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93–082 PDF 2004

S. HRG. 108–415

EXAMINING THE IMPORTANCE OF THE H–1B

VISA TO THE AMERICAN ECONOMY

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

SEPTEMBER 16, 2003

Serial No. J–108–41

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

ORRIN G. HATCH, Utah, Chairman 

CHARLES E. GRASSLEY, Iowa 

ARLEN SPECTER, Pennsylvania 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

LARRY E. CRAIG, Idaho 

SAXBY CHAMBLISS, Georgia 

JOHN CORNYN, Texas 

PATRICK J. LEAHY, Vermont 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

JOHN EDWARDS, North Carolina 

BRUCE ARTIM, Chief Counsel and Staff Director 

BRUCE A. COHEN, Democratic Chief Counsel and Staff Director 

(III)

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page

Chambliss, Hon. Saxby, a U.S. Senator from the State of Georgia ..................... 3

prepared statement .......................................................................................... 52

Craig, Hon. Larry E., a U.S. Senator from the State of Idaho ............................ 4

Feinstein, Hon. Dianne, a U.S. Senator from the State of California ................. 25

prepared statement .......................................................................................... 95

Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah ............................ 1

prepared statement .......................................................................................... 100

Kennedy, Hon. Edward M., a U.S. Senator from the State of Massachusetts ... 19

prepared statement .......................................................................................... 104

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, prepared 

statement .............................................................................................................. 106

Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama .......................... 23

WITNESSES

Dickson, Elizabeth C., Director of Immigration Services, Ingersoll-Rand Company, Woodcliff Lake, New Jersey ...................................................................... 8

Duffy, Patrick J., Human Resources Attorney, Intel Corporation, Chandler, 

Arizona .................................................................................................................. 15

Steadman, John W., President-elect, Institute of Electrical and Electronics 

Engineers-United States of America, Washington, D.C. .................................. 11

Yale-Loehr, Stephen, Chair, Business Immigration Committee, American Immigration Lawyers Association, and Adjunct Professor, Cornell University 

Law School, Ithaca, New York ............................................................................ 5

QUESTIONS AND ANSWERS

Responses of Ms. Dickson to questions submitted by Senator Kennedy ............. 33

Responses of Mr. Duffy to questions submitted by Senators Chambliss and 

Kennedy ................................................................................................................ 35

Responses of Mr. Steadman to questions submitted by Senator Kennedy ......... 41

SUBMISSIONS FOR THE RECORD

American Business for Legal Immigration, Washington, D.C., statement ......... 44

American Council on Education, David Ward, President, Washington, D.C., 

letter ...................................................................................................................... 46

American Electronics Association, Washington, D.C., press release ................... 49

Coalition for Fair Employment in Silicon Valley, San Francisco, California, 

report ..................................................................................................................... 53

Commission on Professionals in Science and Technology, IT Workforce Data 

Project, Washington, D.C., report ....................................................................... 71

Dickson, Elizabeth C., Director of Immigration Services, Ingersoll-Rand Company, Woodcliff Lake, New Jersey, prepared statement ................................... 77

Duffy, Patrick J., Human Resources Attorney, Intel Corporation, Chandler, 

Arizona, prepared statement ............................................................................... 87

Steadman, John W., President-elect, Institute of Electrical and Electronics 

Engineers-United States of America, Washington, D.C., prepared statement ...................................................................................................................... 108

Page

IV

Texas Instruments Incorporated, John K. Boidock, Vice President, Government Relations, letter .......................................................................................... 118

Yale-Loehr, Stephen, Chair, Business Immigration Committee, American Immigration Lawyers Association, and Adjunct Professor, Cornell University 

Law School, Ithaca, New York, prepared statement ......................................... 120

(1)

EXAMINING THE IMPORTANCE OF THE H–1B 

VISA TO THE AMERICAN ECONOMY 

TUESDAY, SEPTEMBER 16, 2003 

UNITED STATES SENATE, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Committee met, pursuant to notice, at 2:37 p.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Orrin G. Hatch, 

Chairman of the Committee, presiding. 

Present: Senators Hatch, Sessions, Craig, Chambliss, Kennedy, 

and Feinstein. 

OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. 

SENATOR FROM THE STATE OF UTAH 

Chairman HATCH. Well, thank you for being here today. 

The Committee is holding this hearing because we need to take 

a careful look at the role of the H–1B visa category in today’s economy. Since 1952, this visa category or its predecessor has allowed 

some of the most talented persons in the world to come to the 

United States. During this time, our Nation became the global 

leader in technology and innovation. 

From 1980 to 2000, there was a 623-percent growth in high-technology jobs in our country. By the late 1990’s, there was a shortage 

of American workers in that field. In response to the need for a 

larger high-technology labor force, Congress twice increased the numerical limits. In 1998, through the American Competitiveness and 

Workforce Improvement Act, we increased the annual cap from 

65,000 to 115,000 visas. 

By the year 2000, even the newly raised cap was not sufficient 

to meet the needs of the industry. For that reason, I sponsored the 

American Competitiveness in the 21st Century Act, or AC–21. AC–

21 increased the level of annual numerical limits to 195,000 visas. 

We realized that increasing the cap was only a temporary solution to a long-term problem, which is the lack of American students 

enrolling in the fields of math, science, and technology. Therefore, 

as part of the 1998 Act, and again in AC–21, we implemented 

training and scholarship programs, funded by a $1,000 fee to be 

paid by H–1B employers so that our Nation would not have to perpetually look for highly specialized workers abroad. 

The latest figures I have seen indicate that more than $692 million was raised for the education, training, and retraining of American students and workers. According to the GAO, these programs 

are attracting a high proportion of minorities and women into the 

field of science and technology, providing valuable diversity to the 

2

high-tech workforce of the future. Altogether, funds raised through 

H–1B applications have helped provide training to more than 

55,000 American workers and have funded scholarships for more 

than 12,500 students in science and engineering. 

At the end of this fiscal year, some of the provisions of AC–21 

will sunset. If nothing is done between now and the end of this 

month, the numerical limitation will revert to 65,000 and there will 

no longer be statutory authority to collect the $1,000 fee to fund 

the scholarship and job training programs. 

The job market today is much different than it was back in 1998 

and the year 2000. There are many who are out of work, including 

American professionals in the high-technology sector. We in Congress have the responsibility to get as much information as we can 

in order to make the best, most informed decision as to what action 

should be taken in light of the impending sunset and what should 

be done as a long-term solution to protect the interests of American 

workers without impeding our Nation’s ability to compete in a global market. 

I hope that throughout the course of this hearing, we can find 

answers to some important questions. Two questions we must answer are whether the presence of highly specialized professionals 

from other countries actually and significantly impacts the unemployment rate and whether it is fair to point our fingers to immigrants for all of our economic problems without checking whether 

facts or figures support such accusations. 

For example, we often hear the accusation that U.S. companies 

are using the H–1B visa to hire cheaper foreign workers. However, 

recently released figures from the Federal Reserve Bank of Atlanta 

indicate that the median annual salary of H–1B visa workers, 98 

percent of whom hold at least a bachelor’s degree, is $55,000, 

whereas the median income for U.S. workers who hold bachelor’s 

degrees, consisting of 26 percent of U.S. residents over the age of 

25, is $46,000 per year. 

We need to ask whether the current anti-immigration sentiment 

is in the long-term interest of the American economy and American 

workers. If our Nation is to stay competitive, can we do without 

having access to the most talented individuals from abroad? If we 

fall behind other industrialized nations, what would that do to our 

own economic development, and what are the consequences to 

American workers and their families if we do, in fact, fall behind? 

By the end of this hearing, I hope that the Judiciary Committee, 

the Senate, the administration, and other policymakers will be in 

a better position to consider the appropriate next step with regard 

to H–1B visas, both in deciding what to do in light of the impending sunset of the key provisions and in terms of reaching a longterm solution that would both protect the interests of American 

workers and secure America’s position as a leader in technology 

and innovation. 

Once again, I want to thank you for being here at this hearing 

as we discuss this important issue affecting the well-being of American workers and of the American economy. 

[The prepared statement of Senator Hatch appears as a submission for the record.] 

3

Now we have a vote that comes in about four minutes and the 

distinguished Chairman of the Immigration Subcommittee of the 

Judiciary Committee will now speak to us and then I am going to 

turn the hearing over to him. He is doing an excellent job in this 

area and I am very grateful to have Senator Chambliss working 

with us on these very, very crucial and important issues. 

Senator Chambliss, we will turn to you. 

STATEMENT OF HON. SAXBY CHAMBLISS, A U.S. SENATOR 

FROM THE STATE OF GEORGIA 

Senator CHAMBLISS. Thank you very much, Mr. Chairman, and 

I appreciate your holding this hearing today. Professional worker 

visas have been in the spotlight for the last few months and I am 

glad we will have a chance to focus on the H–1B visa today. 

We are in very difficult economic times in this country and, as 

a result, we need to reflect on the right approach for both American 

businesses as well as American workers. Having the critical skills 

and top talent from around the world is essential for our economic 

progress, but at the same time we must make sure that our immigration policies don’t have a backlash effect on displacing American 

workers. 

The H–1B program has been valuable to our country, and particularly to the high-tech industry that needs programmers and 

technicians to operate their business successfully. With the lapsing 

of H–1B authorization this year, including the cap reverting from 

195,000 to 65,000, we will have an opportunity to reevaluate our 

priorities and our policies for professional worker visas. 

A related issue on professional worker visas is the so-called L–

1 visa loophole. The L–1 visa allows for intra-company transfers so 

that our multinational companies can bring executives, managers, 

and employees with specialized knowledge into the United States. 

However, some companies have abused this visa by bringing 

workers with only generic knowledge and then outsourcing those 

workers to other companies. This kind of off-site placement can in 

some cases circumvent the protections of the H–1B visa when the 

worker is essentially performing that function of that visa. As a result, American workers have been displaced and this must stop. 

We held a hearing in our Subcommittee, and many of the folks 

in the audience and one witness, in particular, was present that 

day, in which these deficiencies and these loopholes in the L–1 visa 

program were really highlighted. I will introduce legislation tomorrow that closes the L–1 loophole without inadvertent and unnecessary negative effects on business. My legislation is targeted to this 

specific problem and it will end the practice of companies who are 

displacing American workers. 

In these economic times, we must ensure that United States 

workers are given every opportunity and protection that is in the 

law, as well as ensure that our businesses remain competitive 

worldwide. My legislation will do both. 

Mr. Chairman, I look forward to this hearing, and thank you 

again for bringing us together today. 

[The prepared statement of Senator Chambliss appears as a submission for the record.] 

Chairman HATCH. Thank you so much, Senator. 

4

Senator Craig, did you have anything you would care to say? 

