizona HERBERT KOHL, Wisconsin
MIKE DeWINE, Ohio DIANNE FEINSTEIN, California
JOHN ASHCROFT, Missouri RUSSELL D. FEINGOLD, Wisconsin
SPENCER ABRAHAM, Michigan ROBERT G. TORRICELLI, New Jersey
JEFF SESSIONS, Alabama CHARLES E. SCHUMER, New York
BOB SMITH, New Hampshire
Manus Cooney, Chief Counsel and Staff Director
Bruce A. Cohen, Minority Chief Counsel
______
Subcommittee on Immigration
SPENCER ABRAHAM, Michigan, Chairman
ARLEN SPECTER, Pennsylvania EDWARD M. KENNEDY, Massachusetts
CHARLES E. GRASSLEY, Iowa DIANNE FEINSTEIN, California
JON KYL, Arizona CHARLES E. SCHUMER, New York
Lee Liberman Otis, Chief Counsel
Melody Barnes, Minority Chief Counsel
(ii)
C O N T E N T S
----------
STATEMENTS OF COMMITTEE MEMBERS
Page
Abraham, Hon. Spencer, U.S. Senator from the State of Michigan... 1, 4
Leahy, Hon. Patrick, J., U.S. Senator from the State of Vermont.. 6
Feinstein, Hon. Dianne, U.S. Senator from the State of California 6
Kennedy, Hon. Edward M., U.S. Senator from the State of
Massachusetts.................................................. 13
Schumer, Hon. Charles E., U.S. Senator from the State of New York21, 21
CHRONOLOGICAL LIST OF WITNESSES
Statement of Hon. Charles S. Robb, U.S. Senator from the State of
Virginia....................................................... 9
Panel consisting of Susan Williams DeFife, president and chief
executive officer, Womenconnect.com, Fairfax, VA; Julie
Holdren, president and chief executive officer, Olympus, Group,
Alexandria, VA; Robert D. Atkinson, director, Technology and
New Economy Project, Progressive Policy Institute, Washington,
DC; Roberta Katz, chief executive officer, The Technology
Network, Palo Alto, CA; and William T. Archey, president and
chief executive officer, American Electronics Association,
Washington, DC................................................. 15
ALPHABETICAL LIST AND MATERIAL SUBMITTED
Archey, William T.:
Testimony.................................................... 39
Prepared statement........................................... 42
Atkinson, Robert D.:
Testimony.................................................... 22
Prepared statement........................................... 24
Attachment: Building New Skills for the New Economy--
Regional Skills Alliances.............................. 28
DeFife, Williams Susan:
Testimony.................................................... 15
Prepared statement........................................... 17
Holdren, Julie:
Testimony.................................................... 18
Prepared statement........................................... 20
Katz, Roberta:
Testimony.................................................... 33
Prepared statement........................................... 35
Attachment: Technet CEO Testifies About American
Competitiveness........................................ 39
APPENDIX
Additional Submissions for the Record
Prepared statement of Hon. Phil Gramm, U.S. Senator from the
State of Texas................................................. 65
Prepared statement of The American Federation of Labor--Congress
of Industrial Organizations 65
Chart: Bureau of Labor Statistics, Employment and Earnings,
January, various years..................................... 69
Prepared statement of The American Occupational Therapy
Association.................................................... 70
Prepared statement of John William Templeton. Co-convener,
Coalition for Fair Employment in Silicon Valley................ 73
News Release of The American Business for Legal Immigration...... 75
News Release of The American Occupational Therapy Association,
Inc............................................................ 75
News Release of The National Association of Manufacturers........ 76
Letter and charts to President Clinton from:
Paul J. Kostek, president, The Institute of Electrical and
Electronics, Inc., dated October 20, 1999.................. 76
Letter to Senator Trent Lott from:
American Business for Legal Immigration, dated October 20,
1999....................................................... 79
AMERICA'S WORKFORCE NEEDS IN THE
21ST CENTURY
----------
THURSDAY, OCTOBER 21, 1999
U.S. Senate,
Subcommittee on Immigration,
Committee on the Judiciary,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:26 p.m., in
room SD-226, Dirksen Senate Office Building, Hon. Spencer
Abraham (chairman of the subcommittee) presiding.
Also present: Senators Feinstein, Kennedy, and Schumer.
OPENING STATEMENT OF HON. SPENCER ABRAHAM, A U.S. SENATOR FROM
THE STATE OF MICHIGAN
Senator Abraham. We will come to order. I begin today with
a brief apology on behalf of Senator Robb and myself. We were a
little late getting here because there is a vote still being
conducted on the floor, and so we apologize to everybody for
our slightly late arrival. It is also my understanding that
Senator Gramm, who was to have been part of the first panel to
testify, along with Senator Robb, is engaged in, I believe,
continuing conference on the banking reform legislation, so he
will not be here today, but we will continue.
I will make an opening statement and then we will turn to
Senator Robb. If we are joined, whenever we might be joined by
other members of the subcommittee, we will turn to them for an
opportunity to make statements if they wish, depending on where
we are in the proceedings. So let me just begin.
The principal purpose of today's hearing is to examine
workforce needs in the high tech area and at smaller companies.
The impact of the current availability of skilled workers on
entrepreneurs has received less attention than large firms in
the discussion of H-1B visas for skilled professionals. The
hearing will also address the need for additional H-1B visas
and possible approaches to meeting that need.
Senator Gramm, I know, who, as I said, will not be able to
be here today, still will be, I am sure, submitting written
testimony to discuss a bill that he has introduced to address
this problem, and Senator Robb, I believe, has legislation, as
well, to address it in a slightly different format but will be
here today to present his views accordingly.
This is not a new issue for our committee. In February
1998, the Senate Judiciary Committee, under the leadership of
Chairman Hatch, held a hearing on high tech workforce issues
that demonstrated that many companies could not find enough
qualified professionals to fill key roles. It also showed that
foreign-born individuals companies hired on H-1B temporary
visas typically created many additional jobs for Americans
through their skills and their innovations.
Shortly after that hearing, with the cap on H-1B visas
projected to be reached by June, I introduced the American
Competitiveness Act, which raised the H-1B visa cap from the
arbitrary 65,000 number selected in 1990 while also providing
10,000 scholarships for young Americans in high technology
fields. In April of that year, that bill passed the Senate
Judiciary Committee, and then in May, the legislation passed
the full Senate by a 78 to 20 vote. Sometime thereafter, the
House Judiciary Committee passed out a much different H-1B visa
bill. A negotiation ensued, and in time, a House-Senate
compromise was reached.
At that point, the White House raised several additional
issues and threatened a veto. After several more weeks of
negotiations, we were able to reach an agreement with the
administration and the bill passed the House by over 150 votes.
It was later signed into law as part of the ominous--ominous--
-- [Laughter.]
Senator Abraham [continuing]. Omnibus appropriations bill.
The delay caused by the White House objections unfortunately
did set us back a bit, and it resulted in an extra 20,000 visas
that were at least initially included in the House-Senate
compromise from being available to employers in 1998, simply
because the bill did not finish until after the beginning of
the new fiscal year. That created, of course, an additional
backlog for 1999.
The final legislation, which differed only somewhat from
the initial bill, met objections that had been raised initially
to increasing H-1B visas from the 65,000 cap. Some had argued
that we needed to have money for training and educating U.S.
workers, and as I indicated, the legislation did that. It
created a $500 fee per visa, which means that today, every time
an individual is hired on an H-1B visa, $500 goes to training
U.S. workers and providing scholarships for up to 10,000
American students a year in science and technology.
In addition, since the bill's passage, we have seen Intel,
Texas Instruments, and others in the private sector increase
mentoring and other significant education programs, and we
recently witnessed the $1 billion charitable donation from
Microsoft Chairman Bill Gates to fund full scholarships in the
science and technology fields.
At the time we passed the bill, others argued that tougher
enforcement was needed, so that legislation dramatically
increased fines, including a $35,000 penalty per violation, as
well as a 3-year debarment if a company willfully underpays an
H-1B visa holder and, in the course of which, replaces a U.S.
worker. For the employers about which opponents had expressed
the most concern, those employers with a high percentage of H-
1B visas in their workforce, the bill added new layoff and
recruitment attestations. In addition, the Labor Department was
given the authority to initiate an investigation if it received
credible evidence indicating a violation and received the
approval of the Secretary of Labor to investigate.
Since the passage of the legislation, the case for
maintaining an adequate supply of H-1B visas has only grown
stronger. First, despite the H-1B cap having been raised to
115,000 in fiscal years 1999 and 2000, as well as to 107,500 in
the year 2001, the increase has proven insufficient due to the
tight labor market, increasing globalization, the rapid pace of
the high tech sector, and the backlog of visas that developed
from the prior year. With the cap reached by June this year,
employers were again left wondering why government restrictions
are causing them to shelve projects and drop plans to place key
personnel overseas.
In addition, foreign countries are stepping up their own
recruitment efforts, including a pitch by the Canadian
government for U.S. high tech companies to move to Canada so as
to avoid the problem of hitting the H-1B visa cap year after
year. The CEO of Lucent Technologies stated this summer at a
Capitol Hill technology forum that it has placed hundreds of
engineers and other technical people in the United Kingdom in
response to an insufficient supply of U.S.-based workers,
keeping many related jobs from being created in America.
In addition, the INS has told Congressional committees that
due to at least one significant systems error, it may have
awarded more H-1B visas than the fiscal year 1999 statutory cap
permitted. However, the INS also has been unable to rule out
the possibility that other errors may have seriously
shortchanged employers, leaving the actual number of visas
issued in fiscal year 1999 uncertain absent a meticulous audit.
Finally, we have seen more studies and more individuals
reach the same conclusion embodied in last year's legislation.
A study by Joint Venture: Silicon Valley found that a lack of
skilled workers is costing Silicon Valley companies $3 to $4
billion a year. A study by the Computer Technology Industry
Association computed that a shortage of information technology
professionals is costing the U.S. economy as a whole $105
billion a year.
In a study for the Public Policy Institute of California,
University of California-Berkeley Professor Annalee Saxenian
found that immigrants are a major source of job creation. Her
research showed that Chinese and Indian immigrant entrepreneurs
in Northern California alone were responsible for employing
58,000 people with annual sales of nearly $17 billion.
Perhaps most notably, Laura D'Andrea Tyson, who was our
former chief economic advisor to the President, wrote recently
in Business Week, ``Conditions in the information technology
sector indicate that it is time to raise the cap on H-1B visas
yet again and to provide room for further increases as
warranted. Silicon Valley's experience reveals that the results
will be more jobs and higher incomes for both Americans and
immigrant workers,'' she went on to say.
In closing, I would just like to note that although this
hearing is in the Immigration subcommittee, I do not think
anyone here thinks the issues we address today are solely
immigration issues. Our long-term goal should be to make sure
that American workers have the skills to fill the high-tech
jobs of the future. In addition to the education and training
measures included in last year's bill, this year, I introduced
the New Millennium Classrooms Act to increase the amount of
computer technology donated to schools and to help our kids
prepare for the high tech jobs of the future. There are other
bills, I know, in both the House and Senate that similarly
attempt to increase the focus on training and computer
technologies. Indeed, currently, according to the Department of
Education, the line to use a school computer is 5 times longer
than it should be.
So I look at today's hearing more as an opportunity to get
a gauge on where things stand. We will see. Senator Gramm, as I
said, has a bill, Senator Robb a bill, and probably others will
be offering various formula, but these are issues we need to
deal with as well as to monitor, and we very much appreciate
the witnesses who will be here a little bit later to testify
from their perspectives and look forward to continuing to focus
on these issues in the time ahead.
[The prepared statement of Senator Spencer Abraham
follows:]
PREPARED STATEMENT OF SENATOR SPENCER ABRAHAM
``This issue is not new to this committee. In February 1998, the
Senate Judiciary Committee, under the leadership of Chairman Hatch,
held a hearing on high technology workforce issues that demonstrated
that many companies could not find enough qualified professionals to
fill key jobs. It also showed that the foreign-born individuals
companies hired on H-1B temporary visas typically created many
additional jobs for Americans through their skills and innovations.
``Shortly after that hearing, with the cap on H-1B visas projected
to be reached by June, I introduced the American Competitiveness Act,
which raised the H-1B visa cap from the arbitrary 65,000, number
selected in 1990 while also providing 10,000 scholarships for young
Americans in high technology fields.
``In April, that bill passed the Senate Judiciary Committee. And
then in May the legislation passed the full Senate by a 78 to 20 vote.
``Sometime after that, the House Judiciary Committee passed out a
much different H-1B visa bill. A negotiation ensued and in time a
House-Senate compromise was reached
``At that point, the White House raised several additional issues
and threatened a veto. After several more weeks of negotiations, I was
able to reach an agreement with the Administration and the bill passed
the House by over 150 votes and was later signed into law as part of
the Omnibus Appropriations Bill. The delay caused by the White House
objections prevented an extra 20,000 visas that were included in the
House-Senate compromise from being available to employers in 1998,
creating an additional backlog for 1999.
``The final legislation, which differed only somewhat from the
initial bill, met objections that had been raised initially to
increasing H-1B visas from the 65,000 cap. Some argued that we needed
to have money for training and educating U.S. workers. The legislation
added a $500 fee per visa, meaning that today every time an individual
is hired on an H-1B visa $500 goes to training U.S. workers and
providing scholarships for up to 10,000 U.S. students a year in science
and technology.
``In addition, since the bill's passage we have seen Intel, Texas
Instruments and others in the private sector increase mentoring and
other significant education programs. And we recently witnessed a $1
billion charitable donation from Microsoft chairman Bill Gates to fund
full scholarships in science and technology fields.
``Some argued that tougher enforcement was needed. So the
legislation dramatically increased fines, including a $35,000 penalty
per violation and a three-year debarment if a company willfully
underpays an H-1B visa holder and (in the course of which) replaces a
U.S. worker. For the employers about which opponents had expressed the
most concern, those employers with a high percentage of H-1B's in their
workforce, the bill added new layoff and recruitment attestations. In
addition, the Labor Department was given the authority to initiate an
investigation if it received credible evidence indicating a violation
and received the approval of the Secretary of Labor to investigate.
``Since the passage of the legislation the case for maintaining an
adequate supply of H-1B visas has grown stronger.
``First, despite the H-1B cap having been raised to 115,000 in
fiscal year 1999 and 2000, and 107,500 in 2001, the increase has proven
insufficient due to the tight labor market, increasing globalization,
the rapid pace of the high tech sector, and the backlog of visas that
developed from the prior year. With the cap reached by June this year,
employers were again left wondering why government restrictions are
causing them to shelve projects and draw up plans to place key
personnel overseas.
``Second, foreign countries are stepping up their own recruitment
efforts, including a pitch by the Canadian government for U.S. high
tech companies to move to Canada so as to avoid the problem of hitting
the H-1B visa cap year after year here in America. The CEO of Lucent
Technologies stated this summer at a Capitol Hill technology forum that
it has placed hundreds of engineers and other technical people in the
United Kingdom in response to an insufficient supply of U.S.-based
workers--keeping many related jobs from being created in America.
``Third, the INS has told Congressional committees that due to at
least one significant systems error it may have awarded more H-1B visas
than the fiscal year 1999 statutory cap permitted. However, the INS
also has been unable to rule out the possibility that other errors may
have seriously shortchanged employers, leaving the actual number of
visas issued in fiscal year 1999 uncertain absent a meticulous audit.
``As a solution, the Administration has proposed taking visas out
of the fiscal year 2000 cap, which would only further exacerbate the
expected shortfall for 2000. I also think it is of questionable
legality. Even though political resistance has thus far prevented a
higher H-1B cap, in light of these INS counting difficulties it seems
clear that it's imprudent to set the H-1B cap too close to anticipated
usage, since it engenders many problems for both employers and the U.S.
government. This would appear to be a major benefit of Senator Gramm's
bill.
``Finally, we have seen more studies and more individuals reach the
same conclusion embodied in last year's legislation.
``A study by Joint Venture: Silicon Valley found that a lack of
skilled workers is costing Silicon Valley companies $3 to $4 billion a
year.
``A study by the Computer Technology Industry Association concluded
that a shortage of information technology professionals is costing the
U.S. economy as a whole $105 billion a year.
``In a study for the Public Policy Institute of California, U.C.-
Berkeley Professor Annalee Saxenian found that immigrants are a major
source of job creation. Her research showed that Chinese and Indian
immigrant entrepreneurs in northern California alone were responsible
for employing 58,000 people, with annual sales of nearly $17 billion.
``And most notably, Laura D'Andrea Tyson, former chief economic
adviser to President Clinton, wrote recently in Business Week:
``Conditions in the information technology sector indicate that it's
time to raise the cap on H-1B visas yet again and to provide room for
further increases as warranted Silicon Valley's experience reveals that
the results will be more jobs and higher incomes for both Americans and
immigrant workers.''
``In closing, I'd like to note that although this hearing is in the
immigration subcommittee, I don't think anyone here thinks the issues
we address today are solely immigration issues. Our long term goal
should be to make sure American workers have the skills to fill the
high tech jobs of the future. In addition to the education and training
measures included in last year's bill, this year I introduced the New
Millennium Classrooms Act to increase the amount of computer technology
donated to schools and to help our kids prepare for the high-tech jobs
of the future. Currently, the line to use a school computer is five
times longer than the Education Department says it should be.
``The New Millennium Classrooms Act will address this problem by
increasing the deduction businesses can take for donating computers to
schools.
``I look forward to today's testimony and the opportunity to
explore all of these issues further.''
Senator Abraham. We have been joined since we began by
Senator Feinstein, and I would like to turn to her at this
point, if she has an opening statement to make, and then we
will go to Senator Robb.
Senator Feinstein. Thanks very much, Mr. Chairman. If I
may, I would like to ask your consent to enter into the record
a statement by the ranking member, Senator Leahy.
Senator Abraham. Without objection.
[The prepared statement of Senator Leahy follows:]
PREPARED STATEMENT OF HON. PATRICK J. LEAHY, U.S. SENATOR FROM THE
STATE OF VERMONT
I would like to thank the witnesses who have come here today and
highlighted a serious problem, and thank Senator Abraham and Senator
Kennedy for holding this hearing. Our high-tech industries have played
a crucial role in driving our unprecedented economic progress, and I
believe that we in Congress should act to help them meet their
increasing needs for well-trained and highly skilled employees. That is
why I am a proud cosponsor and strong supporter of Senator Robb's
Helping Improve Technology Education and Competitiveness (``HITEC'')
Act. The bill will provide a needed boost to both the current high-tech
work force and to science, math, and technical education in our
schools.
The bill creates the T-visa, which would be available to companies
looking to hire recent foreign graduates of U.S. master's and doctoral
programs in mathematics, science, engineering or computer science. In
other words, it will allow international students who gain advanced
degrees in the United States to apply their American education to help
American business. To be eligible, a company must provide total
compensation of at least $60,000 a year to the graduate, and must also
pay a $1,000 fee per visa. The fees paid by the companies would in turn
be used to fund partnerships between schools and industry to improve
science, math, and technology education in our grade schools and high
schools.
Thus, while this bill addresses the current labor shortage by
facilitating the hiring of additional foreign workers, it also takes a
significant step toward ensuring that there will be no such labor
shortage when our next generation of students finishes school. This
approach is far better than simply increasing the number of H-1B visas,
which is at best a stopgap solution.
Moreover, this bill also contains important protections for
American workers. Employers must pay the T-visa holders the prevailing
American wage for the tasks they are performing, and must give notice
to their employees (or their bargaining unit, where one exists) before
applying for a T-visa. In addition, employers cannot fire or lay off an
American worker to hire T-visa holders, and also cannot hire them
during a lockout or strike. Finally, the bill creates the T-visas for a
five-year period. After that, we can reevaluate and see whether our
employers still have needs that cannot be satisfied by the American
workforce.
The HITEC Act offers the best and most comprehensive solution I
have seen to the problems facing the high-tech industry. Indeed, it
helps guarantee that our economy will continue to be strong, both now
and in the future. I encourage all of my colleagues to support the bill
and to work to make it law.
STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR FROM THE
STATE OF CALIFORNIA
Senator Feinstein. Mr. Chairman, I listened carefully to
what you said. I thank you for holding the hearing. I think you
are quite accurate in what you did say. We did raise the H-1B
cap for 3 years. Last year, we doubled it, and apparently, that
cap is already filled and the industry is back for an
expansion. I would like particularly to welcome Senator Robb,
the distinguished Senator from Virginia, who has a bill. I
certainly have an open mind. I would like to read just a part
of my statement, though.
Senator Abraham. Please.
Senator Feinstein. Our society has undergone a dramatic
technical transformation. Indeed, information technology has
influenced every aspect of our society, from telephone and
banking services on to electronic commerce and education. Every
day, Americans are becoming more and more connected to one
another and to the global community through digital technology.
Given this fact, the demand for emerging digital
technologies and highly skilled professionals to develop these
technologies has exploded. Excluded the biotech industry, the
high tech explosion experienced in the United States has
created over 4.8 million jobs since 1993--that is
extraordinary--and produced an industry unemployment rate of
1.4 percent.
In my State, California alone, this growth in technology
has made the State number one in high tech employment by
creating 784,151 jobs and comprising 61 percent of California's
exports. That is how big it is. As a result, our Nation's
economy has embarked on an unprecedented expansion.
Certainly, it is in our interest to ensure that these
industries, which are located in the United States and help
drive our economy, can continue to obtain qualified, highly
skilled employees. I am interested in hearing the high tech
industry's views on the adequacy of our current law to address
these issues.
But at the same time, we must not lose sight of our
country's long-term need to ensure that American workers,
including minorities, women, and potentially displaced workers,
are sufficiently educated, recruited, trained, and retrained to
obtain or retain employment in the high tech industry. In
California, and I have been since I have been on this committee
now, which I guess have been 7 years, besieged by CEO's of high
tech companies year after year. Our committee, the full
Judiciary Committee, has held a hearing. I have heard first
hand CEO's say, we cannot find educated Californians who can do
these jobs. We advertise. The salaries are good. We have
starting jobs that are paying $60,000, $70,000 a year.
I guess one of the things that I feel the strongest is that
we must find a way to see that our young people are educated
for this workforce, because not only is it the cutting edge
workforce, but it is the workforce that is going to provide
them with the jobs that enable them to buy the home and live
the American dream. In my State, a high cost of living State,
if you have a minimum wage job, if you have a job that is going
to pay $29,000, $30,000, $32,000 a year, $35,000, even $40,000,
you cannot buy a home. You cannot live and ever realize that
dream.
So high tech really plays a very special role and the
Bureau of Labor Statistics estimates that between 1994 and
2005, more than one million new computer scientists, engineers,
systems analysts, and computer programmers will be required to
fill these jobs in the United States. Now, that is an average
of 95,000 new jobs each and every year. I hope the great
portion of these will go to students educated in our schools,
and I just throw out that challenge.
I know the problem. I know the deficit here. But I know the
challenge we face, because unless we meet that challenge, what
we are going to have in the California society is an increasing
division between those who have and those who have not, those
who can participate in the economy and those who cannot.
So I think and I hope that this hearing is more than just
about, well, let us expand the cap, let us double the cap, we
have got to have more foreign nationals because we cannot hire
California students, into how we are going to prepare our
youngsters for the future so that these companies can come in
one day and say, yes, we are hiring local people and we are
finding them to be excellent. Thank you very much.
Senator Abraham. I want to thank you, Senator Feinstein. I
also want to reiterate the point you are making. I share them
completely. As I indicated in my statement, this is not the
only place on Capitol Hill where we need to focus on this
issue. I mean, it just so happens that the immigration
component of this brings a part of this before us, but I
actually regret, I do not think I have seen some of the other
committees who have jurisdiction over the workforce issues
focus as much on it as we have tried to do here. Obviously, our
oversight can only extend to a certain aspect of the problem.
I would also say one other thing before we turn to Senator
Robb, which is that I have, I think, consistently indicated to
the companies who have come to us with respect to the H-1B visa
cap that while I think this is something we need to address, it
is only, in my judgment, a short-term fix, because I do not
really think that the possibility of having unlimited number of
highly skilled immigrants coming to this country will exist for
long, either. Other nations are not going to want to see their
most talented people all come to the United States. They are
going to want to develop their own industries, their own
software, their own computer and high tech businesses, as well,
and there are going to be a lot of inducements I think quite a
few people will select, because they will be able to stay in
their own home country.
