High-Tech Robbery (Nelson) - TSC Spring 2012 - 1

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Income inequality exacerbated by record levels of immigration. The controversial H-1B Visa program plays a significant role in the transfer of approximately $10 trillion of wealth from the U.S. middle class to the economic elites. The wealth transfer is in the form of salary and benefit avoidances.
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  Spring 2012 The Social Contract 36 A Glut of Immigrants T here has been attention given to thechanges in the characteristics of the U.S. population that are the consequences of high levels of immigration to the UnitedStates since the liberalization of immigra-tion policies that began in 1965 with the passage of theHart-Cellar Act. The changes were dramatically accel-erated by the unprecedented increases in immigration,which were the consequence of the Immigration Act of 1990.Currently, there are a record 39.96 million immi-grants, comprising 12.92 percent of the U.S. population. 1 The economic law of supply and demand predicts thatthe workforce gluts that are the consequence of the im-migrant glut will drive down wages and worsen workingconditions. The U.S. economic contraction that beganabout 12 years ago is consistent with the current lower  real (ination-corrected) wages for most wage earners. These policy changes were the consequence of econom-ic and political elites demanding immigration policychanges. The United States currently admits more legalimmigrants than all other nations combined. (The levelof  illegal  immigration in the form of visa violations, in-cluding overstaying, or of entering without inspection is almost on par with legal immigration. The illegal ow is not discussed in this article. However, because illegalimmigrants are much more vulnerable to economic ex- ploitation by those that hire them, the economic impacton the U.S. workforce is to further exacerbate workforcegluts across a broad spectrum of job titles, leading to ad- ditional downward pressure on wages.) $10 Trillion in middle-classeconomic losses The author made a platform presentation at the2004 American Chemical Society annual meeting titled,“There is No Looming Shortage of Chemists.” This pre-sentation included the surprising observation that for allworkers except the economic elite, their decade of peak earnings was between ages 40 and 50. The source of thisobservation was an obscure table from a 2002 U.S. Cen- sus Bureau CPS survey (see graph below). It was verysignicant that disaggregated salary data as a function of  How Record Immigration Levels RobbedAmerican High-Tech Workers of $10 Trillion B  y G ene A. n elson , P h .D.    Abstract  : While there has been some attention paid by immigration researchers to the record numbers of immigrants residing in the United States, little attention has been paid to quantifying the adverse economicimpacts to American citizens. A preliminary model is offered in this article that is consistent with observedeconomic trends. The economic losses of approximately $10 trillion dollars to American knowledge workersare a consequence of workforce gluts. The legislative history of these changes is reviewed. Planned changesto the business model of American colleges and universities could dramatically increase the economic lossesto American citizens. The article concludes with some relevant observations of recent American history andsome policy suggestions. Gene Nelson  , a contributor to The Social Contract  , has testied twice in the U.S. House of Representatives and twice to the National Academy of Sciences (NAS) on thecontroversial H-1B Visa program.  