STATEMENT OF HON. LARRY CRAIG, A U.S. SENATOR FROM 

THE STATE OF IDAHO 

Senator CRAIG. Mr. Chairman, thank you very much for this 

hearing. This whole issue of immigration—I am working on the H–

2A issue, but let’s move forward. I thank you for this hearing. This 

is a critical area in dealing with these particular problems. 

Chairman HATCH. Well, thank you, Senator Craig. 

I look forward to hearing from our distinguished panel of witnesses, who can provide us with a balanced view of the situation. 

We will first hear from Stephen Yale-Loehr, Chair of the American 

Immigration Lawyers Association’s Business Committee, and Adjunct Professor at Cornell University Law School. Professor YaleLoehr is a co-author of Immigration Law and Procedure, widely 

considered the premier immigration law treatise. 

Next is Ms. Elizabeth Dickson—we are happy to welcome you all 

here—Director of Global Services for Ingersoll-Rand, a diversified 

manufacturer with 55,000 employees in over 100 locations worldwide. 

We are also pleased to have Mr. John Steadman, President-Elect 

of the Institute of Electrical and Electronics Engineers, or IEEE. 

Mr. Steadman is the Dean of Engineering at the University of 

South Alabama in Mobile. 

Last, but certainly not least, Mr. Patrick Duffy, of Intel Corporation, is also on this distinguished panel. Mr. Duffy has been Intel’s 

human resources attorney since 1996. He advises Intel on labor, 

employment, and immigration matters. 

So we are delighted to have all four of you here. Now, having introduced you, I think we are going to recess so we can go vote, and 

then Senator Chambliss and others will be back as soon as that 

vote is over and we will continue this hearing. It is an important 

hearing and we are grateful to have all of you here. 

So with that, we will recess for about ten minutes or so. 

[The Committee stood in recess from 2:47 p.m. to 3:08 p.m.] 

Senator CHAMBLISS [presiding]. Thank you all very much for 

being patient with us. Occasionally, we have to go do what you all 

pay us to do, and that is to vote on the floor. I was told that there 

is a 50-percent chance we may have another vote before the conclusion of this hearing. In south Georgia, we used to have a weather 

man who, when asked 1 day what a 50-percent chance of rain 

meant, said it might rain and it might not. So we may have another vote and we may not, but hopefully not. 

Again, we welcome our distinguished panel. 

Mr. Yale-Loehr, we appreciate very much you coming back. You 

did such a good job at our L–1 hearing, we wanted you back again 

to hear from you again. So we will hear from each of you at this 

point and, Mr. Yale-Loehr, we will start with you. 

5

STATEMENT OF STEPHEN YALE-LOEHR, CHAIR, BUSINESS IMMIGRATION COMMITTEE, AMERICAN IMMIGRATION LAWYERS ASSOCIATION, AND ADJUNCT PROFESSOR, CORNELL 

UNIVERSITY LAW SCHOOL, ITHACA, NEW YORK 

Mr. YALE-LOEHR. Thank you. First, I want to give you a background about the H–1B non-immigrant visa category. Then I want 

to talk about H–1Bs, the global economy, and free trade agreements, and then finally end with proposals to improve the H–1B 

category. 

As background, the H–1B category allows U.S. companies to temporarily hire foreign nationals who have at least a bachelor’s degree or equivalent. Congress carefully built protections for the U.S. 

labor market into the program. Employers have to pay the higher 

of the prevailing wage or the actual wage. In addition, H–1B employers have to sign four attestations as part of the process. 

They have to attest that, number one, they will pay the prevailing or actual wage. Number two, they have to attest that they 

will give the H–1B worker the same benefits as other comparable 

U.S. workers. Number three, they have to attest that there is no 

strike or lock-out at the facility. And, number four, they have to attest that they will pay the return transportation of the H–1B worker back to their home country if they are let go. 

Enough about the overview. Let me focus on a few key issues. 

As Senator Hatch pointed out in his opening remarks, the H–1B 

cap is scheduled to drop down to 65,000 beginning in a few weeks, 

October 1. Moreover, it appears that fewer than 65,000 numbers 

are really available the next fiscal year. I have heard estimates 

from the Immigration Service that about 22,000 cases that are subject to the annual cap have been filed in this fiscal year, but will 

be decided in the next fiscal year. 

Moreover, the free trade agreements that were recently concluded with Chile and Singapore set aside another 6,800 H–1B 

numbers per year for use by professionals from those countries. 

Adding those two figures together, that leaves only about 36,200 

numbers really available for H–1B usage in fiscal year 2004. 

A chart attached as Appendix A to my testimony sets out the statistics on H–1B usage over the last several years. Those figures 

show that H–1B usage is market-driven. The number of petitions 

increases when the economy is good and declines in a recession. 

The chart shows that in the peak economic year of fiscal year 

2001, the former Immigration and Naturalization Service approved 

164,000 H–1B petitions that were subject to the cap. However, the 

next fiscal year the number dropped by half to 79,000, equaling a 

mere six-tenths of 1 percent of the total U.S. labor force. 

According to government statistics, about 57,000 H–1B petitions 

subject to the cap were approved through June 30 of this year. At 

that rate, approximately 76,000 H–1B petitions subject to the cap 

will be approved by the end of the fiscal year. 

Turning to the types of people who use H–1B petitions, over 60 

percent of H–1B workers in fiscal year 2002 were not in computerrelated occupations. This shows the importance of H–1B workers to 

all parts of the economy, not just IT workers. Examples include H–

1B doctors who provide care in medically underserved areas and 

researchers at universities. 

6

Moreover, in fiscal year 2002 approximately 65 percent of the 

beneficiaries of initial employment were in the United States in another non-immigrant status already. This shows that two-thirds of 

all H–1Bs are already in the United States, most of them graduates of U.S. universities. It does no good to train them and then 

tell them that they cannot get a job here because the H–1B cap is 

too low. Otherwise, we are just training our foreign competition. 

In terms of how the H–1B category protects U.S. workers, Department of Labor enforcement statistics show that they are enforcing the law. Over the last decade, the Department of Labor started 

886 H–1B investigations and concluded 482 of them. During that 

time, the Labor Department found almost $12 million in back 

wages was due to over 2,300 H–1B non-immigrants who had not 

been paid the correct amount. 

Those numbers should be measured against the size of the overall H–1B program—2,300 H–1B non-immigrants not paid the correct wage, versus over 1 million H–1B petitions for new employment approved during that same decade. Thus, the number of H–

1B non-immigrants found to have been underpaid is only about 

two-tenths of 1 percent. 

My own view is that the Department of Labor is enforcing the 

H–1B program adequately, and that most employers are complying 

with the attestation regime set up by the H–1B program. Supporting this view is the fact that the Department of Labor has 

found willful H–1B violations requiring debarment from the program in less than 5 percent of its investigations. It would seem 

that many employers simply are experiencing difficulty in complying with the complex H–1B-related regulations. 

I know that you want to consider the impact of H–1B workers 

on comparable U.S. workers. It is hard to do that and I am not an 

economist. The only comprehensive effort to date was done in 2000 

by the National Research Council of the National Academy of 

Sciences. They concluded that the magnitude of any effect the H–

1B program has on wages is difficult to estimate with confidence. 

The report noted that the effect, if any, may be not to depress 

wages, not to hurt employment opportunities for U.S. workers, but 

rather to keep wages from rising as rapidly as they would if the 

program did not exist. Another study in 2001 similarly concluded 

that if the H–1B program does have any effect on comparable U.S. 

workers, the effect must be very subtle because they couldn’t find 

the data in its report. 

H–1Bs and globalization: Globalization, or the cross-border movement of goods, services and people, is one of the most important 

characteristics of this 21st century. Some have raised concerns that 

globalization and the related activity of overseas outsourcing or 

offshoring, as it is sometimes called, can hurt the U.S. economy. 

In my view, the H–1B category, if properly administered, monitored and enforced, can be an antidote to concerns about overseas 

outsourcing. Use of H–1B visas encourages work in the United 

States, and thus can help keep and grow jobs in the United States. 

Ask yourselves this question: Isn’t it better for an H–1B foreign 

national to be working in your State, buying goods from your constituents, paying taxes on the $60,000 salary or whatever they are 

7

getting, instead of working in India or China for a $7,000 salary, 

none of which gets spent in the United States? 

Finally, turning to proposals on how to improve the H–1B category, I have two types of proposals. One is exemptions from the 

cap. Exemptions are already in the program, but they can be 

strengthened and improved. Potential new areas for exemptions include jobs deemed to be in the public interest if the Federal Government, a State government or a non-profit requires an H–1B professional; second, jobs requiring an H–1B professional that a State 

economic development agency deems important due to a positive 

economic impact in that State; and, third, jobs that facilitate the 

retention of foreign students educated in the United States. All 

these three areas are detailed in more detail in my testimony. 

Finally, talking about the H–1B cap, an annual cap of 65,000 is 

simply too small. Even in the recent recession, actual H–1B usage 

subject to the cap has averaged about 75,000 to 80,000 a year. 

Moreover, as I mentioned, it appears that really only 36,200 numbers are available for new H–1B petitions this coming fiscal year. 

Even if there were 65,000 fresh H–1B numbers a fiscal year, 

which there aren’t, that is not enough. I believe that a modest H–

1B increase of 115,000 for fiscal year 2004 would alleviate our immediate labor pressures, while permitting employers to hire H–1B 

workers to fill various positions that require specific sets of skills. 

If Congress does not do anything, companies, hospitals in medically underserved areas, and universities will not have access to 

needed workers. In the longer term, Congress needs to look more 

comprehensively at how to better prepare U.S. students and workers for the jobs of the 21st century and how immigration, both temporary and permanent, fits into that strategy. 

The government, industry, and educational institutions need to 

work together on this important challenge. That, however, cannot 

be done by September 30 of this year. Therefore, I think we need 

to do something in the short term, whether it is to keep the status 

quo or to perhaps increase the cap a little bit for now and then 

have a longer-range solution. 

In sum, Congress needs to support an H–1B program that reflects our Nation’s needs for highly educated foreign professionals 

and allows U.S. employers access to their talent now and in the future, while at the same time protecting U.S. workers. The existing 

H–1B program accommodates both sets of interests. Changes set to 

take place October 1, however, will upset that delicate balance and 

I urge Congress to do something to try to restore that balance 

quickly. 

Thank you. 

[The prepared statement of Mr. Yale-Loehr appears as a submission for the record.] 

Senator CHAMBLISS. Thank you very much. 

Ms. Dickson, we are sure pleased to have you here and we look 

forward to hearing from you. 

8

STATEMENT OF ELIZABETH C. DICKSON, DIRECTOR OF IMMIGRATION SERVICES, INGERSOLL-RAND COMPANY, 

WOODCLIFF LAKE, NEW JERSEY, ON BEHALF OF THE U.S. 