I have always viewed this as being an interim solution that
can only really help us for a short period of time, and then I
think at that point, what we will see is that either we come up
with the ways to encourage young people in this country to move
in these directions and to train people in these directions or
we are going to find that we start losing a lot of
opportunities.
Senator Feinstein. Would you allow me to comment?
Senator Abraham. Sure. Please.
Senator Feinstein. I think that is right. This is not to
say that high tech, and I can only speak for my State, is not
trying to be helpful, because they are. Company after company
after company provide really major service to school districts
with computers, with teacher training, trying to turn things
around, after-school programs, internship programs, and the
like. So I think the industry itself is aware of the dilemma.
Of course, I think, in a way, what we need to--and one of the
things I am interested in hearing from the high-tech people is
the kind of engineer they need, where we fall short in our
local curriculum that so many of these people have to be
brought in from abroad.
Senator Abraham. That is certainly part of it, and again, I
would hope that some of the other committees with jurisdiction
who have more of the workforce responsibilities will also start
to look at this with some precision. I mean, I know they look
at workforce issues in kind of a macro sense, but this is sort
of more, as you indicated, a more micro focus, as well.
We have kept Senator Robb and our panel waiting for a while
and we will, I am sure, have more comments to make as this goes
on. I want to thank Senator Feinstein for participating today.
She is one of the few members of the subcommittee who seems to
make it to all of our hearings, which I appreciate, as opposed
to the lonely conditions that usually ensue when I am up here.
Senator Abraham. We will now turn to our first panel. We
are joined by Senator Chuck Robb from the State of Virginia,
who I know has a fair amount, maybe not quite as much high tech
industry as Silicon Valley, although I do not know. From what I
can tell, the area around Northern Virginia here is quickly
becoming a competitive alternative, and I know he has been very
active on these issues.
We welcome you and we thank you for being here, Senator. We
turn the floor over to you.
STATEMENT OF THE HON. CHARLES S. ROBB, A U.S. SENATOR FROM THE
STATE OF VIRGINIA
Senator Robb. Thank you, Mr. Chairman. I am delighted to be
able to join both you and Senator Feinstein. I think you will
find that the testimony that I am going to give is very much in
sync with the words that have already been spoken. As a matter
of fact, I was thinking some of the phraseology I was going to
use is quite similar to some of the things that you have
already said. But I join you in apologizing to others who may
have been here earlier for the fact that we were delayed
getting started with a vote.
I am delighted that you have held this hearing and I think
that, as I say, the information that is going to be provided
will be very useful to the other members of the subcommittee
and other workforce-specific subcommittees in terms of dealing
with this particular question.
This is really about the intersection of workforce and
immigration issues, as you have already indicated, and I doubt
that there is anyone in America who does not recognize that a
really pretty radical change in our economy has come about as a
result of the information technology explosion.
When I was Governor of Virginia in the early 1980's, we
created a commission on science and technology so that we could
determine how best to help Virginia companies bring new
technology to the market and, to be perfectly honest, to
attract additional businesses to locate in Virginia at the time
that that technology appeared to be a burgeoning industry.
There was a recognition that the explosion that was taking
place in Silicon Valley was extremely important not only to
Silicon Valley and the country, but to other areas that could
take advantage of this technology explosion, as well.
One of the things that I did with this commission was to
ask for a number of recommendations and they came back with 44
recommendations, one of which was to create a Center for
Innovative Technology. You may have looked as you arrived from
Dulles, and I know that until we have changed the slot and
perimeter rule, all of at least our California Senators, if not
our Michigan Senators, come and go through Dulles so that they
can have a non-stop flight.
Right after you get on the Dulles access road or the Dulles
toll road, depending upon which lanes you happen to be driving,
if you look to the left, you will see a rather unusually shaped
building. One of the recommendations of this task force was to
create a Center for Innovative Technology, and although the
actual building was finally approved and built after I left the
Governor's office, I asked the group that was going to have
that responsibility, the architects, I said, I would like to
have a building that makes a statement. I was not quite certain
how they would interpret that, and I think for any of you who
have seen what appears to be a design architecture that might
be upside down, at the very least, it makes a statement and it
does provide a focal point and creates a certain amount of
discussion about the role of technology.
Let me say that these technological explosions, as I say,
have occurred in many regions of the country, not just Silicon
Valley and not just in this area that we used to refer to as
the Dulles access road, and now the Dulles toll road since we
have both roads. Our economy has grown. The number of quality
jobs has increased, and a new and increasingly more important
area of commerce has been born. While this growth has been
occurring, Congress played a helping hand in terms of providing
research funding and utilizing modern technology within the
public sector.
For example, smart card technology has been used to
streamline outdated administrative systems in the Department of
Defense, and I should now recognize Route 128 around Boston
with the arrival of the distinguished senior Senator from
Massachusetts, and I will continue. We have used the Internet
to put Congressional bills and votes online and establish home
pages for almost every government agency. We passed the
Telecommunications Act of 1996 that included what I view to be
an extremely important provision, the e-rate to help ensure
that every school and library has access to the Internet.
But as with any burgeoning industry, there are likely to be
growing pains, and the most significant one that we see now is
the shortage of skilled workers to fill the nearly 350,000
vacant information technology jobs in this country.
Prior to the passage last year of the H-1B legislation,
Congress had recognized the problem but had failed to reach any
consensus about how to begin to address the skilled workforce
shortage. I certainly commend you, Mr. Chairman, for your
particularly outstanding leadership in passing that
legislation.
As you acknowledged then and many in the industry have
acknowledged since, raising the caps on H-1B visas is a short-
term solution to the critical labor shortages that this
industry has been facing, and you have both reiterated that
again today. The long-term challenge is to find ways to upgrade
the skills of our existing workforce and to improve the quality
of our education system so that the next generation has the
skills needed to maintain our global dominance in the
technology arena.
I am pleased that we were able to work together last year
to include a provision in the legislation which will establish
an industry-based, regional public-private partnership program
to conduct training of U.S. workers. I understand that the
Department of Labor has issued a request for proposals and I
look forward to monitoring the Department's implementation of
that portion of the H-1B legislation.
The effort last year, Mr. Chairman, was a good start to
find a short-term solution. Unfortunately, it looks like the
caps will again be reached early next year. With the start of
the new fiscal year now, the new quota or the new increase
takes effect, but there are projections that that cap will be
reached or exceeded as early as the first of the next calendar
year.
I see two main problems with continuing to just raise the
caps on H-1B visas. The first is that it is an imprecise and
short-term way of solving the high tech worker shortage. The H-
1B visa category is a general visa that applies to a wide range
of workers. These visas can be granted to everyone from bakers
to occupational therapists to computer programmers and fashion
models. If we just increase the H-1B caps, we will not be
targeting our specific need for high tech workers. Instead, we
may end up inadvertently providing a supply of workers in other
fields for which there may not be any shortage of labor at all.
The second problem with continuing to simply raise the H-1B
cap is that it does not address the long-term education and
training challenges that we face. In June, the Joint Economic
Committee, which has already been referred to and on which I
sit, convened a 3-day high technology summit to discuss the
impact of technology on our Nation's economy. It was helpful in
terms of confirming what most of us already suspected, that the
advances in technology have accounted for half of our economic
growth in the last 50 years and for a quarter of our real
growth in recent years. We learned that the three fastest
growing occupations in the United States are database
administrators, computer engineers, and systems analysts. The
number of people employed in these areas is expected to double
by the year 2006.
The other thing we heard from high tech CEO after CEO is
that the real answer to our workforce shortages lies in the
improvement of our elementary and secondary education system.
This is not an easy task. Our students need more than just
computers in their classrooms. They also need teachers who are
well equipped, modern schools who can teach them strong
technology skills. And our teachers need to be better trained
to use technology, particularly innovative software as a tool
to further their students' development of other basic schools.
Teachers need help in learning how to use technology in the
classroom and how to better integrate technology into their
curriculum. School districts that are struggling just to get
technology into the classroom also desperately need trained
experts to help them maintain their systems.
For all these reasons, Mr. Chairman, I introduced the HITEC
Act, or Helping Improve Technology and Competitiveness Act of
1999. It provides some short-term relief to companies who need
highly skilled technology workers and it encourages long-term
solutions by fostering partnerships between the private sector
and local schools to improve technology education in elementary
and secondary schools, much like the H-1B program that the
chairman has already referred to.
For the short term, the HITEC Act creates a new category of
visa, the T, or tech, visa, which is specifically aimed at
foreign nationals with top skills in science and technology.
Any international student who is a new graduate of a master's
or doctoral program in mathematics, science, engineering, or
computer science in this country would be eligible to obtain a
T visa if they had a job offer with an annual compensation,
total, not just salary, of $60,000 or more.
I targeted this group because the tremendous success of our
high tech economy has made it increasingly difficult for
universities to attract qualified candidates for master's and
doctoral degrees in engineering and the sciences. With salaries
high and stock options abundant, the majority of recent
graduates in these fields opt to enter the job market rather
than pursue an advanced degree. Our universities, in turn, have
looked overseas to find qualified students to fill these
graduate programs, and as a result, 32 percent of high tech
master's degrees and 45 percent of high tech Ph.D.'s are
currently being awarded to foreign nationals.
With the tight tech labor market, this talent is in high
demand and many American companies are making generous offers
to these new graduates. But while they may want to stay, a
limited number of H-1B visas forces many recent graduates to
return to their own country, where they then compete against
American businesses. I believe that the best and brightest
products from our university system have a valuable role in our
new economy.
Given that individuals with advanced degrees are needed to
teach the next generation of tech professionals and continue
the cutting-edge research that has made our economy the
strongest in the world, we ought to do all that we can to hold
on to our seed corn of our great minds. But Mr. Chairman, I do
not believe that immigration, as you have suggested and Senator
Feinstein has suggested and I know that Senator Kennedy
believes, I do not believe that immigration is going to solve
our long-term problems. These are problems that only education
can solve.
The HITEC Act looks toward the future by levying a $1,000
fee on applications for the T visa. These fees would be
directed toward the creation of public-private partnerships
between schools and businesses that improve K through 12 math,
science, and technology education, a basic format with which
you are familiar. Funds from the T-visa program would be
available through a competitive grant program on a one-to-one-
to-one matching basis, with the other two-thirds provided
equally by private industry and local public schools. To
encourage public-private partnerships that better reach out to
rural and disadvantaged areas, the government would increase
its share of the matching in these areas to a two-to-one-to-one
basis, covering 50 percent of the partnership cost.
Through these new alliances, the technology industry could
provide direct training to teachers, support of schools,
equipment, and networks, and supply both recent engineering
graduates and more experienced tech workers who could serve as
technology fellows to help teach math, science, and technology
in our public schools.
One of the greatest hurdles we face is preparing our
children for the kind of rigorous coursework required for
today's high tech forces. We know that our public schools in
many cases lack the resources and manpower to improve
technology education. We know that we need better trained
teachers and more technical support staff. And we certainly
know that we need more role models for students, who frequently
get discouraged by more advanced math and science courses and
simply give up on these fields.
While the tech industry has begun to contribute equipment
and services to improve education, more efforts are needed to
connect willing businesses with schools to bring more
innovation to our schools.
Mr. Chairman, technology changes very rapidly, so one of
the very best ways to teach teachers and students the latest
information and skills in high technology is simply to bring
those who have the expertise into the schools themselves.
Finally, the High Tech Act would create a new high tech
gold medal award to recognize technology companies who take an
active role in improving our public schools. There are a number
of businesses who are doing some fantastic things right now
with our public schools and they simply ought to be commended
for their efforts.
Mr. Chairman, there are many facets to the larger issue of
how we as legislators can promote policies which support
continued growth of our technology sector, but in terms of
workforce issues, I believe the legislation that I have
introduced with a number of cosponsors provides a good starting
point to address both the short-term and long-term needs. It is
not a panacea, but it is a proposal which I believe can be
supported by a majority of our colleagues, given the
overwhelming support of the legislation that you worked to pass
last year.
Mr. Chairman, with that, I thank you very much for the
opportunity to present this information to you today and I look
forward to working with you and the other distinguished members
of this committee and other committees with jurisdiction to
solve a pressing problem and to resolve the shortage of some
350,000 unfilled vacancies today, over 20,000 of which are
right in that burgeoning high tech corridor that both you and
the distinguished Senator from California were kind enough to
recognize in your opening statement.
With that, Mr. Chairman, I thank you for the privilege and
I look forward to working with you.
Senator Abraham. Senator Robb, we appreciate it and look
forward to working with you and other colleagues with an
interest in this area. I know you have other commitments here,
so we will thank you again for being here and let you go into
the next event on your schedule today. But we appreciate your
participation very much.
Senator Robb. Thank you, Mr. Chairman.
Senator Abraham. We have been joined by our ranking member,
Senator Kennedy, and I turn to him if he would like to make an
opening statement at this time.
STATEMENT OF HON. EDWARD M. KENNEDY, A U.S. SENATOR FROM THE
STATE OF MASSACHUSETTS
Senator Kennedy. Thank you, Mr. Chairman, but I think, as
you, Senator Feinstein, and others would understand, I remember
when I first entered the U.S. Senate. In an area, say, of the
South Shore of Massachusetts, if you worked for the Four Rivers
Shipyard, your father worked there, your grandfather worked
there, you had a high school diploma, and you had a very decent
life. You may have even been able to buy a small little place
on the Cape or off in the mountains. It was a satisfying,
fulfilling kind of a life.
Now, everyone who enters the job market has seven different
jobs, or will have at least seven different jobs. The skills
which are required have expanded dramatically. We come from a
part of the country, as my friend and colleague, Senator
Feinstein, and yourself, Senator Abraham, where we are taking
knowledge-based industries and basically hoping that we are
going to take these various important breakthroughs that we are
seeing in knowledge-based industries and use them actually in
manufacturing so that they will not go overseas, so that there
will be manufacturers that will provide good jobs, good
opportunities, and a good future.
If we expect to do that, you have to have highly-trained,
highly-educated individuals to be able to do it, and that is
what we are dealing with. We are distressed by the flow lines
in terms of our own country about producing these individuals.
We attempted in our bipartisan effort last year in terms of
training programs to consolidate training programs and to be
able to respond to many of those different challenges.
We have an immediate problem and a longer-term problem and
I am looking forward today to hearing from some of the people
who have thought about this to give us some guidance. I thank
you for having this hearing. It is very important, and as
always, you have brought some very thoughtful people that can
help and guide us.
Senator Abraham. Thank you very much. I do think one thing
probably I suspect all of us up here would agree on is that we
do not want to turn today's, or any of these events, to create
the impression that there has not been a great deal of effort,
and Senator Feinstein alluded to this, to try to train people
on the part of the private sector and on the part of government
and private sector partnerships. We have had a tremendous
increase in the number of these jobs and we have filled an
awful lot of them, obviously, with American workers, some who
had the skills and some who were trained. But it is obvious
from the statistics we already heard from Senator Robb and from
Senator Feinstein that growth is running faster than the
training programs so far can keep up.
I hope, as I said, Senator Kennedy, in my earlier comments,
that this will not be the only subcommittee that focuses on
this, because we only have a limited jurisdiction that really
deals with only the immigration part of it. This really is
something that other jurisdictions of the Senate really have to
take a major role in, too, and we need to work together with
them. Thank you for your participation.
At this point, we will invite the second panel to join us.
We will put name tags up there so that people can sit
accordingly. We are very pleased to have such a terrific panel
of experts now to join us.
Senator Feinstein. Mr. Chairman, while they are getting
settled, may I just personally welcome Roberta Katz. She heads
the Tech Net group in California, and it just so happens, I
have worked very much with her predecessor, John Dorr,
particularly on education issues. I want you to know that Tech
Net has been really very responsive to trying to help and
upgrade public education throughout the State, so I am looking
forward to your testimony.
Ms. Katz. Thank you, Senator.
Senator Abraham. Thank you, Senator.
I will now introduce each of the panelists and then we will
begin where we start.
First, we have Susan DeFife, who is the President and CEO
of womenCONNECT, which is headquartered in McLean, Virginia.
WomenCONNECT is considered the leading Internet site for
professional women and women business owners.
We will next hear from Ms. Julie Holdren, who is President
and CEO of the Alexandria, VA based Olympus Group, which
develops business intelligence software for the Internet.
Next, we will hear from Mr. Robert D. Atkinson, who is the
Director of the Technology and New Economy Project with the
Progressive Policy Institute here in Washington, DC, and we
welcome you.
Then we will turn to a friend of mine, as well, Roberta
Katz who comes to us as the President and CEO now of the
Technology Network--we met in your previous role at Netscape--
from Palo Alto, CA.
Then we will hear from Mr. William Archey, who is the
President and CEO of the American Electronics Association,
which is the country's largest high tech trade association,
with over 3,000 members, also an old friend. I remember you and
I did a little visit to Northern California 4 years ago. I now
hear lots of talk about members traveling to Silicon Valley to
find out what is going on, and you were my guide on one of
those trips myself when we first started talking about some of
these issues.
I want to thank everybody for being here. We tend to be
pretty informal at this subcommittee, but when we have a large
panel, I do ask the panelists, if they would, to try to keep
their opening statements, if possible, to about a 5-minute time
frame. So we have this little clock system with orange lights
indicating a minute to go and red lights indicating 5 minutes,
but we are pretty generous in terms of flexibility. If at the
end of that point there is a thought that needs to be finished,
we will certainly be happy to do that.
I would also just mention that everybody's opening
statement, if it is longer, will be included in the record, as
well as any statements that other members of either the
Judiciary Committee or the subcommittee want to submit
subsequently.
We will begin with you. Thanks very much for being here,
Ms. DeFife.
PANEL CONSISTING OF SUSAN WILLIAMS DeFIFE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, WOMENCONNECT.COM, FAIRFAX, VA; JULIE
HOLDREN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, OLYMPUS GROUP,
ALEXANDRIA, VA; ROBERT D. ATKINSON, DIRECTOR, TECHNOLOGY AND
NEW ECONOMY PROJECT, PROGRESSIVE POLICY INSTITUTE, WASHINGTON,
DC; ROBERTA KATZ, CHIEF EXECUTIVE OFFICER, THE TECHNOLOGY
NETWORK, PALO ALTO, CA; AND WILLIAM T. ARCHEY, PRESIDENT AND
CHIEF EXECUTIVE OFFICER, AMERICAN ELECTRONICS ASSOCIATION,
WASHINGTON, DC
STATEMENT OF SUSAN WILLIAMS DeFIFE
Ms. DeFife. Thank you, Senator Abraham, for inviting me
today and for your leadership on this issue.
The H-1B issue is becoming critical to the future growth of
the technology industry. I am here today on behalf of CAP Net
and the greater Washington region. As you mentioned, I am CEO
and founder of womenCONNECT.com, the leading Internet site for
women in business, providing original daily content,
interactive tools, online discussion groups, and e-commerce.
When I started the company in 1994, the Internet was not
yet a part of most people's lives. The info.com industry in
Northern Virginia was in its infancy, and skilled technical
workers or those who had the knowledge base to learn new
technologies were fairly easy to come by.
In the past 5 years, the growth in the industry has
exceeded even our own aggressive predictions. The Internet has
become an integral part of people's everyday lives, changing
the way we communicate, how we gather information, how we shop,
and how we do business.
In Northern Virginia, you only have to drive from Tysons to
Dulles to see the impact of the industry on our economy. You
can see the size, the strength, and the wealth of the new
technology companies in the many buildings cropping up. What
many of us also see in those new buildings is an extraordinary
increase in new jobs and the demand for more and more skilled
workers to fill those positions. What you may not be familiar
with is the fact that technology employment in the greater
Washington region has surpassed Federal Government employment
today.
From industry giants like AOL to emerging growth companies
like womenCONNECT.com, the shortage of skilled workers has
become one of the highest priority issues facing us. For
companies like mine, with a smaller employee base--we have 25
employees--one unfilled tech position can severely impact our
ability to grow.
Emerging companies are fueling the technology revolution
and making significant contributions to the strong economy we
now enjoy. Among them will be the next AOL or Amazon.com. We
are the companies that are innovating and growing fast. At
womenCONNECT, we have doubled in size each of the past 2 years
and we expect to double again within the next 6 months.
There are many stories like ours out there. As investment
capital flows into start-ups and puts them on a fast growth
track, the demand for workers will continue to far exceed the
supply, and the workforce shortage is not limited to our
region. Similar concerns are expressed across the country.
What happens when companies like mine cannot find the
workers we need? We have to delay projects, and in the Internet
industry where change occurs daily and competitors are
springing up all around us, waiting to execute on a project can
be lethal.
Last year, we spent months recruiting for a systems
administrator who has the critical role of ensuring our content
is presented correctly and on time to our audience. We were
fortunate to eventually find Noemi Nieto-Mendieta, a young
woman from Mexico who is finishing coursework at a local
university, and Noemi is here with me today. In order to hire
her, we went through the H-1B application process, and then
instead of filling that month-old vacancy, we waited again for
an additional 4 months until the next fiscal year began and
additional H-1B's became available.
Today, I have another tech position that has gone unfilled
for 7 months, and not because of lack of interest in our
company. We are one of the companies that people want to work
for. We have a great reputation, we are viewed as a company
with huge potential, and we offer the ever popular stock
options as incentives.
What I cannot find are people with specific skills or the
ability to obtain those skills as quickly as I need them. As we
have entered into new partnerships with industry heavyweights
such as Lycos, CNN, CompuServe, and USA Today, we have had to
carefully space those projects to ensure we can meet scheduled
delivery dates and hold off on new projects until the
appropriate staff people can come on board.
In order to fill vacant positions, the options for tech
companies are not particularly attractive. We can limit our
growth, but then we lose the ability to compete. We can steal
employees from other companies, which makes none of us stronger
and forces us to constantly look over our shoulders. Or in the
case of larger companies I know, move operations offshore.
I fully understand the desire to provide jobs to American
citizens, but in an economy where unemployment is at record
lows, it is unrealistic to believe we can fill all of these new
jobs being created within the technology industry with the
workers we have.
I agree with the calls today and increasingly for increased
educational programs. We should be developing new workers who
can fully participate in the new economy and maintain our
competitiveness. Many business leaders like me are willing to
step up to fully participate and support those programs, but
they are long-term solutions. In the short term, limiting our
ability to recruit skilled workers from a larger labor pool
around the world only limits the growth of emerging companies
and ultimately slows the economy.
I hope Congress will give strong consideration to the
importance of the H-1B program and support an increase in the
annual cap on these visas. Thank you.
Senator Abraham. Thank you very much.
[The prepared statement of Ms. DeFife follows:]
PREPARED STATEMENT OF SUSAN WILLIAMS DEFIFE
Thank you Senator Abraham for inviting me here today and for your
leadership on the H-1B visa issue. It is an issue that is becoming
critical to the future growth of the technology industry.
To give you a little background on my company, womenCONNECT.com is
the leading Internet site for women in business--providing original
daily content, interactive tools, online discussion groups and e-
commerce. When I started the company in 1994, the Internet was not yet
a part of most people's lives, the InfoComm industry in Northern
Virginia was in its infancy, and skilled technical workers or those who
had the knowledge base to learn new technologies were fairly easy to
come by.
In the past five years, the growth in the industry has exceeded
even our own aggressive predictions. The Internet has become an
integral part of people's everyday lives changing how we communicate,
how we gather information, how we shop, and how we do business. In
Northern Virginia you only have to drive from Tysons to Dulles to see
the impact of the industry on the economy. You can see the size, the
strength, and the wealth of the new technology companies in the many
buildings cropping up. Those new buildings also represent an
extraordinary increase in new jobs and the demand for more and more
skilled workers to fill those positions.
From industry giants like AOL to the emerging growth companies like
womenCONNECT.com, the shortage of skilled workers has become one of the
highest priority issues facing us. For emerging companies like mine
with a smaller employee base--we have 25 employees--one unfilled tech
position can severely impact our ability to grow.
These emerging companies are fueling the technology revolution and
making significant contributions to the strong economy we now enjoy.
Among them will be the next AOL or Amazon.com. We are the companies
that are innovating and growing fast. At womenCONNECT.com we've doubled
in size in each of the past two years and we expect to double again
within the next six months. There are many stories like ours. As
investment capital flows into start-ups and puts them on a fast growth
track, the demand for workers will continue to far exceed the supply.
