[Senate Hearing 106-929]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 106-929

             AMERICA'S WORKFORCE NEEDS IN THE 21ST CENTURY

=======================================================================

                                HEARING

                               before the

                      SUBCOMMITTEE ON IMMIGRATION

                                 of the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                                   on

   EXAMINING WORKFORCE NEEDS IN THE HIGH TECHNOLOGY INDUSTRY AND AT 
   SMALLER COMPANIES, FOCUSING ON THE NEED FOR ADDITIONAL H-1B VISAS

                               __________

                            OCTOBER 21, 1999

                               __________

                          Serial No. J-106-54

                               __________

         Printed for the use of the Committee on the Judiciary


                   U.S. GOVERNMENT PRINTING OFFICE
70-662                     WASHINGTON : 2001



                   SENATE COMMITTEE ON THE JUDICIARY

                     ORRIN G. HATCH, Utah, Chairman

STROM THURMOND, South Carolina       PATRICK J. LEAHY, Vermont
CHARLES E. GRASSLEY, Iowa            EDWARD M. KENNEDY, Massachusetts
ARLEN SPECTER, Pennsylvania          JOSEPH R. BIDEN, Jr., Delaware
JON KYL, Arizona                     HERBERT KOHL, Wisconsin
MIKE DeWINE, Ohio                    DIANNE FEINSTEIN, California
JOHN ASHCROFT, Missouri              RUSSELL D. FEINGOLD, Wisconsin
SPENCER ABRAHAM, Michigan            ROBERT G. TORRICELLI, New Jersey
JEFF SESSIONS, Alabama               CHARLES E. SCHUMER, New York
BOB SMITH, New Hampshire

             Manus Cooney, Chief Counsel and Staff Director

                 Bruce A. Cohen, Minority Chief Counsel

                                 ______

                      Subcommittee on Immigration

                  SPENCER ABRAHAM, Michigan, Chairman

ARLEN SPECTER, Pennsylvania          EDWARD M. KENNEDY, Massachusetts
CHARLES E. GRASSLEY, Iowa            DIANNE FEINSTEIN, California
JON KYL, Arizona                     CHARLES E. SCHUMER, New York

                   Lee Liberman Otis,  Chief Counsel

                 Melody Barnes, Minority Chief Counsel

                                  (ii)


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Abraham, Hon. Spencer, U.S. Senator from the State of Michigan...  1, 4
Leahy, Hon. Patrick, J., U.S. Senator from the State of Vermont..     6
Feinstein, Hon. Dianne, U.S. Senator from the State of California     6
Kennedy, Hon. Edward M., U.S. Senator from the State of 
  Massachusetts..................................................    13
Schumer, Hon. Charles E., U.S. Senator from the State of New York21, 21

                    CHRONOLOGICAL LIST OF WITNESSES

Statement of Hon. Charles S. Robb, U.S. Senator from the State of 
  Virginia.......................................................     9
Panel consisting of Susan Williams DeFife, president and chief 
  executive officer, Womenconnect.com, Fairfax, VA; Julie 
  Holdren, president and chief executive officer, Olympus, Group, 
  Alexandria, VA; Robert D. Atkinson, director, Technology and 
  New Economy Project, Progressive Policy Institute, Washington, 
  DC; Roberta Katz, chief executive officer, The Technology 
  Network, Palo Alto, CA; and William T. Archey, president and 
  chief executive officer, American Electronics Association, 
  Washington, DC.................................................    15

                ALPHABETICAL LIST AND MATERIAL SUBMITTED

Archey, William T.:
    Testimony....................................................    39
    Prepared statement...........................................    42
Atkinson, Robert D.:
    Testimony....................................................    22
    Prepared statement...........................................    24
        Attachment: Building New Skills for the New Economy--
          Regional Skills Alliances..............................    28
DeFife, Williams Susan:
    Testimony....................................................    15
    Prepared statement...........................................    17
Holdren, Julie:
    Testimony....................................................    18
    Prepared statement...........................................    20
Katz, Roberta:
    Testimony....................................................    33
    Prepared statement...........................................    35
        Attachment: Technet CEO Testifies About American 
          Competitiveness........................................    39

                                APPENDIX
                 Additional Submissions for the Record

Prepared statement of Hon. Phil Gramm, U.S. Senator from the 
  State of Texas.................................................    65
Prepared statement of The American Federation of Labor--Congress 
  of Industrial Organizations                                        65
    Chart: Bureau of Labor Statistics, Employment and Earnings, 
      January, various years.....................................    69
Prepared statement of The American Occupational Therapy 
  Association....................................................    70
Prepared statement of John William Templeton. Co-convener, 
  Coalition for Fair Employment in Silicon Valley................    73
News Release of The American Business for Legal Immigration......    75
News Release of The American Occupational Therapy Association, 
  Inc............................................................    75
News Release of The National Association of Manufacturers........    76
Letter and charts to President Clinton from:
    Paul J. Kostek, president, The Institute of Electrical and 
      Electronics, Inc., dated October 20, 1999..................    76
Letter to Senator Trent Lott from:
    American Business for Legal Immigration, dated October 20, 
      1999.......................................................    79

 
                   AMERICA'S WORKFORCE NEEDS IN THE 
                              21ST CENTURY

                              ----------                              


                       THURSDAY, OCTOBER 21, 1999

                               U.S. Senate,
                       Subcommittee on Immigration,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:26 p.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Spencer 
Abraham (chairman of the subcommittee) presiding.
    Also present: Senators Feinstein, Kennedy, and Schumer.

OPENING STATEMENT OF HON. SPENCER ABRAHAM, A U.S. SENATOR FROM 
                     THE STATE OF MICHIGAN

    Senator Abraham. We will come to order. I begin today with 
a brief apology on behalf of Senator Robb and myself. We were a 
little late getting here because there is a vote still being 
conducted on the floor, and so we apologize to everybody for 
our slightly late arrival. It is also my understanding that 
Senator Gramm, who was to have been part of the first panel to 
testify, along with Senator Robb, is engaged in, I believe, 
continuing conference on the banking reform legislation, so he 
will not be here today, but we will continue.
    I will make an opening statement and then we will turn to 
Senator Robb. If we are joined, whenever we might be joined by 
other members of the subcommittee, we will turn to them for an 
opportunity to make statements if they wish, depending on where 
we are in the proceedings. So let me just begin.
    The principal purpose of today's hearing is to examine 
workforce needs in the high tech area and at smaller companies. 
The impact of the current availability of skilled workers on 
entrepreneurs has received less attention than large firms in 
the discussion of H-1B visas for skilled professionals. The 
hearing will also address the need for additional H-1B visas 
and possible approaches to meeting that need.
    Senator Gramm, I know, who, as I said, will not be able to 
be here today, still will be, I am sure, submitting written 
testimony to discuss a bill that he has introduced to address 
this problem, and Senator Robb, I believe, has legislation, as 
well, to address it in a slightly different format but will be 
here today to present his views accordingly.
    This is not a new issue for our committee. In February 
1998, the Senate Judiciary Committee, under the leadership of 
Chairman Hatch, held a hearing on high tech workforce issues 
that demonstrated that many companies could not find enough 
qualified professionals to fill key roles. It also showed that 
foreign-born individuals companies hired on H-1B temporary 
visas typically created many additional jobs for Americans 
through their skills and their innovations.
    Shortly after that hearing, with the cap on H-1B visas 
projected to be reached by June, I introduced the American 
Competitiveness Act, which raised the H-1B visa cap from the 
arbitrary 65,000 number selected in 1990 while also providing 
10,000 scholarships for young Americans in high technology 
fields. In April of that year, that bill passed the Senate 
Judiciary Committee, and then in May, the legislation passed 
the full Senate by a 78 to 20 vote. Sometime thereafter, the 
House Judiciary Committee passed out a much different H-1B visa 
bill. A negotiation ensued, and in time, a House-Senate 
compromise was reached.
    At that point, the White House raised several additional 
issues and threatened a veto. After several more weeks of 
negotiations, we were able to reach an agreement with the 
administration and the bill passed the House by over 150 votes. 
It was later signed into law as part of the ominous--ominous--
-- [Laughter.]
    Senator Abraham [continuing]. Omnibus appropriations bill. 
The delay caused by the White House objections unfortunately 
did set us back a bit, and it resulted in an extra 20,000 visas 
that were at least initially included in the House-Senate 
compromise from being available to employers in 1998, simply 
because the bill did not finish until after the beginning of 
the new fiscal year. That created, of course, an additional 
backlog for 1999.
    The final legislation, which differed only somewhat from 
the initial bill, met objections that had been raised initially 
to increasing H-1B visas from the 65,000 cap. Some had argued 
that we needed to have money for training and educating U.S. 
workers, and as I indicated, the legislation did that. It 
created a $500 fee per visa, which means that today, every time 
an individual is hired on an H-1B visa, $500 goes to training 
U.S. workers and providing scholarships for up to 10,000 
American students a year in science and technology.
    In addition, since the bill's passage, we have seen Intel, 
Texas Instruments, and others in the private sector increase 
mentoring and other significant education programs, and we 
recently witnessed the $1 billion charitable donation from 
Microsoft Chairman Bill Gates to fund full scholarships in the 
science and technology fields.
    At the time we passed the bill, others argued that tougher 
enforcement was needed, so that legislation dramatically 
increased fines, including a $35,000 penalty per violation, as 
well as a 3-year debarment if a company willfully underpays an 
H-1B visa holder and, in the course of which, replaces a U.S. 
worker. For the employers about which opponents had expressed 
the most concern, those employers with a high percentage of H-
1B visas in their workforce, the bill added new layoff and 
recruitment attestations. In addition, the Labor Department was 
given the authority to initiate an investigation if it received 
credible evidence indicating a violation and received the 
approval of the Secretary of Labor to investigate.
    Since the passage of the legislation, the case for 
maintaining an adequate supply of H-1B visas has only grown 
stronger. First, despite the H-1B cap having been raised to 
115,000 in fiscal years 1999 and 2000, as well as to 107,500 in 
the year 2001, the increase has proven insufficient due to the 
tight labor market, increasing globalization, the rapid pace of 
the high tech sector, and the backlog of visas that developed 
from the prior year. With the cap reached by June this year, 
employers were again left wondering why government restrictions 
are causing them to shelve projects and drop plans to place key 
personnel overseas.
    In addition, foreign countries are stepping up their own 
recruitment efforts, including a pitch by the Canadian 
government for U.S. high tech companies to move to Canada so as 
to avoid the problem of hitting the H-1B visa cap year after 
year. The CEO of Lucent Technologies stated this summer at a 
Capitol Hill technology forum that it has placed hundreds of 
engineers and other technical people in the United Kingdom in 
response to an insufficient supply of U.S.-based workers, 
keeping many related jobs from being created in America.
    In addition, the INS has told Congressional committees that 
due to at least one significant systems error, it may have 
awarded more H-1B visas than the fiscal year 1999 statutory cap 
permitted. However, the INS also has been unable to rule out 
the possibility that other errors may have seriously 
shortchanged employers, leaving the actual number of visas 
issued in fiscal year 1999 uncertain absent a meticulous audit.
    Finally, we have seen more studies and more individuals 
reach the same conclusion embodied in last year's legislation. 
A study by Joint Venture: Silicon Valley found that a lack of 
skilled workers is costing Silicon Valley companies $3 to $4 
billion a year. A study by the Computer Technology Industry 
Association computed that a shortage of information technology 
professionals is costing the U.S. economy as a whole $105 
billion a year.
    In a study for the Public Policy Institute of California, 
University of California-Berkeley Professor Annalee Saxenian 
found that immigrants are a major source of job creation. Her 
research showed that Chinese and Indian immigrant entrepreneurs 
in Northern California alone were responsible for employing 
58,000 people with annual sales of nearly $17 billion.
    Perhaps most notably, Laura D'Andrea Tyson, who was our 
former chief economic advisor to the President, wrote recently 
in Business Week, ``Conditions in the information technology 
sector indicate that it is time to raise the cap on H-1B visas 
yet again and to provide room for further increases as 
warranted. Silicon Valley's experience reveals that the results 
will be more jobs and higher incomes for both Americans and 
immigrant workers,'' she went on to say.
    In closing, I would just like to note that although this 
hearing is in the Immigration subcommittee, I do not think 
anyone here thinks the issues we address today are solely 
immigration issues. Our long-term goal should be to make sure 
that American workers have the skills to fill the high-tech 
jobs of the future. In addition to the education and training 
measures included in last year's bill, this year, I introduced 
the New Millennium Classrooms Act to increase the amount of 
computer technology donated to schools and to help our kids 
prepare for the high tech jobs of the future. There are other 
bills, I know, in both the House and Senate that similarly 
attempt to increase the focus on training and computer 
technologies. Indeed, currently, according to the Department of 
Education, the line to use a school computer is 5 times longer 
than it should be.
    So I look at today's hearing more as an opportunity to get 
a gauge on where things stand. We will see. Senator Gramm, as I 
said, has a bill, Senator Robb a bill, and probably others will 
be offering various formula, but these are issues we need to 
deal with as well as to monitor, and we very much appreciate 
the witnesses who will be here a little bit later to testify 
from their perspectives and look forward to continuing to focus 
on these issues in the time ahead.
    [The prepared statement of Senator Spencer Abraham 
follows:]

             PREPARED STATEMENT OF SENATOR SPENCER ABRAHAM

    ``This issue is not new to this committee. In February 1998, the 
Senate Judiciary Committee, under the leadership of Chairman Hatch, 
held a hearing on high technology workforce issues that demonstrated 
that many companies could not find enough qualified professionals to 
fill key jobs. It also showed that the foreign-born individuals 
companies hired on H-1B temporary visas typically created many 
additional jobs for Americans through their skills and innovations.
    ``Shortly after that hearing, with the cap on H-1B visas projected 
to be reached by June, I introduced the American Competitiveness Act, 
which raised the H-1B visa cap from the arbitrary 65,000, number 
selected in 1990 while also providing 10,000 scholarships for young 
Americans in high technology fields.
    ``In April, that bill passed the Senate Judiciary Committee. And 
then in May the legislation passed the full Senate by a 78 to 20 vote.
    ``Sometime after that, the House Judiciary Committee passed out a 
much different H-1B visa bill. A negotiation ensued and in time a 
House-Senate compromise was reached
    ``At that point, the White House raised several additional issues 
and threatened a veto. After several more weeks of negotiations, I was 
able to reach an agreement with the Administration and the bill passed 
the House by over 150 votes and was later signed into law as part of 
the Omnibus Appropriations Bill. The delay caused by the White House 
objections prevented an extra 20,000 visas that were included in the 
House-Senate compromise from being available to employers in 1998, 
creating an additional backlog for 1999.
    ``The final legislation, which differed only somewhat from the 
initial bill, met objections that had been raised initially to 
increasing H-1B visas from the 65,000 cap. Some argued that we needed 
to have money for training and educating U.S. workers. The legislation 
added a $500 fee per visa, meaning that today every time an individual 
is hired on an H-1B visa $500 goes to training U.S. workers and 
providing scholarships for up to 10,000 U.S. students a year in science 
and technology.
    ``In addition, since the bill's passage we have seen Intel, Texas 
Instruments and others in the private sector increase mentoring and 
other significant education programs. And we recently witnessed a $1 
billion charitable donation from Microsoft chairman Bill Gates to fund 
full scholarships in science and technology fields.
    ``Some argued that tougher enforcement was needed. So the 
legislation dramatically increased fines, including a $35,000 penalty 
per violation and a three-year debarment if a company willfully 
underpays an H-1B visa holder and (in the course of which) replaces a 
U.S. worker. For the employers about which opponents had expressed the 
most concern, those employers with a high percentage of H-1B's in their 
workforce, the bill added new layoff and recruitment attestations. In 
addition, the Labor Department was given the authority to initiate an 
investigation if it received credible evidence indicating a violation 
and received the approval of the Secretary of Labor to investigate.
    ``Since the passage of the legislation the case for maintaining an 
adequate supply of H-1B visas has grown stronger.
    ``First, despite the H-1B cap having been raised to 115,000 in 
fiscal year 1999 and 2000, and 107,500 in 2001, the increase has proven 
insufficient due to the tight labor market, increasing globalization, 
the rapid pace of the high tech sector, and the backlog of visas that 
developed from the prior year. With the cap reached by June this year, 
employers were again left wondering why government restrictions are 
causing them to shelve projects and draw up plans to place key 
personnel overseas.
    ``Second, foreign countries are stepping up their own recruitment 
efforts, including a pitch by the Canadian government for U.S. high 
tech companies to move to Canada so as to avoid the problem of hitting 
the H-1B visa cap year after year here in America. The CEO of Lucent 
Technologies stated this summer at a Capitol Hill technology forum that 
it has placed hundreds of engineers and other technical people in the 
United Kingdom in response to an insufficient supply of U.S.-based 
workers--keeping many related jobs from being created in America.
    ``Third, the INS has told Congressional committees that due to at 
least one significant systems error it may have awarded more H-1B visas 
than the fiscal year 1999 statutory cap permitted. However, the INS 
also has been unable to rule out the possibility that other errors may 
have seriously shortchanged employers, leaving the actual number of 
visas issued in fiscal year 1999 uncertain absent a meticulous audit.
    ``As a solution, the Administration has proposed taking visas out 
of the fiscal year 2000 cap, which would only further exacerbate the 
expected shortfall for 2000. I also think it is of questionable 
legality. Even though political resistance has thus far prevented a 
higher H-1B cap, in light of these INS counting difficulties it seems 
clear that it's imprudent to set the H-1B cap too close to anticipated 
usage, since it engenders many problems for both employers and the U.S. 
government. This would appear to be a major benefit of Senator Gramm's 
bill.
    ``Finally, we have seen more studies and more individuals reach the 
same conclusion embodied in last year's legislation.
    ``A study by Joint Venture: Silicon Valley found that a lack of 
skilled workers is costing Silicon Valley companies $3 to $4 billion a 
year.
    ``A study by the Computer Technology Industry Association concluded 
that a shortage of information technology professionals is costing the 
U.S. economy as a whole $105 billion a year.
    ``In a study for the Public Policy Institute of California, U.C.-
Berkeley Professor Annalee Saxenian found that immigrants are a major 
source of job creation. Her research showed that Chinese and Indian 
immigrant entrepreneurs in northern California alone were responsible 
for employing 58,000 people, with annual sales of nearly $17 billion.
    ``And most notably, Laura D'Andrea Tyson, former chief economic 
adviser to President Clinton, wrote recently in Business Week: 
``Conditions in the information technology sector indicate that it's 
time to raise the cap on H-1B visas yet again and to provide room for 
further increases as warranted Silicon Valley's experience reveals that 
the results will be more jobs and higher incomes for both Americans and 
immigrant workers.''
    ``In closing, I'd like to note that although this hearing is in the 
immigration subcommittee, I don't think anyone here thinks the issues 
we address today are solely immigration issues. Our long term goal 
should be to make sure American workers have the skills to fill the 
high tech jobs of the future. In addition to the education and training 
measures included in last year's bill, this year I introduced the New 
Millennium Classrooms Act to increase the amount of computer technology 
donated to schools and to help our kids prepare for the high-tech jobs 
of the future. Currently, the line to use a school computer is five 
times longer than the Education Department says it should be.
    ``The New Millennium Classrooms Act will address this problem by 
increasing the deduction businesses can take for donating computers to 
schools.
    ``I look forward to today's testimony and the opportunity to 
explore all of these issues further.''

    Senator Abraham. We have been joined since we began by 
Senator Feinstein, and I would like to turn to her at this 
point, if she has an opening statement to make, and then we 
will go to Senator Robb.
    Senator Feinstein. Thanks very much, Mr. Chairman. If I 
may, I would like to ask your consent to enter into the record 
a statement by the ranking member, Senator Leahy.
    Senator Abraham. Without objection.
    [The prepared statement of Senator Leahy follows:]

  PREPARED STATEMENT OF HON. PATRICK J. LEAHY, U.S. SENATOR FROM THE 
                            STATE OF VERMONT

    I would like to thank the witnesses who have come here today and 
highlighted a serious problem, and thank Senator Abraham and Senator 
Kennedy for holding this hearing. Our high-tech industries have played 
a crucial role in driving our unprecedented economic progress, and I 
believe that we in Congress should act to help them meet their 
increasing needs for well-trained and highly skilled employees. That is 
why I am a proud cosponsor and strong supporter of Senator Robb's 
Helping Improve Technology Education and Competitiveness (``HITEC'') 
Act. The bill will provide a needed boost to both the current high-tech 
work force and to science, math, and technical education in our 
schools.
    The bill creates the T-visa, which would be available to companies 
looking to hire recent foreign graduates of U.S. master's and doctoral 
programs in mathematics, science, engineering or computer science. In 
other words, it will allow international students who gain advanced 
degrees in the United States to apply their American education to help 
American business. To be eligible, a company must provide total 
compensation of at least $60,000 a year to the graduate, and must also 
pay a $1,000 fee per visa. The fees paid by the companies would in turn 
be used to fund partnerships between schools and industry to improve 
science, math, and technology education in our grade schools and high 
schools.
    Thus, while this bill addresses the current labor shortage by 
facilitating the hiring of additional foreign workers, it also takes a 
significant step toward ensuring that there will be no such labor 
shortage when our next generation of students finishes school. This 
approach is far better than simply increasing the number of H-1B visas, 
which is at best a stopgap solution.
    Moreover, this bill also contains important protections for 
American workers. Employers must pay the T-visa holders the prevailing 
American wage for the tasks they are performing, and must give notice 
to their employees (or their bargaining unit, where one exists) before 
applying for a T-visa. In addition, employers cannot fire or lay off an 
American worker to hire T-visa holders, and also cannot hire them 
during a lockout or strike. Finally, the bill creates the T-visas for a 
five-year period. After that, we can reevaluate and see whether our 
employers still have needs that cannot be satisfied by the American 
workforce.
    The HITEC Act offers the best and most comprehensive solution I 
have seen to the problems facing the high-tech industry. Indeed, it 
helps guarantee that our economy will continue to be strong, both now 
and in the future. I encourage all of my colleagues to support the bill 
and to work to make it law.

  STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR FROM THE 
                      STATE OF CALIFORNIA

    Senator Feinstein. Mr. Chairman, I listened carefully to 
what you said. I thank you for holding the hearing. I think you 
are quite accurate in what you did say. We did raise the H-1B 
cap for 3 years. Last year, we doubled it, and apparently, that 
cap is already filled and the industry is back for an 
expansion. I would like particularly to welcome Senator Robb, 
the distinguished Senator from Virginia, who has a bill. I 
certainly have an open mind. I would like to read just a part 
of my statement, though.
    Senator Abraham. Please.
    Senator Feinstein. Our society has undergone a dramatic 
technical transformation. Indeed, information technology has 
influenced every aspect of our society, from telephone and 
banking services on to electronic commerce and education. Every 
day, Americans are becoming more and more connected to one 
another and to the global community through digital technology.
    Given this fact, the demand for emerging digital 
technologies and highly skilled professionals to develop these 
technologies has exploded. Excluded the biotech industry, the 
high tech explosion experienced in the United States has 
created over 4.8 million jobs since 1993--that is 
extraordinary--and produced an industry unemployment rate of 
1.4 percent.
    In my State, California alone, this growth in technology 
has made the State number one in high tech employment by 
creating 784,151 jobs and comprising 61 percent of California's 
exports. That is how big it is. As a result, our Nation's 
economy has embarked on an unprecedented expansion.
    Certainly, it is in our interest to ensure that these 
industries, which are located in the United States and help 
drive our economy, can continue to obtain qualified, highly 
skilled employees. I am interested in hearing the high tech 
industry's views on the adequacy of our current law to address 
these issues.
    But at the same time, we must not lose sight of our 
country's long-term need to ensure that American workers, 
including minorities, women, and potentially displaced workers, 
are sufficiently educated, recruited, trained, and retrained to 
obtain or retain employment in the high tech industry. In 
California, and I have been since I have been on this committee 
now, which I guess have been 7 years, besieged by CEO's of high 
tech companies year after year. Our committee, the full 
Judiciary Committee, has held a hearing. I have heard first 
hand CEO's say, we cannot find educated Californians who can do 
these jobs. We advertise. The salaries are good. We have 
starting jobs that are paying $60,000, $70,000 a year.
    I guess one of the things that I feel the strongest is that 
we must find a way to see that our young people are educated 
for this workforce, because not only is it the cutting edge 
workforce, but it is the workforce that is going to provide 
them with the jobs that enable them to buy the home and live 
the American dream. In my State, a high cost of living State, 
if you have a minimum wage job, if you have a job that is going 
to pay $29,000, $30,000, $32,000 a year, $35,000, even $40,000, 
you cannot buy a home. You cannot live and ever realize that 
dream.
    So high tech really plays a very special role and the 
Bureau of Labor Statistics estimates that between 1994 and 
2005, more than one million new computer scientists, engineers, 
systems analysts, and computer programmers will be required to 
fill these jobs in the United States. Now, that is an average 
of 95,000 new jobs each and every year. I hope the great 
portion of these will go to students educated in our schools, 
and I just throw out that challenge.
    I know the problem. I know the deficit here. But I know the 
challenge we face, because unless we meet that challenge, what 
we are going to have in the California society is an increasing 
division between those who have and those who have not, those 
who can participate in the economy and those who cannot.
    So I think and I hope that this hearing is more than just 
about, well, let us expand the cap, let us double the cap, we 
have got to have more foreign nationals because we cannot hire 
California students, into how we are going to prepare our 
youngsters for the future so that these companies can come in 
one day and say, yes, we are hiring local people and we are 
finding them to be excellent. Thank you very much.
    Senator Abraham. I want to thank you, Senator Feinstein. I 
also want to reiterate the point you are making. I share them 
completely. As I indicated in my statement, this is not the 
only place on Capitol Hill where we need to focus on this 
issue. I mean, it just so happens that the immigration 
component of this brings a part of this before us, but I 
actually regret, I do not think I have seen some of the other 
committees who have jurisdiction over the workforce issues 
focus as much on it as we have tried to do here. Obviously, our 
oversight can only extend to a certain aspect of the problem.
    I would also say one other thing before we turn to Senator 
Robb, which is that I have, I think, consistently indicated to 
the companies who have come to us with respect to the H-1B visa 
cap that while I think this is something we need to address, it 
is only, in my judgment, a short-term fix, because I do not 
really think that the possibility of having unlimited number of 
highly skilled immigrants coming to this country will exist for 
long, either. Other nations are not going to want to see their 
most talented people all come to the United States. They are 
going to want to develop their own industries, their own 
software, their own computer and high tech businesses, as well, 
and there are going to be a lot of inducements I think quite a 
few people will select, because they will be able to stay in 
their own home country.
    I have always viewed this as being an interim solution that 
can only really help us for a short period of time, and then I 
think at that point, what we will see is that either we come up 
with the ways to encourage young people in this country to move 
in these directions and to train people in these directions or 
we are going to find that we start losing a lot of 
opportunities.
    Senator Feinstein. Would you allow me to comment?
    Senator Abraham. Sure. Please.
    Senator Feinstein. I think that is right. This is not to 
say that high tech, and I can only speak for my State, is not 
trying to be helpful, because they are. Company after company 
after company provide really major service to school districts 
with computers, with teacher training, trying to turn things 
around, after-school programs, internship programs, and the 
like. So I think the industry itself is aware of the dilemma. 
Of course, I think, in a way, what we need to--and one of the 
things I am interested in hearing from the high-tech people is 
the kind of engineer they need, where we fall short in our 
local curriculum that so many of these people have to be 
brought in from abroad.
    Senator Abraham. That is certainly part of it, and again, I 
would hope that some of the other committees with jurisdiction 
who have more of the workforce responsibilities will also start 
to look at this with some precision. I mean, I know they look 
at workforce issues in kind of a macro sense, but this is sort 
of more, as you indicated, a more micro focus, as well.
    We have kept Senator Robb and our panel waiting for a while 
and we will, I am sure, have more comments to make as this goes 
on. I want to thank Senator Feinstein for participating today. 
She is one of the few members of the subcommittee who seems to 
make it to all of our hearings, which I appreciate, as opposed 
to the lonely conditions that usually ensue when I am up here.
    Senator Abraham. We will now turn to our first panel. We 
are joined by Senator Chuck Robb from the State of Virginia, 
who I know has a fair amount, maybe not quite as much high tech 
industry as Silicon Valley, although I do not know. From what I 
can tell, the area around Northern Virginia here is quickly 
becoming a competitive alternative, and I know he has been very 
active on these issues.
    We welcome you and we thank you for being here, Senator. We 
turn the floor over to you.