CHAMBER OF COMMERCE 

Ms. DICKSON. Thank you very much for inviting me today. My 

name is Elizabeth Dickson and I am responsible for global immigration at Ingersoll-Rand Company. In addition, I do Chair the 

U.S. Chamber Subcommittee on Immigration and I am actually 

testifying today on the Chamber’s behalf. 

The U.S. Chamber of Commerce is the world’s largest business 

federation, representing more than 3 million businesses and organizations of every size, sector, and region. The Chamber has had 

a long history of involvement in immigration issues, including the 

H–1B visa. Chamber staff and Chamber members have testified on 

immigration issues no less than 8 times in the last 5 years, 4 times 

specifically on H–1B and highly-skilled workers. I have previously 

testified on this issue myself. 

My testimony today reflects my experience with Ingersoll-Rand’s 

ability to find vitally needed workers. It comes from the perspective 

of a big multinational company which is trying to comply with 

more and more complex immigration laws. 

Ingersoll-Rand is a Fortune 200 company with 50,000 direct employees worldwide; 30,000 of those employees are here in the 

United States. The company is a major diversified industrial equipment and components manufacturer. 

We do understand that immigration is a complex issue, particularly in the wake of September 11. The Government has focused on 

a lot of security initiatives and that has been a priority since that 

time. We do understand that. There is this necessary focus, but we 

have to bear in mind that we also have an ever-present need to utilize a shrinking H–1B visa program to hire the best engineering 

and other professional talent that directly impacts on my company’s productivity and global competitiveness, and that contributes to the American economy. 

Stephen has already taken you through what is an H–1B worker, 

and we realize that these are very highly qualified and talented 

people. He also made mention of the fact that it is a pretty difficult 

visa category to administer, with a lot of attestations, a lot of documentation, and a lot of paperwork to ensure that we are paying the 

appropriate prevailing wage and providing all the other benefits 

and other issues that are mandated by the regulations. I do believe 

most companies are complying with this. I know we work very hard 

to make sure we comply at Ingersoll-Rand. 

When the cap reverts to 65,000, we are going to have a lot of 

problems that we experienced both in 1997 and 1998. I had the 

same job in those years and I certainly did experience what happened with my company. We had petitions that were pending that 

were placed on hold. We had people that had to be taken off payroll. We had new hires that we could not bring into the United 

States for three or 4 months. Sometimes, that ended up putting 

very important projects, particularly engineering projects, on hold. 

We can’t really afford to let arbitrary caps dictate U.S. business 

immigration policy. As a big, global company, we must be able to 

tap the top talent we need both domestically and abroad. IngersollVerDate 0ct 09 2002 11:47 Apr 19, 2004 Jkt 093082 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\93082.TXT SJUD4 PsN: CMORC
9

Rand has the majority of its manufacturing operations in the 

United States; in fact, we have plants in 24 States. It is important 

to remember that 45 percent of our profits are tied to export sales. 

We have experienced in particular fields of engineering a problem identifying and retaining certain workers. Recruiting engineers 

within the U.S. often results in foreign-born applicants. At a time 

when Americans continue to earn fewer graduate degrees, particularly in math, science and engineering, our need for such knowledge continues to grow. 

My testimony includes a lot of examples of how we use the H–

1B category and I would just like for this hearing to concentrate 

on some of the engineering specialties that drive our need for foreign-born H–1B workers. When I took this job initially, I always 

thought an engineer was an engineer, and I learned very quickly 

that that is not true. Engineering is like the medical profession; 

there are very specific specialty occupations. 

Some of the engineers that we have recruited for actively are 

metrologists. Engineering managers tell me that there are only five 

or six universities in the United States that have master’s programs in metrology and, of them, there are almost no Americans 

that are completing those programs. 

Our Waterject Cutting Systems business spent 20 months 

searching extensively, using professional recruiters as well as advertisers, to get an engineer that was experienced in industrial robotics and pressurized product development. We finally found one 

in Canada. 

Metallurgical engineers have always been a shortage occupation 

in the United States and are very key contributors to machinery 

development projects, particularly for our mining and drilling products. Our Thermo King climate control sector had a 13-month 

search to find a qualified plastics engineer, and again we hired 

somebody from Canada. 

Currently, we have a number of Ph.D.’s who are working in critical product development for three of our different business units. 

Dresser-Rand, the oil compressor business; Drilling Solutions, 

which is mining and that kind of technology; and Thermo King, the 

climate control and refrigeration systems, all have recruited Ph.D.’s 

who are performing innovative, very, very important research and 

development to bring us into the next generation of products that 

are going to be globally competitive. Again, there are a number of 

other examples that I have cited in my written testimony. 

We constantly hear the request from the Government and other 

people to train U.S. workers, and I believe most companies do that 

actively. Training and employee development are part of our culture at Ingersoll-Rand Company. All of our manufacturing plants 

have training centers at their facilities. Many of them interface 

with community colleges and vocational-technical schools. 

We provide certificate and college degree programs. We sponsor 

distance learning. We have a full tuition reimbursement program 

for both bachelor’s and advanced degrees. We provide many corporate on-site training programs and we encourage cultural exchange from our facilities abroad in order to enhance diversity and 

awareness. Ingersoll-Rand University was established in 2001 and 

10

is responsible to train Ingersoll-Rand employees from worldwide locations. 

Additionally, Ingersoll-Rand remains a major contributor to U.S. 

colleges and universities, and we fund a number of scholarship organizations, as well as in some locations we have developed relationships with universities and actually fund some of the research 

projects at the graduate level. 

We continue to conduct extensive recruitment in the U.S. market 

for our unfilled positions. We have job fairs. We advertise in both 

newspapers and journals. We advertise electronically. There are a 

number of job openings at any given time on the IRCO website. We 

do pay for relocation and we offer highly competitive wage and benefit packages for all employees. 

Employers will continue to need H–1B workers, particularly 

when we are looking for people with highly specialized skills that 

are going to keep us competitive. We are looking for a reasonable, 

market-driven H–1B policy. Stephen did allude to how the numbers 

have fluctuated based on the need, and I think his testimony 

stands for that. But, basically, based on general economic trends, 

the numbers do mirror the needs of the market. I think when we 

are looking to find a solution here, we want to be looking ahead 

and think, if we have a recovering economy, what are our needs 

going to be long term. 

Some people say H–1B workers displace American workers and 

lower American workers’ wages and working conditions. It is hard 

to displace a U.S. worker when you are recruiting for a job and you 

can’t find anybody here with the specific skill set that you are looking for. 

But, additionally, we feel very comfortable that we are paying 

the prevailing wage, and also that these people are contributing to 

our taxes, to our social system, and all the other things that are 

required as part of the program. Really, it is a lot, lot more expensive to hire a foreign worker. 

I am actually in kind of a unique position because I do global immigration work, so I have seen how our immigration laws impact 

our ability to move people around and hire people. We have one of 

the more complicated visa processes, and that certainly is the case 

with the H–1B. 

An HR manager can go out and hire almost anybody and I never 

know about and nobody else in the company knows about it. If it 

is a U.S. worker, they just go and do it and there is no big deal. 

But when you are trying to hire a foreign worker, you end up going 

through corporate headquarters and before a job offer is ever made, 

we are looking at prevailing wage, we are making sure the business unit understands the requirements of the H–1B. We are making sure the documents are properly posted, that we can properly 

do the attestations, and that the business unit totally understands 

what they have to do to comply with every aspect of the program. 

Additionally, the HR manager has to pull a lot of paperwork together to work on this, and then there are the legal fees, the application fees, and these workers also require ongoing support. 

When you actually bring somebody in from a foreign country, it 

is not unusual for the total cost of that worker to be double or triple their salary in a year, particularly if it is somebody who is comVerDate 0ct 09 2002 11:47 Apr 19, 2004 Jkt 093082 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\93082.TXT SJUD4 PsN: CMORC
11

ing in for a short period of time and you are planning to send them 

back to their home country. There are a lot of dual taxation issues, 

relocation expenses, and other things that I include in my testimony. 

I believe that American cannot maintain its global advantage 

without an adequate supply of top-quality engineers. Immigrants 

build wealth and create jobs for native-born Americans, and I agree 

with Stephen that they keep manufacturing in the United States. 

In the near term, we simply must have access to foreign nationals. Many of them have been educated in the United States. By 

sending them home, we are, at best, sending them to our own foreign plants, and at worst we are sending them to our competitors. 

I have seen other countries relaxing their immigration laws to try 

to get access to this top talent. It is something that, if we want to 

maintain a global edge, we want to have the best and the brightest 

working for us in the United States. 

I encourage the Committee to explore the economic issues surrounding the H–1B program and I hope that you can come up with 

a solution that will work for all of us. 

Thank you. 

[The prepared statement of Ms. Dickson appears as a submission 

for the record.] 

Senator CHAMBLISS. Thank you very much, Ms. Dickson. 

Mr. Steadman, we are also very pleased to have you here and appreciate your testimony at this time. 

STATEMENT OF JOHN W. STEADMAN, PRESIDENT-ELECT, INSTITUTE OF ELECTRICAL AND ELECTRONICS ENGINEERSUNITED STATES OF AMERICA, WASHINGTON, D.C. 

Mr. STEADMAN. Thank you, Mr. Chambliss, and thank all of you 

for the opportunity to testify on the subject of H–1B visas. My 

name is John Steadman and I am here today in my role as the 

President-Elect of the Institute of Electrical and Electronics Engineers-United States of America. 

Senator SESSIONS. Mr. Chairman, I would just like to note that 

we are delighted to have Dr. Steadman at the University of South 

Alabama, where he just became Dean of the Engineering School 

there. We are also proud of his prestigious position as National 

President of the Institute of Electrical and Electronics Engineers. 

Mr. STEADMAN. I appreciate that, Mr. Sessions, and I am pleased 

with the warm welcome I received at the University of South Alabama, where I, in fact, am currently Dean of Engineering. Previous 

to that, I was head of electrical and computer engineering at the 

University of Wyoming. 

The IEEE is a trans-national professional society with more than 

380,000 electrical, electronics, computer, and software engineering 

members in 150 countries—the largest single engineering organization in the world. IEEE–USA was established to promote the professional careers and public policy interests of IEEE’s 235,000 U.S. 

members. 

My prepared statement goes into greater detail on a number of 

concerns. I am going to summarize by focusing on just three key 

issues. First, the H–1B visa is exacerbating the problem of engineering unemployment in the United States. Two, abuses of the L–

12

1 visa compound this problem. And, three, these guest worker programs accelerate outsourcing to offshore companies and create security concerns. I will conclude in my oral remarks with some specific policy recommendations on behalf of IEEE–USA. 

The first point: H–1B visas exacerbate the problem of engineering unemployment. Between fiscal year 2000 and fiscal year 2002, 

the INS approved almost 800,000 H–1B visa petitions. During the 

first three quarters of 2003, the new Bureau of Citizenship and Immigration Services approved 140,000 new, renewal and exempt 

visas. This results in nearly 1 million guest workers just in the last 

3 years. 