And the workforce shortage isn't limited to our region. Similar
concerns are expressed across the country.
What happens when companies like mine can't hire the workers we
need? We have to delay projects and in the Internet industry where
change occurs daily and competitors are springing up all around you,
waiting to execute on a project can be lethal. Last year, we spent
months recruiting for a systems administrator who has the critical role
of ensuring our content is presented correctly and on time to our
audience. We were fortunate to eventually find Noemi Nieto-Mendieta, a
young woman from Mexico who was finishing coursework at a local
university. (Noemi is with me today.) In order to hire her we went
through the H-1B application process and then, instead of filling that
months old vacancy, we waited again, for four more months until the
next fiscal year began and additional H-1B's became available. Today, I
have another tech position that has gone unfilled for 7 months--not
because of lack of interest in the company. We are one of the companies
that people want to work for. We have a great reputation, are viewed as
a company with huge potential, and we offer stock options as
incentives. What I can't find are people with the specific skills or
the ability to obtain those skills as quickly as I need them. As we've
entered into new partnerships with industry heavyweights such as Lycos,
CNN, CompuServe, and USA Today we have had to carefully space those
projects to ensure we can meet scheduled delivery dates and hold off on
new projects until the appropriate staff people can come on board.
In order to fill these positions, the options for tech companies
are not particularly attractive: we can limit our growth, but then we
lose the ability to compete; we can ``steal'' employees from other
companies, which makes none of us stronger and forces us to constantly
look over our shoulders; or, in the case of larger companies I know,
move operations off-shore.
I understand the desire to provide jobs to American citizens, but
in an economy where unemployment is at record lows, it is unrealistic
to believe we can fill all of the new jobs being created within the
technology industry with the workers we have. I agree with those who
call for increased educational programs. We should be developing new
workers who can fully participate in the new economy and maintain our
competitiveness. Many business leaders like me are willing to step up
to fully participate and support those programs. But they are long-term
solutions. In the short term, limiting our ability to recruit skilled
workers from a larger labor pool around the world only limits the
growth of emerging companies and ultimately slows the economy. I hope
Congress will give strong consideration to the importance of the H-1B
program and support an increase in the annual cap on these visas. Thank
you.
Senator Abraham. Ms. Holdren, thank you for being here.
STATEMENT OF JULIE HOLDREN
Ms. Holdren. Senator Abraham and members of the committee,
on behalf of Olympus Group, I would like to thank you for
allowing me to participate in today's hearing.
I am the founder, President, and CEO of the Olympus Group.
Olympus Group is a fast-track, high tech company that delivers
business intelligence solutions via the Internet. Olympus
Group's next generation solutions enable businesses to both
actively and passively deliver meaningful information to the
appropriate end users, including employees, customers, and
suppliers, over the Internet.
Our Nation's workforce needs for the next century is one of
top concern to me. I am pleased your committee has chosen to
delve further into this subject, which has tremendous
implications for all Americans. While it is true that the
United States is enjoying a record low unemployment and
phenomenal economic expansion, if we do not concern ourselves
with meeting the hiring needs of American employers, we will
lose the benefits we are reaping today.
As technology continues to advance at a fast pace and the
economy remains vigorous, companies such as mine will continue
to have an unquenchable need for skilled IT workers. Many U.S.
employers cannot find qualified workers for jobs that demand
specialized education, such as engineering or computer science.
It is not just technology companies that are hurt by the worker
shortage. Almost any company in this Nation that hires IT
workers in any capacity is feeling the pinch.
I am here to confirm, and shout from the hilltops, if
necessary, that the serious shortage of skilled workers is,
indeed, very real. My company currently employs over 70 people
and has over 30 job openings. We have had these positions open
for more than 120 days. Out of the 70 people that Olympus Group
employs, we have five H-1B visa holders. Without the ability to
hire a few key talented people from overseas, I would not be
able to handle the current client workload. For every H-1B
worker I employ, I am able to hire 10 more American workers.
That is the ironic part of this whole debate. H-1B visa
holders who are employed by me actually create many new job
opportunities for domestic workers. Several Olympus Group H-1B
workers are currently training a team of Olympus employees on
specific technology skill sets that will enable us to grow
existing clients and add new clients. Without this type of
strategic cross-training, I would not be able to continue to
grow my company in a competitive manner.
Last year, Congress approved an increase in the number of
H-1B visas for skilled foreign workers to come to the United
States for temporary employment. Unfortunately, the new quota
of visas was reached only 8 months into the year, leaving many
employers to wait until the next fiscal year.
No one anticipated reaching the limit on H-1B visas before
the end of the fiscal year. Now, the INS wants to cut the
number of H-1B visas it will grant until fiscal year 2000
because officials at the agency claim they have approved more
than the quota for fiscal year 1999.
The current employment immigration system is not working.
Employers' hiring efforts are not only hampered by a serious
shortage of American workers and a strict limit on the number
of skilled foreign workers they can hire, but they also must
deal with a government system that is in disarray. We cannot
afford to come back year after year to address this national
problem in a piecemeal fashion. Our economic and technological
future is at risk.
As my company continues to grow, I expect I will need to
hire an even larger percentage of H-1B workers if I cannot find
the skilled applicants domestically. I hear the same concern
day after day from my counterparts at other technology
companies. No employer I know is without a worker shortage
problem. It is both a blessing that U.S. employers and workers
are simply worried about too many jobs in an economy that is
growing quickly, as opposed to be concerned with high
unemployment and slow economic growth.
The United States truly is the envy of the world, but we
stand to lose this position if we do not take steps now to
ensure that we shore up U.S. productivity by stocking our
companies with qualified workers. Thank you.
Senator Abraham. Thank you very much.
[The prepared statement of Ms. Holdren follows:]
PREPARED STATEMENT OF JULIE HOLDREN
Senator Abraham and members of the Committee, on behalf of Olympus
Group, I want to thank you for allowing me to participate in today's
hearing.
I am the Founder, President and CEO of Olympus Group, Inc. Olympus
Group is a fast-track high technology company founded in 1995 and based
in Alexandria, Virginia that specializes in internet based business
intelligence solutions, Java application development and multimedia web
design. Olympus Group's next generation solutions enable business to
both actively and passively deliver meaningful information to the
appropriate end users, including employees, customers, and suppliers
over the Internet.
Our nation's workforce needs for the next century is of top concern
to me. I am pleased your committee has chosen to delve further into
this subject which has tremendous implications for all Americans. While
it is true that the U.S. is enjoying record low unemployment and
phenomenal economic expansion, if we don't concern ourselves with
meeting the hiring needs of American employers, we will lose the
benefits we are reaping today.
As technology continues to advance at a fast pace and the economy
remains vigorous, companies such as mine will continue to have an
unquenchable need for skilled IT workers. Many U.S. employers cannot
find qualified workers for jobs that demand specialized education, such
as engineering or computer science. It's not just technology companies
that are hurt by the worker shortage. Almost any company in this nation
that hires IT workers in any capacity is feeling the pinch.
I am here to confirm, and shout from the hilltops if necessary,
that this serious shortage of skilled workers is indeed very real. My
company currently employs over 70 people and has over 30 job openings.
We have had these positions open for more than 120 days.
Out of the 70 people that Olympus Group employees we have 5 H-1B
visa holders. Without the ability to hire a few key talented people
from overseas I would not be able to handle the current client
workload. For every H-1B worker I employ, I am able to hire ten more
American workers. That's the ironic part of this whole debate. The H-1B
visa holders who are employed by me actually create many new job
opportunities for domestic workers.
Several Olympus Group H-1B workers are currently training a team of
Olympus employees on specific technology skill sets that will enable us
to grow existing clients and add new clients. Without this type of
strategic cross training I would not be able to continue to grow my
company in a competitive manner.
Last year, Congress approved an increase in the number of H-1B
visas for skilled foreign workers to come into the U.S. for temporary
employment. Unfortunately, the new quota of visas was reached only
eight months into the year, leaving many employers to wait until the
next fiscal year, which began just a few weeks ago. No one anticipated
reaching the limit on H-1B visas before the end of the fiscal year.
Now, the INS wants to cut the number of H-1B visas it will grant in
fiscal year 2000 because officials at the agency claim they approved
more than the quota in fiscal year 1999.
The current employment immigration system is not working.
Employers' hiring efforts are not only hampered by a serious shortage
of American workers and a strict limit on the number of skilled foreign
workers they can hire, but they must also deal with a government system
that is in disarray. We cannot afford to come back year after year to
address this national problem in a piecemeal fashion. Our economic and
technological future is at risk.
As my company continues to grow, I expect I will need to hire an
even larger percentage of H-1B workers if I can't find skilled
applicants domestically. I hear the same concern day after day from my
counterparts at other technology companies. No employer I know is
without a worker shortage problem.
It is a blessing that both U.S. employers and workers are simply
worried about too many jobs and an economy that is growing quickly, as
opposed to being concerned with high unemployment and slow economic
growth. The U.S. truly is the envy of the world. But we stand to lose
this position if we don't take steps now to ensure that we shore up
U.S. productivity by stocking our companies with qualified workers.
Mr. Chairman, thank you for the opportunity to testify before your
committee. I am prepared to answer any questions you may have.
Senator Abraham. Before we turn to you, Mr. Atkinson and
the rest of the panel, we have been joined by Senator Schumer
and he is in the middle of the banking conference, I think.
Despite enormous bribes to keep him here as long as possible, I
am going to let him go ahead.
STATEMENT OF HON. CHARLES E. SCHUMER, A U.S. SENATOR FROM THE
STATE OF NEW YORK
Senator Schumer. I am a cosponsor of Mr. Robb's bill. I
would ask unanimous consent that my statement be added to the
record.
All I want to say is, for my folks in silicon alley,
getting a way of finding new high tech workers is their number
one legislative concern, barring anything else. Obviously, I
would like if that our education system produces everybody here
in America, but we have two choices. Either the businesses go
overseas or we grow them here by allowing a proposal such as
the one Senator Robb and I have put in. I hope we will
seriously consider it.
I thank the committee for its indulgence and ask unanimous
consent my statement be put in the record.
Senator Abraham. Without objection, it will be.
Senator Schumer. I appreciate the opportunity to interrupt.
We are over on the House side with the banking markup.
Senator Abraham. I appreciate that you took the time to
come over and participate, Senator. We appreciate it very much.
[The prepared statement of Senator Schumer follows:]
PREPARED STATEMENT OF SENATOR CHARLES E. SCHUMER
Mr. Chairman, I'd like to first thank you for holding a hearing on
this vital and timely topic.
I think we can all agree that the fuel that propels our high tech
industry and its many innovations is human capital. And we can all
agree that our high tech economy is experiencing explosive growth.
But as this industry grows from a handful of firms to hundreds of
them; from thousands of employees to tens of thousands of employees;
from billions of dollars in industry-wide market capitalization to
trillions of dollars--the pool of people skilled enough and schooled
enough to keep this industry thriving is falling far short of demand.
The estimates are that there are currently 346,000 unfilled high
tech jobs in the country, and that by 2006 the high tech sector will
need upwards of 1.3 million new highly skilled employees.
This shortage of top-notch, high-tech talent, which I hear about
all the time from members of New York's Silicon Alley, poses a serious
problem for the high tech industry. And because the high tech industry
is one of the main drivers of the long, steady, sustained economic boom
in America--this also presents a major threat to our economy, and
America's position as the dominant economy in the world.
The question then becomes what are the best and most effective
legislative models for handling the shortage. Of course, answering that
question requires us to understand the causes of the shortage.
I think there are mainly two: the speed with which the high tech
industry develops and innovates, and the weaknesses in our education
system.
We should therefore focus our legislative efforts on addressing
both of these root problems, while still employing all the necessary
safeguards to protect American workers.
That's why I recently joined Senator Robb to introduce the HITEC
Act, which he has already outlined for us. The bill creates a new high-
tech visa for foreign graduate students of science, engineering, math,
and computer science who have job offers paying over $60,000.
Ideally, we'd want high tech jobs to go to Americans, but there is
a shortage of U.S. workers qualified for many of these positions. Thus,
we are not talking here about a choice between higher paid American
workers and lower paid foreign workers--this is about filling jobs in
companies that will fuel the growth of the American economy for the
next century.
We should all recognize and acknowledge that one out of every five
Silicon Valley high tech companies was founded by an immigrant;
likewise, one out of every three Silicon Valley engineers and one out
of three Silicon Valley scientists is an immigrant.
The fact that these entrepreneurs, engineers and scientists are
here rather than in their native India, Korea, France, Germany, Sweden,
or Australia has made this country far and away the economic envy of
the world. We should continue to allow the best and the brightest
individuals to come here to benefit our companies, our consumers, and
our country. That is one of the ways that we can remain strong and
ahead of the curve in this very competitive new world we live in.
Importantly, the HITEC bill also begins to address the problems in
our school system so that in the future we can get all the brainpower
we need at home.
Now, this is just one way we can start dealing with these issues.
There may be others, and I'm certainly open to suggestions. Moreover,
it is my hope that in the future we will have the American workforce to
tackle all of these jobs.
Let's face fact. We need to dramatically improve our education
system. In a 21st century ideal economy where the success or failure of
each individual depends more on the agility of their minds than the
strength of their backs; where the success or failure of each country
depends less on the fertility of its soil or the minerals in its mines
than the intellectual prowess of its people--our schools are simply not
good enough.
Our standards are too low. We are not attracting high quality
individuals to the teaching profession. The curriculum often bares
little resemblance to the world of work. And we are graduating students
from high school and college who are ill-equipped to work at an Intel,
a Sun, an Oracle, a Qwest or an AOL.
I believe that ultimately the right solution to the issues we are
grappling with in this hearing will be best resolved by a comprehensive
approach that addresses the needs of our schools, our students, our
companies, and our workers. Again, Mr. Chairman, thank you for holding
this hearing.
Senator Abraham. We will now turn to you, Mr. Atkinson.
Thank you very much for being here. We appreciate it.
STATEMENT OF ROBERT D. ATKINSON
Mr. Atkinson. Thank you, Mr. Chairman, and other members of
the committee. I want to just put this in a little bit of
context by saying I think this is a central issue to U.S.
economic growth in the next 15 to 20 years, but it is also a
broader issue than just high tech workers. The skill shortage
is really broader and really encompasses many, many industries,
and it really speaks to a challenge of how we reshape our
educational and training systems in this country.
But there is no doubt that this is an issue that is
particularly relevant right now to the high tech community.
According to the NSF statistics, in 1995, which is their latest
statistics, the unemployment rate was 5.6 percent for the
overall economy. It was 2.2 percent for scientists and
engineers. It was only 1.7 percent for computer scientists,
which is essentially no employment.
You see the same thing with job projections. A couple of
people have alluded to this already. Jobs are expected to grow
by 14 percent between 1996 and 2006, 44 percent for scientists
and engineers and 100 percent for computer scientists. So that
sector of the economy, because of its explosive growth, is the
one facing critical skill shortages.
But I think what we need to do to really address that is we
need to think about really a new bargain between government and
industry to address these problems. In our view at PPI, to
effectively address these new economy skill needs, companies
can simply not rely on educational institutions to provide this
for them, or even in the short run to rely solely on H-1B
increases, however needed those might be, and you have already
alluded to this. But rather, companies need to play a more
central and sustained role in skill development, but they
cannot do that without government programs being reshaped to
support that type of role, and I want to talk about a number of
different programs that we think might play a key role in
creating those kinds of partnerships.
I am not saying that companies have not done a lot,
companies like Cisco with their training academy, the Novelle
certified network engineer programs, the efforts of Microsoft
and Boeing in the Pacific Northwest, the Massachusetts High
Tech Council, but clearly, they can do more.
We found that in the 1990's, that actually corporate
expenditures on training as a share of GDP have gone down, not
up. Why is that? It is not because companies are not interested
in this, but in our view, it is really two-fold. One is that
the competitive environment is so stiff for companies now that
it is hard for them to invest in those kind of public goods.
Second, and Susan DeFife alluded to this, the new economy
and the high tech economy is really made up largely of small
firms. In Research Triangle Park, for example, the average firm
size is under 70 employees. It is very difficult for small
firms on their own to invest in skill development without some
kind of partnership arrangement.
So what do we need to do? I think, first of all, what we
need to do is it is a mistake to think that the problem is only
at, for example, K through 12, or only at college, or only in
technical workers. I think we need really a three-fold
approach. We need to think about systematically upgrading K
through 12 for science and education. We need to think about
upgrading the technical skills of the incumbent workforce. And
finally, how do we get more scientists and engineers, whether
through H-1B visas or other ways or through graduation.
I would like to just talk about nine recommendations very
quickly. Some of these are being considered by this New Economy
Task Force that PPI has formed that we are honored that Senator
Kennedy is a member of and Senator Robb is also a member.
First of all, we need to boost K through 12 education
levels, math and science education at the K through 12 level,
and we have two thoughts on that. One, co-investing in math and
science charter high schools or magnet high schools for
disadvantaged communities--many of you may be aware of math and
science high schools that have been developed. Northern
Virginia has got a very excellent one, as well as some other
communities. But by and large, those are really serving
suburban upper-middle-class kids and we really need to extend
that model, in our view, to disadvantaged areas, either in
urban areas or in rural areas, and get those kinds of kids more
interested and knowledgeable about science.
Two, to increase the number of teachers who are qualified.
We have been talking about an idea of a forgivable loan for
students who agree to major in math, science, or engineering,
uphold a certain grade point average, and then agree to teach
in an elementary or secondary school for at least 5 years.
Second, upgrading the skills of the workforce. One thing
that the Federal Government could easily do and really we
forget about it is the Federal Government being a significant
employer in the economy, frankly, the Federal Government does
very little to train its information technology workers. It
could play a much more sustained role in training information
technology workers just for its own use, which would,
therefore, expand the overall supply.
The second area to help with incumbent workers or technical
trained workers, we strongly supported your efforts last year
to create this regional skills alliance partnership idea. I
think it is a great idea. Unfortunately, in our view, the
Department of Labor really needs to--we are somewhat concerned
with how the Department of Labor is really structuring that,
that it is not industry or even industry and union led, it is
more government led. We think that is a mistake. It needs to be
industry led.
And finally, increasing the number of college graduates in
math and science, graduates or people who are in this economy.
Three ideas there. One is matching grants to State science/
technology scholars programs. There are a number of States--
only a handful--that have established new programs in the last
few years, Pennsylvania and Maryland being the best cases,
where they will provide a 3-year science or math or engineering
scholarships to students to obtain a good grade point average
and agree to work in the State either in an internship or some
kind of arrangement with companies in the State. We need to
expand those programs, and I think sort of a Federal carrot
that gets States to do more there would be a way to do that.
Second, Paul Romer, a noted economist out at Stanford, has
been talking a lot about this problem, and one of the, I think,
most interesting recommendations he has made is a new approach
to science fellowships. Most graduate students in math and
science and engineering essentially work on Federal grants.
They work on a very narrow area that their faculty mentor is
interested in. We need to make sure that they are multi-
disciplinary trained and also trained in areas that industry is
involved in. Romer has proposed a new type of fellowship that
would be oriented to students that would be matched with
industry money. I think that is an excellent idea of how to get
industry more involved in this.
Lastly, supporting what Senator Robb referred to, which is
his bill and a companion bill in the House for this T visa, for
essentially expanding the visas for foreign graduates of U.S.
math, science, and engineering programs. Thank you very much.
[The prepared statement of Mr. Atkinson follows:]
PREPARED STATEMENT OF ROBERT D. ATKINSON, PH.D.
Mr. Chairman, Members of the Committee, I am Robert Atkinson,
Director of the Progressive Policy Institute's Technology and New
Economy Project. PPI is a think tank whose mission is to define and
promote a new progressive politics for America in the 21st century. It
is a pleasure to testify in front of you on the critical issue of
America's workforce needs in the 21st century.
education and skills are more important in the new economy
In the New Economy, skill requirements are increasing in many
industries, not just the so-called high-tech industries. The percentage
of workers who use computers at work has risen from 25 percent in 1984,
to 46 percent in 1993, to 75 percent today. More than half of the new
jobs created between 1984 and 2005 will require some education beyond
high school.\1\
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\1\ Arnold E. Packer, et al., Workforce 2000: Work and Workers for
the 21st Century (Indianapolis, Ind.: Hudson Institute, 1987).
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The rise of new industries has also meant the rise of new jobs.
Knowledge-based jobs (those requiring post-secondary, vocational, or
higher education) have grown as a share of total employment. For
example, there were fewer than 5,000 computer programmers in America in
1960; there are over 1.3 million today. Managerial and professional
jobs have increased as a share of total employment from 22 percent in
1979 to 28.4 percent in 1995. Jobs in offices have grown from 30
percent of all jobs in 1960 to over 40 percent today.
Overall, there is an increasing realization across the nation that
firms in a wide range of industries face serious difficulties hiring
workers with needed skills. While estimates vary (as high as 200,000),
there is a consensus that we face a shortage of workers with
information technology skills. In 1995, when the national unemployment
rate was 5.6 percent, the unemployment rate for scientists and
engineers was 2.2 percent (1.7 percent for computer scientists)--a
level most economists would term as frictional (i.e., workers between
jobs).\2\
---------------------------------------------------------------------------
\2\ National Science Foundation, Science and Engineering
Indicators, 1998, p. A-106.
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Finally, in the new knowledge economy, education and skills are
increasingly becoming the ticket to upward mobility and increased
earnings.
COMPANIES NEED TO DO MORE TO PROVIDE WORKERS WITH SKILLS
In the New Economy, technology companies cannot simply rely on
government and educational institutions to provide the skilled workers
they need. Rather, companies must play a more central and engaged role
in skill development. But just as importantly, public policy must be
re-structured to encourage and facilitate such partnerships.
To date, the technology industry has made efforts to train workers.
For example, Cisco has established hundreds of training academies while
Novel has created its certified network engineer programs. Microsoft
and Boeing have invested in the Northwest Center for Emerging
Technology at Bellevue Community College to develop a new IT training
program. The Massachusetts Software Council has developed a program to
train dislocated workers to be software programmers. In Washington,
D.C., regional telecommunications firms donated computers and helped
set up a program to train public high school students to be computer
network administrators. The companies hire students who pass a standard
certification exam for $25,000 to $30,000 a year.
But in spite of these efforts, more remains to be done to
effectively address the high-tech worker skills shortage. There are a
number of factors that have made it more difficult for companies to
take active roles in high-tech skill development.
First, while employment stability in the old economy gave workers
the opportunity to learn new skills on the job and move up within the
company, increased competitive pressures coupled with reduced
employment tenure make it harder for companies to justify training
investments. Moreover, because workers are so mobile, it is difficult
for individual employers to bear all the burden of training employees,
whether new or incumbent workers, especially since the employee is
likely to leave at some time to work for a competitor. This serves as a
disincentive for individual firms to provide training without a
concerted regional effort on the part of the entire industry.
This factor, coupled with increasingly competitive markets, is one
reason why many larger companies that supported in-house, dedicated
training programs in the 1960's and 1970's have eliminated those
efforts. It's also why company training efforts have not kept pace with
economic change. In 1995, American businesses spent $55 billion per
year upgrading the skills of their employees, 20 percent more than a
dozen years ago.\3\ But the number of workers rose 24 percent, meaning
that private-sector spending hasn't kept pace. Corporate training
expenditures as a share of GDP have declined slightly since 1988, to
about 0.7 percent of GDP in 1997. Considering that skills upgrading is
far more important now than in the early 1980's, this shortfall is
troubling. Finally, training is more prevalent among highly educated
workers than other workers: 61 percent of college-educated workers
participated in on-the-job training in 1991, compared to 22 percent of
workers with a high school degree.\4\
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\3\ Dr. Laurie J. Bassi, Expenditures on Employer-Provided Training
(Alexandria, VA: American Society for Training and Development, July
1996).
\4\ Progressive Policy Institute, The New Economy Index, (PPI:
Washington, DC, 1998).
