Today’s Grads Face Mounting Pressure From Foreign Tech Workers

Writing in the November 15 issue of ComputerWorld, Patrick Thibodeau reminds us of the plight of today’s college graduates who have obtained pricey degrees in technical fields, but have become burdened with tuition debt while trying to compete in a tight job market with the estimated 650,000 foreign workers already here under H-1B visas.

Things could get worse under the Senate immigration reform bill, which calls for increasing the current annual H-1B visa cap of 65,000 to about 180,000...

Ironically, with an anemic economy and a stubborn unemployment rate of 7 percent, the nation’s blue chip companies continue to lobby for more H-1B visas at a time when many are shedding headcount to cut costs.

Last quarter, Cisco laid off 4,000 people, bringing its two-year total layoffs to 12,000. HP just completed a plan announced in 2012 to cut 9,000 American jobs. Pharmaceutical giant Merck announced it will cut 8,500 more jobs, bringing the total number to 16,000...

Mass layoffs are typically justified in terms of restructuring to meet changing market needs, retooling for the next phase of innovation, or remaining competitive in an increasingly dynamic industry. But there’s more to it than this. These goals can be achieved in large part by replacing American workers with foreign workers who will do more for less and not complain about it.

In September, IBM agreed to settle a claim with the Justice Department that its job listings for almost four years expressed a preference for foreign workers with temporary visas over U.S. citizens. According to one HR manager at the company, the cost difference is too great for IBM not to look for foreign workers first. Many firms routinely violate the “citizens-first” hiring rule, but because they are hit with paltry fines if caught, it is easy to dismiss them as a cost of doing business.

Tech companies like Apple, Microsoft, Google, and Cisco are among the many companies awash in cash, yet claim to need more foreign workers to stay on life support. If corporate profits are any measure, this line of reasoning falls squarely into the category of pure blather. The SP500 companies are sitting on a cash pile of $1.3 trillion.

Apple is widely hailed as the world leader in innovation. It has accumulated a cash hoard of $147 billion, which equates to nearly 10% of all corporate cash held by non-financial companies, according to Moody’s. Google pales in comparison with only $56 billion cash on hand and Facebook with $10 billion. All three companies are key players in petitioning Congress to lift the H-1B visa cap, as if they faced imminent extinction without a drip infusion of foreign workers.

The prospect of a big increase in H-1B visas could have serious consequences for American students and society...

Under the H-1B program, companies are allowed to pay foreign workers less than American citizens. When a company sees its competitors doing this, they have little choice but to follow suit to lower their own operating costs. This situation lowers wages across the board, making it difficult for American graduates to compete for jobs, pay down tuition loans, buy homes and raise families. With an uncertain job future in technical fields, high school students have good reason to think twice about pursuing expensive university degrees in preparation for jobs they are not likely to get.

In the ComputerWorld article, Karen Panetta, IEEE-USA Vice President for Communications and Public Awareness, and a professor of electrical engineering at Tufts University, warned that the cost of tuition in the U.S. is so unrealistically prohibitive that a class shift is underway. “The really wealthy are the only ones who can afford to send their kids to school,” she said. With her students owing $50,000 on average, “It’s the house you are not going to be able to buy for another 10 years.”

Also reported in ComputerWorld, Hal Salzman, a professor of public policy at Rutgers University, noted that the U.S. produces enough graduates to satisfy the demands of the labor market. But if the H-1B visa cap increase goes through, he sees a market that will be flooded with workers, with people under age 30 being especially hard hit by the increased job competition.

As the Wall Street Journal noted in its October 23 editorial, “With total employment at 144.3 million, for every three Americans over the age of 16 earning a paycheck there are two who aren’t even looking for a job. That’s an ugly portent for American prosperity.”

It’s hard to fathom how an annual influx of ever greater numbers of foreign workers will improve on this dire situation. It may very well accelerate the decline in workforce participation and increase dependence on the expanding array of government benefits as a substitute for work – both of which may trigger unforeseen consequences, including societal turbulence, followed by remedies we may prefer not to think about.

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