[Senate Hearing 108-415]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-415

   EXAMINING THE IMPORTANCE OF THE H-1B VISA TO THE AMERICAN ECONOMY

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

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 16, 2003

                               __________

                          Serial No. J-108-41

                               __________

         Printed for the use of the Committee on the Judiciary



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                       COMMITTEE ON THE JUDICIARY

                     ORRIN G. HATCH, Utah, Chairman
CHARLES E. GRASSLEY, Iowa            PATRICK J. LEAHY, Vermont
ARLEN SPECTER, Pennsylvania          EDWARD M. KENNEDY, Massachusetts
JON KYL, Arizona                     JOSEPH R. BIDEN, Jr., Delaware
MIKE DeWINE, Ohio                    HERBERT KOHL, Wisconsin
JEFF SESSIONS, Alabama               DIANNE FEINSTEIN, California
LINDSEY O. GRAHAM, South Carolina    RUSSELL D. FEINGOLD, Wisconsin
LARRY E. CRAIG, Idaho                CHARLES E. SCHUMER, New York
SAXBY CHAMBLISS, Georgia             RICHARD J. DURBIN, Illinois
JOHN CORNYN, Texas                   JOHN EDWARDS, North Carolina
             Bruce Artim, Chief Counsel and Staff Director
      Bruce A. Cohen, Democratic Chief Counsel and Staff Director


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Chambliss, Hon. Saxby, a U.S. Senator from the State of Georgia..     3
    prepared statement...........................................    52
Craig, Hon. Larry E., a U.S. Senator from the State of Idaho.....     4
Feinstein, Hon. Dianne, a U.S. Senator from the State of 
  California.....................................................    25
    prepared statement...........................................    95
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......     1
    prepared statement...........................................   100
Kennedy, Hon. Edward M., a U.S. Senator from the State of 
  Massachusetts..................................................    19
    prepared statement...........................................   104
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, 
  prepared statement.............................................   106
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama....    23

                               WITNESSES

Dickson, Elizabeth C., Director of Immigration Services, 
  Ingersoll-Rand Company, Woodcliff Lake, New Jersey.............     8
Duffy, Patrick J., Human Resources Attorney, Intel Corporation, 
  Chandler, Arizona..............................................    15
Steadman, John W., President-elect, Institute of Electrical and 
  Electronics Engineers-United States of America, Washington, 
  D.C............................................................    11
Yale-Loehr, Stephen, Chair, Business Immigration Committee, 
  American Immigration Lawyers Association, and Adjunct 
  Professor, Cornell University Law School, Ithaca, New York.....     5

                         QUESTIONS AND ANSWERS

Responses of Ms. Dickson to questions submitted by Senator 
  Kennedy........................................................    33
Responses of Mr. Duffy to questions submitted by Senators 
  Chambliss and Kennedy..........................................    35
Responses of Mr. Steadman to questions submitted by Senator 
  Kennedy........................................................    41

                       SUBMISSIONS FOR THE RECORD

American Business for Legal Immigration, Washington, D.C., 
  statement......................................................    44
American Council on Education, David Ward, President, Washington, 
  D.C., letter...................................................    46
American Electronics Association, Washington, D.C., press release    49
Coalition for Fair Employment in Silicon Valley, San Francisco, 
  California, report.............................................    53
Commission on Professionals in Science and Technology, IT 
  Workforce Data Project, Washington, D.C., report...............    71
Dickson, Elizabeth C., Director of Immigration Services, 
  Ingersoll-Rand Company, Woodcliff Lake, New Jersey, prepared 
  statement......................................................    77
Duffy, Patrick J., Human Resources Attorney, Intel Corporation, 
  Chandler, Arizona, prepared statement..........................    87
Steadman, John W., President-elect, Institute of Electrical and 
  Electronics Engineers-United States of America, Washington, 
  D.C., prepared statement.......................................   108
Texas Instruments Incorporated, John K. Boidock, Vice President, 
  Government Relations, letter...................................   118
Yale-Loehr, Stephen, Chair, Business Immigration Committee, 
  American Immigration Lawyers Association, and Adjunct 
  Professor, Cornell University Law School, Ithaca, New York, 
  prepared statement.............................................   120

 
   EXAMINING THE IMPORTANCE OF THE H-1B VISA TO THE AMERICAN ECONOMY

                              ----------                              


                      TUESDAY, SEPTEMBER 16, 2003

                              United States Senate,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:37 p.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Orrin G. 
Hatch, Chairman of the Committee, presiding.
    Present: Senators Hatch, Sessions, Craig, Chambliss, 
Kennedy, and Feinstein.

 OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM 
                       THE STATE OF UTAH

    Chairman Hatch. Well, thank you for being here today.
    The Committee is holding this hearing because we need to 
take a careful look at the role of the H-1B visa category in 
today's economy. Since 1952, this visa category or its 
predecessor has allowed some of the most talented persons in 
the world to come to the United States. During this time, our 
Nation became the global leader in technology and innovation.
    From 1980 to 2000, there was a 623-percent growth in high-
technology jobs in our country. By the late 1990's, there was a 
shortage of American workers in that field. In response to the 
need for a larger high-technology labor force, Congress twice 
increased the numerical limits. In 1998, through the American 
Competitiveness and Workforce Improvement Act, we increased the 
annual cap from 65,000 to 115,000 visas.
    By the year 2000, even the newly raised cap was not 
sufficient to meet the needs of the industry. For that reason, 
I sponsored the American Competitiveness in the 21st Century 
Act, or AC-21. AC-21 increased the level of annual numerical 
limits to 195,000 visas.
    We realized that increasing the cap was only a temporary 
solution to a long-term problem, which is the lack of American 
students enrolling in the fields of math, science, and 
technology. Therefore, as part of the 1998 Act, and again in 
AC-21, we implemented training and scholarship programs, funded 
by a $1,000 fee to be paid by H-1B employers so that our Nation 
would not have to perpetually look for highly specialized 
workers abroad.
    The latest figures I have seen indicate that more than $692 
million was raised for the education, training, and retraining 
of American students and workers. According to the GAO, these 
programs are attracting a high proportion of minorities and 
women into the field of science and technology, providing 
valuable diversity to the high-tech workforce of the future. 
Altogether, funds raised through H-1B applications have helped 
provide training to more than 55,000 American workers and have 
funded scholarships for more than 12,500 students in science 
and engineering.
    At the end of this fiscal year, some of the provisions of 
AC-21 will sunset. If nothing is done between now and the end 
of this month, the numerical limitation will revert to 65,000 
and there will no longer be statutory authority to collect the 
$1,000 fee to fund the scholarship and job training programs.
    The job market today is much different than it was back in 
1998 and the year 2000. There are many who are out of work, 
including American professionals in the high-technology sector. 
We in Congress have the responsibility to get as much 
information as we can in order to make the best, most informed 
decision as to what action should be taken in light of the 
impending sunset and what should be done as a long-term 
solution to protect the interests of American workers without 
impeding our Nation's ability to compete in a global market.
    I hope that throughout the course of this hearing, we can 
find answers to some important questions. Two questions we must 
answer are whether the presence of highly specialized 
professionals from other countries actually and significantly 
impacts the unemployment rate and whether it is fair to point 
our fingers to immigrants for all of our economic problems 
without checking whether facts or figures support such 
accusations.
    For example, we often hear the accusation that U.S. 
companies are using the H-1B visa to hire cheaper foreign 
workers. However, recently released figures from the Federal 
Reserve Bank of Atlanta indicate that the median annual salary 
of H-1B visa workers, 98 percent of whom hold at least a 
bachelor's degree, is $55,000, whereas the median income for 
U.S. workers who hold bachelor's degrees, consisting of 26 
percent of U.S. residents over the age of 25, is $46,000 per 
year.
    We need to ask whether the current anti-immigration 
sentiment is in the long-term interest of the American economy 
and American workers. If our Nation is to stay competitive, can 
we do without having access to the most talented individuals 
from abroad? If we fall behind other industrialized nations, 
what would that do to our own economic development, and what 
are the consequences to American workers and their families if 
we do, in fact, fall behind?
    By the end of this hearing, I hope that the Judiciary 
Committee, the Senate, the administration, and other 
policymakers will be in a better position to consider the 
appropriate next step with regard to H-1B visas, both in 
deciding what to do in light of the impending sunset of the key 
provisions and in terms of reaching a long-term solution that 
would both protect the interests of American workers and secure 
America's position as a leader in technology and innovation.
    Once again, I want to thank you for being here at this 
hearing as we discuss this important issue affecting the well-
being of American workers and of the American economy.
    [The prepared statement of Senator Hatch appears as a 
submission for the record.]
    Now we have a vote that comes in about four minutes and the 
distinguished Chairman of the Immigration Subcommittee of the 
Judiciary Committee will now speak to us and then I am going to 
turn the hearing over to him. He is doing an excellent job in 
this area and I am very grateful to have Senator Chambliss 
working with us on these very, very crucial and important 
issues.
    Senator Chambliss, we will turn to you.

  STATEMENT OF HON. SAXBY CHAMBLISS, A U.S. SENATOR FROM THE 
                        STATE OF GEORGIA

    Senator Chambliss. Thank you very much, Mr. Chairman, and I 
appreciate your holding this hearing today. Professional worker 
visas have been in the spotlight for the last few months and I 
am glad we will have a chance to focus on the H-1B visa today.
    We are in very difficult economic times in this country 
and, as a result, we need to reflect on the right approach for 
both American businesses as well as American workers. Having 
the critical skills and top talent from around the world is 
essential for our economic progress, but at the same time we 
must make sure that our immigration policies don't have a 
backlash effect on displacing American workers.
    The H-1B program has been valuable to our country, and 
particularly to the high-tech industry that needs programmers 
and technicians to operate their business successfully. With 
the lapsing of H-1B authorization this year, including the cap 
reverting from 195,000 to 65,000, we will have an opportunity 
to reevaluate our priorities and our policies for professional 
worker visas.
    A related issue on professional worker visas is the so-
called L-1 visa loophole. The L-1 visa allows for intra-company 
transfers so that our multinational companies can bring 
executives, managers, and employees with specialized knowledge 
into the United States.
    However, some companies have abused this visa by bringing 
workers with only generic knowledge and then outsourcing those 
workers to other companies. This kind of off-site placement can 
in some cases circumvent the protections of the H-1B visa when 
the worker is essentially performing that function of that 
visa. As a result, American workers have been displaced and 
this must stop.
    We held a hearing in our Subcommittee, and many of the 
folks in the audience and one witness, in particular, was 
present that day, in which these deficiencies and these 
loopholes in the L-1 visa program were really highlighted. I 
will introduce legislation tomorrow that closes the L-1 
loophole without inadvertent and unnecessary negative effects 
on business. My legislation is targeted to this specific 
problem and it will end the practice of companies who are 
displacing American workers.
    In these economic times, we must ensure that United States 
workers are given every opportunity and protection that is in 
the law, as well as ensure that our businesses remain 
competitive worldwide. My legislation will do both.
    Mr. Chairman, I look forward to this hearing, and thank you 
again for bringing us together today.
    [The prepared statement of Senator Chambliss appears as a 
submission for the record.]
    Chairman Hatch. Thank you so much, Senator.
    Senator Craig, did you have anything you would care to say?