37 Spring 2012 The Social Contract a worker’s age was presented in this table, showing thatdoctorate’s income declines above age 50. (One of thePR techniques utilized by those that promote the earn-ing of a Ph.D. degree is to aggregate the incomes of theeconomic elites, including medical doctors and lawyers with doctorate degree holders.) Given the improvements in the health of U.S.workers, many are capable of making full-time pro-fessional contributions even when they are older thanthe traditional retirement age of 65 years. However,when there is a glut of workers at all skill levels, em- ployers are able to selectively hire young workers, whoare perceived by most employers to be less expensive.When older workers are shunned by employers, the ex- perienced knowledge worker must hold a position thatmakes scant use of their training and experience, simplyto provide for the necessaries of life. Professor NormMatloff in a March 18, 2011 presentation 2 at the George-town University Law School in Washington, D.C. ob-served that this employer hiring age discrimination iscausing a historically unprecedented “internal braindrain” in the United States which is harming the nation’seconomic competitiveness. A calculation that projectsearnings from the peak earning year to a retirement ageof 65 from the 2002 Census Bureau survey shows thatthe cumulative economic losses to male workers are on the order of $10 trillion (a trillion is a million million.) Female workers suffer a comparable economic loss.One of the key policy tools that employers haveutilized to facilitate employment age discriminationwas to procure a large number of work visa programswhere the visa is conditioned upon being continuouslyemployed — and where the employer has the poten-tial to sponsor the immigrant for permanent residency.This gives the employer powerful “sticks and carrots”to insure that the workforce remains docile regardingdemands for increased wages and improved workingconditions. As a consequence of the unprecedented nu-merical gluts of workers, even citizens become docile asthere is a well-founded fear of job loss if they object toostrongly to these employer policies. An “Alphabet Soup” of work visa programs See the author’s writings that chronicle the de-velopment and expansion of U.S. high-skill work visa programs since 1976. 3,4,5 To summarize, colleges anduniversities were facing funding cuts after the once-in-history increases in funding following the 1957 launchof  Sputnik  . The university trade association lobbyists identied a work visa program created in 1952 designed to import up to 500 Basque sheepherders per year. Em- ployers were not  required to attest that they were pre-venting harms to the career prospects of American cit-izen sheepherders — and the employer would set thewages and working conditions of the imported workers.The imported workers could be sponsored for perma-nent residency. This set of immigration policies wascalled “special handling.” As immigration researcher Rob Sanchez noted, the use of special handling was ap- plied to extremely small numbers of unskilled workers until the Association of American Universities (AAU) applied special handling to the importation of unlimitednumbers of college professors and researchers. See, ”In-viting our own problems: Robert Sanchez talks about the aws in employment-based visa programs, includ -ing the threat they pose to American workers, the U.S.economy, and national security” by Hyde Kurt, The New American , May 28, 2007.The legislator who was lobbied was serving as theChairman of the House Immigration and Claims Sub-committee. His name was Representative Joshua Ei-lberg — and he used once-in-a-lifetime parliamentarytactics to sneak through passage of the “Eilberg Amend-ment” in 1976 for yet undisclosed considerations. As noted in endnote 4 Eilberg will eventually be identied  by historians of science as an architect for the destruc-tion of the American science and engineering enterprise.(Eilberg was corrupt. He was ejected from the Housetwo years later as a consequence of a scandal involving federal kickbacks received by his law rm from Hahn - emann Medical Hospital.) The Eilberg Amendment was cited as a legal prec-edent for the expansion of the H and L work visa clas- sications in the Immigration Act of 1990. Microsoft Corporation, which leads in the number of H-1B Visaholders (up to 35,183 directly hired between 2001 and2010. 