Prepared Floor Statement by Senator Chuck Grassley of Iowa
Chairman, Senate Judiciary Committee
February 24, 2015
High-Skilled Immigration

Many of my colleagues know that I have been fighting for years to end the abuse of the H-1B visa program and help disadvantaged U.S. workers who are harmed by the program.  So, today, I would like to draw my colleagues’ attention to a recent incident that highlights how some employers are potentially using legal avenues to import foreign workers, lay-off qualified Americans, and then export jobs overseas.    I was shocked by the heartless manner in which U.S. workers were injured in the case I am about to describe.

But, first, let me first briefly remind my colleagues about how the H-1B program works:

Under the terms of the H-1B program, U.S. employers may import into the United States each year up to 65,000 so-called “specialty occupation” workers.  The job being filled must be a job for which a bachelor’s degree is necessary.   

Even though the annual cap is 65,000, the actual number of foreign workers being imported is much more because of numerous exemptions.  In Fiscal Year 2012, for example, U.S. Citizenship and Immigration Services approved a total of 262,569 H-1B petitions.  

About 60% of H-1B workers come to fill computer-related occupations.  Every year, the list of the top ten H-1B employers is dominated by foreign-based companies offering information technology or “IT” consulting services to U.S. clients.

H-1B employers are also required to:

(1) pay the worker the greater of the prevailing wage for that job in that area or the wage that the employer pays to similarly qualified U.S. workers doing the same job; and

(2) provide working conditions that will not “adversely affect” other similarly employed U.S. workers.

Additionally, H-1B employers may not displace a U.S. worker within the period beginning 90 days before and ending 90 days after the date of filing any H-1B petition by that employer.

Now, allow me to describe what the program lacks.  Most people believe that employers try to recruit Americans before they petition for an H-1B worker.  Yet, under the law, not all employers are required to prove to the Department of Labor that they tried to find an American to fill the job first. 

That’s right.  Americans do not get the first chance at these jobs in the U.S.   And, if there is an equally or even better qualified U.S. worker, the company does not have to offer him or her the job.  

I have pushed legislation to change the law.  In fact, I offered several pro-U.S. worker amendments during consideration of the immigration bill in 2013.  Every amendment I offered was defeated.  The Majority at the time helped defeat these pro-American worker amendments.  They pushed through S. 744, the 2013 immigration bill, without this significant and much needed change.  

Now let me describe to you the appalling incident I referenced earlier.

Last August, Southern California Edison started laying off 400 American workers from its “IT” department.  The company replaced them with foreign H-1B workers.  According to the company, 100 additional American workers, who will also be replaced by H-1B workers, will leave “voluntarily.”  According to Computerworld, the final major batch of layoffs is scheduled for March 6.  

The foreign workers who are replacing the American workers at Edison are employees of two overseas-based IT consulting companies that are also two of the largest users of H-1B visas.  In 2013, one of the two companies paid the largest immigration fine in U.S. history.  That company paid $34 million in a civil settlement after allegations of systemic visa fraud and abuse.  

The jobs being filled by H-1B workers are manifestly not jobs for which Americans are unavailable.  I say that because the jobs are currently filled by skilled American workers.  It’s not only disturbing that these American workers have been laid off, but also that some of them have reportedly had to train their own replacements.  

A columnist for the Los Angeles Times writes that by laying off hundreds of its American IT staff and replacing them with relatively low-wage foreign contract workers, Edison stands to save as much as 40% in wage costs per laid off worker.  One laid-off Edison worker told the columnist that company supervisors told a group of workers last year: “We can get four Indian guys for cheaper than the price of you.”

Worse yet, most of the 500 jobs that had been held by Americans will eventually just move overseas.  According to the Los Angeles Times, Edison admits that eventually about 70% of the work will shift overseas permanently.