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

    Senator Craig. Mr. Chairman, thank you very much for this 
hearing. This whole issue of immigration--I am working on the 
H-2A issue, but let's move forward. I thank you for this 
hearing. This is a critical area in dealing with these 
particular problems.
    Chairman Hatch. Well, thank you, Senator Craig.
    I look forward to hearing from our distinguished panel of 
witnesses, who can provide us with a balanced view of the 
situation. We will first hear from Stephen Yale-Loehr, Chair of 
the American Immigration Lawyers Association's Business 
Committee, and Adjunct Professor at Cornell University Law 
School. Professor Yale-Loehr is a co-author of Immigration Law 
and Procedure, widely considered the premier immigration law 
treatise.
    Next is Ms. Elizabeth Dickson--we are happy to welcome you 
all here--Director of Global Services for Ingersoll-Rand, a 
diversified manufacturer with 55,000 employees in over 100 
locations worldwide.
    We are also pleased to have Mr. John Steadman, President-
Elect of the Institute of Electrical and Electronics Engineers, 
or IEEE. Mr. Steadman is the Dean of Engineering at the 
University of South Alabama in Mobile.
    Last, but certainly not least, Mr. Patrick Duffy, of Intel 
Corporation, is also on this distinguished panel. Mr. Duffy has 
been Intel's human resources attorney since 1996. He advises 
Intel on labor, employment, and immigration matters.
    So we are delighted to have all four of you here. Now, 
having introduced you, I think we are going to recess so we can 
go vote, and then Senator Chambliss and others will be back as 
soon as that vote is over and we will continue this hearing. It 
is an important hearing and we are grateful to have all of you 
here.
    So with that, we will recess for about ten minutes or so.
    [The Committee stood in recess from 2:47 p.m. to 3:08 p.m.]
    Senator Chambliss [presiding]. Thank you all very much for 
being patient with us. Occasionally, we have to go do what you 
all pay us to do, and that is to vote on the floor. I was told 
that there is a 50-percent chance we may have another vote 
before the conclusion of this hearing. In south Georgia, we 
used to have a weather man who, when asked 1 day what a 50-
percent chance of rain meant, said it might rain and it might 
not. So we may have another vote and we may not, but hopefully 
not.
    Again, we welcome our distinguished panel.
    Mr. Yale-Loehr, we appreciate very much you coming back. 
You did such a good job at our L-1 hearing, we wanted you back 
again to hear from you again. So we will hear from each of you 
at this point and, Mr. Yale-Loehr, we will start with you.

 STATEMENT OF STEPHEN YALE-LOEHR, CHAIR, BUSINESS IMMIGRATION 
   COMMITTEE, AMERICAN IMMIGRATION LAWYERS ASSOCIATION, AND 
 ADJUNCT PROFESSOR, CORNELL UNIVERSITY LAW SCHOOL, ITHACA, NEW 
                              YORK

    Mr. Yale-Loehr. Thank you. First, I want to give you a 
background about the H-1B non-immigrant visa category. Then I 
want to talk about H-1Bs, the global economy, and free trade 
agreements, and then finally end with proposals to improve the 
H-1B category.
    As background, the H-1B category allows U.S. companies to 
temporarily hire foreign nationals who have at least a 
bachelor's degree or equivalent. Congress carefully built 
protections for the U.S. labor market into the program. 
Employers have to pay the higher of the prevailing wage or the 
actual wage. In addition, H-1B employers have to sign four 
attestations as part of the process.
    They have to attest that, number one, they will pay the 
prevailing or actual wage. Number two, they have to attest that 
they will give the H-1B worker the same benefits as other 
comparable U.S. workers. Number three, they have to attest that 
there is no strike or lock-out at the facility. And, number 
four, they have to attest that they will pay the return 
transportation of the H-1B worker back to their home country if 
they are let go.
    Enough about the overview. Let me focus on a few key 
issues. As Senator Hatch pointed out in his opening remarks, 
the H-1B cap is scheduled to drop down to 65,000 beginning in a 
few weeks, October 1. Moreover, it appears that fewer than 
65,000 numbers are really available the next fiscal year. I 
have heard estimates from the Immigration Service that about 
22,000 cases that are subject to the annual cap have been filed 
in this fiscal year, but will be decided in the next fiscal 
year.
    Moreover, the free trade agreements that were recently 
concluded with Chile and Singapore set aside another 6,800 H-1B 
numbers per year for use by professionals from those countries. 
Adding those two figures together, that leaves only about 
36,200 numbers really available for H-1B usage in fiscal year 
2004.
    A chart attached as Appendix A to my testimony sets out the 
statistics on H-1B usage over the last several years. Those 
figures show that H-1B usage is market-driven. The number of 
petitions increases when the economy is good and declines in a 
recession.
    The chart shows that in the peak economic year of fiscal 
year 2001, the former Immigration and Naturalization Service 
approved 164,000 H-1B petitions that were subject to the cap. 
However, the next fiscal year the number dropped by half to 
79,000, equaling a mere six-tenths of 1 percent of the total 
U.S. labor force.
    According to government statistics, about 57,000 H-1B 
petitions subject to the cap were approved through June 30 of 
this year. At that rate, approximately 76,000 H-1B petitions 
subject to the cap will be approved by the end of the fiscal 
year.
    Turning to the types of people who use H-1B petitions, over 
60 percent of H-1B workers in fiscal year 2002 were not in 
computer-related occupations. This shows the importance of H-1B 
workers to all parts of the economy, not just IT workers. 
Examples include H-1B doctors who provide care in medically 
underserved areas and researchers at universities.
    Moreover, in fiscal year 2002 approximately 65 percent of 
the beneficiaries of initial employment were in the United 
States in another non-immigrant status already. This shows that 
two-thirds of all H-1Bs are already in the United States, most 
of them graduates of U.S. universities. It does no good to 
train them and then tell them that they cannot get a job here 
because the H-1B cap is too low. Otherwise, we are just 
training our foreign competition.
    In terms of how the H-1B category protects U.S. workers, 
Department of Labor enforcement statistics show that they are 
enforcing the law. Over the last decade, the Department of 
Labor started 886 H-1B investigations and concluded 482 of 
them. During that time, the Labor Department found almost $12 
million in back wages was due to over 2,300 H-1B non-immigrants 
who had not been paid the correct amount.
    Those numbers should be measured against the size of the 
overall H-1B program--2,300 H-1B non-immigrants not paid the 
correct wage, versus over 1 million H-1B petitions for new 
employment approved during that same decade. Thus, the number 
of H-1B non-immigrants found to have been underpaid is only 
about two-tenths of 1 percent.
    My own view is that the Department of Labor is enforcing 
the H-1B program adequately, and that most employers are 
complying with the attestation regime set up by the H-1B 
program. Supporting this view is the fact that the Department 
of Labor has found willful H-1B violations requiring debarment 
from the program in less than 5 percent of its investigations. 
It would seem that many employers simply are experiencing 
difficulty in complying with the complex H-1B-related 
regulations.
    I know that you want to consider the impact of H-1B workers 
on comparable U.S. workers. It is hard to do that and I am not 
an economist. The only comprehensive effort to date was done in 
2000 by the National Research Council of the National Academy 
of Sciences. They concluded that the magnitude of any effect 
the H-1B program has on wages is difficult to estimate with 
confidence. The report noted that the effect, if any, may be 
not to depress wages, not to hurt employment opportunities for 
U.S. workers, but rather to keep wages from rising as rapidly 
as they would if the program did not exist. Another study in 
2001 similarly concluded that if the H-1B program does have any 
effect on comparable U.S. workers, the effect must be very 
subtle because they couldn't find the data in its report.
    H-1Bs and globalization: Globalization, or the cross-border 
movement of goods, services and people, is one of the most 
important characteristics of this 21st century. Some have 
raised concerns that globalization and the related activity of 
overseas outsourcing or offshoring, as it is sometimes called, 
can hurt the U.S. economy.
    In my view, the H-1B category, if properly administered, 
monitored and enforced, can be an antidote to concerns about 
overseas outsourcing. Use of H-1B visas encourages work in the 
United States, and thus can help keep and grow jobs in the 
United States.
    Ask yourselves this question: Isn't it better for an H-1B 
foreign national to be working in your State, buying goods from 
your constituents, paying taxes on the $60,000 salary or 
whatever they are getting, instead of working in India or China 
for a $7,000 salary, none of which gets spent in the United 
States?
    Finally, turning to proposals on how to improve the H-1B 
category, I have two types of proposals. One is exemptions from 
the cap. Exemptions are already in the program, but they can be 
strengthened and improved. Potential new areas for exemptions 
include jobs deemed to be in the public interest if the Federal 
Government, a State government or a non-profit requires an H-1B 
professional; second, jobs requiring an H-1B professional that 
a State economic development agency deems important due to a 
positive economic impact in that State; and, third, jobs that 
facilitate the retention of foreign students educated in the 
United States. All these three areas are detailed in more 
detail in my testimony.
    Finally, talking about the H-1B cap, an annual cap of 
65,000 is simply too small. Even in the recent recession, 
actual H-1B usage subject to the cap has averaged about 75,000 
to 80,000 a year. Moreover, as I mentioned, it appears that 
really only 36,200 numbers are available for new H-1B petitions 
this coming fiscal year.
    Even if there were 65,000 fresh H-1B numbers a fiscal year, 
which there aren't, that is not enough. I believe that a modest 
H-1B increase of 115,000 for fiscal year 2004 would alleviate 
our immediate labor pressures, while permitting employers to 
hire H-1B workers to fill various positions that require 
specific sets of skills.
    If Congress does not do anything, companies, hospitals in 
medically underserved areas, and universities will not have 
access to needed workers. In the longer term, Congress needs to 
look more comprehensively at how to better prepare U.S. 
students and workers for the jobs of the 21st century and how 
immigration, both temporary and permanent, fits into that 
strategy.
    The government, industry, and educational institutions need 
to work together on this important challenge. That, however, 
cannot be done by September 30 of this year. Therefore, I think 
we need to do something in the short term, whether it is to 
keep the status quo or to perhaps increase the cap a little bit 
for now and then have a longer-range solution.
    In sum, Congress needs to support an H-1B program that 
reflects our Nation's needs for highly educated foreign 
professionals and allows U.S. employers access to their talent 
now and in the future, while at the same time protecting U.S. 
workers. The existing H-1B program accommodates both sets of 
interests. Changes set to take place October 1, however, will 
upset that delicate balance and I urge Congress to do something 
to try to restore that balance quickly.
    Thank you.
    [The prepared statement of Mr. Yale-Loehr appears as a 
submission for the record.]
    Senator Chambliss. Thank you very much.
    Ms. Dickson, we are sure pleased to have you here and we 
look forward to hearing from you.

