[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
HELP WANTED: THE SMALL BUSINESS STEM
WORKFORCE SHORTAGE AND IMMIGRATION
REFORM
=======================================================================
HEARING
before the
SUBCOMMITTEE ON CONTRACTING AND WORKFORCE
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
APRIL 25, 2013
__________
[GRAPHIC] [TIFF OMITTED]
Small Business Committee Document Number 113-014
Available via the GPO Website: www.fdsys.gov
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80-823 WASHINGTON : 2013
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HOUSE COMMITTEE ON SMALL BUSINESS
SAM GRAVES, Missouri, Chairman
STEVE CHABOT, Ohio
STEVE KING, Iowa
MIKE COFFMAN, Colorado
BLAINE LUETKEMER, Missour
MICK MULVANEY, South Carolina
SCOTT TIPTON, Colorado
JAIME HERRERA BEUTLER, Washington
RICHARD HANNA, New York
TIM HUELSKAMP, Kansas
DAVID SCHWEIKERT, Arizona
KERRY BENTIVOLIO, Michigan
CHRIS COLLINS, New York
TOM RICE, South Carolina
NYDIA VELAZQUEZ, New York, Ranking Member
KURT SCHRADER, Oregon
YVETTE CLARKE, New York
JUDY CHU, California
JANICE HAHN, California
DONALD PAYNE, JR., New Jersey
GRACE MENG, New York
BRAD SCHNEIDER, Illinois
RON BARBER, Arizona
ANN McLANE KUSTER, New Hampshire
PATRICK MURPHY, Florida
Lori Salley, Staff Director
Paul Sass, Deputy Staff Director
Barry Pineles, Chief Counsel
Michael Day, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Richard Hanna............................................... 1
Hon. Grace Meng.................................................. 2
WITNESSES
Mr. John Tyler, General Counsel and Secretary, Ewing Marion
Kauffman Foundation, Kansas City, MO........................... 4
Mr. Nagappa Ravindra, President, Ravi Engineering & Land
Surveying P.C., Rochester, NY.................................. 6
Mr. Ryan Costella, Director of Strategic Initiatives, Click Bond
Inc., Carson City, NV.......................................... 8
Mr. Morgan Reed, Executive Director, Association for Competitive
Technology, Washington, DC..................................... 10
APPENDIX
Prepared Statements:
Mr. John Tyler, General Counsel and Secretary, Ewing Marion
Kauffman Foundation, Kansas City, MO....................... 31
Mr. Nagappa Ravindra, President, Ravi Engineering & Land
Surveying P.C., Rochester, NY.............................. 36
Mr. Ryan Costella, Director of Strategic Initiatives, Click
Bond Inc., Carson City, NV................................. 39
Mr. Morgan Reed, Executive Director, Association for
Competitive Technology, Washington, DC..................... 43
Questions for the Record:
None.
Answers for the Record:
None.
HELP WANTED: THE SMALL BUSINESS STEM WORKFORCE SHORTAGE AND IMMIGRATION
REFORM
----------
THURSDAY, APRIL 25, 2013
House of Representatives,
Committee on Small Business,
Subcommittee on Contracting and Workforce,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 2360, Rayburn House Office Building. Hon. Richard Hanna
[chairman of the subcommittee] presiding.
Present: Representatives Hanna, Amodei, Meng, Clarke, and
Chu.
Chairman HANNA. This hearing is called to order.
Thank you for appearing today to discuss two topics of
critical importance to small businesses and our national
economy: the shortage of workers with educations and skills in
Science, Technology, Engineering, and Mathematics, also known
as STEM, and immigration reform.
Small businesses are the backbone of the United States'
economy and the historic source of new jobs and innovation.
Among American small businesses, high-tech firms that engage in
STEM fields hold great promise in creating the kinds of jobs
critical to helping rebuild our middle class.
The potential of STEM-based firms to achieve this goal is
evident in economic reports that show that even during the
deepest troughs of the recession, many technology-dependent
firms continued to grow and add jobs. In addition, wages paid
in these industries outpaced those paid in most non-STEM
occupations.
Unfortunately, despite the great promise of technology to
grow our economy and create solid middle class jobs, the share
of degrees in STEM fields awarded by American universities has
been in decline. In addition, a larger percentage of these
degrees are earned by foreign students present in the United
States on a temporary visa.
As a consequence, 34 percent of small businesses surveyed
reported difficulties finding qualified applicants for
available positions. What we know is that we face a shortage
and long-term gap between STEM jobs openings and qualified
applicants.
This Committee partially examined this issue at a September
2011 hearing. During that hearing, small businesses and their
representative associations testified that small businesses
face shortages of workers even with elementary skills in STEM-
based disciplines.
At the same time, many small businesses report an even more
acute shortage of workers with post-secondary and advanced
degrees in STEM disciplines. According to one estimate, by
2018, there will be more than 200,000 jobs requiring graduate
STEM-level training that businesses will not be able to fill
with native-born workers.
While the preference of many businesses and policymakers is
to fill available jobs with American workers, it will take a
great deal of resources and time to build up the pipeline of
American students with advanced STEM skills. It can be done. I
personally think we should pursue this task with urgency, and I
have introduced legislation to do just that.
In the meantime, however, in order to grow and remain
competitive, small businesses need a reliable supply of skilled
workers to meet their pressing workforce needs. Many have
suggested that expanding programs for highly-skilled immigrants
and guest workers could be a viable strategy to meet these
needs while the United States improves its STEM education
system.
Today's hearing will examine a number of issues pertaining
to immigration reform and the skilled workforce needs of small
businesses, including the extent of the STEM workforce
shortage, its economic effects on small business, and whether
immigrants and guest worker visas reduce or improve wages and
opportunities for the American worker. American has always been
welcoming to those who seek freedom and opportunity, and if you
talk at any length of time with any member of Congress or their
constituents, you will find an American immigrant story.
In today's global economy, small businesses are not just
competing against larger rivals for market share; they are also
competing for talent. Allowing small businesses to fill STEM
job openings with foreign workers in the short-term will help
those businesses grow and aid our economic recovery and make
America more competitive globally.
Once again, thank you all for being here today. I now yield
to Ranking Member Meng for her opening statement.
Ms. MENG. Thank you, Mr. Chairman. And thank you to all our
witnesses for being here.
Education is the foundation of America's economy, providing
the tools for discovery and the skills to participate in an
evolving global economy. Perhaps no fields are more important
to this reality than Science, Technology, Engineering, and
Mathematics, the so-called STEM disciplines. For many small
businesses, success is often dependent on being able to hire
these STEM educated workers. Without them, small firms would be
left without the workforce they need to innovate and grow.
It is easy to see the importance of STEM to the United
States' economy. STEM occupations have lower unemployment rates
and higher pay, showing a high demand for this workforce.
Workers with an undergraduate major in STEM make a half million
more over their careers than non-STEM majors.
During the last 10 years, growth in STEM jobs was three
times as far as growth in non-STEM jobs, and workers in these
fields are less likely to experience joblessness than their
non-STEM counterparts. As a result, it is clear that STEM
education is playing a vital role in America's economy.
Over the long-term, its role will expand even further.
According to research from Georgetown University, STEM
occupations will grow far more quickly than the economy as a
whole, and by 2018, there will be 2.4 million job openings in
STEM fields. Finding workers to fill these positions will be
essential, both to the companies in these sectors and the
overall competitiveness of America's economy. The primary way
to fill these positions is through increasing education in
these fields. In this respect, the federal government is
playing a major role, providing more than $3 billion in STEM
education funding through a wide range of agencies, including
NSF, HHS, and the Department of Education.
These initiatives are critical to improving two areas at
the center of STEM education--graduate study and K-12 teacher
training. Supporting graduate education in computer science,
engineering, and mathematics will encourage more students to
pursue a STEM path. Fellowships and stipends for graduate
studies are crucial in this regard. Doing so will increase the
supply of STEM workers, allowing the United States' businesses
to achieve their full potential.
Similarly, increasing the quality of teacher training at
the elementary and high school levels will help reverse the
reluctance of many of our young students to pursue STEM
education. This is important because the Lemelson-MIT Invention
Index has shown that 34 percent of young adults do not know
much about these fields. A third of them said they were too
challenging, and 28 percent said that their schools did not
prepare them for STEM education. Simply put, investment in
these teacher training programs can reverse these trends.
Another important mechanism to filling STEM positions is
through immigration. H-1B visas are the primary way that a
foreign STEM worker would gain access to the U.S., but with
only 85,000 spots, this year's limit was hit in just 10 days
since taking applications. The result is that fewer foreigners
trained in scientific fields are coming to work in America. Not
only does this mean that it is harder to find qualified
employees, but it means lower rates of entrepreneurship. To
this point, according to research completed by the Kauffman
Foundation, the proportion of immigrant-founded companies
nationwide has slipped by 1 percent, and in Silicon Valley, the
percentage of immigrant-founded startups declined by nearly 10
percent. Fewer startups mean less growth and fewer jobs, both
of which we need.
With these complex issues before us, I am looking forward
to today's hearing, which will provide insights into what our
country can do to prepare and attract a STEM workforce. Doing
so is essential for the U.S. to remain one of the most
innovative and competitive economies in the world.
Understanding how we can increase the quality of STEM education
while encouraging greater participation in these scientific
fields is imperative not just for America's workers and
businesses but for the U.S. economy overall.
I thank the chairman for convening this hearing and I yield
back.
Chairman HANNA. If committee members have opening
statements I would ask they be submitted for the record.
The lighting system is fairly simple. You have five minutes
to deliver your testimony. We will be flexible with that. We
want to hear from you. When you see the light go yellow you
have another minute, but relax.
Our first witness is Mr. John Tyler. He serves as general
counsel and secretary of the Ewing Marion Kauffman Foundation
in Kansas City, Missouri. Among his areas of expertise are
issues related to innovation and highly-skilled immigration.
Thank you, Mr. Tyler, for being here today. You may now deliver
your testimony.
STATEMENTS OF JOHN TYLER, GENERAL COUNSEL AND SECRETARY, EWING
MARION KAUFFMAN FOUNDATION; NAGAPPA RAVINDRA, PRESIDENT, RAVI
ENGINEERING AND LAND SURVEYING, P.C.; RYAN COSTELLA, DIRECTOR
OF STRATEGIC INITIATIVES, CLICK BOND; MORGAN REED, EXECUTIVE
DIRECTOR, ASSOCIATION FOR COMPETITIVE TECHNOLOGY.
STATEMENT OF JOHN TYLER
Mr. TYLER. Thank you, Mr. Chairman. Good morning to
everyone.
As the chairman said, I am the general counsel and
secretary for the Ewing Kauffman Foundation. The Kauffman
Foundation focuses on fostering economic independence by
promoting entrepreneurial success and educational achievement.
Small businesses, and in particular young businesses, have
been a significant driver of job growth, and they are a major
source of innovative products, services, and processes. More
new firms and more growth can mean more jobs, more innovation,
and improved standards of living. As such, U.S. policy must
support small businesses, and especially the entrepreneurial
subset positioned for the transformative growth that keeps our
nation's economy vibrant.
Among current policies that do not do that well is our
immigration system, particularly for STEM businesses. According
to the National Science Foundation, demand for STEM jobs has
been growing, and part of the reason for that is not just
demand within industry but also due to people retiring and the
lack of native-born talent being educated in the relevant
fields as the opening statements commented as well.
According to data from the Department of Education and the
Georgetown Center on Education in the Workforce, there is an
estimate that the shortfall in STEM fields could be nearly
224,000 workers by 2018 or about 25 percent of industry labor,
that is if we just rely on a native-born workforce.
Although these problems affect our economy and innovative
capacity more broadly, they present distinct challenges for
small business, which too often is at the mercy of an expensive
process with too many businesses competing for too few visas
that take too long to process. Small businesses frequently
operate on limited budgets and personal sacrifice, particularly
during the early stages. Survival, much less growth, can depend
on a company's ability to attract and retain the right talent
with the right skills and experience at the right time.
Three changes in U.S. immigration law will help small
business in this regard. First, increased numbers. All business
will be helped by eliminating or raising the national caps on
the EB series visas. Also, Congress should increase the annual
H-1B visa allocation. Demand frequently exhausts supply before
the visas are even available as the ranking member noted,
including for the coming year. Moreover, increasing these
numbers may increase jobs based on studies that show that an
average of between two and five additional jobs are created in
connection with each H-1B hired.
More specific to small business, Congress should also
consider setting aside a number or percentage of economic STEM
visas for small business in recognition of the infrequency with
which they generally engage the bureaucracy and the
corresponding inability to realize efficiencies.
A second change would be to provide a predictable path to
permanent residency for foreign students who receive graduate
or even bachelor degrees in STEM disciplines from U.S. colleges
and universities. These visas could help in at least three
ways. First, they permit holders to become small business
owners, entrepreneurs, and job creators themselves. Second, the
visas would presumably be portable because there is no employer
to protect who has made an investment in obtaining the visa.
Finally, these visas better position our nation to directly
benefit from permitting a high quality education at a U.S.
college or university instead of forcing those benefits
overseas.
My third recommendation recognizes that other changes will
likely be of little value without changes in the process. The
current process is too cumbersome, too time-consuming for all
business, but especially so for small business. As evidence of
that distinction, the service is more likely to recognize a
longstanding large business as a ``trusted employer,'' entitled
to expedited processing, which is fine, but Malcolm Goeschl
asserts that the service is operated with the presumption that
businesses could not have a legitimate visa need if they meet
any two of the following three criteria, all of which are
likely to encompass small business. Those criteria are having
25 or fewer employees, having annual gross income of less than
$10 million, and/or being less than 10 years old. Congress
should ensure against such an ill conceived presumption, which
this Committee might do directly given its responsibilities.
In addition, the service should be required to afford
presumptive status to H-1B holders and EB series applicants who
original employer closes, particularly if they have a similar
job or have started a legitimate company. Too often, those
people lose their visa status and must leave or start over if
they can.
Given that only about 44 percent of firms founded since
2003 survive after five years, there are significant risks for
foreign employees of the other 56 percent, which because they
are less than five years old are likely to be small businesses.
Other nations are increasingly eager to welcome high-
skilled and entrepreneurial immigrants, particularly those
trained at our colleges and universities. Without the types of
changes I suggest, U.S. participation in the global brain
circulation is more likely to be one-sided, meaning that
knowledge and innovation will leave but do not circulate back,
and small businesses will suffer.
Thank you for the invitation to submit this testimony, and
I look forward to your questions.
Chairman HANNA. Thank you, Mr. Tyler.
Our next witness is Nagappa Ravindra.
Mr. RAVINDRA. Yes.