---------------------------------------------------------------------------
Moreover, large firms spend almost three times more per employee on
training than small firms, and since the New Economy is all about small
and medium-sized firms, this poses a new policy challenge. For example,
the average size of high tech firms in Research Triangle Park is under
70 employees. Most firms, but particularly small and medium-sized
enterprises (SME's), have limited capacity (financial, institutional,
and informational) to engage in significant and sustained workforce
development efforts. There are several reasons why. Managers and owners
of most firms are simply too busy running their business to develop
training systems, especially for new or dislocated workers. SME's often
lack information on what kind of training their firms need and where to
get it, and additionally, finding this information can be very time
consuming. As a result, when confronted with a shortage of skilled
workers, most firms try to hire workers from other companies.
When faced with persistent and significant shortages in skilled
workers, the technology industry has looked to short-term assistance
through the expansion of the H-1B visa program. During last year's
deliberations on the H-1B visa program, PPI supported a temporary
expansion of the cap. However, PPI also advocated not just ``raising
the cap,'' but also ``filling the gap.'' In other words, PPI believes
that while short-term expansion of high-tech visas is warranted, we
need to also put in place moderate and longer-term policies to ensure
that industry, government, and educational institutions work together
to train Americans in these critical skill areas.
In short, we need a new social compact between the technology
industry and government. If industry is to ask government to provide it
short-term relief through increases in the number of visas for high-
tech workers, it needs to make a strong and sustained commitment to
invest money and effort to boost the skills of American workers so that
they can also access these jobs. In turn, government must develop and
fund policies and programs that work in partnership with industry.
POLICY RECOMMENDATIONS
To effectively train modern workers we need to foster industry/
education/government partnerships at all levels of education. This
requires making improvements in K-12 education, colleges and
universities--including graduate education--and technical skills
training, particularly among incumbent workers. As part of the 1998
American Workforce Competitiveness Act, Congress agreed to assign a
portion of the fee companies pay to obtain an H-1B visa to a program to
support industry-led training alliances run by the Department of Labor
(DOL). Recently, DOL issued a solicitation to provide funding for such
training alliances. The program, based in part on a PPI proposal,\5\
was intended to stimulate the creation of industry-led, or industry-
and union-led, training alliances. Unfortunately, the DOL plan does not
require that the proposals be industry-led. Rather, they can be led by
existing public training agencies and involve industry in only a
peripheral manner. Moreover, DOL does not require matching funds from
industry, as the legislative intent suggests. As a result, there is a
significant risk that the program will simply duplicate existing
public-sector programs, rather than provide a new opportunity for
industry to take the lead in the development of skills training
programs to address technical skills shortage areas. In PPI's view,
having these programs be industry-led (or industry/union led) is
critical to their success. Therefore, Congress should reauthorize this
program to require that any applications be industry-led and that
industry be required to provide at least some share of the overall
funding.
---------------------------------------------------------------------------
\5\ Progressive Policy Institute, Building New Skills for the New
Economy, (PPI: Washington, DC, 1998).
---------------------------------------------------------------------------
(1) Math and Science Education at K-12 level
Student performance on verbal and reading skills has remained
stagnant since the early 1980's while performance on math tests
increased only modestly. As a result, as American students go through
school, they fall further behind their foreign counterparts on math and
science. The recent TIMSS report (the Third International Mathematics
and Science Study) finds that between the 4th and 8th grades, U.S.
students lost almost 40 points. In comparison, most other nations
either lost only a few points, or as in cases such as Thailand and
Singapore, gained significant ground. The result is that, while U.S.
4th graders scored among the top, 12th graders were among the lowest of
all nations. Clearly, K-12 education needs to give students the math
and science skills they need to succeed in the New Economy.
Co-invest in math, science, and technology charter high
schools for disadvantaged communities. In the last 15 years,
states such as North Carolina and Illinois have established
math and science magnet high schools. While these programs have
proven effective in providing a solid education in math and
science, the number of these high schools are limited, and they
have generally not focused on disadvantaged students. If states
are to encourage students--including minority students who have
not traditionally gone into science and engineering fields--
they need to target their efforts. Congress should co-fund with
states and industry math, science, and technology charter high
schools that are focused on serving children from disadvantaged
urban or rural communities. Entrance would be merit based, and
as charter schools, they would have the flexibility they need
to develop innovative curricula and work closely with industry
partners.
Establish forgivable loans for students who major in math,
science, or engineering and agree to teach math or science in
elementary or secondary schools for at least 5 years. Such
forgivable loans would not only help reduce the shortage of
qualified science and math teachers, it would also reduce the
number of teachers teaching outside their fields, and increase
the amount of science, math, and engineering bachelor's degrees
awarded.
(2) Upgrade Technical Skills of the Workforce
Companies can fill many technical positions by training or
retraining workers who are already out of the formal education system.
The federal government should take the lead in skills
development and upgrading the skills of its workforce. While
some agencies such as the Department of Defense have out of
necessity focused on training workers, most federal agencies
have not. The federal government should partner with
educational institutions to establish training and
apprenticeship programs for technically skilled workers who
would be eligible to work for the federal government.
Support-modify the Department of Labor's regional skills
alliances (RSA's) program. As part of the 1998 American
Workforce Competitiveness Act, RSA's--independent, staffed
collaborations among firms in an industry formed to identify
common areas of skills shortages and develop and implement
effective training solutions--would be supported, in part, for
the first three years by federal funds. Companies would provide
at least one-third of the costs of the alliances. Federal funds
would be allocated through a competitive grant process
administered by the Department of Commerce with consortia of
firms as applicants.
(3) Increase the Number of College and Graduate Math, Science, and
Engineering Graduates
As a share of the workforce, scientists and engineers increased
moderately throughout the 1980's, and faster since 1993. But because
jobs requiring science and engineering expertise are forecast to
increase three times faster than other occupations between 1994 and
2005, the demand for scientists and engineers is expected to exceed
supply by approximately 4 percent. Much of this increase has been
driven by a rapidly growing demand for computer scientists and
programmers, who increased as a share of all scientists and engineers
from 23 percent in 1983 to 36 percent in 1997. According to the
National Science Foundation, while total employment is expected to
increase 14.4 percent between 1996 and 2006, the number of employed
scientists and engineers is expected to increase 44 percent, with the
number of computer engineers and support specialists doubling.
Foreign-born scientists and engineers are also becoming a larger
and more valuable part of our economy. The numbers of immigrant
scientists and engineers admitted with permanent visas to meet growing
industry demand has doubled from 0.3 percent of the science and
engineering workforce in 1988 to 0.6 percent in 1993 (the latest year
available). Similarly, while only 1.3 percent of all Ph.D. scientists
and engineers in the United States who have had a degree more than 25
years are foreign born, almost one-quarter (24.3 percent) of those who
earned their degrees in the last 5 years are foreign born.
After falling in the mid-1980's, the number of people getting
science and engineering degrees has grown as a share of the population
to slightly more than in the mid 1980's. But given that science and
engineering have become more important to the economy, the modest
increase is not enough. Moreover, within certain areas there has been
an absolute decline. Full-time enrollment in undergraduate engineering
has declined from a high of 406,000 in 1983 to 317,700 in 1996, while
graduate enrollment was essentially unchanged between 1987 and 1996.\6\
---------------------------------------------------------------------------
\6\ National Science Foundation, Science and Engineering
Indicators, 1998, p. A-55.
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Foreign students, who remain a modest fraction of all science and
engineering degree holders, are earning a significant and growing share
of graduate degrees in some scientific and technical fields. For
example, foreign students earned 35 percent of the master's degrees in
computer science and 33 percent of those in engineering in 1993, up
from 11 percent and 22 percent, respectively, in these fields in 1977.
Provide matching grants to state ``SciTech Scholars''
programs. In response to declining graduation rates in
technical fields, a number of states have established
scholarship programs for students who major in science, math,
or engineering; who maintain a high grade point average; and
who agree to work in some capacity for a technology company in
the state. For example, Pennsylvania provides a three-year
science scholarship for students who maintain a B average and
undertake an internship with a Pennsylvania technology company.
Maryland has adopted a similar program. Federal matching funds
could expand the scope of existing state programs and encourage
more states to establish their own programs.
Establish a matching grant fellowship science and
engineering graduate student fellowship program. Currently,
most science and engineering graduate students receiving
financial support obtain it indirectly through federal research
grants obtained by their faculties. However, as economist Paul
Romer has pointed out, this system reduces the amount of inter-
disciplinary and practical, real-world research and education
that is undertaken. In order to increase both the number of
Americans enrolled in science and engineering graduate programs
and the amount of inter-disciplinary and industry-relevant
graduate education, more graduate support should flow directly
to students. The federal government could establish a matching
grant fellowship program, paying half the costs, with industry
and universities each picking up one-quarter of the costs.
Continue to support the NSF Computer Science, Engineering,
And Mathematics Scholarships program. Funded from fees on the
H-1B visa, the CSEMS program provides scholarships to low-
income, academically talented students who are working full-
time toward associate, baccalaureate, or graduate degrees in
computer science, computer technology, engineering, engineering
technology, and mathematics. The scholarship provides up to
$2,500 per student, per academic year. In the first year of the
program, it granted approximately $21 million. The program
should be continued.
Make it easier for foreign graduates of master's or doctoral
science and engineering programs in the United States to stay
in the United States. A bill introduced by Senator Robb (D-VA),
S. 1645, would establish a five year ``T'' visa (technology)
for foreign graduates of master's or doctoral math, science,
engineering, or computer science programs in the United States
who receive a job with an annual total compensation of at least
$60,000. The Act imposes a fee (between $500 and $1,000 per
visa) on applications for the T-visa and provide funds to the
National Institute of Standards and Technology to set up a
competitive grant program with matching funds from industry to
establish science and math educational K-12 partnerships.
Similar legislation has been introduced in the U.S. House by
Representative Zoe Lofgren (H.R. 2687). Because of the
importance of engaging the technology industry in education and
training efforts, the approach in the Robb bill has significant
merit.
______
Attachment of Robert D. Atkinson
BUILDING NEW SKILLS FOR THE NEW ECONOMY--REGIONAL SKILLS ALLIANCES
The Problem
There is an increasing realization across the nation that firms in
a wide range of industries face serious difficulties in hiring workers
with needed skills, and that we need to do a better job of training and
educating new entrants to the workforce and workers dislocated by
economic change.
Many industries point to the lack of skilled workers as a critical
factor limiting their competitiveness and growth. For example, the
Information Technology Association of America recently concluded that
there are approximately 190,000 unfilled information technology jobs in
the United States today due to a shortage of qualified workers.\1\ But
it is not just high-tech firms. When asked ``what are the main barriers
firms face to expanding and becoming more competitive,'' companies
across the country in different industries point to the difficulty in
getting skilled workers. These shortages not only slow regional and
national economic growth, they mean that hundreds of thousands of
workers are not increasing their skills and standards of living.
---------------------------------------------------------------------------
\1\ ``Help Wanted: The IT Workforce Gap at the Dawn of a New
Century,'' (Arlington, VA: Information Technology Association of
America, 1997). See also ``America's New Deficit: The Shortage of
Information Technology Workers,'' (Washington, DC: U.S. Department of
Commerce, Office of Technology Policy, 1997).
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While the current low unemployment rate contributes to this
problem, its roots are more fundamental. In the New Economy, skill
requirements are going up in many industries, even so-called low-tech
industries. More than half of the new jobs created between 1984 and
2005 will require some education beyond high school.\2\ The percentage
of workers who use computers at work has risen from 25 percent to 46
percent between 1984 and 1993.\3\ These changes are being felt around
the nation. States such as Colorado, Maryland, Rhode Island, and
Washington have all recently released reports highlighting the pressing
need of employers for skilled workers. Today, to be competitive, firms
are not only using more technology but are also reorganizing production
processes in new ways, such as cellular production, use of teams, and
other high performance work organization methods that require higher
levels and new kinds of skills. For example, a recent survey of U.S.
manufacturers found that in 81 percent of plants, production workers
participate in empowered or self-directed teams. Marty Cohen, President
of the Work in America Institute, states: ``Thanks to e-mail,
statistical process control, Just-In-Time, [* * *] and so forth, the
need for production workers to master new technology is almost
universal, whether they work on loading docks or in silicon clean
rooms.'' And much of the needed knowledge is not firm-specific, but
rather generic (related to math, communication, writing, and computing)
and industry-specific (such as manufacturing methods).
---------------------------------------------------------------------------
\2\ Arnold E. Packer, et al., Workforce 2000: Work and Workers for
the 21st Century (Indianapolis, Ind.: Hudson Institute, 1987).
\3\ ``Computer Use and Ownership: Level of Access and Use of
Computers, 1984, 1989, 1993, Table A,'' (Washington, DC: U.S. Census
Bureau, October 1993).
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There is increasing interest in addressing skills shortages.
Several high-tech trade associations, in conjunction with the U.S.
Department of Labor (DOL) and Department of Commerce (DOC), hosted a
skills ``summit'' earlier this month in Berkeley, CA. President Clinton
recently announced several proposals, including creation of a
nationwide job bank and modest increases in funding for training
programs.\4\ The awareness of the problem and the interest in finding
effective solutions is growing.
---------------------------------------------------------------------------
\4\ Rajiv Chandrasekaran, ``U.S. to Train Workers for Tech Jobs,''
Washington Post, (January 12, 1998), p. A1.
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The Administration's proposal, while a useful start, is not enough.
The problem cannot be solved at the federal level: solutions need to be
regional, diverse, and industry-led. However, the federal government
can and should play a catalytic role in bringing together the firms and
other institutions that are critical to crafting effective solutions.
The Progressive Policy Institute (PPI) proposes that the federal
government invest $40 to $60 million annually to support industry-led,
regional skills alliances (RSA's). RSA's--independent, staffed
collaborations among firms in an industry, and including educational
institutions such as community colleges, formed to identify common
areas of skills shortages and develop and implement effective training
solutions--would be supported in part for the first three years by
federal funds. Funds would be allocated through a competitive grant
process administered by the DOC's Manufacturing Extension Partnership
(MEP), with consortia of firms as applicants.
Why Existing Institutions Cannot Solve the Problem
According to the American Society for Training and Development,
company spending on training has not kept up with the need. In 1995,
American businesses spent $55 billion per year upgrading the skills of
their employees, 20 percent more than a dozen years ago.\5\ But the
number of workers has risen 24 percent, meaning that private-sector
spending hasn't kept pace. Considering that skills upgrading is far
more important now than in the early 1980's, this shortfall is
troubling.
---------------------------------------------------------------------------
\5\ Dr. Laurie J. Bassi, ``Expenditures on Employer-Provided
Training'' (Alexandria, VA: American Society for Training and
Development, July 1996).
---------------------------------------------------------------------------
Most firms, but particularly small and medium-sized enterprises
(SME's), have limited capacity (financial, institutional, and
informational) to engage in significant and sustained workforce
development efforts. There are several reasons why. Managers and owners
of most firms are simply too busy running their business to develop
training systems, especially for new or dislocated workers. SME's often
lack information on what kind of training their firms need and where to
get it. And finding this information is very time consuming. As a
result, when confronted with a shortage of skilled workers, most firms
try to hire workers from other companies.
Moreover, because workers are so mobile, it is difficult for
individual employers to bear all the burden of training employees,
whether new or incumbent workers, especially since the employee is
likely to leave at some time and go to work for a competitor. In this
case, not only does the firm ``not realize an adequate return on the
investment,'' it is actually at a disadvantage since it has spent money
other firms have not, and has made its competitors stronger in the
meantime. This serves as a disincentive for individual firms to provide
training without a concerted effort on the part of the entire industry
regionally. This factor, coupled with increasingly competitive markets,
is one reason why many larger companies that supported in-house,
dedicated training programs in the 1960's and 1970's have eliminated
these efforts.
The skills shortage is also a problem for workers. Millions of
American workers would like to upgrade their skills, but it is often
difficult for government-run training programs to provide the kinds of
skills that employees need. Dislocated workers (even a low unemployment
economy has dislocated workers--approximately 1.4 million per year
between 1993 and 1995 \6\), young people coming out of high school, and
workers making the transition from welfare to work may especially need
the types of skills demanded by growing industries.
---------------------------------------------------------------------------
\6\ DOL defines dislocated workers as workers who lose their jobs
due to their plant closing down or moving, insufficient work for them
to do, or their position being abolished. Source: U.S. Department of
Labor, Employment and Training Administration.
---------------------------------------------------------------------------
The educational system has not proven up to the task of providing
technical training for workers. Many community colleges, and even four-
year colleges, and universities, lack the resources to purchase up-to-
date equipment (machines, computers, software) on which to train
workers in relevant knowledge and skills. In addition, while some post-
secondary training institutions (especially private ones) have reached
out to industry and become more customer-focused, many more have not
adequately responded to the changing skills needs of employers. The
lack of partnerships with industry means that many educational
institutions continue to train students for old economy jobs with old
economy methods and equipment.
In some cases this may reflect a lack of entrepreneurial and
innovative spirit in bureaucratic institutions. But there is a more
fundamental issue: While colleges and universities, especially
community colleges, may be able to establish partnerships with larger
firms that have human resource departments, building partnerships and a
two-way dialogue with small- and medium-sized firms has proven more
difficult.
Finally, it has been difficult to use federally funded training
programs for these kinds of industry-driven, innovative programs. Most
federal training funds go to displaced and disadvantaged workers, not
to incumbent workers. Yet, because of rigid and bureaucratic rules, it
is difficult to use these federal funds to support effective industry-
driven efforts, including some of the most successful and creative
industry-community alliances training disadvantaged youth.\7\ Moreover,
even if the much-needed reforms of federal employment and training
efforts are implemented, these efforts are largely focused on making it
easier for workers to access training and reemployment services. To
really address the skills issues in the New Economy, we need both--a
more user-friendly employment and training system and an industry-
driven skills effort based on firm alliances. Each complements the
other.
---------------------------------------------------------------------------
\7\ Peter Behr, ``Job Training Success Story at Risk,'' Washington
Post, (January 16, 1998), G1.
---------------------------------------------------------------------------
The Solution: RSA's
It is becoming clear to many firms and training experts working in
the trenches of the New American Economy that if we are going to begin
to meaningfully address the skills problem, we have to motivate and
assist companies in the same or similar industries to work
collaboratively at the regional level to lead this process. As training
expert Bill Nothdurft argues, ``creating the workforce of the future
requires partnerships and private industry leadership.'' \8\
---------------------------------------------------------------------------
\8\ William E. Nothdurft, ``How to Produce Work-Ready Workers,''
Across the Board, (September 1990), pp. 47-52.
---------------------------------------------------------------------------
Employers are most qualified to do this for several reasons. First,
employers are the best positioned--often in partnership with others,
such as community colleges--to identify the skills and knowledge needed
for emerging jobs. Second, by letting employers lead, it is much easier
to tie training directly to employment. And third, employers and
industries facing skills shortages will be the ones to participate.
While employers need to take the lead, crafting effective solutions
requires collaboration among firms. Because a skilled workforce
benefits all firms in a region, a small handful of skills alliances
have already been established, often with large firms and their
employee unions. It has been more difficult for small- and medium-sized
firms to band together to tackle educational and training needs. As a
result, a critical task is helping firms build ongoing capacities to
collaboratively address their own industries' workforce development
issues.
Collaborative solutions are more effective than going it alone.
First, by working together, firms in the same or similar industries can
pool resources (information, on-the-job training opportunities,
equipment, curricula) that lower costs of training. Moreover, by
supporting sector-based alliances (e.g., metal working, tourism,
information technology), firms focus on building a regional training
pool, rather than on ``poaching'' other firms in the industry to get
workers.
Second, collaboration allows firms to develop joint solutions and
communicate these to educational institutions. Without this ongoing
collaboration, it is often very difficult for educational institutions
to communicate effectively with industry and develop needed curricula.
Moreover, alliances could serve as the intermediary between firms in an
industry and the complex array of training programs and initiatives in
any particular region.
Finally, solutions need to be regional. Too often Washington
forgets that the economy runs through firms, institutions, and workers
operating in locales and regions which are very diverse in their
industrial structure, growth patterns, and institutional resources. At
any one time, some regions may be booming and have the need for new
workers, while others may not be growing and are struggling to address
the needs of displaced workers. Some regions may be characterized by
large firms that can address ``infrastructure'' needs related to
skills, while many others may be populated by smaller firms. In
addition, regions differ profoundly in terms of industrial mix. Many
industries cluster regionally. In fact, regional industrial clusters
are becoming more, not less, a feature of the New Economy--e.g., high-
tech electronics and software in places like Silicon Valley, Boston,
and Northern Virginia; plastics in Western Massachusetts; rubber in
Akron; metal working in Pennsylvania; aerospace in Wichita; and
financial services in Wilmington. All of these places have different
needs and different problems.
The few collaborative training programs in place today act as
powerful and innovative models of industry working together to address
common skills shortages. Collaborative training is one reason why
German firms invest more in training than U.S. firms do. There, a dense
network of industry associations makes it much easier for firms, most
of which are small, to jointly address training, with the German
federal government contributing half the cost.\9\ In the last several
years, a small number of regional and industry-based training alliances
in the United States have emerged, usually in partnership with state
and local governments and technical colleges.
---------------------------------------------------------------------------
\9\ Margaret Hilton, ``Shared Training: Lessons from Germany,''
Monthly Labor Review, (March 1991).
As part of the Wisconsin Regional Training Partnership, a
number of metal-working firms, in conjunction with the AFL-CIO,
used an abandoned mill building to set up a teaching factory to
train workers with needed skills. The workers learn directly on
state-of-the-art manufacturing equipment.
In Rhode Island, with help from the state's Human Resource
Investment Council, plastics firms developed a skills alliance.
Funds supported a part-time alliance coordinator who worked
with firms to assess skills needs and develop curricula. In
addition, a share of the funds went to establish a state-of-
the-art polymer training laboratory at the local community
college which trains workers in an apprenticeship program that
guarantees jobs for graduates.
In Wichita, a small federal grant, coupled with state and
industry funds, helped 33 small aerospace supplier firms
develop joint training curricula for new workers in partnership
with the local community college.
In Washington, D.C., regional telecommunications firms
donated computers and helped set up a program to train public
high school students to be computer network administrators. The
companies hire students who pass a standard certification exam
for $25,000 to $30,000 a year.\10\
---------------------------------------------------------------------------
\10\ Washington Post, op. cit.
While successful, these kinds of alliances are by far the exception
rather than the rule.
Why a Federal Role?
There are several reasons why a limited but strategic federal role
would be highly effective:
The federal government already spends millions on training,
but not as effectively as it could.
Federal, state, and local governments have created a wide
array of complicated and disjointed bureaucratic training
programs. New initiatives are needed that empower customers and
serve as models for service delivery integration.
While a small handful of these kinds of partnerships have
emerged around the nation, there are documented difficulties in
fostering this kind of collective action without some federal
``glue'' money. Widespread and timely deployment of these kinds
of partnerships is simply not likely to happen without the
incentives established by a federal initiative. This can help
create successful models and templates that others can
replicate across the nation.
Because workers are mobile across regions and state borders,
the federal government has an incentive to help new workers get
an adequate education and skills to be employed in well-paid
and rewarding jobs.
Without some kind of support to create alliances, small
firms just don't have the time or resources to collaborate with
anybody on training, and over 99 percent of all businesses in
the United States are small. In fact, almost all existing RSA's
report that they would not have been able to get off the ground
without an independent, staffed entity to operate the alliance.
How Regional Skills Alliances Would Work
PPI proposes that the federal government invest $40 to $60 million
annually to support industry-led RSA's. Funds would be allocated
through a competitive grant process, with consortia of firms as
applicants. Federal support would be limited to three years, after
which the efforts would be required to be self-supporting.
Successful applicants would be:
Consortia: Alliances would have to have meaningful
participation with a large number of firms, ideally at least 10
firms and/or employing at least 50 percent of the workers in
that industry in the region.
Industry-led (e.g., board of directors predominantly made up
of industry, with state and local officials, educational
leaders, and union officials also eligible as participants):
Regional chapters of industry trade associations would be
eligible to apply.
Sector-based: The efforts would have to be organized around
one or more industry sectors.
Alliances providing a 2-to-1 match for federal funds: For
every $1 in federal funds, state and/or local government would
need to provide at least $1, and industry $1. Industry
equipment donations to shared, off-site facilities (e.g.,
community colleges) would count as matching, while ``in-kind''
donations would not, but would be considered in ranking
proposals.
How Many Alliances and What Level of Support?