During that same 3-year period, unemployment among electrical 

and electronics engineers in the United States increased sharply 

from 1 percent in 2000, more than quadrupling to 4 percent in 

2002. Among computer scientists, it jumped from 2 percent in 2002 

to 5 percent last year. 

Thus, the unemployment rate for electrical and electronics engineers has reached an all-time high of about 7 percent in the first 

quarter of this year. This translates to hundreds of thousands of 

unemployed U.S. engineers. Now, I grant you that not all engineers 

are alike, but we are all degreed and capable. U.S. engineers with 

good skill sets ought to be finding employment. 

Yes, it would be better to have a person hired in a U.S. corporation working in your State than be doing that work in India. But 

wouldn’t it be better yet to have U.S. citizens employed in your 

State, spending their earnings in your State and contributing to 

your economy, rather than sending in, many cases, 70 or 80 percent of their wages back home to support a family? 

The second point: Abuses of the L–1 visa are compounding this 

problem. The L–1, or intra-company transfer visa, was established 

by Congress in the 1950’s to enable multinational companies to periodically relocate foreign executives, managers, and workers with 

specialized knowledge of their employers’ products and services to 

branches and subsidiaries in the United States. 

Let me make it clear that IEEE–USA supports the L–1 visa program when used for the purposes Congress intended. It is currently 

being used by non-U.S. engineering services firms to import significant numbers of technical workers, IT professionals, and engineers 

through their U.S. subsidiaries, who are then outsourced to U.S. 

companies and subsidiaries, with those U.S. firms in turn laying off 

their U.S. workers. 

In many instances well documented to this Committee, the displaced workers have to train their non-U.S. replacements in order 

to obtain a severance package. This is clearly an abuse of the L–

1 visa and outside the intent of Congress in establishing this visa 

category. 

The L–1 visa has been exploited due to the absence of even minimal workforce protections and because it allowed some employers 

to avoid, at least for a short time, the public scrutiny and the negative publicity associated with the H–1B visa program. 

The bottom line is that the U.S. is continuing to import significant numbers of skilled workers at a time when the U.S. electrical 

engineering, computer, and information technology workforce is experiencing sustained and historic highs in unemployment. 

13

My third point: Guest workers and offshoring often go hand-inhand. Everyone is worried these days about the loss of U.S. jobs 

offshore, especially in the manufacturing sector. Let me assure you, 

offshoring is not just an issue for blue-collar workers these days. 

It is increasingly a major concern of white-collar professionals, including engineering, information technology, and other technical 

specialties. 

The argument is often made that the U.S. has to choose between 

importing guest workers and offshoring our technology jobs. IEEE–

USA believes this argument rings hollow, as it greatly oversimplifies the reality of the economic forces driving globalization. 

Even though companies have enjoyed ready access to guest workers through H–1B, L–1, and other related visas, the offshore 

outsourcing of engineering, design, and R and D work is increasing 

to such an extent that even U.S.-based companies are starting to 

acknowledge the potential backlash, not to mention the national security, economic growth, and proprietary intellectual property concerns that outsourcing brings. 

If reducing costs and increasing short-term profits are the only 

driving criteria for management, then offshore outsourcing will 

occur regardless of how far we open the door to guest labor, because the relative cost of acquiring labor and facilities is presently 

so far tilted toward offshore production that there can be no realistic competition. 

The Chairman of the American Association of Engineering Societies recently put that clearly in focus by asking the question, how 

do you compete with an $800-a-month engineer? I commend that 

recently published article to you for your reading. 

IEEE–USA believes the increasing reliance on guest workers is 

actually fueling the trend toward offshoring. H–1B guest workers 

are increasingly being brought to the U.S. specifically to facilitate 

outsourcing by taking advantage of their connections, their language skills, and their familiarity with the offshore business partner. 

An unintended consequence is that they take proprietary company information with them when they return to their home country. Guest workers take home with them an acquired knowledge of 

the U.S. market and business practices, a network of contacts, and 

exposure to U.S. technology and its applications. With that knowledge, coupled with lower foreign labor costs, they are well positioned to compete with U.S. firms for work. 

Here are some specific policy recommendations. IEEE–USA believes it is time to rein in the H–1B program, not terminate it. We 

believe that business does need some access to talented, specific 

foreign workers. But it is time to adopt meaningful safeguards to 

protect the ability of skilled U.S. high-tech workers to compete for 

jobs on a level playing field. 

The H–1B visa quota should be reduced to its originally authorized level of 65,000 per year. All H–1B workers should be paid a 

prevailing wage that is not less than the median salary paid to 

similarly qualified U.S. workers, and there needs to be a better understanding of exactly what the prevailing wage is. 

Protections currently associated with H–1B-dependent employers 

should apply to all firms, not just those that are H–1B-dependent. 

14

I note that Senator Hatch quoted that a study concluded that H–

1B workers were paid $55,000 annually, while the average for all 

B.S. degree-holding employees was $46,000. It seems to me that is 

comparing apples to oranges. 

The vast majority of the H–1B workers in that study were 

degreed engineers and computer scientists, and I certainly know of 

no degreed electrical engineers from my institutions who recently 

have left the university and are working for $55,000. That is substantially below median salaries for electrical engineers. In fact, a 

recent salary study for electrical engineers put median annual salary at $90,000. So I think we must be careful when we compare 

these average salary numbers and see whether or not, in fact, H–

1B workers are depressing U.S. salaries. 

The Department of Labor should be empowered to enhance compliance and reduce abuse by having authority to audit the labor 

conditions. Where H–1B workers are employed the $1,000 training 

fee should be retained and redirected so that it actually aids U.S. 

IT professionals and engineers. Using more of those funds for the 

NSF scholarships is one option to ensure that the money is used 

for the purposes it was levied. Another is to provide more flexibility 

to enable displaced U.S. workers to obtain the training they need. 

IEEE–USA also urges Congress to pass the U.S. Jobs Protection 

Act, (S. 1452/H.R. 2489) bipartisan legislation that would help plug 

loopholes and prevent abuses of both the H–1B and L–1 temporary 

visa programs. The balance of our recommendations are outlined in 

my prepared statement. 

To reiterate my main points, first, the H–1B program is exacerbating record unemployment among U.S. engineers. Second, the L–

1 visa abuses compound this problem. And, third, importation of 

foreign workers is accelerating the loss of U.S. jobs through offshore outsourcing. 

In closing, let me reiterate that these are difficult times for IT 

and electrical engineering professionals in the U.S., but there is a 

lot more at risk here than jobs for our members. If we continue 

down this path, the United States will become increasingly dependent on foreign technical expertise both here and abroad. 

I think all of the speakers you have heard agree on at least one 

thing: that we ought to be finding ways to encourage more U.S. 

citizens, especially women and other underrepresented groups, to 

pursue degrees and careers in engineering, computer science, and 

information technology. 

Remember that the congressionally mandated National Academy 

study in 2001 concluded that the H–1B program depresses U.S. 

wages in these high-tech job categories—whether you say it was 

through lower wages or that it kept wages from rising. Surely this 

is not going to encourage more young people to pursue degrees in 

engineering and information technology. The H–1B visa and other 

high-tech guest worker programs are putting our domestic talent 

pool at risk. 

I thank you very much for the opportunity to address you. 

[The prepared statement of Mr. Steadman appears as a submission for the record.] 

Senator CHAMBLISS. Thank you very much, Mr. Steadman. 

15

Mr. Duffy, thank you for being here and we look forward to your 

testimony now. 

STATEMENT OF PATRICK J. DUFFY, HUMAN RESOURCES 

ATTORNEY, INTEL CORPORATION, CHANDLER, ARIZONA 

Mr. DUFFY. Thank you, Mr. Chairman and members of the panel. 

My name is Patrick Duffy. I am from Phoenix, Arizona, and I am 

a human resources attorney with Intel Corporation. I thank you for 

the opportunity to share with you Intel’s perspective about the important role that H–1B workers play in our economy. 

What I would like to do today is tell you a little bit about the 

nature of Intel’s business, our immigration philosophy, how we use 

the H–1B visa. I would like to briefly talk a little bit about how 

we use the L visa, discuss the training fee, as well as make some 

concluding remarks about some of the pending legislative proposals 

that are being debated about whether to reintroduce them in this 

body. 

Intel Corporation is an engineering company that was founded in 

the United States 35 years ago. We design, manufacture and market micro computer components and related products. We are identified and recognized as the technological leader in the semiconductor industry. We have the developed the semiconductor technology on which the entire personal computer industry has been 

built. Our products have continually revolutionized the industry 

and redefined the role of the computer in our everyday lives. This 

impact is a testament to our talented workforce at Intel. 

We are a U.S.-based company with global operations. Besides 

having facilities throughout the United States, we have major sites 

in Ireland, Israel, Costa Rica, Malaysia, and the Philippines. We 

also have an increasing presence in our fastest growing markets 

such as China, India, and Russia. Seventy percent of our revenue 

comes from outside the U.S. 

The majority of our research and development work occurs within the U.S. In fact, 4 of our 5 most advanced 300-millimeter manufacturing plants are located in the U.S. This represents an investment of more than $8 billion in Intel’s U.S. manufacturing capacity. 

We believe that the benefits to the U.S. economy from multinational corporations like Intel are enormous. We employ close to 

80,000 individuals worldwide. We had revenue of $26.8 billion in 

2002, with a net profit of $3.1 billion. If we grow, jobs grow. We 

recognize at Intel that the key to growth and the key to being number one in the high-technology industry is we need the world’s best 

engineering talent who can develop innovative products that generate demand and spur growth. 

With respect to our immigration philosophy, we view employment-based immigration from two distinct perspectives. First, we 

look at business immigration from the perspective of needing to fill 

critical gaps among our U.S. workforce through sponsorship of foreign nationals through the H–1B program and then later on 

through the permanent resident process. 

Secondly, we use the L program to move our global workforce for 

temporary assignments to facilitate technology development and 

16

ramp our global factories to high-volume manufacturing of our 

products. 

We have a clear philosophy with regard to hiring foreign national 

employees in the U.S. First, we seek U.S. workers when we need 

to fill a U.S. position. We have a visa sponsorship guideline that 

provides an example of this philosophy. 

Before we will agree to sponsor a foreign national who requires 

an H–1B visa to work in the United States, we require the business group to demonstrate to us that they have engaged in goodfaith efforts to source-recruit qualified U.S. workers for this position and they have been unsuccessful. This is above what the law 

requires. Nevertheless, it reflects Intel’s commitment, we believe, 

to the U.S. worker. 

As a result of our visa sponsorship guideline, our H–1B employee 

population in the U.S. is less than 5 percent of our U.S. workforce. 