He is president of Ravi Engineering and Land Surveying,
headquartered in Rochester, New York. Mr. Ravindra began his
business in 1995 and employs approximately 90 people. A native
of India, he earned his master's degree in structural
engineering from Syracuse University and has become a United
States citizen.
Mr. Ravindra, thank you for appearing here today. I would
like to acknowledge your wife who is also here with you and
drove down from Rochester.
You may begin your testimony.
STATEMENT OF NAGAPPA RAVINDRA
Mr. RAVINDRA. Thank you. Chairman Hanna, Ranking Member
Meng, and members of the Committee, I appreciate the
opportunity to testify in today's hearing on how the STEM
workforce shortage is affecting small firms.
My name is Nagappa Ravindra and I am the president of Ravi
Engineering. We are a small engineering consulting firm based
in Rochester, New York. I am here today to testify about how H-
1B visas are essential to small engineering firms that need to
hire engineers with specific skill sets in order to serve our
clients' needs. I also want to tell you my story and how my
firm would not exist without work visas for engineers.
I am a member of the American Council of Engineering
Companies, the voice of America's engineering industry. ACEC,
for short, members--numbering more than 5,000 firms
representing hundreds of thousands of engineers and other
specialists throughout the country--are engaged in a wide range
of engineering works that propel the nation's economy and
enhance and safeguard America's quality of life. Over 70
percent of ACEC's members are small firms.
My firm, Ravi Engineering and Land Surveying, has been in
business since 1995. I came to this country in 1980 after
graduating from the Indian Institute of Technology in Madras,
India, with a Bachelor of Science degree in Civil Engineering.
I got my Master's degree in Structural Engineering from
Syracuse University and started my career as a structural
engineer in a consulting firm in Syracuse, New York. I was able
to get a green card within nine months with the help of my
employer and became a citizen at a later time. After training
for eight years, I moved to Rochester, New York to accept a
high position in another consulting firm and worked another
five years before starting my own business in 1995. I started a
consulting engineering firm providing structural engineering
services and went on to add employees and offer other services
such as bridge design and inspection, land surveying,
construction inspection, environmental and geotechnical
engineering. Currently, we average 90 employees and have three
offices in New York and one in Pittsburgh, Pennsylvania.
As a member of ACEC, we advocate a quality-based selection
process and we compete for work based on the strengths and
talents of our employees. To win projects, we need to
demonstrate exceptional qualifications and experience. So, in
order to grow and succeed, we need experienced, as well as
entry-level engineers who are exceptional and talented
individuals. Our growth is limited because of a lack of
qualified people in our industry. Currently, we have vacant
positions we cannot fill due to lack of experienced engineers.
Because there are not enough engineers with the skill sets
we need, we currently employ one engineer on an H-1B visa and a
student on an OPT visa. We had hoped to transfer the student to
an H-1B visa, but as you know, the current cap of 65,000 was
met in five days and our labor certification could not be
completed in time.
Engineers and the engineering industry are major economic
drivers and play an essential role in helping the U.S. compete
in the global economy. Engineers are in high demand, but the
output of new engineers from the nation's universities is not
keeping up with the needs of the industry and the nation.
Bachelor's degrees in engineering have declined by nearly
20 percent since 1985. The workforce is also getting older.
Nearly 30 percent of all engineering and science degree holders
in the labor force are 50 or over and are headed toward
retirement.
There is also greater competition for the diminishing pool
of engineering graduates, particularly from the information
technology industry seeking the skill sets that engineering
graduates provide. Only half of engineering degree holders work
in the engineering field. According to Duke University, between
30 and 40 percent of graduates from the University's Master's
of Engineering Management program take jobs outside of the
engineering profession.
Moreover, the proportion of foreign students earning
engineering degrees at American universities is quite high.
According to the American Association of Engineering Societies,
for the 2008-2009 academic year, foreign nationals comprised
43.9 percent of the Masters and 54.6 percent of the Ph.D.s
awarded in engineering by U.S. universities.
With so many engineering graduates from American
universities working in other fields, it does not make any
sense to send trained foreign engineers home to work for our
competitors in the global marketplace. If I had not been given
the opportunity to stay and work in the United States, 90
American workers would not have the job opportunities provided
by my firm. My story is not unique. Speaking from my personal
experience, nearly half of my graduating class of 220 students
from Indian Institute of Technology in Madras, India, came to
the United States in 1980 to pursue higher education. Out of
that pool of 110 engineers who came to this country, today,
nearly 30 percent have their own businesses employing a large
number of Americans; about 20 percent are CEOs, CTOs, general
managers, and senior officers in Fortune 500 companies; 20
percent of professors, deans, and educators in premier
institutions; and the remaining have become venture capitalists
and successful investors.
I strongly believe that the United States needs to invest
in talented and young engineers similar to investing in our
roads, bridges, and infrastructure as a long-term strategy for
growth and prosperity. I urge Congress to strengthen and expand
the H-1B visa program so that firms like mine will be able to
hire the necessary engineering talent to serve our clients'
needs and continue to grow and thrive.
Thank you for the opportunity to participate in today's
hearing, and I would be happy to respond to any questions from
Committee members.
Chairman HANNA. Thank you, Mr. Ravindra.
I now yield to a visiting colleague, Mr. Amodei, who will
introduce our next witness.
Mr. AMODEI. Thank you, Mr. Chairman and Madam Ranking
Member. I was excited about doing this until I heard the last
witness refer to people over 50 as getting older, so I am still
dealing with a little bit of that. But I will drive on
nonetheless.
I appreciate your courtesies. It is a privilege to appear
before you here today, not only as a member of the Immigration
Subcommittee of the Judiciary Committee to get a little cross-
pollenization on what your fine Subcommittee is doing, which
will be helpful in our work also, but also to introduce a
fellow Carson High School graduate in the form of Mr. Costella.
Now, in keeping with chronological accuracy that Mr.
Ravindra has started, Mr. Costella, to make no mistake about
it, went through that high school about two and a half decades
after I did and has obviously made much better use of his high
school start in his career than I have. But it is with some
pride that I introduce not only a constituent but a person who
represents a company that is a constituent company--a leader in
national defense, aerospace, transportation; not only a major
impact on local commerce but nationally, the fabric of our
community; a company that employs over some 300 people in
Nevada and Connecticut; folks that are innovators not only in
their particular product line but also in terms of everything
they are faced with--and that includes not only their product
but also the way they manage, recruit, and administer the
people that work for them, our most important resource.
So with that, Mr. Chairman, I would yield back. Thank you
for your courtesy, and I look forward to hearing from Mr.
Costella, hopefully without any indications on how much younger
than I he happens to be and how much more productive his
professional career has been to date.
Thank you.
STATEMENT OF RYAN COSTELLA
Mr. COSTELLA. Thank you, Congressman Amodei. It is great to
see you here. Thank you. And Mr. Chairman and Ranking Member
Meng, thank you guys for the invitation. It is great to be
here.
This is a really important issue. As Congressman Amodei
alluded to, I am the director of Strategic Initiatives at Click
Bond, Inc., and we are headquartered in Carson City, Nevada,
which is actually the state capital, for those of you who might
think it is Las Vegas. We employ about 250 people in Carson
City and then another 60 or so in Watertown, Connecticut.
We are a family-owned business. This past year we
celebrated our 25th anniversary. We are a very, very proud
manufacturer in the United States. We are a company that is in
transition. Since we are talking about generations and ages,
our owners are actually transitioning toward handing the
company to the next generation, to their son, and we are a
company in transition. We are growing. There is no shortage of
opportunities. We are the global leader in the design and
manufacture of adhesive-bonded fasteners, primarily for the
aerospace industry but we also do a lot of work in naval and
marine, and increasingly other transit vehicle sectors. And for
the laypeople, basically our parts are mechanical fasteners
that we use adhesives to put into place that hold in all the
electrical systems and planes and trains and ships and those
kinds of things.
As we look into the future, we have an incredible workforce
that has done amazing work to make us the global leader, but a
large number of our folks are baby boomers, and very similar to
other companies, especially small businesses in this country,
those folks are going to be leaving the workforce soon, and we
have to replace them somehow. And on top of that, as I said
before, we have major growth opportunities in front of us and
we have to find the people that can help us achieve those
goals.
Unfortunately, in Nevada we have challenges with respect to
education, and we have challenges with respect to retaining
folk even in our state, and that is a totally different
subject, but the point is when we look out into the future,
filling those jobs is not going to be an easy task. Now, we
have made some major investments in Nevada on trying to address
this problem. We, as a company, have partnered with the
Manufacturers Association in Nevada, as well as our fellow
manufacturers themselves to partner with higher education
institutions across the state, the Workforce Development
System, the Economic Development Apparatus, as well as the K-12
education system to really define what the needs are that we
have.
Historically, we have pounded our fists on the table and
said we cannot find the people we need, and we were very good
at pointing our fingers at the education system and anyone else
that would allow us to point at them to tell them that we are
not getting what we need. And I would say probably over the
past three to five years we have really had a change of mind
where we have said maybe we need to look in the mirror a little
bit and we need to be a bit more proactive about defining what
our needs actually are.
And so we have been very involved in our work in Nevada in
really saying, look, let us talk about with STEM skills really
are. Everyone hears STEM and the first question is usually what
the heck is STEM? And then they hear Science, Technology,
Engineering, and Math. Okay, what does that mean?
For us, STEM are the basics--reading, writing, the ability
to do math, the ability to problem solve. And those things
paired with a propensity to show up on time, to communicate
effectively and work in teams, if someone has those skills, we
can train them to do any job in our company. We can put them
through school and they can become an engineer who invents the
next greatest thing. Without those basics, there is not a very
bright road ahead. And so we have really focused our work on
trying to set that as the minimum standard--those basic
reading, writing, and math skills. We tend to actually look at
the National Career Readiness Certificate granted by ACT as a
solid indicator of that.
And then as you move up the chain, we have to realize that
as manufacturers and as employers, when we want to tell the
world, hey, we need these specific skills, we have to use some
sort of common language so people understand what you are
talking about. So we have really got behind the idea of using
nationally portable, industry-driven credentials to particulate
what our needs are.
So at Click Bond we have a huge need for machine operators
that can one day become journeyman-level machinists. So we
align our needs with the National Institute of Metal Working
Skills Credentials, and we have seen tremendous success in a
program that has taken people literally from unemployment to
full-time jobs with benefits and national credentials. So I
would love to talk a little more about that.
In closing, I see my red light is on here, as far as the
immigration piece goes, when we need a person with a specific
skill set, we look for someone who is the right fit who has got
the skills, and if there is a way to build a larger pool of
people as we grow and as other small- and medium-sized
businesses grow, if we can have a larger pool of people to pick
from that is more competitive, that just drives how much more
excellent and competitive we can be in this global economy.
So I look forward to your questions and telling you a
little bit more about our company if you would like to know
more. Thank you.
Chairman HANNA. Thank you, Mr. Costella.
I now yield to Ranking Member Meng, who will introduce the
next witness.
Ms. MENG. I am happy to welcome Morgan Reed, who is the
executive director of the Association of Competitive
Technology. ACT represents more than 5,000 small- and medium-
sized information technology firms and helps them leverage
their intellectual assets to raise capital, create jobs, and
continue innovating. Mr. Reed specializes in issues involving
application development relating to privacy, intellectual
property, competition, and small business innovation. He also
serves on the SBA's Office of Advocacy Advisory Council.
Welcome.
STATEMENT OF MORGAN REED
Mr. REED. Thank you. And thank you for the introduction.
Chairman Hanna, Ranking Member Meng, and distinguished
members of the Committee. As you heard, my name is Morgan Reed,
and we represent over 5,000 software and other high-tech small
businesses throughout the world. Our members are at the
forefront of the revolutionary changes happening today through
mobile apps, cloud computing, and data management. And the best
news is I am here to tell you today my members are hiring, or
rather trying to hire.
Chairman Hanna noted in his op-ed yesterday that small
businesses are the engine of job creation. Well, for the mobile
apps economy, we are dominated by small business; 70 percent of
the top selling mobile apps, small businesses or micro
businesses. Moreover, this is not a Silicon Valley-only
phenomenon. In fact, the study we did in 2012 showed that 60
percent of the app companies are actually outside of
California.
And of course, the growth that we have all talked about--
you have heard everyone at the table talk about--I want to put
some numbers to that--$92,000--$92,000 is the current median
pay according to the Bureau of Labor Statistics for a software
engineer. Ninety-two grand. I know a lot of people who consider
that a great living wage. And, of course, BLS predicts that
there will be 120,000 new computing jobs annually through 2020.
Unfortunately, my numbers cannot grow their companies if they
are unable to hire the workers they need to make the next game
or the next game changing application.
But instead of talking BLS numbers or Department of Labor
averages, I thought I would be a little more specific. So
Congressman--Chairman Hanna, in your district, Enesco Avionics
is looking for a software engineer to work in Endicott; BAE,
looking for engineers. Congresswoman Meng, Hoptin Media, which
is on Austin Street in Forest Hills, they are looking for a
software engineer. Aurora Games in Jackson Heights, looking for
a mobile app developer. Congressman Amodei, you obviously heard
from Mr. Costella, but guess what? Hodges Transportation is
looking for two engineers--a design engineer and a test
engineer. Congresswoman Clarke, in your district I have got
Cardwell Beach Marketing. They are looking for an interactive
design engineer.
All of these openings have been available for some time.
And with these openings commanding high salaries one would
expect that, well, America must be spiking in people pursuing
computer science degrees. Remarkably, that is not happening.
The primary reason is the steep decline in schools teaching
computer science. Only one in 10 high schools offer the class.
Students are less likely to major in a technical subject if
they did not study it in high school. And with fewer computer
science majors graduating from universities, we are woefully
short on the talent our U.S.-based tech industry needs.
Now, we know that improved STEM education can produce
results. A National Science Foundation supported effort called
Young People's Project is already out in the field working to
improve math and science scores in schools in underserved
communities. For example, Aria Fleming was a middle school
student when YPP reached out to her in the Mississippi Delta.
She clearly was not on a path to math and science education,
yet she has now graduated from Tennessee State University with
a degree in electrical engineering and works for Procter and
Gamble. CodeNow is an afterschool program in New York that is
taking high schoolers after school and teaching them how to
code, and its graduates are winning national science awards and
studying computer science in college.
Now, we have seen the investment in STEM education at the
secondary level has positive results, but this begs some
obvious questions. One, does STEM education solve today's
problem; and two, how do we pay for it? I mean, we all love the
idea of putting more money into something but we have got to
find some revenue to make it happen. And the reality is the
tech industry is willing to step up. Right now we know that the
tech industry has said something we rarely hear, which is
charge us more, please. We are looking at the need for H-1B
visas and saying double our fees for H-1B visas if that helps
us get more workers today to solve problem number one, and also
if that money goes to help solve problem number two, which is
the STEM education need that we have.