Funds could be used to support alliance coordinator staff to work
with firms to develop joint standards, curricula, apprenticeships, and
other joint efforts. In addition, funds could be used to market the
program, to purchase equipment on which to train workers, and to
develop curricula. Alliances could also focus on other areas of joint
concern, such as technology transfer or industrial modernization.
Estimated costs for each alliance would be between $350,000 and $1
million per year, depending on the size of the area, the need, and the
extent of effort by firms. Assuming that the federal government
provides, at a maximum, one-third of the funds, $50 million would allow
approximately 200 alliances to be established.
What Activities Would Qualify for Support?
Virtually all activities directly related to improving the skills
of a region's workforce would qualify for support, including:
Salaries and expenses to support a skills alliance manager;
Joint assessment of industry training and skills needs;
Development of skills standards benchmarked to advanced
industry practices;
Development of joint curriculum and training methods;
Purchases or donations of equipment on which to train
workers;
Identification and development of training providers, and
establishment of training programs;
Development of apprenticeship and school-to-work programs;
Development of training programs for dislocated workers;
Initiatives to link technology and business modernization to
skills upgrades; and
Development of performance outcome measures.
Funding would not be allowed to subsidize workers wages (even
training wages), could not be used for lobbying or political action,
and could not be devoted to senior management development except
possibly for skills development focused on team building or employee
involvement.\11\ Alliances would also be required to report evaluation
and outcome measures.
---------------------------------------------------------------------------
\11\ PPI has proposed a similar non-discrimination rule that would
treat firm expenses on training as taxable compensation unless the firm
extends training to all its workers, just as health care coverage and
retirement benefits are not taxable if all workers in a firm are
eligible for them.
---------------------------------------------------------------------------
Administration
Because this is a skills and training effort it could be argued
that DOL should administer the program nationally. However, because it
is also an industry competitiveness effort, it may be more appropriate
for DOC to administer it in partnership with DOL. The program could be
run out of the Manufacturing Extension Partnership (MEP), an initiative
at the National Institute of Standards and Technology (NIST), since
NIST is already actively engaged in regional business modernization
efforts around the nation. However, because the initiatives could
support alliances in non-manufacturing sectors, and because these
should be industry-led efforts, NIST should operate this program
separate from, but linked to, the MEP.
Advantages of Regional Skills Alliances
Catalyzing the formation of RSA's has several advantages. These
include:
Engaging firms, particularly small- and medium-sized firms,
more deeply in the issue of skills training and constructive
interaction with educational institutions;
Engaging public-sector educational providers (e.g.,
community colleges) more actively in on-going working
relationships with groups of employers (i.e., encouraging them
to be more responsive by creating the kinds of curricula needed
by New Economy employers);
Significantly increasing the scale of state and local
training efforts, by moving away from a one-on-one approach
toward engaging whole industries. (Workforce training in states
is almost always one-on-one, customized training with
individual firms); and
Providing flexibility in the system to focus on a wide
variety of training issues, including new workers, dislocated
workers (e.g., Massachusetts Software Alliance), and welfare-
to-work (e.g., Wisconsin Regional Training Partnership).
CONCLUSION
The transition underway to a more technological and skills-
intensive economy has led to skills shortages in many industries and
regions of the country. Yet, existing government-run training programs
are not up to the task at hand. Effective solutions require
collaboration between government and industry, and between firms in
similar industries in the same region. Federal matching grants to
industry to form skill alliances can be a catalyst to the formation of
new, innovative, and flexible solutions.
Robert D. Atkinson is director of the Technology and Innovation
Project at the Progressive Policy Institute.
Senator Abraham. Mr. Atkinson, I thank you. You got a lot
in in 5 minutes. I am not sure how you got it all in, but it
was appreciated and I look forward to actually looking in more
detail at it, because we appreciate your need to be succinct
there. So thank you.
We welcome Ms. Katz. Thank you very much for coming out for
this hearing. We appreciate it.
STATEMENT OF ROBERTA KATZ
Ms. Katz. Thank you. It is a pleasure to be here. I very
much appreciate the opportunity to testify on what we believe
is one of the most important issues facing America's technology
industry, which is the workforce needs of the 21st century.
Tech Net very much appreciates this committee's recognition of
the role of the technology sector in driving our Nation's
growth and its focus on policies that support continued growth
by addressing these workforce issues.
It is also a great pleasure to testify today before you,
Mr. Chairman, for your leadership of technology policy is
unparalleled. Your dedication to the development of fair and
responsible business immigration policy has supported and
protected our Nation's technological leadership, and the
benefits of that leadership are enjoyed by all industries.
Employee talent is a defining feature of this new economy
and a key to its tremendous growth. More and more, companies
today derive their value from the ideas, the intellect, and the
skills of their workforce. Yet today, we face a serious
shortage in the number of skilled professionals necessary to
support technology's continued growth. The number of graduates
from American universities with computer science and
engineering degrees declined significantly in the 1980's, and
this trend has only recently reversed, largely due to the
increased number of foreign students pursuing technical studies
in the United States.
Yet demand for skilled employees in the technology
industries continues to grow exponentially. Between 1996 and
2006, demand for database administrators, computer support
specialists, and computer scientists is expected to increase
118 percent. Demand for computer engineers is expected to
increase 109 percent. And demand for system analysts is
expected to double.
Until our schools and universities are graduating
sufficient numbers of technically trained American-born
professionals, an efficient and effective business integration
system must fill the workforce gap. From the standpoint of Tech
Net's member companies, this is not an immigration issue. This
is an issue that will affect our Nation's global
competitiveness in the 21st century.
America's growing high technology industry has created
hundreds of thousands of new high-paying jobs in the past
decade. Studies have estimated that every additional skilled
immigrant supports the creation of three to five new technology
jobs for American employees, and I think that is also
underscoring what previous witnesses have said. Every immigrant
who comes with these skills creates a greater number of jobs
for American employees.
Skilled immigrants also play a key role in supporting
innovation in the high tech sector. Today, for example, nearly
one-third of start-up companies in Silicon Valley are run by an
Indian or Chinese immigrant. Intel and Sun Microsystems are two
of the many Tech Net member companies whose early products were
developed by foreign-born professionals. Today, those companies
together employ nearly 100,000 workers. The contributions these
companies have made to the American economy and quality of life
are immeasurable.
Tech Net member companies utilize H-1B visas responsibly,
relying upon H-1B employees only as necessary to fill a
relatively small number of key positions. Companies hire
skilled foreign-born employees when they offer a unique set of
skills that cannot otherwise be found, in large part because
our universities are not graduating sufficient numbers of
American-born students who have the scientific or technical
skills that companies demand.
As has been stated by Senator Robb, almost one-half of the
advanced degrees in computer engineering, electrical, and
electronic engineering awarded by American universities go to
foreign nationals. To turn these highly-skilled scientists and
engineers away after we have trained them in the United States,
in essence, to encourage them to seek employment by foreign
companies who may be our competitors, simply does not make
sense.
The technology industry is working hard to close the
workforce gap. Our Tech Net members are working at the K
through 12 level, as Senator Feinstein pointed out, in
partnership with universities and through in-house programs to
train and retrain a skilled technology workforce. U.S.
companies spend approximately $210 billion annually on the
formal and informal training of their information technology
workforce and provide an estimated $4 billion in support to
schools at the K to 12, college, and university levels around
the country. The technology companies are among the most
generous of these corporate donors, according to the Conference
Board.
Both large and small Tech Net member companies have
developed educational programs to meet the workforce challenges
that all technology companies are facing. These range from
scholarships to in-house training programs. Tech Net also
supported the provisions of the American Competitiveness and
Workforce Improvement Act that ensure that a portion of the H-
1B visa fees is used to support scholarships and technical
skills training programs.
We understand that the INS is considering reducing the
number of H-1B visas available in fiscal year 2000 to
compensate for the issuance of visas possibly in excess of the
fiscal year 1999 cap. We would urge the INS not to take such
action, particularly given the uncertain data about the number
of visas processed in 1999.
We also need to consider whether the business immigration
programs are structured as efficiently as possible. Progress in
increasing the H-1B visa cap will be undone by excessive
processing delays and other inefficiencies. Companies which
have a proven record of responsible reliance on the H-1B
program should not be unnecessarily burdened or micromanaged by
these excessive regulatory requirements.
In conclusion, I want to again express our appreciation for
the leadership that this committee and the Congress have shown
on these complex issues. I hope these thoughts are helpful and
look forward to continuing a thoughtful examination of these
important issues in the months ahead. Thank you.
Senator Abraham. Thank you very much.
[The prepared statement of Ms. Katz follows:]
PREPARED STATEMENT OF ROBERTA KATZ
Mr. Chairman, Members of the Committee, thank you for the
opportunity to testify today. I am Roberta Katz, Chief Executive
Officer of the Technology Network, a network of senior executives of
the nation's leading technology companies. Our members include chief
executive officers and senior partners of companies in the fields of
information technology, biotechnology, venture capital, investment
banking and law. We are proud that our industries have played a leading
role in the unparalleled growth of the United States economy in the
past decade.
It is a pleasure to testify today on one of the most important
issues facing America's technology industry: the workforce needs of the
21st century. The Technology Network appreciates this Committee's
recognition of the role of the technology sector in driving our
nation's remarkable economic expansion and its focus on policies that
support continued growth by addressing these workforce issues. I am
particularly pleased that Congress and industry, recognizing the
technology workforce shortage, are examining the underlying business
immigration issues, including the role of business immigration, the
contribution of the technology industries to workforce training and
education and the workforce needs of the future. Addressing these
workforce issues as we approach the 21st century is fundamental to
supporting America's technology industries and the New Economy.
It is also a great pleasure to testify today before Chairman
Spencer Abraham, whose leadership of technology policy is unparalleled.
Mr. Chairman, your dedication to the development of fair and
responsible business immigration policy has supported and protected our
nation's technological leadership. The benefits of that leadership are
enjoyed by all industries and all Americans.
THE GLOBAL ECONOMY DEMANDS AN EFFECTIVE BUSINESS IMMIGRATION POLICY
The American economy is undergoing a fundamental change as we
approach the 21st century. This change is driven by technology and
innovation and it has led to a revolution in the way we do business and
live our lives.
Employee talent is a defining feature of this New Economy and a key
to its tremendous growth. More and more, companies today derive their
value from the ideas, the intellect and the skills of their workforce.
Yet today we face a growing workforce gap--a serious shortage in
the number of skilled professionals necessary to support the technology
industry's continued growth. The number of graduates from American
universities with computer science and engineering degrees declined
significantly in the 1980's. This trend has only recently reversed,
largely due to the increased number of foreign students pursuing
technical studies in the U.S. Yet, demand for skilled employees in the
technology industries continues to grow exponentially. Between 1996 and
2006, demand for database administrators, computer support specialists,
and computer scientists is expected to increase 118 percent, demand for
computer engineers is expected to increase 109 percent and demand for
system analysts is expected to double. Unless we take steps now to
address this growing workforce gap, America's technological and
economic leadership will be jeopardized.
A second defining feature of the New Economy is its global reach.
In today's society, everything--products, capital, ideas--moves
internationally and at Internet speed. At a keystroke, products are
developed, markets are created, companies are launched. More than ever
before, corporations must plan and compete on a global level. Those
that fail to do so will lose market share, often to foreign
competitors.
If the United States is to remain the world's technology leader, it
is essential that American companies continue to have access to the
most highly skilled employees. Until our schools and universities are
graduating sufficient numbers of technically trained American-born
professionals, an efficient and effective business immigration system
must fill the workforce gap. As the global economy speeds up, business
immigration policy must keep pace.
From the standpoint of TechNet's member companies, this is not an
immigration issue, but a competitiveness issue. We need to separate
these issues from the parameters of the immigration reform debate and
understand this quite simply as an issue that will affect our nation's
global competitiveness in the 2lst century.
BUSINESS IMMIGRATION SUPPORTS JOB CREATION AND INNOVATION
The valuable contribution of immigrants to America's economic
growth is well known. The critical role of foreign-born engineers,
computer programmers, managers and other skilled professionals to the
growth and success of Silicon Valley companies is less understood.
Employment-based immigrants who hold H-1B visas play a vital role in
keeping the U.S. technology industry globally competitive.
America's growing high technology industry has created hundreds of
thousands of new high-paying jobs in the past decade, becoming the
single largest manufacturing employer in the United States. Studies
have estimated that every additional skilled immigrant supports the
creation of three to five new Silicon Valley jobs for American
employees. By creating and managing technology companies, skilled
immigrants have made a valuable contribution to U.S. job growth.
Skilled immigrants also play a key role in supporting innovation in
the high tech sector. Today, for example, nearly one-third of start-up
companies in Silicon Valley are run by an Indian or Chinese immigrant.
Intel and Sun Microsystems are two of the many TechNet member
companies whose early products were developed by foreign-born
professionals. Today, those companies together employ nearly 100,000
workers. The contributions these companies have made to the American
economy and quality of life are immeasurable.
technology companies utilize business immigration programs responsibly
The extent to which American businesses rely on foreign-born
professionals is also misunderstood. Foreign-born professionals, form a
small but extremely important percentage of the overall technology
workforce. TechNet member companies Utilize H-1B visas responsibly,
relying upon these employees as necessary to fill a relatively small
number of key positions.
In general, technology companies rely on skilled foreign
professionals in several ways:
First, companies hire skilled foreign-born employee's when they
offer a unique set of skills that cannot otherwise be found. These
skilled workers possess unique combinations of knowledge and experience
or simply are the best in their fields. Access to these professionals
is particularly critical today when our universities are not graduating
sufficient numbers of American-born students who have the scientific or
technical skills that companies demand. Business immigration, however,
should always have a role in ensuring that America's technology
industries have access to the most highly skilled professionals,
wherever the source.
Second, a significant number of H-1B visas are granted to foreign-
born students who have graduated from American universities. Almost
one-half of the advanced degrees in computer engineering, electrical
and electronic engineering awarded by American universities go to
foreign nationals. America's universities are truly a magnet for the
world's brightest minds. To turn these highly skilled scientists and
engineers away after we have trained them in the United States--
encouraging them to seek employment by foreign companies who may be our
competitors--simply does not make sense.
And because American universities are sponsoring the most advanced
technology research, these graduating students are not only brilliant
researchers but also bring knowledge of the newest technologies to
their employers.
Third, companies may hire skilled foreign professionals to help
them build or strengthen their business in foreign markets. These
professionals clearly offer valuable insight into language, culture and
geographies that enable American companies to compete in foreign
countries--increasingly important markets for American technology
products and services.
Finally, a major use of foreign-born professionals is to fill skill
shortages. As long as we face a workforce gap, this will remain a
critical need of the technology industry.
THE TECHNOLOGY INDUSTRY SUPPORTS EDUCATION AND WORKFORCE TRAINING
The technology industry is working hard to close the workforce gap.
Every TechNet member is concerned with the workforce needs of the 21st
century. We all recognize that today's engineer will have seven careers
before she retires and that, because technology changes overnight,
lifelong learning is the key to competitiveness in the technology
industries. To that end, our members are working at the K-12 level, in
partnership with universities and through in-house programs to train
and retrain a skilled technology workforce.
U.S. companies spend approximately $210 billion annually on the
formal and informal training of their information technology workforce,
and provide an estimated $4 billion in support to schools at the K-12,
college and university levels around the country. The technology
industries are among the most generous donors in the corporate world,
according to data compiled by The Conference Board. In Silicon Valley,
corporate contributions as a percentage of pretax profit are 17 percent
higher than the median for all industries.
Both large and small TechNet member companies have developed
programs to meet the workforce challenges that all technology companies
are facing. These range from scholarships which are successfully
encouraging minority students to pursue careers in engineering and
computer science to in-house training programs that prepare current
employees for the challenges of the future. Corporations also support
K-12 education through the donation of dollars, technical resources and
volunteers to nonprofit initiatives. We are in the process of
cataloguing these efforts and look forward to sharing the experiences
of our members with successful education and training programs.
Donations to education programs represent over 40 percent of all
charitable activity by high tech companies. Some of the programs which
are having an impact on science and technology education in American
communities include Cisco Systems Networking Academies which currently
enroll 17,000 students in all 50 states; Hewlett-Packard's Diversity in
Education Scholarships which support engineering and computer science
training for outstanding minority students; and the Microsoft Connected
Learning Community program which provides grants to support technology
access in disadvantaged communities.
TechNet supported the provisions of the American Competitiveness
and Workforce Improvement Act that ensure that a portion of the H-1B
visa fees are used to support scholarships and technical skills
training programs. The technology industry is committed to continuing
its high level of support for American education and worker training.
BUSINESS IMMIGRATION IN THE 21ST CENTURY
As we enter the next millennium, there are important issues that
must be addressed to meet the workforce needs of the high technology
industries.
First and foremost, we need to ensure sufficient supply of skilled
technology professionals. The technology industry is committed to
continuing its support for education and workforce training. Until
America's schools and universities are graduating enough technically
trained professionals, however, we must rely on skilled foreign
professionals to fill the gap.
Next year, predictions are that the quota of H-1B visas may be used
up before January 1, 2000. This will be due in part to a growing
backlog of visas that stems from the period in 1998 when the quota was
unavailable. It is estimated that between 40,000 and 60,000 H-1B
petitions are pending at INS Service Centers. This rolling backlog has
significantly reduced the effectiveness of the recent quota increases
and must be addressed.
We understand also that the Immigration and Naturalization Service
is considering reducing the number of H-1B visas available in fiscal
year 2000 to compensate for the issuance of visas possibly in excess of
the fiscal year 1999 cap. We would urge the INS not to take such
action, particularly given the uncertain data about the number of visas
processed in 1999. This controversial proposal also underscores the
need for better data and predictability in these programs.
On behalf of TechNet's members, I want to express our appreciation
to the members of the House and Senate, including Senator Phil Gramm,
who have taken the proactive step of introducing H-1B visa legislation
this year. We are encouraged by these efforts and hope that with the
help of this Committee's leadership, we can pursue a bipartisan
approach to these important issues in the months ahead.
Second, we need to consider whether the business immigration
programs are structured as efficiently as possible. Progress in
increasing the H-1B visa cap will be undone by excessive processing
delays and inefficiencies in program administration. Delays in
processing currently make it impossible for companies to plan or
predict how long it will take to secure an H-1B visa. Policy makers
should look carefully at how program management can be enhanced and
consider potentially far reaching proposals to reform and improve these
services. There is bipartisan support for restructuring and improving
INS management and we hope that Congress will move expeditiously to
address these reforms.
Further, as the provisions of the American Competitiveness and
Workforce Improvement Act are implemented, policy makers should ensure
that paperwork and regulatory requirements remain manageable. Companies
which have a proven record of responsible reliance on the H-1B program
should not be unnecessarily burdened or micromanaged by these
requirements. It was certainly not congressional intent to hinder the
ability of legitimate employers to utilize H-1B visas and we are very
concerned with many aspects of the Department of Labor regulations in
this area. Several TechNet member companies have submitted letters
detailing concerns with these regulations.
CONCLUSION
This hearing is an important first step in addressing these urgent
workforce issues. We hope that Congress will act on the pending
proposals to address these issues early in 2000.
As we approach the 21st century, we simply cannot afford to let a
lack of skilled workers jeopardize our nation's technological and
economic leadership. The technology industry is continuing its efforts
to build America's scientific and technically skilled workforce. As we
do so, it is essential that have access to the scientists, engineers,
managers and other skilled workers necessary to sustain our global
competitiveness.
In conclusion, I want to again express our appreciation for the
leadership that this Committee and the Congress have shown on these
complex issues. I hope these thoughts are helpful and look forward to
continuing a thoughtful examination of these important issues in the
months ahead.
______
Attachment to Statement of Roberta Katz
TECHNET CEO TESTIFIES ABOUT AMERICAN COMPETITIVENESS
Highlights High Tech Giving for Education
Washington, D.C.--Technology Network (TechNet) Chief Executive
Officer Roberta Katz testified today about maintaining American
competitiveness in the 21st Century. During Senator Spencer Abraham's
(R-MI) Immigration Subcommittee hearing, Katz highlighted the extensive
efforts by high tech companies to improve education.
``If the United States is to remain the world's technology leader,
it is essential that American companies continue to have access to the
most highly skilled workers. Until our schools and universities
graduate sufficient numbers of technically trained American-born
professionals, an efficient and effective business immigration system
must fill the workforce gap. As the global economy speeds up, business
immigration policy must keep pace,'' said Roberta Katz, CEO of TechNet.
``From the standpoint of TechNet's member companies, this is not an
immigration issue, but a competitiveness issue. These issues need to be
separated from the parameters of the immigration reform debate and
understood as an issue that affects our nation's global competitiveness
in the 21st century.''
Katz highlighted the extensive efforts of industry to improve
education. Cisco Systems, Compaq, Apple Computers, Intel, Microsoft,
Nortel Networks, Sun Microsystems and 3Com give time and resources to
bring technology to underserved areas.
According to the Conference Board, high tech companies direct more
than 40 percent of their charitable contributions to education. These
contributions are more than 34 percent higher than such contributions
from all industries.
``High tech companies are rising to the challenge to improve K-12
education and ensure opportunities for all Americans working in the New
Economy,'' said Roberta Katz.
During the hearing Katz thanked Senator Abraham for his work. ``It
is also a great pleasure to testify today before Chairman Spencer
Abraham, whose leadership of technology policy is unparalleled. Mr.
Chairman, your dedication to the development of fair and responsible
business immigration policy has supported and protected our nation's
technological leadership. The benefits of that leadership are enjoyed
by all industries and all Americans.''
Last year when H-1B visas were increased, TechNet worked to
reenergize efforts to reach a compromise. Specifically, the
organization engaged in a series of detailed, three-way negotiations
between high-tech industry leaders, Congress, and the White House in an
effort to reach common ground. At the end of the negotiations, when
small issues still remained in dispute, dozens of TechNet executives
called senior officials urging that a compromise be reached in a timely
fashion. Senator Abraham was instrumental in finalizing the compromise.
TechNet is a national bipartisan political network. Its mission is
to help its members build working relationships with national and state
political leaders and pass federal and state laws that will help foster
the New Economy. Its primary public policy priorities for 1999 are: to
strengthen the nation's investment in basic research by enacting a
permanent R&D tax credit and increasing federal funding for basic
research, to protect current accounting rules for business combinations
and stock options, and to improve K-12 education.
Senator Abraham. Mr. Archey, welcome. Again, we are glad to
have you here.
STATEMENT OF WILLIAM T. ARCHEY
Mr. Archey. Thank you, Mr. Chairman. I would like to
express AEA's thanks to you for your leadership on this issue
and to Senator Feinstein and Senator Kennedy for their help and
support on this issue over the last couple of years.
In my prepared statement, I sought to provide a
quantitative base for the legitimacy of the concerns of this
industry in terms of the shortage of jobs and in terms of what
are some of the phenomenon taking place in the industry, and I
just want to very quickly go over a handful of those.
Using government data that we used in our Cyber States
report and our Cyber Nation report and our recent report on
Cyber Education, this industry since the first quarter of 1984
has created 1.1 million net new jobs totaling 4.8 million.
Interestingly, this industry is now the largest manufacturing
employer in the United States, with two million employees.
I would also note that the average wage now in the industry
is almost $54,000, 77 percent higher than the average private
sector salary. By the way, that breaks down in some other
interesting ways. For example, if you work in prepackaged
software, the average salary yearly is about $81,000, and if
you happen to work in the State of Washington, the average
salary for a prepackaged software worker is $158,000 a year. I
think the moral of that is, one, thank you, Microsoft, and
number two is, may your son and daughter grow up and be a
software engineer.
The other thing I think in terms of the employment, this is
again Bureau of Labor Statistics 1998 data, the unemployment
rate overall for all engineers is 1.6 percent, for computer
programmers it is 1.4 percent, for computer scientists it is
1.2 percent. In no instance in terms of the high tech jobs--we
classified six categories--is there any unemployment rate
higher than 2.1 percent.
The point, I guess, I would make also in all of this has to
do with--I am fascinated sometimes, although I think the
controversy surrounding H-1B seems to be diminishing each year
because I think the legitimacy of the case we make is being
recognized. But I often think about the concept of George
Orwell and language is everything and I am wondering if we
called this the H-1B job program, if there would be any
controversy at all, because that is, in fact, what it is.