  STATEMENT OF ELIZABETH C. DICKSON, DIRECTOR OF IMMIGRATION 
 SERVICES, INGERSOLL-RAND COMPANY, WOODCLIFF LAKE, NEW JERSEY, 
           ON BEHALF OF THE U.S. CHAMBER OF COMMERCE

    Ms. Dickson. Thank you very much for inviting me today. My 
name is Elizabeth Dickson and I am responsible for global 
immigration at Ingersoll-Rand Company. In addition, I do Chair 
the U.S. Chamber Subcommittee on Immigration and I am actually 
testifying today on the Chamber's behalf.
    The U.S. Chamber of Commerce is the world's largest 
business federation, representing more than 3 million 
businesses and organizations of every size, sector, and region. 
The Chamber has had a long history of involvement in 
immigration issues, including the H-1B visa. Chamber staff and 
Chamber members have testified on immigration issues no less 
than 8 times in the last 5 years, 4 times specifically on H-1B 
and highly-skilled workers. I have previously testified on this 
issue myself.
    My testimony today reflects my experience with Ingersoll-
Rand's ability to find vitally needed workers. It comes from 
the perspective of a big multinational company which is trying 
to comply with more and more complex immigration laws.
    Ingersoll-Rand is a Fortune 200 company with 50,000 direct 
employees worldwide; 30,000 of those employees are here in the 
United States. The company is a major diversified industrial 
equipment and components manufacturer.
    We do understand that immigration is a complex issue, 
particularly in the wake of September 11. The Government has 
focused on a lot of security initiatives and that has been a 
priority since that time. We do understand that. There is this 
necessary focus, but we have to bear in mind that we also have 
an ever-present need to utilize a shrinking H-1B visa program 
to hire the best engineering and other professional talent that 
directly impacts on my company's productivity and global 
competitiveness, and that contributes to the American economy.
    Stephen has already taken you through what is an H-1B 
worker, and we realize that these are very highly qualified and 
talented people. He also made mention of the fact that it is a 
pretty difficult visa category to administer, with a lot of 
attestations, a lot of documentation, and a lot of paperwork to 
ensure that we are paying the appropriate prevailing wage and 
providing all the other benefits and other issues that are 
mandated by the regulations. I do believe most companies are 
complying with this. I know we work very hard to make sure we 
comply at Ingersoll-Rand.
    When the cap reverts to 65,000, we are going to have a lot 
of problems that we experienced both in 1997 and 1998. I had 
the same job in those years and I certainly did experience what 
happened with my company. We had petitions that were pending 
that were placed on hold. We had people that had to be taken 
off payroll. We had new hires that we could not bring into the 
United States for three or 4 months. Sometimes, that ended up 
putting very important projects, particularly engineering 
projects, on hold.
    We can't really afford to let arbitrary caps dictate U.S. 
business immigration policy. As a big, global company, we must 
be able to tap the top talent we need both domestically and 
abroad. Ingersoll-Rand has the majority of its manufacturing 
operations in the United States; in fact, we have plants in 24 
States. It is important to remember that 45 percent of our 
profits are tied to export sales.
    We have experienced in particular fields of engineering a 
problem identifying and retaining certain workers. Recruiting 
engineers within the U.S. often results in foreign-born 
applicants. At a time when Americans continue to earn fewer 
graduate degrees, particularly in math, science and 
engineering, our need for such knowledge continues to grow.
    My testimony includes a lot of examples of how we use the 
H-1B category and I would just like for this hearing to 
concentrate on some of the engineering specialties that drive 
our need for foreign-born H-1B workers. When I took this job 
initially, I always thought an engineer was an engineer, and I 
learned very quickly that that is not true. Engineering is like 
the medical profession; there are very specific specialty 
occupations.
    Some of the engineers that we have recruited for actively 
are metrologists. Engineering managers tell me that there are 
only five or six universities in the United States that have 
master's programs in metrology and, of them, there are almost 
no Americans that are completing those programs.
    Our Waterject Cutting Systems business spent 20 months 
searching extensively, using professional recruiters as well as 
advertisers, to get an engineer that was experienced in 
industrial robotics and pressurized product development. We 
finally found one in Canada.
    Metallurgical engineers have always been a shortage 
occupation in the United States and are very key contributors 
to machinery development projects, particularly for our mining 
and drilling products. Our Thermo King climate control sector 
had a 13-month search to find a qualified plastics engineer, 
and again we hired somebody from Canada.
    Currently, we have a number of Ph.D.'s who are working in 
critical product development for three of our different 
business units. Dresser-Rand, the oil compressor business; 
Drilling Solutions, which is mining and that kind of 
technology; and Thermo King, the climate control and 
refrigeration systems, all have recruited Ph.D.'s who are 
performing innovative, very, very important research and 
development to bring us into the next generation of products 
that are going to be globally competitive. Again, there are a 
number of other examples that I have cited in my written 
testimony.
    We constantly hear the request from the Government and 
other people to train U.S. workers, and I believe most 
companies do that actively. Training and employee development 
are part of our culture at Ingersoll-Rand Company. All of our 
manufacturing plants have training centers at their facilities. 
Many of them interface with community colleges and vocational-
technical schools.
    We provide certificate and college degree programs. We 
sponsor distance learning. We have a full tuition reimbursement 
program for both bachelor's and advanced degrees. We provide 
many corporate on-site training programs and we encourage 
cultural exchange from our facilities abroad in order to 
enhance diversity and awareness. Ingersoll-Rand University was 
established in 2001 and is responsible to train Ingersoll-Rand 
employees from worldwide locations.
    Additionally, Ingersoll-Rand remains a major contributor to 
U.S. colleges and universities, and we fund a number of 
scholarship organizations, as well as in some locations we have 
developed relationships with universities and actually fund 
some of the research projects at the graduate level.
    We continue to conduct extensive recruitment in the U.S. 
market for our unfilled positions. We have job fairs. We 
advertise in both newspapers and journals. We advertise 
electronically. There are a number of job openings at any given 
time on the IRCO website. We do pay for relocation and we offer 
highly competitive wage and benefit packages for all employees.
    Employers will continue to need H-1B workers, particularly 
when we are looking for people with highly specialized skills 
that are going to keep us competitive. We are looking for a 
reasonable, market-driven H-1B policy. Stephen did allude to 
how the numbers have fluctuated based on the need, and I think 
his testimony stands for that. But, basically, based on general 
economic trends, the numbers do mirror the needs of the market. 
I think when we are looking to find a solution here, we want to 
be looking ahead and think, if we have a recovering economy, 
what are our needs going to be long term.
    Some people say H-1B workers displace American workers and 
lower American workers' wages and working conditions. It is 
hard to displace a U.S. worker when you are recruiting for a 
job and you can't find anybody here with the specific skill set 
that you are looking for.
    But, additionally, we feel very comfortable that we are 
paying the prevailing wage, and also that these people are 
contributing to our taxes, to our social system, and all the 
other things that are required as part of the program. Really, 
it is a lot, lot more expensive to hire a foreign worker.
    I am actually in kind of a unique position because I do 
global immigration work, so I have seen how our immigration 
laws impact our ability to move people around and hire people. 
We have one of the more complicated visa processes, and that 
certainly is the case with the H-1B.
    An HR manager can go out and hire almost anybody and I 
never know about and nobody else in the company knows about it. 
If it is a U.S. worker, they just go and do it and there is no 
big deal. But when you are trying to hire a foreign worker, you 
end up going through corporate headquarters and before a job 
offer is ever made, we are looking at prevailing wage, we are 
making sure the business unit understands the requirements of 
the H-1B. We are making sure the documents are properly posted, 
that we can properly do the attestations, and that the business 
unit totally understands what they have to do to comply with 
every aspect of the program. Additionally, the HR manager has 
to pull a lot of paperwork together to work on this, and then 
there are the legal fees, the application fees, and these 
workers also require ongoing support.
    When you actually bring somebody in from a foreign country, 
it is not unusual for the total cost of that worker to be 
double or triple their salary in a year, particularly if it is 
somebody who is coming in for a short period of time and you 
are planning to send them back to their home country. There are 
a lot of dual taxation issues, relocation expenses, and other 
things that I include in my testimony.
    I believe that American cannot maintain its global 
advantage without an adequate supply of top-quality engineers. 
Immigrants build wealth and create jobs for native-born 
Americans, and I agree with Stephen that they keep 
manufacturing in the United States.
    In the near term, we simply must have access to foreign 
nationals. Many of them have been educated in the United 
States. By sending them home, we are, at best, sending them to 
our own foreign plants, and at worst we are sending them to our 
competitors. I have seen other countries relaxing their 
immigration laws to try to get access to this top talent. It is 
something that, if we want to maintain a global edge, we want 
to have the best and the brightest working for us in the United 
States.
    I encourage the Committee to explore the economic issues 
surrounding the H-1B program and I hope that you can come up 
with a solution that will work for all of us.
    Thank you.
    [The prepared statement of Ms. Dickson appears as a 
submission for the record.]
    Senator Chambliss. Thank you very much, Ms. Dickson.
    Mr. Steadman, we are also very pleased to have you here and 
appreciate your testimony at this time.