One of the key elements of the I-Squared Act, of course, it
will raise $500 million annually over 10 years for STEM
programs. This funding represents a fraction of the positive
economic impact for future generations who can fill these jobs
that are currently going overseas or worse, remaining unfilled.
So I urge members of this Committee to help small
businesses succeed by charging us more so that we can get the
tech visas that we need now and get the STEM education that we
need to grow America's workforce to meet our needs tomorrow.
Thank you very much.
Chairman HANNA. Thank you, Mr. Reed. I appreciate your time
and testimony.
Mr. Tyler, you said that the--maybe I misunderstood, but in
order to qualify for the program, the immigration program, H-1B
visas, the minimum is 25 employees, $10 million gross?
Mr. TYLER. No, I am sorry, I may have misspoke, Mr.
Chairman. What I was referring to was a practice at the USCIS
that was documented at least in 2010, where the USCIS seemed to
have a presumption that if a business had fewer than 25
employees, if it had less than 10 million in annual revenue, or
if it was less than 10 years old, any two of those three, that
there was a presumption at the service that the company did not
have legitimate visa needs.
Chairman HANNA. On its face that seems absurd to me knowing
that most companies start with one employed or, like Mr.
Ravindra, start by himself. Can you elaborate on that? Maybe
Mr. Reed would also because the tech companies in my community,
most companies, start as a very small business with an idea and
expand. So basically, we are limiting our helping small
businesses simply by those rather arbitrary and capricious
rules.
Mr. TYLER. I agree. And Malcolm Goeschl in his article goes
at some length to describe that process and how the presumption
hurts. With that fundamental presumption in place it denies
those businesses that meet those criteria the opportunity to
hire talent, denies them the opportunity to grow and to advance
their products, much less to advance the company's----
Chairman HANNA. Well, Mr. Ravindra, who started with one
himself, would not be able to be anywhere he is today at all.
He would have to wait for years and years to grow to that size
which almost by definition means he will never get there.
Mr. TYLER. That is the impediment.
Chairman HANNA. Mr. Reed.
Mr. REED. I mean, let us be very specific. The high-tech
industry is built off of companies that are incredibly small.
We all know recently Instagram was purchased for $1 billion.
They had 12 employees--12. Instagram. Huge. A lot of these tech
companies as you say would not even hit that threshold even
when they have hit true success. And the really key part--and
you know, Mr. Ravindra here is a perfect example of that--is
finding the right person. There is all this discussion about,
well, we need STEM skills. We also need the right skills. Mr.
Costella already referenced that about making sure that he has
got the right kind of person to do the job.
So the problem with that number is it arbitrarily limits
small business to find that one right person who has that right
skill that can make the difference between your company going
public, being acquired, or failing. And so that is a huge part
of the problem that we see with this artificial limit on the
side.
Chairman HANNA. So you would suggest then or that would
suggest that there be no requirements whatsoever; that one
person would be enough and one dollar and no years? Ten years
is a long time to be in business in my view.
Mr. REED. Well, a lot of the tech companies we work with
have actually either been in business in one form or another
for far longer than that. I think, and the Kauffman Foundation
can weigh in, obviously the ideal would be to have the ability
to get the right person instantaneously with no wait and no
requirements. We are also pragmatic and we know that finding a
solution that will meet 435 members' approval of the House and
100 members of the Senate will be difficult, so there is ideal
and what we think we can work with.
Chairman HANNA. Let me ask you one other question. When
tens of millions of people are out of work in this country or
have simply given up or are under employed, how does the guest
worker program--this is for any witness--help those people find
work?
Mr. REED. I will do a quick one. We have a member company
in Illinois, and this is a horrible story because it actually
talks about seven people who lost their job, but it fits with
your model.
This was a company that did service and they had a person
from Britain who was in the United States on a H-1B visa. The
visa expired and there were seven people that helped support
that person on the bids that they did for large enterprise-
level companies in the Chicago area. They lost their H-1B visa
person who was the team head, and those seven people could not
go to work. So when you look at that number, I might have one
H-1B visa, but if he is the key--or she is the key to making
the rest of that bid possible, completing that RFP on time,
then it is worth it to have that one person because that
provides 7, 8, 10 more jobs to support the overall contract.
Chairman HANNA. Thank you.
Mr. TYLER. Mr. Chairman, if I might add to that, there are
a couple of additional ways that the H-1B program can help but
also needs to be changed. One of the ways that it currently
helps is that there are studies that show for every H-1B that
is hired there is an average of between two and five other jobs
that are created to support the H-1B. So hiring the H-1Bs can,
in fact, contribute to employing other folks as well.
One of the ways in which the H-1B visa would need to change
to get to your point about the unemployment rate, currently
folks who are here on an H-1B have difficult, if not absolute
barriers, to starting and growing their own company as an H-1B.
And yet when we look at the impact of immigrants on the
economy, if we look at the impact of immigrants on startups and
new jobs and growth companies, 40 percent of the Fortune 500
companies had immigrant founders that were part of them.
Between 25 and 50 percent of various companies depending on the
studies in Silicon Valley and biomedical industry in Boston,
publicly traded companies with venture capital input. So
between 25 and 50 percent of these companies have had immigrant
founders.
We need to do a better job. We need to do more to allow
immigrants to start and grow companies, and the H-1B has
impediments to that.
Chairman HANNA. One other question, just generally.
So what I have learned and I am pretty confident that we
would all hear this, that STEM-related jobs are solidly middle
class jobs. In a world where we see declining incomes,
diminishing lifestyles, the American dream as we understand it
generally becoming mere elusive and harder to attain, STEM
educated workers, regardless of their origin, are people who
pay taxes, and add value at all levels.
I would like to yield to Ranking Member Meng for her
questions.
Ms. MENG. Thank you. I have a question for Mr. Costella.
Community colleges can play a significant role in training
STEM professionals. What experience does your company have with
employing these types of graduates? And anyone can answer also.
Mr. COSTELLA. Thanks for the question.
Community colleges, I mean, they are such a godsend for us,
especially in Nevada. I will tell you a little bit about some
success we have had.
We have a need, like I said before in my opening remarks,
for machine operators. These are folks who--the machine
operator, just for folks who do not know, is the entry-level
point for a career in machining. So if you want to be a
journeyman-level machinist that gets paid quite a bit of money
to do your work, the entry point is a machine operator. We are
not unique in the Northern Nevada area. A lot of small- and
medium-size manufacturers have that need. So what we were able
to do was come together as a community of employers and say we
have the specific need, as I said before, we need to use the
National Institute of Metalworking Skills credentials to
validate that skill set. Then what we did is partnered with two
of the community colleges up in Northern Nevada--Truckee
Meadows Community College and Western Nevada College. We got
them engaged in understanding what these credentials were and
what they validate, and they agreed because these credentials
are nationally portable and industry driven, and third-party
validated and driven by longitudinal data, that they could
actually grant academic credit along with the credential for
anyone who would go through a program to receive it.
We then partnered with the workforce system so that the
community colleges could get their facilities up to par to be
able to train towards the National Institute of Metalworking
Skills standard, and then we partnered as a community basically
to go look at the unemployment lines and screen people to say,
okay, who has got the basic skills--reading, writing, math,
problem solving--and who can pass a drug test? It is serious.
People laugh but it is a problem.
So the folks who could do that, who could earn the National
Career Readiness certificate, be drug-free, were then
interviewed. And the folks who made it through that process--I
think somewhere around 40 folks ended up going through this
program initially. In 16 weeks, they went through eight weeks
of in-classroom training on measurement, safety, materials,
five days a week, eight hours a day. The second eight weeks
they did three days a week in the classroom and the last two
days of the week were spent in on-the-job internships with the
employers who had the need, who articulated that need upfront,
paid internships, and in 16 weeks they went from being
unemployed, went through a training program at the community
college that had a demand-driven equation from the employers,
and ended up I think over a 90-something percent success rate
in becoming employed with benefits. And again, we are talking
about the first level of a career machining, $12-$14 an hour
with benefits. And it is up from there.
And I am happy to say Click Bond, we actually hired four
people out of that program and they are outstanding employees.
I spoke with our vice president of production before I came out
here and asked him how are these folks performing? And he said
they are outstanding. They have got very, very bright futures.
So that is a model that we saw a lot of success with in Nevada.
Mr. RAVINDRA. If I may add, we hire a lot of construction
inspectors who most of them come from community colleges and
they are graduates of community colleges and there is a severe
shortage of these inspectors that we hire and community
colleges are a great place to produce these graduates.
Ms. MENG. A question for Mr. Reed.
You proposed to increase visa fees and use the additional
revenue to pay for STEM education, and maybe Mr. Ravindra would
want to answer, too. Do you believe that smaller firms would be
able to afford these visas or would large businesses end up
being at an advantage because of their deeper pockets?
Mr. REED. The cost, when you look at an employee for the
software sector, the cost of an H-1B visa--and worst of all,
the time that it takes--remember, as you have all talked about,
it was a matter of days until we hit that cap. So if you look
at lost productivity, a few thousand dollars more is nothing
compared to the cost of the acquisition of a talented software
engineer. So if I am going to pay somebody $92,000 and you are
going to say I am going to have to pay $2,000 or $3,000 more to
acquire them, that is nothing. The legal fees that go into H-1B
far exceeds the actual visa account. So whether you double our
fees or more, it is not a significant portion of getting that
right person. And so absolutely, unequivocally when I have
talked to our members, they have said if I get the right person
out of the deal I will take it in a heartbeat.
Mr. RAVINDRA. Well, I do not know about that. As a small
business, we are certainly watching our dollars and whenever we
hire people we try to hire through the Internet and through
trade journals, and realizing ourselves we do not even go
through a head hunter. So any cost increase would not be looked
upon kindly by the small firm industry. So it does affect our
bottom-line. If that is what it takes to bring in more educated
people with the right skill set we probably will, you know, pay
for it but definitely it is not a good idea.
Mr. TYLER. If I could add in, it may be worth considering
some sort of or exploring some sort of a compromise similar to
what the U.S. Patent and Trademark Office has done. They now
have multiple tracks by which you can get patents through the
PTO. And one of the tracks you get an expedited track if you
pay a higher fee. So rather than increasing the fee on
everyone, there is a possibility that a multi-tracked system
could help. But particularly, considering the effect on small
business, a track for small business could also be useful.
Mr. REED. And I will amend mine to say yes, we all are
watching our bottom dollar but right now the desire to get a
product to market is really critical for us, and so there is
another element of it that I think is important and that is
that large businesses will actually be helping to build our
domestic developer workforce. So I did not want to make it
sound cavalier but I want to keep our eye on the prize, and our
eye on the prize is getting talented work, American workforce
built here in this country by any means that we can get it
done.
Mr. RAVINDRA. I just want to add one thing. I do agree when
it comes to the cost allocation, the major cost is spent on the
lawyers who help get the research together. So if we simplify
the process we can simply save a lot of money and then the part
that goes to pay for the H-1B visa itself is not a big portion
of the whole process. So yes, I do agree with Reed. We can
absorb some cost increase in the processing of the H-1B visa.
If it is simplified quite a bit, then we save a lot of money on
lawyers.
Ms. MENG. Question for Mr. Tyler.
While the number of foreign students in STEM fields has
increased by 50 percent in the last 20 years, the percentage of
the students receiving the temporary visas has remained the
same. If more of these students were able to remain in the U.S.
on H-1B visas, how would this affect American students' ability
to secure employment in STEM fields?
Mr. TYLER. That is an excellent question, and there have
been a number of studies related to crowding out as it is. The
Kauffman Foundation has not done those studies so I am not
directly involved with those studies. But a number of the
studies do show that there is not only not a crowding-out
effect with regard to those jobs, but there is actually in some
ways a crowding-in effect because with the foreign students
getting jobs it is creating other opportunities. I mean, with
the foreign students getting jobs there is still a need for
teams. There is still a need for people to complement each
other and to complement each other's skill sets. And there are
studies that show that there is, in fact, a crowding-in effect
as opposed to a crowding-out effect.
Ms. MENG. Another question for Mr. Reed.
The steep drop-off mentioned in computer science education
at the high school level is very troubling. Is this a supply
issue--are there not enough qualified teachers? Or demand
issue--demand issue--students are not interested enough? Or
both?
Mr. REED. It is a little A plus B. You are exactly right.
My own personal story fits this very much. My father was a
computer science and mathematics teacher and I actually took AP
math from my dad. So I am exactly what is part of this.
What is interesting about that is if I look at my
classmates in my dad's AP class from a high school in Alaska
with 116 kids in it, I can name five of us that are now in the
software industry in one form or another. And the problem that
we are facing is that folks like my dad are retired. It is
harder to find qualified math and computer science teachers
that are willing to take that pay. I mean, the good news is a
good software engineer earns $92,000. The bad news is it is
really hard for a math and computer science teacher to make
$92,000. So basic economics says if you are good at computer
science, you are going to find a computer science job with one
of us here at the table rather than teaching. So yes, A is part
of the problem. And then B, we need to do more to encourage
students to see the advantage from taking computer science even
at a younger age. And so that is why we look at programs like
CodeNow and others that help incent people and make them
understand, hey, there is not only a job here but a bright
future that can change the way you look at the world.
Mr. COSTELLA. Just on that note with STEM careers in
general, one of the things we have seen some major success with
is employers themselves taking the responsibility to
communicate what we do. Historically, we have just assumed that
counselors and teachers and everyone knows what we do and they
will somehow drive people magically into our factories and we
will all be happy. Well, if we do not open our doors and we do
not ask students and parents and teachers and folks to come
through our facilities, whether it is in the IT world or
manufacturing, they do not know any better. And what we have
seen is when we do that it does significantly increase the
likelihood that people want to pursue these careers. And then
if you can attach to that sophisticated marketing and
advertising and fund that through kind of associations and
whatnot, you actually can make some inroads.
Ms. MENG. Thank you, Mr. Chairman. I yield back.
Chairman HANNA. Ms. Clarke. You have five minutes or a
little more if you like.
Ms. CLARKE. Thank you very much, Mr. Chairman. And thank
you, Ranking Member Meng. And I would like to thank our
witnesses for your testimony here today.
I want to refer back to a point that was raised by you, Mr.
Tyler. You spoke about the barrier to H-1B visa employees to
establishing a business in the United States. What would you
see as a remedy for this challenge to a nonresident, noncitizen
entrepreneur?
Mr. TYLER. It may not be necessarily changing the H-1B
itself, but actually creating a new visa class that would allow
for entrepreneurial visas. And there have been a couple of
various bills introduced to do these sorts of things. But to
more specifically allow foreign----
Ms. CLARKE. Nationals?
Mr. TYLER.--nationals to start and grow companies and to
allow H-1B recipients to transition into that status or to
allow foreign nationals to enter that status directly.