STATEMENT OF THE HON. CHARLES S. ROBB, A U.S. SENATOR FROM THE 
                       STATE OF VIRGINIA

    Senator Robb. Thank you, Mr. Chairman. I am delighted to be 
able to join both you and Senator Feinstein. I think you will 
find that the testimony that I am going to give is very much in 
sync with the words that have already been spoken. As a matter 
of fact, I was thinking some of the phraseology I was going to 
use is quite similar to some of the things that you have 
already said. But I join you in apologizing to others who may 
have been here earlier for the fact that we were delayed 
getting started with a vote.
    I am delighted that you have held this hearing and I think 
that, as I say, the information that is going to be provided 
will be very useful to the other members of the subcommittee 
and other workforce-specific subcommittees in terms of dealing 
with this particular question.
    This is really about the intersection of workforce and 
immigration issues, as you have already indicated, and I doubt 
that there is anyone in America who does not recognize that a 
really pretty radical change in our economy has come about as a 
result of the information technology explosion.
    When I was Governor of Virginia in the early 1980's, we 
created a commission on science and technology so that we could 
determine how best to help Virginia companies bring new 
technology to the market and, to be perfectly honest, to 
attract additional businesses to locate in Virginia at the time 
that that technology appeared to be a burgeoning industry. 
There was a recognition that the explosion that was taking 
place in Silicon Valley was extremely important not only to 
Silicon Valley and the country, but to other areas that could 
take advantage of this technology explosion, as well.
    One of the things that I did with this commission was to 
ask for a number of recommendations and they came back with 44 
recommendations, one of which was to create a Center for 
Innovative Technology. You may have looked as you arrived from 
Dulles, and I know that until we have changed the slot and 
perimeter rule, all of at least our California Senators, if not 
our Michigan Senators, come and go through Dulles so that they 
can have a non-stop flight.
    Right after you get on the Dulles access road or the Dulles 
toll road, depending upon which lanes you happen to be driving, 
if you look to the left, you will see a rather unusually shaped 
building. One of the recommendations of this task force was to 
create a Center for Innovative Technology, and although the 
actual building was finally approved and built after I left the 
Governor's office, I asked the group that was going to have 
that responsibility, the architects, I said, I would like to 
have a building that makes a statement. I was not quite certain 
how they would interpret that, and I think for any of you who 
have seen what appears to be a design architecture that might 
be upside down, at the very least, it makes a statement and it 
does provide a focal point and creates a certain amount of 
discussion about the role of technology.
    Let me say that these technological explosions, as I say, 
have occurred in many regions of the country, not just Silicon 
Valley and not just in this area that we used to refer to as 
the Dulles access road, and now the Dulles toll road since we 
have both roads. Our economy has grown. The number of quality 
jobs has increased, and a new and increasingly more important 
area of commerce has been born. While this growth has been 
occurring, Congress played a helping hand in terms of providing 
research funding and utilizing modern technology within the 
public sector.
    For example, smart card technology has been used to 
streamline outdated administrative systems in the Department of 
Defense, and I should now recognize Route 128 around Boston 
with the arrival of the distinguished senior Senator from 
Massachusetts, and I will continue. We have used the Internet 
to put Congressional bills and votes online and establish home 
pages for almost every government agency. We passed the 
Telecommunications Act of 1996 that included what I view to be 
an extremely important provision, the e-rate to help ensure 
that every school and library has access to the Internet.
    But as with any burgeoning industry, there are likely to be 
growing pains, and the most significant one that we see now is 
the shortage of skilled workers to fill the nearly 350,000 
vacant information technology jobs in this country.
    Prior to the passage last year of the H-1B legislation, 
Congress had recognized the problem but had failed to reach any 
consensus about how to begin to address the skilled workforce 
shortage. I certainly commend you, Mr. Chairman, for your 
particularly outstanding leadership in passing that 
legislation.
    As you acknowledged then and many in the industry have 
acknowledged since, raising the caps on H-1B visas is a short-
term solution to the critical labor shortages that this 
industry has been facing, and you have both reiterated that 
again today. The long-term challenge is to find ways to upgrade 
the skills of our existing workforce and to improve the quality 
of our education system so that the next generation has the 
skills needed to maintain our global dominance in the 
technology arena.
    I am pleased that we were able to work together last year 
to include a provision in the legislation which will establish 
an industry-based, regional public-private partnership program 
to conduct training of U.S. workers. I understand that the 
Department of Labor has issued a request for proposals and I 
look forward to monitoring the Department's implementation of 
that portion of the H-1B legislation.
    The effort last year, Mr. Chairman, was a good start to 
find a short-term solution. Unfortunately, it looks like the 
caps will again be reached early next year. With the start of 
the new fiscal year now, the new quota or the new increase 
takes effect, but there are projections that that cap will be 
reached or exceeded as early as the first of the next calendar 
year.
    I see two main problems with continuing to just raise the 
caps on H-1B visas. The first is that it is an imprecise and 
short-term way of solving the high tech worker shortage. The H-
1B visa category is a general visa that applies to a wide range 
of workers. These visas can be granted to everyone from bakers 
to occupational therapists to computer programmers and fashion 
models. If we just increase the H-1B caps, we will not be 
targeting our specific need for high tech workers. Instead, we 
may end up inadvertently providing a supply of workers in other 
fields for which there may not be any shortage of labor at all.
    The second problem with continuing to simply raise the H-1B 
cap is that it does not address the long-term education and 
training challenges that we face. In June, the Joint Economic 
Committee, which has already been referred to and on which I 
sit, convened a 3-day high technology summit to discuss the 
impact of technology on our Nation's economy. It was helpful in 
terms of confirming what most of us already suspected, that the 
advances in technology have accounted for half of our economic 
growth in the last 50 years and for a quarter of our real 
growth in recent years. We learned that the three fastest 
growing occupations in the United States are database 
administrators, computer engineers, and systems analysts. The 
number of people employed in these areas is expected to double 
by the year 2006.
    The other thing we heard from high tech CEO after CEO is 
that the real answer to our workforce shortages lies in the 
improvement of our elementary and secondary education system. 
This is not an easy task. Our students need more than just 
computers in their classrooms. They also need teachers who are 
well equipped, modern schools who can teach them strong 
technology skills. And our teachers need to be better trained 
to use technology, particularly innovative software as a tool 
to further their students' development of other basic schools. 
Teachers need help in learning how to use technology in the 
classroom and how to better integrate technology into their 
curriculum. School districts that are struggling just to get 
technology into the classroom also desperately need trained 
experts to help them maintain their systems.
    For all these reasons, Mr. Chairman, I introduced the HITEC 
Act, or Helping Improve Technology and Competitiveness Act of 
1999. It provides some short-term relief to companies who need 
highly skilled technology workers and it encourages long-term 
solutions by fostering partnerships between the private sector 
and local schools to improve technology education in elementary 
and secondary schools, much like the H-1B program that the 
chairman has already referred to.
    For the short term, the HITEC Act creates a new category of 
visa, the T, or tech, visa, which is specifically aimed at 
foreign nationals with top skills in science and technology. 
Any international student who is a new graduate of a master's 
or doctoral program in mathematics, science, engineering, or 
computer science in this country would be eligible to obtain a 
T visa if they had a job offer with an annual compensation, 
total, not just salary, of $60,000 or more.
    I targeted this group because the tremendous success of our 
high tech economy has made it increasingly difficult for 
universities to attract qualified candidates for master's and 
doctoral degrees in engineering and the sciences. With salaries 
high and stock options abundant, the majority of recent 
graduates in these fields opt to enter the job market rather 
than pursue an advanced degree. Our universities, in turn, have 
looked overseas to find qualified students to fill these 
graduate programs, and as a result, 32 percent of high tech 
master's degrees and 45 percent of high tech Ph.D.'s are 
currently being awarded to foreign nationals.
    With the tight tech labor market, this talent is in high 
demand and many American companies are making generous offers 
to these new graduates. But while they may want to stay, a 
limited number of H-1B visas forces many recent graduates to 
return to their own country, where they then compete against 
American businesses. I believe that the best and brightest 
products from our university system have a valuable role in our 
new economy.
    Given that individuals with advanced degrees are needed to 
teach the next generation of tech professionals and continue 
the cutting-edge research that has made our economy the 
strongest in the world, we ought to do all that we can to hold 
on to our seed corn of our great minds. But Mr. Chairman, I do 
not believe that immigration, as you have suggested and Senator 
Feinstein has suggested and I know that Senator Kennedy 
believes, I do not believe that immigration is going to solve 
our long-term problems. These are problems that only education 
can solve.
    The HITEC Act looks toward the future by levying a $1,000 
fee on applications for the T visa. These fees would be 
directed toward the creation of public-private partnerships 
between schools and businesses that improve K through 12 math, 
science, and technology education, a basic format with which 
you are familiar. Funds from the T-visa program would be 
available through a competitive grant program on a one-to-one-
to-one matching basis, with the other two-thirds provided 
equally by private industry and local public schools. To 
encourage public-private partnerships that better reach out to 
rural and disadvantaged areas, the government would increase 
its share of the matching in these areas to a two-to-one-to-one 
basis, covering 50 percent of the partnership cost.
    Through these new alliances, the technology industry could 
provide direct training to teachers, support of schools, 
equipment, and networks, and supply both recent engineering 
graduates and more experienced tech workers who could serve as 
technology fellows to help teach math, science, and technology 
in our public schools.
    One of the greatest hurdles we face is preparing our 
children for the kind of rigorous coursework required for 
today's high tech forces. We know that our public schools in 
many cases lack the resources and manpower to improve 
technology education. We know that we need better trained 
teachers and more technical support staff. And we certainly 
know that we need more role models for students, who frequently 
get discouraged by more advanced math and science courses and 
simply give up on these fields.
    While the tech industry has begun to contribute equipment 
and services to improve education, more efforts are needed to 
connect willing businesses with schools to bring more 
innovation to our schools.
    Mr. Chairman, technology changes very rapidly, so one of 
the very best ways to teach teachers and students the latest 
information and skills in high technology is simply to bring 
those who have the expertise into the schools themselves.
    Finally, the High Tech Act would create a new high tech 
gold medal award to recognize technology companies who take an 
active role in improving our public schools. There are a number 
of businesses who are doing some fantastic things right now 
with our public schools and they simply ought to be commended 
for their efforts.
    Mr. Chairman, there are many facets to the larger issue of 
how we as legislators can promote policies which support 
continued growth of our technology sector, but in terms of 
workforce issues, I believe the legislation that I have 
introduced with a number of cosponsors provides a good starting 
point to address both the short-term and long-term needs. It is 
not a panacea, but it is a proposal which I believe can be 
supported by a majority of our colleagues, given the 
overwhelming support of the legislation that you worked to pass 
last year.
    Mr. Chairman, with that, I thank you very much for the 
opportunity to present this information to you today and I look 
forward to working with you and the other distinguished members 
of this committee and other committees with jurisdiction to 
solve a pressing problem and to resolve the shortage of some 
350,000 unfilled vacancies today, over 20,000 of which are 
right in that burgeoning high tech corridor that both you and 
the distinguished Senator from California were kind enough to 
recognize in your opening statement.
    With that, Mr. Chairman, I thank you for the privilege and 
I look forward to working with you.
    Senator Abraham. Senator Robb, we appreciate it and look 
forward to working with you and other colleagues with an 
interest in this area. I know you have other commitments here, 
so we will thank you again for being here and let you go into 
the next event on your schedule today. But we appreciate your 
participation very much.
    Senator Robb. Thank you, Mr. Chairman.
    Senator Abraham. We have been joined by our ranking member, 
Senator Kennedy, and I turn to him if he would like to make an 
opening statement at this time.

 STATEMENT OF HON. EDWARD M. KENNEDY, A U.S. SENATOR FROM THE 
                     STATE OF MASSACHUSETTS

    Senator Kennedy. Thank you, Mr. Chairman, but I think, as 
you, Senator Feinstein, and others would understand, I remember 
when I first entered the U.S. Senate. In an area, say, of the 
South Shore of Massachusetts, if you worked for the Four Rivers 
Shipyard, your father worked there, your grandfather worked 
there, you had a high school diploma, and you had a very decent 
life. You may have even been able to buy a small little place 
on the Cape or off in the mountains. It was a satisfying, 
fulfilling kind of a life.
    Now, everyone who enters the job market has seven different 
jobs, or will have at least seven different jobs. The skills 
which are required have expanded dramatically. We come from a 
part of the country, as my friend and colleague, Senator 
Feinstein, and yourself, Senator Abraham, where we are taking 
knowledge-based industries and basically hoping that we are 
going to take these various important breakthroughs that we are 
seeing in knowledge-based industries and use them actually in 
manufacturing so that they will not go overseas, so that there 
will be manufacturers that will provide good jobs, good 
opportunities, and a good future.
    If we expect to do that, you have to have highly-trained, 
highly-educated individuals to be able to do it, and that is 
what we are dealing with. We are distressed by the flow lines 
in terms of our own country about producing these individuals. 
We attempted in our bipartisan effort last year in terms of 
training programs to consolidate training programs and to be 
able to respond to many of those different challenges.
    We have an immediate problem and a longer-term problem and 
I am looking forward today to hearing from some of the people 
who have thought about this to give us some guidance. I thank 
you for having this hearing. It is very important, and as 
always, you have brought some very thoughtful people that can 
help and guide us.
    Senator Abraham. Thank you very much. I do think one thing 
probably I suspect all of us up here would agree on is that we 
do not want to turn today's, or any of these events, to create 
the impression that there has not been a great deal of effort, 
and Senator Feinstein alluded to this, to try to train people 
on the part of the private sector and on the part of government 
and private sector partnerships. We have had a tremendous 
increase in the number of these jobs and we have filled an 
awful lot of them, obviously, with American workers, some who 
had the skills and some who were trained. But it is obvious 
from the statistics we already heard from Senator Robb and from 
Senator Feinstein that growth is running faster than the 
training programs so far can keep up.
    I hope, as I said, Senator Kennedy, in my earlier comments, 
that this will not be the only subcommittee that focuses on 
this, because we only have a limited jurisdiction that really 
deals with only the immigration part of it. This really is 
something that other jurisdictions of the Senate really have to 
take a major role in, too, and we need to work together with 
them. Thank you for your participation.
    At this point, we will invite the second panel to join us. 
We will put name tags up there so that people can sit 
accordingly. We are very pleased to have such a terrific panel 
of experts now to join us.
    Senator Feinstein. Mr. Chairman, while they are getting 
settled, may I just personally welcome Roberta Katz. She heads 
the Tech Net group in California, and it just so happens, I 
have worked very much with her predecessor, John Dorr, 
particularly on education issues. I want you to know that Tech 
Net has been really very responsive to trying to help and 
upgrade public education throughout the State, so I am looking 
forward to your testimony.
    Ms. Katz. Thank you, Senator.
    Senator Abraham. Thank you, Senator.
    I will now introduce each of the panelists and then we will 
begin where we start.
    First, we have Susan DeFife, who is the President and CEO 
of womenCONNECT, which is headquartered in McLean, Virginia. 
WomenCONNECT is considered the leading Internet site for 
professional women and women business owners.
    We will next hear from Ms. Julie Holdren, who is President 
and CEO of the Alexandria, VA based Olympus Group, which 
develops business intelligence software for the Internet.
    Next, we will hear from Mr. Robert D. Atkinson, who is the 
Director of the Technology and New Economy Project with the 
Progressive Policy Institute here in Washington, DC, and we 
welcome you.
    Then we will turn to a friend of mine, as well, Roberta 
Katz who comes to us as the President and CEO now of the 
Technology Network--we met in your previous role at Netscape--
from Palo Alto, CA.
    Then we will hear from Mr. William Archey, who is the 
President and CEO of the American Electronics Association, 
which is the country's largest high tech trade association, 
with over 3,000 members, also an old friend. I remember you and 
I did a little visit to Northern California 4 years ago. I now 
hear lots of talk about members traveling to Silicon Valley to 
find out what is going on, and you were my guide on one of 
those trips myself when we first started talking about some of 
these issues.
    I want to thank everybody for being here. We tend to be 
pretty informal at this subcommittee, but when we have a large 
panel, I do ask the panelists, if they would, to try to keep 
their opening statements, if possible, to about a 5-minute time 
frame. So we have this little clock system with orange lights 
indicating a minute to go and red lights indicating 5 minutes, 
but we are pretty generous in terms of flexibility. If at the 
end of that point there is a thought that needs to be finished, 
we will certainly be happy to do that.
    I would also just mention that everybody's opening 
statement, if it is longer, will be included in the record, as 
well as any statements that other members of either the 
Judiciary Committee or the subcommittee want to submit 
subsequently.
    We will begin with you. Thanks very much for being here, 
Ms. DeFife.

PANEL CONSISTING OF SUSAN WILLIAMS DeFIFE, PRESIDENT AND CHIEF 
    EXECUTIVE OFFICER, WOMENCONNECT.COM, FAIRFAX, VA; JULIE 
HOLDREN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, OLYMPUS GROUP, 
 ALEXANDRIA, VA; ROBERT D. ATKINSON, DIRECTOR, TECHNOLOGY AND 
NEW ECONOMY PROJECT, PROGRESSIVE POLICY INSTITUTE, WASHINGTON, 
   DC; ROBERTA KATZ, CHIEF EXECUTIVE OFFICER, THE TECHNOLOGY 
 NETWORK, PALO ALTO, CA; AND WILLIAM T. ARCHEY, PRESIDENT AND 
  CHIEF EXECUTIVE OFFICER, AMERICAN ELECTRONICS ASSOCIATION, 
                         WASHINGTON, DC

               STATEMENT OF SUSAN WILLIAMS DeFIFE

    Ms. DeFife. Thank you, Senator Abraham, for inviting me 
today and for your leadership on this issue.
    The H-1B issue is becoming critical to the future growth of 
the technology industry. I am here today on behalf of CAP Net 
and the greater Washington region. As you mentioned, I am CEO 
and founder of womenCONNECT.com, the leading Internet site for 
women in business, providing original daily content, 
interactive tools, online discussion groups, and e-commerce.
    When I started the company in 1994, the Internet was not 
yet a part of most people's lives. The info.com industry in 
Northern Virginia was in its infancy, and skilled technical 
workers or those who had the knowledge base to learn new 
technologies were fairly easy to come by.
    In the past 5 years, the growth in the industry has 
exceeded even our own aggressive predictions. The Internet has 
become an integral part of people's everyday lives, changing 
the way we communicate, how we gather information, how we shop, 
and how we do business.
    In Northern Virginia, you only have to drive from Tysons to 
Dulles to see the impact of the industry on our economy. You 
can see the size, the strength, and the wealth of the new 
technology companies in the many buildings cropping up. What 
many of us also see in those new buildings is an extraordinary 
increase in new jobs and the demand for more and more skilled 
workers to fill those positions. What you may not be familiar 
with is the fact that technology employment in the greater 
Washington region has surpassed Federal Government employment 
today.
    From industry giants like AOL to emerging growth companies 
like womenCONNECT.com, the shortage of skilled workers has 
become one of the highest priority issues facing us. For 
companies like mine, with a smaller employee base--we have 25 
employees--one unfilled tech position can severely impact our 
ability to grow.
    Emerging companies are fueling the technology revolution 
and making significant contributions to the strong economy we 
now enjoy. Among them will be the next AOL or Amazon.com. We 
are the companies that are innovating and growing fast. At 
womenCONNECT, we have doubled in size each of the past 2 years 
and we expect to double again within the next 6 months.
    There are many stories like ours out there. As investment 
capital flows into start-ups and puts them on a fast growth 
track, the demand for workers will continue to far exceed the 
supply, and the workforce shortage is not limited to our 
region. Similar concerns are expressed across the country.
    What happens when companies like mine cannot find the 
workers we need? We have to delay projects, and in the Internet 
industry where change occurs daily and competitors are 
springing up all around us, waiting to execute on a project can 
be lethal.
    Last year, we spent months recruiting for a systems 
administrator who has the critical role of ensuring our content 
is presented correctly and on time to our audience. We were 
fortunate to eventually find Noemi Nieto-Mendieta, a young 
woman from Mexico who is finishing coursework at a local 
university, and Noemi is here with me today. In order to hire 
her, we went through the H-1B application process, and then 
instead of filling that month-old vacancy, we waited again for 
an additional 4 months until the next fiscal year began and 
additional H-1B's became available.
    Today, I have another tech position that has gone unfilled 
for 7 months, and not because of lack of interest in our 
company. We are one of the companies that people want to work 
for. We have a great reputation, we are viewed as a company 
with huge potential, and we offer the ever popular stock 
options as incentives.
    What I cannot find are people with specific skills or the 
ability to obtain those skills as quickly as I need them. As we 
have entered into new partnerships with industry heavyweights 
such as Lycos, CNN, CompuServe, and USA Today, we have had to 
carefully space those projects to ensure we can meet scheduled 
delivery dates and hold off on new projects until the 
appropriate staff people can come on board.
    In order to fill vacant positions, the options for tech 
companies are not particularly attractive. We can limit our 
growth, but then we lose the ability to compete. We can steal 
employees from other companies, which makes none of us stronger 
and forces us to constantly look over our shoulders. Or in the 
case of larger companies I know, move operations offshore.
    I fully understand the desire to provide jobs to American 
citizens, but in an economy where unemployment is at record 
lows, it is unrealistic to believe we can fill all of these new 
jobs being created within the technology industry with the 
workers we have.
    I agree with the calls today and increasingly for increased 
educational programs. We should be developing new workers who 
can fully participate in the new economy and maintain our 
competitiveness. Many business leaders like me are willing to 
step up to fully participate and support those programs, but 
they are long-term solutions. In the short term, limiting our 
ability to recruit skilled workers from a larger labor pool 
around the world only limits the growth of emerging companies 
and ultimately slows the economy.
    I hope Congress will give strong consideration to the 
importance of the H-1B program and support an increase in the 
annual cap on these visas. Thank you.
    Senator Abraham. Thank you very much.
    [The prepared statement of Ms. DeFife follows:]

              PREPARED STATEMENT OF SUSAN WILLIAMS DEFIFE

    Thank you Senator Abraham for inviting me here today and for your 
leadership on the H-1B visa issue. It is an issue that is becoming 
critical to the future growth of the technology industry.
    To give you a little background on my company, womenCONNECT.com is 
the leading Internet site for women in business--providing original 
daily content, interactive tools, online discussion groups and e-
commerce. When I started the company in 1994, the Internet was not yet 
a part of most people's lives, the InfoComm industry in Northern 
Virginia was in its infancy, and skilled technical workers or those who 
had the knowledge base to learn new technologies were fairly easy to 
come by.
    In the past five years, the growth in the industry has exceeded 
even our own aggressive predictions. The Internet has become an 
integral part of people's everyday lives changing how we communicate, 
how we gather information, how we shop, and how we do business. In 
Northern Virginia you only have to drive from Tysons to Dulles to see 
the impact of the industry on the economy. You can see the size, the 
strength, and the wealth of the new technology companies in the many 
buildings cropping up. Those new buildings also represent an 
extraordinary increase in new jobs and the demand for more and more 
skilled workers to fill those positions.
    From industry giants like AOL to the emerging growth companies like 
womenCONNECT.com, the shortage of skilled workers has become one of the 
highest priority issues facing us. For emerging companies like mine 
with a smaller employee base--we have 25 employees--one unfilled tech 
position can severely impact our ability to grow.
    These emerging companies are fueling the technology revolution and 
making significant contributions to the strong economy we now enjoy. 
Among them will be the next AOL or Amazon.com. We are the companies 
that are innovating and growing fast. At womenCONNECT.com we've doubled 
in size in each of the past two years and we expect to double again 
within the next six months. There are many stories like ours. As 
investment capital flows into start-ups and puts them on a fast growth 
track, the demand for workers will continue to far exceed the supply. 
And the workforce shortage isn't limited to our region. Similar 
concerns are expressed across the country.
    What happens when companies like mine can't hire the workers we 
need? We have to delay projects and in the Internet industry where 
change occurs daily and competitors are springing up all around you, 
waiting to execute on a project can be lethal. Last year, we spent 
months recruiting for a systems administrator who has the critical role 
of ensuring our content is presented correctly and on time to our 
audience. We were fortunate to eventually find Noemi Nieto-Mendieta, a 
young woman from Mexico who was finishing coursework at a local 
university. (Noemi is with me today.) In order to hire her we went 
through the H-1B application process and then, instead of filling that 
months old vacancy, we waited again, for four more months until the 
next fiscal year began and additional H-1B's became available. Today, I 
have another tech position that has gone unfilled for 7 months--not 
because of lack of interest in the company. We are one of the companies 
that people want to work for. We have a great reputation, are viewed as 
a company with huge potential, and we offer stock options as 
incentives. What I can't find are people with the specific skills or 
the ability to obtain those skills as quickly as I need them. As we've 
entered into new partnerships with industry heavyweights such as Lycos, 
CNN, CompuServe, and USA Today we have had to carefully space those 
projects to ensure we can meet scheduled delivery dates and hold off on 
new projects until the appropriate staff people can come on board.
    In order to fill these positions, the options for tech companies 
are not particularly attractive: we can limit our growth, but then we 
lose the ability to compete; we can ``steal'' employees from other 
companies, which makes none of us stronger and forces us to constantly 
look over our shoulders; or, in the case of larger companies I know, 
move operations off-shore.
    I understand the desire to provide jobs to American citizens, but 
in an economy where unemployment is at record lows, it is unrealistic 
to believe we can fill all of the new jobs being created within the 
technology industry with the workers we have. I agree with those who 
call for increased educational programs. We should be developing new 
workers who can fully participate in the new economy and maintain our 
competitiveness. Many business leaders like me are willing to step up 
to fully participate and support those programs. But they are long-term 
solutions. In the short term, limiting our ability to recruit skilled 
workers from a larger labor pool around the world only limits the 
growth of emerging companies and ultimately slows the economy. I hope 
Congress will give strong consideration to the importance of the H-1B 
program and support an increase in the annual cap on these visas. Thank 
you.