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

    Mr. Steadman. Thank you, Mr. Chambliss, and thank all of 
you for the opportunity to testify on the subject of H-1B 
visas. My name is John Steadman and I am here today in my role 
as the President-Elect of the Institute of Electrical and 
Electronics Engineers-United States of America.
    Senator Sessions. Mr. Chairman, I would just like to note 
that we are delighted to have Dr. Steadman at the University of 
South Alabama, where he just became Dean of the Engineering 
School there. We are also proud of his prestigious position as 
National President of the Institute of Electrical and 
Electronics Engineers.
    Mr. Steadman. I appreciate that, Mr. Sessions, and I am 
pleased with the warm welcome I received at the University of 
South Alabama, where I, in fact, am currently Dean of 
Engineering. Previous to that, I was head of electrical and 
computer engineering at the University of Wyoming.
    The IEEE is a trans-national professional society with more 
than 380,000 electrical, electronics, computer, and software 
engineering members in 150 countries--the largest single 
engineering organization in the world. IEEE-USA was established 
to promote the professional careers and public policy interests 
of IEEE's 235,000 U.S. members.
    My prepared statement goes into greater detail on a number 
of concerns. I am going to summarize by focusing on just three 
key issues. First, the H-1B visa is exacerbating the problem of 
engineering unemployment in the United States. Two, abuses of 
the L-1 visa compound this problem. And, three, these guest 
worker programs accelerate outsourcing to offshore companies 
and create security concerns. I will conclude in my oral 
remarks with some specific policy recommendations on behalf of 
IEEE-USA.
    The first point: H-1B visas exacerbate the problem of 
engineering unemployment. Between fiscal year 2000 and fiscal 
year 2002, the INS approved almost 800,000 H-1B visa petitions. 
During the first three quarters of 2003, the new Bureau of 
Citizenship and Immigration Services approved 140,000 new, 
renewal and exempt visas. This results in nearly 1 million 
guest workers just in the last 3 years.
    During that same 3-year period, unemployment among 
electrical and electronics engineers in the United States 
increased sharply from 1 percent in 2000, more than quadrupling 
to 4 percent in 2002. Among computer scientists, it jumped from 
2 percent in 2002 to 5 percent last year.
    Thus, the unemployment rate for electrical and electronics 
engineers has reached an all-time high of about 7 percent in 
the first quarter of this year. This translates to hundreds of 
thousands of unemployed U.S. engineers. Now, I grant you that 
not all engineers are alike, but we are all degreed and 
capable. U.S. engineers with good skill sets ought to be 
finding employment.
    Yes, it would be better to have a person hired in a U.S. 
corporation working in your State than be doing that work in 
India. But wouldn't it be better yet to have U.S. citizens 
employed in your State, spending their earnings in your State 
and contributing to your economy, rather than sending in, many 
cases, 70 or 80 percent of their wages back home to support a 
family?
    The second point: Abuses of the L-1 visa are compounding 
this problem. The L-1, or intra-company transfer visa, was 
established by Congress in the 1950's to enable multinational 
companies to periodically relocate foreign executives, 
managers, and workers with specialized knowledge of their 
employers' products and services to branches and subsidiaries 
in the United States.
    Let me make it clear that IEEE-USA supports the L-1 visa 
program when used for the purposes Congress intended. It is 
currently being used by non-U.S. engineering services firms to 
import significant numbers of technical workers, IT 
professionals, and engineers through their U.S. subsidiaries, 
who are then outsourced to U.S. companies and subsidiaries, 
with those U.S. firms in turn laying off their U.S. workers.
    In many instances well documented to this Committee, the 
displaced workers have to train their non-U.S. replacements in 
order to obtain a severance package. This is clearly an abuse 
of the L-1 visa and outside the intent of Congress in 
establishing this visa category.
    The L-1 visa has been exploited due to the absence of even 
minimal workforce protections and because it allowed some 
employers to avoid, at least for a short time, the public 
scrutiny and the negative publicity associated with the H-1B 
visa program.
    The bottom line is that the U.S. is continuing to import 
significant numbers of skilled workers at a time when the U.S. 
electrical engineering, computer, and information technology 
workforce is experiencing sustained and historic highs in 
unemployment.
    My third point: Guest workers and offshoring often go hand-
in-hand. Everyone is worried these days about the loss of U.S. 
jobs offshore, especially in the manufacturing sector. Let me 
assure you, offshoring is not just an issue for blue-collar 
workers these days. It is increasingly a major concern of 
white-collar professionals, including engineering, information 
technology, and other technical specialties.
    The argument is often made that the U.S. has to choose 
between importing guest workers and offshoring our technology 
jobs. IEEE-USA believes this argument rings hollow, as it 
greatly oversimplifies the reality of the economic forces 
driving globalization.
    Even though companies have enjoyed ready access to guest 
workers through H-1B, L-1, and other related visas, the 
offshore outsourcing of engineering, design, and R and D work 
is increasing to such an extent that even U.S.-based companies 
are starting to acknowledge the potential backlash, not to 
mention the national security, economic growth, and proprietary 
intellectual property concerns that outsourcing brings.
    If reducing costs and increasing short-term profits are the 
only driving criteria for management, then offshore outsourcing 
will occur regardless of how far we open the door to guest 
labor, because the relative cost of acquiring labor and 
facilities is presently so far tilted toward offshore 
production that there can be no realistic competition.
    The Chairman of the American Association of Engineering 
Societies recently put that clearly in focus by asking the 
question, how do you compete with an $800-a-month engineer? I 
commend that recently published article to you for your 
reading.
    IEEE-USA believes the increasing reliance on guest workers 
is actually fueling the trend toward offshoring. H-1B guest 
workers are increasingly being brought to the U.S. specifically 
to facilitate outsourcing by taking advantage of their 
connections, their language skills, and their familiarity with 
the offshore business partner.
    An unintended consequence is that they take proprietary 
company information with them when they return to their home 
country. Guest workers take home with them an acquired 
knowledge of the U.S. market and business practices, a network 
of contacts, and exposure to U.S. technology and its 
applications. With that knowledge, coupled with lower foreign 
labor costs, they are well positioned to compete with U.S. 
firms for work.
    Here are some specific policy recommendations. IEEE-USA 
believes it is time to rein in the H-1B program, not terminate 
it. We believe that business does need some access to talented, 
specific foreign workers. But it is time to adopt meaningful 
safeguards to protect the ability of skilled U.S. high-tech 
workers to compete for jobs on a level playing field.
    The H-1B visa quota should be reduced to its originally 
authorized level of 65,000 per year. All H-1B workers should be 
paid a prevailing wage that is not less than the median salary 
paid to similarly qualified U.S. workers, and there needs to be 
a better understanding of exactly what the prevailing wage is.
    Protections currently associated with H-1B-dependent 
employers should apply to all firms, not just those that are H-
1B-dependent. I note that Senator Hatch quoted that a study 
concluded that H-1B workers were paid $55,000 annually, while 
the average for all B.S. degree-holding employees was $46,000. 
It seems to me that is comparing apples to oranges.
    The vast majority of the H-1B workers in that study were 
degreed engineers and computer scientists, and I certainly know 
of no degreed electrical engineers from my institutions who 
recently have left the university and are working for $55,000. 
That is substantially below median salaries for electrical 
engineers. In fact, a recent salary study for electrical 
engineers put median annual salary at $90,000. So I think we 
must be careful when we compare these average salary numbers 
and see whether or not, in fact, H-1B workers are depressing 
U.S. salaries.
    The Department of Labor should be empowered to enhance 
compliance and reduce abuse by having authority to audit the 
labor conditions. Where H-1B workers are employed the $1,000 
training fee should be retained and redirected so that it 
actually aids U.S. IT professionals and engineers. Using more 
of those funds for the NSF scholarships is one option to ensure 
that the money is used for the purposes it was levied. Another 
is to provide more flexibility to enable displaced U.S. workers 
to obtain the training they need.
    IEEE-USA also urges Congress to pass the U.S. Jobs 
Protection Act, (S. 1452/H.R. 2489) bipartisan legislation that 
would help plug loopholes and prevent abuses of both the H-1B 
and L-1 temporary visa programs. The balance of our 
recommendations are outlined in my prepared statement.
    To reiterate my main points, first, the H-1B program is 
exacerbating record unemployment among U.S. engineers. Second, 
the L-1 visa abuses compound this problem. And, third, 
importation of foreign workers is accelerating the loss of U.S. 
jobs through offshore outsourcing.
    In closing, let me reiterate that these are difficult times 
for IT and electrical engineering professionals in the U.S., 
but there is a lot more at risk here than jobs for our members. 
If we continue down this path, the United States will become 
increasingly dependent on foreign technical expertise both here 
and abroad.
    I think all of the speakers you have heard agree on at 
least one thing: that we ought to be finding ways to encourage 
more U.S. citizens, especially women and other underrepresented 
groups, to pursue degrees and careers in engineering, computer 
science, and information technology.
    Remember that the congressionally mandated National Academy 
study in 2001 concluded that the H-1B program depresses U.S. 
wages in these high-tech job categories--whether you say it was 
through lower wages or that it kept wages from rising. Surely 
this is not going to encourage more young people to pursue 
degrees in engineering and information technology. The H-1B 
visa and other high-tech guest worker programs are putting our 
domestic talent pool at risk.
    I thank you very much for the opportunity to address you.
    [The prepared statement of Mr. Steadman appears as a 
submission for the record.]
    Senator Chambliss. Thank you very much, Mr. Steadman.
    Mr. Duffy, thank you for being here and we look forward to 
your testimony now.