Ms. CLARKE. So what would that business be classified as?
Would it be an American business or what type of business would
it be?
Mr. TYLER. The presumption is that it would be an American
business starting in America, and presumably, one of the bills
requires that you hire various numbers of people, nonfamily
members, in jobs in America. But I would not necessarily want
to say that the business could only operate in America. In
today's global economy it is important for growth and
opportunity that if a business can, in fact, be multinational--
--
Ms. CLARKE. I just think that this is sort of a new
paradigm.
Mr. TYLER. True.
Ms. CLARKE. Right. And it is an intriguing one because I
certainly understand the global nature of business these days,
but one of the challenges has been I guess American employment.
Mr. TYLER. Correct.
Ms. CLARKE. And so the question becomes are we ready to
embrace that new paradigm or in the alternative, do we provide
a pathway to either residency and/or citizenship for H-1B visa
holders? Have you given any thought to that?
Mr. TYLER. Well, in some ways--and there are studies that
show that right now the alternative for a lot of these folks is
not to start their companies in America; it is to leave America
and start their companies somewhere else. So they go back to
their home countries and they start and grow their companies
there. And a lot of these countries are very eager and they are
very intentional and strategic about trying to recruit these
people back to their country.
Ms. CLARKE. Right. Part of the challenge is the brain
drain, right?
Mr. TYLER. Correct.
Ms. CLARKE. Of any of these nations. So what I am saying is
in terms of ultimately anchoring someone in the United States.
We want the talent. We want the business. There is a tension, a
natural tension between a national of another nation and the
United States in terms of that talent, right? So I am trying to
get a sense of just in terms of creating this new paradigm, if
you will, is what is it that we would use as I guess the
magnet? Is it to become on a pathway to becoming American? Or
is it just sort of a global, this is a good place for you to
start a business mentality? And I will open that up for the
rest of the panel because I am just trying to get a sense as we
go through reform or what I call a new system, how we would
manage that.
Mr. TYLER. Well, America continues to be the best place to
start and grow a company, and we need to retain that status.
And I think if we allow opportunities for foreign nationals to
start and grow their companies here, not necessarily--or not on
temporary visas--maybe provisional, but certainly permanent
residency at a minimum, in starting and growing a company you
are attracting capital, you are attracting talent, you are
attracting customers and suppliers. A temporary status adds
risk, a high degree of risk to an already risky venture.
So in addition to the ecosystem that supports starting and
growing businesses for the foreign national and their ability
to start and grow their business, to hire people, there needs
to be some degree of certainty around their status.
Mr. REED. I wanted to give you a quick specific answer. As
you know, the president supported something called the Start-up
Visa Act of 2013, and I was using my handy dandy mobile device
to make sure who the sponsors were. But it gets to the heart of
your question--how do we find a way to bring them in? You
mentioned the brain drain. Well, the good news is so far the
brain drain has worked in our favor. Folks have come to
America. We have been the beneficiary of it. So you are right.
It acts like the Startup Visa in finding ways as part of the
immigration reform bill. Any form of immigration reform that
helps us continue to win the brain drain war is absolutely
essential. And so I would encourage you to look at some of the
suggestions through the Startup Visa Act that the president has
supported and others.
Mr. COSTELLA. I would just say we do not really deal with
the H-1B visa specifically but as a manufacturer that is
growing, that has a really intense design capability, we want
the best and brightest in the world to come here to live, to
work in our companies, to build their families, to pay taxes,
and we do not want to educate them here in our universities and
then sit across the negotiating table from them. We want them
on our side of the negotiating table. So whatever can be done
to allow that to happen, and that is what you all are diving
into, that is something that I think small- and medium-size
businesses in general are probably supportive of.
Ms. MENG. Thank you very much. Mr. Chairman, I yield back.
Chairman HANNA. Thank you.
Ms. Chu, are you prepared to ask a question?
Ms. CHU. Yes.
Chairman HANNA. Go ahead.
Ms. CHU. Mr. Reed, I have heard--well, actually maybe for
the whole panel, I have heard many of you address the solution
for STEM job shortages via immigration reform, but no one has
mentioned the large pool of potential STEM workers that are
women. Currently, women hold less than 25 percent of STEM jobs
and as discussed by many of you directing visa fees to bolster
an improved STEM education at the K-12 level certainly is key
to increasing the native STEM workforce population that we have
for the long term. But we also need to make sure that some of
this money is directed at increasing the number of women
getting STEM degrees.
So in what ways could we do that--could we increase the
presence of women in STEM jobs and therefore increase the
supply of STEM workers to alleviate these shortages?
Mr. REED. Well, I will start with a little bit of a
personal side of the story. My wife is actually a veterinarian,
so she is actually a STEM professional and went through school
to take math and science classes all throughout and become a
doctor. And I watched her class over the time that she has been
in it. Veterinary medicine, for example, started out with
almost all men. Her class when she graduated had 90 students.
Four, I think, were men; the rest were women. So we are, in
fact, seeing a lot of women in medical professions and others
that are, in fact, STEM-based, that are heading towards women.
I believe the last statistic I saw was that there were more
women in medicine--in medical school right now than there are
men.
So I think it is good to see that growth, but you point to
something a little more specific, which is my industry, the
software industry, where we are not still seeing the growth.
And I think it is absolutely worth looking at to find ways to
increase the diversity through how we spend the money that
comes out of the H-1B program. I think there is a lot to learn
from some of the nonprofit work that has already been done and
we should use that as we figure out the best way to utilize the
spending.
Mr. RAVINDRA. I would like to add, yes, there is certainly
a shortage of women in the engineering field and also a
shortage of high school students going into engineering. So
definitely we need to increase the awareness among high school
students and also train the high school guidance counselors to
introduce STEM-related fields to let them know that the kids
have a future in them. So it definitely needs to be introduced
at the high school level to encourage girls to go into
engineering.
Ms. CLARKE. Mr. Costella.
Mr. COSTELLA. One of the owners of our company is a woman.
Our director of communications and our director of technical
communications are women. Our director of business process is a
woman. And one of the things that we find extremely important
is making sure that when we engage with schools, both letting
parents and students and folks into our factory, visiting
schools for career fairs, is to show that our sector is not
just putting parts together. There is a whole slew of jobs that
are interesting. And showing the folks who are in leadership in
our company who are women, having them go out and be the
spokespeople, too. It has a tremendous impact in inspiring
young girls that these are careers that they can have. And so
again, I go back to I think the answer lies with the employers
taking responsibility and taking this seriously enough. If we
do not engage, I do not see how you build a pool of interest
that is sustainable.
Mr. TYLER. Yeah. And I would add I think that your question
is very astute and I would add to not just women in STEM fields
but women in entrepreneurship, women who grow companies. There
should be more of them and we need to have more of them. But
there is also evidence that the number of women who have
started growing companies is growing. And I think at the
Kauffman Foundation, we are trying to engage in one particular
set of programs how do we do that better? How do we as a
foundation facilitate the entry of women into STEM fields,
entry of women into entrepreneurial fields and their ability
not just to enter, but to succeed in those fields? So
supporting groups like Astea, which provides women mentors to
women entrepreneurs, trying to identify those women who can be
role models, who are role models, and to do more to support
them in their efforts to demonstrate that this is an excellent
path for women.
Ms. CLARKE. Thank you.
I yield back.
Chairman HANNA. Something maybe a little more contentious,
we have limits from certain countries on the total numbers of
people who can immigrate to the U.S. Knowing what we know about
STEM and how important STEM is to the future of this country,
and we have a lot of anecdotal evidence that suggests that when
people come here, if they cannot get a visa within a certain
period of time they actually go back and become our
competition, do you think we should set visas based on skill
sets as opposed to just raw numbers?
Mr. REED. Obviously, I am going to sound like a broken
record. That is exactly right. We are looking for the right
person, and we do not care what country they come from, what
accent they have. We want the person with the skill set that we
want. So absolutely. We see a need to change the perspective
basing it on the border versus basing it on the talent. And I
think you are exactly right there.
Mr. TYLER. And it seems arbitrary that Malawi or
Lichtenstein would have access to the same 7 percent of EB
series visas that countries like India and China and European
Union countries have. The number is arbitrary. The application
of the system in that regard is arbitrary. And it sure seems
like there are a lot better ways to do it that would be
particularly tied to opportunities, to needs, to skill sets, to
education levels that folks in the countries may have.
Chairman HANNA. So there is a fundamental logic for this
country to pursue immigration policy that perhaps acknowledges
the fact that there are certain people we need more of, and
those for this moment in history are people who are educated in
STEM.
Can any of you give me some real life evidence of somebody
you knew, maybe a company you know of, that came here and could
not get a visa in time, so they took their knowledge and their
skills and built a business overseas that is perhaps our
competitor today?
Mr. RAVINDRA. I can speak about that.
Not necessarily because they did not get a visa or they
were not able to stay here, but what we need to do is we need
to attract the best and the most talented people to come to the
United States, stay on, and then continue on to start
businesses and that will be to our benefit. So I do know that
many of my classmates who came here and did start businesses
but did go back to my home country, India, and continue to
expand and establish bases outside the country, it is just
global economy. So whatever they thought for their business
that it would be beneficial for them to be in India instead of
being in the United States, they pursued that. So not because
they were not able to obtain the visa or anything.
But lately things are changing because, like I said, when I
first came here to this country 20-30 years ago I got my green
card within nine months, so that is a big difference. Today,
for a student to get a green card it takes eight years for
somebody from my country. So there is definitely--the person is
going to think about it and then say, hey, you know, if there
are opportunities elsewhere in other countries as good, why
would I want to stay here? So that person would think very
seriously about staying in this country and go outside.
Chairman HANNA. To follow up with that, and I am going to
read you something--I will ask the question quickly.
So we are the competitive place to be. People want to start
businesses here. We have great educational systems here. And to
your point, if it takes nine years, people are going to think
twice about whether or not they should even bother. But this is
from David Brooks, a columnist from the New York Times, ``In
the 21st century, the U.S. will no longer be the big dog. Human
capital will be more broadly dispersed. There will be an array
of affluent nations fully engaged in a global economy. Their
competitiveness will be more about organizing relationships and
amassing force to thrive. America will need to have to be the
crossroads nation where global talent congregates and
collaborates.''
So if we do not get ahead of this dynamic that you
describe, we will not be that country at that global
crossroads. Would anyone like to comment on that?
Mr. RAVINDRA. That is correct. As a matter of fact, many
other countries, like the European countries, are jumping ahead
and then giving research to very talented people in STEM,
inviting them over to their countries with open arms compared
to the United States. So they recognize that. So the European
countries have already started recognizing the need for it.
Mr. TYLER. And I would add not just European countries but
also your neighbor to the north, Canada, is aggressively
pursuing U.S. castaways, if you will. They have new visas that
they make available. They have expedited processes that they
make available. Australia, New Zealand are being aggressive.
Japan. I mean, any number of countries. I mean, Japan, which
had formerly been mostly closed to immigrants, is now
recognizing value in attracting----
Chairman HANNA. So, Mr. Tyler, would you say then, we are
losing our ability to attract these people; a lot of it is
because of our own bureaucracy and of course the whole other
issues around immigration. How long do you think this dynamic
can go on before we are looked at as a place that is too
formidable to try?
Mr. TYLER. Predicting the future is always risky. I would
suggest that with the degree of attention that other countries
are paying to this issue and the aggressiveness with which they
are pursuing talent and not just the countries we have
mentioned but also China and India who we are educating a lot
of their talent and a lot of their workforce and a lot of their
entrepreneurs. Not only do we have to change how we are doing
business as a nation because it makes it more attractive, but
we have to do it more aggressively because other countries are
not just being more welcoming for U.S. educated students but
they are making inroads in having a more friendly business
climate where there are more opportunities for advancement, and
even wealth creation, to degrees. And those opportunities
become, you know, on one hand an opportunity for the U.S.
economy given the global marketplace, but on the other hand, if
we do not pay attention, we do not pay attention quickly, it
becomes a threat to the U.S. economy.
Mr. REED. I will give you a specific one and that is Kunal
Bahl who created a company called Snapdeal. I am looking at the
article where it talks about it. He now has 400 employees. He
is in position to take on Groupon, and he specifically said his
H-1B visa expired in 2007 and he returned home to India now to
create a company called Snapdeal. The headline on the article
is great. It says, ``At a time where the U.S. could use all the
tech jobs it can get, Kunal Bahl is creating hundreds of them
in India.''
Chairman HANNA. Amazing.
Mr. COSTELLA. And I would just add, at least from the
manufacturer's perspective, we are kind of there. There is a
shortage of people today in skilled STEM careers, as many as
600,000 across the country according to some estimates. It is a
problem and I appreciate that we want to look forward and be
ahead of the curve. I think we are at the curve and not
figuring this out will be detrimental to our future. I really
believe that.
Chairman HANNA. Innovation technology can facilitate new
domestic jobs in industries or make it easier to transfer jobs
overseas. Besides improving STEM education, what else do you
think we can do to keep jobs here with knowing that all the
uncertainty by government in terms of regulation and taxes and
everything else? I know it is a big question but Mr. Reed, you
are smiling.
Mr. REED. The size of that question is pretty daunting.
Obviously, from the small business perspective----
Chairman HANNA. You ask questions.
Mr. REED. Yeah, I know. You get the opportunity.
From the small business perspective we have several issues
from the technology part that we need to look at. We do have a
lot of uncertainty right now with regards to regulation around
other issues. Privacy is one that you heard mentioned earlier.
But as we have to build these companies here in the United
States, making sure that we can get the right person quickly
and be able to pivot--one of the biggest--the biggest things
that we have learned in the last five to six years over the
mobile apps economy is it is not just about having the smartest
person; it is having the smartest person who can change
direction because the market changes.
Eight years ago there was no such thing as the iPhone.
There was no mobile apps economy. So in a matter of years we
have created something that will hit about $100 billion by
2016. So when you look at barriers to entry and barriers to
success, a lot of it has to do with where there is either a
government or other impediments that get in the way of a good,
fast pivot.
Mr. TYLER. And part of what could be done to alleviate that
is just in looking at the amount of regulation that current
exists. And too often regulation gets adopted and it stays on
the books without any real effort over time to evaluate is it
still right? Does it still make sense? Should we do away with
this regulation? What is the effect? Just because a regulation
was adopted 15 years ago not only does not mean that it still
makes sense today but it may actually be causing harm today
when it may have been the right thing 15 years ago. So there
needs to be a more concerted effort to review regulations, and
I would suggest at all levels of government, not just the
federal level, but state levels as well. And to evaluate the
regulation--what is the effect of this regulation not only
based on the original intent and purpose of the regulation but
what harm is it causing now? What harm is it likely to cause in
the future? And are the benefits, you know, which comes in more
important--the benefits to be gained or the harm that is
caused? And a lot of that harm that is caused is increasing the
expense associated with starting and growing businesses.
