Information Technology

End the Recession in 18 Months Without Spending Taxpayer Money

The other day I was out tilling a field and listening to NPR’s Left Right Center broadcast. Listening to NPR while in a tractor tends to be quite a feat since the FM stations tend to only come in going one way and the AM stations static out. I was shocked and, might I even say, appalled that nobody on the broadcast actually knew the source of the current recession. A statement I found even more flabbergasting was that there is no quick or easy way out of this recession. Quite simply, nothing could be further from the truth, then again, if you don’t know what the root of the problem is, you cannot fix it.

This recession was only made worse by the sub-prime meltdown, it was not the cause of it. Yes, the mortgage crisis left the more spectacular pile of body parts, but, you have to ask why we were all standing on that land mine when it went off. Regular readers of this blog will already know the answer, for those of you who don’t, http://logikalblog.com/2008/06/09/the-recession-that-gartner-built/

Once you know the root of the problem, fixing it becomes easy, rip out the root. Some of you probably need some more data to make sense of the solution.

Visa Type

Description

Length of Stay

H-1B

Temporary worker of distinguished merit and ability performing services other than as a registered nurse

Up to 6 years

H-1B1

Free Trade Agreement worker (Chile/Singapore)

Up to 6 years

L-1

Intracompany transferee (executive, managerial, and specialized personnel continuing employment with international firm or corporation)

Up to 7 years

Initially the H-1B family of visas is for only 3 years, but can be extended, and in some cases extended well beyond six years. There is supposed to be a prevailing wage law stopping H-1B workers from displacing U.S. citizens, but the Department of Labor has yet to do any meaningful enforcement of it. This is why you see $90/hr FORTRAN programmers suddenly being replaced by $25/hr H-1B workers (with $25/hr going to the pimp, not the worker) and being asked to train their own replacements. The situation is even worse with L-1 visa holders. There is no prevailing wage requirement. The L-1 family of visas is legalized slavery. With very few exceptions, these people are paid $10-$30/day U.S., brought over here, stacked two to eight deep in an extended stay hotel suite, given a small per-diem for meals, and in many cases shuttled by the hotel to the client site. The shuttle also takes them to a grocery store and a Walmart or other big box store upon request. The higher paid U.S. workers are forced to train these L-1 workers, who then take over the U.S. worker job.

Pay very close attention to the dollar amount L-1 workers are being paid and the replacement issue. This is the root of the problem (along with the H-1B problem from the Clinton era). Because none of these workers are being paid U.S. prevailing wage for the jobs they do, we lose one to twelve additional jobs for each technical job lost to workers over here on these visas. These are not just IT workers, but med-techs and every other degreed technical profession.

Now for some numbers. I obtained these numbers from a spreadsheet found here:

http://www.travel.state.gov/visa/statistics/nivstats/nivstats_4582.html

2003 2004 2005 2006 2007 2008 2009

H-1B

107,196

138,965

124,099

135,421

154,053

129,464

110,367

H-1B1

0

72

275

440

639

719

621

L-1

57,245

62,700

65,458

72,613

84,532

84,078

64,696

Total

164,441

201,737

189,832

208,474

239,224

214,261

175,684

1,393,653

Roughly 1.4 million U.S. workers have been directly replaced by visa workers, despite regulations stating that they were only supposed to bring in skill sets which didn’t exist in this country. Corporate America has neatly been getting around that by using Vendor Management Systems to post job and contract openings. These systems block any submission of candidates wishing to receive above the posted billing rate or salary. They then take the output and say “see, we had to hire an H-1 because there were no U.S. Citizens.” It’s a federal crime called racketeering and it qualifies for RICO prosecution, but we will all die of old age before the campaign contributors see a day in court.

What you don’t see in these numbers are the secondary, tertiary, and ancillary impacts. Allowing corporations to replace technical workers in-country via legalized slavery was never a good idea Mr. Clinton. You really should have done something Mr. Bush.

http://www.computerworld.com/s/article/9178806/_Elena_s_Inbox_details_H_1B_battle_in_Clinton_White_House

I know I haven’t laid out the plan yet, but you have to understand the complete scope of the problem to understand the solution. The technical workers we are talking about were all making $90K-$190K. They were flush with cash, and they spent it keeping the economy going. Starbucks would have never made it without them and the fast food lunch business thrived because of them. Detroit had a market for its $70,000 SUVs and the world was right as rain. Many of the technical workers traded cars at least every three years and most were the target market for automotive leases. Drive through window, automotive detailing, and house cleaning services all thrived because of the technical worker. They had the disposable income and they disposed of it.

Have you ever known a waiter or waitress to make $100K/yr? I have. They work at those high end restaurants where getting out for less than $100 per person requires coupon cutting. Yes, spouses and significant others were treated to special evenings out in places like these for birthday’s, anniversaries, etc. Those restaurants are dying right now, but with the return of the tech worker, they will have customers again. As I stated earlier, even the lowest paid U.S. citizen tech worker supports at least one other worker in this country. The higher end technical workers support about twelve. Let’s be kind. Let’s use a low number like four as an average, because the whole is really greater than the sum of its parts, especially when the tech workers begin trading cars again. Between the dealer and the factory, it is difficult to identify how many they physically support. (When a new model is added there tends to be around 1000 workers these days. http://abclocal.go.com/wls/story?section=news/business&id=7239358 Once a car sells over X units a second shift has to be added. After exceeding Y units in one year a second line has to be added. Then you have the parts supplier workers, the insurance people, the finance people, the shipping companies transporting all of the stuff, and I’m sure I left others out. The same thing happens when these workers start buying houses and cars.)