    Senator Abraham. Ms. Holdren, thank you for being here.

                   STATEMENT OF JULIE HOLDREN

    Ms. Holdren. Senator Abraham and members of the committee, 
on behalf of Olympus Group, I would like to thank you for 
allowing me to participate in today's hearing.
    I am the founder, President, and CEO of the Olympus Group. 
Olympus Group is a fast-track, high tech company that delivers 
business intelligence solutions via the Internet. Olympus 
Group's next generation solutions enable businesses to both 
actively and passively deliver meaningful information to the 
appropriate end users, including employees, customers, and 
suppliers, over the Internet.
    Our Nation's workforce needs for the next century is one of 
top concern to me. I am pleased your committee has chosen to 
delve further into this subject, which has tremendous 
implications for all Americans. While it is true that the 
United States is enjoying a record low unemployment and 
phenomenal economic expansion, if we do not concern ourselves 
with meeting the hiring needs of American employers, we will 
lose the benefits we are reaping today.
    As technology continues to advance at a fast pace and the 
economy remains vigorous, companies such as mine will continue 
to have an unquenchable need for skilled IT workers. Many U.S. 
employers cannot find qualified workers for jobs that demand 
specialized education, such as engineering or computer science. 
It is not just technology companies that are hurt by the worker 
shortage. Almost any company in this Nation that hires IT 
workers in any capacity is feeling the pinch.
    I am here to confirm, and shout from the hilltops, if 
necessary, that the serious shortage of skilled workers is, 
indeed, very real. My company currently employs over 70 people 
and has over 30 job openings. We have had these positions open 
for more than 120 days. Out of the 70 people that Olympus Group 
employs, we have five H-1B visa holders. Without the ability to 
hire a few key talented people from overseas, I would not be 
able to handle the current client workload. For every H-1B 
worker I employ, I am able to hire 10 more American workers.
    That is the ironic part of this whole debate. H-1B visa 
holders who are employed by me actually create many new job 
opportunities for domestic workers. Several Olympus Group H-1B 
workers are currently training a team of Olympus employees on 
specific technology skill sets that will enable us to grow 
existing clients and add new clients. Without this type of 
strategic cross-training, I would not be able to continue to 
grow my company in a competitive manner.
    Last year, Congress approved an increase in the number of 
H-1B visas for skilled foreign workers to come to the United 
States for temporary employment. Unfortunately, the new quota 
of visas was reached only 8 months into the year, leaving many 
employers to wait until the next fiscal year.
    No one anticipated reaching the limit on H-1B visas before 
the end of the fiscal year. Now, the INS wants to cut the 
number of H-1B visas it will grant until fiscal year 2000 
because officials at the agency claim they have approved more 
than the quota for fiscal year 1999.
    The current employment immigration system is not working. 
Employers' hiring efforts are not only hampered by a serious 
shortage of American workers and a strict limit on the number 
of skilled foreign workers they can hire, but they also must 
deal with a government system that is in disarray. We cannot 
afford to come back year after year to address this national 
problem in a piecemeal fashion. Our economic and technological 
future is at risk.
    As my company continues to grow, I expect I will need to 
hire an even larger percentage of H-1B workers if I cannot find 
the skilled applicants domestically. I hear the same concern 
day after day from my counterparts at other technology 
companies. No employer I know is without a worker shortage 
problem. It is both a blessing that U.S. employers and workers 
are simply worried about too many jobs in an economy that is 
growing quickly, as opposed to be concerned with high 
unemployment and slow economic growth.
    The United States truly is the envy of the world, but we 
stand to lose this position if we do not take steps now to 
ensure that we shore up U.S. productivity by stocking our 
companies with qualified workers. Thank you.
    Senator Abraham. Thank you very much.
    [The prepared statement of Ms. Holdren follows:]

                  PREPARED STATEMENT OF JULIE HOLDREN

    Senator Abraham and members of the Committee, on behalf of Olympus 
Group, I want to thank you for allowing me to participate in today's 
hearing.
    I am the Founder, President and CEO of Olympus Group, Inc. Olympus 
Group is a fast-track high technology company founded in 1995 and based 
in Alexandria, Virginia that specializes in internet based business 
intelligence solutions, Java application development and multimedia web 
design. Olympus Group's next generation solutions enable business to 
both actively and passively deliver meaningful information to the 
appropriate end users, including employees, customers, and suppliers 
over the Internet.
    Our nation's workforce needs for the next century is of top concern 
to me. I am pleased your committee has chosen to delve further into 
this subject which has tremendous implications for all Americans. While 
it is true that the U.S. is enjoying record low unemployment and 
phenomenal economic expansion, if we don't concern ourselves with 
meeting the hiring needs of American employers, we will lose the 
benefits we are reaping today.
    As technology continues to advance at a fast pace and the economy 
remains vigorous, companies such as mine will continue to have an 
unquenchable need for skilled IT workers. Many U.S. employers cannot 
find qualified workers for jobs that demand specialized education, such 
as engineering or computer science. It's not just technology companies 
that are hurt by the worker shortage. Almost any company in this nation 
that hires IT workers in any capacity is feeling the pinch.
    I am here to confirm, and shout from the hilltops if necessary, 
that this serious shortage of skilled workers is indeed very real. My 
company currently employs over 70 people and has over 30 job openings. 
We have had these positions open for more than 120 days.
    Out of the 70 people that Olympus Group employees we have 5 H-1B 
visa holders. Without the ability to hire a few key talented people 
from overseas I would not be able to handle the current client 
workload. For every H-1B worker I employ, I am able to hire ten more 
American workers. That's the ironic part of this whole debate. The H-1B 
visa holders who are employed by me actually create many new job 
opportunities for domestic workers.
    Several Olympus Group H-1B workers are currently training a team of 
Olympus employees on specific technology skill sets that will enable us 
to grow existing clients and add new clients. Without this type of 
strategic cross training I would not be able to continue to grow my 
company in a competitive manner.
    Last year, Congress approved an increase in the number of H-1B 
visas for skilled foreign workers to come into the U.S. for temporary 
employment. Unfortunately, the new quota of visas was reached only 
eight months into the year, leaving many employers to wait until the 
next fiscal year, which began just a few weeks ago. No one anticipated 
reaching the limit on H-1B visas before the end of the fiscal year. 
Now, the INS wants to cut the number of H-1B visas it will grant in 
fiscal year 2000 because officials at the agency claim they approved 
more than the quota in fiscal year 1999.
    The current employment immigration system is not working. 
Employers' hiring efforts are not only hampered by a serious shortage 
of American workers and a strict limit on the number of skilled foreign 
workers they can hire, but they must also deal with a government system 
that is in disarray. We cannot afford to come back year after year to 
address this national problem in a piecemeal fashion. Our economic and 
technological future is at risk.
    As my company continues to grow, I expect I will need to hire an 
even larger percentage of H-1B workers if I can't find skilled 
applicants domestically. I hear the same concern day after day from my 
counterparts at other technology companies. No employer I know is 
without a worker shortage problem.
    It is a blessing that both U.S. employers and workers are simply 
worried about too many jobs and an economy that is growing quickly, as 
opposed to being concerned with high unemployment and slow economic 
growth. The U.S. truly is the envy of the world. But we stand to lose 
this position if we don't take steps now to ensure that we shore up 
U.S. productivity by stocking our companies with qualified workers.
    Mr. Chairman, thank you for the opportunity to testify before your 
committee. I am prepared to answer any questions you may have.

    Senator Abraham. Before we turn to you, Mr. Atkinson and 
the rest of the panel, we have been joined by Senator Schumer 
and he is in the middle of the banking conference, I think. 
Despite enormous bribes to keep him here as long as possible, I 
am going to let him go ahead.

 STATEMENT OF HON. CHARLES E. SCHUMER, A U.S. SENATOR FROM THE 
                       STATE OF NEW YORK

    Senator Schumer. I am a cosponsor of Mr. Robb's bill. I 
would ask unanimous consent that my statement be added to the 
record.
    All I want to say is, for my folks in silicon alley, 
getting a way of finding new high tech workers is their number 
one legislative concern, barring anything else. Obviously, I 
would like if that our education system produces everybody here 
in America, but we have two choices. Either the businesses go 
overseas or we grow them here by allowing a proposal such as 
the one Senator Robb and I have put in. I hope we will 
seriously consider it.
    I thank the committee for its indulgence and ask unanimous 
consent my statement be put in the record.
    Senator Abraham. Without objection, it will be.
    Senator Schumer. I appreciate the opportunity to interrupt. 
We are over on the House side with the banking markup.
    Senator Abraham. I appreciate that you took the time to 
come over and participate, Senator. We appreciate it very much.
    [The prepared statement of Senator Schumer follows:]

            PREPARED STATEMENT OF SENATOR CHARLES E. SCHUMER

    Mr. Chairman, I'd like to first thank you for holding a hearing on 
this vital and timely topic.
    I think we can all agree that the fuel that propels our high tech 
industry and its many innovations is human capital. And we can all 
agree that our high tech economy is experiencing explosive growth.
    But as this industry grows from a handful of firms to hundreds of 
them; from thousands of employees to tens of thousands of employees; 
from billions of dollars in industry-wide market capitalization to 
trillions of dollars--the pool of people skilled enough and schooled 
enough to keep this industry thriving is falling far short of demand.
    The estimates are that there are currently 346,000 unfilled high 
tech jobs in the country, and that by 2006 the high tech sector will 
need upwards of 1.3 million new highly skilled employees.
    This shortage of top-notch, high-tech talent, which I hear about 
all the time from members of New York's Silicon Alley, poses a serious 
problem for the high tech industry. And because the high tech industry 
is one of the main drivers of the long, steady, sustained economic boom 
in America--this also presents a major threat to our economy, and 
America's position as the dominant economy in the world.
    The question then becomes what are the best and most effective 
legislative models for handling the shortage. Of course, answering that 
question requires us to understand the causes of the shortage.
    I think there are mainly two: the speed with which the high tech 
industry develops and innovates, and the weaknesses in our education 
system.
    We should therefore focus our legislative efforts on addressing 
both of these root problems, while still employing all the necessary 
safeguards to protect American workers.
    That's why I recently joined Senator Robb to introduce the HITEC 
Act, which he has already outlined for us. The bill creates a new high-
tech visa for foreign graduate students of science, engineering, math, 
and computer science who have job offers paying over $60,000.
    Ideally, we'd want high tech jobs to go to Americans, but there is 
a shortage of U.S. workers qualified for many of these positions. Thus, 
we are not talking here about a choice between higher paid American 
workers and lower paid foreign workers--this is about filling jobs in 
companies that will fuel the growth of the American economy for the 
next century.
    We should all recognize and acknowledge that one out of every five 
Silicon Valley high tech companies was founded by an immigrant; 
likewise, one out of every three Silicon Valley engineers and one out 
of three Silicon Valley scientists is an immigrant.
    The fact that these entrepreneurs, engineers and scientists are 
here rather than in their native India, Korea, France, Germany, Sweden, 
or Australia has made this country far and away the economic envy of 
the world. We should continue to allow the best and the brightest 
individuals to come here to benefit our companies, our consumers, and 
our country. That is one of the ways that we can remain strong and 
ahead of the curve in this very competitive new world we live in.
    Importantly, the HITEC bill also begins to address the problems in 
our school system so that in the future we can get all the brainpower 
we need at home.
    Now, this is just one way we can start dealing with these issues. 
There may be others, and I'm certainly open to suggestions. Moreover, 
it is my hope that in the future we will have the American workforce to 
tackle all of these jobs.
    Let's face fact. We need to dramatically improve our education 
system. In a 21st century ideal economy where the success or failure of 
each individual depends more on the agility of their minds than the 
strength of their backs; where the success or failure of each country 
depends less on the fertility of its soil or the minerals in its mines 
than the intellectual prowess of its people--our schools are simply not 
good enough.
    Our standards are too low. We are not attracting high quality 
individuals to the teaching profession. The curriculum often bares 
little resemblance to the world of work. And we are graduating students 
from high school and college who are ill-equipped to work at an Intel, 
a Sun, an Oracle, a Qwest or an AOL.
    I believe that ultimately the right solution to the issues we are 
grappling with in this hearing will be best resolved by a comprehensive 
approach that addresses the needs of our schools, our students, our 
companies, and our workers. Again, Mr. Chairman, thank you for holding 
this hearing.

    Senator Abraham. We will now turn to you, Mr. Atkinson. 
Thank you very much for being here. We appreciate it.

                STATEMENT OF ROBERT D. ATKINSON

    Mr. Atkinson. Thank you, Mr. Chairman, and other members of 
the committee. I want to just put this in a little bit of 
context by saying I think this is a central issue to U.S. 
economic growth in the next 15 to 20 years, but it is also a 
broader issue than just high tech workers. The skill shortage 
is really broader and really encompasses many, many industries, 
and it really speaks to a challenge of how we reshape our 
educational and training systems in this country.
    But there is no doubt that this is an issue that is 
particularly relevant right now to the high tech community. 
According to the NSF statistics, in 1995, which is their latest 
statistics, the unemployment rate was 5.6 percent for the 
overall economy. It was 2.2 percent for scientists and 
engineers. It was only 1.7 percent for computer scientists, 
which is essentially no employment.
    You see the same thing with job projections. A couple of 
people have alluded to this already. Jobs are expected to grow 
by 14 percent between 1996 and 2006, 44 percent for scientists 
and engineers and 100 percent for computer scientists. So that 
sector of the economy, because of its explosive growth, is the 
one facing critical skill shortages.
    But I think what we need to do to really address that is we 
need to think about really a new bargain between government and 
industry to address these problems. In our view at PPI, to 
effectively address these new economy skill needs, companies 
can simply not rely on educational institutions to provide this 
for them, or even in the short run to rely solely on H-1B 
increases, however needed those might be, and you have already 
alluded to this. But rather, companies need to play a more 
central and sustained role in skill development, but they 
cannot do that without government programs being reshaped to 
support that type of role, and I want to talk about a number of 
different programs that we think might play a key role in 
creating those kinds of partnerships.
    I am not saying that companies have not done a lot, 
companies like Cisco with their training academy, the Novelle 
certified network engineer programs, the efforts of Microsoft 
and Boeing in the Pacific Northwest, the Massachusetts High 
Tech Council, but clearly, they can do more.
    We found that in the 1990's, that actually corporate 
expenditures on training as a share of GDP have gone down, not 
up. Why is that? It is not because companies are not interested 
in this, but in our view, it is really two-fold. One is that 
the competitive environment is so stiff for companies now that 
it is hard for them to invest in those kind of public goods.
    Second, and Susan DeFife alluded to this, the new economy 
and the high tech economy is really made up largely of small 
firms. In Research Triangle Park, for example, the average firm 
size is under 70 employees. It is very difficult for small 
firms on their own to invest in skill development without some 
kind of partnership arrangement.
    So what do we need to do? I think, first of all, what we 
need to do is it is a mistake to think that the problem is only 
at, for example, K through 12, or only at college, or only in 
technical workers. I think we need really a three-fold 
approach. We need to think about systematically upgrading K 
through 12 for science and education. We need to think about 
upgrading the technical skills of the incumbent workforce. And 
finally, how do we get more scientists and engineers, whether 
through H-1B visas or other ways or through graduation.
    I would like to just talk about nine recommendations very 
quickly. Some of these are being considered by this New Economy 
Task Force that PPI has formed that we are honored that Senator 
Kennedy is a member of and Senator Robb is also a member.
    First of all, we need to boost K through 12 education 
levels, math and science education at the K through 12 level, 
and we have two thoughts on that. One, co-investing in math and 
science charter high schools or magnet high schools for 
disadvantaged communities--many of you may be aware of math and 
science high schools that have been developed. Northern 
Virginia has got a very excellent one, as well as some other 
communities. But by and large, those are really serving 
suburban upper-middle-class kids and we really need to extend 
that model, in our view, to disadvantaged areas, either in 
urban areas or in rural areas, and get those kinds of kids more 
interested and knowledgeable about science.
    Two, to increase the number of teachers who are qualified. 
We have been talking about an idea of a forgivable loan for 
students who agree to major in math, science, or engineering, 
uphold a certain grade point average, and then agree to teach 
in an elementary or secondary school for at least 5 years.
    Second, upgrading the skills of the workforce. One thing 
that the Federal Government could easily do and really we 
forget about it is the Federal Government being a significant 
employer in the economy, frankly, the Federal Government does 
very little to train its information technology workers. It 
could play a much more sustained role in training information 
technology workers just for its own use, which would, 
therefore, expand the overall supply.
    The second area to help with incumbent workers or technical 
trained workers, we strongly supported your efforts last year 
to create this regional skills alliance partnership idea. I 
think it is a great idea. Unfortunately, in our view, the 
Department of Labor really needs to--we are somewhat concerned 
with how the Department of Labor is really structuring that, 
that it is not industry or even industry and union led, it is 
more government led. We think that is a mistake. It needs to be 
industry led.
    And finally, increasing the number of college graduates in 
math and science, graduates or people who are in this economy. 
Three ideas there. One is matching grants to State science/
technology scholars programs. There are a number of States--
only a handful--that have established new programs in the last 
few years, Pennsylvania and Maryland being the best cases, 
where they will provide a 3-year science or math or engineering 
scholarships to students to obtain a good grade point average 
and agree to work in the State either in an internship or some 
kind of arrangement with companies in the State. We need to 
expand those programs, and I think sort of a Federal carrot 
that gets States to do more there would be a way to do that.
    Second, Paul Romer, a noted economist out at Stanford, has 
been talking a lot about this problem, and one of the, I think, 
most interesting recommendations he has made is a new approach 
to science fellowships. Most graduate students in math and 
science and engineering essentially work on Federal grants. 
They work on a very narrow area that their faculty mentor is 
interested in. We need to make sure that they are multi-
disciplinary trained and also trained in areas that industry is 
involved in. Romer has proposed a new type of fellowship that 
would be oriented to students that would be matched with 
industry money. I think that is an excellent idea of how to get 
industry more involved in this.
    Lastly, supporting what Senator Robb referred to, which is 
his bill and a companion bill in the House for this T visa, for 
essentially expanding the visas for foreign graduates of U.S. 
math, science, and engineering programs. Thank you very much.
    [The prepared statement of Mr. Atkinson follows:]

            PREPARED STATEMENT OF ROBERT D. ATKINSON, PH.D.

    Mr. Chairman, Members of the Committee, I am Robert Atkinson, 
Director of the Progressive Policy Institute's Technology and New 
Economy Project. PPI is a think tank whose mission is to define and 
promote a new progressive politics for America in the 21st century. It 
is a pleasure to testify in front of you on the critical issue of 
America's workforce needs in the 21st century.
       education and skills are more important in the new economy
    In the New Economy, skill requirements are increasing in many 
industries, not just the so-called high-tech industries. The percentage 
of workers who use computers at work has risen from 25 percent in 1984, 
to 46 percent in 1993, to 75 percent today. More than half of the new 
jobs created between 1984 and 2005 will require some education beyond 
high school.\1\
---------------------------------------------------------------------------
    \1\ Arnold E. Packer, et al., Workforce 2000: Work and Workers for 
the 21st Century (Indianapolis, Ind.: Hudson Institute, 1987).
---------------------------------------------------------------------------
    The rise of new industries has also meant the rise of new jobs. 
Knowledge-based jobs (those requiring post-secondary, vocational, or 
higher education) have grown as a share of total employment. For 
example, there were fewer than 5,000 computer programmers in America in 
1960; there are over 1.3 million today. Managerial and professional 
jobs have increased as a share of total employment from 22 percent in 
1979 to 28.4 percent in 1995. Jobs in offices have grown from 30 
percent of all jobs in 1960 to over 40 percent today.
    Overall, there is an increasing realization across the nation that 
firms in a wide range of industries face serious difficulties hiring 
workers with needed skills. While estimates vary (as high as 200,000), 
there is a consensus that we face a shortage of workers with 
information technology skills. In 1995, when the national unemployment 
rate was 5.6 percent, the unemployment rate for scientists and 
engineers was 2.2 percent (1.7 percent for computer scientists)--a 
level most economists would term as frictional (i.e., workers between 
jobs).\2\
---------------------------------------------------------------------------
    \2\ National Science Foundation, Science and Engineering 
Indicators, 1998, p. A-106.
---------------------------------------------------------------------------
    Finally, in the new knowledge economy, education and skills are 
increasingly becoming the ticket to upward mobility and increased 
earnings.

        COMPANIES NEED TO DO MORE TO PROVIDE WORKERS WITH SKILLS

    In the New Economy, technology companies cannot simply rely on 
government and educational institutions to provide the skilled workers 
they need. Rather, companies must play a more central and engaged role 
in skill development. But just as importantly, public policy must be 
re-structured to encourage and facilitate such partnerships.
    To date, the technology industry has made efforts to train workers. 
For example, Cisco has established hundreds of training academies while 
Novel has created its certified network engineer programs. Microsoft 
and Boeing have invested in the Northwest Center for Emerging 
Technology at Bellevue Community College to develop a new IT training 
program. The Massachusetts Software Council has developed a program to 
train dislocated workers to be software programmers. In Washington, 
D.C., regional telecommunications firms donated computers and helped 
set up a program to train public high school students to be computer 
network administrators. The companies hire students who pass a standard 
certification exam for $25,000 to $30,000 a year.
    But in spite of these efforts, more remains to be done to 
effectively address the high-tech worker skills shortage. There are a 
number of factors that have made it more difficult for companies to 
take active roles in high-tech skill development.
    First, while employment stability in the old economy gave workers 
the opportunity to learn new skills on the job and move up within the 
company, increased competitive pressures coupled with reduced 
employment tenure make it harder for companies to justify training 
investments. Moreover, because workers are so mobile, it is difficult 
for individual employers to bear all the burden of training employees, 
whether new or incumbent workers, especially since the employee is 
likely to leave at some time to work for a competitor. This serves as a 
disincentive for individual firms to provide training without a 
concerted regional effort on the part of the entire industry.
    This factor, coupled with increasingly competitive markets, is one 
reason why many larger companies that supported in-house, dedicated 
training programs in the 1960's and 1970's have eliminated those 
efforts. It's also why company training efforts have not kept pace with 
economic change. In 1995, American businesses spent $55 billion per 
year upgrading the skills of their employees, 20 percent more than a 
dozen years ago.\3\ But the number of workers rose 24 percent, meaning 
that private-sector spending hasn't kept pace. Corporate training 
expenditures as a share of GDP have declined slightly since 1988, to 
about 0.7 percent of GDP in 1997. Considering that skills upgrading is 
far more important now than in the early 1980's, this shortfall is 
troubling. Finally, training is more prevalent among highly educated 
workers than other workers: 61 percent of college-educated workers 
participated in on-the-job training in 1991, compared to 22 percent of 
workers with a high school degree.\4\
---------------------------------------------------------------------------
    \3\ Dr. Laurie J. Bassi, Expenditures on Employer-Provided Training 
(Alexandria, VA: American Society for Training and Development, July 
1996).
    \4\ Progressive Policy Institute, The New Economy Index, (PPI: 
Washington, DC, 1998).
---------------------------------------------------------------------------
    Moreover, large firms spend almost three times more per employee on 
training than small firms, and since the New Economy is all about small 
and medium-sized firms, this poses a new policy challenge. For example, 
the average size of high tech firms in Research Triangle Park is under 
70 employees. Most firms, but particularly small and medium-sized 
enterprises (SME's), have limited capacity (financial, institutional, 
and informational) to engage in significant and sustained workforce 
development efforts. There are several reasons why. Managers and owners 
of most firms are simply too busy running their business to develop 
training systems, especially for new or dislocated workers. SME's often 
lack information on what kind of training their firms need and where to 
get it, and additionally, finding this information can be very time 
consuming. As a result, when confronted with a shortage of skilled 
workers, most firms try to hire workers from other companies.
    When faced with persistent and significant shortages in skilled 
workers, the technology industry has looked to short-term assistance 
through the expansion of the H-1B visa program. During last year's 
deliberations on the H-1B visa program, PPI supported a temporary 
expansion of the cap. However, PPI also advocated not just ``raising 
the cap,'' but also ``filling the gap.'' In other words, PPI believes 
that while short-term expansion of high-tech visas is warranted, we 
need to also put in place moderate and longer-term policies to ensure 
that industry, government, and educational institutions work together 
to train Americans in these critical skill areas.
    In short, we need a new social compact between the technology 
industry and government. If industry is to ask government to provide it 
short-term relief through increases in the number of visas for high-
tech workers, it needs to make a strong and sustained commitment to 
invest money and effort to boost the skills of American workers so that 
they can also access these jobs. In turn, government must develop and 
fund policies and programs that work in partnership with industry.