STATEMENT OF PATRICK J. DUFFY, HUMAN RESOURCES ATTORNEY, INTEL 
                 CORPORATION, CHANDLER, ARIZONA

    Mr. Duffy. Thank you, Mr. Chairman and members of the 
panel. My name is Patrick Duffy. I am from Phoenix, Arizona, 
and I am a human resources attorney with Intel Corporation. I 
thank you for the opportunity to share with you Intel's 
perspective about the important role that H-1B workers play in 
our economy.
    What I would like to do today is tell you a little bit 
about the nature of Intel's business, our immigration 
philosophy, how we use the H-1B visa. I would like to briefly 
talk a little bit about how we use the L visa, discuss the 
training fee, as well as make some concluding remarks about 
some of the pending legislative proposals that are being 
debated about whether to reintroduce them in this body.
    Intel Corporation is an engineering company that was 
founded in the United States 35 years ago. We design, 
manufacture and market micro computer components and related 
products. We are identified and recognized as the technological 
leader in the semiconductor industry. We have the developed the 
semiconductor technology on which the entire personal computer 
industry has been built. Our products have continually 
revolutionized the industry and redefined the role of the 
computer in our everyday lives. This impact is a testament to 
our talented workforce at Intel.
    We are a U.S.-based company with global operations. Besides 
having facilities throughout the United States, we have major 
sites in Ireland, Israel, Costa Rica, Malaysia, and the 
Philippines. We also have an increasing presence in our fastest 
growing markets such as China, India, and Russia. Seventy 
percent of our revenue comes from outside the U.S.
    The majority of our research and development work occurs 
within the U.S. In fact, 4 of our 5 most advanced 300-
millimeter manufacturing plants are located in the U.S. This 
represents an investment of more than $8 billion in Intel's 
U.S. manufacturing capacity.
    We believe that the benefits to the U.S. economy from 
multinational corporations like Intel are enormous. We employ 
close to 80,000 individuals worldwide. We had revenue of $26.8 
billion in 2002, with a net profit of $3.1 billion. If we grow, 
jobs grow. We recognize at Intel that the key to growth and the 
key to being number one in the high-technology industry is we 
need the world's best engineering talent who can develop 
innovative products that generate demand and spur growth.
    With respect to our immigration philosophy, we view 
employment-based immigration from two distinct perspectives. 
First, we look at business immigration from the perspective of 
needing to fill critical gaps among our U.S. workforce through 
sponsorship of foreign nationals through the H-1B program and 
then later on through the permanent resident process.
    Secondly, we use the L program to move our global workforce 
for temporary assignments to facilitate technology development 
and ramp our global factories to high-volume manufacturing of 
our products.
    We have a clear philosophy with regard to hiring foreign 
national employees in the U.S. First, we seek U.S. workers when 
we need to fill a U.S. position. We have a visa sponsorship 
guideline that provides an example of this philosophy.
    Before we will agree to sponsor a foreign national who 
requires an H-1B visa to work in the United States, we require 
the business group to demonstrate to us that they have engaged 
in good-faith efforts to source-recruit qualified U.S. workers 
for this position and they have been unsuccessful. This is 
above what the law requires. Nevertheless, it reflects Intel's 
commitment, we believe, to the U.S. worker.
    As a result of our visa sponsorship guideline, our H-1B 
employee population in the U.S. is less than 5 percent of our 
U.S. workforce. This small percentage of our workforce is 
comprised of individuals possessing unique and difficult to 
find skills which can only be acquired through advanced-degree, 
university-level education.
    In terms of Intel's use of the H-1B visa, just like many 
companies in the U.S. today, our overall external hiring has 
decreased since the beginning of the economic slowdown in 2001. 
Consequently, so has our hiring of employees who require H-1B 
sponsorship. Nevertheless, we do continue to hire a number of 
employees requiring sponsorship for those positions where we 
cannot find qualified U.S. workers with the advanced education, 
skills, and expertise we need to compete in this global 
economy.
    Examples of these jobs include design engineers at the 
master's and Ph.D. levels in fields such as electrical and 
computer engineering, and process engineers at the master's and 
Ph.D. levels in fields such as chemical and materials 
engineering. The vast majority of the H-1B workers we sponsor 
are educated at U.S. universities. We expect that we will 
continue to sponsor H-1B employees in the future, for the 
simple reason that we cannot find enough U.S. workers with the 
advanced education, skills, and expertise we need.
    As I think every member of this panel has noted, the 
problem and the solution are found in the U.S. university 
graduation statistics. About half of the graduate students in 
physical sciences in U.S. universities are foreign nationals. 
That percentage increases the higher the degree and the more 
prestigious the school. At Intel, we need engineers operating 
at these rarified levels of knowledge in order to spur our 
research and development efforts, and to generate the products 
that we hope will spur growth and demand in our economy.
    It is important to also note that many U.S. companies and 
the U.S. Government collectively contribute billions of dollars 
to universities to support cutting-edge research, and much of 
that work is done by graduate students, many of whom are 
foreign nationals. If these individuals are to remain in the 
U.S. and contribute to our economy, they need to have H-1B 
status in order to work.
    There are U.S. employers who are eager to hire them, but if 
the H-1B program is burdened by fewer numbers, more 
bureaucracy, and delays in processing, employers will not have 
the option and gifted students will leave the U.S. We believe 
that we lose economically, intellectually, and culturally if 
our policies force these students to leave the U.S. and go to 
countries and companies that compete with U.S. companies such 
as Intel.
    Intel's experience with the H-1B program is that hiring 
such talent through the H-1B program does not displace any U.S. 
worker because our experience has shown that U.S. workers with 
the same education and skills are simply not always available 
in sufficient numbers to satisfy our hiring needs. Hiring this 
level of engineering talent is the way in which we invent new 
products, ensure quality and efficiency in our production, and 
grow the company in both revenue and jobs.
    As some have noted in arguing against the H-1B visa, or 
even the abolition of the system, they quote unemployment 
statistics to prove that H-1B visa workers are not necessary. 
The common argument is we look at the unemployment rate for 
electrical engineers. It is important to note that not all 
electrical engineers are the same and that the disciplines are 
not interchangeable.
    For example, many electrical engineers direct and 
coordinate operation, maintenance, and repair of equipment at 
customer sites. This is quite different than the type of 
electrical engineer that Intel hires who requires H-1B 
sponsorship. Our engineers are primarily component design 
engineers with master's degrees or Ph.D.'s who have highly 
specialized skills in very large-scale integrated circuit 
design, complementary metal oxide semiconductors, and device 
physics. Engineers with such education remain in short supply 
in the U.S. workforce.
    Our experience has also shown that engineers without such 
education cannot acquire it by on-the-job training or by a 
short course in a vocational setting. Rather, our experience 
has shown that this education can only be acquired in the 
course of a structured academic program that, in turn, relies 
upon the person already having the requisite math and physics 
academic building blocks. Access to these highly educated 
engineers is critical to development of our future generation 
of products and technology, and to our ability to maintain our 
position as a global leader in our industry.
    Clearly, the real issue here is the lack of highly educated 
U.S. candidates for jobs for which we experience shortages. We 
are so convinced that academic training is both where the 
problem and solution lies that we contribute over $100 million 
per year to improve teaching and learning. It is important to 
note this is more than the amount contributed by the $1,000 
assessment for H-1B visa applicants for all of 2000.
    Our goal is to spark interest in the hard sciences and 
engineering among U.S. students in order to generate a highly 
educated workforce of U.S. engineers. Emphasizing academics in 
the hard sciences and engineering is the only way to build a 
U.S. workforce that eliminates reliance on foreign talent. But 
it is important to remember this is a long-term process. The 
requisite education needs to begin in elementary school and 
continue through advanced university curriculums if it is to 
meet our industry's needs.
    Next, I would like to discuss how we use the L visa. 
Intel's use of the L-1 visa for intra-company transferees is 
quite different than our use of the H-1B visa. The vast 
majority of cases for which we sponsor an L-1 is in connection 
with temporary assignments in the U.S. rather than to fill a 
shortage of highly educated engineer positions that exists in 
the U.S., as we do with the H-1B visa.
    Our L-1 temporary assignments are primarily for employees 
who work on our new products where we have worldwide 
collaborative design efforts. We know that our use of the L-1 
visa is consistent with the legislative intent of the program.
    Key personnel who are employed by Intel and do work only 
for Intel abroad are brought to the U.S. for temporary 
assignments at Intel and only Intel. Last year, 95 percent of 
the employees we sponsored for L-1 visas came to the U.S. on 
temporary assignments and when their assignments ended, they 
returned to their home sites to work for Intel as Intel 
employees.
    There are rare instances where we use the L-1 visa to fill 
a U.S.-based position, but it is usually to transfer a key 
manager or executive to the U.S. because there are domestic 
operations at our corporate headquarters that require that 
individual's global experience and knowledge. This is the same 
reason for which we will place U.S. employees in other 
countries.
    It is important to recognize that in today's global 
workplace, we need to consider key workers as part of a global 
workforce rather than tied to any one site, whether foreign or 
domestic. It is a new and urgent dynamic in our industry.
    We design, manufacture, and sell to a world market. Our 
human capital, just as our products, needs to be easily 
transferred if we are to compete in this world market. U.S. 
policies that isolate or obstruct our ability to move our human 
resources can seriously compromise our success, and our failure 
is certainly not good for either the U.S. economy or U.S. 
workers.
    Next, I would like to offer you some brief perspectives on 
the training fee and the reach of the training programs. Intel 
does support the $1,000 training fee.
    Senator Chambliss. Mr. Duffy, I don't want to cut you off, 
but I am afraid we are going to get interrupted by a vote. I 
know your detail of all of this is in your written statement. 
If you could summarize right quick so we can get to questions, 
please.
    Mr. Duffy. Sure. Basically, don't throw the baby out with 
the bath water. Recognize there are legitimate uses of business 
immigration visas, and it is important that this body consider 
that it not do anything that impedes the ability of U.S. 
business to compete in this marketplace and tilts the playing 
field in favor of our foreign competition, who are trying to 
hire the same workers.
    [The prepared statement of Mr. Duffy appears as a 
submission for the record.]
    Senator Chambliss. Thank you very much.
    We have been joined by several of my other colleagues here 
who have not had the opportunity to make any sort of opening 
statement. We are going to have rounds of ten-minute questions, 
and I would tell each of you that if you want to make any sort 
of brief opening statement, do so at first, and then we won't 
charge that against your ten minutes.
    I will move directly to Senator Kennedy.