Mr. COSTELLA. And as a small business that is part of the
aerospace and defense supply chain, for example, one of the
things that we have worked very hard in our engagement on the
Hill is to try and educate folks that while the regulation may
be well intended, it oftentimes impacts of customers. And a lot
of people do not realize a lot of small businesses, their
customers are the big OEMs, like a GE or a Boeing or a
Lockheed-Martin or a Northrop Grumman. And so while there may
be regulations that impact those guys at the top, there is
rarely very much analysis about how it impacts the second and
third and fourth tier suppliers down the chain like us. And we
employ people with those good, high paying jobs that if through
the stroke of a pen a program is just wiped out or some sort of
regulation is put in place that adds a tremendous amount of
cost, that does not affect the big guys; that comes right down
the chain to us. And at some point it becomes not sustainable
and it gets kind of scary. So I would say the cognizance of the
entire supply chain and how decisions here, which I truly
believe are well intended in many respects, how do they
actually impact the guys on the front lines?
Chairman HANNA. Thank you.
Mr. RAVINDRA. Being in the construction industry I just
want to add that obviously, the investment in infrastructure is
a good way to improve business climate in the country. And from
what I know, any place in other countries, especially like for
example, India, speaking from my personal experience, building
a good, nice airport in my hometown, paved the way for major
improvements and major investment by private sector all around
and all the way to the town, filled with technology companies
that took advantage of the investment.
Chairman HANNA. Thank you.
Ms. Clarke.
Ms. CLARKE. Thank you, Mr. Chairman. Excuse me.
I would like to refer back to a question actually raised by
Congressman Hanna, and that is given that there is legislation
that would lift the statutory cap on overrepresented countries,
do you find that would be a sufficient answer to the employee
shortages that we face? Or would you be in favor of a removal
of caps all together?
Mr. TYLER. I think----
Ms. CLARKE. Did you kind of get where I was going with that
question?
Mr. TYLER. If I understand the question, you are asking if
eliminating the per country cap in the AB series visa, is that
going to solve the need for talent? I would suggest that it is
a component of solving the need but it is not going to be
sufficient to solve the need because the EB series visas, they
are still--if you eliminate the per country cap, there is still
the numeric caps that exist as well and those numbers are
relatively small for each of the series. And even looking only
at the EB series is not likely to solve the workforce needs.
Mr. REED. I agree. If you look at the raw numbers, the fact
that we hit the cap in a matter of days, it is interesting to
note that in 2009, which we have to argue is the worst economic
condition that this country has faced since the Great
Depression, we still used up all the H-1B visas. So at a
certain level we have to understand that the cap itself needs
to be expanded and eliminating the per country is going to be
important to doing it.
Ms. CLARKE. So then you are saying lift the cap or remove
the cap? Or----
Mr. REED. Ultimately, I am very pragmatic about this. I
want solutions that help my members, and so removing the cap
would be great but I am also very cognizant of the needs of
Congress to meet compromise levels. So at best, let us get it
raised first and then we can revisit the question of removing
it all together.
Ms. CLARKE. So I heard the number 600,000 currently in the
shortage of people with the expertise. If we are raising the
cap, I mean, where is the sweet spot there?
Mr. REED. Well, I think we have looked at numbers more in
the 120,000 range versus where we are right now, and I know
that Kauffman can speak to the specific numbers on that. But
overall, you are right. Even a lift of the cap will not
eliminate our shortage, but that is why we want the money to go
to STEM so at the same moment that we are raising the cap, we
are also getting Americans who are capable of filling those
slots prepared immediately through community college efforts,
through afterschool programs, through every level of the
education system so that at the same time we are lifting the
cap, we are also bringing Americans into those jobs.
Mr. RAVINDRA. I just want to add I would be for removing
the cap because for the primary reason, as an employer, when I
am looking for employees, I am looking for certain skill sets
and I am also comparing the foreign students and graduates with
the local workforce available, and I want to hire the best. So
the market will dictate. If you remove the cap and if the
market is flooded with too many foreign graduates and if the
companies have an abundant supply and then they are going to
hire the best and the remaining will ultimately go home anyway.
So I do not think removing the cap is going to hurt us.
Ms. CLARKE. Very well.
One final question, Mr. Chairman. Can you provide us with
an idea of the diversity of the potential foreign candidates
with STEM degrees that you are finding in the aggregate
candidate pool? I mean, where from around the world are we
talking about? Is it just every nation? We certainly know of
India and China. I heard the E.U. also mentioned but they are
our main competitor right now. I just do not see people rushing
out of the European Union unless I guess financially there is
an incentive. But what are we talking about here?
Mr. REED. Actually, we have been able to get some good
talent out of Ireland. Their economic situation, they have a
great education system in Ireland. They have produced some
really skilled software engineers over there. And you are
right. We are willing to pay more. And that is not a bad thing
necessarily if we get the right talent. So I think it is good
that we face off against our competitors like Ireland, like the
E.U., and say come to America. If you are better, smarter, or
faster, we would love to have you here to help create jobs. So
it is all the way around the world but we should never take our
eye off the places that are directly competing with us.
Ms. CLARKE. I yield back, Mr. Chairman.
Chairman HANNA. Ms. Chu, do you have a question?
Ms. CHU. Yes. I wanted to ask specifically about the Senate
bill that is before us on comprehensive immigration reform.
Mr. Reed, you pointed out that simply increasing the H-1B
cap will be not enough to solve the STEM worker shortages that
we are facing, and you stated that not everyone can fill this
gap and that for vulnerable technology startups that the right
fit is very critical.
The Senate immigration bill would add an additional 120,000
merit-based visas for high- and low-skill immigrant workers
annually. And I am just wondering what you think about this. It
would give extra points to immigrants with masters degrees and
Ph.D.s, and those with experience working in high demand fields
would also provide--it has a potential for providing small
businesses and startups with the skilled employees that they
need. Outside of increasing H-1B or employment-based visa
categories, would this improve the chance of finding the right
fit candidates?
Mr. REED. Congresswoman, I believe that there are quite a
few benefits that we are seeing in the Senate bill. I have to
say that we find the I-Squared legislation as proposed to
definitely have some advantages over the Gang of Eight--I guess
we can call it the Gang of Eight Senate version in that it is a
little more pragmatic about some of the difficulties in making
sure that we can get the right employee. There are elements of
the Gang of Eight bill on the H-1B side that would put some
pretty high burdens for a small startup company in terms of
meeting their requirement that we have looked into every
possible way to find an American, that we leave ourselves open
to investigation by the Department of Labor for multi-years.
So when you look at the Senate bill, to go directly to your
question, does it solve all the problems? Of course not. We
know that. We discussed that ad nauseam. We think that the I-
Squared language probably does a better job of dealing with the
small business needs that are being considered elsewhere, and
so we would encourage you to look at the I-Squared language
around that portion. Overall, I think it is important that the
other area that needs to be looked at is that right now the
legislation in the Senate only apportions about 15 percent of
its money to a secondary education. A lot of it goes right now
to college, community colleges, which is great, but I think one
of the things we need to consider is the fact to get that
competent college student, like you talked about, getting them
in the community college, they need the talent that Mr.
Costella described--reading, writing, arithmetic. So we need to
actually put some more of that money looking at the high school
level, too.
So as you look through that Senate bill, look at the I-
Squared on the H-1B requirements and look at where the money is
going and ask serious questions about is there a way for us to
put more into secondary education so that Mr. Costella's needs
are met as well and that they have the math skill so that they
can go through the journeyman program.
Ms. CHU. Okay. Mr. Tyler.
Mr. TYLER. If I would, I would add that it is important
that immigration reform, particularly as it relates to the high
skilled levels, and particularly in the area of small business,
that we remember that high skilled immigrants have a greater
propensity to start and grow companies. So it is not just a
workforce issue; it is also an entrepreneurship issue and
starting and growing companies, which actually then creates
more demand for workforce. Creates jobs, creates opportunities,
and creates product services, et cetera. So it important that
there be opportunities for folks, as I mentioned earlier, for
foreign nationals to come to the U.S. to start and grow their
companies here. And also for foreign nationals who are here on
temporary visas or other restricted visas to be able to have a
pathway to starting and growing their business.
Ms. CHU. Mr. Tyler, there is--in talking about the Senate
immigration bill, it does have a provision that would improve
the portability of visas, and in your testimony you mentioned
that small businesses would particularly benefit from
procedural changes to the law that allow for this portability.
Could you expand on this point and explain why it would be
important to you? How it would benefit small businesses?
Mr. TYLER. Portability is important for a few different
reasons. The absence of portability ties the immigrant to a
particular company. It ties them to their sponsor. And that
creates opportunities for below market wages, below market
working conditions because of that specific tie to the
employer, because if the person who is sponsored by the
employer leaves that employment, they have to either leave the
country or find somebody else to sponsor them. So having
degrees of portability is important because it becomes a
pressure against abuse of the system which is important.
Portability also needs to encompass the possibilities of
starting and growing companies as opposed to finding another
employer sponsor. Starting a company and having that company
effectively hire you becomes part of portability as well.
Mr. RAVINDRA. If I may add, I was speaking to a friend of
mine who owns a small business--not exactly a small business
but a company of 200 plus employees. I asked him about how many
H-1B visas he has hired and sponsored, how many employees, and
he said none because the complexity of the process scares small
businesses. And they really do not want to deal with going
through the H-1B process to hire people and they will not just
do that. And so simplification of the process is really
critical for small businesses to hire H-1B visa graduates.
Mr. COSTELLA. I would second that just as a smaller
business. When we look at that it is burdensome to figure it
out and understand all the details. So we will adopt our own
measures of finding the right people, but simplifying that
would help us access more talent, which makes us more
competitive and helps us grow and create more jobs.
Ms. CHU. Thank you. I yield back.
Chairman HANNA. We talked a little bit about the Senate
bill. Part of it, to protect opportunities and wages for
domestic workers, the Senate bill includes provisions that
would require employers to pay H-1B visa employees higher
wages. Would anybody like to speak to that?
Mr. RAVINDRA. I can speak a little bit about it.
When we sponsor an employee for the H-1B visa in talking to
our counsel, they advised us that we need to pay the prevailing
wage, which is whatever the average rate of pay is for that
employee and not pay any less than that for the chances of that
employee to get their visa. So we cannot really go and hire
foreign graduates assuming that we can pay less and then make
money out of that. So we do not do that. And also, our counsel
told us that the rate of pay has got to be on par with anybody
that we would hire.
Chairman HANNA. So basically you would say then the Senate
provision is irrelevant; that it is unnecessary?
Mr. REED. I would say that right now I know that being on
the software side it is a little different than my colleagues
here at the table but we are not finding that people are saying
no to hiring the right talent because it is slightly more; in
fact, we are actually looking at wage competition in the other
direction which is trying to keep our best employees in our
company by doing anything we can, including salary increases.
As we all know, those are going up. So it is not really
relevant to us right now in the software sector.
Chairman HANNA. What you are really saying is the market
has taken care of that.
Mr. REED. Absolutely.
Chairman HANNA. Okay.
Mr. TYLER. Mr. Chairman, if I might add on the compensation
side of things, small businesses have a tendency to compensate
their folks in a lot of different ways. It is not just salary.
Chairman HANNA. Oh, is it?
Mr. TYLER. Exactly. So it is salary but there are bonuses
that come into play, and a lot of times, particularly with very
small businesses or even growing small businesses there is
equity that can be part of the compensation. As I understand
it, the prevailing wage calculation, the immigrant calculation
of market wages is salary based. It does not account for
bonuses. It does not account for equity. Now, equity is hard to
value, and particularly in a small company and a closely held
company, but at the same time there is value there and that can
be an important aspect of the compensation.
Mr. REED. That is actually, and I apologize for not even
thinking about bringing that up, that is actually probably one
of the most critical areas for us. If Congresswoman Meng had a
great idea and she and I wanted to start a high-tech firm and
we had the change rattling around in our pocket, the way that
she would be compensated for her brilliant idea and all of her
successful output would be stock. Would be some other
compensation--equity in the firm. And when you take that away
from us it makes it a small business--it gives us--chops us off
at the knee a little bit when we are going up against a much
larger company that can do it all through salary. So
absolutely. Thank you for bringing that point up.
Chairman HANNA. Let me reverse the notion a little bit, the
question.
On our current laws, and we all know immigration is on the
table now. A lot of people are hopeful that by September we
will all have something settled. But in the absence of that or
if we wind up with more of what we have, how long would it take
to build up our own indigenous workforce to fill the types of
jobs that you gentlemen see coming down the pike knowing what
Mr. Reed said earlier, and that less than 10 percent of the
schools are focusing on information technology education types
of individuals, how reckless is it for us to stay on this path,
and what are the long-term consequences if we do not change our
policies?
Mr. REED. I know Rob Atkinson at ITIF has done quite a bit
of looking at the innovation economy in looking at how many
jobs we will be down if we continue on this course. And I have
seen numbers as high as 900,000 or more for in the innovation
economy sector. I know that Kauffman Foundation has also done
some work on this. But we are talking millions, and at least at
least from the software side, at least a million.
Mr. COSTELLA. I would say that in terms of the timeframe to
turn it around it is not going to happen fast. There are so
many facets that we have learned in our work. I mean, we were
able to, because of our very strong partnerships with the
workforce system in the state of Nevada, the governor, the
higher ed system as a whole, the K-12 system, we were able to
put together a program to meet an immediate need for machine
operators in fairly short order, but that does not answer our
need for journeymen level machinists. By the time there is a
shortage of some of these really skilled people, which we will
notice in the next five to seven years, it takes me five years
to train a journeyman level machinist. If we wait till the
shortage hits it is too late. You cannot find those folks. You
cannot train them. And so there is no immediate solution, and I
cannot emphasize enough, as I think I have been doing, the role
of employers to be proactive. I guess I am singing to
ourselves. We have got to engage and be proactive in this
conversation. There are things that can be done at the federal
level from a policy perspective to simplify and to get this
right. But we have to be the boots on the ground, to be clear
about what we need. We have to engage with the community, with
students, with parents, with teachers, to make sure that these
careers are viable options. And without those pieces all coming
together I just do not know where the solution is going to come
from.
Mr. RAVINDRA. I just want to add we really need to look at
long-term benefits of investing in STEM and investing in
encouraging high school students to get into STEM. So whatever
we do, we need to be looking at long-term investments, long-
term--the benefits are going to be 10, 15 years from whatever
we do today is when we benefit. So it is really easy to turn
around and look for short-term gains in any field, even the
companies look for quarterly returns, and then if they stop
looking at the long-term investment and long-term growth aspect
of the business they lose out.