1,393,653 * 4 = 5,574,612 If my estimate is low and it really becomes six after you reach some threshold the number would be 8,361,918. That’s, theoretically, how many jobs we could return to the U.S. economy in 18 months if we simply call corporate America’s bluff. The tech workers will need three to six months to pay down the debt they’ve accumulated during their long unemployment, but soon after that they will start buying those coffees, having those lunches, and getting that dry cleaning done. In truth, we will initially replace only about half of the tech workers and given small business’ reluctance to hire they will generate only two additional jobs each until all of the financial news talks about how robust the economy is, so initially only 1.3 million jobs then the supporting industries will be forced

Why have we lost so many jobs? The legalized slavery movement replaced $100+K workers with less qualified people making $10-$30/day and their employers keeping the rest. The slaves use our infrastructure and medical care, but they simply don’t have any money to pump into our economy. As a direct result of this short sightedness we lost the dry cleaner jobs, the fast food jobs, the auto worker jobs, the construction jobs, the high end restaurant jobs, etc. Oh yes, everybody was standing on top of the sub-prime land mine because that was the last revenue generator the regular worker seemed to have. They could play flip-this-house and in the right market make $20K in less than a month. Once the toll of the tech worker job loss finally weighed in, there were neither speculators nor customers for the housing market and the McMansions went on the auction block.

Congress and the President can end the recession in 18 months. Here’s how:

Phase 1: (Three months start to finish)

  1. Expire all L-1 visas

  2. All newly issued first year L-1 visas will now have a $100,000 application fee if they aren’t for a blanket company. Blanket company first year fee will be $60,000.

  3. Any person who has had an L-1 visa within the past seven years must file a renewal application. That application fee will be $200,000 for non blanket filers and $120,000 for blanket filers.

  4. Companies wishing to obtain or maintain their blanket L-1 status must pay an annual renewal fee of $1 billion dollars.

  5. Give only a 30 day grace period between expiration and deportation. Actually force INS and local law enforcement to do the deportations because companies will continue using the slaves as long as they are here and the slaves don’t have enough money to buy their own ticket home. The company which brought them here must be forced to pick up the tab.

Phase 2: (Three months start to finish)

  1. Expire all H-1B and H-1B1 visas.

  2. All H-1B visa variants are now good for only one year and have an annual $50,000 filing fee. They can be extended up to six years in total, after that, the person can never enter the U.S. again.

  3. Give only a 30 day grace period between expiration and deportation. Actually force INS and local law enforcement to do the deportations because companies will continue using the slaves as long as they are here and the slaves don’t have enough money to buy their own ticket home. The company which brought them here must be forced to pick up the tab.

Don’t worry. That howl about how they’ll be forced to off-shore more jobs is pee-pee-ka-ka. Speaking as a tech worker, I can tell you the bulk of these jobs cannot be off-shored. It should be obvious to anyone looking at the visa numbers. If they could be off-shored, the companies involved wouldn’t have bothered bulk renting extended stay hotel suites and handing over meal per-deims. There are only a tiny subset of technology projects which are optically isolated enough they can be off-shored. It really requires an extremely high skill level on the part of an off-shore team to pull off a project when they don’t have ready and random access to the people with answers. That skill level doesn’t work for $10-$30/day. When any company tries to push that boundary they have spectacular failures. Windows Vista was Microsoft letting its Indian division strut its stuff…Windows 7 was the massive pile of bug fixes developed by the token few U.S. IT workers still employed at Microsoft. Other Fortune 100 companies have been de-listed from the U.S. stock exchanges when their off-shore projects failed and their internal auditors went crying to the SEC about the financial cover up of the failure. Speaking of stock exchanges, this is what happens when you let Accenture’s off-shore team strut their stuff:

http://www.theregister.co.uk/2009/11/26/lse_crash_again/print.html

Don’t try and do both phases together as it will turn into a circle jerk trying to gather up deportees.

When both the H-1B and the L-1 visa family were proposed the argument from business was that the skill sets didn’t exist in this country. It was a bald faced lie. What didn’t exist was legalized slavery until these visa classes came along. Now, the workers may be paid like slaves still, but when they are rented out the billing rate will have to be over $50/hr just to cover the visa application fee. This puts actually billing rates in the $70-$90/hr range and that is predominantly the range you will find most U.S. citizen tech workers in. Now, these visa holders will actually have to have skills that don’t exist in America to get jobs and they really won’t be taking jobs away from American citizens.

If you want to ensure this doesn’t happen again, apply Phase 3.

http://logikalblog.com/2010/09/08/ethics-in-income-act/