                         POLICY RECOMMENDATIONS

    To effectively train modern workers we need to foster industry/
education/government partnerships at all levels of education. This 
requires making improvements in K-12 education, colleges and 
universities--including graduate education--and technical skills 
training, particularly among incumbent workers. As part of the 1998 
American Workforce Competitiveness Act, Congress agreed to assign a 
portion of the fee companies pay to obtain an H-1B visa to a program to 
support industry-led training alliances run by the Department of Labor 
(DOL). Recently, DOL issued a solicitation to provide funding for such 
training alliances. The program, based in part on a PPI proposal,\5\ 
was intended to stimulate the creation of industry-led, or industry- 
and union-led, training alliances. Unfortunately, the DOL plan does not 
require that the proposals be industry-led. Rather, they can be led by 
existing public training agencies and involve industry in only a 
peripheral manner. Moreover, DOL does not require matching funds from 
industry, as the legislative intent suggests. As a result, there is a 
significant risk that the program will simply duplicate existing 
public-sector programs, rather than provide a new opportunity for 
industry to take the lead in the development of skills training 
programs to address technical skills shortage areas. In PPI's view, 
having these programs be industry-led (or industry/union led) is 
critical to their success. Therefore, Congress should reauthorize this 
program to require that any applications be industry-led and that 
industry be required to provide at least some share of the overall 
funding.
---------------------------------------------------------------------------
    \5\ Progressive Policy Institute, Building New Skills for the New 
Economy, (PPI: Washington, DC, 1998).
---------------------------------------------------------------------------

(1) Math and Science Education at K-12 level
    Student performance on verbal and reading skills has remained 
stagnant since the early 1980's while performance on math tests 
increased only modestly. As a result, as American students go through 
school, they fall further behind their foreign counterparts on math and 
science. The recent TIMSS report (the Third International Mathematics 
and Science Study) finds that between the 4th and 8th grades, U.S. 
students lost almost 40 points. In comparison, most other nations 
either lost only a few points, or as in cases such as Thailand and 
Singapore, gained significant ground. The result is that, while U.S. 
4th graders scored among the top, 12th graders were among the lowest of 
all nations. Clearly, K-12 education needs to give students the math 
and science skills they need to succeed in the New Economy.

   Co-invest in math, science, and technology charter high 
        schools for disadvantaged communities. In the last 15 years, 
        states such as North Carolina and Illinois have established 
        math and science magnet high schools. While these programs have 
        proven effective in providing a solid education in math and 
        science, the number of these high schools are limited, and they 
        have generally not focused on disadvantaged students. If states 
        are to encourage students--including minority students who have 
        not traditionally gone into science and engineering fields--
        they need to target their efforts. Congress should co-fund with 
        states and industry math, science, and technology charter high 
        schools that are focused on serving children from disadvantaged 
        urban or rural communities. Entrance would be merit based, and 
        as charter schools, they would have the flexibility they need 
        to develop innovative curricula and work closely with industry 
        partners.
   Establish forgivable loans for students who major in math, 
        science, or engineering and agree to teach math or science in 
        elementary or secondary schools for at least 5 years. Such 
        forgivable loans would not only help reduce the shortage of 
        qualified science and math teachers, it would also reduce the 
        number of teachers teaching outside their fields, and increase 
        the amount of science, math, and engineering bachelor's degrees 
        awarded.

(2) Upgrade Technical Skills of the Workforce
    Companies can fill many technical positions by training or 
retraining workers who are already out of the formal education system.

   The federal government should take the lead in skills 
        development and upgrading the skills of its workforce. While 
        some agencies such as the Department of Defense have out of 
        necessity focused on training workers, most federal agencies 
        have not. The federal government should partner with 
        educational institutions to establish training and 
        apprenticeship programs for technically skilled workers who 
        would be eligible to work for the federal government.
   Support-modify the Department of Labor's regional skills 
        alliances (RSA's) program. As part of the 1998 American 
        Workforce Competitiveness Act, RSA's--independent, staffed 
        collaborations among firms in an industry formed to identify 
        common areas of skills shortages and develop and implement 
        effective training solutions--would be supported, in part, for 
        the first three years by federal funds. Companies would provide 
        at least one-third of the costs of the alliances. Federal funds 
        would be allocated through a competitive grant process 
        administered by the Department of Commerce with consortia of 
        firms as applicants.

(3) Increase the Number of College and Graduate Math, Science, and 
        Engineering Graduates
    As a share of the workforce, scientists and engineers increased 
moderately throughout the 1980's, and faster since 1993. But because 
jobs requiring science and engineering expertise are forecast to 
increase three times faster than other occupations between 1994 and 
2005, the demand for scientists and engineers is expected to exceed 
supply by approximately 4 percent. Much of this increase has been 
driven by a rapidly growing demand for computer scientists and 
programmers, who increased as a share of all scientists and engineers 
from 23 percent in 1983 to 36 percent in 1997. According to the 
National Science Foundation, while total employment is expected to 
increase 14.4 percent between 1996 and 2006, the number of employed 
scientists and engineers is expected to increase 44 percent, with the 
number of computer engineers and support specialists doubling.
    Foreign-born scientists and engineers are also becoming a larger 
and more valuable part of our economy. The numbers of immigrant 
scientists and engineers admitted with permanent visas to meet growing 
industry demand has doubled from 0.3 percent of the science and 
engineering workforce in 1988 to 0.6 percent in 1993 (the latest year 
available). Similarly, while only 1.3 percent of all Ph.D. scientists 
and engineers in the United States who have had a degree more than 25 
years are foreign born, almost one-quarter (24.3 percent) of those who 
earned their degrees in the last 5 years are foreign born.
    After falling in the mid-1980's, the number of people getting 
science and engineering degrees has grown as a share of the population 
to slightly more than in the mid 1980's. But given that science and 
engineering have become more important to the economy, the modest 
increase is not enough. Moreover, within certain areas there has been 
an absolute decline. Full-time enrollment in undergraduate engineering 
has declined from a high of 406,000 in 1983 to 317,700 in 1996, while 
graduate enrollment was essentially unchanged between 1987 and 1996.\6\
---------------------------------------------------------------------------
    \6\ National Science Foundation, Science and Engineering 
Indicators, 1998, p. A-55.
---------------------------------------------------------------------------
    Foreign students, who remain a modest fraction of all science and 
engineering degree holders, are earning a significant and growing share 
of graduate degrees in some scientific and technical fields. For 
example, foreign students earned 35 percent of the master's degrees in 
computer science and 33 percent of those in engineering in 1993, up 
from 11 percent and 22 percent, respectively, in these fields in 1977.

   Provide matching grants to state ``SciTech Scholars'' 
        programs. In response to declining graduation rates in 
        technical fields, a number of states have established 
        scholarship programs for students who major in science, math, 
        or engineering; who maintain a high grade point average; and 
        who agree to work in some capacity for a technology company in 
        the state. For example, Pennsylvania provides a three-year 
        science scholarship for students who maintain a B average and 
        undertake an internship with a Pennsylvania technology company. 
        Maryland has adopted a similar program. Federal matching funds 
        could expand the scope of existing state programs and encourage 
        more states to establish their own programs.
   Establish a matching grant fellowship science and 
        engineering graduate student fellowship program. Currently, 
        most science and engineering graduate students receiving 
        financial support obtain it indirectly through federal research 
        grants obtained by their faculties. However, as economist Paul 
        Romer has pointed out, this system reduces the amount of inter-
        disciplinary and practical, real-world research and education 
        that is undertaken. In order to increase both the number of 
        Americans enrolled in science and engineering graduate programs 
        and the amount of inter-disciplinary and industry-relevant 
        graduate education, more graduate support should flow directly 
        to students. The federal government could establish a matching 
        grant fellowship program, paying half the costs, with industry 
        and universities each picking up one-quarter of the costs.
   Continue to support the NSF Computer Science, Engineering, 
        And Mathematics Scholarships program. Funded from fees on the 
        H-1B visa, the CSEMS program provides scholarships to low-
        income, academically talented students who are working full-
        time toward associate, baccalaureate, or graduate degrees in 
        computer science, computer technology, engineering, engineering 
        technology, and mathematics. The scholarship provides up to 
        $2,500 per student, per academic year. In the first year of the 
        program, it granted approximately $21 million. The program 
        should be continued.
   Make it easier for foreign graduates of master's or doctoral 
        science and engineering programs in the United States to stay 
        in the United States. A bill introduced by Senator Robb (D-VA), 
        S. 1645, would establish a five year ``T'' visa (technology) 
        for foreign graduates of master's or doctoral math, science, 
        engineering, or computer science programs in the United States 
        who receive a job with an annual total compensation of at least 
        $60,000. The Act imposes a fee (between $500 and $1,000 per 
        visa) on applications for the T-visa and provide funds to the 
        National Institute of Standards and Technology to set up a 
        competitive grant program with matching funds from industry to 
        establish science and math educational K-12 partnerships. 
        Similar legislation has been introduced in the U.S. House by 
        Representative Zoe Lofgren (H.R. 2687). Because of the 
        importance of engaging the technology industry in education and 
        training efforts, the approach in the Robb bill has significant 
        merit.
                                 ______
                                 

                    Attachment of Robert D. Atkinson

   BUILDING NEW SKILLS FOR THE NEW ECONOMY--REGIONAL SKILLS ALLIANCES

The Problem
    There is an increasing realization across the nation that firms in 
a wide range of industries face serious difficulties in hiring workers 
with needed skills, and that we need to do a better job of training and 
educating new entrants to the workforce and workers dislocated by 
economic change.
    Many industries point to the lack of skilled workers as a critical 
factor limiting their competitiveness and growth. For example, the 
Information Technology Association of America recently concluded that 
there are approximately 190,000 unfilled information technology jobs in 
the United States today due to a shortage of qualified workers.\1\ But 
it is not just high-tech firms. When asked ``what are the main barriers 
firms face to expanding and becoming more competitive,'' companies 
across the country in different industries point to the difficulty in 
getting skilled workers. These shortages not only slow regional and 
national economic growth, they mean that hundreds of thousands of 
workers are not increasing their skills and standards of living.
---------------------------------------------------------------------------
    \1\ ``Help Wanted: The IT Workforce Gap at the Dawn of a New 
Century,'' (Arlington, VA: Information Technology Association of 
America, 1997). See also ``America's New Deficit: The Shortage of 
Information Technology Workers,'' (Washington, DC: U.S. Department of 
Commerce, Office of Technology Policy, 1997).
---------------------------------------------------------------------------
    While the current low unemployment rate contributes to this 
problem, its roots are more fundamental. In the New Economy, skill 
requirements are going up in many industries, even so-called low-tech 
industries. More than half of the new jobs created between 1984 and 
2005 will require some education beyond high school.\2\ The percentage 
of workers who use computers at work has risen from 25 percent to 46 
percent between 1984 and 1993.\3\ These changes are being felt around 
the nation. States such as Colorado, Maryland, Rhode Island, and 
Washington have all recently released reports highlighting the pressing 
need of employers for skilled workers. Today, to be competitive, firms 
are not only using more technology but are also reorganizing production 
processes in new ways, such as cellular production, use of teams, and 
other high performance work organization methods that require higher 
levels and new kinds of skills. For example, a recent survey of U.S. 
manufacturers found that in 81 percent of plants, production workers 
participate in empowered or self-directed teams. Marty Cohen, President 
of the Work in America Institute, states: ``Thanks to e-mail, 
statistical process control, Just-In-Time, [* * *] and so forth, the 
need for production workers to master new technology is almost 
universal, whether they work on loading docks or in silicon clean 
rooms.'' And much of the needed knowledge is not firm-specific, but 
rather generic (related to math, communication, writing, and computing) 
and industry-specific (such as manufacturing methods).
---------------------------------------------------------------------------
    \2\ Arnold E. Packer, et al., Workforce 2000: Work and Workers for 
the 21st Century (Indianapolis, Ind.: Hudson Institute, 1987).
    \3\ ``Computer Use and Ownership: Level of Access and Use of 
Computers, 1984, 1989, 1993, Table A,'' (Washington, DC: U.S. Census 
Bureau, October 1993).
---------------------------------------------------------------------------
    There is increasing interest in addressing skills shortages. 
Several high-tech trade associations, in conjunction with the U.S. 
Department of Labor (DOL) and Department of Commerce (DOC), hosted a 
skills ``summit'' earlier this month in Berkeley, CA. President Clinton 
recently announced several proposals, including creation of a 
nationwide job bank and modest increases in funding for training 
programs.\4\ The awareness of the problem and the interest in finding 
effective solutions is growing.
---------------------------------------------------------------------------
    \4\ Rajiv Chandrasekaran, ``U.S. to Train Workers for Tech Jobs,'' 
Washington Post, (January 12, 1998), p. A1.
---------------------------------------------------------------------------
    The Administration's proposal, while a useful start, is not enough. 
The problem cannot be solved at the federal level: solutions need to be 
regional, diverse, and industry-led. However, the federal government 
can and should play a catalytic role in bringing together the firms and 
other institutions that are critical to crafting effective solutions.
    The Progressive Policy Institute (PPI) proposes that the federal 
government invest $40 to $60 million annually to support industry-led, 
regional skills alliances (RSA's). RSA's--independent, staffed 
collaborations among firms in an industry, and including educational 
institutions such as community colleges, formed to identify common 
areas of skills shortages and develop and implement effective training 
solutions--would be supported in part for the first three years by 
federal funds. Funds would be allocated through a competitive grant 
process administered by the DOC's Manufacturing Extension Partnership 
(MEP), with consortia of firms as applicants.

Why Existing Institutions Cannot Solve the Problem
    According to the American Society for Training and Development, 
company spending on training has not kept up with the need. In 1995, 
American businesses spent $55 billion per year upgrading the skills of 
their employees, 20 percent more than a dozen years ago.\5\ But the 
number of workers has risen 24 percent, meaning that private-sector 
spending hasn't kept pace. Considering that skills upgrading is far 
more important now than in the early 1980's, this shortfall is 
troubling.
---------------------------------------------------------------------------
    \5\ Dr. Laurie J. Bassi, ``Expenditures on Employer-Provided 
Training'' (Alexandria, VA: American Society for Training and 
Development, July 1996).
---------------------------------------------------------------------------
    Most firms, but particularly small and medium-sized enterprises 
(SME's), have limited capacity (financial, institutional, and 
informational) to engage in significant and sustained workforce 
development efforts. There are several reasons why. Managers and owners 
of most firms are simply too busy running their business to develop 
training systems, especially for new or dislocated workers. SME's often 
lack information on what kind of training their firms need and where to 
get it. And finding this information is very time consuming. As a 
result, when confronted with a shortage of skilled workers, most firms 
try to hire workers from other companies.
    Moreover, because workers are so mobile, it is difficult for 
individual employers to bear all the burden of training employees, 
whether new or incumbent workers, especially since the employee is 
likely to leave at some time and go to work for a competitor. In this 
case, not only does the firm ``not realize an adequate return on the 
investment,'' it is actually at a disadvantage since it has spent money 
other firms have not, and has made its competitors stronger in the 
meantime. This serves as a disincentive for individual firms to provide 
training without a concerted effort on the part of the entire industry 
regionally. This factor, coupled with increasingly competitive markets, 
is one reason why many larger companies that supported in-house, 
dedicated training programs in the 1960's and 1970's have eliminated 
these efforts.
    The skills shortage is also a problem for workers. Millions of 
American workers would like to upgrade their skills, but it is often 
difficult for government-run training programs to provide the kinds of 
skills that employees need. Dislocated workers (even a low unemployment 
economy has dislocated workers--approximately 1.4 million per year 
between 1993 and 1995 \6\), young people coming out of high school, and 
workers making the transition from welfare to work may especially need 
the types of skills demanded by growing industries.
---------------------------------------------------------------------------
    \6\ DOL defines dislocated workers as workers who lose their jobs 
due to their plant closing down or moving, insufficient work for them 
to do, or their position being abolished. Source: U.S. Department of 
Labor, Employment and Training Administration.
---------------------------------------------------------------------------
    The educational system has not proven up to the task of providing 
technical training for workers. Many community colleges, and even four-
year colleges, and universities, lack the resources to purchase up-to-
date equipment (machines, computers, software) on which to train 
workers in relevant knowledge and skills. In addition, while some post-
secondary training institutions (especially private ones) have reached 
out to industry and become more customer-focused, many more have not 
adequately responded to the changing skills needs of employers. The 
lack of partnerships with industry means that many educational 
institutions continue to train students for old economy jobs with old 
economy methods and equipment.
    In some cases this may reflect a lack of entrepreneurial and 
innovative spirit in bureaucratic institutions. But there is a more 
fundamental issue: While colleges and universities, especially 
community colleges, may be able to establish partnerships with larger 
firms that have human resource departments, building partnerships and a 
two-way dialogue with small- and medium-sized firms has proven more 
difficult.
    Finally, it has been difficult to use federally funded training 
programs for these kinds of industry-driven, innovative programs. Most 
federal training funds go to displaced and disadvantaged workers, not 
to incumbent workers. Yet, because of rigid and bureaucratic rules, it 
is difficult to use these federal funds to support effective industry-
driven efforts, including some of the most successful and creative 
industry-community alliances training disadvantaged youth.\7\ Moreover, 
even if the much-needed reforms of federal employment and training 
efforts are implemented, these efforts are largely focused on making it 
easier for workers to access training and reemployment services. To 
really address the skills issues in the New Economy, we need both--a 
more user-friendly employment and training system and an industry-
driven skills effort based on firm alliances. Each complements the 
other.
---------------------------------------------------------------------------
    \7\ Peter Behr, ``Job Training Success Story at Risk,'' Washington 
Post, (January 16, 1998), G1.
---------------------------------------------------------------------------
The Solution: RSA's
    It is becoming clear to many firms and training experts working in 
the trenches of the New American Economy that if we are going to begin 
to meaningfully address the skills problem, we have to motivate and 
assist companies in the same or similar industries to work 
collaboratively at the regional level to lead this process. As training 
expert Bill Nothdurft argues, ``creating the workforce of the future 
requires partnerships and private industry leadership.'' \8\
---------------------------------------------------------------------------
    \8\ William E. Nothdurft, ``How to Produce Work-Ready Workers,'' 
Across the Board, (September 1990), pp. 47-52.
---------------------------------------------------------------------------
    Employers are most qualified to do this for several reasons. First, 
employers are the best positioned--often in partnership with others, 
such as community colleges--to identify the skills and knowledge needed 
for emerging jobs. Second, by letting employers lead, it is much easier 
to tie training directly to employment. And third, employers and 
industries facing skills shortages will be the ones to participate.
    While employers need to take the lead, crafting effective solutions 
requires collaboration among firms. Because a skilled workforce 
benefits all firms in a region, a small handful of skills alliances 
have already been established, often with large firms and their 
employee unions. It has been more difficult for small- and medium-sized 
firms to band together to tackle educational and training needs. As a 
result, a critical task is helping firms build ongoing capacities to 
collaboratively address their own industries' workforce development 
issues.
    Collaborative solutions are more effective than going it alone. 
First, by working together, firms in the same or similar industries can 
pool resources (information, on-the-job training opportunities, 
equipment, curricula) that lower costs of training. Moreover, by 
supporting sector-based alliances (e.g., metal working, tourism, 
information technology), firms focus on building a regional training 
pool, rather than on ``poaching'' other firms in the industry to get 
workers.
    Second, collaboration allows firms to develop joint solutions and 
communicate these to educational institutions. Without this ongoing 
collaboration, it is often very difficult for educational institutions 
to communicate effectively with industry and develop needed curricula. 
Moreover, alliances could serve as the intermediary between firms in an 
industry and the complex array of training programs and initiatives in 
any particular region.
    Finally, solutions need to be regional. Too often Washington 
forgets that the economy runs through firms, institutions, and workers 
operating in locales and regions which are very diverse in their 
industrial structure, growth patterns, and institutional resources. At 
any one time, some regions may be booming and have the need for new 
workers, while others may not be growing and are struggling to address 
the needs of displaced workers. Some regions may be characterized by 
large firms that can address ``infrastructure'' needs related to 
skills, while many others may be populated by smaller firms. In 
addition, regions differ profoundly in terms of industrial mix. Many 
industries cluster regionally. In fact, regional industrial clusters 
are becoming more, not less, a feature of the New Economy--e.g., high-
tech electronics and software in places like Silicon Valley, Boston, 
and Northern Virginia; plastics in Western Massachusetts; rubber in 
Akron; metal working in Pennsylvania; aerospace in Wichita; and 
financial services in Wilmington. All of these places have different 
needs and different problems.
    The few collaborative training programs in place today act as 
powerful and innovative models of industry working together to address 
common skills shortages. Collaborative training is one reason why 
German firms invest more in training than U.S. firms do. There, a dense 
network of industry associations makes it much easier for firms, most 
of which are small, to jointly address training, with the German 
federal government contributing half the cost.\9\ In the last several 
years, a small number of regional and industry-based training alliances 
in the United States have emerged, usually in partnership with state 
and local governments and technical colleges.
---------------------------------------------------------------------------
    \9\ Margaret Hilton, ``Shared Training: Lessons from Germany,'' 
Monthly Labor Review, (March 1991).

   As part of the Wisconsin Regional Training Partnership, a 
        number of metal-working firms, in conjunction with the AFL-CIO, 
        used an abandoned mill building to set up a teaching factory to 
        train workers with needed skills. The workers learn directly on 
        state-of-the-art manufacturing equipment.
   In Rhode Island, with help from the state's Human Resource 
        Investment Council, plastics firms developed a skills alliance. 
        Funds supported a part-time alliance coordinator who worked 
        with firms to assess skills needs and develop curricula. In 
        addition, a share of the funds went to establish a state-of-
        the-art polymer training laboratory at the local community 
        college which trains workers in an apprenticeship program that 
        guarantees jobs for graduates.
   In Wichita, a small federal grant, coupled with state and 
        industry funds, helped 33 small aerospace supplier firms 
        develop joint training curricula for new workers in partnership 
        with the local community college.
   In Washington, D.C., regional telecommunications firms 
        donated computers and helped set up a program to train public 
        high school students to be computer network administrators. The 
        companies hire students who pass a standard certification exam 
        for $25,000 to $30,000 a year.\10\
---------------------------------------------------------------------------
    \10\ Washington Post, op. cit.

    While successful, these kinds of alliances are by far the exception 
rather than the rule.

Why a Federal Role?
    There are several reasons why a limited but strategic federal role 
would be highly effective:

   The federal government already spends millions on training, 
        but not as effectively as it could.
   Federal, state, and local governments have created a wide 
        array of complicated and disjointed bureaucratic training 
        programs. New initiatives are needed that empower customers and 
        serve as models for service delivery integration.
   While a small handful of these kinds of partnerships have 
        emerged around the nation, there are documented difficulties in 
        fostering this kind of collective action without some federal 
        ``glue'' money. Widespread and timely deployment of these kinds 
        of partnerships is simply not likely to happen without the 
        incentives established by a federal initiative. This can help 
        create successful models and templates that others can 
        replicate across the nation.
   Because workers are mobile across regions and state borders, 
        the federal government has an incentive to help new workers get 
        an adequate education and skills to be employed in well-paid 
        and rewarding jobs.
   Without some kind of support to create alliances, small 
        firms just don't have the time or resources to collaborate with 
        anybody on training, and over 99 percent of all businesses in 
        the United States are small. In fact, almost all existing RSA's 
        report that they would not have been able to get off the ground 
        without an independent, staffed entity to operate the alliance.