This small percentage of our workforce is comprised of individuals 

possessing unique and difficult to find skills which can only be acquired through advanced-degree, university-level education. 

In terms of Intel’s use of the H–1B visa, just like many companies in the U.S. today, our overall external hiring has decreased 

since the beginning of the economic slowdown in 2001. Consequently, so has our hiring of employees who require H–1B sponsorship. Nevertheless, we do continue to hire a number of employees requiring sponsorship for those positions where we cannot find 

qualified U.S. workers with the advanced education, skills, and expertise we need to compete in this global economy. 

Examples of these jobs include design engineers at the master’s 

and Ph.D. levels in fields such as electrical and computer engineering, and process engineers at the master’s and Ph.D. levels in fields 

such as chemical and materials engineering. The vast majority of 

the H–1B workers we sponsor are educated at U.S. universities. 

We expect that we will continue to sponsor H–1B employees in the 

future, for the simple reason that we cannot find enough U.S. 

workers with the advanced education, skills, and expertise we 

need. 

As I think every member of this panel has noted, the problem 

and the solution are found in the U.S. university graduation statistics. About half of the graduate students in physical sciences in 

U.S. universities are foreign nationals. That percentage increases 

the higher the degree and the more prestigious the school. At Intel, 

we need engineers operating at these rarified levels of knowledge 

in order to spur our research and development efforts, and to generate the products that we hope will spur growth and demand in 

our economy. 

It is important to also note that many U.S. companies and the 

U.S. Government collectively contribute billions of dollars to universities to support cutting-edge research, and much of that work 

is done by graduate students, many of whom are foreign nationals. 

If these individuals are to remain in the U.S. and contribute to our 

economy, they need to have H–1B status in order to work. 

There are U.S. employers who are eager to hire them, but if the 

H–1B program is burdened by fewer numbers, more bureaucracy, 

and delays in processing, employers will not have the option and 

gifted students will leave the U.S. We believe that we lose economiVerDate 0ct 09 2002 11:47 Apr 19, 2004 Jkt 093082 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\93082.TXT SJUD4 PsN: CMORC
17

cally, intellectually, and culturally if our policies force these students to leave the U.S. and go to countries and companies that 

compete with U.S. companies such as Intel. 

Intel’s experience with the H–1B program is that hiring such talent through the H–1B program does not displace any U.S. worker 

because our experience has shown that U.S. workers with the same 

education and skills are simply not always available in sufficient 

numbers to satisfy our hiring needs. Hiring this level of engineering talent is the way in which we invent new products, ensure 

quality and efficiency in our production, and grow the company in 

both revenue and jobs. 

As some have noted in arguing against the H–1B visa, or even 

the abolition of the system, they quote unemployment statistics to 

prove that H–1B visa workers are not necessary. The common argument is we look at the unemployment rate for electrical engineers. It is important to note that not all electrical engineers are 

the same and that the disciplines are not interchangeable. 

For example, many electrical engineers direct and coordinate operation, maintenance, and repair of equipment at customer sites. 

This is quite different than the type of electrical engineer that Intel 

hires who requires H–1B sponsorship. Our engineers are primarily 

component design engineers with master’s degrees or Ph.D.’s who 

have highly specialized skills in very large-scale integrated circuit 

design, complementary metal oxide semiconductors, and device 

physics. Engineers with such education remain in short supply in 

the U.S. workforce. 

Our experience has also shown that engineers without such education cannot acquire it by on-the-job training or by a short course 

in a vocational setting. Rather, our experience has shown that this 

education can only be acquired in the course of a structured academic program that, in turn, relies upon the person already having 

the requisite math and physics academic building blocks. Access to 

these highly educated engineers is critical to development of our future generation of products and technology, and to our ability to 

maintain our position as a global leader in our industry. 

Clearly, the real issue here is the lack of highly educated U.S. 

candidates for jobs for which we experience shortages. We are so 

convinced that academic training is both where the problem and 

solution lies that we contribute over $100 million per year to improve teaching and learning. It is important to note this is more 

than the amount contributed by the $1,000 assessment for H–1B 

visa applicants for all of 2000. 

Our goal is to spark interest in the hard sciences and engineering among U.S. students in order to generate a highly educated 

workforce of U.S. engineers. Emphasizing academics in the hard 

sciences and engineering is the only way to build a U.S. workforce 

that eliminates reliance on foreign talent. But it is important to remember this is a long-term process. The requisite education needs 

to begin in elementary school and continue through advanced university curriculums if it is to meet our industry’s needs. 

Next, I would like to discuss how we use the L visa. Intel’s use 

of the L–1 visa for intra-company transferees is quite different 

than our use of the H–1B visa. The vast majority of cases for which 

we sponsor an L–1 is in connection with temporary assignments in 

18

the U.S. rather than to fill a shortage of highly educated engineer 

positions that exists in the U.S., as we do with the H–1B visa. 

Our L–1 temporary assignments are primarily for employees who 

work on our new products where we have worldwide collaborative 

design efforts. We know that our use of the L–1 visa is consistent 

with the legislative intent of the program. 

Key personnel who are employed by Intel and do work only for 

Intel abroad are brought to the U.S. for temporary assignments at 

Intel and only Intel. Last year, 95 percent of the employees we 

sponsored for L–1 visas came to the U.S. on temporary assignments and when their assignments ended, they returned to their 

home sites to work for Intel as Intel employees. 

There are rare instances where we use the L–1 visa to fill a U.S.-

based position, but it is usually to transfer a key manager or executive to the U.S. because there are domestic operations at our corporate headquarters that require that individual’s global experience and knowledge. This is the same reason for which we will 

place U.S. employees in other countries. 

It is important to recognize that in today’s global workplace, we 

need to consider key workers as part of a global workforce rather 

than tied to any one site, whether foreign or domestic. It is a new 

and urgent dynamic in our industry. 

We design, manufacture, and sell to a world market. Our human 

capital, just as our products, needs to be easily transferred if we 

are to compete in this world market. U.S. policies that isolate or 

obstruct our ability to move our human resources can seriously 

compromise our success, and our failure is certainly not good for 

either the U.S. economy or U.S. workers. 

Next, I would like to offer you some brief perspectives on the 

training fee and the reach of the training programs. Intel does support the $1,000 training fee. 

Senator CHAMBLISS. Mr. Duffy, I don’t want to cut you off, but 

I am afraid we are going to get interrupted by a vote. I know your 

detail of all of this is in your written statement. If you could summarize right quick so we can get to questions, please. 

Mr. DUFFY. Sure. Basically, don’t throw the baby out with the 

bath water. Recognize there are legitimate uses of business immigration visas, and it is important that this body consider that it not 

do anything that impedes the ability of U.S. business to compete 

in this marketplace and tilts the playing field in favor of our foreign competition, who are trying to hire the same workers. 

[The prepared statement of Mr. Duffy appears as a submission 

for the record.] 

Senator CHAMBLISS. Thank you very much. 

We have been joined by several of my other colleagues here who 

have not had the opportunity to make any sort of opening statement. We are going to have rounds of ten-minute questions, and I 

would tell each of you that if you want to make any sort of brief 

opening statement, do so at first, and then we won’t charge that 

against your ten minutes. 

I will move directly to Senator Kennedy. 

19

STATEMENT OF HON. EDWARD M. KENNEDY, A U.S. SENATOR 

FROM THE STATE OF MASSACHUSETTS 

Senator KENNEDY. Thank you, Mr. Chairman. I will put my full 

statement in the record. 

[The prepared statement of Senator Kennedy appears as a submission for the record.] 

Senator KENNEDY. I want to thank you very much for having this 

hearing. It is a very, very important hearing because it is basically 

about the workforce in our country which is the backbone of our 

economy both now and in terms of the future. 

This hearing is held at a time where we have had a rather important change, a dramatic change in terms of our economy over 

the recent years, reflected in an unemployment rate of 6.1 percent, 

with no sign of abating. In Massachusetts, the rate is 5.4 percent, 

in sharp contrast to 3 years ago when we were looking at the whole 

issue of H–1B and it was 2.5 percent at that time. 

We also have a situation where we have 22,000 applications, 

through no fault of their own, basically as I result, I believe, primarily of problems in the immigration lag, given the general kind 

of lag that the Immigration Service has accumulated. We are also 

looking at the new additions that will be allocated in terms of Chile 

and Singapore with the free trade agreements. 

So you put all of those together and that cuts the 65,000 down 

very considerably, I guess, to about 40,000, and that is a very significant alteration and change. I personally believe we have to deal 

with the 22,000. It would be grossly unfair to these individuals who 

have just gotten caught in the bureaucracy and have been left in 

limbo. 

Comments have been made about the filing fee. I have been one 

who supported a higher filing fee, but we have seen the determination of the Congress with the $1,000. Even with this, we have seen 

the amounts that have been allocated toward training and it is 

really very, very significant. $129 million has been spent in computer sciences, engineering, and mathematics at NSF. Twelve thousand low-income undergraduate and graduate students received 

scholarships in 2000 and 2002; a $228 million technical training 

program at DOL, 56,000 individuals to be trained in this. That is 

not insignificant. 

We have had very good testimony about how H–1B ties into the 

L–1, and I thank the Chair for having a very informative hearing 

on the L–1. I personally believe we can deal with the L–1 abuses 

with legislation. There have been pieces of legislation that have 

been introduced to attempt to do that. I am hopeful we can work 

that out. I am sure we can. 

It is nice to see a number of you back. Mr. Stephen Yale-Loehr, 

it seems like only yesterday you were here on the L–1 visa, and 

others as well. 

Mr. YALE-LOEHR. I am buying an apartment in Washington. 

Senator KENNEDY. Well, we benefit from your experience. 

Others are here and want to talk, but I would be interested as 

someone who spends a good deal of time thinking about this in how 

do we develop a program. If we are looking into the future, uncertainty in terms of our economy and seeing these changed economic 

20

circumstances, how do we really plan down the road in the future 

as to what this figure really ought to be? 

I always thought what we were trying to do is to have those individuals with very special skills. The fact that they were working 

here was going to mean that more workers were going to work here 

and were going to increase our economic capability and capacity. It 

was going to make us more competitive and it was going to stimulate the economy, and we were going to have a shortage of individuals that had skills and there were training programs to upgrade 

those skills for Americans to be able to work. 

We obviously want to deal with the abuses, and I might come 

back and give written questions about suggestions that you have 

about how we can deal with the outsourcing that Mr. Steadman 

has talked about. We have heard other testimony along those lines. 

In fact, it is happening and we have had hearings with the different groups that go out there and purposefully do that. We have 

to deal with the abuses that take place. 

We heard today—and I will just wind this up—from one of our 

colleagues; actually, it was Senator Schumer from New York who 

mentioned a securities firm in New York City that employs 800 

people at the present time with an average income of $150,000. 