Mr. TYLER. Mr. Chairman, I would offer a couple of points.
One, the importance of education and educating our native-born
population cannot be understated. It is not just a workforce
issue, it is not just an employment issue. It, in fact, affects
the future of our democracy. Educated citizenry is essential to
the functioning of our nation. If we continue to neglect that
we are continuing to neglect our nation in those sorts of ways
in addition to the workforce issues.
A second point is that even if we had a completely educated
native-born workforce, there would still be needs to bring in
foreign nationals, not necessarily to supplement the expertise
and the skill sets, but if nothing else but to provide new
ideas and new insights because in the global economy, American
businesses are reaching out into some of the least strange
places of the world, like European Union, but they are also
reaching out to what might be strange places in the world, to
understand cultures around the world, to understand frankly
just how a product is used, much less the interaction with the
potential customers, customs with suppliers, having access to
that information, we are not going to be able to grow it at
home. We are going to need to access it from abroad.
Chairman HANNA. Thank you. Thank you all.
Are there any further questions?
We have a couple of minutes, and a lot of times in these
hearings the right questions do not come out and there are
things that people would like to say and they do not
necessarily have an opportunity to say. So we have got a few
minutes if anyone would like to add to the conversation.
Mr. COSTELLA. I would just say, reiterate from my opening
remarks, that when we talk about STEM skills, a lot of people
automatically think NASA engineer or something, and those are
STEM jobs. But from the perspective of small- and medium-size
businesses, it is the basics. It is reading, writing, math,
problem solving. If we can get across that bar then we
companies are happy to train and develop people. It is very,
very normal for a company like ours to make substantial
investments in developing and cultivating talent from the start
all the way up through the senior levels of the company. So I
just hope we do not think STEM is the separate kind of entity
out there that is different than the basics. It is the basics
and then all the way up.
Chairman HANNA. Sure. So knowing that people change jobs
seven or eight times in their lifetime, knowing that what once
was true, that you could have a set of skills today, but you
need a long-term set of skills that you keep up with throughout
your life to stay competitive and that if we are going to build
a thriving middle class in this country, and rebuild this
country in a way that provides a positive future for all of us,
and reduces our high unemployment and this enormous debt that
we are facing, we need to focus on STEM.
With that, I would like to thank you all for your time
today. It has been very valuable. And again, I know you go
through long distances and a lot of work to get here.
I ask unanimous consent that members have five legislative
days to submit statements and supporting material for the
record. Without objection, so ordered.
This hearing is now adjourned. Thank you.
[Whereupon, at 11:49 a.m., the Subcommittee was adjourned.]
A P P E N D I X
Testimony for Hearing on STEM Workforce and Immigration Reform
Before the Contracting and Workforce Subcommittee
Of the Small Business Committee
Of the United States House of Representatives
John Tyler - April 25, 2013
Introduction and Context
Good morning. My name is John Tyler and for the past 14
years I have been the General Counsel and Corporate Secretary
for the Ewing Marion Kauffman Foundation in Kansas City,
Missouri. The Kauffman Foundation is among the largest private
foundations in America and our focus is on fostering economic
independence by promoting entrepreneurial success and
educational achievement.
As you know, small businesses and in particular young
businesses have been a significant driver of job growth in our
nation. Kauffman research shows that most net new job creation
has historically come from businesses that are less than five
years old.\1\ Small and young businesses also are a substantial
contributor to our nation's economy and a major source of
innovative products, services, and processes that have not only
contributed to our economy but also to our ways of life. As
such, it is imperative that U.S. policy support opportunities
for small businesses and especially that entrepreneurial subset
whose businesses are positioned for the transformative growth
that keeps our nation's economy vibrant. I refer to these
collectively as ``small business'' in this testimony.
---------------------------------------------------------------------------
\1\ See Dane Stangler and Robert Litan, Where Will the Jobs Come
From? (Ewing Marion Kauffman Foundation, November 2009).
Among current policies that do not provide enough support
for those opportunities is a U.S. immigration system that does
not give enough consideration or support to economic priorities
and opportunities that immigrants provide. The STEM workforce
---------------------------------------------------------------------------
is particularly at risk of being neglected.
Demand for STEM jobs has been growing,\2\ but STEM
businesses are being squeezed from one end by the large number
of STEM-skilled people leaving the field because of retirement
\3\ and from the other by the decreasing number of native-born
talent with the requisite level of knowledge and expertise who
are entering the field.\4\ Although these problems affect our
economy and innovative capacity more broadly, they present
distinct challenges for small business.
---------------------------------------------------------------------------
\2\ Peter Schuck and John Tyler, Making the Case for Changing U.S.
Policy Regarding Highly Skilled Immigrants, 38 Fordham Urban L. J.,
327, 359-41 (2010) (citations omitted).
\3\ See National Science Board, Science and Engineering Indicators
2010, NSB 10-01, chapter 3, p. 29 (National Science Foundation, 2010);
Peter Schuck and John Tyler, Making the Case for Changing U.S. Policy
Regarding Highly Skilled Immigrants, 38 Fordham Urban L. J., 327, 339-
41 (2010) (citations omitted). Dowell Myers, Thinking Ahead About our
Immigrant Future: New Trends and Mutual Benefits in our Aging Society,
(Immigration Policy Center, American Immigration Law Foundation,
January 2008); Jacob Funk Kierkegaard, The Accelerating Decline in
America's High-Skilled Workforce: Implications for Immigration Policy,
Policy Analyses in International Economics 84, p. 1 (Peterson Institute
for International Economics, December 2007).
\4\ Peter Schuck and John Tyler, Making the Case for Changing U.S.
Policy Regarding Highly Skilled Immigrants, 38 Fordham Urban L. J.,
327, 340-41 (2010) (citations omitted).
---------------------------------------------------------------------------
Small Business Vulnerability Under the Current System
As this Committee knows and understands, small businesses
frequently operate on limited budgets and personal sacrifices
of people driven by passion for their business' purpose,
particularly during their early stages. Their very survival--
much less growth--can depend on the ability to attract and
retain the right talent with the right skillsets and experience
at the right time.
Thus, small businesses in STEM fields are particularly
vulnerable to the talent squeeze and workforce issues. The
current immigration system too often leaves small businesses at
the mercy of an expensive process with too many businesses
competing for too few visas that take too long to process.
Large established businesses are better able to dedicate
regular financial and personnel resources to manage through the
expense and bureaucracy of meeting their workforce needs. For
example, one explicit way in which the system favors large
business is that, because of their resources and regularity of
engagement, they are more likely to be recognized as ``trusted
employers'' for purposes of expedited processing. Even so, the
current system does not meet the workforce needs of big
business either.
Policy Change Recommendations
Changes in U.S. policy regarding immigration could
alleviate the vulnerability of small business to certain
workforce issues. As a result, firms may be more likely to
survive past the early years and become growth firms. More
firms and more growth will mean more jobs, more innovation,
better standards of living, and advances in human welfare just
as we have experienced in prior decades.
A 2010 article by Malcolm Goeschl highlights some of the
challenges that small companies and startups face when trying
to hire prospective non-native employees. Among these
challenges are what Goeschl asserts was an apparent USCIS
presumption that no company with 25 or fewer employees, annual
gross income of less than $10 million, and/or less than 10
years old could have legitimate visa needs.\5\ Such a
presumption--whether actual or in practice--hurts small
business.
---------------------------------------------------------------------------
\5\ See Malcolm Goeschl, An Attack on Entrepreneurialism: A Review
of USCIS Adjudication of H1-B Petitions for Startups and Small
Companies in 2009, 87 No. 7 Interpreter Releases 369 (February 15,
2010).
In addition, there are three key types of changes that will
help small business and their contributions to the American
economy: changing the total of available economically oriented
visas, adding at least one new visa type, and changing
---------------------------------------------------------------------------
processes by which applicable visas are awarded.
Increase Number of Visas Available
With regard to quantity, there are any number of general
increases that, by helping all business will also help small
business. Among these are the following: (1) increase the
annual number of H1-B visas so that supply better matches
demand and (2) remove or at least increase the national caps on
employment-based series visas. Data shows that increasing the
number of H1-B visas has a further effect on job creation as
studies show that an average of between 2-5 additional jobs are
created in connection with each H1-B hired.\6\
---------------------------------------------------------------------------
\6\ See Madeline Zavodny, Immigration and American Jobs, American
Enterprise Institute and The Partnership for a New Economy (December
2011) (immigrants with advanced degrees from U.S. universities in STEM
fields creates average of 2.62 jobs); National Foundation for American
Policy, H1-B Visas and Job Creation (March 2008) (``for every H1-B
position requested, U.S. technology companies increase their employment
by 5 workers'' on average with the average increasing to 7.5 workers
for technology companies with fewer than 5000 employees).
More specific to small business and recognizing their
unique circumstances, it may be appropriate to target a certain
number of percentage of economy-oriented STEM visas for small
business, based possibly on number of employees, overall
revenues, and/or investment capital resources. This step would
position small businesses to choose between competing with each
other in this realm rather than with big business but without
---------------------------------------------------------------------------
hurting big business.
New Class for STEM Graduates of U.S. Universities
Along with more visas, another change that would help small
business by helping all business would be allowing foreign
students who receive graduate or even bachelors degrees in STEM
disciplines from U.S. colleges and universities to have a
predictable, certain path to permanent residency, either by
automatically providing green cards upon graduation or at least
providing a temporary visa that automatically leads to
permanent status upon satisfaction of certain conditions.
These visas could have at least four outcomes beneficial to
the U.S. economy. First, they would permit U.S. employers to
more readily access this talent to help meet their employment
needs. Second, these visas would presumably permit broad
portability, which will help protect against below market wages
and working conditions and permit professional advancement and
enhanced contributions through promotions and job moves.
Moreover, there would not be the same incentives to restrict
portability in order to protect the initial employer's
investment of funds to obtain a visa through current channels.
Third, they would permit these visa holders to become small
business owners and entrepreneurs themselves by starting and
growing their own businesses, as studies show that high skilled
immigrants are more likely to do.\7\ Finally, these visas would
better position our nation to directly harvest the fruit of
seeds sown by permitting access to the knowledge, experiences,
networks, and other benefits of a high quality education at a
U.S. college or university.
---------------------------------------------------------------------------
\7\ A recent Kauffman Foundation study showed that immigrants are
almost twice as likely as native born people to start businesses. See
Robert W. Fairlie, Kauffman Index of Entrepreneurial Activity 1996-
2012, p. 10 (Ewing Marion Kauffman Foundation, April 2013). See also
Anthony Luppino, John Norton and Malika Simmons, Reforming Immigration
Law to Allow More Foreign Student Entrepreneurs to Launch Job-Creating
Ventures in the United States, Ewing Marion Kauffman Foundation (August
2012).
---------------------------------------------------------------------------
Procedural Changes
Although increasing quantities and adding a class(es) could
help significantly, the benefits risk being minimized or even
eliminated without changes in how visa applications are
processed. The process is too cumbersome and time consuming for
all business but is especially so for small business, which
often is not engaged in the system with enough regularity and
consistency to do so efficiently.
A more specific procedural change would better account for
the inherently changing nature of new firms, most of which are
small businesses, by allowing for portability if the
originating firm goes out of business. According to Census
Bureau data, only 44% of firms founded since 2003 survive after
five years.\8\ A person who is legally present on an H1-B or
whose EB series visa is pending should not be penalized if the
business that originally sponsored them closes. If the person
has found similarly gainful employment or has started a valid
business, the Service should be required to afford them
presumptive legitimate status--not for their benefit
necessarily but for the contributions they make to their new
employer or business.
---------------------------------------------------------------------------
\8\ Dane Stangler and Jared Konczal, Give Me Your Entrepreneurs,
Your Innovators: Estimating the Employment Impact of a Startup Visa, p.
4 (Ewing Marion Kauffman Foundation February 2013); Dane Stangler, The
Economic Future Just Happened, p. 10 (Ewing Marion Kauffman Foundation,
June 9, 2009) (setting survival to five years at 48-49%).
---------------------------------------------------------------------------
Conclusion
Other nations are increasingly eager to welcome high
skilled and entrepreneurial immigrants, particularly those
trained at American institutions of higher education.\9\ The
United States' current approach to immigration makes it a lot
easier for those nations to succeed in this regard. While it is
true that stronger economies elsewhere can have tangential,
indirect contributions for the U.S. economy and businesses, it
should not be at the expense of opportunities for direct
benefits for U.S. jobs, economic growth, innovation, and
advances in human welfare. The changes proposed here better
protect those opportunities, particularly for small business.
---------------------------------------------------------------------------
\9\ See The Partnership for a New American Economy and The
Partnership for New York City, Not Coming to America: Why the U.S. Is
Falling Behind in the Global Race for Talent (May 2012); Vivek Wadhwa,
et al., The Grass is Indeed Greener in India and China for Returnee
Entrepreneurs (Ewing Marion Kauffman Foundation, April 2011); Chris
Gafner and Steven Yale-Loehr, Attracting the Best and the Brightest: A
Critique of the Current U.S. Immigration System, 38 Fordham Urban L. J.
191 (2010); Peter Schuck and John Tyler, Making the Case for Changing
U.S. Policy Regarding Highly Skilled Immigrants, 38 Fordham Urban L.
J., 327, 336-39 (2010) (citations omitted).
These proposed changes also position the United States to
more actively benefit from the growing global ``brain
circulation'' by which knowledge and innovation is increasingly
shared among nations. Without these types of changes, U.S.
participation is more likely to be one-sided--meaning that
knowledge and innovation leaves but does not most fully benefit
---------------------------------------------------------------------------
us by circulating back.
Thank you for the invitation to submit this testimony and
to be a part of the Committee's work on reforming U.S. policy
regarding high skilled immigration. I look forward to your
questions.
A C E C
American Council of Engineering Companies
100 Yeras of Exxcellence
Testimony of Mr. Nagappa Ravindra, P.E.
President of
Ravi Engineering & Land Surveying, P.C.
Before the House Committee on Small Business
Subcommittee on Contracting and Workforce
April 25, 2013
Chairman Hanna, Ranking Member Meng, and members of the
committee, I appreciate the opportunity to testify in today's
hearing on how the STEM workforce shortage is affecting small
firms.
My name is Nagappa Ravindra and I am the President of Ravi
Engineering & Land Surveying. We are a small engineering
consulting firm based in Rochester, New York. I am here today
to testify about how H-1B visas are essential to small
engineering firms that need to hire engineers with specific
skill sets in order to serve our client's needs. I also want to
tell you my store, and how my firm would not exist without work
visas for engineers.
I am a member of the American Council of Engineering
Companies (ACEC), the voice of America's engineering industry.