How Regional Skills Alliances Would Work
    PPI proposes that the federal government invest $40 to $60 million 
annually to support industry-led RSA's. Funds would be allocated 
through a competitive grant process, with consortia of firms as 
applicants. Federal support would be limited to three years, after 
which the efforts would be required to be self-supporting.
    Successful applicants would be:

   Consortia: Alliances would have to have meaningful 
        participation with a large number of firms, ideally at least 10 
        firms and/or employing at least 50 percent of the workers in 
        that industry in the region.
   Industry-led (e.g., board of directors predominantly made up 
        of industry, with state and local officials, educational 
        leaders, and union officials also eligible as participants): 
        Regional chapters of industry trade associations would be 
        eligible to apply.
   Sector-based: The efforts would have to be organized around 
        one or more industry sectors.
   Alliances providing a 2-to-1 match for federal funds: For 
        every $1 in federal funds, state and/or local government would 
        need to provide at least $1, and industry $1. Industry 
        equipment donations to shared, off-site facilities (e.g., 
        community colleges) would count as matching, while ``in-kind'' 
        donations would not, but would be considered in ranking 
        proposals.

How Many Alliances and What Level of Support?
    Funds could be used to support alliance coordinator staff to work 
with firms to develop joint standards, curricula, apprenticeships, and 
other joint efforts. In addition, funds could be used to market the 
program, to purchase equipment on which to train workers, and to 
develop curricula. Alliances could also focus on other areas of joint 
concern, such as technology transfer or industrial modernization. 
Estimated costs for each alliance would be between $350,000 and $1 
million per year, depending on the size of the area, the need, and the 
extent of effort by firms. Assuming that the federal government 
provides, at a maximum, one-third of the funds, $50 million would allow 
approximately 200 alliances to be established.

What Activities Would Qualify for Support?
    Virtually all activities directly related to improving the skills 
of a region's workforce would qualify for support, including:

   Salaries and expenses to support a skills alliance manager;
   Joint assessment of industry training and skills needs;
   Development of skills standards benchmarked to advanced 
        industry practices;
   Development of joint curriculum and training methods;
   Purchases or donations of equipment on which to train 
        workers;
   Identification and development of training providers, and 
        establishment of training programs;
   Development of apprenticeship and school-to-work programs;
   Development of training programs for dislocated workers;
   Initiatives to link technology and business modernization to 
        skills upgrades; and
   Development of performance outcome measures.

    Funding would not be allowed to subsidize workers wages (even 
training wages), could not be used for lobbying or political action, 
and could not be devoted to senior management development except 
possibly for skills development focused on team building or employee 
involvement.\11\ Alliances would also be required to report evaluation 
and outcome measures.
---------------------------------------------------------------------------
    \11\ PPI has proposed a similar non-discrimination rule that would 
treat firm expenses on training as taxable compensation unless the firm 
extends training to all its workers, just as health care coverage and 
retirement benefits are not taxable if all workers in a firm are 
eligible for them.
---------------------------------------------------------------------------

Administration
    Because this is a skills and training effort it could be argued 
that DOL should administer the program nationally. However, because it 
is also an industry competitiveness effort, it may be more appropriate 
for DOC to administer it in partnership with DOL. The program could be 
run out of the Manufacturing Extension Partnership (MEP), an initiative 
at the National Institute of Standards and Technology (NIST), since 
NIST is already actively engaged in regional business modernization 
efforts around the nation. However, because the initiatives could 
support alliances in non-manufacturing sectors, and because these 
should be industry-led efforts, NIST should operate this program 
separate from, but linked to, the MEP.

Advantages of Regional Skills Alliances
    Catalyzing the formation of RSA's has several advantages. These 
include:

   Engaging firms, particularly small- and medium-sized firms, 
        more deeply in the issue of skills training and constructive 
        interaction with educational institutions;
   Engaging public-sector educational providers (e.g., 
        community colleges) more actively in on-going working 
        relationships with groups of employers (i.e., encouraging them 
        to be more responsive by creating the kinds of curricula needed 
        by New Economy employers);
   Significantly increasing the scale of state and local 
        training efforts, by moving away from a one-on-one approach 
        toward engaging whole industries. (Workforce training in states 
        is almost always one-on-one, customized training with 
        individual firms); and
   Providing flexibility in the system to focus on a wide 
        variety of training issues, including new workers, dislocated 
        workers (e.g., Massachusetts Software Alliance), and welfare-
        to-work (e.g., Wisconsin Regional Training Partnership).

                               CONCLUSION

    The transition underway to a more technological and skills-
intensive economy has led to skills shortages in many industries and 
regions of the country. Yet, existing government-run training programs 
are not up to the task at hand. Effective solutions require 
collaboration between government and industry, and between firms in 
similar industries in the same region. Federal matching grants to 
industry to form skill alliances can be a catalyst to the formation of 
new, innovative, and flexible solutions.
    Robert D. Atkinson is director of the Technology and Innovation 
Project at the Progressive Policy Institute.

    Senator Abraham. Mr. Atkinson, I thank you. You got a lot 
in in 5 minutes. I am not sure how you got it all in, but it 
was appreciated and I look forward to actually looking in more 
detail at it, because we appreciate your need to be succinct 
there. So thank you.
    We welcome Ms. Katz. Thank you very much for coming out for 
this hearing. We appreciate it.

                   STATEMENT OF ROBERTA KATZ

    Ms. Katz. Thank you. It is a pleasure to be here. I very 
much appreciate the opportunity to testify on what we believe 
is one of the most important issues facing America's technology 
industry, which is the workforce needs of the 21st century. 
Tech Net very much appreciates this committee's recognition of 
the role of the technology sector in driving our Nation's 
growth and its focus on policies that support continued growth 
by addressing these workforce issues.
    It is also a great pleasure to testify today before you, 
Mr. Chairman, for your leadership of technology policy is 
unparalleled. Your dedication to the development of fair and 
responsible business immigration policy has supported and 
protected our Nation's technological leadership, and the 
benefits of that leadership are enjoyed by all industries.
    Employee talent is a defining feature of this new economy 
and a key to its tremendous growth. More and more, companies 
today derive their value from the ideas, the intellect, and the 
skills of their workforce. Yet today, we face a serious 
shortage in the number of skilled professionals necessary to 
support technology's continued growth. The number of graduates 
from American universities with computer science and 
engineering degrees declined significantly in the 1980's, and 
this trend has only recently reversed, largely due to the 
increased number of foreign students pursuing technical studies 
in the United States.
    Yet demand for skilled employees in the technology 
industries continues to grow exponentially. Between 1996 and 
2006, demand for database administrators, computer support 
specialists, and computer scientists is expected to increase 
118 percent. Demand for computer engineers is expected to 
increase 109 percent. And demand for system analysts is 
expected to double.
    Until our schools and universities are graduating 
sufficient numbers of technically trained American-born 
professionals, an efficient and effective business integration 
system must fill the workforce gap. From the standpoint of Tech 
Net's member companies, this is not an immigration issue. This 
is an issue that will affect our Nation's global 
competitiveness in the 21st century.
    America's growing high technology industry has created 
hundreds of thousands of new high-paying jobs in the past 
decade. Studies have estimated that every additional skilled 
immigrant supports the creation of three to five new technology 
jobs for American employees, and I think that is also 
underscoring what previous witnesses have said. Every immigrant 
who comes with these skills creates a greater number of jobs 
for American employees.
    Skilled immigrants also play a key role in supporting 
innovation in the high tech sector. Today, for example, nearly 
one-third of start-up companies in Silicon Valley are run by an 
Indian or Chinese immigrant. Intel and Sun Microsystems are two 
of the many Tech Net member companies whose early products were 
developed by foreign-born professionals. Today, those companies 
together employ nearly 100,000 workers. The contributions these 
companies have made to the American economy and quality of life 
are immeasurable.
    Tech Net member companies utilize H-1B visas responsibly, 
relying upon H-1B employees only as necessary to fill a 
relatively small number of key positions. Companies hire 
skilled foreign-born employees when they offer a unique set of 
skills that cannot otherwise be found, in large part because 
our universities are not graduating sufficient numbers of 
American-born students who have the scientific or technical 
skills that companies demand.
    As has been stated by Senator Robb, almost one-half of the 
advanced degrees in computer engineering, electrical, and 
electronic engineering awarded by American universities go to 
foreign nationals. To turn these highly-skilled scientists and 
engineers away after we have trained them in the United States, 
in essence, to encourage them to seek employment by foreign 
companies who may be our competitors, simply does not make 
sense.
    The technology industry is working hard to close the 
workforce gap. Our Tech Net members are working at the K 
through 12 level, as Senator Feinstein pointed out, in 
partnership with universities and through in-house programs to 
train and retrain a skilled technology workforce. U.S. 
companies spend approximately $210 billion annually on the 
formal and informal training of their information technology 
workforce and provide an estimated $4 billion in support to 
schools at the K to 12, college, and university levels around 
the country. The technology companies are among the most 
generous of these corporate donors, according to the Conference 
Board.
    Both large and small Tech Net member companies have 
developed educational programs to meet the workforce challenges 
that all technology companies are facing. These range from 
scholarships to in-house training programs. Tech Net also 
supported the provisions of the American Competitiveness and 
Workforce Improvement Act that ensure that a portion of the H-
1B visa fees is used to support scholarships and technical 
skills training programs.
    We understand that the INS is considering reducing the 
number of H-1B visas available in fiscal year 2000 to 
compensate for the issuance of visas possibly in excess of the 
fiscal year 1999 cap. We would urge the INS not to take such 
action, particularly given the uncertain data about the number 
of visas processed in 1999.
    We also need to consider whether the business immigration 
programs are structured as efficiently as possible. Progress in 
increasing the H-1B visa cap will be undone by excessive 
processing delays and other inefficiencies. Companies which 
have a proven record of responsible reliance on the H-1B 
program should not be unnecessarily burdened or micromanaged by 
these excessive regulatory requirements.
    In conclusion, I want to again express our appreciation for 
the leadership that this committee and the Congress have shown 
on these complex issues. I hope these thoughts are helpful and 
look forward to continuing a thoughtful examination of these 
important issues in the months ahead. Thank you.
    Senator Abraham. Thank you very much.
    [The prepared statement of Ms. Katz follows:]

                   PREPARED STATEMENT OF ROBERTA KATZ

    Mr. Chairman, Members of the Committee, thank you for the 
opportunity to testify today. I am Roberta Katz, Chief Executive 
Officer of the Technology Network, a network of senior executives of 
the nation's leading technology companies. Our members include chief 
executive officers and senior partners of companies in the fields of 
information technology, biotechnology, venture capital, investment 
banking and law. We are proud that our industries have played a leading 
role in the unparalleled growth of the United States economy in the 
past decade.
    It is a pleasure to testify today on one of the most important 
issues facing America's technology industry: the workforce needs of the 
21st century. The Technology Network appreciates this Committee's 
recognition of the role of the technology sector in driving our 
nation's remarkable economic expansion and its focus on policies that 
support continued growth by addressing these workforce issues. I am 
particularly pleased that Congress and industry, recognizing the 
technology workforce shortage, are examining the underlying business 
immigration issues, including the role of business immigration, the 
contribution of the technology industries to workforce training and 
education and the workforce needs of the future. Addressing these 
workforce issues as we approach the 21st century is fundamental to 
supporting America's technology industries and the New Economy.
    It is also a great pleasure to testify today before Chairman 
Spencer Abraham, whose leadership of technology policy is unparalleled. 
Mr. Chairman, your dedication to the development of fair and 
responsible business immigration policy has supported and protected our 
nation's technological leadership. The benefits of that leadership are 
enjoyed by all industries and all Americans.

  THE GLOBAL ECONOMY DEMANDS AN EFFECTIVE BUSINESS IMMIGRATION POLICY

    The American economy is undergoing a fundamental change as we 
approach the 21st century. This change is driven by technology and 
innovation and it has led to a revolution in the way we do business and 
live our lives.
    Employee talent is a defining feature of this New Economy and a key 
to its tremendous growth. More and more, companies today derive their 
value from the ideas, the intellect and the skills of their workforce.
    Yet today we face a growing workforce gap--a serious shortage in 
the number of skilled professionals necessary to support the technology 
industry's continued growth. The number of graduates from American 
universities with computer science and engineering degrees declined 
significantly in the 1980's. This trend has only recently reversed, 
largely due to the increased number of foreign students pursuing 
technical studies in the U.S. Yet, demand for skilled employees in the 
technology industries continues to grow exponentially. Between 1996 and 
2006, demand for database administrators, computer support specialists, 
and computer scientists is expected to increase 118 percent, demand for 
computer engineers is expected to increase 109 percent and demand for 
system analysts is expected to double. Unless we take steps now to 
address this growing workforce gap, America's technological and 
economic leadership will be jeopardized.
    A second defining feature of the New Economy is its global reach. 
In today's society, everything--products, capital, ideas--moves 
internationally and at Internet speed. At a keystroke, products are 
developed, markets are created, companies are launched. More than ever 
before, corporations must plan and compete on a global level. Those 
that fail to do so will lose market share, often to foreign 
competitors.
    If the United States is to remain the world's technology leader, it 
is essential that American companies continue to have access to the 
most highly skilled employees. Until our schools and universities are 
graduating sufficient numbers of technically trained American-born 
professionals, an efficient and effective business immigration system 
must fill the workforce gap. As the global economy speeds up, business 
immigration policy must keep pace.
    From the standpoint of TechNet's member companies, this is not an 
immigration issue, but a competitiveness issue. We need to separate 
these issues from the parameters of the immigration reform debate and 
understand this quite simply as an issue that will affect our nation's 
global competitiveness in the 2lst century.

       BUSINESS IMMIGRATION SUPPORTS JOB CREATION AND INNOVATION

    The valuable contribution of immigrants to America's economic 
growth is well known. The critical role of foreign-born engineers, 
computer programmers, managers and other skilled professionals to the 
growth and success of Silicon Valley companies is less understood. 
Employment-based immigrants who hold H-1B visas play a vital role in 
keeping the U.S. technology industry globally competitive.
    America's growing high technology industry has created hundreds of 
thousands of new high-paying jobs in the past decade, becoming the 
single largest manufacturing employer in the United States. Studies 
have estimated that every additional skilled immigrant supports the 
creation of three to five new Silicon Valley jobs for American 
employees. By creating and managing technology companies, skilled 
immigrants have made a valuable contribution to U.S. job growth.
    Skilled immigrants also play a key role in supporting innovation in 
the high tech sector. Today, for example, nearly one-third of start-up 
companies in Silicon Valley are run by an Indian or Chinese immigrant.
    Intel and Sun Microsystems are two of the many TechNet member 
companies whose early products were developed by foreign-born 
professionals. Today, those companies together employ nearly 100,000 
workers. The contributions these companies have made to the American 
economy and quality of life are immeasurable.
 technology companies utilize business immigration programs responsibly
    The extent to which American businesses rely on foreign-born 
professionals is also misunderstood. Foreign-born professionals, form a 
small but extremely important percentage of the overall technology 
workforce. TechNet member companies Utilize H-1B visas responsibly, 
relying upon these employees as necessary to fill a relatively small 
number of key positions.
    In general, technology companies rely on skilled foreign 
professionals in several ways:
    First, companies hire skilled foreign-born employee's when they 
offer a unique set of skills that cannot otherwise be found. These 
skilled workers possess unique combinations of knowledge and experience 
or simply are the best in their fields. Access to these professionals 
is particularly critical today when our universities are not graduating 
sufficient numbers of American-born students who have the scientific or 
technical skills that companies demand. Business immigration, however, 
should always have a role in ensuring that America's technology 
industries have access to the most highly skilled professionals, 
wherever the source.
    Second, a significant number of H-1B visas are granted to foreign-
born students who have graduated from American universities. Almost 
one-half of the advanced degrees in computer engineering, electrical 
and electronic engineering awarded by American universities go to 
foreign nationals. America's universities are truly a magnet for the 
world's brightest minds. To turn these highly skilled scientists and 
engineers away after we have trained them in the United States--
encouraging them to seek employment by foreign companies who may be our 
competitors--simply does not make sense.
    And because American universities are sponsoring the most advanced 
technology research, these graduating students are not only brilliant 
researchers but also bring knowledge of the newest technologies to 
their employers.
    Third, companies may hire skilled foreign professionals to help 
them build or strengthen their business in foreign markets. These 
professionals clearly offer valuable insight into language, culture and 
geographies that enable American companies to compete in foreign 
countries--increasingly important markets for American technology 
products and services.
    Finally, a major use of foreign-born professionals is to fill skill 
shortages. As long as we face a workforce gap, this will remain a 
critical need of the technology industry.

   THE TECHNOLOGY INDUSTRY SUPPORTS EDUCATION AND WORKFORCE TRAINING

    The technology industry is working hard to close the workforce gap. 
Every TechNet member is concerned with the workforce needs of the 21st 
century. We all recognize that today's engineer will have seven careers 
before she retires and that, because technology changes overnight, 
lifelong learning is the key to competitiveness in the technology 
industries. To that end, our members are working at the K-12 level, in 
partnership with universities and through in-house programs to train 
and retrain a skilled technology workforce.
    U.S. companies spend approximately $210 billion annually on the 
formal and informal training of their information technology workforce, 
and provide an estimated $4 billion in support to schools at the K-12, 
college and university levels around the country. The technology 
industries are among the most generous donors in the corporate world, 
according to data compiled by The Conference Board. In Silicon Valley, 
corporate contributions as a percentage of pretax profit are 17 percent 
higher than the median for all industries.
    Both large and small TechNet member companies have developed 
programs to meet the workforce challenges that all technology companies 
are facing. These range from scholarships which are successfully 
encouraging minority students to pursue careers in engineering and 
computer science to in-house training programs that prepare current 
employees for the challenges of the future. Corporations also support 
K-12 education through the donation of dollars, technical resources and 
volunteers to nonprofit initiatives. We are in the process of 
cataloguing these efforts and look forward to sharing the experiences 
of our members with successful education and training programs.
    Donations to education programs represent over 40 percent of all 
charitable activity by high tech companies. Some of the programs which 
are having an impact on science and technology education in American 
communities include Cisco Systems Networking Academies which currently 
enroll 17,000 students in all 50 states; Hewlett-Packard's Diversity in 
Education Scholarships which support engineering and computer science 
training for outstanding minority students; and the Microsoft Connected 
Learning Community program which provides grants to support technology 
access in disadvantaged communities.
    TechNet supported the provisions of the American Competitiveness 
and Workforce Improvement Act that ensure that a portion of the H-1B 
visa fees are used to support scholarships and technical skills 
training programs. The technology industry is committed to continuing 
its high level of support for American education and worker training.

                BUSINESS IMMIGRATION IN THE 21ST CENTURY

    As we enter the next millennium, there are important issues that 
must be addressed to meet the workforce needs of the high technology 
industries.
    First and foremost, we need to ensure sufficient supply of skilled 
technology professionals. The technology industry is committed to 
continuing its support for education and workforce training. Until 
America's schools and universities are graduating enough technically 
trained professionals, however, we must rely on skilled foreign 
professionals to fill the gap.
    Next year, predictions are that the quota of H-1B visas may be used 
up before January 1, 2000. This will be due in part to a growing 
backlog of visas that stems from the period in 1998 when the quota was 
unavailable. It is estimated that between 40,000 and 60,000 H-1B 
petitions are pending at INS Service Centers. This rolling backlog has 
significantly reduced the effectiveness of the recent quota increases 
and must be addressed.
    We understand also that the Immigration and Naturalization Service 
is considering reducing the number of H-1B visas available in fiscal 
year 2000 to compensate for the issuance of visas possibly in excess of 
the fiscal year 1999 cap. We would urge the INS not to take such 
action, particularly given the uncertain data about the number of visas 
processed in 1999. This controversial proposal also underscores the 
need for better data and predictability in these programs.
    On behalf of TechNet's members, I want to express our appreciation 
to the members of the House and Senate, including Senator Phil Gramm, 
who have taken the proactive step of introducing H-1B visa legislation 
this year. We are encouraged by these efforts and hope that with the 
help of this Committee's leadership, we can pursue a bipartisan 
approach to these important issues in the months ahead.
    Second, we need to consider whether the business immigration 
programs are structured as efficiently as possible. Progress in 
increasing the H-1B visa cap will be undone by excessive processing 
delays and inefficiencies in program administration. Delays in 
processing currently make it impossible for companies to plan or 
predict how long it will take to secure an H-1B visa. Policy makers 
should look carefully at how program management can be enhanced and 
consider potentially far reaching proposals to reform and improve these 
services. There is bipartisan support for restructuring and improving 
INS management and we hope that Congress will move expeditiously to 
address these reforms.
    Further, as the provisions of the American Competitiveness and 
Workforce Improvement Act are implemented, policy makers should ensure 
that paperwork and regulatory requirements remain manageable. Companies 
which have a proven record of responsible reliance on the H-1B program 
should not be unnecessarily burdened or micromanaged by these 
requirements. It was certainly not congressional intent to hinder the 
ability of legitimate employers to utilize H-1B visas and we are very 
concerned with many aspects of the Department of Labor regulations in 
this area. Several TechNet member companies have submitted letters 
detailing concerns with these regulations.

                               CONCLUSION

    This hearing is an important first step in addressing these urgent 
workforce issues. We hope that Congress will act on the pending 
proposals to address these issues early in 2000.
    As we approach the 21st century, we simply cannot afford to let a 
lack of skilled workers jeopardize our nation's technological and 
economic leadership. The technology industry is continuing its efforts 
to build America's scientific and technically skilled workforce. As we 
do so, it is essential that have access to the scientists, engineers, 
managers and other skilled workers necessary to sustain our global 
competitiveness.
    In conclusion, I want to again express our appreciation for the 
leadership that this Committee and the Congress have shown on these 
complex issues. I hope these thoughts are helpful and look forward to 
continuing a thoughtful examination of these important issues in the 
months ahead.
                                 ______
                                 

                Attachment to Statement of Roberta Katz

          TECHNET CEO TESTIFIES ABOUT AMERICAN COMPETITIVENESS

Highlights High Tech Giving for Education
    Washington, D.C.--Technology Network (TechNet) Chief Executive 
Officer Roberta Katz testified today about maintaining American 
competitiveness in the 21st Century. During Senator Spencer Abraham's 
(R-MI) Immigration Subcommittee hearing, Katz highlighted the extensive 
efforts by high tech companies to improve education.
    ``If the United States is to remain the world's technology leader, 
it is essential that American companies continue to have access to the 
most highly skilled workers. Until our schools and universities 
graduate sufficient numbers of technically trained American-born 
professionals, an efficient and effective business immigration system 
must fill the workforce gap. As the global economy speeds up, business 
immigration policy must keep pace,'' said Roberta Katz, CEO of TechNet. 
``From the standpoint of TechNet's member companies, this is not an 
immigration issue, but a competitiveness issue. These issues need to be 
separated from the parameters of the immigration reform debate and 
understood as an issue that affects our nation's global competitiveness 
in the 21st century.''
    Katz highlighted the extensive efforts of industry to improve 
education. Cisco Systems, Compaq, Apple Computers, Intel, Microsoft, 
Nortel Networks, Sun Microsystems and 3Com give time and resources to 
bring technology to underserved areas.
    According to the Conference Board, high tech companies direct more 
than 40 percent of their charitable contributions to education. These 
contributions are more than 34 percent higher than such contributions 
from all industries.
    ``High tech companies are rising to the challenge to improve K-12 
education and ensure opportunities for all Americans working in the New 
Economy,'' said Roberta Katz.
    During the hearing Katz thanked Senator Abraham for his work. ``It 
is also a great pleasure to testify today before Chairman Spencer 
Abraham, whose leadership of technology policy is unparalleled. Mr. 
Chairman, your dedication to the development of fair and responsible 
business immigration policy has supported and protected our nation's 
technological leadership. The benefits of that leadership are enjoyed 
by all industries and all Americans.''
    Last year when H-1B visas were increased, TechNet worked to 
reenergize efforts to reach a compromise. Specifically, the 
organization engaged in a series of detailed, three-way negotiations 
between high-tech industry leaders, Congress, and the White House in an 
effort to reach common ground. At the end of the negotiations, when 
small issues still remained in dispute, dozens of TechNet executives 
called senior officials urging that a compromise be reached in a timely 
fashion. Senator Abraham was instrumental in finalizing the compromise.
    TechNet is a national bipartisan political network. Its mission is 
to help its members build working relationships with national and state 
political leaders and pass federal and state laws that will help foster 
the New Economy. Its primary public policy priorities for 1999 are: to 
strengthen the nation's investment in basic research by enacting a 
permanent R&D tax credit and increasing federal funding for basic 
research, to protect current accounting rules for business combinations 
and stock options, and to improve K-12 education.

    Senator Abraham. Mr. Archey, welcome. Again, we are glad to 
have you here.