6 For comparison, note that Microsoft’s total U.S. Pennsylvania Congressman Joshua Eilberg (1921-2004)  Spring 2012 The Social Contract 38 workforce was 46,000 in 2007.) Microsoft hired corrupt lobbyist Jack Abramoff and his team in December, 1994to help to procure three “Microsoft friendly” changesto H-1B Visa legislation between 1995-2000. Microsoftand its proxies expended about $100 million during this period for legislatively connected expenditures. In re-turn, they received over $5 billion in reduced salary and  benet expenditures. This kind of lobbying for huge eco - nomic benets was the subject of a July 12, 2010 Time cover article by Steven Brill, “The Best Laws MoneyCan Buy” I continue to hold that this corporate conductis legally sanctioned bribery and should be proscribed by existing federal RICO statutes. How Many Economic Migrants? In endnote 3 a table of work visa admissions is provided showing over 25 million admissions (an im- migrant enters the United States on a visa) in just 5 high- skilled work visa programs between 1975-2005. This table is updated to 2010 in (see page 39) and plotted in the graph to the right. In just 5 short years, 12 mil-lion additional visa admissions occurred in these work visa programs. Some of this increase is a consequenceof better quality annual counts of visa admissions that began in 2010, according to a Department of Homeland Security (DHS) report. 7 This leads to the conclusion that there were signicant visa admissions undercounts in re - ports issued prior to 2010. What is the economic cost to Americanwage earners? A useful analytical approach to determine the eco-nomic losses to the American middle-class knowledgeworkers is to develop an estimate for the cost to Ameri-can workers of a single work visa admission under the 5work visa programs examined in this article. The author offers $150,000.00 per admission as an initial estimate.A lower bound estimate is $11,860 per year, accordingto a recently-publicized study. 8 A more reasonable esti- mate is average reduced salary and benet expendituresof $30,000 annually with a beneciary causing salaryand benet expenditure reduction for an average of 5 years, for a total of $150,000. Thus, the second table in[updated Figure 2] tabulates a total economic loss to theAmerican middle class in excess of $5 trillion as a con-sequence of the 5 high-skill work visa programs.An immigrant may be admitted on an L-1 Visa for up to 7 years. For a H-1B Visa holder, they may be ad- mitted for up to 6 years, with indenite annual exten -sions. A J-1 Visa with waiver permits at least 4 yearsof working in the United States. With recently-passedExecutive Branch actions, the so-called Optional Pro- fessional Training (OPT) period for F-1 Visas was ex - tended to 29 months for many academic elds. The employer sets the wages and working conditions for theOPT work visas as well as the H-1B and L-1 Visa class-es. Currently, there are no annual caps on F-1 and L-1Visa admissions. The annual cap on H-1B Visas is over 100,000 annually. While an immigrant may be admittedon multiple occasions under a work visa, the author be- lieves that readmissions for work visa beneciaries from the developing world are negligible because the cost of round-trip air travel would be precluded by the well-documented tendency of these visa holders to remit anydiscretionary income to their extended family membersstill residing in the sending nation. Since the DHS indi-cates that they may now query visa admissions data tomatch individuals by their birth date, last name, and the rst 3 characters of their rst name, 7 the potential to de-termine a more accurate value for cost of a single work visa admission, particularly when coupled to the actualwage data for the visa holder. This comparison would  be with comparably qualied Americans employed by similar employers. Since the American citizen, regard-less of their nation of srcin, has the right of “free agen-cy” regarding employment, they are paid substantiallymore than the work visa recipient. The Unprecedented Cost for College DegreeHolders who are American Citizens The unprecedented cost for American citizens whohave earned college degrees is a consequence of the dra-matic increase in college student loans since the 1980s.A recent estimate of the total loans outstanding is in ex-cess of $1 trillion. 