Three years from now, none of them will have a job, all moving 

overseas for about $10,000, every one of them. And these are highly 

skilled people, people obviously, clearly, in computer technology, information technology, highly skilled people. I know the total number of people in computers has moved down a bit. 

We used to have low-income jobs moving overseas, and now very 

eloquently from all of you pointing out middle-income engineering 

jobs are moving overseas. That is maybe a different question, but 

how do we develop a system where we have to get some numbers 

up and that is going to be really reflective of where we are in our 

economy, and still try and maintain—if you agree with me that 

that was the purpose of this was to try and take special skills that 

would expand our economy, how do we figure out what that number is? 

Mr. YALE-LOEHR. Is that a question? 

Senator KENNEDY. Yes, you have got it. 

Mr. YALE-LOEHR. That is a very complicated question and there 

is no easy answer to that. I think that in the long term, industry, 

government, and educational institutions all have to sit down and 

figure out what is best for America. 

Congress has worked hard over the last several years in the H–

1B context to try to make sure there is a balance between allowing 

skilled workers to come into the country, while still protecting the 

U.S. workforce. You see that through the training fee, you see that 

through the labor attestation requirements, you see that through 

Labor Department enforcement. 

I think we have a delicate balance now and I think that in the 

short term, because of these changes that take effect October 1, the 

safest, simplest thing maybe to do is to simply say let’s keep that 

delicate balance in place for another year or so while we convene 

a larger group of people—industry, government, educational institutions—to look at the whole issue, because some of these are not 

immigration. 

21

You want immigration wagging the economic dog here. Some 

issues like outsourcing and offshoring really are not directly related 

to immigration, and I think you need to focus on what is really important both in the short term and the long term. 

Senator KENNEDY. That is very helpful. 

Would others like to make a brief comment on that? Ms. Dickson. 

Ms. DICKSON. I don’t think we wanted to see a quick fix here. 

I agree with Stephen. We need to do something in the interim, but 

it is a much bigger picture that we have to look at. Every time we 

run out of numbers, we pass some legislation for a short period of 

time and we increase the cap, and then a couple of years later, we 

are back at the same situation. Maybe an interim measure has to 

be done, but we have got to look at the bigger picture and come 

up with a better solution. 

Senator KENNEDY. That is helpful. 

Mr. Steadman. 

Mr. STEADMAN. I couldn’t agree with you more, Senator Kennedy. 

The purpose of H–1B visas was highly specialized, enabling access 

to particular skills. Clearly, many members of my organization 

would have liked me to urge you to end H–1B visas entirely. I 

didn’t do that. I believe there are justifiable reasons for the program as long as we keep the numbers reasonable, and I have testified as to what that needs to be. 

My only additional comment—and I think it agrees with what 

other witnesses have just said—is that a few decades ago we were 

very worried about national security in a different context. Our 

ability to design, build, fabricate, produce nuclear weapons, for example. And there were very well-thought-out programs that encouraged domestic talent to enroll in science and engineering. At 

that time, computer science wasn’t so important. Programs to support graduate study in these disciplines were limited to U.S. citizens. They paid stipends that were very much higher than those 

for other graduate fellowships. 

Senator KENNEDY. The National Defense Education Act? 

Mr. STEADMAN. Yes. The NDEA was more targeted to where we 

needed to go than things in the Department of Labor, in my opinion. These are longer-term, higher education issues, as the gentleman from Intel has pointed out. 

Senator KENNEDY. Mr. Duffy, quickly. I am going to run out of 

time. 

Mr. DUFFY. Yes, I am sorry, Senator. Just basically I don’t think 

that it is always a direct connection between immigration and 

outsourcing, and we really need to look at what is the root cause 

and what is the U.S. doing in order to ensure that we have the 

workforce to spur innovation and development. 

Senator KENNEDY. Let me come back to the training programs. 

We have got the figures on that. The individuals selected generally 

are through the consortia that are worked out, business, labor and 

community consortia that are worked out to go into these programs, and then the training programs are developed. I am not 

going to go into what the results have been. I think they have been 

quite impressive, but I think they could be strengthened. 

Let me start with you and go down. Do you have recommendations or suggestions on how they could be done better? With the 

22

amount of money that we have got, how can they be done better? 

How can they be tied in and achieve the general objective more effectively? What more can be done? 

My good friend, Senator Feinstein, is here, and she was very active in the development of this program. We looked at the Department of Labor, Commerce, the National Science Foundation. All of 

us were interested in trying to get the best here. 

What can any of you tell us, based on your experience, about how 

to make these programs more effective in terms of achieving what 

we had intended? 

Mr. YALE-LOEHR. Senator, I don’t have any direct experience 

with this program, only from what I have read and that is very little. My understanding is that a large chunk of the money is going 

to the Labor Department for general training and skills development, and I think based on the testimony here we may want to 

come to a consensus that maybe we need to focus more of that 

money at the high academic end rather than at basic training. 

Senator KENNEDY. Interesting. 

Ms. Dickson. 

Ms. DICKSON. From my perspective, it was the first time I really 

got the figures on how much money was spent on training and 

where it was going, so it was enlightening to me. 

I don’t think that the program is really communicated perhaps 

as well as it could be. And, again, what are we looking to achieve 

with this training and at what level would be something to look at, 

but I am not sure people even know how to access the money. 

Senator KENNEDY. Mr. Steadman. 

Mr. STEADMAN. I would absolutely agree with what Stephen just 

said—that more emphasis on higher levels is appropriate. I would 

add that I have direct experience with the CSEMS (Computer 

Science Engineering and Math Scholarship) program at NSF. It 

has been an outstanding success specifically in attracting women 

and minorities to math, science, and engineering careers, more so 

perhaps than anything else that the Division of Human Resources 

at NSF has done recently. 

Senator KENNEDY. The GAO indicates that approximately 37 percent of the students in the scholarships are women, and all the 

problems that you mentioned. 

Mr. STEADMAN. I seldom agree with the GAO, but in this case 

they are absolutely right. 

Senator KENNEDY. Let me ask you just finally, if I could, Mr. 

Chairman—and this sort of gets back to what we talked about a 

little bit in the first question about the regional disparities. 

Is that out of the question in terms of looking at these regional 

disparities? We are going to have to set some figures on the overall, 

and have to develop training programs. This is going to be obviously a national kind of—-immigration is a national issue, but do 

you have suggestions about anything we could think of, or does 

that get too complicated too quickly? Could you help us with that, 

Mr. Steadman? 

Mr. STEADMAN. I would stay away from trying to deal with it regionally, frankly. 

Senator KENNEDY. Finally, I would submit questions about suggestions on enforcement. There is a difference between the preVerDate 0ct 09 2002 11:47 Apr 19, 2004 Jkt 093082 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\93082.TXT SJUD4 PsN: CMORC
23

vailing wage and, as I understand it, a similarly situated worker’s 

wage. That is complicated. I am not going to take the time here, 

but I would like to hear you out on these issues and recommendations about how we could tighten the program in terms of potential 

abuses. 

I will write to each of you and if those answers could be included 

in the record, I thank the Chair very much for having the hearing. 

Senator CHAMBLISS. Certainly, every member will have the opportunity to submit written questions, if you members of the panel 

will please receive those and answer them with all due haste, 

please. 

Senator Sessions. 

STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM 

THE STATE OF ALABAMA 

Senator SESSIONS. Thank you, Mr. Chairman. This is an important issue. I remember when we voted on it before, it was during 

the Y2K period and the high-tech IT boom. We couldn’t get enough 

workers and we voted to increase the numbers dramatically. Since 

then, there have been changes. 

Anecdotally, I would just say that I had a friend tell me—a 

Chamber of Commerce type that is a free trader, but he said he 

saw a former computer engineer working a cash register in his medium-sized town. I have got applications for employment from a 

Stanford engineering graduate to work on the Senate staff. He had 

been out of employment, so the unemployment numbers are somewhat troubling to me there. We know at Intel, as you noted, 13 of 

your 45 Fellows are foreign-born. So it shows how much creativity 

and fire power we can get when we give bright people a chance to 

participate. This is not an easy issue for us. 

I would just like to ask a few bread-and-butter questions here. 

Ms. Dickson, how do people apply? Where do they come from, the 

ones who apply to your company? 

Ms. DICKSON. Generally speaking, our most effective tool is the 

online IRCO website, and there is an electronic way of submitting 

your resume. 

Senator SESSIONS. Now, are they living in the country, studying 

at American universities, or are they out of the country with foreign degrees? 

Ms. DICKSON. I think most of our applicants are here in the U.S. 

for U.S. jobs, but I mean technically anybody who has access to a 

computer worldwide would look at it. Again, we tend to filter out 

those people. We are mostly looking initially, the same as Intel, to 

hire U.S. workers. They are cheaper and there are a lot less problems to contend with. 

But in the areas of special skills, you will start looking broader 

and broader. For example, we just hired a worldwide engineering 

manager. He is actually a Polish national who has advanced degrees, worked in Australia, actually taught in the universities 

there, now works for a company in Germany, and we have just 

hired him to come and work for us. And he has very specialized 

skills. 

Senator SESSIONS. Yes. Well, let me just ask this because I have 

just got a minute and I have to scoot. 

24

Where do you get most of your people, Mr. Duffy? 

Mr. DUFFY. Senator, we try to cast as wide a possible net as possible. In terms of our H–1B hires, most of them do come from U.S. 

universities and colleges. 

Senator SESSIONS. They were here through education visas, properly here. They are about to graduate, then they apply under the 

H–1B program and if you think they qualify and you need them, 

you go through the process? 

Mr. DUFFY. Right. We will interview them through on-campus recruiting, advertisements through the Internet, job fairs. 

Senator SESSIONS. Now, of those, how many have bachelor’s, 

master’s, and Ph.D.’s, if you have an idea? 

Mr. DUFFY. The majority of our individuals have master’s and 

Ph.D.’s, the component design engineers. 

Senator SESSIONS. Do we have any idea how many of these people become citizens through various processes that might be available to them, and how many go back after how much time? 

Mr. DUFFY. Well, Senator, I can let you know. Even though in 

the press you see ‘‘temporary worker,’’ these are not temporary 

workers to us. The H–1B is just one step in making these individuals U.S. workers. Since we are hiring them in shortage positions, 

we sponsor them for permanent residence. They get their green 

card, they become U.S. worker and remain in the U.S. 

Senator SESSIONS. For the rest of their lives? 

Mr. DUFFY. Hopefully, yes. Hopefully, they will stay with Intel 

working the rest of their lives rather than going to a competitor. 

Senator SESSIONS. Well, we don’t want to be a country that 

turned down Einstein, but we don’t want to be in a situation in 

which we flood the market. 

Mr. Steadman, there is no doubt that labor is like a commodity. 