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

    Senator Kennedy. Thank you, Mr. Chairman. I will put my 
full statement in the record.
    [The prepared statement of Senator Kennedy appears as a 
submission for the record.]
    Senator Kennedy. I want to thank you very much for having 
this hearing. It is a very, very important hearing because it 
is basically about the workforce in our country which is the 
backbone of our economy both now and in terms of the future.
    This hearing is held at a time where we have had a rather 
important change, a dramatic change in terms of our economy 
over the recent years, reflected in an unemployment rate of 6.1 
percent, with no sign of abating. In Massachusetts, the rate is 
5.4 percent, in sharp contrast to 3 years ago when we were 
looking at the whole issue of H-1B and it was 2.5 percent at 
that time.
    We also have a situation where we have 22,000 applications, 
through no fault of their own, basically as I result, I 
believe, primarily of problems in the immigration lag, given 
the general kind of lag that the Immigration Service has 
accumulated. We are also looking at the new additions that will 
be allocated in terms of Chile and Singapore with the free 
trade agreements.
    So you put all of those together and that cuts the 65,000 
down very considerably, I guess, to about 40,000, and that is a 
very significant alteration and change. I personally believe we 
have to deal with the 22,000. It would be grossly unfair to 
these individuals who have just gotten caught in the 
bureaucracy and have been left in limbo.
    Comments have been made about the filing fee. I have been 
one who supported a higher filing fee, but we have seen the 
determination of the Congress with the $1,000. Even with this, 
we have seen the amounts that have been allocated toward 
training and it is really very, very significant. $129 million 
has been spent in computer sciences, engineering, and 
mathematics at NSF. Twelve thousand low-income undergraduate 
and graduate students received scholarships in 2000 and 2002; a 
$228 million technical training program at DOL, 56,000 
individuals to be trained in this. That is not insignificant.
    We have had very good testimony about how H-1B ties into 
the L-1, and I thank the Chair for having a very informative 
hearing on the L-1. I personally believe we can deal with the 
L-1 abuses with legislation. There have been pieces of 
legislation that have been introduced to attempt to do that. I 
am hopeful we can work that out. I am sure we can.
    It is nice to see a number of you back. Mr. Stephen Yale-
Loehr, it seems like only yesterday you were here on the L-1 
visa, and others as well.
    Mr. Yale-Loehr. I am buying an apartment in Washington.
    Senator Kennedy. Well, we benefit from your experience.
    Others are here and want to talk, but I would be interested 
as someone who spends a good deal of time thinking about this 
in how do we develop a program. If we are looking into the 
future, uncertainty in terms of our economy and seeing these 
changed economic circumstances, how do we really plan down the 
road in the future as to what this figure really ought to be?
    I always thought what we were trying to do is to have those 
individuals with very special skills. The fact that they were 
working here was going to mean that more workers were going to 
work here and were going to increase our economic capability 
and capacity. It was going to make us more competitive and it 
was going to stimulate the economy, and we were going to have a 
shortage of individuals that had skills and there were training 
programs to upgrade those skills for Americans to be able to 
work.
    We obviously want to deal with the abuses, and I might come 
back and give written questions about suggestions that you have 
about how we can deal with the outsourcing that Mr. Steadman 
has talked about. We have heard other testimony along those 
lines. In fact, it is happening and we have had hearings with 
the different groups that go out there and purposefully do 
that. We have to deal with the abuses that take place.
    We heard today--and I will just wind this up--from one of 
our colleagues; actually, it was Senator Schumer from New York 
who mentioned a securities firm in New York City that employs 
800 people at the present time with an average income of 
$150,000. Three years from now, none of them will have a job, 
all moving overseas for about $10,000, every one of them. And 
these are highly skilled people, people obviously, clearly, in 
computer technology, information technology, highly skilled 
people. I know the total number of people in computers has 
moved down a bit.
    We used to have low-income jobs moving overseas, and now 
very eloquently from all of you pointing out middle-income 
engineering jobs are moving overseas. That is maybe a different 
question, but how do we develop a system where we have to get 
some numbers up and that is going to be really reflective of 
where we are in our economy, and still try and maintain--if you 
agree with me that that was the purpose of this was to try and 
take special skills that would expand our economy, how do we 
figure out what that number is?
    Mr. Yale-Loehr. Is that a question?
    Senator Kennedy. Yes, you have got it.
    Mr. Yale-Loehr. That is a very complicated question and 
there is no easy answer to that. I think that in the long term, 
industry, government, and educational institutions all have to 
sit down and figure out what is best for America.
    Congress has worked hard over the last several years in the 
H-1B context to try to make sure there is a balance between 
allowing skilled workers to come into the country, while still 
protecting the U.S. workforce. You see that through the 
training fee, you see that through the labor attestation 
requirements, you see that through Labor Department 
enforcement.
    I think we have a delicate balance now and I think that in 
the short term, because of these changes that take effect 
October 1, the safest, simplest thing maybe to do is to simply 
say let's keep that delicate balance in place for another year 
or so while we convene a larger group of people--industry, 
government, educational institutions--to look at the whole 
issue, because some of these are not immigration.
    You want immigration wagging the economic dog here. Some 
issues like outsourcing and offshoring really are not directly 
related to immigration, and I think you need to focus on what 
is really important both in the short term and the long term.
    Senator Kennedy. That is very helpful.
    Would others like to make a brief comment on that? Ms. 
Dickson.
    Ms. Dickson. I don't think we wanted to see a quick fix 
here. I agree with Stephen. We need to do something in the 
interim, but it is a much bigger picture that we have to look 
at. Every time we run out of numbers, we pass some legislation 
for a short period of time and we increase the cap, and then a 
couple of years later, we are back at the same situation. Maybe 
an interim measure has to be done, but we have got to look at 
the bigger picture and come up with a better solution.
    Senator Kennedy. That is helpful.
    Mr. Steadman.
    Mr. Steadman. I couldn't agree with you more, Senator 
Kennedy. The purpose of H-1B visas was highly specialized, 
enabling access to particular skills. Clearly, many members of 
my organization would have liked me to urge you to end H-1B 
visas entirely. I didn't do that. I believe there are 
justifiable reasons for the program as long as we keep the 
numbers reasonable, and I have testified as to what that needs 
to be.
    My only additional comment--and I think it agrees with what 
other witnesses have just said--is that a few decades ago we 
were very worried about national security in a different 
context. Our ability to design, build, fabricate, produce 
nuclear weapons, for example. And there were very well-thought-
out programs that encouraged domestic talent to enroll in 
science and engineering. At that time, computer science wasn't 
so important. Programs to support graduate study in these 
disciplines were limited to U.S. citizens. They paid stipends 
that were very much higher than those for other graduate 
fellowships.
    Senator Kennedy. The National Defense Education Act?
    Mr. Steadman. Yes. The NDEA was more targeted to where we 
needed to go than things in the Department of Labor, in my 
opinion. These are longer-term, higher education issues, as the 
gentleman from Intel has pointed out.
    Senator Kennedy. Mr. Duffy, quickly. I am going to run out 
of time.
    Mr. Duffy. Yes, I am sorry, Senator. Just basically I don't 
think that it is always a direct connection between immigration 
and outsourcing, and we really need to look at what is the root 
cause and what is the U.S. doing in order to ensure that we 
have the workforce to spur innovation and development.
    Senator Kennedy. Let me come back to the training programs. 
We have got the figures on that. The individuals selected 
generally are through the consortia that are worked out, 
business, labor and community consortia that are worked out to 
go into these programs, and then the training programs are 
developed. I am not going to go into what the results have 
been. I think they have been quite impressive, but I think they 
could be strengthened.
    Let me start with you and go down. Do you have 
recommendations or suggestions on how they could be done 
better? With the amount of money that we have got, how can they 
be done better? How can they be tied in and achieve the general 
objective more effectively? What more can be done?
    My good friend, Senator Feinstein, is here, and she was 
very active in the development of this program. We looked at 
the Department of Labor, Commerce, the National Science 
Foundation. All of us were interested in trying to get the best 
here.
    What can any of you tell us, based on your experience, 
about how to make these programs more effective in terms of 
achieving what we had intended?
    Mr. Yale-Loehr. Senator, I don't have any direct experience 
with this program, only from what I have read and that is very 
little. My understanding is that a large chunk of the money is 
going to the Labor Department for general training and skills 
development, and I think based on the testimony here we may 
want to come to a consensus that maybe we need to focus more of 
that money at the high academic end rather than at basic 
training.
    Senator Kennedy. Interesting.
    Ms. Dickson.
    Ms. Dickson. From my perspective, it was the first time I 
really got the figures on how much money was spent on training 
and where it was going, so it was enlightening to me.
    I don't think that the program is really communicated 
perhaps as well as it could be. And, again, what are we looking 
to achieve with this training and at what level would be 
something to look at, but I am not sure people even know how to 
access the money.
    Senator Kennedy. Mr. Steadman.
    Mr. Steadman. I would absolutely agree with what Stephen 
just said--that more emphasis on higher levels is appropriate. 
I would add that I have direct experience with the CSEMS 
(Computer Science Engineering and Math Scholarship) program at 
NSF. It has been an outstanding success specifically in 
attracting women and minorities to math, science, and 
engineering careers, more so perhaps than anything else that 
the Division of Human Resources at NSF has done recently.
    Senator Kennedy. The GAO indicates that approximately 37 
percent of the students in the scholarships are women, and all 
the problems that you mentioned.
    Mr. Steadman. I seldom agree with the GAO, but in this case 
they are absolutely right.
    Senator Kennedy. Let me ask you just finally, if I could, 
Mr. Chairman--and this sort of gets back to what we talked 
about a little bit in the first question about the regional 
disparities.
    Is that out of the question in terms of looking at these 
regional disparities? We are going to have to set some figures 
on the overall, and have to develop training programs. This is 
going to be obviously a national kind of---immigration is a 
national issue, but do you have suggestions about anything we 
could think of, or does that get too complicated too quickly? 
Could you help us with that, Mr. Steadman?
    Mr. Steadman. I would stay away from trying to deal with it 
regionally, frankly.
    Senator Kennedy. Finally, I would submit questions about 
suggestions on enforcement. There is a difference between the 
prevailing wage and, as I understand it, a similarly situated 
worker's wage. That is complicated. I am not going to take the 
time here, but I would like to hear you out on these issues and 
recommendations about how we could tighten the program in terms 
of potential abuses.
    I will write to each of you and if those answers could be 
included in the record, I thank the Chair very much for having 
the hearing.
    Senator Chambliss. Certainly, every member will have the 
opportunity to submit written questions, if you members of the 
panel will please receive those and answer them with all due 
haste, please.
    Senator Sessions.

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

    Senator Sessions. Thank you, Mr. Chairman. This is an 
important issue. I remember when we voted on it before, it was 
during the Y2K period and the high-tech IT boom. We couldn't 
get enough workers and we voted to increase the numbers 
dramatically. Since then, there have been changes.
    Anecdotally, I would just say that I had a friend tell me--
a Chamber of Commerce type that is a free trader, but he said 
he saw a former computer engineer working a cash register in 
his medium-sized town. I have got applications for employment 
from a Stanford engineering graduate to work on the Senate 
staff. He had been out of employment, so the unemployment 
numbers are somewhat troubling to me there. We know at Intel, 
as you noted, 13 of your 45 Fellows are foreign-born. So it 
shows how much creativity and fire power we can get when we 
give bright people a chance to participate. This is not an easy 
issue for us.
    I would just like to ask a few bread-and-butter questions 
here.
    Ms. Dickson, how do people apply? Where do they come from, 
the ones who apply to your company?
    Ms. Dickson. Generally speaking, our most effective tool is 
the online IRCO website, and there is an electronic way of 
submitting your resume.
    Senator Sessions. Now, are they living in the country, 
studying at American universities, or are they out of the 
country with foreign degrees?
    Ms. Dickson. I think most of our applicants are here in the 
U.S. for U.S. jobs, but I mean technically anybody who has 
access to a computer worldwide would look at it. Again, we tend 
to filter out those people. We are mostly looking initially, 
the same as Intel, to hire U.S. workers. They are cheaper and 
there are a lot less problems to contend with.
    But in the areas of special skills, you will start looking 
broader and broader. For example, we just hired a worldwide 
engineering manager. He is actually a Polish national who has 
advanced degrees, worked in Australia, actually taught in the 
universities there, now works for a company in Germany, and we 
have just hired him to come and work for us. And he has very 
specialized skills.
    Senator Sessions. Yes. Well, let me just ask this because I 
have just got a minute and I have to scoot.
    Where do you get most of your people, Mr. Duffy?
    Mr. Duffy. Senator, we try to cast as wide a possible net 
as possible. In terms of our H-1B hires, most of them do come 
from U.S. universities and colleges.
    Senator Sessions. They were here through education visas, 
properly here. They are about to graduate, then they apply 
under the H-1B program and if you think they qualify and you 
need them, you go through the process?
    Mr. Duffy. Right. We will interview them through on-campus 
recruiting, advertisements through the Internet, job fairs.
    Senator Sessions. Now, of those, how many have bachelor's, 
master's, and Ph.D.'s, if you have an idea?
    Mr. Duffy. The majority of our individuals have master's 
and Ph.D.'s, the component design engineers.
    Senator Sessions. Do we have any idea how many of these 
people become citizens through various processes that might be 
available to them, and how many go back after how much time?
    Mr. Duffy. Well, Senator, I can let you know. Even though 
in the press you see ``temporary worker,'' these are not 
temporary workers to us. The H-1B is just one step in making 
these individuals U.S. workers. Since we are hiring them in 
shortage positions, we sponsor them for permanent residence. 
They get their green card, they become U.S. worker and remain 
in the U.S.
    Senator Sessions. For the rest of their lives?
    Mr. Duffy. Hopefully, yes. Hopefully, they will stay with 
Intel working the rest of their lives rather than going to a 
competitor.
    Senator Sessions. Well, we don't want to be a country that 
turned down Einstein, but we don't want to be in a situation in 
which we flood the market.
    Mr. Steadman, there is no doubt that labor is like a 
commodity. If you dump five times as much cotton in this 
country, the price of cotton is going down. If you dump much, 
much more labor into this country, the marketplace value of the 
workers or engineers will go down.
    How do you deal with these issues? Do you have any comments 
so far on what has been said?
    Mr. Steadman. Well, yes. I think the only thing you hear 
really wide agreement on, Senator, is that the longer-term 
solution is to encourage in various ways--and I believe it can 
be done--more domestic people to pursue what was referred to as 
hard science and engineering degrees. Now, I am assuming that 
means the brittleness and not how difficult it is 
intellectually. I was pleased to hear there is some chance even 
for a university professor eventually to get a real job at 
Ingersoll-Rand.
    I think in the short term it is accurate to say that in 
highly specific areas, allowing some H-1B visas with 
appropriate safeguards is still the appropriate thing to do. In 
the longer term, we need to think about how we encourage people 
in all the education levels. I mean, I am not defending only 
the universities or just attacking the K-12. At all levels, we 
need some assistance and some focus on what is going to make 
this country more competitive economically in the future.
    Senator Sessions. Do we spend more money on taking people, 
say, with a B.S. degree and help them to--maybe the job market 
has changed for them and they are now unemployed--to assist 
them, experienced workers and engineers, to change so they can 
meet the current demand?
    Mr. Steadman. I believe you are right on target for the 
quickest, most effective way, yes. Take people with bachelor's 
degrees and encourage them to continue or go back to graduate 
school to learn about VLSI and the chemical processing that 
they need in the semiconductor, for example industry. Those are 
skills we need to encourage.
    Senator Sessions. And for a relatively small amount of 
money comparatively, we could help transition a lot of capable 
people, would you say?
    Mr. Steadman. I think that is accurate. I understand how 
tight our time is, I just have to tell you about a concomitant 
issue that no one has been speaking about here; one that would 
also encourage a different face on the faculty at U.S. 
engineering and science departments.
    I think right now the face of that faculty is not very 
encouraging to women and minorities to participate, to pursue 
careers in engineering. It is just the reality that we all like 
to go to a classroom and at least occasionally see somebody 
that we look like. I mean, it is as simple as that, and yet as 
complicated as that. It is a problem that needs attention.
    Senator Sessions. It is an interesting question and it is 
something I look forward to discussing with you further, Dr. 
Steadman. We are glad to have you at the University of South 
Alabama and we are just excited about that and hope you enjoy 
the city.
    Mr. Steadman. So am I. I hope I will see you down there 
soon.
    Senator Sessions. No doubt. If you like baseball, I will be 
out there at Eddie Stanke Field.
    Senator Chambliss. I know Senator Sessions well and he is 
not going to be an applicant for a metallurgical engineering 
degree.
    [Laughter.]
    Senator Chambliss. Senator Feinstein.