9 With the change to bankruptcy lawin 1995, student loan debts are no longer dischargeablein bankruptcy. As a consequence of workforce gluts, even recent graduates are having signicant difculties in obtaining and keeping employment, particularly at a 051015202530351975 1980 1985 1990 1995 2000 2005 2010      M     i     l     l     i    o    n    s    o     f    a     d    m     i    s    s     i    o    n    s Competitionfor the ~ 8 Million U.S. High Tech Jobs : Cumulative Estimated Admissions sinceFY 1975 - Five classes of noncitizen High Tech visas  39 Spring 2012 The Social Contract High Skill Visas Transfer More Than $5 Trillion to Economic Elites   AnnualAnnual Est. Total Salary and  F1 and Admissions Admissions Benet H-1B TN M1 Totals Since 1975 Avoidance Year L1 Visa Visa Visa Visas J1 Visa ($ Millions) ($ Millions) ($Billions) 1975 12,570 15,550 107,495 46,001 0.182 0.182 27.2421976 15,112 47,387 121,317 44,486 0.228 0.410 34.2451977 17,673 47,387 154,507 50,507 0.270 0.680 40.5111978 21,495 42,979 191,139 53,319 0.309 0.989 46.3401979 16,423 32,942 106,977 30,644 0.187 1.176 28.0481981 38,595 44,770 240,805 80,230 0.404 1.580 60.6601982 47,893 52,482 263,176 85,382 0.449 2.029 67.3401983 62,025 39,944 286,909 89,969 0.479 2.508 71.8271984 62,359 42,473 227,394 94,008 0.426 2.934 63.9351985 65,349 47,322 257,069 110,942 0.481 3.415 72.1021986 66,925 54,426 261,081 130,416 0.513 3.928 76.9271987 65,673 65,461 261,829 148,205 0.541 4.469 81.1751988 63,849 77,931 312,363 166,659 0.621 5.090 93.1201989 62,390 89,856 334,402 178,199 0.665 5.755 99.7271990 63,180 100,446 326,264 174,247 0.664 6.419 99.6211991 70,357 118,038 282,077 182,940 0.653 7.072 98.0121992 75,347 110,193 241,093 189,919 0.617 7.689 92.4831993 82,606 92,795 370,620 196,782 0.743 8.432 111.4201994 98,189 105,899 19,806 394,001 216,610 0.835 9.266 125.1761995 112,124 117,574 23,904 364,220 201,095 0.819 10.085 122.8381996 140,457 144,458 26,987 426,903 215,475 0.954 11.039 143.1421997 140,457 144,458 26,987 426,903 215,475 0.954 11.994 143.1421998 203,255 240,947 59,061 564,683 250,959 1.319 13.312 197.8361999 234,462 302,421 68,411 567,146 275,545 1.448 14.760 217.1982000 294,658 355,605 91,279 659,081 304,225 1.705 16.465 255.7272001 328,480 384,191 95,287 698,595 339,848 1.846 18.312 276.9602002 313,699 370,490 73,360 646,016 325,580 1.729 20.041 259.3722003 298,054 360,498 59,201 624,917 321,660 1.664 21.705 249.6502004 314,484 386,821 65,970 620,210 321,975 1.709 23.415 256.4192005 312,144 407,418 64,713 629,556 342,742 1.757 25.171 263.4862006 320,829 431,853 73,880 704,189 385,286 1.916 27.087 287.4062007 363,536 461,730 85,142 800,829 443,482 2.155 29.242 323.2082008 382,776 409,619 88,382 874,665 459,126 2.215 31.457 332.1852009 333,386 339,243 99,018 910,024 413,150 2.095 33.551 314.2232010 502,732 454,763 634,121 1,532,424 484,740 3.609 37.160 541.317 Est. Totals1975-2010 5,603,543 6,540,370 1,655,509 15,790,879 7,569,828 37.160 $5.574 Trillion Estimated TotalImmig, Adms. 37,160,129 Model: $150K per admission  Sources: 1982 - 2010 Statistical Yearbooks of the Immigration and Naturalization Service & USCIS, U.S. Dept. of Justice & DHS Federal Repository Library Reference Catalog Number J.21.2-2.982 for the 1982 Yearbook. Microlm copies used for some years. Per 1982 Yearbook, page 107, Basque Sheepherder admissions. 1977:206, 1978:274, 1979:258, 1980:149, 1981:206, 1982:185.Up to 500 Basque Sheepherders issued per year by the Immigration Act of April 9, 1952Year skipped (no data available): 1980. 1997 duplicates 1996 data, as no reliable data exists. (System re-engineering problems.)Online Statistical Yearbooks: http://www.dhs.gov/ximgtn/statistics/publications/yearbook.shtm1996-2005 summary statistics: http://www.dhs.gov/xlibrary/assets/statistics/yearbook/2005/Table26D.xls Prior to October 1, 1991 (scal year 1992), H1B admissions were termed “Distinguished merit or ability.” Note that for the H-1B visa tabulation, admissions are substantially above statutory limits from FY 1992 to Present Despite the signicant 2009-2010 U.S. economic contraction, note the dramatic annual increases for all categories.  
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