If you dump five times as much cotton in this country, the price 

of cotton is going down. If you dump much, much more labor into 

this country, the marketplace value of the workers or engineers 

will go down. 

How do you deal with these issues? Do you have any comments 

so far on what has been said? 

Mr. STEADMAN. Well, yes. I think the only thing you hear really 

wide agreement on, Senator, is that the longer-term solution is to 

encourage in various ways—and I believe it can be done—more domestic people to pursue what was referred to as hard science and 

engineering degrees. Now, I am assuming that means the brittleness and not how difficult it is intellectually. I was pleased to hear 

there is some chance even for a university professor eventually to 

get a real job at Ingersoll-Rand. 

I think in the short term it is accurate to say that in highly specific areas, allowing some H–1B visas with appropriate safeguards 

is still the appropriate thing to do. In the longer term, we need to 

think about how we encourage people in all the education levels. 

I mean, I am not defending only the universities or just attacking 

the K–12. At all levels, we need some assistance and some focus 

on what is going to make this country more competitive economically in the future. 

Senator SESSIONS. Do we spend more money on taking people, 

say, with a B.S. degree and help them to—maybe the job market 

25

has changed for them and they are now unemployed—to assist 

them, experienced workers and engineers, to change so they can 

meet the current demand? 

Mr. STEADMAN. I believe you are right on target for the quickest, 

most effective way, yes. Take people with bachelor’s degrees and 

encourage them to continue or go back to graduate school to learn 

about VLSI and the chemical processing that they need in the 

semiconductor, for example industry. Those are skills we need to 

encourage. 

Senator SESSIONS. And for a relatively small amount of money 

comparatively, we could help transition a lot of capable people, 

would you say? 

Mr. STEADMAN. I think that is accurate. I understand how tight 

our time is, I just have to tell you about a concomitant issue that 

no one has been speaking about here; one that would also encourage a different face on the faculty at U.S. engineering and science 

departments. 

I think right now the face of that faculty is not very encouraging 

to women and minorities to participate, to pursue careers in engineering. It is just the reality that we all like to go to a classroom 

and at least occasionally see somebody that we look like. I mean, 

it is as simple as that, and yet as complicated as that. It is a problem that needs attention. 

Senator SESSIONS. It is an interesting question and it is something I look forward to discussing with you further, Dr. Steadman. 

We are glad to have you at the University of South Alabama and 

we are just excited about that and hope you enjoy the city. 

Mr. STEADMAN. So am I. I hope I will see you down there soon. 

Senator SESSIONS. No doubt. If you like baseball, I will be out 

there at Eddie Stanke Field. 

Senator CHAMBLISS. I know Senator Sessions well and he is not 

going to be an applicant for a metallurgical engineering degree. 

[Laughter.] 

Senator CHAMBLISS. Senator Feinstein. 

STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR 

FROM THE STATE OF CALIFORNIA 

Senator FEINSTEIN. Thank you, Mr. Chairman. To the Senator 

from Alabama, if he wants to see good baseball, he has got to come 

to San Francisco and see the Giants play. 

Senator SESSIONS. Oh, yes. 

Senator FEINSTEIN. That is good baseball. 

Senator SESSIONS. Well, I have seen USC at the University of 

South Alabama, which is a competitive national college program. 

Senator FEINSTEIN. Mr. Chairman, I just wanted to use my time 

to make a brief statement. 

I am very concerned about these programs. I did a lot of speaking throughout California in August. I cannot tell you how many 

workers came up to me and said, I have been replaced by somebody 

I trained and they are getting a third of what I got. 

Now, the degree to which this permeates the system, I don’t 

know, but I do know this. Of the Department of Labor investigations, of those 300-plus that have reached final conclusion, over 

26

half of them were found to have some fraud, and there is $8 million 

in fines against those institutions. 

I do know that companies like Intel and Ingersoll-Rand are obviously legitimate companies, but there are other companies that use 

job shops. And it is a catch-22. This isn’t an easy one because we 

are bleeding jobs offshore at the same time. We don’t want to lose 

the jobs offshore, and yet we want to be able to have American 

workers fill jobs. 

The Department of Homeland Security—and I want this just for 

the record—has done a report entitled ‘‘Characteristics of Specialty 

Occupation Workers: Fiscal Year 2002.’’ There were a total of 

197,537 petitions approved by type that year. Initial employment 

was 103,584. Of that initial employment, 36,494 were aliens outside the United States, and aliens in the United States were 

67,090. Continuing employment were 93,953. This is a huge program. 

As we all know, it goes back to 65,000 in 2004. My view is that 

it should go back to that unless we are able to produce some 

stronger safeguards, standards, and a mandate that there be some 

prevailing rate considerations to stop this business of having a 

worker train another worker, then be fired, and find out that the 

worker they trained is getting a third the salary. 

Now, at the same time, August, I think, was the 37th month in 

a row we have lost manufacturing jobs, and this is predicted to increase. The jobs go offshore. So it is a catch-22. How do we encourage companies to better train American workers, encourage schools 

to better train American workers? We tried that, I think, back in 

2000 with the high-tech community, and I suspect my State is the 

highest user of H–1Bs. I don’t know, and I would suspect that Massachusetts is probably number two. 

I have to check and see how that training program has gone, but 

as one of the witnesses pointed out, the great weakness in math 

and science—and this program through the National Academy of 

Sciences that we authorized was supposed to provide standards 

and scholarship programs, and really move math and science training. 

Now, I am elected, obviously, to represent people from California 

who are losing their jobs big time. How do we correct this program? 

How do we put in the safeguards that are necessary in view of this 

outsourcing, and also in view of the fact that Americans are being 

replaced? I mean, if you look at the countries, the majority come 

from India, China, Canada, and some other countries, but India is 

the big one, China next. 

So I would like to have you answer the question, each one of you. 

What do you say to someone like me where now wherever I go, this 

program comes up and somebody tells me they have been replaced 

and they are angry? Does anybody want to take a crack at it? 

Mr. YALE-LOEHR. Well, let me start that, Senator Feinstein. I 

think Congress did a good job in trying to build protections into the 

law, but like any law, the question is it is going to be enforced adequately? For example, if you have a law saying you are only supposed to drive 55 miles an hour, but there are no State troopers 

along the side of the road to enforce it, everybody is going to violate 

the law. 

27

Senator FEINSTEIN. And this law can only be enforced, as I recall, 

on the petition of the—somebody has to file a complaint. 

Mr. YALE-LOEHR. In 2000, Congress amended that and allowed 

the Labor Department to directly enforce alleged violations of the 

H–1B program, and that particular provision sunsets as of October 

1. For at least the last 3 years, the Labor Department has had the 

authority to do its own investigations and not have to wait for a 

complaint. 

Senator FEINSTEIN. So we would want to take a look at that. 

Mr. YALE-LOEHR. I think you want to take a look at that and you 

may want to consider increasing appropriations for the Labor Department to better enforce the H–1B program. That may go a long 

way to making sure that employers really are complying. 

The law already says they have to pay the higher of the prevailing wage or the actual wage for that particular job. So it is in 

the law. The question is how do you make sure that employers 

abide by that. 

Senator FEINSTEIN. Let me stop you. My staff tells me that is 

only for H–1B-dependent employers, which is only 15 percent of the 

users. 

Mr. YALE-LOEHR. What is only for H–1B-dependent employers? 

Senator FEINSTEIN. Fifteen percent of the users of H–1B visas— 

Mr. YALE-LOEHR. Right. There are H–1B-dependent employers. 

Senator FEINSTEIN. So it is only 15 percent, if I understand what 

she has just told me. 

Mr. YALE-LOEHR. There are two types of employers for H–1B 

purposes, regular H–1B employers and those who use at least 15 

percent of their workforce comprised of H–1B nationals. Those people, because they have such a high dependence on H–1B in their 

workforce, are called H–1B-dependent employers. They have to live 

by a higher attestation regime, do more to try to protect the U.S. 

workforce than regular H–1B employers. Those dependency provisions also go out October 1 unless Congress acts. 

Senator FEINSTEIN. Does anybody else have any suggestions? 

Ms. DICKSON. I agree with Stephen. I think the enforcement 

mechanism is there. I think the law has a lot of—it is complex to 

look at the prevailing wage, the actual wage. I know when someone 

is hiring an H–1B worker, we really have to talk them through it 

so that they understand what the salary has to be for that particular employee and what they have to look at to actually establish the correct wage for that employee. 

I do think certainly big companies are working hard to comply 

with the regulations and the enforcement mechanism is in place already. It is just a matter of using it, I would say. 

Senator FEINSTEIN. Mr. Steadman. 

Mr. STEADMAN. I think largely what you need to say to them you 

just said to this panel at the beginning of this panel when you said 

you believe that, in fact, the abuses have to be stopped. You need 

to say that to those people. 

I am a little bit less enthusiastic about the ability and the will 

of the Department of Labor to enforce some of these things than 

some of the colleagues at this table, I guess. 

First of all, it is accurate what your staff said and what Steve 

said that there is a higher attestation requirement for those who 

28

are H–1B-dependent employers. I see absolutely no logic to why 

that shouldn’t attach to all people employing them. After all, the 

purpose of this was not to displace U.S. workers in the first place. 

It was to allow companies, businesses, to bring in people when they 

could not get U.S. workers. Why not make them attest that they 

have tried to get a U.S. worker before they do this? It seems to me 

a straightforward thing that ought to be done. So many of those 

tools are right at hand and it appears to me the Senate is right 

on track to make it happen. 

Senator FEINSTEIN. Mr. Duffy. 

Mr. DUFFY. Senator, I think it is important to be careful to recognize the distinction that there is not always a direct connection between an H–1B visa and business decisions to outsource. So we 

need to look at that carefully. 

In terms of attestation requirements, we believe the current 

scheme is accurate, and it is also careful again to balance that 

those employers whom you view as dependent who have to attest 

there has been no displacement tend to be the ones who maybe 

aren’t really focusing on the true intent of the program in terms 

of the skill shortages. 

You want to be careful not to penalize the legitimate users of the 

program with a process that becomes so burdensome and slow that 

it impedes our ability to hire these skill-shortage positions in the 

U.S., because again that impacts our research and development 

which helps create jobs. 

Senator FEINSTEIN. But you have to understand that it is not 

easy when somebody comes to you and says, this is a program you 

helped create and I am losing my job because of it. That is the concern that I have. It is one thing not to have a position filled and 

not to be able to really recruit or find anyone so that you can attest 

that you have tried to recruit, under penalty of perjury, and bring 

somebody in. 

It is another thing to have an American worker have to train 

their replacement; I mean, the indignity of finding out they are 

training somebody who is going to work for a third. And interestingly enough, it always works out, at least among the people who 

have come to me in different places in California, that their replacement is paid about a third. 

Do you agree, Mr. Steadman? 