Ms. Holdren made a very, very pungent point that the number
of people coming in on an H-1B visa creates the intellectual
property that, in turn, creates other jobs, and, indeed,
creates wealth. This is really what this is about, and a lot of
the other controversy tends to be, in my judgment, at the
margin. The fundamental issue here is very talented technical
people who get jobs in this industry tend to create enormous
intellectual property which, in turn, creates an enormous
number of jobs, and that is really what this is about. Yes,
there are some complaints about other aspects, but I think that
is it.
The other thing I would just note in terms of what Rob
said, we have been taking a look at the whole issue of
education. One of the things that is interesting is in the
1990's, 1990 to 1996--that is the latest data--their overall
degrees from associate to doctorate have gone up by 16 percent.
In the high tech industry, the degrees have declined by 5
percent. You would think that if the laws of supply and demand
were operating, that more and more people would be taking those
kinds of courses.
But then you look at educational performance in K through
12 in terms of our kids, particularly as compared to other kids
in the rest of the world, and, for example, our kids do
extremely well in math and science testing in the fourth grade.
By the time they get to the 12th grade, they are 19th out of 21
countries in math and 16th out of 21 countries in science.
I would also note that not enough kids are taking it.
Sometimes people think this is facetious, but I think if we
want to really look at one overall thing that might help, you
take a look at what tests are done with kids when it comes to
particular professions and they draw caricatures. It is very
interesting when you talk about engineering. The caricature is
always somebody with coke-bottle glasses, clearly somebody who
is terribly inept, and it has got an image that does not
attract people, despite the fact that there is probably no more
exciting place to work in the United States than in the high
tech industry.
So my thought is, and I am going to be pursuing this next
month, is what we need is Hollywood to get interested in a new
program sit-com called ``L.A. Geek,'' where it takes place
actually in the workforce and shows how exciting this industry
really is. And then, as an afterthought, by the way, you are
going to be making somewhere between 80 and 100 percent more
than somebody else in another industry. But I think there is an
attitude issue here and a perception on the part of kids that
we need to change.
And I think, lastly, I would just make this point. We are
putting together a clearinghouse on high technology educational
initiatives, to gather the data that is being asked by you and
by many others on both, one, what is being spent, but two, the
kinds of programs and whether they have succeeded or not so
that we can seek to replicate those programs in lots of other
parts of the country.
The point I would just make on this, and others have made
this, this is an industry that disproportionately is
contributing to educational reform and educational improvement.
It is going to continue to do so. H-1B visa happens to be
something that, until we can solve those larger problems, we
must have it. Thank you very much.
Senator Abraham. Mr. Archey, thank you very much.
[The prepared statement of Mr. Archey follows:]
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Senator Abraham. I will turn to Senator Kennedy, if he has
any questions for the panel. We will begin with you.
Senator Kennedy. I thank you all very much for your
testimony and the variety of different observations that were
made about how we deal with the short term and then how we deal
with the long term. I think it is pretty easy to understand
what the short term is, perhaps, and less in terms of the long
term.
As I see from the National Science Foundation, in the last
10 years, the number of science and engineering graduates has
declined 17 percent nationally, and 37 percent in my own State
of Massachusetts. So the economic indicators are going south.
One thing we have not talked about at all in the panel was
what the pay rates are, what we are paying. Usually when we
talk about supply and demand, we also talk about wages that are
going up. Here, according to CRS figures from 1998 and 1999 for
computer engineering--and this is the average salary of the
bachelor degree candidates by major field of study and
function--in 1998, it was $43,800 for computer engineering. In
September, $49,045. Computer science, $41,900. In September,
$49,000. Computer programming, $38,700, $40,839.
There is not a law student in Massachusetts that is
graduating from any one of their schools that is not doing
better than that, and we have got more lawyers than we possibly
need. They have said that for a long time.
I could go down, but I do not want to because we are all on
limited time, but this goes down, information science, $37,000
to $38,000; system analysis, $36,000 to $38,000. All of them
have had a bleep of about $1,100 or $1,200, which is basically
across the board, across the board in terms of every one of the
professions--no jump, no hike there.
Furthermore, in terms of job function, software design and
development, $43,400 to $45,500. Hardware design, $44,000 to
$45,000. That is $1,000. Why are we finding out that in terms
of at least the CRS and these kinds of studies, that with all
this enormous demand, that all of you are being paralyzed in
terms of the future of your companies, why in the world do we
not see these things ratcheted up more?
A number of people are telling us that it is the law of
supply and demand and they refuse to pay these increases of
what the needs are, and would that not have some impact in
terms of young people, if they suddenly saw the dramatic
escalation their brothers and sisters are getting, that they
have gone up from $36,000 to $45,000 to $60,000 to $100,000
over 2 or 3 years. Maybe someone down in those high schools
sends them a message on this.
There was not one comment from any of you about pay, and
there are people that believe that that is an issue. I would be
glad to hear your comments. We are going to have a brief period
of time.
Ms. DeFife. Senator, if I could address that issue. In
companies like ours that are venture backed and where we are
losing money on a fairly regular basis, we do a number of
things to attract workers. Salary is obviously important, but
one of the things we use is to increase the benefits and the
package, basically, by the use of stock options. Oftentimes,
what we do is make two offers, an offer of a higher salary
level, less of stock, or a lower salary level and greater
number of options. I will tell you that, without fail, everyone
who has walked into the company has taken a lower salary and a
higher stock options package with the feeling that, long term,
there is a lot of potential here, a lot of potential wealth.
I will also tell you that at the higher levels, the
compensation is so great that you are talking a minimum of
$60,000 and more likely in the $80,000 to $90,000 range to hire
a senior technical officer, and that includes a very generous
options package, as well.
Senator Kennedy. There is not a graduate from Harvard Law
School who is not going to get $100,000 next year, start off
first year from law school.
Ms. DeFife. But they have no options.
Senator Kennedy. You are talking about a highly competent,
a highly trained person that is going to have a package of
about $80,000. It really does surprise me. I understand about
the stock. Nobody can look at what CEO's are being paid and not
know what the stocks are and all the rest of it. But a lot of
these are winners and losers. People understand that. You can
talk about the stock. You are going to find, everybody can give
a half-a-dozen different companies that have gone off the logs.
They started out and they were only getting $30,000 and are
worth over $1 million. At Microsoft, they keep throwing this
back up.
But for what is happening out there in the average kind of
smaller company, and I am just, quite frankly, kind of
surprised that this is the level that is coming out. You take a
fellow from a 2-year college and he gets a mechanic, advanced
mechanics degree in that school, starting out with $47,000,
$48,000 as a mechanic on a car, and you are talking about what
is happening here.
I am just surprised that in terms of the totality of this,
that it is not more, and I think it is going to happen. We will
go through this in terms of the expansion of it, but I, for
one, want to see what is happening out there and finding out
what the companies are paying these people and what this thing
is worth. I mean, if you are not paying it and want to get some
people in here who are going to be cheaper workers on this kind
of thing, that does not make a lot of sense as far as I am
concerned.
I do not see why--part of it, we have to do. No one is more
committed than I am in terms of K through 12, in terms of
training and consolidating programs and all the rest of it. But
we want to try and see what is being offered out there for
people coming into the job market, too, rather than just
saying, well, this is where we are and we have a lot more on it
and it is going to take that.
This is another point. They talked about the decline in
training programs. That is what they had all over Europe. They
had all the decline programs. You mentioned, I think, $220
billion. How much of that goes to actually workers and how much
goes to management?
Ms. Katz. I do not have the background on that, but----
Senator Kennedy. I will bet you the great percentage of it
goes to the management part of it. If you do not have it, you
can submit it.
Ms. Katz. I will look into that.
Senator Kennedy. If it is not, it will be one of the really
important differences that we have had, where they have
provided the greatest percentage of the training programs are
going to be for management rather than for continuing upward
grade. There are others, there are exceptional companies and
all the rest, but I am interested.
There is one other point. This is what was happening in
Europe, not that this is the answer, but it is certainly one
that you ought to consider. Instead, they had the requirements.
Companies had the options that they could either have education
programs and training programs available to everybody,
everybody across the board, top and bottom suitable so that
everybody moved up, or they paid an additional kind of
contribution--call it a tax, whatever it is. They had their
choice. They had their choice in it.
But what happened is they all went on for the training
programs, all of them, and none of them cared about the--they
made their best efforts to hold the workers, but they knew if
the worker went out the door, they could bring another worker
on in, and that worker was trained, too.
We have an incentive where if these companies, which the
best companies do, go out and train, they lose them, they end
up paying for it. You have financial disincentives for
companies. I do not know whether you have any sense about how
we deal with that, if we are going to have the private sector a
partnership over a longer term.
Ms. Katz. I do know that for technology companies, across
the board, the number one issue is education because we cannot
have an information age without people who do not know how to
process information. Where our schools seem to be failing at is
in basic skills that then translate into the ability to
manipulate information. So for all of our companies, it is our
number one issue.
Senator Kennedy. Thank you very much.
Could I just ask, Mr. Atkinson, this is a very interesting
book, and Massachusetts does reasonably well. I want to thank
you very much. You worked for the Office of Technology
Assessment, and one of the functions of the OTA was to guide
the Congress about the impact of technology on legislation and
also legislation on technology. This is one of the kinds of
areas we are dealing in here, and we are always thirsty for
information. We disbanded one of the enormous assets, and I had
enormous respect for the personnel, and I know you were highly
regarded.
Let me just ask you, Massachusetts does reasonably well,
but we fall down in just three quick areas. One was in the
education technology. We were 48th out of 50 States in online,
without being partisan, Mr. Chairman, but under the Governor
Wells period. Now, we are back to about 10th, and that is
because of the private sector. We had Net Day and the private
companies, software and so on, put $30 million and coordinated
with schools. We got 350 miles of cable done by the union. It
is the most extraordinary thing that I have seen as far as a
partnership goes. So that figure might be a little different
because that was done recently.
I wish you would just, if you could, tell me or supply it
later, but we are 21st on IPO's, and what that means, and we
are 18th on job churning. Could you just do it quickly, and I
am finished, Mr. Chairman.
Mr. Atkinson. IPO's--before you were alluding to the State
New Economy Index that we just came out the end of July. It
ranks all 50 States on how their economies are. The IPO measure
is simply measuring the value of IPO's in a given year as a
share of the gross State product. Massachusetts, as you say,
does very well. In fact, they were the number one State in the
country. But the IPO's, for some reason, they did not score as
well on.
The churning, I think that is what you said----
Senator Kennedy. Yes. What is churning?
Mr. Atkinson. Churning is the amount of new jobs that are
created, adding to jobs that are dead, that went out of
business, the jobs that declined.
Senator Kennedy. Is that sort of a replacement or
something?
Mr. Atkinson. It is whether the economy is just sort of
stagnant, staying along, growing a little bit, or whether there
is lots of dynamic activity. What was interesting is we found
that actually States that had the most decline in terms of jobs
going out of business had the fastest employment growth, which
is counter-intuitive. One would assume, oh, if your companies
are going out of business, you should not be growing. But we
found that that was not the case, that States where the jobs
were going out of business, for some reason--I think it was
because older companies were going out of business and being
replaced by new fast-growth companies and new fast-growth
industries--that States that had that tended to grow faster.
Senator Kennedy. And as all of you said, it is the
combination of superb educational research facilities, the
universities, and the private sector. We have had a very, very
extraordinary experience with universities and the private
sector, the NIST program, and SBI program for advanced
research. It has just worked up there. We are all interested in
seeing how we can do it in other parts of the country, too.
Thank you, Mr. Chairman.
Senator Abraham. Thank you very much. Before we turn to
Senator Feinstein, I just do want to clarify one point for the
Senator from Massachusetts. I just want to draw your attention
to clarify one point, which is that I graduated from the
Harvard Law School 20 years ago and I am still only making
about $100,000. [Laughter.]
I am not sure the upside potential is as great.
We will turn to Senator Feinstein for any questions here,
but I did want to get that clarified.
Senator Feinstein. Thank you. I just said to Senator
Kennedy that in these rankings, Massachusetts is at number one
and we are trying to change to hold harmless in the Title I
program so that the money follows the children. See,
Massachusetts through his chairmanship and his ranking always--
they lose poor children, but they hold themselves harmless. The
children come to California, but they do not get the money. So
we have to----
Senator Kennedy. Listen, you are talking to one of the big
spenders. I am for doing it for both. [Laughter.]
Senator Kennedy [continuing]. You cannot do enough for
children in Title I.
Senator Feinstein. Anyway----
Senator Kennedy. I will support your amendment to increase
it for all.
Senator Feinstein. You will?
Senator Kennedy. For all children.
Senator Feinstein. You do not want me to get too specific
here.
I was kind of captivated by something, and that was Mr.
Atkinson's suggestion, because it kind of led to something, and
that is if you are going to really encourage the so-called
disadvantaged child to see a future in this industry, it has
got to start very early on and that youngster has to believe
they can be part of it.
Your concept of a scholarship program--I was wondering,
just Ms. Katz and Mr. Archey, whether the private sector might
be interested in doing something like that, setting up a
scholarship program so that a disadvantaged youngster that you
could begin very early on, and if they had the promise and the
interest, commit to a scholarship for college so that they
would then know if they carried this out, there was a future.
With many disadvantaged youngsters with respect to high
tech, they do not see it being an environment that would ever
be friendly or acceptable to them. They look at it as something
from the Harvards and the Cal Techs and that kind of thing. I
would like to know if you would ever be interested in that.
Ms. Katz. Absolutely, and there are some companies and some
individuals. I think the Gates Foundation has just made a large
gift to promote that kind of a scholarship. There are--I
believe Cisco--I think Rob mentioned that--has a program, and
there is a great interest in more of those programs.
Senator Feinstein. How big is the commitment, would you
say?
Ms. Katz. In the case of the Gates Foundation, I think it
is in the billions, I believe.
Senator Feinstein. I know that is a big one, but----
Ms. Katz. Let me see. I have some statistics here. Cisco
has an academy that currently enrolls 17,000 students. Hewlett-
Packard has a program, Diversity in Education Scholarships, and
it has been going on for a while very successfully, supporting
engineering and computer science training for outstanding
minority students. Then I have a reference to the Microsoft
Connected Learning Community program, which provides grants to
support technology access in disadvantaged communities. These
are just some of the examples.
I think, as we get better organized to do this, the
technology community, there is a great interest and there will
be tremendous participation in these programs.
Senator Feinstein. Just before you speak, Mr. Archey, I did
not know that every H-1B visa produces three to five additional
jobs.
Mr. Archey. Yes.
Senator Feinstein. There is also a dark side to that, which
says we in this country cannot create someone that can produce
three to five jobs. Therefore, we have got to go out and find
the individual in another country and bring them in because
that individual has the learning ability, has the basic skills,
et cetera. Mr. Archey?
Mr. Archey. I just would reinforce what Roberta said. A
large number of our member companies--I do not have that data
now, but hope to in a few months--in fact, are sponsoring
scholarship programs for disadvantaged and minorities and to
get them to come into this industry.
The point that I would also make is, there is no industry
in this country and perhaps ever that existed that is a greater
meritocracy than this industry. You do not have to have the
Harvard pedigree to succeed in this industry. You have to have
very good ideas.
Now that the Senator is here, Senator Kennedy, I had a
chairman of my board. It turned out he and I lived in Boston at
the same time. I am a native of Massachusetts, but from
Pittsfield, MA, where most people in Eastern Massachusetts
think it is part of New York.
Senator Kennedy. Not if you run for election, you do not.
[Laughter.]
Mr. Archey. But one of the points that I said to him is,
what is the difference--he moved to Silicon Valley and I said
to him, what is the difference between Boston and Silicon
Valley? Oh, he says, that is real simple. In Silicon Valley, I
have never had anybody ever ask me what school did I go to.
Senator Feinstein. That is interesting.
Mr. Archey. And he said, and number two is, not that you
want to make it a habit, but you can fail out here and it is
OK. You can still make it again.
I think that is the whole point about this industry. I was
talking to somebody a couple of months ago who said, you know,
now we are at the point with the availability of venture
capital that if you have got a totally cockamamie idea, only
five venture capital companies want to fund it.
So I think that to get those who are perhaps disadvantaged,
I think that we have got to do more an industry because there
is not anything that is more fascinating. As I said, merit is
what matters. Your lineage and your pedigree is not of any
great moment.
Senator Feinstein. See, I just wonder if we could not
really make some of this a national model out there and really
attract industry capital in a big way and perhaps one day, when
Senator Kennedy is back as chairman of the Education
Committee----
Senator Kennedy. We have kept this very friendly here
today. [Laughter.]
Senator Feinstein [continuing]. We could get a Federal
share to it, and then you would really have a program, I think,
that could boost youngsters into this industry. I think the
idea of the meritocracy is really interesting. I mean, this
could essentially really resolve a lot of problems in our
society, so it is an exciting concept. Mr. Atkinson?
Mr. Atkinson. I just wanted to completely reinforce what
you said. I mean, I think if there is any message from the
point I was trying to make, it was that we are not going to
solve this problem simply by industry alone or by government
alone. We need to really build that partnership together.
Senator Feinstein. Right, maybe have some kind of a
matching program. For every dollar one puts in, the other puts
in a dollar, and then you can make it national and can really
make a dent in this needy population.
Ms. Katz. Well, and we also need to make sure that the
schools, even for our youngest children, are teaching math and
science in a way that makes them exciting and compelling.
Senator Feinstein. Yes. But you see, the disadvantaged
child, I have worked a lot with them. Math and science are not
the thing that really appeal. They see it as a dead-end street.
So the real need is to show the excitement in it and what the
future can bring. So that would mean there would have to be
something in addition to just scholarship, but some program in
schools that could put youngsters into the program so that they
would get a taste of it, and if they had the aptitude and the
willingness, it could be a lifetime pursuit.
Ms. Katz. And Hewlett-Packard does do that. They bring
students in every summer to work at the company as the kids get
to high school age. It is a very successful program.
Senator Feinstein. Do you have to wait for high school age
to do it, because I think it is too late then, by and large.
The youngster is formed.
Ms. Katz. I think what they do is they participate in the
training of certain of these kids and then as they progress in
the program and then they become of an age where they really
can come to work every day, that is what happens.
Senator Feinstein. Thank you. Thanks, Mr. Chairman.
Ms. DeFife. Senator, could I add some things? There are
some innovative programs going on here, as well. Through the
Potomac Conference, we brought business leaders and education
and government leaders together, and superintendents of the
area school districts are meeting with business to figure out
what we can do, first of all, to figure out what kind of
curriculum might help to develop these jobs and provide the
support, as well. AOL has really taken the lead on developing a
pilot curriculum in the schools that, hopefully, we can use
around the country as an example of how we can help train some
of these workers. We are also----
Senator Feinstein. That would be really terrific.
Ms. DeFife. It is a fabulous program.
Senator Feinstein. Then children, if we can find a way to
get them a little computer at home, that they practice on the
AOL program or something.
Ms. DeFife. And it is designed to capture their
imagination, as you had mentioned, putting it as part of the
curriculum, capturing their imagination on the technology end.
CapNet is also doing a digital divide tour with the
Congressional Black Caucus also to discuss these issues,
because we are well aware that they are there, and trying to
provide our help as much as we can.
If I could add one thing, I do think one of the things we
need to reach out to in addition to the disadvantaged is to
take a look at the issue of young girls and women. They are not
taking advantage of the technology in the schools, and the
reduction in the number of women going into technical fields is
alarming to me. We cannot afford to ignore 50 percent of our
workforce as we are talking about developing new workers.
Senator Feinstein. Thank you.
Senator Kennedy. Just on that, in 1976, we had a special
program through the National Science Foundation for women and
minorities in the sciences, and that thing has just sort of
limped along and they have never really been able to get a
handle on it. I think now, actually, it is disappearing. I
could not agree with you more.
We have taken too much time, but I would be glad if we
could have our staffs visit with you or talk with us about
which companies you know are doing the best in terms of the
training programs and education, if you could let us know. I
would be glad--with our colleagues here or with others--to try
and get the people over there from the Labor Department, as
well. We passed a decent bill this last year to try and
eliminate an awful lot of these targeted programs, to have them
more consolidated, and see what the possibilities are, I mean,
the intersects on some of these things.
I will submit that as a question and then be in touch with
you and see if we can get our colleagues to try and do
something. Thank you very much.
Senator Abraham. Thank you. Let me say, I have a few things
to add. First of all, we will request that our subcommittee be
retitled the Subcommittee on Immigration and Workforce
Development.
Senator Feinstein. Yes, that is good.
Senator Abraham. We obviously are trying to encroach on
somebody's turf who is going to get mad at me, probably by
tomorrow, but----
Senator Feinstein. Do not worry about it.
Senator Kennedy. It is my turf on the Labor Committee, and
I am glad to----
Senator Abraham. Senator DeWine and you can work with us
here. In fact, we probably should do maybe a joint hearing on
this at some point.
I just wanted to put a couple other sort of comments into
play here in response. Mr. Atkinson, you mentioned the notion,
I think, of trying to work on a program to try to get teachers
or people who would become teachers to commit to science and
math and so on. If we moved in that direction, I would say, or
States moved in that direction, certainly--this is going to be
an anecdote-filled commentary by me, but one of the things I
had an interesting experience with was just a year ago or so
with Governor Keating of Oklahoma.
I do not know if you can shed any light on this issue
beyond Oklahoma, but we were talking about the H-1B program,
the problems, and he said, look, we have got them in Oklahoma,
too. We need this increase. I thought, this is not the State
that you would automatically think of. Part of my problem in
Oklahoma, he said, is that in Oklahoma City--I think it was in
Oklahoma City--he said, the oldest math teacher in the entire
school system is 27 years old. That is because what is
happening is the teachers are being hired. I assume--I am just
seeing a lot of nodding of heads here--that math teachers are
being hired by the private sector in high tech-related
industries because the scarcity problem is forcing----
Senator Feinstein. The best teachers end up in high tech.
Every ``Teacher of the Year'' in California ends up leaving and
going into high tech.
Senator Abraham. I am trying to get toward the point here
that it is a bigger problem. The education side of this strikes
me as a lot more complicated than simply a money issue or a
training issue or whatever, because I think the scarcity issue
is taking people who could train folks, train our children to
move in these skill areas. They are leaving. So a lesser, maybe
a lesser focus exists.
I will say this. Our two girls started first grade this
year, and in the school system, which is a fairly affluent
school system that they attend, they have got a program for
kindergartners, for first graders, and I do not know if it goes
into second grade, of a special class on science one morning a
week from 8 to 9 a.m. that is not taught by the school system
but it is done through the PTA.
They had exactly enough help and support to do this for, I
think it was nine children, and our girls, because of a little
glitch in terms of the form getting in, were numbers 10 and 11,
and so they were not going to get to participate because the
PTA could only handle nine slots. Now, this is, as I say, a
fairly affluent school system. Fortunately, my wife then got on
the phone and literally recruited seven other children so that
they could get another set of nine, which would justify having
another section of this.
But that is it. That is the science training, and it
happens not because of anything going on in the school system.
So it really is another example of kind of the problems we
confront, school systems with a lot of resources but not, at
least at that age, focusing enough on science, so that this has
got to happen on a separate track.
I wanted to ask a question that gets more back to not
necessarily either Senator Gramm or Senator Robb's bill, but
just the general issue of the H-1B needs and so on, at least
the short-term issue that we have got to confront in this
subcommittee. Ms. DeFife, you indicated that companies are
moving offshore. I take it that is something that you have some
personal familiarity with, and I suspect some of the others. We
hear that. That is not just sort of a threat, that is
happening, is that correct?
Ms. DeFife. That is correct. For our company, it is not,
but I know a number of CEO's who have said, it is easier for
me, it is more economically feasible, because I cannot find the
workers here, to move. India is one that I am very familiar
with a number of companies moving to.
Senator Abraham. Ms. Katz, in your experience----
Ms. Katz. The same phenomenon is happening with some West
Coast companies.
Senator Abraham. Mr. Archey?
Mr. Archey. I think that is true. I would also, though,
amend that to say that for most of our CEO's, they would rather
expand here. I mean, there is not any question about that. That
is really, if not the course of last resort, it is pretty damn
close to it, of moving it offshore.
Senator Abraham. The issue that we dealt with in the last
go-around on this H-1B debate that was linked, in a way, was
the notion also that, somehow, the perception existed that
somehow it is cheaper and easier to find somebody overseas to
come and work for you than it is just to hire. I mean, it is
not a case that American companies are for some reason
benefitted by going elsewhere to find talent, when if the
talent was here, it would be hired.