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

    Senator Feinstein. Thank you, Mr. Chairman. To the Senator 
from Alabama, if he wants to see good baseball, he has got to 
come to San Francisco and see the Giants play.
    Senator Sessions. Oh, yes.
    Senator Feinstein. That is good baseball.
    Senator Sessions. Well, I have seen USC at the University 
of South Alabama, which is a competitive national college 
program.
    Senator Feinstein. Mr. Chairman, I just wanted to use my 
time to make a brief statement.
    I am very concerned about these programs. I did a lot of 
speaking throughout California in August. I cannot tell you how 
many workers came up to me and said, I have been replaced by 
somebody I trained and they are getting a third of what I got.
    Now, the degree to which this permeates the system, I don't 
know, but I do know this. Of the Department of Labor 
investigations, of those 300-plus that have reached final 
conclusion, over half of them were found to have some fraud, 
and there is $8 million in fines against those institutions.
    I do know that companies like Intel and Ingersoll-Rand are 
obviously legitimate companies, but there are other companies 
that use job shops. And it is a catch-22. This isn't an easy 
one because we are bleeding jobs offshore at the same time. We 
don't want to lose the jobs offshore, and yet we want to be 
able to have American workers fill jobs.
    The Department of Homeland Security--and I want this just 
for the record--has done a report entitled ``Characteristics of 
Specialty Occupation Workers: Fiscal Year 2002.'' There were a 
total of 197,537 petitions approved by type that year. Initial 
employment was 103,584. Of that initial employment, 36,494 were 
aliens outside the United States, and aliens in the United 
States were 67,090. Continuing employment were 93,953. This is 
a huge program.
    As we all know, it goes back to 65,000 in 2004. My view is 
that it should go back to that unless we are able to produce 
some stronger safeguards, standards, and a mandate that there 
be some prevailing rate considerations to stop this business of 
having a worker train another worker, then be fired, and find 
out that the worker they trained is getting a third the salary.
    Now, at the same time, August, I think, was the 37th month 
in a row we have lost manufacturing jobs, and this is predicted 
to increase. The jobs go offshore. So it is a catch-22. How do 
we encourage companies to better train American workers, 
encourage schools to better train American workers? We tried 
that, I think, back in 2000 with the high-tech community, and I 
suspect my State is the highest user of H-1Bs. I don't know, 
and I would suspect that Massachusetts is probably number two.
    I have to check and see how that training program has gone, 
but as one of the witnesses pointed out, the great weakness in 
math and science--and this program through the National Academy 
of Sciences that we authorized was supposed to provide 
standards and scholarship programs, and really move math and 
science training.
    Now, I am elected, obviously, to represent people from 
California who are losing their jobs big time. How do we 
correct this program? How do we put in the safeguards that are 
necessary in view of this outsourcing, and also in view of the 
fact that Americans are being replaced? I mean, if you look at 
the countries, the majority come from India, China, Canada, and 
some other countries, but India is the big one, China next.
    So I would like to have you answer the question, each one 
of you. What do you say to someone like me where now wherever I 
go, this program comes up and somebody tells me they have been 
replaced and they are angry? Does anybody want to take a crack 
at it?
    Mr. Yale-Loehr. Well, let me start that, Senator Feinstein. 
I think Congress did a good job in trying to build protections 
into the law, but like any law, the question is it is going to 
be enforced adequately? For example, if you have a law saying 
you are only supposed to drive 55 miles an hour, but there are 
no State troopers along the side of the road to enforce it, 
everybody is going to violate the law.
    Senator Feinstein. And this law can only be enforced, as I 
recall, on the petition of the--somebody has to file a 
complaint.
    Mr. Yale-Loehr. In 2000, Congress amended that and allowed 
the Labor Department to directly enforce alleged violations of 
the H-1B program, and that particular provision sunsets as of 
October 1. For at least the last 3 years, the Labor Department 
has had the authority to do its own investigations and not have 
to wait for a complaint.
    Senator Feinstein. So we would want to take a look at that.
    Mr. Yale-Loehr. I think you want to take a look at that and 
you may want to consider increasing appropriations for the 
Labor Department to better enforce the H-1B program. That may 
go a long way to making sure that employers really are 
complying.
    The law already says they have to pay the higher of the 
prevailing wage or the actual wage for that particular job. So 
it is in the law. The question is how do you make sure that 
employers abide by that.
    Senator Feinstein. Let me stop you. My staff tells me that 
is only for H-1B-dependent employers, which is only 15 percent 
of the users.
    Mr. Yale-Loehr. What is only for H-1B-dependent employers?
    Senator Feinstein. Fifteen percent of the users of H-1B 
visas--
    Mr. Yale-Loehr. Right. There are H-1B-dependent employers.
    Senator Feinstein. So it is only 15 percent, if I 
understand what she has just told me.
    Mr. Yale-Loehr. There are two types of employers for H-1B 
purposes, regular H-1B employers and those who use at least 15 
percent of their workforce comprised of H-1B nationals. Those 
people, because they have such a high dependence on H-1B in 
their workforce, are called H-1B-dependent employers. They have 
to live by a higher attestation regime, do more to try to 
protect the U.S. workforce than regular H-1B employers. Those 
dependency provisions also go out October 1 unless Congress 
acts.
    Senator Feinstein. Does anybody else have any suggestions?
    Ms. Dickson. I agree with Stephen. I think the enforcement 
mechanism is there. I think the law has a lot of--it is complex 
to look at the prevailing wage, the actual wage. I know when 
someone is hiring an H-1B worker, we really have to talk them 
through it so that they understand what the salary has to be 
for that particular employee and what they have to look at to 
actually establish the correct wage for that employee.
    I do think certainly big companies are working hard to 
comply with the regulations and the enforcement mechanism is in 
place already. It is just a matter of using it, I would say.
    Senator Feinstein. Mr. Steadman.
    Mr. Steadman. I think largely what you need to say to them 
you just said to this panel at the beginning of this panel when 
you said you believe that, in fact, the abuses have to be 
stopped. You need to say that to those people.
    I am a little bit less enthusiastic about the ability and 
the will of the Department of Labor to enforce some of these 
things than some of the colleagues at this table, I guess.
    First of all, it is accurate what your staff said and what 
Steve said that there is a higher attestation requirement for 
those who are H-1B-dependent employers. I see absolutely no 
logic to why that shouldn't attach to all people employing 
them. After all, the purpose of this was not to displace U.S. 
workers in the first place. It was to allow companies, 
businesses, to bring in people when they could not get U.S. 
workers. Why not make them attest that they have tried to get a 
U.S. worker before they do this? It seems to me a 
straightforward thing that ought to be done. So many of those 
tools are right at hand and it appears to me the Senate is 
right on track to make it happen.
    Senator Feinstein. Mr. Duffy.
    Mr. Duffy. Senator, I think it is important to be careful 
to recognize the distinction that there is not always a direct 
connection between an H-1B visa and business decisions to 
outsource. So we need to look at that carefully.
    In terms of attestation requirements, we believe the 
current scheme is accurate, and it is also careful again to 
balance that those employers whom you view as dependent who 
have to attest there has been no displacement tend to be the 
ones who maybe aren't really focusing on the true intent of the 
program in terms of the skill shortages.
    You want to be careful not to penalize the legitimate users 
of the program with a process that becomes so burdensome and 
slow that it impedes our ability to hire these skill-shortage 
positions in the U.S., because again that impacts our research 
and development which helps create jobs.
    Senator Feinstein. But you have to understand that it is 
not easy when somebody comes to you and says, this is a program 
you helped create and I am losing my job because of it. That is 
the concern that I have. It is one thing not to have a position 
filled and not to be able to really recruit or find anyone so 
that you can attest that you have tried to recruit, under 
penalty of perjury, and bring somebody in.
    It is another thing to have an American worker have to 
train their replacement; I mean, the indignity of finding out 
they are training somebody who is going to work for a third. 
And interestingly enough, it always works out, at least among 
the people who have come to me in different places in 
California, that their replacement is paid about a third.
    Do you agree, Mr. Steadman?
    Mr. Steadman. I certainly have heard that those things 
happen, and I agree that it is disturbing beyond belief. 
Clearly, that is an abuse of the program that needs to be 
stopped.
    Senator Feinstein. If any of you have any suggestions, I 
would certainly appreciate it. I mean, the numbers don't drop 
until next year, so we have a little bit of time. But I think 
whatever the number is going to be, there is going to have to 
be attached to it some guarantee to prevent this sort of 
undercutting of the American worker in the way I have just 
related.
    Do you have any other comment?
    Mr. Yale-Loehr. No. As Mr. Duffy said, I think you cannot 
say there is a one-to-one correlation between the business 
decisions of a company and H-1B or immigration. I think 
sometimes people try to see there is a correlation when there 
is not necessarily.
    Second, just to go back to my earlier point, I believe that 
again greater enforcement will help the program. Third, I want 
to say that some of the reasons companies are using the H-1B 
program to hire people temporarily is because it is taking so 
long to get people here permanently.
    If we are trying to encourage people to work permanently, 
let's speed up the permanent visa process. If people could get 
their green cards more quickly, they wouldn't necessarily have 
to use the H-1B, and then these would be people who would be 
working permanently in the United States and contributing 
permanently. Some of the concerns my fellow panelists have 
mentioned about information going overseas to our foreign 
competitors would not be in effect.
    Senator Feinstein. Let me take back what I said. The H-1B 
numbers drop October 1, 2003. I have got to go into rapid 
