June 7 (Bloomberg) -- Bruce Morrison has seen immigration legislation backfire before.
In 1990, when he was a Democratic congressman from Connecticut and chairman of the House immigration subcommittee, unions complained that U.S. employers were using H-1 visas to exploit skilled foreign workers, paying them low wages that undercut American job seekers.
So Congress created a new visa, the H-1B, with tighter rules. Workers had to have a bachelor’s degree, and employers had to meet wage standards. At the same time, lawmakers roughly doubled the number of green cards available for these desirable immigrants to encourage companies to sponsor them for permanent residency and citizenship.
The transition from guest worker to citizen didn’t go as planned. Paperwork and bureaucratic hurdles made the green cards hard to get; it sometimes took years for the government to approve applications.
Thousands of green cards went unissued even with a backlog of people seeking them. Many employers decided the hassle wasn’t worth it.
“We were fools” to believe that companies would move their workers from H-1Bs to green cards, says Morrison, now a lobbyist for a professional association representing engineers and programmers. “That’s not how it worked out.”
The bipartisan immigration bill the Senate is considering this month is an attempt to fix the problem.
While the debate in Washington has focused on whether to create a path to citizenship for low-skilled, undocumented workers, another provision in the legislation has gone largely unnoticed: It would make it easier and more desirable for companies to sponsor highly skilled foreign workers for green cards, creating a citizenship path for them, too.
The thinking is that knowledge workers with permanent residency are valuable to the economy because they can more freely switch employers to go where they’re most needed, or start a company of their own, creating jobs for Americans.
Workers brought to the U.S. on H-1Bs are beholden to the employer who hired them. They risk deportation if they quit or are fired and can’t find a new H-1B sponsor. This makes them susceptible to exploitation.
The Senate bill adds to the number of employment-based green cards available and gives incentives to employers to help their H-1B workers obtain them.
“The United States must do a better job of attracting and keeping the world’s best and brightest,” the eight Senate co-sponsors said in a statement.
Yet the legislation -- the biggest attempted overhaul of immigration law since 1986 -- may still leave many foreign workers stranded in H-1B limbo. That’s in large measure because of heavy lobbying from the tech industry, which asked for -- and got -- many more H-1Bs.
Microsoft Corp., Google Inc., and Facebook Inc. each spent more than $2 million on lobbying in the first three months of the year during the run-up to the bill’s consideration, according to the Washington-based Center for Responsive Politics.
The tech industry urged lawmakers to increase the number of H-1B visas. The Senate bill raises the annual cap to 115,000 from 65,000. It can rise over time to 180,000 as long as the jobless rate in management and professional occupations is below 4.5 percent; currently it’s 3.7 percent.
The tech executives argued that there aren’t enough qualified Americans for all the jobs they want to fill.
Brad Smith, Microsoft’s general counsel, said at a Senate hearing in April that the company had 3,300 openings for jobs in the U.S. in core research, engineering, and development -- a 29 percent increase from a year earlier.
What Smith and other tech lobbyists didn’t say is that an increase in the number of H-1B visas makes things easier for them than an increase in the number of green cards.
More work visas means U.S. companies will be able to recruit the workers they need from abroad, while avoiding having to go the extra lengths required to help foreign employees get resident status.
“People come to this country for permanent jobs,” says Morrison. “I have regrets about how the tech industry has steadfastly disdained green cards in favor of the H-1B program.”
Labor unions have failed to persuade Congress that making more visas available would just provide Silicon Valley with cheap bodies.
Hal Salzman, a professor at Rutgers University, says the average salary of a programmer in the U.S. fell slightly, to $70,589 in 2012 from $71,762 in 1999. If the profitable tech industry needs more workers, he argues, it should simply raise pay instead of turning to foreign labor.
Unions and the Institute of Electrical and Electronics Engineers, for which Morrison lobbies, say that H-1Bs can be hired on the cheap, dragging down compensation for U.S. workers.
Studies that have tried to determine whether this is true have produced conflicting results.
Many of the complaints involve foreign outsourcing companies that provide services for American customers. They increasingly operate in the U.S. using workers from abroad.
In February, Tata Consultancy Services Ltd. of India, an information technology outsourcing firm, agreed to pay $29 million to settle a class-action lawsuit by Indian workers who said they were forced to give the company their U.S. tax refunds.
A grand jury in Texas is looking into charges that another Indian firm, Infosys, asked some of its U.S.-based employees to falsify documents to evade the limit on the number of workers it could bring from India on H-1Bs.
Tata spokesman Michael McCabe says the company settled to end costly litigation and “believes that it always acted appropriately.”
Infosys spokeswoman Danielle D’Angelo says “we take our obligations seriously” to ensure that employees obey the law.
The extra visas that tech companies got in the new bill come at a price. To prevent exploitation of employees on H-1Bs - - and the undercutting of Americans who compete with them for jobs -- current law requires that the foreign workers be paid the “prevailing wage” -- that is, whatever the going rate is for their job.
The Senate legislation takes that a step further. It requires all U.S. companies to show they tried to find Americans to fill openings before turning to foreigners.
The rules are tighter for companies designated as “H-1B dependent,” a group that includes not only the likes of Tata and Infosys but also Facebook.
They must pay at the top end of the prevailing wage range and offer jobs first to any equally qualified Americans, not just look for them. The intention is to make H-1Bs just unattractive enough that employers won’t reflexively look overseas to fill jobs.
The Senate bill has one more coercive trick up its sleeve. In what’s called the “Facebook loophole,” companies with lots of H-1B employees can get around the rule requiring them to prove they tried to hire Americans -- if they sponsor at least 90 percent of their H-1B workers for green cards.
The loophole has the twin effect of making it harder for foreign outsourcing companies in the U.S. to operate exclusively with non-American workers, while nudging U.S. employers to help the best minds from overseas make the U.S. their permanent home.
Of course, that was the idea in 1990, too.
“Once again,” says Morrison, “the experiment is being run.”