But this gets me to the question, I know in Senator Robb's
bill, the sort of T visa concept, it is my understanding, and
he did not specifically get into the numbers, but that we would
be talking in the range of 8,000 to 10,000, maybe, per year,
who would fit the parameters, that is, who would graduate with
the kind of degree we are talking about, as well as the salary
we are talking about.
I would ask all of you to comment on whether you think, at
least in the short term, and by that, I guess I would say maybe
over the next 5 years, whether if we were to revert back to the
65,000 number of H-1B visas but have this T visa program,
whether you feel this is adequate in terms of the numbers,
because that is sort of where we will be in a little more than
a year.
Ms. DeFife. I know of one company that has 30,000 technical
vacancies right now, so I can tell you that would not even come
close.
Senator Abraham. Thank you.
Ms. Holdren. It definitely would not come close. It is
alarming.
Mr. Atkinson. I would agree.
Ms. Katz. I would also agree. I think it addresses an
important aspect of it, but the problem is bigger than that.
Mr. Archey. I think that is right. I think the problem is
much bigger than that. You know, I think, Senator, there is one
thing that ought to be considered. We are looking at 45 percent
of all doctoral degrees in high technology that are now being
given to foreign nationals, and that is only up to 1996 data.
That is the last data the Department of Education has got. I
think that number is going to be higher than 50 percent when
you get up to 1999.
It strikes me, and I say this not flippantly at all, that
when somebody who is a foreign national gets a doctoral degree
in high technology and science, math, engineering, that along
with the diploma, they ought to get a green card, because it is
highly likely that that individual has also gotten some public
support, through some form of fellowship or scholarship.
The thing that I do not understand is why would the U.S.
policy want to encourage that individual to leave this country,
and this individual right now is at the cutting edge of his
field. Engineers will tell you, there is nobody more current in
the field than somebody who is just coming out of a doctoral
program. And then have them go back to whatever country, that
just does not make sense.
Senator Abraham. I have to say, that was actually the next
point I was going to comment on, was that one of the things
about Senator Robb's proposal, as I understood it today, that
had an appeal to me is that it begins to look at that issue of
people who are already coming here and part of the country for
obviously their educational training and maybe some may have an
H-1B as part of it in some way, but the idea that we are
training folks to work for competitors does not make a lot of
sense. But the notion of limiting it to only the people who
would hit a certain income or salary level would bring the
numbers down. That was my concern. And as I say, I have heard
the number is 8,000 or 10,000, which seems to me to not maybe
get there. But that is another issue that needs to be examined,
Mr. Archey. I agree with you on that.
I do think it is important to acknowledge for the record
the concern that I think Ms. DeFife mentioned with respect--
although you did talk about some of the compensation issues, I
believe, in your remarks. But I do think that there is a lot of
sort of upside potential. It is kind of hard, and Senator
Kennedy had to leave and I do not want to get too much into his
statement without him here, but I do think the average salary
for people in a certain area, to compare the average graduate
with a mechanical engineering degree to a Harvard Law School
graduate may not be quite the same as comparing them to the
average law school graduate, where I think the number--I know,
because of relatives, the numbers are not necessarily always
the same as they are coming out of Harvard.
But, also, the upside investments that people make. I mean,
not everybody that was in that list is somebody who has gone to
3 years of post-graduate education. I think if you compared
people with post-graduate training of 3 years at an Ivy League
school in these other areas and what their starting salaries
are, I suspect they might be a little closer to the Harvard
salary.
But all of that said, I do think we need to note that there
is a pretty significant distinction between compensation and
salary and some of the other inducements and incentives that
people are, I think, not only inclined to want to do, because
they want to kind of take a little bit of the risk, but also
that, in fact, has become so well known as the way in the high
tech area that so many have profited that that becomes pretty
appealing.
The only other point I guess I would make on the general
front is this, too. I think it is inevitable that in a program
like H-1B, that there will be somebody, somewhere, who
mishandles it, whether intentionally or unintentionally, brings
somebody in, and you referenced fashion models. I am still
waiting to have a hearing with the fashion model H-1B holders
just for purposes of drawing attention to these hearings. With
all due respect to all of you, if we brought in H-1B fashion
models, we would have more cameras, I am sure, here.
[Laughter.]
But nonetheless, it is also the case that a lot of the high
tech uses of these visas is extraordinarily specific in nature.
I had the opportunity to meet, it was, I guess, some people
that Microsoft had under their H-1B program, because when we
were dealing with the H-1B bill, there were a lot of questions
about who these were.
For instance, one of the people was somebody who was
basically adapting the operating system to Arabic and he was
from Jordan. I cannot imagine there is an unemployed person in
America who could do this thing, but he could. The notion that
you had to get somebody like that--now, that may be a little
too specific, but still, I was struck that virtually every one
of the people I met, of the five or six who were brought here
for that meeting, were doing things that you just did not
have--the notion that there is an immediately available
alternative is just simply wrong.
I just throw that out. I mean, you employ people on the H-
1B program. Would you like to comment on the replaceability of
those people in terms of the workforce here and your ability to
find folks who could today, not in 5 years or 10 when hopefully
we can do something, do that work?
Ms. DeFife. Well, it is interesting. I do not even have
jobs that are that specific to doing something that I know I
definitely could not find an American to do. There are not
enough people to fill all of the jobs. I have been unable to
find a single qualified employee for the one vacancy that has
been open for 7 months, whether they are on an H-1B or not. So
I can assure you that it is not something that is easy to do,
it is not something that is taking jobs away from Americans,
and it is not something that is so specialized.
Senator Abraham. Seven months and no one qualified, either
H-1B or non-H-1B.
Ms. DeFife. Correct.
Senator Abraham. Ms. Holdren?
Ms. Holdren. I was actually excited to hear that Susan
brought her network administrator in, because that is a
position I have had open for 6 months, so I am experiencing
much of the same.
Senator Abraham. I want to just thank the panel. We
appreciate very much your participation. This is a set of
issues, and as you can see, that is rapidly going to expand
beyond immigration. I am glad we had a chance to go beyond
immigration because I tried in my efforts to increase the H-1B
program to make it very clear that I see this, as many of you
do, as not something that is an immigration-only issue by any
means. I think as a country, we are very challenged here to try
to find ways to address this in the long term.
The statistics on American children's academic performance
are ones that really are quite staggering. Something is clearly
happening between grade school and the middle of high school.
One only has to have either their own children in these age
categories or know kids in these categories to know that the
interest in technology is extraordinarily great, and yet, for
some reason, we are not very successful, whether it is in a
cultural sense or it is in an academic sense or whatever, to
convince folks that in addition to recreational uses, there are
actually very lucrative employment possibilities.
I want to talk some more about the things that Mr. Atkinson
has mentioned, and learn more about the things he has brought
to us as ideas here, but there is a disconnect, and I see it
even in friends of mine, family members. There still is a
certain cultural distinction between what are perceived to be
professions and things that are not.
In Michigan, we have people in the auto industry, I mean,
in large numbers now, who are in one way or another in high
tech jobs but they are theoretically blue collar employees. I
think sometimes there is a failure to understand that there is
a lot more remuneration for tool and die makers doing those
kinds of things than there are for people who go out and get
professional degrees in fields where there is a surplus of
workers. So we do have these challenges.
I appreciate all five of you participating today to help us
to get a little bit more information on the record about it.
Hopefully, our colleagues will show a similar interest to the
ones who were here today in trying to move forward.
Mr. Archey, do you want to comment?
Mr. Archey. Just on one point, because it really kind of
bugs me, which is the issue of the companies are trying to use
H-1B to get workers on the cheap. I am not saying that there
are not some instances of that happening, but the companies
that Roberta and I represent, I can tell you, one CEO said to
me a couple of weeks ago, he said, those folks in Washington,
they do not really believe that, do they, that we are going to
do this on the cheap? He said, do they not understand that
somebody who is getting a bachelor's degree from Stanford truly
knows what the prevailing wage is? I just wanted to make that
point, because that is one that--maybe it can be directed at a
very small number, but it is a fundamentally wrong assertion.
Senator Abraham. I appreciate your making the point. I
tried to allude to it a few minutes ago. The fact is,
obviously, why would you go through all of this trouble? We
tried to toughen up the laws. We tried to increase the
punishments. We have tried to create, for companies that may
fit a certain profile, a certain amount of additional
requirements for them to go through as a way to address it. I
just do not accept it, either.
There are bad actors in every sector of the economy, and I
am sure there might be somebody who is trying to do something,
and we hear stories from time to time, but this is a case where
I think sometimes people who for other reasons do not want
something to move forward have raised these kinds of excuses.
But I think it is a good point for you to make, and if
anybody else has a closing point, I would be glad to entertain
it, and if not, I, again, want to thank you all, as well as our
audience, for the hearing. I think it was very productive.
We are adjourned.
[Whereupon, at 4:14 p.m., the subcommittee was adjourned.]
A P P E N D I X
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Additional Submissions for the Record
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PREPARED STATEMENT OF HON. PHIL GRAMM, U.S. SENATOR FROM THE
STATE OF TEXAS
Mr. Chairman, thank you for the opportunity to provide the
subcommittee with my views on an issue of such importance to the people
of Texas, and to our entire nation. With record low unemployment and a
nationwide shortage of highly skilled workers, many U.S. high
technology companies have been forced to slow their expansion, or
cancel projects, and may be forced to move their operations overseas
because of an inability to find qualified individuals to fill job
vacancies. We will achieve our full economic potential only if we
ensure that such companies can find and hire the people whose unique
qualifications and specialized skills are critical to America's future
success.
On July 27, 1999, I introduced the ``New Workers for Economic
Growth Act'' (S. 1440) to increase the number of available H-1B
temporary work visas used by U.S. companies to recruit and hire foreign
workers of exceptional skill, particularly in high technology fields.
It is cosponsored not only by you, but also by Senators Trent Lott,
Mitch McConnell and Sam Brownback. This bill will ensure that, the U.S.
economic expansion will not be impeded by a lack of skilled workers.
Last year, the Congress temporarily increased the number of annual
H-1B visas from 65,000 to 115,000 for fiscal years 1999 and 2000, and
to 107,500 in 2001. The number of H-1B visas is scheduled to drop back
to 65,000 for fiscal year 2002 and subsequent years. As you know, Mr.
Chairman, our ``New Workers for Economic Growth Act'' will increase the
H-1B visa cap to 200,000 for fiscal years 2000, 2001 and 2002. By the
end of that period, we will have the data we need to make an informed
decision on the number of such visas required beyond 2002. The bill
retains the language of current law which protects qualified U.S.
workers from being displaced by H-1B visa holders.
According to a recent study by the American Electronics
Association, Texas has the fastest growing high technology industry in
the country and is second only to California in the number of high
technology workers. This legislation would ensure that these companies
have access to highly skilled, specialized workers, in order that such
businesses can continue to grow and prosper, and in doing so, create
jobs and opportunity for U.S. workers.
Additionally, our bill expands work opportunities for America's
retired senior citizens by removing the financial penalty which is now
imposed on those who choose to continue to work while receiving Social
Security and whose wages exceed specified levels. The Social Security
earnings test robs senior citizens of their money, their dignity, and
their right to work, and it robs our nation of their talent and wisdom.
Mr. Chairman, I believe that our legislation represents a fair and
effective way to address a critical need in our Nation's economy. I
appreciate the committee's attention to this important issue and look
forward to working with you in an effort to secure enactment of our
proposal.
__________
PREPARED STATEMENT OF THE AMERICAN FEDERATION OF LABOR--CONGRESS OF
INDUSTRIAL ORGANIZATIONS
The AFL-CIO expresses is appreciation for the opportunity to file
written testimony comment to the October 21, 1999 Subcommittee on
Immigration hearing on ``America's, Workforce Needs in the 21st
Century.'' Of one thing we are absolutely clear: H-1B workers are not
the answer to any perceived information technology skills shortage in
either the long or short-term. By focusing attention on this dubious
solution, we divert precious time and energy from ensuring that U.S.
workers and their children are given a fair opportunity to attain
necessary jobs skills, and to be fairly considered for jobs that
currently are available.
Congress cannot continue to determine H-1B policy on the basis of
unfounded reports of skills shortages. When subject to an objective
analysis rather than self-serving anecdotes, the arguments made by the
information technology industry fail to prove its case of the existence
of a worker shortage. Rather than utilize recruitment methods that may
attract U.S. workers to their companies, information technology
companies have embarked on a multi-year quest for an unlimited supply
of H-1B workers.
The information technology industry, other industries, must contend
with a tight job market during these times of low unemployment. The
usual response of an employer to a tight job market is to raise wages,
and offer better benefits and working conditions to workers, both
current and prospective. However, data from the Bureau of Labor
Statistics show that real median weekly high technology wages were
actually less in 1998 than in 1995, while wages for other mangers and
professionals rose during that same time, illustrated on chart 1.
Likewise, recent computer science graduates have not seen their initial
wages increase, although they are said to be the objects of fierce
bidding wars waged by employers eager to fill vacant positions.
Economic history has shown us time and again that increased employment
and steeply rising wages characterize a tight labor market. This is not
the case for high technology industry. The prevalence of H-1B workers
in the information technology industry must be considered a factor in
the depression of information technology wages.
The Bureau of Labor Statistics figures shown on chart 1 indicate
that the real issue here is not the availability of U.S. Workers or a
skills shortage, but one of manipulation of the H-1B program by
employers in order to hold wages down. In the August 30, 1999 edition
of U.S. News and World Report, Roger Coker, Texas Instrument's director
of staffing in the U.S. listed the pursuit of H-1B workers in addition
to other anti-worker devices, such as the use of contingent labor, to
``fight labor cost creep.'' Congress must ascertain the real
motivations behind the employers' push for H-1B workers.
Employment practices of the high technology industry have not
served to retain or recruit workers. The industry also continues to
layoff workers at an alarming and steady pace. Since January 1, high
technology companies have laid-off over 63,000 workers. As early as
June, 1998, Computerworld magazine was predicting a ``bloodbath'' of
unemployed programmers after the Year 2000 problems are addressed. This
is hardly the behavior one would expect from an industry strapped for
workers.
The report of the Virginia Commission on Information Technology
stated that many of the vacancies listed by Virginia high technology
companies could be filled but for the fact that the employer had
``over-credentialed'' the requisite qualifications, eliminating many
job applicants capable of performing the job duties. This same ``over-
credentialing'' is apparent in the push for workers with advanced
degrees in mathematics, computer science and engineering. Although the
high tech industry says that the jobs they need to fill with H-1B
workers require advanced degrees, the Department of Labor states that
the majority of H-1B Labor Condition Applications filed for computer
positions are for programmers, not higher level occupations. Alleged
shortages are exacerbated when employers are permitted to post job
qualifications that are not related to openings, but are manipulated to
exclude most potential U.S. applicants.
There is not enough information regarding the effect of expanding
the H-1B program on U.S. workers. Last year members from both parties
agreed that we did not know enough about the high tech worker skills
shortage, or the effects of bringing in an additional 142,000 H-1B
workers over the course of three years on the U.S. workforce. The
American Competitiveness and Workforce Improvement Act of 1998 directed
the National Academy of Science (NAS) to file reports on the alleged
high technology worker shortage, and on allegations of age
discrimination in the high technology industry. The NAS currently is in
the process of gathering information through regional hearings and the
solicitation of views from interested parties, and will submit a report
to Congress in the Fall. Likewise, the 1998 legislation directed the
Immigration and Naturalization Service (INS) to report information on
H-1B workers, their employers and occupations by October 2000. While
INS has stated that it will not make interim reports, the agency did
announce last month that it overcertified upwards of 20,000 H-1B visa
petitions. We know nothing more from the INS about the H-1B program
other than the fact that the agency managed to provide business with an
extra 20,000 or more H-1B workers. The Department of State continues to
investigate allegations of H-1B visa fraud at its consular offices.
Accurate information is necessary to administer the H-1B program and to
plan for the program's future. Increasing the number of H-1B workers
without the interaction necessary to craft a meaningful, fair, and
workable solution will ultimately shortchange U.S. workers. Congress
should wait until the NAS, INS and the General Accounting Office submit
reports on the H-1B program and its impacts on U.S. workers before
considering another increase of the H-1B cap.
It is also too early to judge the effectiveness of worker
protections and enhanced DOL enforcement abilities. Not one U.S. worker
has been protected from displacement or failure to select for a job
because DOL has not published regulations to implement the protections.
Neither do we know if the enhanced DOL enforcement role goes far enough
to protect workers. Fair treatment of U.S. workers should be given the
same priority as industry's demands for H-1B workers.
Preparing for future workforce needs must include training
opportunities for U.S. workers, access to education and fair
consideration for jobs. Some members of Congress and the information
technology industry have favored improving K-12 math, science and
computer skills, while failing to promote training programs that would
enable the parents of school children to work in the information
technology industry right now. The best thing that can be done for
American children is to give their parents the opportunity to get a
good, secure well-paying job. With that foundation, parents can provide
computers for their own children, contribute their time and tax dollars
to improve curriculum in the public schools and send those well-
educated children to college. Enrollment in computer science programs
have increased in recent years, and Department of Education statistics
project that at graduation rates of over 1 million annually, U.S.
colleges and universities will be more than able to fill the new jobs
of the future. Opportunity also means that once hired, the employer has
the obligation to facilitate the attainment of skills by their own
incumbent workers to meet future needs of the industry.
Allegations of age, gender and race discrimination in the
information technology industry must be investigated and remedied.
Disturbing allegations of age discrimination persist in the information
technology industry, but have not been addressed with a thorough
investigation or aggressive enforcement of laws prohibiting such
discrimination. U.S. Census Bureau data shows that information
technology workers over the age of 40 are 5 times more likely to be
unemployed than other workers in that same age group. Discrimination
against older workers has caused many information technology workers to
leave the industry at a time when retention of talent is essential. The
information technology industry's desire to wrap itself in the
trappings of youth should not translate into discrimination against
older workers based on stereotypes. More importantly, age
discrimination is a violation of the nation's civil rights laws, and
offensive to public policy.
Currently African American and Latino representation in the
information technology workforce is 3.7 percent and 8.4 percent
respectively. Many technology jobs are being filled by H-1B workers,
while there is a labor pool of more than 300,000 African Americans and
Latinos with engineering and scientific qualifications. A recent report
by the Public Policy Institute of California noted that a 1991 survey
of Asian information technology professionals in Silicon Valley found
that two-thirds of those employed in the private sector believed that
race was a factor in their failure to advance, and that the belief
increased significantly with the age of the worker. The information
technology industry must fully utilize the assets of all U.S. workers
before looking to temporary foreign workers as a solution to personnel
shortages.
Information technology industry representatives often cite the
success of immigrant entrepreneurs, and link that success to the
creation of jobs. However, these entrepreneurs are immigrants, not
temporary foreign workers who are beholden to their H-1B employer/
sponsor for not only their current job, but the opportunity to be
sponsored for permanent immigration. These temporary workers cannot
leave for a better job, or start their own business no matter how good
their idea. The statement of an H-1B worker quoted in the November 1,
1999 edition of Computerworld best describes their predicament. ``I'm
in a situation where I'm at a disadvantage,'' said the worker. ``I'm on
H-1B. I don't have much bargaining power. In a sense, everyone on H-1B
is in the same boat.'' The issues the AFL-CIO, worker advocates and
concerned members of Congress have raised will not be addressed by
granting the information technology or any other industry, a blank
check for as many H-1B workers as they desire. It is time for policy
makers to take a long, hard look at the H-1B program with all of its
reported failings and abuses, and the behavior of the information
technology industry in exploiting the program to the detriment of both
U.S. and foreign temporary workers, and to craft solutions that fairly
serve the interests of both workers and industry.
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PREPARED STATEMENT OF THE AMERICAN OCCUPATIONAL THERAPY ASSOCIATION
The American Occupational Therapy Association (AOTA) appreciates
the opportunity to submit a statement to the Subcommittee on
Immigration of the Senate Judiciary Committee addressing the
recruitment and employment of internationally-educated workers in the
United States. We would like to offer our perspective on the policies
that should be considered when making changes to employment-based visa
programs, particularly the H-1B visa program. Internationally-educated
occupational therapists have made up a significant percentage of H-1B
visa recipients.
While the hearing today is intended to explore the workforce needs
of the hi-tech industry to determine whether a substantial increase in
the number of H-1B visas issued annually is warranted, other
professions, including several health care professions are impacted by
these changes. We urge the Subcommittee to consider the impact any
changes to the H-1B program will have on the health care industry.
The AOTA is the nationally recognized professional association for
over 60,000 occupational therapists and occupational therapy
assistants. These individuals work with people experiencing health
problems such as stroke, spinal cord, injuries, cancer, congenital
conditions, developmental problems, and mental illness, in a wide range
of practice settings including hospitals, nursing facilities, home
health agencies, outpatient rehabilitation clinics, psychiatric
facilities and school systems.
In general, policies directed at reform of employment-based
immigration programs, including existing temporary workforce programs,
should take into consideration the marketplace and other government
action (budget reductions) which are likely to impact demand for
services and the domestic workforce. Policies should be consistent with
overall goals of meeting urgent but temporary business responsibilities
and should strike a balance between American business needs to remain
competitive by having access to skilled foreign workers, while also
protecting American workers against abuses by employers who seek to
replace domestic workers with lower-paid foreign workers.
Internationally-educated workers should be appropriately trained and
prepared to work in the U.S. Laws and regulations governing the
recruitment of internationally-educated workers should recognize the
need to evaluate the responsibilities of all parties involved including
those of employers, recruitment agencies and credentialing
organizations. This should take into account the need to identify both
employment and preparation responsibilities involved in placing non-
immigrant temporary workers in the U.S.
visa program policy should be responsive to supply/demand trends
The U.S. Commission on Immigration Reform has identified the
occupational and physical therapy fields as having among the highest
numbers of nonimmigrant temporary workers in the U.S. on H-1B visas,
second only to computer programmers.
In the 1980's a significant shortage and maldistribution of
occupational therapy (OT) practitioners in the U.S. became evident. In
response, the number of domestic education programs in the
accreditation process has nearly doubled to 121 OT professional level
programs and 157 technical level programs. This represents 24,409
individuals currently in U.S. schools or in clinical fieldwork
placements who will be looking for work opportunities, or a 38 percent
increase over the existing OT workforce of approximately 65,882 for
1998.
The anticipated supply of occupational therapists and occupational
therapy assistants by 2005 approximately will equal the Bureau of Labor
Statistics (BLS) employment forecasts for that year, even if the
marketplace is presumed to have no affect at all in determining the
future requirements for OT practitioners. Moreover, if the capacity of
the OT education system increases more rapidly, the supply of
practitioners by 2005 may be even larger than anticipated. BLS
projections released in December, 1997 for the labor force for the
period 1996-2006 estimates that occupational therapy employment will
increase by 66 percent to 95,000, while occupational therapy assistant
employment will grow by 69 percent to 26,000. A recent workforce study
commissioned by AOTA suggests that these numbers may be too high, and
questions the assumptions used by the BLS in describing the future
direction of the health services industry and whether BLS estimates
reflect some of the market-driven changes affecting different segments
of the health care industry.
International recruiters also responded to the shortage of OT
practitioners by markedly increasing their recruitment of
internationally-trained OT practitioners. The percentage of newly
certified OT's who are foreign graduates had risen from 3 percent in
1985 to over 20 percent in 1995. In 1997, this percentage fell to 14
percent in large part due to new English language proficiency
requirements now required by the National Board for Certification in
Occupational Therapy (NBCOT).
The AOTA believes that the shortage/maldistribution issue must now
be viewed in the context of a rapidly evolving marketplace for health
care services where consolidation and integration are changing the
demand equation for therapy services. Although uncertainty exists as to
the pace, scope and ultimate impact of marketplace changes on the
occupational therapy workforce, it is reasonable to assume that growth
in demand for OT services will not continue as it has in recent years.