Mr. STEADMAN. I certainly have heard that those things happen, 

and I agree that it is disturbing beyond belief. Clearly, that is an 

abuse of the program that needs to be stopped. 

Senator FEINSTEIN. If any of you have any suggestions, I would 

certainly appreciate it. I mean, the numbers don’t drop until next 

year, so we have a little bit of time. But I think whatever the number is going to be, there is going to have to be attached to it some 

guarantee to prevent this sort of undercutting of the American 

worker in the way I have just related. 

Do you have any other comment? 

Mr. YALE-LOEHR. No. As Mr. Duffy said, I think you cannot say 

there is a one-to-one correlation between the business decisions of 

a company and H–1B or immigration. I think sometimes people try 

to see there is a correlation when there is not necessarily. 

29

Second, just to go back to my earlier point, I believe that again 

greater enforcement will help the program. Third, I want to say 

that some of the reasons companies are using the H–1B program 

to hire people temporarily is because it is taking so long to get people here permanently. 

If we are trying to encourage people to work permanently, let’s 

speed up the permanent visa process. If people could get their 

green cards more quickly, they wouldn’t necessarily have to use the 

H–1B, and then these would be people who would be working permanently in the United States and contributing permanently. Some 

of the concerns my fellow panelists have mentioned about information going overseas to our foreign competitors would not be in effect. 

Senator FEINSTEIN. Let me take back what I said. The H–1B 

numbers drop October 1, 2003. I have got to go into rapid motion. 

I appreciate that, but the point is that the employer tries to find 

a qualified American worker and makes a showing that he or she 

cannot find that qualified worker. That is what is really important 

to me, and that the Labor Department, as you say, has the ability 

to see that that is done, to institute an investigation, to require an 

attestation under penalty of perjury. I am really worried about the 

back pay, $8 million. That is a substantial amount. 

Do you have any other comment? I am really looking for suggestions because now we have got to move fast. 

Ms. DICKSON. Well, I do believe that the critical piece here is to 

enforce prevailing wage. That mechanism is already there and we 

just have to be looking at that. If you are saying that some of your 

people are telling you they are making one-third less, well, what 

was their original salary? 

Senator FEINSTEIN. Two-thirds. 

Ms. DICKSON. Two-thirds. Pardon me. 

What is the prevailing wage and what is that employer paying 

other people that are similarly employed? The statute is very, very 

clear that you have to pay the higher of either the geographical 

prevailing wage or what you pay other U.S. workers in the same 

or similar occupation. So if that statute was enforced, that should 

resolve some of those issues. 

Senator FEINSTEIN. I just want to point out that the area of our 

State that is most troubled by this is the Silicon Valley community, 

where there is the most unemployment right now and a lot of layoffs, as well. So it has had just huge repercussions in the State of 

California. 

How this figures in long term, I think, Mr. Chairman, we really 

have to give a great deal of thought because I don’t think any one 

of us wants to run into some of the constituents that I have run 

into who are very aggrieved and very upset by this program. 

If you have any other comments, I would like to hear them. 

Mr. STEADMAN. Only to thank you for the opportunity to be here. 

It has been a pleasure. 

Senator FEINSTEIN. Thank you, Mr. Chairman. 

Senator CHAMBLISS. Thank you, Senator Feinstein. 

If what I am hearing is correct, I think all of you have said that 

the resources out there from which you have to choose really are 

not that great from the standpoint of finding the right kind of engiVerDate 0ct 09 2002 11:47 Apr 19, 2004 Jkt 093082 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\93082.TXT SJUD4 PsN: CMORC
30

neer. If the solution to this problem is what I am hearing, then it 

is not something that we are going to fix by lowering this cap once 

again to 65,000, or for that matter raising it to 200,000. It is more 

of a long-term fix that is going to have to take place with the education of our children beginning early on and bringing them 

through a master’s or a Ph.D. program, which is going to take us 

a long time. 

Just very quickly, if you all would just go down the line starting 

with you, Mr. Yale-Loehr, with respect to what the cap number 

should be, just give me a figure—65,000, 195,000, more, less, somewhere in between? 

Mr. YALE-LOEHR. Let me give you two answers. One is I think 

in one sense we should not have to have a cap. If you are having 

appropriate protections of U.S. workers, if you are having adequate 

enforcement by the Labor Department, the H–1B process will be 

market-driven. Therefore, we are going to get the kinds of workers 

that we need and still protect U.S. workers. So in that sense, you 

don’t need a cap at all. 

As the National Research Council pointed out, any figure, any 

cap on H–1Bs is fundamentally a political decision. There is no economic basis for any such cap. Having said that, putting on my politician’s hat, I would say for purposes of fiscal year 2004, a number 

of about 115,000 would be appropriate. 

Senator CHAMBLISS. Ms. Dickson. 

Ms. DICKSON. I would like to see some sort of a number that 

really represents what the needs are, and I also agree with Stephen that you don’t really need a cap if it is market-driven. But 

obviously when you are talking about what the numbers are going 

to be for next year, 65,000 certainly looks much too low. Maybe 

195,000 is way too high because we certainly didn’t use that this 

year. So if you arbitrarily are going to continue and set a cap, 

something in between is what we are looking for. 

Senator CHAMBLISS. Mr. Steadman. 

Mr. STEADMAN. Obviously, my perspective is somewhat different. 

I think that it should be no more than 65,000, especially with the 

number of highly-skilled, well-educated U.S. engineers who are unemployed. Hundreds of thousands of them are available. IEEE–

USA would welcome the opportunity to help U.S. companies find 

those people. 

Senator CHAMBLISS. Mr. Duffy. 

Mr. DUFFY. Senator, I probably agree with the other business 

representatives here that I tend to allow the free market to work 

its magic with that. Another alternative that you may want to consider is do you want to broaden the exemptions of those individuals 

from the cap. 

As I noted in my testimony, the Ph.D. and master’s-level engineers that we hire—the graduation statistics bear us out in terms 

of the fact that the majority of those classes are foreign nationals. 

So for certain individuals engaged in research and development at 

advanced degree engineering levels, you may want to consider exempting them from the cap. 

Otherwise, I think if you have to pick a number, we are seeing 

right now we are going to end the year at 80,000. Hopefully, we 

31

are beginning an economic recovery. You want to build some room 

into that number so you are not impeding that recovery. 

Senator CHAMBLISS. Well, you answered my next question, and 

that is do we really need a cap or should the market dictate what 

the number ought to be? 

Does anybody else want to comment on that? 

Senator FEINSTEIN. Mr. Chairman, before they do, I have to 

leave, but may I ask you to place a statement by Ranking Member 

Leahy in the record? 

Senator CHAMBLISS. Certainly. Without objection, we would be 

happy to. 

Does anybody else want to comment on the exemption from the 

cap for foreign students? 

Mr. YALE-LOEHR. 

Mr. YALE-LOEHR. I agree with that particular exemption. My testimony also offers several other kinds of exemptions you might consider. For example, if a State or local or Federal Government entity 

determines that they need an H–1 worker, that is in the national 

interest. By policy, by regulation, they are going to consider U.S. 

citizens first, but if they can’t find a U.S. citizen and really need 

an H–1B worker for whatever reason, I think that kind of worker 

should not be subject to the cap. 

Second, non-profits. There are some non-profits related to research institutions or educational institutions right now that are 

already exempt from the cap, But other non-profits should also be 

included. For example, if a human rights organization needs an 

economist to determine the economic impact of certain human 

rights approaches, there is no reason why that person should be 

subject to the cap. 

Third, you might also consider the fact, which is not really an exemption, but the fact that 22,000 H–1B petitions are already in the 

pool, but are not going to be decided until fiscal year 2004. That 

lowers the effective number of new numbers available next fiscal 

year, and you might do something to correct that problem so that 

whatever number you come up with is a sort of fresh number of 

real numbers available to people. 

Senator CHAMBLISS. Mr. Duffy—and this may not be a fair question because of the different categories of engineers that are out 

there, but what is your starting salary for an engineer coming out 

of college? 

Mr. DUFFY. Senator, I don’t have those figures with me. I can get 

them to you so you can have them for the record. 

Senator CHAMBLISS. Well, that usually from a supply and demand standpoint, I would assume, should control. And if we have 

got, Mr. Steadman, hundreds of thousands of engineers unemployed—and we heard some numbers of $90 to $100,000 for graduates—that is a little bit confusing. I am a little bit puzzled by why 

we need the program at all if you have got that kind of money 

being paid to folks and you have got that many unemployed. 

Mr. STEADMAN. So am I a little bit confused about why it is needed at all, although there are clearly some very specific cases where 

it is needed, Senator. But I will tell you that statistics show that 

starting salaries for engineers and computer scientists have, in 

fact, declined in the last 2 years. 

32

I would respectfully disagree that the 22,000 pending adjudications have anything to do with your question. There have always 

been pending applications from the previous year being used each 

year. I mean, that is not in my mind the real issue here. 

I wish that every company in this country were as careful about 

trying to hire U.S. workers first as I hear is going on at IngersollRand and, because of my personal experience, I know happens at 

Intel. But the fact is, not all companies are like that. The fact is 

that abuses have occurred. They are clearly documented. 

Some companies are not using the H–1B visas to hire people they 

couldn’t find in this country. They are hiring H–1B worker and displacing U.S. workers after making them train the guest workers. 

I mean, that is just absolutely clear. So, unfortunately, you deal in 

a realm where not everybody is going to play by the rules unless 

you set some rules. That’s why I think a cap is needed, in fact 

clearly needed, as well as safeguards for American workers. 

Senator CHAMBLISS. I think it is pretty clear just from statements that we have heard from other folks that both the L–1 and 

the H–1B are abused by some companies or some individual proprietorships. But on a wholesale basis, I am not sure that is the case. 

Clearly, there has got to be some regulation of this. 

But I will have to say that having dealt with H–2A, H–1B, L–

1, and any number of other of our visa programs through the intelligence community, the H–1B works better than any program we 

have. I attribute that to the fact that there is a real need on the 

part of employers to get these people here. You are responsible for 

getting them here, you are responsible for them while they are 

here, and you are responsible for them to go back once the time 

frame within which they are authorized to be here is completed. So 

I think this program from that aspect of the day-to-day operation 

of it has worked real well. 

You all have certainly contributed in a very valuable way today 

to the issue of how we should treat this in the short term, but I 

think even more valuable testimony you have given relates to how 

we need to fix the long-term problem. I again appreciate very much 

you taking the time to be here. 

We will leave this record open for one week for any additional 

comments from members of the Committee. There will be some 

questions that some individual members will submit to you. Again, 

if you would get those answers back to us as quickly as possible, 

we would appreciate it. Thank you very much for being here today. 

The hearing is adjourned. 

[Whereupon, at 4:46 p.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.] 

[Additional material is being retained in the Committee files.]

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