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When white-collar jobs follow the blues
TownHall.com ^ | June 2, 2003 | Phyllis Schlafly

Posted on 06/03/2003 10:13:54 AM PDT by Willie Green

For education and discussion only. Not for commercial use.

The big argument for the 2003 tax cut passed by Congress is that it will create much-needed jobs. But one important question remains: Will those jobs be created for Americans, or will corporations simply hire more job-seekers from India and China?

It is time for Congress to call a halt to the scandal of the way big corporations are hiring foreigner workers at the same time they are laying off their American employees.

The hiring of hundreds of thousands of foreigners is why The New York Times proclaimed on Page One that this year's "Graduates Are Lowering Their Sights in Today's Stagnant Job Market."

Remember how, when U.S. corporations built hundreds of plants in Third World countries, we were told not to worry about losing blue-collar manufacturing jobs because we were keeping service jobs? Well, now the high-paying white-collar service jobs are going overseas, too, particularly jobs for engineers and computer specialists.

Follow the money. The big corporations hire Indians and Chinese for less than half what they pay their U.S. employees, work them long hours without overtime pay and treat them like indentured servants unable to quit for a better job. The corporations partner with the U.S. government by making political contributions to assure the passage of legislation that legalizes the importation of cheap foreign labor.

This racket started when Section 1706 was slipped into the Tax Reform Act of 1986. This uniquely discriminatory section required anyone who is an "engineer, designer, computer programmer, systems analyst or other similarly skilled worker" to be classified by the Internal Revenue Service as an employee rather than as an independent contractor, which hundreds of thousands of tech workers were at that time.

This change in the law plus aggressive IRS enforcement resulted in the creation of large consulting or contracting firms that hire tech workers as employees and then contract to sell computer services to big corporations. These "gatekeeper" firms and computer corporations soon began to exploit H-1B and L-1 visas by employing foreigners while at the same time dumping their American engineers and programmers.

H-1B visas were created in 1990 to allow corporations to import up to 65,000 foreign skilled workers to fill alleged labor shortages, a claim that was always a fiction and now is nonsense. L-1 visas were created to allow inter-office transfers of key managers, executives or persons with specialized knowledge, but there are no numerical limits and no safeguards against abuse.

The corporations had such clout with politicians that in 2000 they got the number of allowable H-1B visas tripled to 195,000 - even while the industry was hiring only 2 percent of software applicants. In a striking example of stealth politics, on Oct. 3, 2000, the House leadership announced there would be no more votes that evening. Then, after most members had departed, passed the H-1B increase by a voice vote with only about 40 out of 435 members present.

Rep. Thomas M. Davis, R-Va., the chairman of the Republican Congressional Campaign Committee, candidly commented, "This is not a popular bill with the public. ... This is a very important issue for the high-tech executives who give the money."

U.S. Sen. Robert F. Bennett, R-Utah, admitted, "There were, in fact, a whole lot of folks against it, but because they are tapping the high-tech community for campaign contributions, they don't want to admit that in public."

By 2001, corporations and contracting firms were employing at least 384,191 workers with H-1B visas without any demonstration of a labor shortage, plus at least 328,480 workers with L-1 visas masquerading as "intra-company transferees." In a bitter postscript to the careers of laid-off Americans, they were often required to train their foreign cheap-labor substitutes.

The NBC television affiliate in West Hartford reported why Connecticut has 20,000 unemployed white-collar tech workers but 70,253 employed aliens. Insurance giant Cigna Corp. fired its Connecticut workers and turned its tech jobs over to the Indian firm, Satyam, under a "closed-loop process providing Satyam with the right of first refusal for all consultants requests."

This Cigna agreement denies U.S. citizens even the chance to compete. Where are the conservatives who argued for years against closed union shop?

Siemens Corp. contracted to have its U.S. employees in Florida replaced by foreigners brought in by Tata Consultancy Services, one of India's largest consulting firms. When Tata used L-1 visas to bring in Indians at one-third the salary of the laid-off Americans, a Siemens representative shrugged off questions by saying, "They don't work for us. They work for Tata."

What to do?

Congress should reject all attempts to extend the current number of H-1B visas and allow the limit to revert to 65,000; require employers to show a good-faith effort to hire U.S. citizens before applying for visas; require employers to lay off non-citizens before laying off U.S. citizens; restrict L-1 visas to jobs paying $100,000 a year and prohibit transfers between companies; and forbid U.S. government agencies from hiring non-citizens or from contracting with outside firms that hire non-citizens.


TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Editorial; Foreign Affairs; Government
KEYWORDS: globalism; h1b; l1; thebusheconomy