ACEC members--numbering more than 5,000 firms representing
hundreds of thousands of engineers and other specialists
throughout the country--are engaged in a wide range of
engineering works that propel the nation's economy, and enhance
and safeguard America's quality of life. Over 70 percent of
ACEC's members are small firms.
My firm Ravi Engineering & Land Surveying, P.C. has been in
business since 1995. I came to this country in 1980 after
graduating from the Indian Institute of Technology, Madras,
India, with a Bachelor of Science degree in Civil Engineering.
I got my Master's degree in structural engineering from
Syracuse University and started my career as a structural
engineer in a consulting firm in Syracuse, New York. I was able
to get a green card within 9 months with the help of my
employer and became a citizen at a later time. After training
for 8 years, I moved to Rochester, New York to accept a higher
position in another consulting firm and worked another five
years before starting my own business in 1995. I started a
consulting engineering firm providing structural engineering
services and went on to add employees and offer other services
such as bridge design and inspection, land surveying,
construction inspection, environmental and geotechnical
engineering. Currently, we average 90 employees and have three
offices in New York and one in Pittsburgh, Pennsylvania.
As a member of ACEC, we advocate for a quality based
selection process and we compete for work based on the
strengths and talents of our employees. To win projects, we
need to demonstrate exceptional qualifications and experience.
So, in order to grow and succeed, we need experienced as well
as entry level engineers who are exceptional and talented
individuals. Our growth is limited because of a lack of
qualified people in our industry. Currently, we have vacant
positions we cannot fill due to a lack of experienced
engineers.
Because there are not enough engineers with the skill sets
we need, we currently employ one engineer on an H-1B visa, and
a student on an OPT visa. We had hoped to transfer the student
to an H-1B visa, but as you know, the current cap of 65,000 was
met in just five days and our labor certification could not be
completed in time.
Engineers and the engineering industry are major economic
drivers and play an essential role in helping the U.S. compete
in the global economy. Engineers are in high demand, but the
output of new engineers from the nation's universities is not
keeping up with the needs of the industry and the nation.
Bachelor's degrees in engineering have declined by nearly
20 percent since 1985. The workforce is also getting older:
nearly 30 percent of all engineering and science degree holders
in the labor force are 50 or over and are headed toward
retirement.
There is also greater competition for the diminishing pool
of engineering graduates, particularly from the information
technology industry seeking the skill sets that engineering
graduates provide. Only half of engineering degree holders work
in the engineering field. According to Duke University, between
30 and 40 percent of graduates from the University's Masters of
Engineering Management program take jobs outside of the
engineering profession.
Moreover, the proportion of foreign students earning
engineering degrees at American universities is quite high.
According to the American Association of Engineering Societies,
for the 2008-2009 academic year, foreign nationals comprised
43.9 percent of the Master's and 54.6 percent of the Ph.D.s
awarded in engineering by U.S. universities.
With so many engineers graduating from American
universities and working in other fields, it does not make any
sense to send trained foreign engineers home to work for our
competitors in the global marketplace. If I had not been given
the opportunity to stay and work in the United States, 90
American workers would not have the job opportunities provided
by my firm. My story is not unique. Speaking from my personal
experience, nearly half of my graduating class of 220 students
from Indian Institute of Technology, Madras, India came to the
United States in 1980 to pursue higher education. Out of that
pool of 110 engineers who came to this country, today, nearly
30% have their own businesses employing a large number of
Americans, about 20% are CEO's, CTO's, General Managers and
senior officers in Fortune 500 companies, 20% are professors,
deans and educators in premier institutions and the remaining
have become venture capitalists and successful investors.
I strongly believe that the United States needs to invest
in talented and young engineers similar to investing in our
roads, bridges and infrastructure as a long term strategy for
growth and prosperity. I urge Congress to strengthen and expand
the H-1B visa program so that firms like mine will be able to
hire the necessary engineering talent to serve our clients'
needs and continue to grow and thrive. Thank you for the
opportunity to participate in today's hearing, and I would be
happy to respond to any questions from committee members.
4/25/2013
Mr. Chairman and Members of the Subcommittee:
My name is Ryan Costella. I serve as the Director of
Strategic Initiatives at Click Bond, Inc. We are a family owned
company and just celebrated our 25th anniversary this past
year. We employ 250 people at our headquarters in Carson City,
NV, and an additional 60 people at our facility in Watertown,
CT.
Thank you for the invitation to testify today at the
hearing: Help Wanted: The Small Business STEM Workforce
Shortage and Immigration Reform. I look forward to our
conversation on the importance of STEM skills and their
relevance to economic stability and the viability of small
businesses.
Click Bond is the global leader in the design and
manufacture of adhesive-bonded fasteners. Our products have
revolutionized how the aerospace, marine, and transit vehicle
sectors build their products around the world. Industries that
were once dominated by riveted fasteners in their assembly
solutions have evolved substantially, now embracing the use of
structural adhesives to create the attachment points, which
prevents the drilling of holes.
Our customers realize significant savings on cost of labor
and materials, increased efficiency and profitability, and
enhanced health and safety and reduction of risk. They trust
our record of commitment to quality design, performance, and
on-time delivery of parts. They know they can depend on our
unique ability and knowledge of materials not only to innovate
new solutions for their future challenges but also to provide
robust customer service and training anytime, anywhere in the
world.
We are proud of our presence as a U.S. manufacturer,
leading our industry in innovation, environmental stewardship,
and workforce development. We are heavily involved in our
community and are committed to building partnerships with
educational, workforce, economic development, and civic leaders
to create a sustainable talent pipeline that serves the
workforce needs of the manufacturing industry for decades to
come.
Click Bond is a family itself and remains committed to
fostering a family-friendly culture that provides our employees
with competitive pay and benefits as well as multiple career
advancement opportunities through subsidized education and
training. As a result, we are developing a talented next
generation workforce that enhances our competitiveness and
capacity to continue meeting customer needs globally.
The future is bright, and there is no shortage of
opportunity for us to continue innovating, growing, and
expanding our business right here in the United States. To do
that sustainably, however, we must aggressively confront an
issue that most businesses are facing, which has now commonly
become known as the Skills Gap.
Despite high unemployment levels, businesses are struggling
today to find skilled employees to fill their jobs. Compounding
the problem, millions of Baby Boomers are preparing to leave
the workforce, and we haven't even begun to account for growth.
Will it be possible to fill this gap? If we are struggling
to find skilled people today, where will we find them in the
future, as the problem magnifies? How do we fix this problem?
While there are no easy answers, I can report that Click
Bond and other companies like us are taking the problem very
seriously and finding new ways to tackle the issue head on.
There is a lot of talk about STEM education these days.
Many people wonder, ``What the heck is STEM?'' They are then
told it means, ``Science, Technology, Engineering, and Math.''
But that's not really an explanation of what we mean by STEM
education and skills.
Let me be more specific from an employer's perspective.
Frankly, STEM starts with the basics that all people should
master in a basic education. The ability to read, write, do
math, and think critically are all key pillars, complimented by
the ability to show up on time, communicate effectively, and
work in teams. People with these skills can be developed and
trained to pursue a menagerie of career pathways in multiple
sectors of our economy. Without those foundational skills, the
future is bleak.
Ideally, these skills are mastered by the time a person
leave high school. Whether we're talking about an entry level
accountant or technician on our assembly floor, our top design
engineer or a quality inspector, the head of our sales team or
the folks who package and ship our parts out the door, all
aspects of today's manufacturing workforce require these
foundational skill sets on a daily basis.
As you might imagine, these skills aren't unique just to
manufacturing. Many employers, whether in energy, defense, IT,
health care, transportation, logistics, hospitality,
entertainment--the list goes on--require these basic skills.
Unfortunately today, even with record unemployment numbers,
we are having a tough time finding people who can demonstrate
these basic skills.
Some allege that maybe this gap isn't real at all and
that's it's just an acute problem. Maybe manufacturers are just
``too picky.'' Finding people with the basic skills I
outlined--ability to read, write, do math, problem-solve, show
up on time, communicate effectively, and work in teams--isn't
some outrageous litmus test for employment: it's the minimum
threshold to have a chance at a future on any career path.
Some say we don't pay enough. That's not true either. In
2011, the average manufacturing worker in the United States
earned $77,060 annually, including pay and benefits. The
average worker in all industries earned $60,168. Even more, for
every dollar spent in manufacturing, another $1.48 is added to
the economy, the highest multiplier effect of any economic
sector. Our greatest asset is our people, and most
manufacturers fund robust training and education programs in
partnership with our local high schools, community colleges,
and universities.
Some say our operations are too dirty, and the jobs are too
low-level. None of this is true either. If anything, people are
constantly surprised with how clean manufacturing operations
are in the 21st century. We sit at the forefront of
environmental, safety, and quality standards. We can't compete
globally if we aren't. To maintain these top notch
requirements, we depend on highly skilled individuals, even for
our most entry level jobs. With rapidly evolving technology, we
need people who have the foundations to think, challenge the
status quo, and solve new problems that we can't even
anticipate today.
In response to these misperceptions and to the larger
problem of the Skills Gap, many of us historically have pounded
our fists on the table and pointed fingers, blaming the
education system and other leaders for the gap we're sending.
Blaming and finger-pointing don't achieve anything. This
problem is serious, and we have to work together to find
solutions.
I'm happy to say that we've changed our tune in Nevada by
looking in the mirror. Let me share with you some of the
success we've seen.
The manufacturing community has realized that our proactive
communication is the key to the future. We are engaging with
students, parents, teachers, and the community to explain that
our industry isn't dirty smokestacks and low-paying jobs; in
fact, we're bringing a message that manufacturing jobs ARE that
well-paying jobs of the future. Along with marketing and
advertising campaigns like Dream It Do It, commissioned by the
Manufacturing Institute, we are opening the doors of our
factories to teachers, students, and parents, and we're making
substantial progress in showing our community that our
operations represent the most exciting and sustainable careers
of the future!
We are engaging with leaders in higher education--
especially our community colleges--to ensure that their
investments in training facilities and curriculum are
worthwhile. We are now scaling a fast-track training program
that literally takes people from the unemployment lines to full
time employment with benefits as machine operators (the entry
level position for a career as a machinist) in just 16 weeks.
We were proud to hire four graduates from the program, and all
of them stand out as model employees with bright futures ahead
of them. Similar programs are in development for welding.
We partner with leaders in our workforce development system
to ensure that the formula used in allocating Workforce
Investment Act and other training dollars is demand-driven.
Using these funds to train people for the jobs that exist today
and in the future while simultaneously providing them with
nationally portable, industry driven credentials as proof of
their skill set is a win-win equation for everyone, employee
and employer!
We partner with economic development officials by
highlighting the success stories and illustrating the number of
national credentials granted as proof of a skilled workforce to
attract more employers to our state to take advantage of the
talent we are cultivating here.
We are making these investments because it's critical for
our survival. We are making these investments because
manufacturing is a tremendously exciting career path. Our
quality-critical products enhance the performance and longevity
of military aircraft and the efficiency and competitiveness of
airliners/commercial aircraft. Others are developing technology
and products that are causing breakthroughs in medicine,
renewable energy, IT, transportation, logistics, and so much
more. The reality is: manufacturing makes America strong. And
we want to keep it that way.
Our efforts to develop and train people alone, however,
aren't enough.
As the Baby Boomers leave our workforce, we will need to
find new engineers, quality control experts, machinists,
accountants, marketing and communications professionals, and so
many more in order to grow and compete in the 21st century and
beyond.
It will be critical that we have a pool of talent from
which to recruit this dynamic manufacturing workforce.
We are strong believers that competition breeds excellence,
so if people from other parts of the world are eager to come
here legally to pursue their passion or a great idea or to be
part of existing ideas that are flourishing, we want to welcome
them. That's what America is all about, and it's what makes us
different!
As the CEO of the National Association of Manufacturers
recently stated, ``Talent and skill have no
borders...Manufacturers need to be able to hire the right
person with the right skill at the right time.''
Our company wants access to the world's best and brightest,
period. Thousands of small and medium sized businesses are in
the same boat. If existing regulations can be adjusted to make
it easier for hard-working and talented people to come here
legally to stay and build lives and families, pay taxes, and
help make our businesses even more dynamic and viable--not to
mention make our economy stronger and our future more secure--
then we stand in support of those ideas. Rather than education
the world's best in our universities and then send them home to
eventually sit across from us at the negotiating table, let's
make it easier for them to stay here in our great country and
sit on our side of the table.
Thank you, and I look forward to your questions.
Testimony
of
Morgan Reed
Executive Director
The Association for Competitive Technology
before the
Committee on Small Business
The Subcommittee on Contracting and Workforce
on
Help Wanted: The Small Business STEM Workforce Shortage
and Immigration Reform
April 25, 2013
Chairman Hanna, Ranking Member Meng, and distinguished
members of the Committee: My name is Morgan Reed and I thank
you for holding this important hearing on small business
science, technology, engineering, and math (STEM) workforce
shortage and immigration reform.
I am the executive director of the Association for
Competitive Technology (ACT). ACT is an advocacy and education
organization for people who write software programs--referred
to as application developers. We represent over 5,000 small and
mid-size IT firms and advocate for public policies that help
our members leverage their intellectual assets to raise
capital, create jobs, and innovate.
Our organization was founded in 1998 with the commitment to
foster an environment allowing small technology companies to
flourish. Our founders believed that the greatest innovation
occurs in nimble companies like these and our board of
directors has always been exclusively comprised of small
business owners. The emergence of the mobile economy over the
last five years has provided tremendous opportunity for our
members to market software directly to consumers as apps.
While this new marketplace has thrived, we are now faced
with a serious challenge--our country is not producing enough
software developers to allow companies to grow. America's
schools no longer provide the math and computer science skills
to fuel the innovation that has long driven economic growth in
this country.
This concern has become so grave that many companies are
willing to pay double the current fees for additional visas and
green cards so long as the added funds are designated
exclusively for science, technology, engineering, and math
education. The industry is willing to incur these extra costs--
up to $5 billion--believing that schoolchildren educated in
STEM subjects are more likely to pursue careers in technology.
The simple fact that companies are willing to pay double
the existing fees should speak volumes--when's the last time
anyone has uttered the words ``charge me more, please''?
The small businesses that are tomorrow's leading technology
companies know that finding the right employee today through an
H-1B, and tomorrow through better STEM education, is critical
to their ability to reach their full economic potential.
The Tech Ecosystem and Job Creation
I spend a significant portion of my time speaking to non-
developer audiences who want to know about the state of the
mobile apps economy. Unlike other industries, I find that I
have to update my numbers for every speech, not just once or
twice a year. Just two years ago, total industry revenues were
$3.8 billion and expected to rise to $8.3 billion. However, by
the end of last we already reached $20 billion and are now
projected to reach $100 billion by 2015.\1\ This is a meteoric
rise for an app economy that didn't even exist five years ago.