Changes to government-funded health care programs will have a
significant impact on OT services. Medicaid and Medicare are the
principal public purchasers of occupational therapy services, and
spending for services for people with disabilities under these programs
has risen rapidly in recent years. However, both Medicare and Medicaid
are taking steps to gain more control over future spending for services
provided to beneficiaries and recipients. Expanded payment reforms and
greater use of managed care by these programs will have a major impact
on the future demand for, and delivery of, occupational therapy and
other rehabilitative services. Under the Balanced Budget Act (BBA) of
1997 many of these structural changes to the delivery of health care
for both Medicare and Medicaid patients, as well as significant budget
cuts in rehabilitative care under the Medicare program, were realized.
For example, one of many provisions in the BBA affecting access to
rehabilitative services places a limit on outpatient therapy, including
occupational therapy. The limit--which is applied without regard to
medical necessity--restricts Medicare coverage of occupational therapy
to $1,500 per year per patient in most health care settings. This will
have a significant impact on the utilization of therapy services under
the Medicare program.
Private purchasers are also aggressively moving to restructure
their approaches to health care delivery and finance by selectively
contracting with networks of providers to control costs. Reports from
AOTA members around the country indicate that greater market
penetration of managed care in the private sector has led to more
stringent management of the utilization of occupational therapy
services. School districts, state governments and the federal
government are all under increasingly severe budgetary and personnel
constraints that will shape the future size and composition of the
occupational therapy workforce.
About 27 percent of 1,000 AOTA members who responded to a survey
regarding job status reported that they had lost jobs since January 1,
1999. Of these, about 21 percent had been laid off and 6 percent said
that they had been forced to leave their employer due to severe
cutbacks in pay, loss of contracts, or decrease in hours worked. The
survey also indicated that many OT practitioners who have not lost jobs
have had their hours reduced involuntarily, their pay cut, productivity
quotas imposed or increased, or their status changed from salaried to
per diem. Large rehabilitation employers such as NovaCare, Vencor, Sun
Health and Mariner are mired in severe financial problems and have
laid-off employees and taken other cost cutting measures. The results
indicate that practitioners in long-term care, skilled nursing and home
health settings are facing profound changes in their work status, their
paychecks, and their ability to find appropriate work.
BALANCE COMPETITION WITH ASSURING OPPORTUNITIES FOR
DOMESTIC-TRAINED WORKERS
As these changes in the marketplace are likely to impact the demand
for services, policies should be examined to determine whether the
processes in place to receive approvals for H-1B job openings are
sufficient. Currently the H-1B visa program provides little incentive
to employers to commit themselves to developing a domestic workforce.
In fact, the current design of the H-1B program seems to be encouraging
the building of businesses, which are dependent on the labor of foreign
workers. Employers should be required to determine the availability of
qualified U.S. workers before hiring H-1B workers, and to provide
notice to potential domestic workers of job openings. Lay offs and
replacements of domestic workers should be illegal under the law.
Recruiting and training domestic workers should be a priority and
policies should encourage employers to commit themselves to developing
a domestic workforce rather than encouraging the building of businesses
that are dependent on the labor of foreign workers. In the case of
health care, training priorities would be particularly effective if
directed at the maldistribution problems of health professionals.
Until recently, applications for therapy jobs outranked all other
professions under the Department of Labor's attestation process. Most
of these applications are coming from contractors/recruitment
companies. Of the job openings certified by the Department of Labor in
1997, 25.9 percent or 103,097 were for therapists, second only to
computer-related jobs at 44.4 percent or 177,034. Similarly, the
business section of the Washington Times reported (October 13, 1998)
that of the top 100 companies that sponsor the highest numbers of H-1B
visa recipients, 25.9 percent are for therapists compared to 44.4
percent for hi-tech workers.
The Department of Labor reports of 14 enforcement cases involving
employers of H-1B therapists, nearly all of which were recruitment
companies, finding violations in prevailing wages in the amount of $2
million for nearly 400 temporary foreign therapists. In one case
involving a contractor in the business of recruiting therapists from
Poland primarily for jobs in Texas, the contractor paid its therapists
$500 per month when the prevailing rate was $2,800 per month. The case
resulted in the company paying more than $460,000 in back wages to 54
therapists. In another case, a contracting firm that supplies
Philippine therapists to medical centers in 21 states was ordered to
pay almost $1 million in back wages and $143,000 in civil penalties.
THE AMERICAN COMPETITIVENESS AND WORKFORCE IMPROVEMENT ACT OF 1998
(ACWIA) DOES NOT PROVIDE SUFFICIENT SAFEGUARDS
While AOTA supports the implementation of additional attestation
requirements for employers to ensure better protections for workers, an
issue addressed in ACWIA, we regret that the law does not extend these
protections to all workers potentially effected by the H-1B visas
program. The law only applies these protections to a small number of H-
1B dependent employers. This is particularly troubling considering that
the law also substantially increases the number of visas over the next
three years to more than 60 percent, and the hi-tech industry is
already requesting Congress to consider additional significant
increases to over 200,000 visas annually.
BUSINESS PRACTICES SHOULD ENSURE A WELL TRAINED WORKFORCE
Internationally-educated health care practitioners should have
sufficient education and clinical preparation to work in U.S. health
care settings/programs, including a minimum level of field-based
experience in their field prior to coming to the U.S. In addition to
appropriate education, clinical training and work experience, the
individual should be appropriately prepared in oral and written
language skills, cultural differences, and reporting, documentation and
other management requirements of U.S. health care systems. These skills
are particularly critical in an industry that works with a vulnerable
patient population. The majority of consumers seeking occupational
therapy services are doing so incident to serious injury or illness, or
other physical, medical or psychological problems that result in
disabilities. Because of the complexity of the population served by
occupational therapy practitioners, it is especially important to
regulate members of this profession in a manner that assures the
highest level of protection for those populations who are extremely
vulnerable, frail and often have multiple problems.
The increase in internationally-educated therapists working in the
U.S. has focused attention on issues and business practices associated
with recruitment and placement practices that frequently adversely
affect the well-being of therapists recruited to the U.S. to work.
Among the problems cited were instances of insufficient preparation and
training to work in U.S. health programs, inappropriate written
language skills for meeting the demands of reporting requirements of
Medicare and insurance companies' documentation requirements, lack of
prior cultural orientation preparation for working particularly in
rural areas, and lack of access to professional resources to adequately
prepare for the national examination.
Many of the suggestions offered to improve the process center on
the activities of recruitment companies and include ensuring that
therapists are working with reputable recruiting/contract firms and
that they understand the terms of their contracts and their rights and
responsibilities under state practice laws as well as federal
immigration and labor laws. Requiring therapists to meet all
certification requirements prior to receiving a visa has been
recommended. Currently many states allow OT's to practice for up to 6
months without a license. The AOTA is troubled by anecdotal reports
that some firms are moving therapists from state to state to avoid
meeting license requirements. Also, anecdotal reports of recruitment
companies ``parking'' foreign therapists have also been described. In
these situations, companies keep foreign therapists in a holding
pattern between jobs with employers while not paying them any salary.
Under H-1B rules, foreign workers are required to receive pay on a
continuous basis.
AOTA URGES CONSIDERATION OF THE HEALTH INDUSTRY WHEN INCREASING H-1B
VISAS
The AOTA urges the members of the Subcommittee to consider
refinements to the current H-1B temporary worker program that take into
consideration the changing marketplace, that are more consistent with
the overall goals of this program to meet urgent but temporary business
responsibilities, that ensures a well-educated and prepared foreign-
trained workforce and that carefully scrutinizes the responsibilities
of all parties involved in the recruitment of foreign workers.
Above all, AOTA asks the Members of the Subcommittee to consider
the impact of a substantial increase in H-1B visas on all industries
affected--including the health care industry (approximately 17 health
care professions qualify for H-1B visas). Should the Subcommittee
recommend an increase in these visas, we request that these additional
visas be directed only to those industries with demonstrated shortages.
During the negotiations on ACWIA during the 105th Congress, the
House and Senate conference committee agreed to limit the number of
visas directed to the health professions to a level that more
appropriately corresponded to the health care marketplace. However, the
White House, among other issues, asked Congress to eliminate this
amendment claiming it violated the GATT agreement. AOTA did not agree,
but the law was passed without this amendment, so all categories of H-
1B professions fall under the new increases in visas.
On behalf of our members, we thank you for the opportunity to
address these concerns and we look forward to working with the
Subcommittee on employment-based and related immigration issues.
__________
PREPARED STATEMENT OF JOHN WILLIAM TEMPLETON, CO-CONVENOR, COALITION
FOR FAIR EMPLOYMENT IN SILICON VALLEY
Chairman Abraham, Senator Kennedy and Subcommittee Members: I'd
like to begin by posing a question. Could you count to one thousand?
Do you believe that most Americans could count to eight hundred?
If you lived in a subdivision that was one thousand parcels wide by
eight hundred parcels long, could you locate your house?
Of course, to find your address, you would go down a certain number
of house and then perhaps across a few more.
More than 250 million Americans perform that task every day.
And that is the same basic skill that computer programmers perform.
They describe the behavior of a computer screen that is 1,000 pixels
wide by 800 pixels deep. A program tells each pixel what to do,
choosing from two options.
I'm not a programmer, but the author of a computer language with
whom I'm writing a technical book, just liberated me from the gnawing
feeling that there was a super race of people out there somewhere who
could program computers.
I'd like to share that same sense of liberation with you in the
hope that you would realize that the non-immigrant visa is perhaps the
biggest fraud perpetrated on the Congress of the United States in many
years. Behind the fog of how difficult it must be to program a
computer, you've been convinced to undo the protections of the
immigration system and abdicate your constitutional responsibility to
control access to this country to a few overseas contractors. More than
eight of ten Americans, when asked if they would approve of a law like
the H-1B program, think it is a ridiculous idea. Most are not aware
that you actually put this provision into law. They certainly don't
know that the government actually allowed more H-1B visas in the
country than the law provided or that 60 percent of the applicants are
of questionable qualifications.
African-Americans, Latinos and Native Americans are painfully aware
of how Congress warped the labor marketplace with this corrupt program.
Approximately 770,000 of those groups currently work in information
technology throughout the economy, according to the Bureau of Labor
Statistics. But fewer than 18,000 work in high technology federal
contractors.
Let's examine why this has warped the working of the free market.
There are 125,000 African-Americans and 54,000 Latinos who are systems
analysts. There are also 166,000 of those two groups who are engineers.
In addition, there are 39,000 African-Americans and 30,000 Latinos who
are programmers.
Interestingly enough, the Bureau of Labor Statistics lists
programmers not as a professional occupation, but as a technical
profession.
The employees we've just listed total 414,000.
According to the Institute of Electrical and Electronic Engineers,
only 7,349 members of those groups received bachelors degrees in
engineering in 1997-1998. Only 1,700 received masters in engineering
and only 205 received doctorates in engineering.
Go back five years, the comparable numbers are 5,657; 1,324 and
103.
Clearly, those numbers are not sufficient to produce more than
400,000 high tech workers. Let's look at some real life examples. Two
weeks ago, the Byte Back program in the nation's capital held a
graduation for a class of 20 interns, all older persons being retrained
in high tech skills. I watched one woman of about 50 years of age
describe having spent the previous 10 years as a cook. After one years
internship, she is now a database administrator.
One of my co-convenors in the Coalition is Jacqueline S. Anderson,
who began working with Bank of America 18 years ago as a teller. Last
year, we celebrated her graduation from a masters of business
administration program at Golden Gate University. At the time, she had
two small kids and had been receiving welfare. Since banking became
increasingly technology intensive during that period, she began going
to night school in mathematics. Five years before she finished her
bachelors degree, she was already working for the bank as a technology
troubleshooter, writing the customer account and call center software
and leading teams of programmers to integrate merged banks. When the
bank itself was acquired, her skills were highly coveted by the new
owners. They got rid of the CEO and promoted her.
People like Jackie have an organization called Black Data
Processing Associates that holds programming classes for high school
students each Saturday. The chapters around the country have a
programming competition each August.
People who have risen up through the ranks have a tendency to reach
back and bring along others.
Let's look at another example, Jennifer Wellington, an
instructional technologist at San Francisco State University who
operates its high tech learning lab. She gained her technical training
in the U.S. Army Signal Corps. I met her when she wired the technical
pavilion of 30 computers at the Juneteenth celebration in San Francisco
for Microsoft. Interestingly enough, no one from Microsoft offered her
a job, though.
That is another source of talent which the normal functioning of
the free market would tap. There are currently 422,977 African-
Americans and 161,611 Latinos in the U.S. military. That's 600,000
young people who somehow have mastered the math and science to operate
the most advanced technology. There are more than 167,000 black female
veterans like Wellington and 770,000 black male veterans under the age
of 44--almost one million people who have placed their lives on the
line for this country.
The kind of free market they fought for would value their skills
and aptitude.
The Department of Defense has had to step up its recruiting, get
involved in K-12 education, increase scholarship assistance and
continuing education. That demand has increasingly benefited the groups
that have been excluded.
In a free market, the same thing would happen in high technology.
Congress has created a situation where only three Silicon Valley
companies fund scholarships through the National Action Council on
Minorities in Engineering which provides 700 scholarships yearly on a
budget of $5 million; where only four companies are corporate sponsors
of the Silicon Valley chapter of the National Society of Black
Engineers, where more than 1,200 of 1,500 firms do not file EEO-1 or
VET-100 forms with the Joint Reporting Committee, where a national
laboratory just told an African-American receiving a Ph.D in physics
this year that it had no places available and last year told a black
female Rhodes Scholar in physics the same thing, where the number of
African-Americans and Native Americans at federal contractors in
Northern California high tech firms actually declined from 1996 to
1997.
That's why this program violates the equal protection clause of the
14th Amendment. It denies those workers the opportunity to work in the
high-paying jobs created by taxpayer funded research and allows a group
of wealthy campaign contributors to flout the laws that other employers
have to abide by.
The impact in lost wages is $350 million per year for blacks,
Latinos and Native Americans in Northern California. The impact over
the next 20 years will be $3 trillion in lost income and
entrepreneurship--that's 15 times the impact of residential segregation
over the past 50 years. In Oakland, Micheal Fields, a former military
veteran who rose to be president of Oracle USA without benefit of a
college degree, has invested in a startup company called Via Novus,
which has doubled in the past year and plans to hire 300 employees in
the next year by hiring from places like the local community college
district and area universities. If they can find these workers, why not
the larger high tech companies.
The San Jose airport has a curfew of 11 p.m. No one can land a
plane there past that point. Oracle Chairman Larry Ellison has landed
his plane after the curfew numerous times. The same attitude permeates
companies like Oracle on this H-1B program. They think they're above
the law.
I'm having to cancel a trip to Cote D'Ivoire to a World Bank
conference on educational technology for my software business in
November because I can't get a passport renewed by then. But an H-1B
can get approved into the country in seven days, by fax, with no
confirmation of the supposed qualifications. Do you think that is not
an invitation to fraud?
__________
News Release of The American Business for Legal Immigration
EMPLOYERS TO CONGRESS: FIX H-1B VISA PROGRAM SO WE CAN
HIRE WORKERS WE NEED
WASHINGTON, D.C., Oct. 21, 1999--Declaring that the annual cap on
H-1B visas may be reached as early as January of next year, the
American Business for Legal Reform coalition (ABLI) and more than 90
companies and associations today sent letters to members of the House,
Senate and the Administration urging them to start work now on finding
a bipartisan solution to the problem. A hearing on the program was held
today by the Immigration Subcommittee of the Senate Judiciary
Committee, chaired by Sen. Spencer Abraham (R-MI).
``The U.S. must not allow the baseless H-1B visa quota to cripple
our ability to compete in the global economy,'' the letter said.
``Creative solutions which do not burden employers with unproductive
paperwork and fees are needed now.''
According to the letter, at least 35,000 visas already have been
issued in fiscal year 2000, and the quota may be reached by January 1.
H-1B visa petitions filed after April 1999 were not processed in this
fiscal year, causing projects to be pushed back or moved abroad and
jobs to be delayed.
``The inability to obtain H-1B visas for skilled professionals
impacts all U.S. industries. We are losing our edge in attracting
skilled professionals to countries like Canada, the United Kingdom,
Ireland and others which have streamlined their visa systems to attract
skilled workers,'' the letter concluded. ``The employer community
appreciates the attention Congress has paid to this issue, and the
legislation that has been introduced to alleviate this burden. We urge
you to work with your colleagues to find a bipartisan solution and move
a bill through the committee process before we reach the fiscal year
2000 quota.''
American Business for Legal Immigration is a coalition of business
associations and companies concerned about legal, employment-based
immigration. ABLI believes foreign business personnel are vital to
maintaining U.S. competitiveness in the global marketplace. Our laws
should recognize the significant contributions made by legal immigrants
to the vitality of the U.S. economy.
__________
News Release of The American Occupational Therapy Association, Inc.
EMPLOYMENT TRENDS CALL FOR CHANGE IN IMMIGRATION WORKFORCE POLICIES
Bethesda, MD The American Occupational Therapy Association is
submitting testimony today to the Subcommittee on Immigration of the
Senate Judiciary Committee requesting that workplace visa policies be
amended to consider changes in the marketplace that seriously affect
health care professionals participating in the H-1B visa program.
Senator Phil Gramm (R-TX), together with Senate Majority Leader Trent
Lott (R-MS) and Senator Mitch McConnell (R-KY), are pushing legislation
to raise the number of visas to 200,000 from its current ceiling of
115,000.
Traditionally, the occupational and physical therapy fields have
had the highest numbers of nonimmigrant temporary workers in the United
States on H-1B visas, second only to computer programmers--the target
of this new push to raise the number of visas. But in the months since
the Balanced Budget Act of 1997 took effect, there has been a
significant drop in the amount of therapy that is ordered and paid for
through government sponsored programs such as Medicare. At the very
least, supply now equals demand in most settings. An increase in the
number of available H-1B visas could make it more difficult for U.S. OT
practitioners to find employment.
AOTA believes workplace visa program policies that affect the
supply of health care practitioners must find a balance between reduced
reimbursement and need of Americans for good quality care. In its
testimony, AOTA stated that ``policies should strike a balance between
the needs of American business to remain competitive * * * while
protecting American workers against abuses by employers seeking to
replace domestic workers with lower paid foreign workers.''
AOTA contends that the current design of the H-1B program may
encourage the development of businesses that are dependent on the low-
cost labor of foreign-trained workers. The association would like
employers to be required to determine the availability of qualified
U.S. workers before hiring H-1B workers.
``The Balanced Budget Act and greater use of managed care by
Medicaid and Medicare, the principal public purchasers of OT services,
have decreased the demand for occupational therapy and other
rehabilitation services,'' notes AOTA Associate Executive Director Fred
Somers. ``Resulting employment cutbacks have been exacerbated by major
healthcare providers who were not positioned to effectively deal with
these reimbursement changes.''
AOTA is the nationally recognized professional association for over
60,000 occupational therapists and occupational therapy assistants.
These individuals work with people experiencing health problems such as
stroke, spinal cord, injuries, cancer, congenital conditions,
developmental problems, and mental illness, in a wide range of practice
settings including hospitals, nursing facilities, home health agencies,
outpatient rehabilitation clinics, psychiatric facilities and schools.
__________
News Release of The National Association of Manufacturers
NAM CALLS ON CONGRESS TO STEP UP EFFORTS TO FIND BIPARTISAN SOLUTION TO
H-1B VISA CRISIS
Inability to Hire Skilled Workers Impacts Broad Range of Companies
WASHINGTON, D.C., Oct. 21, 1999--Noting that some 35,000 H-1B visas
have already been issued since the beginning of October, the National
Association of Manufacturers today called on Congress to find a
``bipartisan, innovative and fair way to enable U.S. companies to hire
the personnel they need to maintain their competitive edge.''
``Arbitrary caps and quotas that are not based on the realities of
today's global economy are stifling our ability to compete and could
threaten our economic vitality,'' said Sandy Boyd, the NAM's assistant
vice president for human resources policy. ``Congress needs to take the
lead in finding a sensible solution, sooner rather than later.
``Already, we are losing ground to other countries in key areas
because their companies have access to professionals with highly
specialized math and science skills when, very often, American
companies don't. We simply can't afford to wait to streamline our visa
process, which often leads to delayed projects, lost business
opportunities and limited job creation.
``Crafting a balanced and creative solution to our H-1B visa
problems now could be one of the most important things Congress does
for American economic growth and prosperity,'' Boyd concluded.
The National Association of Manufacturers--``18 million people who
make things in America''--is the nation's largest and oldest multi-
industry trade association. The NAM represents 14,000 members
(including 10,000 small and mid-sized companies) and 350 member
associations serving manufacturers and employees in every industrial
sector and all 50 states. Headquartered in Washington, D.C., the NAM
has 11 additional offices across the country.
__________
The Institute of Electrical and Electronics, Inc.,
United States of America,
Washington, DC, October 20, 1999.
The Hon. William Jefferson Clinton,
President of the United States,
1600 Pennsylvania Ave.,
Washington, DC.
Dear Mr. President: As you know, the Immigration and Naturalization
Service has announced that it issued at least 20,000 unauthorized H-1B
non-immigrant visas in fiscal year 1999. Since it would require an Act
of Congress to create such a large number of visas, resolving the
problems created by this error pose several unattractive options.
First, the INS could simply proceed as if these unauthorized visas
were not issued in fiscal year 1999, but rather under the total
authorized by Congress for fiscal year 2000. In effect, these temporary
non-immigrant workers would simply have been hired several months
early.
But lobbyists for the affected industries, notably information
technology, and their allies in Congress have argued that this
approach, however sensible, would somehow ``penalize'' industry by
counting the 20,000 unauthorized visas for fiscal year 1999 in the
115,000 authorized for fiscal year 2000. Obviously, if the INS does not
have authority to reduce the total for fiscal year 2000, it did not
have the authority to increase the total for fiscal year 1999; the
agency cannot simply create visas whenever it loses count. Which leaves
a second option.
The law may mandate the INS to revoke all H-1B visas issued in
fiscal year 1999 beyond the 115,000 specifically authorized by the
Congress. That would force the INS to require all of these new hires to
re-apply for H-1B visas to be issued under the fiscal year 2000
ceiling. This approach would follow the letter of the law, but it may
be particularly difficult to implement in light of the INS' evident
difficulties.
It seems likely that no matter which approach the Administration
follows, there will be litigation. If the unauthorized visas arc
revoked, some employers and H-1B visa holders may sue. And if the INS
does not issue the 115,000 visas authorized by Congress for fiscal year
2000 during fiscal year 2000, employers who seek H-1B visas for new
hires when the available visas run out next year are also likely to
sue.
As President of the IEEE-USA, the career services and public policy
arm of the 225,000 U.S. members of the Institute of Electrical and
Electronics Engineers worldwide, may I make a suggestion that might--
just might--avoid a needless mess?
Green cards, not guest worker visas, are the answer.
As you know, the IEEE-USA opposed last year's increase in the H-1B
visa ceiling from its permanent level of 65,000 to a temporary level of
115,000 for several sound reasons. But one of the most telling is
simply that, for all the talk about shortages of skilled workers and
high demand for H-1B guestworker visas, in every year since the
Immigration Act of 1990 nearly tripled the available number to 140,000,
we have fallen far short of using all of these permanent employment-
based visas. For example, in fiscal year 1998 (the most recent year for
which official figures are available), the INS reported just 77,000 of
the 140,000 were issued.
Mr. President, you are justly proud of your record as ``pro-
immigration--and pro-immigrant.'' Many observers note that most H-1B
visa holders intend to remain in the United States as permanent
immigrants, and it makes no sense that they are here on temporary, NON-
immigrant visas.
Surely we can devise a better system for skilled immigration than
the current combination of the H-1B fiasco and the utterly failed
bureaucratic paper chase of labor certification. Since every year
50,000 to 60,000 permanent employment-based visas remain unused, and
since most H-1B workers want to be permanent immigrants, the most fair
way to resolve industry's concerns that it not be penalized for the INS
error would be to use those unused employment-based visas.
There are unacceptably long delays, which are getting even worse,
to get green cards from the INS. But the fact is, it is labor
certification itself that causes the real failure of employment-based
immigration both to protect U.S, workers and to provide industry with
the skilled immigrants which they need.
We are ready to work with your administration, and the Congress, to
develop and implement a better way to allow industry to hire the
skilled workers they need, promptly: as immigrants, not guest workers.
Green cards, not guest workers. That is the solution, Mr.
President.
Sincerely,
Paul J. Kostek,
President, IEEE-USA.
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