1 posted on 06/03/2003 10:13:54 AM PDT by Willie Green
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To: Willie Green
Both sides are guilty of this DISGRACE!
2 posted on 06/03/2003 10:31:47 AM PDT by TheWillardHotel
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To: TheWillardHotel
Bump
3 posted on 06/03/2003 10:33:29 AM PDT by Mini-14
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To: Willie Green
When RR rebuilt the economy post Jimmy the red tried to tear down
NAFTA hadnt shipped manufacturing overseas or accross the southern border
whats to fall back on?
4 posted on 06/03/2003 10:34:36 AM PDT by joesnuffy (Moderate Islam Is For Dilettantes)
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To: sarcasm; chance33_98
ping
5 posted on 06/03/2003 10:37:43 AM PDT by Willie Green (Go Pat Go!!!)
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To: Willie Green
Yep. So when your accounting, IT, radiology, engineering job has dried up and blown off shore, and ya go to lay bricks, do menial lawn work, auto detailing, etc., ya find the illegals have already beaten you to it.
6 posted on 06/03/2003 10:41:25 AM PDT by banjo joe
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To: Willie Green
Thanks for the ping!
7 posted on 06/03/2003 10:57:01 AM PDT by chance33_98 (www.hannahmore.com -- Shepherd Of Salisbury Plain is online, more to come! (my website))
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To: Willie Green
Time to Freep the Senate! Email all Senators and send off a copy of their addresses along with this article to your unemployed friends!
8 posted on 06/03/2003 11:00:38 AM PDT by Lunatic Fringe (Tip the Pizza guy!)
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To: Willie Green
arlen_specter@specter.senate.gov
dick@durbin.senate.gov
mailbox@gregg.senate.gov
mailbox@sununu.senate.gov
olympia@snowe.senate.gov
russell_feingold@feingold.senate.gov
saxby_chambliss@chambliss.senate.gov
senator@akaka.senate.gov
senator@biden.senate.gov
senator@dorgan.senate.gov
senator@enzi.senate.gov
senator@kennedy.senate.gov
senator@mcconnell.senate.gov
senator@rockefeller.senate.gov
senator@sessions.senate.gov
senator_bingaman@bingaman.senate.gov
senator_kohl@kohl.senate.gov
senator_leahy@leahy.senate.gov
senator_lugar@lugar.senate.gov
senator_murray@murray.senate.gov
senator_talent@talent.senate.gov
senatorlott@lott.senate.gov
tom_harkin@harkin.senate.gov
9 posted on 06/03/2003 11:03:29 AM PDT by Lunatic Fringe (Tip the Pizza guy!)
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This is an automatically generated Delivery Status Notification. Delivery to the following recipients failed. Senator_Kennedy@Kennedy.senate.gov

Why am I not surprised?

10 posted on 06/03/2003 11:11:16 AM PDT by Lunatic Fringe (Tip the Pizza guy!)
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To: Willie Green
Even dear Phyllis has moved to the left, perhaps without even knowing it.

This racket started when Section 1706 was slipped into the Tax Reform Act of 1986. This uniquely discriminatory section required anyone who is an "engineer, designer, computer programmer, systems analyst or other similarly skilled worker" to be classified by the Internal Revenue Service as an employee rather than as an independent contractor, which hundreds of thousands of tech workers were at that time.

If this is the problem why not attack it there rather than fiddle with fine tuning the resulting dislocation? You begin with examining why this classification was slipped in by the liberals. As Congress extends its control of the market through taxes and regulations, smart entrepreneurs find ways around them. In this case, employers were finding ways around ever increasing health insurance costs, brought about again by government through Medicare, and increasing FICA taxes which employers must pay half of. They circumvented this in a small way by laying off some employees and then signing them up at higher pay as independent consultants. This was win-win for everyone but the IRS.

In addition to losing the automatic deductions from employees' paychecks, the former employees could then write off all work related expenses from their taxes. The government then came up with the 15% self-employment tax on the consultants. However, this was based on the consultants net profit which, in turn, was reduced by the expense deductions. The government was losing control and losing tax revenues so they tried to remedy that by very narrowly prescribing what an independent consultant was. They did that with the bill Ms. Schlafly cites.

The proper solution is reduced regulation and reduced taxes. First, and foremost the SS scam must be stopped because it is eventually going to stop itself through insolvency. In reality, FICA is just an increase and extension of the income tax as SS payments are simply paid out of current tax revenues while the "trust fund" is just spent on pork out of the general fund.

Finally, when all is said and done, the market will correct itself. It always does and it always will. Labor is a commodity, or product, that is for sale just like iron ore, timber, and washing machines. Free trade in labor is just as valid as free trade on other goods and services. If continued or severe job loss causes the US not to be able to buy products then those who sell them will suffer also. That may bring about hard times, even a depression, but it will cause a correction to the imbalance.

11 posted on 06/03/2003 11:40:32 AM PDT by Mind-numbed Robot (Not all things that need to be done need to be done by the government.)
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To: Mind-numbed Robot
TEFRA was a disaster. Not only did it kill off technical consulting jobs, but it laid the groundwork for the S&L crisis by removing most deductions for depreciation on real estate.

Maybe it was just a coincidence but the booming job market for real engineers (not software weenies), ended right about 1986.

Reagan shouldn't have signed TEFRA.

12 posted on 06/03/2003 1:24:40 PM PDT by snopercod
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To: Willie Green
[...] This racket started when Section 1706 was slipped into the Tax Reform Act of 1986. This uniquely discriminatory section required anyone who is an "engineer, designer, computer programmer, systems analyst or other similarly skilled worker" to be classified by the Internal Revenue Service as an employee rather than as an independent contractor, which hundreds of thousands of tech workers were at that time.

This change in the law plus aggressive IRS enforcement resulted in the creation of large consulting or contracting firms that hire tech workers as employees and then contract to sell computer services to big corporations. These "gatekeeper" firms and computer corporations soon began to exploit H-1B and L-1 visas by employing foreigners while at the same time dumping their American engineers and programmers.
[...]
The corporations had such clout with politicians that in 2000 they got the number of allowable H-1B visas tripled to 195,000 - even while the industry was hiring only 2 percent of software applicants. In a striking example of stealth politics, on Oct. 3, 2000, the House leadership announced there would be no more votes that evening. Then, after most members had departed, passed the H-1B increase by a voice vote with only about 40 out of 435 members present.[...]

Bump

13 posted on 06/04/2003 10:40:41 AM PDT by A. Pole
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