                 STATEMENT OF WILLIAM T. ARCHEY

    Mr. Archey. Thank you, Mr. Chairman. I would like to 
express AEA's thanks to you for your leadership on this issue 
and to Senator Feinstein and Senator Kennedy for their help and 
support on this issue over the last couple of years.
    In my prepared statement, I sought to provide a 
quantitative base for the legitimacy of the concerns of this 
industry in terms of the shortage of jobs and in terms of what 
are some of the phenomenon taking place in the industry, and I 
just want to very quickly go over a handful of those.
    Using government data that we used in our Cyber States 
report and our Cyber Nation report and our recent report on 
Cyber Education, this industry since the first quarter of 1984 
has created 1.1 million net new jobs totaling 4.8 million. 
Interestingly, this industry is now the largest manufacturing 
employer in the United States, with two million employees.
    I would also note that the average wage now in the industry 
is almost $54,000, 77 percent higher than the average private 
sector salary. By the way, that breaks down in some other 
interesting ways. For example, if you work in prepackaged 
software, the average salary yearly is about $81,000, and if 
you happen to work in the State of Washington, the average 
salary for a prepackaged software worker is $158,000 a year. I 
think the moral of that is, one, thank you, Microsoft, and 
number two is, may your son and daughter grow up and be a 
software engineer.
    The other thing I think in terms of the employment, this is 
again Bureau of Labor Statistics 1998 data, the unemployment 
rate overall for all engineers is 1.6 percent, for computer 
programmers it is 1.4 percent, for computer scientists it is 
1.2 percent. In no instance in terms of the high tech jobs--we 
classified six categories--is there any unemployment rate 
higher than 2.1 percent.
    The point, I guess, I would make also in all of this has to 
do with--I am fascinated sometimes, although I think the 
controversy surrounding H-1B seems to be diminishing each year 
because I think the legitimacy of the case we make is being 
recognized. But I often think about the concept of George 
Orwell and language is everything and I am wondering if we 
called this the H-1B job program, if there would be any 
controversy at all, because that is, in fact, what it is.
    Ms. Holdren made a very, very pungent point that the number 
of people coming in on an H-1B visa creates the intellectual 
property that, in turn, creates other jobs, and, indeed, 
creates wealth. This is really what this is about, and a lot of 
the other controversy tends to be, in my judgment, at the 
margin. The fundamental issue here is very talented technical 
people who get jobs in this industry tend to create enormous 
intellectual property which, in turn, creates an enormous 
number of jobs, and that is really what this is about. Yes, 
there are some complaints about other aspects, but I think that 
is it.
    The other thing I would just note in terms of what Rob 
said, we have been taking a look at the whole issue of 
education. One of the things that is interesting is in the 
1990's, 1990 to 1996--that is the latest data--their overall 
degrees from associate to doctorate have gone up by 16 percent. 
In the high tech industry, the degrees have declined by 5 
percent. You would think that if the laws of supply and demand 
were operating, that more and more people would be taking those 
kinds of courses.
    But then you look at educational performance in K through 
12 in terms of our kids, particularly as compared to other kids 
in the rest of the world, and, for example, our kids do 
extremely well in math and science testing in the fourth grade. 
By the time they get to the 12th grade, they are 19th out of 21 
countries in math and 16th out of 21 countries in science.
    I would also note that not enough kids are taking it. 
Sometimes people think this is facetious, but I think if we 
want to really look at one overall thing that might help, you 
take a look at what tests are done with kids when it comes to 
particular professions and they draw caricatures. It is very 
interesting when you talk about engineering. The caricature is 
always somebody with coke-bottle glasses, clearly somebody who 
is terribly inept, and it has got an image that does not 
attract people, despite the fact that there is probably no more 
exciting place to work in the United States than in the high 
tech industry.
    So my thought is, and I am going to be pursuing this next 
month, is what we need is Hollywood to get interested in a new 
program sit-com called ``L.A. Geek,'' where it takes place 
actually in the workforce and shows how exciting this industry 
really is. And then, as an afterthought, by the way, you are 
going to be making somewhere between 80 and 100 percent more 
than somebody else in another industry. But I think there is an 
attitude issue here and a perception on the part of kids that 
we need to change.
    And I think, lastly, I would just make this point. We are 
putting together a clearinghouse on high technology educational 
initiatives, to gather the data that is being asked by you and 
by many others on both, one, what is being spent, but two, the 
kinds of programs and whether they have succeeded or not so 
that we can seek to replicate those programs in lots of other 
parts of the country.
    The point I would just make on this, and others have made 
this, this is an industry that disproportionately is 
contributing to educational reform and educational improvement. 
It is going to continue to do so. H-1B visa happens to be 
something that, until we can solve those larger problems, we 
must have it. Thank you very much.
    Senator Abraham. Mr. Archey, thank you very much.
    [The prepared statement of Mr. Archey follows:]

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    Senator Abraham. I will turn to Senator Kennedy, if he has 
any questions for the panel. We will begin with you.
    Senator Kennedy. I thank you all very much for your 
testimony and the variety of different observations that were 
made about how we deal with the short term and then how we deal 
with the long term. I think it is pretty easy to understand 
what the short term is, perhaps, and less in terms of the long 
term.
    As I see from the National Science Foundation, in the last 
10 years, the number of science and engineering graduates has 
declined 17 percent nationally, and 37 percent in my own State 
of Massachusetts. So the economic indicators are going south.
    One thing we have not talked about at all in the panel was 
what the pay rates are, what we are paying. Usually when we 
talk about supply and demand, we also talk about wages that are 
going up. Here, according to CRS figures from 1998 and 1999 for 
computer engineering--and this is the average salary of the 
bachelor degree candidates by major field of study and 
function--in 1998, it was $43,800 for computer engineering. In 
September, $49,045. Computer science, $41,900. In September, 
$49,000. Computer programming, $38,700, $40,839.
    There is not a law student in Massachusetts that is 
graduating from any one of their schools that is not doing 
better than that, and we have got more lawyers than we possibly 
need. They have said that for a long time.
    I could go down, but I do not want to because we are all on 
limited time, but this goes down, information science, $37,000 
to $38,000; system analysis, $36,000 to $38,000. All of them 
have had a bleep of about $1,100 or $1,200, which is basically 
across the board, across the board in terms of every one of the 
professions--no jump, no hike there.
    Furthermore, in terms of job function, software design and 
development, $43,400 to $45,500. Hardware design, $44,000 to 
$45,000. That is $1,000. Why are we finding out that in terms 
of at least the CRS and these kinds of studies, that with all 
this enormous demand, that all of you are being paralyzed in 
terms of the future of your companies, why in the world do we 
not see these things ratcheted up more?
    A number of people are telling us that it is the law of 
supply and demand and they refuse to pay these increases of 
what the needs are, and would that not have some impact in 
terms of young people, if they suddenly saw the dramatic 
escalation their brothers and sisters are getting, that they 
have gone up from $36,000 to $45,000 to $60,000 to $100,000 
over 2 or 3 years. Maybe someone down in those high schools 
sends them a message on this.
    There was not one comment from any of you about pay, and 
there are people that believe that that is an issue. I would be 
glad to hear your comments. We are going to have a brief period 
of time.
    Ms. DeFife. Senator, if I could address that issue. In 
companies like ours that are venture backed and where we are 
losing money on a fairly regular basis, we do a number of 
things to attract workers. Salary is obviously important, but 
one of the things we use is to increase the benefits and the 
package, basically, by the use of stock options. Oftentimes, 
what we do is make two offers, an offer of a higher salary 
level, less of stock, or a lower salary level and greater 
number of options. I will tell you that, without fail, everyone 
who has walked into the company has taken a lower salary and a 
higher stock options package with the feeling that, long term, 
there is a lot of potential here, a lot of potential wealth.
    I will also tell you that at the higher levels, the 
compensation is so great that you are talking a minimum of 
$60,000 and more likely in the $80,000 to $90,000 range to hire 
a senior technical officer, and that includes a very generous 
options package, as well.
    Senator Kennedy. There is not a graduate from Harvard Law 
School who is not going to get $100,000 next year, start off 
first year from law school.
    Ms. DeFife. But they have no options.
    Senator Kennedy. You are talking about a highly competent, 
a highly trained person that is going to have a package of 
about $80,000. It really does surprise me. I understand about 
the stock. Nobody can look at what CEO's are being paid and not 
know what the stocks are and all the rest of it. But a lot of 
these are winners and losers. People understand that. You can 
talk about the stock. You are going to find, everybody can give 
a half-a-dozen different companies that have gone off the logs. 
They started out and they were only getting $30,000 and are 
worth over $1 million. At Microsoft, they keep throwing this 
back up.
    But for what is happening out there in the average kind of 
smaller company, and I am just, quite frankly, kind of 
surprised that this is the level that is coming out. You take a 
fellow from a 2-year college and he gets a mechanic, advanced 
mechanics degree in that school, starting out with $47,000, 
$48,000 as a mechanic on a car, and you are talking about what 
is happening here.
    I am just surprised that in terms of the totality of this, 
that it is not more, and I think it is going to happen. We will 
go through this in terms of the expansion of it, but I, for 
one, want to see what is happening out there and finding out 
what the companies are paying these people and what this thing 
is worth. I mean, if you are not paying it and want to get some 
people in here who are going to be cheaper workers on this kind 
of thing, that does not make a lot of sense as far as I am 
concerned.
    I do not see why--part of it, we have to do. No one is more 
committed than I am in terms of K through 12, in terms of 
training and consolidating programs and all the rest of it. But 
we want to try and see what is being offered out there for 
people coming into the job market, too, rather than just 
saying, well, this is where we are and we have a lot more on it 
and it is going to take that.
    This is another point. They talked about the decline in 
training programs. That is what they had all over Europe. They 
had all the decline programs. You mentioned, I think, $220 
billion. How much of that goes to actually workers and how much 
goes to management?
    Ms. Katz. I do not have the background on that, but----
    Senator Kennedy. I will bet you the great percentage of it 
goes to the management part of it. If you do not have it, you 
can submit it.
    Ms. Katz. I will look into that.
    Senator Kennedy. If it is not, it will be one of the really 
important differences that we have had, where they have 
provided the greatest percentage of the training programs are 
going to be for management rather than for continuing upward 
grade. There are others, there are exceptional companies and 
all the rest, but I am interested.
    There is one other point. This is what was happening in 
Europe, not that this is the answer, but it is certainly one 
that you ought to consider. Instead, they had the requirements. 
Companies had the options that they could either have education 
programs and training programs available to everybody, 
everybody across the board, top and bottom suitable so that 
everybody moved up, or they paid an additional kind of 
contribution--call it a tax, whatever it is. They had their 
choice. They had their choice in it.
    But what happened is they all went on for the training 
programs, all of them, and none of them cared about the--they 
made their best efforts to hold the workers, but they knew if 
the worker went out the door, they could bring another worker 
on in, and that worker was trained, too.
    We have an incentive where if these companies, which the 
best companies do, go out and train, they lose them, they end 
up paying for it. You have financial disincentives for 
companies. I do not know whether you have any sense about how 
we deal with that, if we are going to have the private sector a 
partnership over a longer term.
    Ms. Katz. I do know that for technology companies, across 
the board, the number one issue is education because we cannot 
have an information age without people who do not know how to 
process information. Where our schools seem to be failing at is 
in basic skills that then translate into the ability to 
manipulate information. So for all of our companies, it is our 
number one issue.
    Senator Kennedy. Thank you very much.
    Could I just ask, Mr. Atkinson, this is a very interesting 
book, and Massachusetts does reasonably well. I want to thank 
you very much. You worked for the Office of Technology 
Assessment, and one of the functions of the OTA was to guide 
the Congress about the impact of technology on legislation and 
also legislation on technology. This is one of the kinds of 
areas we are dealing in here, and we are always thirsty for 
information. We disbanded one of the enormous assets, and I had 
enormous respect for the personnel, and I know you were highly 
regarded.
    Let me just ask you, Massachusetts does reasonably well, 
but we fall down in just three quick areas. One was in the 
education technology. We were 48th out of 50 States in online, 
without being partisan, Mr. Chairman, but under the Governor 
Wells period. Now, we are back to about 10th, and that is 
because of the private sector. We had Net Day and the private 
companies, software and so on, put $30 million and coordinated 
with schools. We got 350 miles of cable done by the union. It 
is the most extraordinary thing that I have seen as far as a 
partnership goes. So that figure might be a little different 
because that was done recently.
    I wish you would just, if you could, tell me or supply it 
later, but we are 21st on IPO's, and what that means, and we 
are 18th on job churning. Could you just do it quickly, and I 
am finished, Mr. Chairman.
    Mr. Atkinson. IPO's--before you were alluding to the State 
New Economy Index that we just came out the end of July. It 
ranks all 50 States on how their economies are. The IPO measure 
is simply measuring the value of IPO's in a given year as a 
share of the gross State product. Massachusetts, as you say, 
does very well. In fact, they were the number one State in the 
country. But the IPO's, for some reason, they did not score as 
well on.
    The churning, I think that is what you said----
    Senator Kennedy. Yes. What is churning?
    Mr. Atkinson. Churning is the amount of new jobs that are 
created, adding to jobs that are dead, that went out of 
business, the jobs that declined.
    Senator Kennedy. Is that sort of a replacement or 
something?
    Mr. Atkinson. It is whether the economy is just sort of 
stagnant, staying along, growing a little bit, or whether there 
is lots of dynamic activity. What was interesting is we found 
that actually States that had the most decline in terms of jobs 
going out of business had the fastest employment growth, which 
is counter-intuitive. One would assume, oh, if your companies 
are going out of business, you should not be growing. But we 
found that that was not the case, that States where the jobs 
were going out of business, for some reason--I think it was 
because older companies were going out of business and being 
replaced by new fast-growth companies and new fast-growth 
industries--that States that had that tended to grow faster.
    Senator Kennedy. And as all of you said, it is the 
combination of superb educational research facilities, the 
universities, and the private sector. We have had a very, very 
extraordinary experience with universities and the private 
sector, the NIST program, and SBI program for advanced 
research. It has just worked up there. We are all interested in 
seeing how we can do it in other parts of the country, too.
    Thank you, Mr. Chairman.
    Senator Abraham. Thank you very much. Before we turn to 
Senator Feinstein, I just do want to clarify one point for the 
Senator from Massachusetts. I just want to draw your attention 
to clarify one point, which is that I graduated from the 
Harvard Law School 20 years ago and I am still only making 
about $100,000. [Laughter.]
    I am not sure the upside potential is as great.
    We will turn to Senator Feinstein for any questions here, 
but I did want to get that clarified.
    Senator Feinstein. Thank you. I just said to Senator 
Kennedy that in these rankings, Massachusetts is at number one 
and we are trying to change to hold harmless in the Title I 
program so that the money follows the children. See, 
Massachusetts through his chairmanship and his ranking always--
they lose poor children, but they hold themselves harmless. The 
children come to California, but they do not get the money. So 
we have to----
    Senator Kennedy. Listen, you are talking to one of the big 
spenders. I am for doing it for both. [Laughter.]
    Senator Kennedy [continuing]. You cannot do enough for 
children in Title I.
    Senator Feinstein. Anyway----
    Senator Kennedy. I will support your amendment to increase 
it for all.
    Senator Feinstein. You will?
    Senator Kennedy. For all children.
    Senator Feinstein. You do not want me to get too specific 
here.
    I was kind of captivated by something, and that was Mr. 
Atkinson's suggestion, because it kind of led to something, and 
that is if you are going to really encourage the so-called 
disadvantaged child to see a future in this industry, it has 
got to start very early on and that youngster has to believe 
they can be part of it.
    Your concept of a scholarship program--I was wondering, 
just Ms. Katz and Mr. Archey, whether the private sector might 
be interested in doing something like that, setting up a 
scholarship program so that a disadvantaged youngster that you 
could begin very early on, and if they had the promise and the 
interest, commit to a scholarship for college so that they 
would then know if they carried this out, there was a future.
    With many disadvantaged youngsters with respect to high 
tech, they do not see it being an environment that would ever 
be friendly or acceptable to them. They look at it as something 
from the Harvards and the Cal Techs and that kind of thing. I 
would like to know if you would ever be interested in that.
    Ms. Katz. Absolutely, and there are some companies and some 
individuals. I think the Gates Foundation has just made a large 
gift to promote that kind of a scholarship. There are--I 
believe Cisco--I think Rob mentioned that--has a program, and 
there is a great interest in more of those programs.
    Senator Feinstein. How big is the commitment, would you 
say?
    Ms. Katz. In the case of the Gates Foundation, I think it 
is in the billions, I believe.
    Senator Feinstein. I know that is a big one, but----
    Ms. Katz. Let me see. I have some statistics here. Cisco 
has an academy that currently enrolls 17,000 students. Hewlett-
Packard has a program, Diversity in Education Scholarships, and 
it has been going on for a while very successfully, supporting 
engineering and computer science training for outstanding 
minority students. Then I have a reference to the Microsoft 
Connected Learning Community program, which provides grants to 
support technology access in disadvantaged communities. These 
are just some of the examples.
    I think, as we get better organized to do this, the 
technology community, there is a great interest and there will 
be tremendous participation in these programs.
    Senator Feinstein. Just before you speak, Mr. Archey, I did 
not know that every H-1B visa produces three to five additional 
jobs.
    Mr. Archey. Yes.
    Senator Feinstein. There is also a dark side to that, which 
says we in this country cannot create someone that can produce 
three to five jobs. Therefore, we have got to go out and find 
the individual in another country and bring them in because 
that individual has the learning ability, has the basic skills, 
et cetera. Mr. Archey?
    Mr. Archey. I just would reinforce what Roberta said. A 
large number of our member companies--I do not have that data 
now, but hope to in a few months--in fact, are sponsoring 
scholarship programs for disadvantaged and minorities and to 
get them to come into this industry.
    The point that I would also make is, there is no industry 
in this country and perhaps ever that existed that is a greater 
meritocracy than this industry. You do not have to have the 
Harvard pedigree to succeed in this industry. You have to have 
very good ideas.
    Now that the Senator is here, Senator Kennedy, I had a 
chairman of my board. It turned out he and I lived in Boston at 
the same time. I am a native of Massachusetts, but from 
Pittsfield, MA, where most people in Eastern Massachusetts 
think it is part of New York.
    Senator Kennedy. Not if you run for election, you do not. 
[Laughter.]
    Mr. Archey. But one of the points that I said to him is, 
what is the difference--he moved to Silicon Valley and I said 
to him, what is the difference between Boston and Silicon 
Valley? Oh, he says, that is real simple. In Silicon Valley, I 
have never had anybody ever ask me what school did I go to.
    Senator Feinstein. That is interesting.
    Mr. Archey. And he said, and number two is, not that you 
want to make it a habit, but you can fail out here and it is 
OK. You can still make it again.
    I think that is the whole point about this industry. I was 
talking to somebody a couple of months ago who said, you know, 
now we are at the point with the availability of venture 
capital that if you have got a totally cockamamie idea, only 
five venture capital companies want to fund it.
    So I think that to get those who are perhaps disadvantaged, 
I think that we have got to do more an industry because there 
is not anything that is more fascinating. As I said, merit is 
what matters. Your lineage and your pedigree is not of any 
great moment.
    Senator Feinstein. See, I just wonder if we could not 
really make some of this a national model out there and really 
attract industry capital in a big way and perhaps one day, when 
Senator Kennedy is back as chairman of the Education 
Committee----
    Senator Kennedy. We have kept this very friendly here 
today. [Laughter.]
    Senator Feinstein [continuing]. We could get a Federal 
share to it, and then you would really have a program, I think, 
that could boost youngsters into this industry. I think the 
idea of the meritocracy is really interesting. I mean, this 
could essentially really resolve a lot of problems in our 
society, so it is an exciting concept. Mr. Atkinson?
    Mr. Atkinson. I just wanted to completely reinforce what 
you said. I mean, I think if there is any message from the 
point I was trying to make, it was that we are not going to 
solve this problem simply by industry alone or by government 
alone. We need to really build that partnership together.
    Senator Feinstein. Right, maybe have some kind of a 
matching program. For every dollar one puts in, the other puts 
in a dollar, and then you can make it national and can really 
make a dent in this needy population.
    Ms. Katz. Well, and we also need to make sure that the 
schools, even for our youngest children, are teaching math and 
science in a way that makes them exciting and compelling.
    Senator Feinstein. Yes. But you see, the disadvantaged 
child, I have worked a lot with them. Math and science are not 
the thing that really appeal. They see it as a dead-end street. 
So the real need is to show the excitement in it and what the 
future can bring. So that would mean there would have to be 
something in addition to just scholarship, but some program in 
schools that could put youngsters into the program so that they 
would get a taste of it, and if they had the aptitude and the 
willingness, it could be a lifetime pursuit.
    Ms. Katz. And Hewlett-Packard does do that. They bring 
students in every summer to work at the company as the kids get 
to high school age. It is a very successful program.
    Senator Feinstein. Do you have to wait for high school age 
to do it, because I think it is too late then, by and large. 
The youngster is formed.
    Ms. Katz. I think what they do is they participate in the 
training of certain of these kids and then as they progress in 
the program and then they become of an age where they really 
can come to work every day, that is what happens.
    Senator Feinstein. Thank you. Thanks, Mr. Chairman.
    Ms. DeFife. Senator, could I add some things? There are 
some innovative programs going on here, as well. Through the 
Potomac Conference, we brought business leaders and education 
and government leaders together, and superintendents of the 
area school districts are meeting with business to figure out 
what we can do, first of all, to figure out what kind of 
curriculum might help to develop these jobs and provide the 
support, as well. AOL has really taken the lead on developing a 
pilot curriculum in the schools that, hopefully, we can use 
around the country as an example of how we can help train some 
of these workers. We are also----
    Senator Feinstein. That would be really terrific.
    Ms. DeFife. It is a fabulous program.
    Senator Feinstein. Then children, if we can find a way to 
get them a little computer at home, that they practice on the 
AOL program or something.
    Ms. DeFife. And it is designed to capture their 
imagination, as you had mentioned, putting it as part of the 
curriculum, capturing their imagination on the technology end. 
CapNet is also doing a digital divide tour with the 
Congressional Black Caucus also to discuss these issues, 
because we are well aware that they are there, and trying to 
provide our help as much as we can.
    If I could add one thing, I do think one of the things we 
need to reach out to in addition to the disadvantaged is to 
take a look at the issue of young girls and women. They are not 
taking advantage of the technology in the schools, and the 
reduction in the number of women going into technical fields is 
alarming to me. We cannot afford to ignore 50 percent of our 
workforce as we are talking about developing new workers.
    Senator Feinstein. Thank you.
    Senator Kennedy. Just on that, in 1976, we had a special 
program through the National Science Foundation for women and 
minorities in the sciences, and that thing has just sort of 
limped along and they have never really been able to get a 
handle on it. I think now, actually, it is disappearing. I 
could not agree with you more.
    We have taken too much time, but I would be glad if we 
could have our staffs visit with you or talk with us about 
which companies you know are doing the best in terms of the 
training programs and education, if you could let us know. I 
would be glad--with our colleagues here or with others--to try 
and get the people over there from the Labor Department, as 
well. We passed a decent bill this last year to try and 
eliminate an awful lot of these targeted programs, to have them 
more consolidated, and see what the possibilities are, I mean, 
the intersects on some of these things.
    I will submit that as a question and then be in touch with 
you and see if we can get our colleagues to try and do 
something. Thank you very much.
    Senator Abraham. Thank you. Let me say, I have a few things 
to add. First of all, we will request that our subcommittee be 
retitled the Subcommittee on Immigration and Workforce 
Development.
    Senator Feinstein. Yes, that is good.
    Senator Abraham. We obviously are trying to encroach on 
somebody's turf who is going to get mad at me, probably by 
tomorrow, but----
    Senator Feinstein. Do not worry about it.
    Senator Kennedy. It is my turf on the Labor Committee, and 
I am glad to----
    Senator Abraham. Senator DeWine and you can work with us 
here. In fact, we probably should do maybe a joint hearing on 
this at some point.
    I just wanted to put a couple other sort of comments into 
play here in response. Mr. Atkinson, you mentioned the notion, 
I think, of trying to work on a program to try to get teachers 
or people who would become teachers to commit to science and 
math and so on. If we moved in that direction, I would say, or 
States moved in that direction, certainly--this is going to be 
an anecdote-filled commentary by me, but one of the things I 
had an interesting experience with was just a year ago or so 
with Governor Keating of Oklahoma.
    I do not know if you can shed any light on this issue 
beyond Oklahoma, but we were talking about the H-1B program, 
the problems, and he said, look, we have got them in Oklahoma, 
too. We need this increase. I thought, this is not the State 
that you would automatically think of. Part of my problem in 
Oklahoma, he said, is that in Oklahoma City--I think it was in 
Oklahoma City--he said, the oldest math teacher in the entire 
school system is 27 years old. That is because what is 
happening is the teachers are being hired. I assume--I am just 
seeing a lot of nodding of heads here--that math teachers are 
being hired by the private sector in high tech-related 
industries because the scarcity problem is forcing----
    Senator Feinstein. The best teachers end up in high tech. 
Every ``Teacher of the Year'' in California ends up leaving and 
going into high tech.
    Senator Abraham. I am trying to get toward the point here 
that it is a bigger problem. The education side of this strikes 
me as a lot more complicated than simply a money issue or a 
training issue or whatever, because I think the scarcity issue 
is taking people who could train folks, train our children to 
move in these skill areas. They are leaving. So a lesser, maybe 
a lesser focus exists.
    I will say this. Our two girls started first grade this 
year, and in the school system, which is a fairly affluent 
school system that they attend, they have got a program for 
kindergartners, for first graders, and I do not know if it goes 
into second grade, of a special class on science one morning a 
week from 8 to 9 a.m. that is not taught by the school system 
but it is done through the PTA.
    They had exactly enough help and support to do this for, I 
think it was nine children, and our girls, because of a little 
glitch in terms of the form getting in, were numbers 10 and 11, 
and so they were not going to get to participate because the 
PTA could only handle nine slots. Now, this is, as I say, a 
fairly affluent school system. Fortunately, my wife then got on 
the phone and literally recruited seven other children so that 
they could get another set of nine, which would justify having 
another section of this.
    But that is it. That is the science training, and it 
happens not because of anything going on in the school system. 
So it really is another example of kind of the problems we 
confront, school systems with a lot of resources but not, at 
least at that age, focusing enough on science, so that this has 
got to happen on a separate track.
    I wanted to ask a question that gets more back to not 
necessarily either Senator Gramm or Senator Robb's bill, but 
just the general issue of the H-1B needs and so on, at least 
the short-term issue that we have got to confront in this 
subcommittee. Ms. DeFife, you indicated that companies are 
moving offshore. I take it that is something that you have some 
personal familiarity with, and I suspect some of the others. We 
hear that. That is not just sort of a threat, that is 
happening, is that correct?
    Ms. DeFife. That is correct. For our company, it is not, 
but I know a number of CEO's who have said, it is easier for 
me, it is more economically feasible, because I cannot find the 
workers here, to move. India is one that I am very familiar 
with a number of companies moving to.
    Senator Abraham. Ms. Katz, in your experience----
    Ms. Katz. The same phenomenon is happening with some West 
Coast companies.
    Senator Abraham. Mr. Archey?
    Mr. Archey. I think that is true. I would also, though, 
amend that to say that for most of our CEO's, they would rather 
expand here. I mean, there is not any question about that. That 
is really, if not the course of last resort, it is pretty damn 
close to it, of moving it offshore.
    Senator Abraham. The issue that we dealt with in the last 
go-around on this H-1B debate that was linked, in a way, was 
the notion also that, somehow, the perception existed that 
somehow it is cheaper and easier to find somebody overseas to 
come and work for you than it is just to hire. I mean, it is 
not a case that American companies are for some reason 
benefitted by going elsewhere to find talent, when if the 
talent was here, it would be hired.
    But this gets me to the question, I know in Senator Robb's 
bill, the sort of T visa concept, it is my understanding, and 
he did not specifically get into the numbers, but that we would 
be talking in the range of 8,000 to 10,000, maybe, per year, 
who would fit the parameters, that is, who would graduate with 
the kind of degree we are talking about, as well as the salary 
we are talking about.
    I would ask all of you to comment on whether you think, at 
least in the short term, and by that, I guess I would say maybe 
over the next 5 years, whether if we were to revert back to the 
65,000 number of H-1B visas but have this T visa program, 
whether you feel this is adequate in terms of the numbers, 
because that is sort of where we will be in a little more than 
a year.
    Ms. DeFife. I know of one company that has 30,000 technical 
vacancies right now, so I can tell you that would not even come 
close.
    Senator Abraham. Thank you.
    Ms. Holdren. It definitely would not come close. It is 
alarming.
    Mr. Atkinson. I would agree.
    Ms. Katz. I would also agree. I think it addresses an 
important aspect of it, but the problem is bigger than that.
    Mr. Archey. I think that is right. I think the problem is 
much bigger than that. You know, I think, Senator, there is one 
thing that ought to be considered. We are looking at 45 percent 
of all doctoral degrees in high technology that are now being 
given to foreign nationals, and that is only up to 1996 data. 
That is the last data the Department of Education has got. I 
think that number is going to be higher than 50 percent when 
you get up to 1999.
    It strikes me, and I say this not flippantly at all, that 
when somebody who is a foreign national gets a doctoral degree 
in high technology and science, math, engineering, that along 
with the diploma, they ought to get a green card, because it is 
highly likely that that individual has also gotten some public 
support, through some form of fellowship or scholarship.
    The thing that I do not understand is why would the U.S. 
policy want to encourage that individual to leave this country, 
and this individual right now is at the cutting edge of his 
field. Engineers will tell you, there is nobody more current in 
the field than somebody who is just coming out of a doctoral 
program. And then have them go back to whatever country, that 
just does not make sense.
    Senator Abraham. I have to say, that was actually the next 
point I was going to comment on, was that one of the things 
about Senator Robb's proposal, as I understood it today, that 
had an appeal to me is that it begins to look at that issue of 
people who are already coming here and part of the country for 
obviously their educational training and maybe some may have an 
H-1B as part of it in some way, but the idea that we are 
training folks to work for competitors does not make a lot of 
sense. But the notion of limiting it to only the people who 
would hit a certain income or salary level would bring the 
numbers down. That was my concern. And as I say, I have heard 
the number is 8,000 or 10,000, which seems to me to not maybe 
get there. But that is another issue that needs to be examined, 
Mr. Archey. I agree with you on that.
    I do think it is important to acknowledge for the record 
the concern that I think Ms. DeFife mentioned with respect--
although you did talk about some of the compensation issues, I 
believe, in your remarks. But I do think that there is a lot of 
sort of upside potential. It is kind of hard, and Senator 
Kennedy had to leave and I do not want to get too much into his 
statement without him here, but I do think the average salary 
for people in a certain area, to compare the average graduate 
with a mechanical engineering degree to a Harvard Law School 
graduate may not be quite the same as comparing them to the 
average law school graduate, where I think the number--I know, 
because of relatives, the numbers are not necessarily always 
the same as they are coming out of Harvard.
    But, also, the upside investments that people make. I mean, 
not everybody that was in that list is somebody who has gone to 
3 years of post-graduate education. I think if you compared 
people with post-graduate training of 3 years at an Ivy League 
school in these other areas and what their starting salaries 
are, I suspect they might be a little closer to the Harvard 
salary.
    But all of that said, I do think we need to note that there 
is a pretty significant distinction between compensation and 
salary and some of the other inducements and incentives that 
people are, I think, not only inclined to want to do, because 
they want to kind of take a little bit of the risk, but also 
that, in fact, has become so well known as the way in the high 
tech area that so many have profited that that becomes pretty 
appealing.
    The only other point I guess I would make on the general 
front is this, too. I think it is inevitable that in a program 
like H-1B, that there will be somebody, somewhere, who 
mishandles it, whether intentionally or unintentionally, brings 
somebody in, and you referenced fashion models. I am still 
waiting to have a hearing with the fashion model H-1B holders 
just for purposes of drawing attention to these hearings. With 
all due respect to all of you, if we brought in H-1B fashion 
models, we would have more cameras, I am sure, here. 
[Laughter.]
    But nonetheless, it is also the case that a lot of the high 
tech uses of these visas is extraordinarily specific in nature. 
I had the opportunity to meet, it was, I guess, some people 
that Microsoft had under their H-1B program, because when we 
were dealing with the H-1B bill, there were a lot of questions 
about who these were.
    For instance, one of the people was somebody who was 
basically adapting the operating system to Arabic and he was 
from Jordan. I cannot imagine there is an unemployed person in 
America who could do this thing, but he could. The notion that 
you had to get somebody like that--now, that may be a little 
too specific, but still, I was struck that virtually every one 
of the people I met, of the five or six who were brought here 
for that meeting, were doing things that you just did not 
have--the notion that there is an immediately available 
alternative is just simply wrong.
    I just throw that out. I mean, you employ people on the H-
1B program. Would you like to comment on the replaceability of 
those people in terms of the workforce here and your ability to 
find folks who could today, not in 5 years or 10 when hopefully 
we can do something, do that work?
    Ms. DeFife. Well, it is interesting. I do not even have 
jobs that are that specific to doing something that I know I 
definitely could not find an American to do. There are not 
enough people to fill all of the jobs. I have been unable to 
find a single qualified employee for the one vacancy that has 
been open for 7 months, whether they are on an H-1B or not. So 
I can assure you that it is not something that is easy to do, 
it is not something that is taking jobs away from Americans, 
and it is not something that is so specialized.
    Senator Abraham. Seven months and no one qualified, either 
H-1B or non-H-1B.
    Ms. DeFife. Correct.
    Senator Abraham. Ms. Holdren?
    Ms. Holdren. I was actually excited to hear that Susan 
brought her network administrator in, because that is a 
position I have had open for 6 months, so I am experiencing 
much of the same.
    Senator Abraham. I want to just thank the panel. We 
appreciate very much your participation. This is a set of 
issues, and as you can see, that is rapidly going to expand 
beyond immigration. I am glad we had a chance to go beyond 
immigration because I tried in my efforts to increase the H-1B 
program to make it very clear that I see this, as many of you 
do, as not something that is an immigration-only issue by any 
means. I think as a country, we are very challenged here to try 
to find ways to address this in the long term.
    The statistics on American children's academic performance 
are ones that really are quite staggering. Something is clearly 
happening between grade school and the middle of high school. 
One only has to have either their own children in these age 
categories or know kids in these categories to know that the 
interest in technology is extraordinarily great, and yet, for 
some reason, we are not very successful, whether it is in a 
cultural sense or it is in an academic sense or whatever, to 
convince folks that in addition to recreational uses, there are 
actually very lucrative employment possibilities.
    I want to talk some more about the things that Mr. Atkinson 
has mentioned, and learn more about the things he has brought 
to us as ideas here, but there is a disconnect, and I see it 
even in friends of mine, family members. There still is a 
certain cultural distinction between what are perceived to be 
professions and things that are not.
    In Michigan, we have people in the auto industry, I mean, 
in large numbers now, who are in one way or another in high 
tech jobs but they are theoretically blue collar employees. I 
think sometimes there is a failure to understand that there is 
a lot more remuneration for tool and die makers doing those 
kinds of things than there are for people who go out and get 
professional degrees in fields where there is a surplus of 
workers. So we do have these challenges.
    I appreciate all five of you participating today to help us 
to get a little bit more information on the record about it. 
Hopefully, our colleagues will show a similar interest to the 
ones who were here today in trying to move forward.
    Mr. Archey, do you want to comment?
    Mr. Archey. Just on one point, because it really kind of 
bugs me, which is the issue of the companies are trying to use 
H-1B to get workers on the cheap. I am not saying that there 
are not some instances of that happening, but the companies 
that Roberta and I represent, I can tell you, one CEO said to 
me a couple of weeks ago, he said, those folks in Washington, 
they do not really believe that, do they, that we are going to 
do this on the cheap? He said, do they not understand that 
somebody who is getting a bachelor's degree from Stanford truly 
knows what the prevailing wage is? I just wanted to make that 
point, because that is one that--maybe it can be directed at a 
very small number, but it is a fundamentally wrong assertion.
    Senator Abraham. I appreciate your making the point. I 
tried to allude to it a few minutes ago. The fact is, 
obviously, why would you go through all of this trouble? We 
tried to toughen up the laws. We tried to increase the 
punishments. We have tried to create, for companies that may 
fit a certain profile, a certain amount of additional 
requirements for them to go through as a way to address it. I 
just do not accept it, either.
    There are bad actors in every sector of the economy, and I 
am sure there might be somebody who is trying to do something, 
and we hear stories from time to time, but this is a case where 
I think sometimes people who for other reasons do not want 
something to move forward have raised these kinds of excuses.
    But I think it is a good point for you to make, and if 
anybody else has a closing point, I would be glad to entertain 
it, and if not, I, again, want to thank you all, as well as our 
audience, for the hearing. I think it was very productive.
    We are adjourned.
    [Whereupon, at 4:14 p.m., the subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              