motion.
    I appreciate that, but the point is that the employer tries 
to find a qualified American worker and makes a showing that he 
or she cannot find that qualified worker. That is what is 
really important to me, and that the Labor Department, as you 
say, has the ability to see that that is done, to institute an 
investigation, to require an attestation under penalty of 
perjury. I am really worried about the back pay, $8 million. 
That is a substantial amount.
    Do you have any other comment? I am really looking for 
suggestions because now we have got to move fast.
    Ms. Dickson. Well, I do believe that the critical piece 
here is to enforce prevailing wage. That mechanism is already 
there and we just have to be looking at that. If you are saying 
that some of your people are telling you they are making one-
third less, well, what was their original salary?
    Senator Feinstein. Two-thirds.
    Ms. Dickson. Two-thirds. Pardon me.
    What is the prevailing wage and what is that employer 
paying other people that are similarly employed? The statute is 
very, very clear that you have to pay the higher of either the 
geographical prevailing wage or what you pay other U.S. workers 
in the same or similar occupation. So if that statute was 
enforced, that should resolve some of those issues.
    Senator Feinstein. I just want to point out that the area 
of our State that is most troubled by this is the Silicon 
Valley community, where there is the most unemployment right 
now and a lot of layoffs, as well. So it has had just huge 
repercussions in the State of California.
    How this figures in long term, I think, Mr. Chairman, we 
really have to give a great deal of thought because I don't 
think any one of us wants to run into some of the constituents 
that I have run into who are very aggrieved and very upset by 
this program.
    If you have any other comments, I would like to hear them.
    Mr. Steadman. Only to thank you for the opportunity to be 
here. It has been a pleasure.
    Senator Feinstein. Thank you, Mr. Chairman.
    Senator Chambliss. Thank you, Senator Feinstein.
    If what I am hearing is correct, I think all of you have 
said that the resources out there from which you have to choose 
really are not that great from the standpoint of finding the 
right kind of engineer. If the solution to this problem is what 
I am hearing, then it is not something that we are going to fix 
by lowering this cap once again to 65,000, or for that matter 
raising it to 200,000. It is more of a long-term fix that is 
going to have to take place with the education of our children 
beginning early on and bringing them through a master's or a 
Ph.D. program, which is going to take us a long time.
    Just very quickly, if you all would just go down the line 
starting with you, Mr. Yale-Loehr, with respect to what the cap 
number should be, just give me a figure--65,000, 195,000, more, 
less, somewhere in between?
    Mr. Yale-Loehr. Let me give you two answers. One is I think 
in one sense we should not have to have a cap. If you are 
having appropriate protections of U.S. workers, if you are 
having adequate enforcement by the Labor Department, the H-1B 
process will be market-driven. Therefore, we are going to get 
the kinds of workers that we need and still protect U.S. 
workers. So in that sense, you don't need a cap at all.
    As the National Research Council pointed out, any figure, 
any cap on H-1Bs is fundamentally a political decision. There 
is no economic basis for any such cap. Having said that, 
putting on my politician's hat, I would say for purposes of 
fiscal year 2004, a number of about 115,000 would be 
appropriate.
    Senator Chambliss. Ms. Dickson.
    Ms. Dickson. I would like to see some sort of a number that 
really represents what the needs are, and I also agree with 
Stephen that you don't really need a cap if it is market-
driven. But obviously when you are talking about what the 
numbers are going to be for next year, 65,000 certainly looks 
much too low. Maybe 195,000 is way too high because we 
certainly didn't use that this year. So if you arbitrarily are 
going to continue and set a cap, something in between is what 
we are looking for.
    Senator Chambliss. Mr. Steadman.
    Mr. Steadman. Obviously, my perspective is somewhat 
different. I think that it should be no more than 65,000, 
especially with the number of highly-skilled, well-educated 
U.S. engineers who are unemployed. Hundreds of thousands of 
them are available. IEEE-USA would welcome the opportunity to 
help U.S. companies find those people.
    Senator Chambliss. Mr. Duffy.
    Mr. Duffy. Senator, I probably agree with the other 
business representatives here that I tend to allow the free 
market to work its magic with that. Another alternative that 
you may want to consider is do you want to broaden the 
exemptions of those individuals from the cap.
    As I noted in my testimony, the Ph.D. and master's-level 
engineers that we hire--the graduation statistics bear us out 
in terms of the fact that the majority of those classes are 
foreign nationals. So for certain individuals engaged in 
research and development at advanced degree engineering levels, 
you may want to consider exempting them from the cap.
    Otherwise, I think if you have to pick a number, we are 
seeing right now we are going to end the year at 80,000. 
Hopefully, we are beginning an economic recovery. You want to 
build some room into that number so you are not impeding that 
recovery.
    Senator Chambliss. Well, you answered my next question, and 
that is do we really need a cap or should the market dictate 
what the number ought to be?
    Does anybody else want to comment on that?
    Senator Feinstein. Mr. Chairman, before they do, I have to 
leave, but may I ask you to place a statement by Ranking Member 
Leahy in the record?
    Senator Chambliss. Certainly. Without objection, we would 
be happy to.
    Does anybody else want to comment on the exemption from the 
cap for foreign students?
    Mr. Yale-Loehr.
    Mr. Yale-Loehr. I agree with that particular exemption. My 
testimony also offers several other kinds of exemptions you 
might consider. For example, if a State or local or Federal 
Government entity determines that they need an H-1 worker, that 
is in the national interest. By policy, by regulation, they are 
going to consider U.S. citizens first, but if they can't find a 
U.S. citizen and really need an H-1B worker for whatever 
reason, I think that kind of worker should not be subject to 
the cap.
    Second, non-profits. There are some non-profits related to 
research institutions or educational institutions right now 
that are already exempt from the cap, But other non-profits 
should also be included. For example, if a human rights 
organization needs an economist to determine the economic 
impact of certain human rights approaches, there is no reason 
why that person should be subject to the cap.
    Third, you might also consider the fact, which is not 
really an exemption, but the fact that 22,000 H-1B petitions 
are already in the pool, but are not going to be decided until 
fiscal year 2004. That lowers the effective number of new 
numbers available next fiscal year, and you might do something 
to correct that problem so that whatever number you come up 
with is a sort of fresh number of real numbers available to 
people.
    Senator Chambliss. Mr. Duffy--and this may not be a fair 
question because of the different categories of engineers that 
are out there, but what is your starting salary for an engineer 
coming out of college?
    Mr. Duffy. Senator, I don't have those figures with me. I 
can get them to you so you can have them for the record.
    Senator Chambliss. Well, that usually from a supply and 
demand standpoint, I would assume, should control. And if we 
have got, Mr. Steadman, hundreds of thousands of engineers 
unemployed--and we heard some numbers of $90 to $100,000 for 
graduates--that is a little bit confusing. I am a little bit 
puzzled by why we need the program at all if you have got that 
kind of money being paid to folks and you have got that many 
unemployed.
    Mr. Steadman. So am I a little bit confused about why it is 
needed at all, although there are clearly some very specific 
cases where it is needed, Senator. But I will tell you that 
statistics show that starting salaries for engineers and 
computer scientists have, in fact, declined in the last 2 
years.
    I would respectfully disagree that the 22,000 pending 
adjudications have anything to do with your question. There 
have always been pending applications from the previous year 
being used each year. I mean, that is not in my mind the real 
issue here.
    I wish that every company in this country were as careful 
about trying to hire U.S. workers first as I hear is going on 
at Ingersoll-Rand and, because of my personal experience, I 
know happens at Intel. But the fact is, not all companies are 
like that. The fact is that abuses have occurred. They are 
clearly documented.
    Some companies are not using the H-1B visas to hire people 
they couldn't find in this country. They are hiring H-1B worker 
and displacing U.S. workers after making them train the guest 
workers. I mean, that is just absolutely clear. So, 
unfortunately, you deal in a realm where not everybody is going 
to play by the rules unless you set some rules. That's why I 
think a cap is needed, in fact clearly needed, as well as 
safeguards for American workers.
    Senator Chambliss. I think it is pretty clear just from 
statements that we have heard from other folks that both the L-
1 and the H-1B are abused by some companies or some individual 
proprietorships. But on a wholesale basis, I am not sure that 
is the case. Clearly, there has got to be some regulation of 
this.
    But I will have to say that having dealt with H-2A, H-1B, 
L-1, and any number of other of our visa programs through the 
intelligence community, the H-1B works better than any program 
we have. I attribute that to the fact that there is a real need 
on the part of employers to get these people here. You are 
responsible for getting them here, you are responsible for them 
while they are here, and you are responsible for them to go 
back once the time frame within which they are authorized to be 
here is completed. So I think this program from that aspect of 
the day-to-day operation of it has worked real well.
    You all have certainly contributed in a very valuable way 
today to the issue of how we should treat this in the short 
term, but I think even more valuable testimony you have given 
relates to how we need to fix the long-term problem. I again 
appreciate very much you taking the time to be here.
    We will leave this record open for one week for any 
additional comments from members of the Committee. There will 
be some questions that some individual members will submit to 
you. Again, if you would get those answers back to us as 
quickly as possible, we would appreciate it. Thank you very 
much for being here today.
    The hearing is adjourned.
    [Whereupon, at 4:46 p.m., the Committee was adjourned.]
    [Questions and answers and submissions for the record 
follow.]
    [Additional material is being retained in the Committee 
files.]

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