Edison describes the 400 layoffs as a “transition” to the foreign IT consulting companies that "will lead to enhancements that deliver faster and more efficient tools and applications for services that customers rely on.”  It adds that “[t]hrough outsourcing, [Edison’s] information technology organization will adopt a proven business strategy commonly and successfully used by top U.S. companies that [Edison] benchmarks against."

With respect to replacing American workers with H-1B workers, Edison says  that the company "is not hiring H-1B workers to replace displaced employees."  Edison’s cynical defense is built upon the shameless exploitation of a loophole in the H-1B laws.  

Technically, Edison isn’t the H-1B workers’ employer; the two foreign consulting companies are.  The H-1B workers are just contracted out for extended, potentially multi-year periods from the foreign consulting companies to Edison.  Thus, Edison argues that it is not subject to the requirements under the immigration law that I spoke of earlier.  They argue that, because they are not the employer who petitioned directly for the H-1B workers, they don’t have to abide by the working conditions requirement or the 90-day rule.  

The condemnation of this attack on American workers has been quick and bipartisan.  On February 10, over 300 members of the International Brotherhood of Electrical Workers rallied in Irvine, California in support of their fellow Edison employees.  Several members of Congress have expressed concerns about the situation.  

On February 17, the Economic Policy Institute sent a letter to the Secretary of Labor asking him to investigate the Edison layoffs.  Specifically, the Institute asks the Secretary of Labor to determine whether Edison, the foreign consulting companies, or any of the parties involved in these layoffs violated the requirement that the hiring of the H-1B workers not “adversely affect the wages and working conditions of U.S. workers comparably employed.”  

I echo the request by the Economic Policy Institute.  The prohibition on adversely affecting U.S. workers can reasonably be applied to situations, such as in the Edison case, where the H-1B workers are contractors at a worksite rather than employees.

I also draw your attention to a powerful February 16 Los Angeles Times editorial entitled “End H-1B Visa Program’s Abuse.”  The Los Angeles Times calls Edison's action “part of a years-long trend among companies of misusing H-1B visas to undercut wages and offshore high-paying American jobs.”  The Los Angeles Times concludes that the H-1B program, though perhaps well-intentioned, is “broken” and that “Congress needs to fix it.”  I could not agree more.

This situation with Southern California Edison is not new.  It’s happening time and time again.  American workers are losing out because the law is not strong enough to protect them.  It needs to be fixed.  

Any proposal to reform the H-1B program must include substantially increased protections for U.S. workers, such as I have proposed many times in the past.  These protections must, at a minimum, include the requirement that companies first recruit here at home before they import more foreign workers.  We also need to reform the H-1B wage requirements so that U.S. workers’ wages would no longer be undercut by H-1B workers’ wages.  There also needs to be more oversight of the program, including random audits of those who use the program.  

Tightening the law to ensure that U.S. workers have the first opportunity at high paying, high skilled jobs in this country is a no-brainer.  Yet, there is so much opposition to this philosophy.  As I stated earlier, the Majority pushed for changes to the H-1B program in 2013 but voted against every single amendment I offered to ensure that U.S. workers were given priority.  

And, now, there is a lot of fanfare and talk about a high skilled bill that has been reintroduced in the Senate that would increase the annual number of H-1B visas.  The sponsors of the bill claim it will “boost our competitiveness in the global economy. “  This bill only makes the problem worse.  It doesn’t plug the loopholes.  It doesn’t make sure that American workers are put before foreign workers.  It doesn’t ensure that employers don’t use the program to pay cheaper wages, which in turn, disadvantages U.S. workers.  

The H-1B program could be a worthwhile program.  Our employment-based immigration programs have served and could again serve a valuable purpose if used properly. However, they’re being misused and abused. They’re failing the American worker.  Reforms are needed to put integrity back into the programs and to ensure that American workers and students are given every chance to fill vacant jobs in this country.  

I want my colleagues to know that I’m committed to this effort.  As Chairman of the Judiciary Committee, I don’t intend on allowing legislation to move through this body without reforms to the H-1B visa program that protect the American worker.  

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