                 Additional Submissions for the Record

                              ----------                              


     PREPARED STATEMENT OF HON. PHIL GRAMM, U.S. SENATOR FROM THE 
                             STATE OF TEXAS

    Mr. Chairman, thank you for the opportunity to provide the 
subcommittee with my views on an issue of such importance to the people 
of Texas, and to our entire nation. With record low unemployment and a 
nationwide shortage of highly skilled workers, many U.S. high 
technology companies have been forced to slow their expansion, or 
cancel projects, and may be forced to move their operations overseas 
because of an inability to find qualified individuals to fill job 
vacancies. We will achieve our full economic potential only if we 
ensure that such companies can find and hire the people whose unique 
qualifications and specialized skills are critical to America's future 
success.
    On July 27, 1999, I introduced the ``New Workers for Economic 
Growth Act'' (S. 1440) to increase the number of available H-1B 
temporary work visas used by U.S. companies to recruit and hire foreign 
workers of exceptional skill, particularly in high technology fields. 
It is cosponsored not only by you, but also by Senators Trent Lott, 
Mitch McConnell and Sam Brownback. This bill will ensure that, the U.S. 
economic expansion will not be impeded by a lack of skilled workers.
    Last year, the Congress temporarily increased the number of annual 
H-1B visas from 65,000 to 115,000 for fiscal years 1999 and 2000, and 
to 107,500 in 2001. The number of H-1B visas is scheduled to drop back 
to 65,000 for fiscal year 2002 and subsequent years. As you know, Mr. 
Chairman, our ``New Workers for Economic Growth Act'' will increase the 
H-1B visa cap to 200,000 for fiscal years 2000, 2001 and 2002. By the 
end of that period, we will have the data we need to make an informed 
decision on the number of such visas required beyond 2002. The bill 
retains the language of current law which protects qualified U.S. 
workers from being displaced by H-1B visa holders.
    According to a recent study by the American Electronics 
Association, Texas has the fastest growing high technology industry in 
the country and is second only to California in the number of high 
technology workers. This legislation would ensure that these companies 
have access to highly skilled, specialized workers, in order that such 
businesses can continue to grow and prosper, and in doing so, create 
jobs and opportunity for U.S. workers.
    Additionally, our bill expands work opportunities for America's 
retired senior citizens by removing the financial penalty which is now 
imposed on those who choose to continue to work while receiving Social 
Security and whose wages exceed specified levels. The Social Security 
earnings test robs senior citizens of their money, their dignity, and 
their right to work, and it robs our nation of their talent and wisdom.
    Mr. Chairman, I believe that our legislation represents a fair and 
effective way to address a critical need in our Nation's economy. I 
appreciate the committee's attention to this important issue and look 
forward to working with you in an effort to secure enactment of our 
proposal.
                               __________

  PREPARED STATEMENT OF THE AMERICAN FEDERATION OF LABOR--CONGRESS OF 
                        INDUSTRIAL ORGANIZATIONS

    The AFL-CIO expresses is appreciation for the opportunity to file 
written testimony comment to the October 21, 1999 Subcommittee on 
Immigration hearing on ``America's, Workforce Needs in the 21st 
Century.'' Of one thing we are absolutely clear: H-1B workers are not 
the answer to any perceived information technology skills shortage in 
either the long or short-term. By focusing attention on this dubious 
solution, we divert precious time and energy from ensuring that U.S. 
workers and their children are given a fair opportunity to attain 
necessary jobs skills, and to be fairly considered for jobs that 
currently are available.
    Congress cannot continue to determine H-1B policy on the basis of 
unfounded reports of skills shortages. When subject to an objective 
analysis rather than self-serving anecdotes, the arguments made by the 
information technology industry fail to prove its case of the existence 
of a worker shortage. Rather than utilize recruitment methods that may 
attract U.S. workers to their companies, information technology 
companies have embarked on a multi-year quest for an unlimited supply 
of H-1B workers.
    The information technology industry, other industries, must contend 
with a tight job market during these times of low unemployment. The 
usual response of an employer to a tight job market is to raise wages, 
and offer better benefits and working conditions to workers, both 
current and prospective. However, data from the Bureau of Labor 
Statistics show that real median weekly high technology wages were 
actually less in 1998 than in 1995, while wages for other mangers and 
professionals rose during that same time, illustrated on chart 1. 
Likewise, recent computer science graduates have not seen their initial 
wages increase, although they are said to be the objects of fierce 
bidding wars waged by employers eager to fill vacant positions. 
Economic history has shown us time and again that increased employment 
and steeply rising wages characterize a tight labor market. This is not 
the case for high technology industry. The prevalence of H-1B workers 
in the information technology industry must be considered a factor in 
the depression of information technology wages.
    The Bureau of Labor Statistics figures shown on chart 1 indicate 
that the real issue here is not the availability of U.S. Workers or a 
skills shortage, but one of manipulation of the H-1B program by 
employers in order to hold wages down. In the August 30, 1999 edition 
of U.S. News and World Report, Roger Coker, Texas Instrument's director 
of staffing in the U.S. listed the pursuit of H-1B workers in addition 
to other anti-worker devices, such as the use of contingent labor, to 
``fight labor cost creep.'' Congress must ascertain the real 
motivations behind the employers' push for H-1B workers.
    Employment practices of the high technology industry have not 
served to retain or recruit workers. The industry also continues to 
layoff workers at an alarming and steady pace. Since January 1, high 
technology companies have laid-off over 63,000 workers. As early as 
June, 1998, Computerworld magazine was predicting a ``bloodbath'' of 
unemployed programmers after the Year 2000 problems are addressed. This 
is hardly the behavior one would expect from an industry strapped for 
workers.
    The report of the Virginia Commission on Information Technology 
stated that many of the vacancies listed by Virginia high technology 
companies could be filled but for the fact that the employer had 
``over-credentialed'' the requisite qualifications, eliminating many 
job applicants capable of performing the job duties. This same ``over-
credentialing'' is apparent in the push for workers with advanced 
degrees in mathematics, computer science and engineering. Although the 
high tech industry says that the jobs they need to fill with H-1B 
workers require advanced degrees, the Department of Labor states that 
the majority of H-1B Labor Condition Applications filed for computer 
positions are for programmers, not higher level occupations. Alleged 
shortages are exacerbated when employers are permitted to post job 
qualifications that are not related to openings, but are manipulated to 
exclude most potential U.S. applicants.
    There is not enough information regarding the effect of expanding 
the H-1B program on U.S. workers. Last year members from both parties 
agreed that we did not know enough about the high tech worker skills 
shortage, or the effects of bringing in an additional 142,000 H-1B 
workers over the course of three years on the U.S. workforce. The 
American Competitiveness and Workforce Improvement Act of 1998 directed 
the National Academy of Science (NAS) to file reports on the alleged 
high technology worker shortage, and on allegations of age 
discrimination in the high technology industry. The NAS currently is in 
the process of gathering information through regional hearings and the 
solicitation of views from interested parties, and will submit a report 
to Congress in the Fall. Likewise, the 1998 legislation directed the 
Immigration and Naturalization Service (INS) to report information on 
H-1B workers, their employers and occupations by October 2000. While 
INS has stated that it will not make interim reports, the agency did 
announce last month that it overcertified upwards of 20,000 H-1B visa 
petitions. We know nothing more from the INS about the H-1B program 
other than the fact that the agency managed to provide business with an 
extra 20,000 or more H-1B workers. The Department of State continues to 
investigate allegations of H-1B visa fraud at its consular offices. 
Accurate information is necessary to administer the H-1B program and to 
plan for the program's future. Increasing the number of H-1B workers 
without the interaction necessary to craft a meaningful, fair, and 
workable solution will ultimately shortchange U.S. workers. Congress 
should wait until the NAS, INS and the General Accounting Office submit 
reports on the H-1B program and its impacts on U.S. workers before 
considering another increase of the H-1B cap.
    It is also too early to judge the effectiveness of worker 
protections and enhanced DOL enforcement abilities. Not one U.S. worker 
has been protected from displacement or failure to select for a job 
because DOL has not published regulations to implement the protections. 
Neither do we know if the enhanced DOL enforcement role goes far enough 
to protect workers. Fair treatment of U.S. workers should be given the 
same priority as industry's demands for H-1B workers.
    Preparing for future workforce needs must include training 
opportunities for U.S. workers, access to education and fair 
consideration for jobs. Some members of Congress and the information 
technology industry have favored improving K-12 math, science and 
computer skills, while failing to promote training programs that would 
enable the parents of school children to work in the information 
technology industry right now. The best thing that can be done for 
American children is to give their parents the opportunity to get a 
good, secure well-paying job. With that foundation, parents can provide 
computers for their own children, contribute their time and tax dollars 
to improve curriculum in the public schools and send those well-
educated children to college. Enrollment in computer science programs 
have increased in recent years, and Department of Education statistics 
project that at graduation rates of over 1 million annually, U.S. 
colleges and universities will be more than able to fill the new jobs 
of the future. Opportunity also means that once hired, the employer has 
the obligation to facilitate the attainment of skills by their own 
incumbent workers to meet future needs of the industry.
    Allegations of age, gender and race discrimination in the 
information technology industry must be investigated and remedied. 
Disturbing allegations of age discrimination persist in the information 
technology industry, but have not been addressed with a thorough 
investigation or aggressive enforcement of laws prohibiting such 
discrimination. U.S. Census Bureau data shows that information 
technology workers over the age of 40 are 5 times more likely to be 
unemployed than other workers in that same age group. Discrimination 
against older workers has caused many information technology workers to 
leave the industry at a time when retention of talent is essential. The 
information technology industry's desire to wrap itself in the 
trappings of youth should not translate into discrimination against 
older workers based on stereotypes. More importantly, age 
discrimination is a violation of the nation's civil rights laws, and 
offensive to public policy.
    Currently African American and Latino representation in the 
information technology workforce is 3.7 percent and 8.4 percent 
respectively. Many technology jobs are being filled by H-1B workers, 
while there is a labor pool of more than 300,000 African Americans and 
Latinos with engineering and scientific qualifications. A recent report 
by the Public Policy Institute of California noted that a 1991 survey 
of Asian information technology professionals in Silicon Valley found 
that two-thirds of those employed in the private sector believed that 
race was a factor in their failure to advance, and that the belief 
increased significantly with the age of the worker. The information 
technology industry must fully utilize the assets of all U.S. workers 
before looking to temporary foreign workers as a solution to personnel 
shortages.
    Information technology industry representatives often cite the 
success of immigrant entrepreneurs, and link that success to the 
creation of jobs. However, these entrepreneurs are immigrants, not 
temporary foreign workers who are beholden to their H-1B employer/
sponsor for not only their current job, but the opportunity to be 
sponsored for permanent immigration. These temporary workers cannot 
leave for a better job, or start their own business no matter how good 
their idea. The statement of an H-1B worker quoted in the November 1, 
1999 edition of Computerworld best describes their predicament. ``I'm 
in a situation where I'm at a disadvantage,'' said the worker. ``I'm on 
H-1B. I don't have much bargaining power. In a sense, everyone on H-1B 
is in the same boat.'' The issues the AFL-CIO, worker advocates and 
concerned members of Congress have raised will not be addressed by 
granting the information technology or any other industry, a blank 
check for as many H-1B workers as they desire. It is time for policy 
makers to take a long, hard look at the H-1B program with all of its 
reported failings and abuses, and the behavior of the information 
technology industry in exploiting the program to the detriment of both 
U.S. and foreign temporary workers, and to craft solutions that fairly 
serve the interests of both workers and industry.

[GRAPHIC] [TIFF OMITTED] T0662.011

  PREPARED STATEMENT OF THE AMERICAN OCCUPATIONAL THERAPY ASSOCIATION


    The American Occupational Therapy Association (AOTA) appreciates 
the opportunity to submit a statement to the Subcommittee on 
Immigration of the Senate Judiciary Committee addressing the 
recruitment and employment of internationally-educated workers in the 
United States. We would like to offer our perspective on the policies 
that should be considered when making changes to employment-based visa 
programs, particularly the H-1B visa program. Internationally-educated 
occupational therapists have made up a significant percentage of H-1B 
visa recipients.
    While the hearing today is intended to explore the workforce needs 
of the hi-tech industry to determine whether a substantial increase in 
the number of H-1B visas issued annually is warranted, other 
professions, including several health care professions are impacted by 
these changes. We urge the Subcommittee to consider the impact any 
changes to the H-1B program will have on the health care industry.
    The AOTA is the nationally recognized professional association for 
over 60,000 occupational therapists and occupational therapy 
assistants. These individuals work with people experiencing health 
problems such as stroke, spinal cord, injuries, cancer, congenital 
conditions, developmental problems, and mental illness, in a wide range 
of practice settings including hospitals, nursing facilities, home 
health agencies, outpatient rehabilitation clinics, psychiatric 
facilities and school systems.
    In general, policies directed at reform of employment-based 
immigration programs, including existing temporary workforce programs, 
should take into consideration the marketplace and other government 
action (budget reductions) which are likely to impact demand for 
services and the domestic workforce. Policies should be consistent with 
overall goals of meeting urgent but temporary business responsibilities 
and should strike a balance between American business needs to remain 
competitive by having access to skilled foreign workers, while also 
protecting American workers against abuses by employers who seek to 
replace domestic workers with lower-paid foreign workers. 
Internationally-educated workers should be appropriately trained and 
prepared to work in the U.S. Laws and regulations governing the 
recruitment of internationally-educated workers should recognize the 
need to evaluate the responsibilities of all parties involved including 
those of employers, recruitment agencies and credentialing 
organizations. This should take into account the need to identify both 
employment and preparation responsibilities involved in placing non-
immigrant temporary workers in the U.S.
    visa program policy should be responsive to supply/demand trends
    The U.S. Commission on Immigration Reform has identified the 
occupational and physical therapy fields as having among the highest 
numbers of nonimmigrant temporary workers in the U.S. on H-1B visas, 
second only to computer programmers.
    In the 1980's a significant shortage and maldistribution of 
occupational therapy (OT) practitioners in the U.S. became evident. In 
response, the number of domestic education programs in the 
accreditation process has nearly doubled to 121 OT professional level 
programs and 157 technical level programs. This represents 24,409 
individuals currently in U.S. schools or in clinical fieldwork 
placements who will be looking for work opportunities, or a 38 percent 
increase over the existing OT workforce of approximately 65,882 for 
1998.
    The anticipated supply of occupational therapists and occupational 
therapy assistants by 2005 approximately will equal the Bureau of Labor 
Statistics (BLS) employment forecasts for that year, even if the 
marketplace is presumed to have no affect at all in determining the 
future requirements for OT practitioners. Moreover, if the capacity of 
the OT education system increases more rapidly, the supply of 
practitioners by 2005 may be even larger than anticipated. BLS 
projections released in December, 1997 for the labor force for the 
period 1996-2006 estimates that occupational therapy employment will 
increase by 66 percent to 95,000, while occupational therapy assistant 
employment will grow by 69 percent to 26,000. A recent workforce study 
commissioned by AOTA suggests that these numbers may be too high, and 
questions the assumptions used by the BLS in describing the future 
direction of the health services industry and whether BLS estimates 
reflect some of the market-driven changes affecting different segments 
of the health care industry.
    International recruiters also responded to the shortage of OT 
practitioners by markedly increasing their recruitment of 
internationally-trained OT practitioners. The percentage of newly 
certified OT's who are foreign graduates had risen from 3 percent in 
1985 to over 20 percent in 1995. In 1997, this percentage fell to 14 
percent in large part due to new English language proficiency 
requirements now required by the National Board for Certification in 
Occupational Therapy (NBCOT).
    The AOTA believes that the shortage/maldistribution issue must now 
be viewed in the context of a rapidly evolving marketplace for health 
care services where consolidation and integration are changing the 
demand equation for therapy services. Although uncertainty exists as to 
the pace, scope and ultimate impact of marketplace changes on the 
occupational therapy workforce, it is reasonable to assume that growth 
in demand for OT services will not continue as it has in recent years.
    Changes to government-funded health care programs will have a 
significant impact on OT services. Medicaid and Medicare are the 
principal public purchasers of occupational therapy services, and 
spending for services for people with disabilities under these programs 
has risen rapidly in recent years. However, both Medicare and Medicaid 
are taking steps to gain more control over future spending for services 
provided to beneficiaries and recipients. Expanded payment reforms and 
greater use of managed care by these programs will have a major impact 
on the future demand for, and delivery of, occupational therapy and 
other rehabilitative services. Under the Balanced Budget Act (BBA) of 
1997 many of these structural changes to the delivery of health care 
for both Medicare and Medicaid patients, as well as significant budget 
cuts in rehabilitative care under the Medicare program, were realized. 
For example, one of many provisions in the BBA affecting access to 
rehabilitative services places a limit on outpatient therapy, including 
occupational therapy. The limit--which is applied without regard to 
medical necessity--restricts Medicare coverage of occupational therapy 
to $1,500 per year per patient in most health care settings. This will 
have a significant impact on the utilization of therapy services under 
the Medicare program.
    Private purchasers are also aggressively moving to restructure 
their approaches to health care delivery and finance by selectively 
contracting with networks of providers to control costs. Reports from 
AOTA members around the country indicate that greater market 
penetration of managed care in the private sector has led to more 
stringent management of the utilization of occupational therapy 
services. School districts, state governments and the federal 
government are all under increasingly severe budgetary and personnel 
constraints that will shape the future size and composition of the 
occupational therapy workforce.
    About 27 percent of 1,000 AOTA members who responded to a survey 
regarding job status reported that they had lost jobs since January 1, 
1999. Of these, about 21 percent had been laid off and 6 percent said 
that they had been forced to leave their employer due to severe 
cutbacks in pay, loss of contracts, or decrease in hours worked. The 
survey also indicated that many OT practitioners who have not lost jobs 
have had their hours reduced involuntarily, their pay cut, productivity 
quotas imposed or increased, or their status changed from salaried to 
per diem. Large rehabilitation employers such as NovaCare, Vencor, Sun 
Health and Mariner are mired in severe financial problems and have 
laid-off employees and taken other cost cutting measures. The results 
indicate that practitioners in long-term care, skilled nursing and home 
health settings are facing profound changes in their work status, their 
paychecks, and their ability to find appropriate work.