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\1\ Egle Mikalajunaite, ``The Application Development Market Will
Grow to $US100bn in 2015,'' research2guidance (July 6, 2011) available
at http://www.research2guidance.com/the-application-development-market-
will-grow-to-us100bn-in-2015/.
Smartphones derive considerable value from the apps that
run on them. Consumers are attracted to phones based on the
functionality these program provide. Telephone companies and
handset makers have devised entire ad campaigns highlighting
the apps that run on their platforms. ``There's an app for
that'' is probably one of the most recognizable ads in the
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technology space.
This success has had a dramatic impact on job creation.
ACT's study in 2011 estimated that the current mobile apps
economy has created, saved, or supplemented more than 600,000
jobs nationwide across iOS, Android, Windows Phone 7, and
Blackberry platforms.\2\ Another study by TechNet showed nearly
500,000 jobs created by the app economy on the major platforms
alone.\3\ We are sure that those numbers have grown by 20
percent or more through 2013, compared to an overall job growth
rate more in the 7-10 percent range.
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\2\ ``Testimony of Morgan Reed before the House Committee on Energy
and Commerce Subcommittee on Commerce, Manufacturing and Trade.'' (Oct.
5, 2011) available at http://democrats.energycommerce.house.gov/sites/
default/files/image--uploads/
Testimony--10.05.11--CMT--Reed.pdf
\3\ ``New TechNet Sponsored Study: Nearly 500,000 `App Economy'
Jobs in the United States,'' TechNet (Feb. 7, 2012) available at http:/
/www.technet.org/new-technet-sponsored-study-nearly-500000-app-economy-
jobs-in-united-states-february-7-2012/
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ACT July 2012 Study of Top 800 Apps: Findings and Analysis
In 2012, ACT looked at of the current mobile app ecosystem,
this time examining apps not only by revenue, but also by type
and by geographic location.\4\
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\4\ ``Apps Across America: The Economics and Ecosystem of the
Mobile App Market,'' ACT (July 18, 2012), available at http://
actonline.org/files/Apps-Across-America.pdf.
The results of our research showed two key results relevant
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to this committee:
1. Seventy eight percent of the top app developers
are small businesses, with U.S. based companies
heaviest in California, but significant regional
diversity, especially in Business and Education
applications
2. U.S. developers make a majority of apps, but
international developers make up a growing portion of
the market.
[GRAPHIC] [TIFF OMITTED]
ACT research continues to find that the majority of the
top-selling mobile app developers (78%) are small businesses.
Nowhere is the dominance of small business seen more than in
education apps, where over 70% of the app developers surveyed
were small businesses. Of those small businesses, 87% have 50
or fewer employees.
Without question, the new, increasingly mobile consumer is
creating opportunities at every level and in every location of
this country.
The Bad News
America's dominance in this fast growth market is held
together by our ability to find new employees who can provide
and support innovative new solutions. According to the U.S.
Bureau of Labor Statistics, America is expected to create
120,000 new jobs in computer science annually throughout the
decade, but our universities only produce 40,000 graduates a
year qualified for these positions.\5\ Self-taught individuals
will help to fill that gap but at the end of the day, even the
self-taught require an understanding of the kind of complex
mathematics that drive today's data-crunching algorithms.
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\5\ This estimate is based on the U.S. Bureau of Labor Statistics'
occupational employment and job openings data, projected for 2010-2020,
available at http://www.bls.gov/emp/.; Integrated Postsecondary
Education Data System from the U.S. Department of Education's National
Center for Education Statistics (NCES) available at https://
webcaspar.nsf.gov.
Moreover, the jobs we are sending overseas by failing to
educate at home aren't bad ones. Software developers command
significantly higher wages--$93,280 at the median according to
the Bureau of Labor Statistics;\6\ all with an unemployment
rate among computer-related occupations of only 3.2 percent.\7\
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\6\ ``Occupational Employment and Wages, 15-1132 Software
Developers, Applications'' Bureau of Labor and Statistics (May, 2012)
available at http://www.bls.gov/oes/current/oes151132.htm.
\7\ ``Unemployed Persons By Occupation And Sex'' Bureau of Labor
and Statistics (March 2013) available at http://www.bls.gov/web/empsit/
cpseea30.pdf.
For ACT's members, this job shortage creates an ideas
problem. Prospective employees may choose to work at a larger
corporation because of the job security that risky new ventures
simply cannot match. And while you may think that's good for
the employee, it could be bad for our innovation economy.
According to an analysis of patents by the US Patent and
Trademark Office, small businesses account for 51 percent of
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the most innovative (and most often cited) patents.
The primary reason is the steep decline in schools teaching
computer science. Only 1 in 10 high schools offer the class,
and computer science accounts for just 0.6 percent of all
Advanced Placement tests taken--a 60 percent drop since
2000.\8\ University students are less likely to major in a
technical subject if they have not studied it in high school.
To fill classrooms, computer science departments admit foreign
students who are then ineligible to work in the U.S. upon
graduation.
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\8\ The College Board's Database of AP Course Audits, available at
https://apcourseaudit.epiconline.org/ledger/search.php.
When the Association for Competitive Technology's small-
business members visit their representatives in Washington,
they identify this broken pipeline of STEM education as the
root cause of the high-tech worker shortage. Unable to find
qualified computer science graduates, one California member
company has 40 unfilled positions currently and some positions
have been open for more than two years. At a hearing last year,
Flurry, the fastest growing mobile analytics company, testified
that it had more than 80 openings, many requiring the kinds of
math and science that can't simply be learned over a weekend.
Earlier this week, Microsoft testified that they had 6,300 open
positions. Imagine what it's like for a small company to
convince a great candidate that they should turn down the offer
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from Microsoft, or any other major technology company.
Finally, the Economist reports that for every job created
in the high tech sector, 4.3 additional positions are created
in the local economy.\9\ Therefore the jobs we see unfilled
today will lead to hundreds of thousands of lost local
employment in a wide variety of other fields.
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\9\ ``The Jobs Machine: Start-ups founded by immigrants are
creating jobs all over America'' The Economist (Apr. 13, 2013).
If we lose those jobs, where do they go? The beauty of the
internet is its global, always-on nature. But this very global
nature is why our failure to deal with the STEM problem could
be catastrophic. Unlike other businesses, these high paying
tech jobs can simply move elsewhere. Small companies that
previously would never have considered overseas hiring now look
to Israel for high skilled math workers, or Norway for User
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Interface expertise.
Fixing The Problem
Step One: the H-1B Band-Aid
There is no way to fix that skills gap overnight; it will
take eight to ten years to see any STEM program produce the
kind of impact we know is needed. So where does the needed math
and science talent lay today? Right here in America's colleges
and universities.
It is estimated that in colleges and universities, foreign-
born doctorate degree holders account for approximately 33% of
the full-time faculty in computer sciences, 26% in engineering,
33% in mathematics, and 22% in the physical sciences. At the
postdoctoral level, the participation of foreign doctorate
holders is 56% in engineering, 50% in mathematics, and 42% in
physical sciences. Data show that since 1990, approximately 50%
of the U.S. Nobel laureates in the scientific and technical
disciplines were foreign-born.\10\
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\10\ CRS Report Foreign Science and Engineering Presence in U.S.
Institutions and the Labor Force Christine M. Matthews, Oct. 28, 2010.
With that kind of talent pool here on our shores, finding a
way to keep them becomes critical. But H-1Bs are very limited,
and often go to large, deep-pocketed firms that can afford to
wait months to find out if a visa has been awarded. According
to a 2011 GAO study, in years where the H-1B cap was met
quickly and applicants denied, small businesses were the big
losers, facing economic loss and product delays.\11\ To avoid
this negative impact on small business, a higher, more rational
cap to H-1Bs must be in place.
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\11\ ``For example, in years when visas were denied by the cap,
most large firms reported finding other (sometimes more costly) ways to
hire their preferred job candidates. On the other hand, small firms
were more likely to fill their positions with different candidates,
which they said resulted in delays and sometimes economic losses,
particularly for firms in rapidly changing technology fields.'' U.S.
Government Accountability Office, ``H-1B VISA PROGRAM: Reforms Are
Needed To Minimize The Risks And Costs Of Current Program,''
www.gao.gov, January 2011
However simply increasing the cap will not be enough. We
need the right employee to make it to our small business
doorstep because we can't just pick anyone to fill the slot.
Today's technology companies have found that the right team can
be more valuable than just the right skill. According to a
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recent Reuters article, the right fit is everything:
``Especially in a small start-up, they say, more than
expertise is required: The right fit is critical. `When
you're creating something from scratch you need
somebody outstanding,' said Nathan Blecharczyk, co-
founder of the red-hot short-term rental company
Airbnb. The firm currently has only two engineers
working on its search capability, he explained--a
critical function that could be improved if he could
find just the right caliber of engineer. `There isn't
enough of the talent that we need to basically create
this business in the U.S.,' he said. `We do need to
look globally for that talent.''' \12\
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\12\ ``VCs and Startups Call for More H-1B Visas, But Some Say
Talent Shortage is Exaggerated,'' Reuters, (April 10, 2013). 4/10/13
To help small businesses, we support efforts to recapture
unused employment-based green cards. We also support an
exemption from the annual limits for U.S. advanced STEM degree
holders. This should reduce the backlog, helping a small
business make a realistic offer that results in a key team
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member moving from ``visitor'' to ``resident.''
Clearly small businesses need more H-1B visas in the
pipeline. Unfortunately, some recent efforts to increase the
number of H-1B visas come with far too many strings attached.
The most recent version of the ``Gang of Eight'' bill in the
Senate includes language that could create incredible
regulatory hurdles.
We understand the desire of those in the Senate to ensure
the correct use of H-1B, but if the level of bureaucracy
functionally bars small businesses from using H-1B visas, we
will harm the very innovators we need to support.
Specifically, the bill includes a recruitment requirements
for non-dependent employers who are only modest users of the H-
1B program. This recruitment language will require companies to
maintain extensive records of individualized hiring decisions
and subject employers to extensive scrutiny and second-guessing
by the Department of Labor (DOL), years after the hiring
decision, over case-by-case hiring outcomes.
And while the H-1B program should not be used to displace
U.S. workers, the language mixes displacement and layoffs.
Companies, especially small ones, often need to pivot to meet
new strategic challenges. Their design or plan may not be
workable against a competitor, or the platforms they depend on
may change. These regular business requirements do not rise to
the level of ``for cause'' terminations, and therefore create
incredible burdens on small businesses who must be nimble to
survive.
Instead, we believe legislation could help to protect
workers better by other means. For example, legislation could
restrict these provisions to employers whose net hiring of U.S.
workers for the year is lower than layoffs within the same
occupation.
Step Two: The STEM Investment
Scott Stanfield, an ACT member and president of Vertigo
Software, Inc., addressed the STEM question with the best
possible answer I have ever heard. When asked about why he
supported using H-1B money for STEM, Mr. Stanfield answered:
I have been in business for a bit more than 15 years,
and I plan to be in business 15 years from now. I know
I will need talented, well-educated programmers in the
future. I want that child who is just now entering
grade school to have the training needed so that I can
hire them as soon as they are ready
Mr. Stanfield's long-term perspective is not uncommon for
our small business members. They all plan to be in business,
the technology business, for the foreseeable future. And they
know that will take serious investment.
Technology businesses both large and small see value in
funding STEM education through additional fees on H-1B visas
and green cards. The I-Squared Act proposes to raise $500
million annually over ten years to be allocated for teacher
training, post-secondary STEM programs, and computer science
community college training. This funding represents a fraction
of the positive economic impact for future generations who can
fill these jobs currently going overseas, or simply remaining
unfilled.
Looking beyond a Band-Aid fix, however, requires us to
focus our efforts on primary and secondary education. If we
hope to produce enough graduates capable of qualifying for
these high wage tech jobs, then students must be exposed to
computer science education at an early age. This will require a
renewed commitment to the subject in school districts across
the country. Currently, only ten percent of high schools offer
computer science courses. If students have never taken a
technical subject before college, they are unlikely to pursue
it as a major.
In the Senate I-Squared legislation, tech companies have
expressed a willingness to pay double the current fees for
additional tech visas and green cards if the extra funds are
dedicated to STEM education in U.S. schools. Generating as much
as $5 billion to expand education in these subjects, the tech
industry hopes that more schoolchildren exposed to computer
science will choose careers in the tech field.
The current draft of the Senate's ``Gang of Eight''
immigration bill allocates money for STEM education funded by
H-1B visa fees, but most of it is directed to post-secondary
education. A far larger percentage must be dedicated to educate
schoolchildren in primary and secondary schools if they are to
develop an interest in computer science and acquire the skills
necessary to pursue it as a major in college.
The work of a few nonprofits reveals this approach yields
success. One example comes from a group called CodeNow that
conducted afterschool computer science training for students in
Washington, DC. The organization targeted children in
underserved communities whose schools didn't offer the subject.
After teaching the students how to write software, one of the
participants won a national STEM video game challenge only a
year later. More importantly, these high school age children
are sticking with it. Today, 30 percent of the program
graduates have gone on to major in computer science at
university.
Another program called the Young People's Project teaches
school children math and other STEM skills. It is a math
literacy outreach and mentoring program, utilizing high school
and college students as ``math literacy workers'' that focus on
innovative teaching techniques to make the subject more
accessible through hands-on activities and workshops. The
organization believes that kids who master math (and other STEM
skills) develop greater academic self-esteem, and are more
likely to succeed in school and become leaders in their
community. They have programs in Boston; New York City;
Jackson, MS; Ann Arb or, MI; Eldorado, IL; and Mansfield, Ohio.
These non-profit organizations have provided valuable
insight for the government into how to design effective STEM
programs and the incredible results that could be achieved with
the kind of real, long-term investment that the I-Squared Act
provides.
Conclusion
Mobile app makers and small tech companies are at the
leading edge of innovation and job creation, but their
inability to hire more workers is limiting their growth. Recent
immigration legislation offers relief in the form of expanded
H-1B visa and green card access.
This meets immediate staffing needs, but doesn't provide
the solution to America's chronic shortage of software
developers and engineers. Our nation cannot maintain its global
technology leadership with a foreign labor dependency. We must
foster the growth of an American software developer workforce
to ensure our industry's long-term stability and
competitiveness.
Lucrative careers in the thriving tech industry should be
more accessible to American students. If we are willing to
invest in STEM education, particularly at the secondary level,
we can get this done. The tech industry is willing to do its
part to help fund these measures through increased fees for
high skilled visas. The Senate I-Squared Act provides that
opportunity. We hope Congress agrees with this approach and
allows us to help.