          BALANCE COMPETITION WITH ASSURING OPPORTUNITIES FOR 
                        DOMESTIC-TRAINED WORKERS

    As these changes in the marketplace are likely to impact the demand 
for services, policies should be examined to determine whether the 
processes in place to receive approvals for H-1B job openings are 
sufficient. Currently the H-1B visa program provides little incentive 
to employers to commit themselves to developing a domestic workforce. 
In fact, the current design of the H-1B program seems to be encouraging 
the building of businesses, which are dependent on the labor of foreign 
workers. Employers should be required to determine the availability of 
qualified U.S. workers before hiring H-1B workers, and to provide 
notice to potential domestic workers of job openings. Lay offs and 
replacements of domestic workers should be illegal under the law. 
Recruiting and training domestic workers should be a priority and 
policies should encourage employers to commit themselves to developing 
a domestic workforce rather than encouraging the building of businesses 
that are dependent on the labor of foreign workers. In the case of 
health care, training priorities would be particularly effective if 
directed at the maldistribution problems of health professionals.
    Until recently, applications for therapy jobs outranked all other 
professions under the Department of Labor's attestation process. Most 
of these applications are coming from contractors/recruitment 
companies. Of the job openings certified by the Department of Labor in 
1997, 25.9 percent or 103,097 were for therapists, second only to 
computer-related jobs at 44.4 percent or 177,034. Similarly, the 
business section of the Washington Times reported (October 13, 1998) 
that of the top 100 companies that sponsor the highest numbers of H-1B 
visa recipients, 25.9 percent are for therapists compared to 44.4 
percent for hi-tech workers.
    The Department of Labor reports of 14 enforcement cases involving 
employers of H-1B therapists, nearly all of which were recruitment 
companies, finding violations in prevailing wages in the amount of $2 
million for nearly 400 temporary foreign therapists. In one case 
involving a contractor in the business of recruiting therapists from 
Poland primarily for jobs in Texas, the contractor paid its therapists 
$500 per month when the prevailing rate was $2,800 per month. The case 
resulted in the company paying more than $460,000 in back wages to 54 
therapists. In another case, a contracting firm that supplies 
Philippine therapists to medical centers in 21 states was ordered to 
pay almost $1 million in back wages and $143,000 in civil penalties.

  THE AMERICAN COMPETITIVENESS AND WORKFORCE IMPROVEMENT ACT OF 1998 
             (ACWIA) DOES NOT PROVIDE SUFFICIENT SAFEGUARDS

    While AOTA supports the implementation of additional attestation 
requirements for employers to ensure better protections for workers, an 
issue addressed in ACWIA, we regret that the law does not extend these 
protections to all workers potentially effected by the H-1B visas 
program. The law only applies these protections to a small number of H-
1B dependent employers. This is particularly troubling considering that 
the law also substantially increases the number of visas over the next 
three years to more than 60 percent, and the hi-tech industry is 
already requesting Congress to consider additional significant 
increases to over 200,000 visas annually.

       BUSINESS PRACTICES SHOULD ENSURE A WELL TRAINED WORKFORCE

    Internationally-educated health care practitioners should have 
sufficient education and clinical preparation to work in U.S. health 
care settings/programs, including a minimum level of field-based 
experience in their field prior to coming to the U.S. In addition to 
appropriate education, clinical training and work experience, the 
individual should be appropriately prepared in oral and written 
language skills, cultural differences, and reporting, documentation and 
other management requirements of U.S. health care systems. These skills 
are particularly critical in an industry that works with a vulnerable 
patient population. The majority of consumers seeking occupational 
therapy services are doing so incident to serious injury or illness, or 
other physical, medical or psychological problems that result in 
disabilities. Because of the complexity of the population served by 
occupational therapy practitioners, it is especially important to 
regulate members of this profession in a manner that assures the 
highest level of protection for those populations who are extremely 
vulnerable, frail and often have multiple problems.
    The increase in internationally-educated therapists working in the 
U.S. has focused attention on issues and business practices associated 
with recruitment and placement practices that frequently adversely 
affect the well-being of therapists recruited to the U.S. to work. 
Among the problems cited were instances of insufficient preparation and 
training to work in U.S. health programs, inappropriate written 
language skills for meeting the demands of reporting requirements of 
Medicare and insurance companies' documentation requirements, lack of 
prior cultural orientation preparation for working particularly in 
rural areas, and lack of access to professional resources to adequately 
prepare for the national examination.
    Many of the suggestions offered to improve the process center on 
the activities of recruitment companies and include ensuring that 
therapists are working with reputable recruiting/contract firms and 
that they understand the terms of their contracts and their rights and 
responsibilities under state practice laws as well as federal 
immigration and labor laws. Requiring therapists to meet all 
certification requirements prior to receiving a visa has been 
recommended. Currently many states allow OT's to practice for up to 6 
months without a license. The AOTA is troubled by anecdotal reports 
that some firms are moving therapists from state to state to avoid 
meeting license requirements. Also, anecdotal reports of recruitment 
companies ``parking'' foreign therapists have also been described. In 
these situations, companies keep foreign therapists in a holding 
pattern between jobs with employers while not paying them any salary. 
Under H-1B rules, foreign workers are required to receive pay on a 
continuous basis.

 AOTA URGES CONSIDERATION OF THE HEALTH INDUSTRY WHEN INCREASING H-1B 
                                 VISAS

    The AOTA urges the members of the Subcommittee to consider 
refinements to the current H-1B temporary worker program that take into 
consideration the changing marketplace, that are more consistent with 
the overall goals of this program to meet urgent but temporary business 
responsibilities, that ensures a well-educated and prepared foreign-
trained workforce and that carefully scrutinizes the responsibilities 
of all parties involved in the recruitment of foreign workers.
    Above all, AOTA asks the Members of the Subcommittee to consider 
the impact of a substantial increase in H-1B visas on all industries 
affected--including the health care industry (approximately 17 health 
care professions qualify for H-1B visas). Should the Subcommittee 
recommend an increase in these visas, we request that these additional 
visas be directed only to those industries with demonstrated shortages.
    During the negotiations on ACWIA during the 105th Congress, the 
House and Senate conference committee agreed to limit the number of 
visas directed to the health professions to a level that more 
appropriately corresponded to the health care marketplace. However, the 
White House, among other issues, asked Congress to eliminate this 
amendment claiming it violated the GATT agreement. AOTA did not agree, 
but the law was passed without this amendment, so all categories of H-
1B professions fall under the new increases in visas.
    On behalf of our members, we thank you for the opportunity to 
address these concerns and we look forward to working with the 
Subcommittee on employment-based and related immigration issues.
                               __________

 PREPARED STATEMENT OF JOHN WILLIAM TEMPLETON, CO-CONVENOR, COALITION 
                 FOR FAIR EMPLOYMENT IN SILICON VALLEY

    Chairman Abraham, Senator Kennedy and Subcommittee Members: I'd 
like to begin by posing a question. Could you count to one thousand?
    Do you believe that most Americans could count to eight hundred?
    If you lived in a subdivision that was one thousand parcels wide by 
eight hundred parcels long, could you locate your house?
    Of course, to find your address, you would go down a certain number 
of house and then perhaps across a few more.
    More than 250 million Americans perform that task every day.
    And that is the same basic skill that computer programmers perform. 
They describe the behavior of a computer screen that is 1,000 pixels 
wide by 800 pixels deep. A program tells each pixel what to do, 
choosing from two options.
    I'm not a programmer, but the author of a computer language with 
whom I'm writing a technical book, just liberated me from the gnawing 
feeling that there was a super race of people out there somewhere who 
could program computers.
    I'd like to share that same sense of liberation with you in the 
hope that you would realize that the non-immigrant visa is perhaps the 
biggest fraud perpetrated on the Congress of the United States in many 
years. Behind the fog of how difficult it must be to program a 
computer, you've been convinced to undo the protections of the 
immigration system and abdicate your constitutional responsibility to 
control access to this country to a few overseas contractors. More than 
eight of ten Americans, when asked if they would approve of a law like 
the H-1B program, think it is a ridiculous idea. Most are not aware 
that you actually put this provision into law. They certainly don't 
know that the government actually allowed more H-1B visas in the 
country than the law provided or that 60 percent of the applicants are 
of questionable qualifications.
    African-Americans, Latinos and Native Americans are painfully aware 
of how Congress warped the labor marketplace with this corrupt program. 
Approximately 770,000 of those groups currently work in information 
technology throughout the economy, according to the Bureau of Labor 
Statistics. But fewer than 18,000 work in high technology federal 
contractors.
    Let's examine why this has warped the working of the free market. 
There are 125,000 African-Americans and 54,000 Latinos who are systems 
analysts. There are also 166,000 of those two groups who are engineers. 
In addition, there are 39,000 African-Americans and 30,000 Latinos who 
are programmers.
    Interestingly enough, the Bureau of Labor Statistics lists 
programmers not as a professional occupation, but as a technical 
profession.
    The employees we've just listed total 414,000.
    According to the Institute of Electrical and Electronic Engineers, 
only 7,349 members of those groups received bachelors degrees in 
engineering in 1997-1998. Only 1,700 received masters in engineering 
and only 205 received doctorates in engineering.
    Go back five years, the comparable numbers are 5,657; 1,324 and 
103.
    Clearly, those numbers are not sufficient to produce more than 
400,000 high tech workers. Let's look at some real life examples. Two 
weeks ago, the Byte Back program in the nation's capital held a 
graduation for a class of 20 interns, all older persons being retrained 
in high tech skills. I watched one woman of about 50 years of age 
describe having spent the previous 10 years as a cook. After one years 
internship, she is now a database administrator.
    One of my co-convenors in the Coalition is Jacqueline S. Anderson, 
who began working with Bank of America 18 years ago as a teller. Last 
year, we celebrated her graduation from a masters of business 
administration program at Golden Gate University. At the time, she had 
two small kids and had been receiving welfare. Since banking became 
increasingly technology intensive during that period, she began going 
to night school in mathematics. Five years before she finished her 
bachelors degree, she was already working for the bank as a technology 
troubleshooter, writing the customer account and call center software 
and leading teams of programmers to integrate merged banks. When the 
bank itself was acquired, her skills were highly coveted by the new 
owners. They got rid of the CEO and promoted her.
    People like Jackie have an organization called Black Data 
Processing Associates that holds programming classes for high school 
students each Saturday. The chapters around the country have a 
programming competition each August.
    People who have risen up through the ranks have a tendency to reach 
back and bring along others.
    Let's look at another example, Jennifer Wellington, an 
instructional technologist at San Francisco State University who 
operates its high tech learning lab. She gained her technical training 
in the U.S. Army Signal Corps. I met her when she wired the technical 
pavilion of 30 computers at the Juneteenth celebration in San Francisco 
for Microsoft. Interestingly enough, no one from Microsoft offered her 
a job, though.
    That is another source of talent which the normal functioning of 
the free market would tap. There are currently 422,977 African-
Americans and 161,611 Latinos in the U.S. military. That's 600,000 
young people who somehow have mastered the math and science to operate 
the most advanced technology. There are more than 167,000 black female 
veterans like Wellington and 770,000 black male veterans under the age 
of 44--almost one million people who have placed their lives on the 
line for this country.
    The kind of free market they fought for would value their skills 
and aptitude.
    The Department of Defense has had to step up its recruiting, get 
involved in K-12 education, increase scholarship assistance and 
continuing education. That demand has increasingly benefited the groups 
that have been excluded.
    In a free market, the same thing would happen in high technology.
    Congress has created a situation where only three Silicon Valley 
companies fund scholarships through the National Action Council on 
Minorities in Engineering which provides 700 scholarships yearly on a 
budget of $5 million; where only four companies are corporate sponsors 
of the Silicon Valley chapter of the National Society of Black 
Engineers, where more than 1,200 of 1,500 firms do not file EEO-1 or 
VET-100 forms with the Joint Reporting Committee, where a national 
laboratory just told an African-American receiving a Ph.D in physics 
this year that it had no places available and last year told a black 
female Rhodes Scholar in physics the same thing, where the number of 
African-Americans and Native Americans at federal contractors in 
Northern California high tech firms actually declined from 1996 to 
1997.
    That's why this program violates the equal protection clause of the 
14th Amendment. It denies those workers the opportunity to work in the 
high-paying jobs created by taxpayer funded research and allows a group 
of wealthy campaign contributors to flout the laws that other employers 
have to abide by.
    The impact in lost wages is $350 million per year for blacks, 
Latinos and Native Americans in Northern California. The impact over 
the next 20 years will be $3 trillion in lost income and 
entrepreneurship--that's 15 times the impact of residential segregation 
over the past 50 years. In Oakland, Micheal Fields, a former military 
veteran who rose to be president of Oracle USA without benefit of a 
college degree, has invested in a startup company called Via Novus, 
which has doubled in the past year and plans to hire 300 employees in 
the next year by hiring from places like the local community college 
district and area universities. If they can find these workers, why not 
the larger high tech companies.
    The San Jose airport has a curfew of 11 p.m. No one can land a 
plane there past that point. Oracle Chairman Larry Ellison has landed 
his plane after the curfew numerous times. The same attitude permeates 
companies like Oracle on this H-1B program. They think they're above 
the law.
    I'm having to cancel a trip to Cote D'Ivoire to a World Bank 
conference on educational technology for my software business in 
November because I can't get a passport renewed by then. But an H-1B 
can get approved into the country in seven days, by fax, with no 
confirmation of the supposed qualifications. Do you think that is not 
an invitation to fraud?
                               __________

      News Release of The American Business for Legal Immigration

        EMPLOYERS TO CONGRESS: FIX H-1B VISA PROGRAM SO WE CAN 
                          HIRE WORKERS WE NEED

    WASHINGTON, D.C., Oct. 21, 1999--Declaring that the annual cap on 
H-1B visas may be reached as early as January of next year, the 
American Business for Legal Reform coalition (ABLI) and more than 90 
companies and associations today sent letters to members of the House, 
Senate and the Administration urging them to start work now on finding 
a bipartisan solution to the problem. A hearing on the program was held 
today by the Immigration Subcommittee of the Senate Judiciary 
Committee, chaired by Sen. Spencer Abraham (R-MI).
    ``The U.S. must not allow the baseless H-1B visa quota to cripple 
our ability to compete in the global economy,'' the letter said. 
``Creative solutions which do not burden employers with unproductive 
paperwork and fees are needed now.''
    According to the letter, at least 35,000 visas already have been 
issued in fiscal year 2000, and the quota may be reached by January 1. 
H-1B visa petitions filed after April 1999 were not processed in this 
fiscal year, causing projects to be pushed back or moved abroad and 
jobs to be delayed.
    ``The inability to obtain H-1B visas for skilled professionals 
impacts all U.S. industries. We are losing our edge in attracting 
skilled professionals to countries like Canada, the United Kingdom, 
Ireland and others which have streamlined their visa systems to attract 
skilled workers,'' the letter concluded. ``The employer community 
appreciates the attention Congress has paid to this issue, and the 
legislation that has been introduced to alleviate this burden. We urge 
you to work with your colleagues to find a bipartisan solution and move 
a bill through the committee process before we reach the fiscal year 
2000 quota.''
    American Business for Legal Immigration is a coalition of business 
associations and companies concerned about legal, employment-based 
immigration. ABLI believes foreign business personnel are vital to 
maintaining U.S. competitiveness in the global marketplace. Our laws 
should recognize the significant contributions made by legal immigrants 
to the vitality of the U.S. economy.
                               __________

  News Release of The American Occupational Therapy Association, Inc.

  EMPLOYMENT TRENDS CALL FOR CHANGE IN IMMIGRATION WORKFORCE POLICIES

    Bethesda, MD The American Occupational Therapy Association is 
submitting testimony today to the Subcommittee on Immigration of the 
Senate Judiciary Committee requesting that workplace visa policies be 
amended to consider changes in the marketplace that seriously affect 
health care professionals participating in the H-1B visa program. 
Senator Phil Gramm (R-TX), together with Senate Majority Leader Trent 
Lott (R-MS) and Senator Mitch McConnell (R-KY), are pushing legislation 
to raise the number of visas to 200,000 from its current ceiling of 
115,000.
    Traditionally, the occupational and physical therapy fields have 
had the highest numbers of nonimmigrant temporary workers in the United 
States on H-1B visas, second only to computer programmers--the target 
of this new push to raise the number of visas. But in the months since 
the Balanced Budget Act of 1997 took effect, there has been a 
significant drop in the amount of therapy that is ordered and paid for 
through government sponsored programs such as Medicare. At the very 
least, supply now equals demand in most settings. An increase in the 
number of available H-1B visas could make it more difficult for U.S. OT 
practitioners to find employment.
    AOTA believes workplace visa program policies that affect the 
supply of health care practitioners must find a balance between reduced 
reimbursement and need of Americans for good quality care. In its 
testimony, AOTA stated that ``policies should strike a balance between 
the needs of American business to remain competitive * * * while 
protecting American workers against abuses by employers seeking to 
replace domestic workers with lower paid foreign workers.''
    AOTA contends that the current design of the H-1B program may 
encourage the development of businesses that are dependent on the low-
cost labor of foreign-trained workers. The association would like 
employers to be required to determine the availability of qualified 
U.S. workers before hiring H-1B workers.
    ``The Balanced Budget Act and greater use of managed care by 
Medicaid and Medicare, the principal public purchasers of OT services, 
have decreased the demand for occupational therapy and other 
rehabilitation services,'' notes AOTA Associate Executive Director Fred 
Somers. ``Resulting employment cutbacks have been exacerbated by major 
healthcare providers who were not positioned to effectively deal with 
these reimbursement changes.''
    AOTA is the nationally recognized professional association for over 
60,000 occupational therapists and occupational therapy assistants. 
These individuals work with people experiencing health problems such as 
stroke, spinal cord, injuries, cancer, congenital conditions, 
developmental problems, and mental illness, in a wide range of practice 
settings including hospitals, nursing facilities, home health agencies, 
outpatient rehabilitation clinics, psychiatric facilities and schools.
                               __________

       News Release of The National Association of Manufacturers

NAM CALLS ON CONGRESS TO STEP UP EFFORTS TO FIND BIPARTISAN SOLUTION TO 

                            H-1B VISA CRISIS

Inability to Hire Skilled Workers Impacts Broad Range of Companies
    WASHINGTON, D.C., Oct. 21, 1999--Noting that some 35,000 H-1B visas 
have already been issued since the beginning of October, the National 
Association of Manufacturers today called on Congress to find a 
``bipartisan, innovative and fair way to enable U.S. companies to hire 
the personnel they need to maintain their competitive edge.''
    ``Arbitrary caps and quotas that are not based on the realities of 
today's global economy are stifling our ability to compete and could 
threaten our economic vitality,'' said Sandy Boyd, the NAM's assistant 
vice president for human resources policy. ``Congress needs to take the 
lead in finding a sensible solution, sooner rather than later.
    ``Already, we are losing ground to other countries in key areas 
because their companies have access to professionals with highly 
specialized math and science skills when, very often, American 
companies don't. We simply can't afford to wait to streamline our visa 
process, which often leads to delayed projects, lost business 
opportunities and limited job creation.
    ``Crafting a balanced and creative solution to our H-1B visa 
problems now could be one of the most important things Congress does 
for American economic growth and prosperity,'' Boyd concluded.
    The National Association of Manufacturers--``18 million people who 
make things in America''--is the nation's largest and oldest multi-
industry trade association. The NAM represents 14,000 members 
(including 10,000 small and mid-sized companies) and 350 member 
associations serving manufacturers and employees in every industrial 
sector and all 50 states. Headquartered in Washington, D.C., the NAM 
has 11 additional offices across the country.
                               __________

 The Institute of Electrical and Electronics, Inc.,
                                  United States of America,
                                  Washington, DC, October 20, 1999.
The Hon. William Jefferson Clinton,
President of the United States,
1600 Pennsylvania Ave.,
Washington, DC.
    Dear Mr. President: As you know, the Immigration and Naturalization 
Service has announced that it issued at least 20,000 unauthorized H-1B 
non-immigrant visas in fiscal year 1999. Since it would require an Act 
of Congress to create such a large number of visas, resolving the 
problems created by this error pose several unattractive options.
    First, the INS could simply proceed as if these unauthorized visas 
were not issued in fiscal year 1999, but rather under the total 
authorized by Congress for fiscal year 2000. In effect, these temporary 
non-immigrant workers would simply have been hired several months 
early.
    But lobbyists for the affected industries, notably information 
technology, and their allies in Congress have argued that this 
approach, however sensible, would somehow ``penalize'' industry by 
counting the 20,000 unauthorized visas for fiscal year 1999 in the 
115,000 authorized for fiscal year 2000. Obviously, if the INS does not 
have authority to reduce the total for fiscal year 2000, it did not 
have the authority to increase the total for fiscal year 1999; the 
agency cannot simply create visas whenever it loses count. Which leaves 
a second option.
    The law may mandate the INS to revoke all H-1B visas issued in 
fiscal year 1999 beyond the 115,000 specifically authorized by the 
Congress. That would force the INS to require all of these new hires to 
re-apply for H-1B visas to be issued under the fiscal year 2000 
ceiling. This approach would follow the letter of the law, but it may 
be particularly difficult to implement in light of the INS' evident 
difficulties.
    It seems likely that no matter which approach the Administration 
follows, there will be litigation. If the unauthorized visas arc 
revoked, some employers and H-1B visa holders may sue. And if the INS 
does not issue the 115,000 visas authorized by Congress for fiscal year 
2000 during fiscal year 2000, employers who seek H-1B visas for new 
hires when the available visas run out next year are also likely to 
sue.
    As President of the IEEE-USA, the career services and public policy 
arm of the 225,000 U.S. members of the Institute of Electrical and 
Electronics Engineers worldwide, may I make a suggestion that might--
just might--avoid a needless mess?
    Green cards, not guest worker visas, are the answer.
    As you know, the IEEE-USA opposed last year's increase in the H-1B 
visa ceiling from its permanent level of 65,000 to a temporary level of 
115,000 for several sound reasons. But one of the most telling is 
simply that, for all the talk about shortages of skilled workers and 
high demand for H-1B guestworker visas, in every year since the 
Immigration Act of 1990 nearly tripled the available number to 140,000, 
we have fallen far short of using all of these permanent employment-
based visas. For example, in fiscal year 1998 (the most recent year for 
which official figures are available), the INS reported just 77,000 of 
the 140,000 were issued.
    Mr. President, you are justly proud of your record as ``pro-
immigration--and pro-immigrant.'' Many observers note that most H-1B 
visa holders intend to remain in the United States as permanent 
immigrants, and it makes no sense that they are here on temporary, NON-
immigrant visas.
    Surely we can devise a better system for skilled immigration than 
the current combination of the H-1B fiasco and the utterly failed 
bureaucratic paper chase of labor certification. Since every year 
50,000 to 60,000 permanent employment-based visas remain unused, and 
since most H-1B workers want to be permanent immigrants, the most fair 
way to resolve industry's concerns that it not be penalized for the INS 
error would be to use those unused employment-based visas.
    There are unacceptably long delays, which are getting even worse, 
to get green cards from the INS. But the fact is, it is labor 
certification itself that causes the real failure of employment-based 
immigration both to protect U.S, workers and to provide industry with 
the skilled immigrants which they need.
    We are ready to work with your administration, and the Congress, to 
develop and implement a better way to allow industry to hire the 
skilled workers they need, promptly: as immigrants, not guest workers.
    Green cards, not guest workers. That is the solution, Mr. 
President.
            Sincerely,
                                            Paul J. Kostek,
                                               President, IEEE-USA.

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