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Has demand for foreign workers fallen?

The INS will tell Congress how many H-1B visas have been issued this fiscal year--shedding light on whether the economic downturn has reduced the demand for foreign workers.

The Immigration and Naturalization Service will tell Congress on Monday how many H-1B visas have been issued this fiscal year--shedding light on whether the economic downturn has reduced the once red-hot demand for foreign workers.

The report will mark the first count since Congress raised the visa limit to 195,000 from 115,000 last October, after strong lobbying efforts from people on both sides of the debate.

The numbers were initially supposed to be released Thursday but were postponed until Monday.

Despite an economic slowdown that has led to layoffs, some H-1B opponents and proponents alike are saying they do not expect to see a dramatic decline in the number of foreign workers. Last year at this time, the INS stopped accepting H-1B requests because the 115,000-person limit had already been reached.

The INS account comes as dozens of bellwether technology companies are laying off or reducing employees through attrition. More are expected. A recent report from the global business-consulting firm Bain & Company showed that 40 percent of U.S. executives surveyed said they were likely to institute layoffs in the face of an economic downturn.

Still, several immigration and labor experts believe demand for foreign workers will remain strong.

"I expect that just as many if not more (H-1B visas) will be requested this year because it's a great source of cheap labor," said John Miano, chairman of the New Jersey-based Programmer's Guild.

Steven Camarota, director of research at the Center for Immigration Studies, agreed.

If anything, Camarota explained, the soft economy may spur an increase in foreign workers because this group is often less expensive than their domestic counterparts and can save cash-strapped companies large sums on the payroll.

Foreign means less money?
A study by the University of California at Los Angeles found that foreigners working in the United States on H-1B visas made as much as 33 percent less than their American-born counterparts. A similar study by Cornell University found a 20 percent to 30 percent disparity.

"H-1B visas become even more attractive to employers in an economic downturn," Camarota said. "Companies may not be able to control demand for software or semiconductors, but they can at least control the supply of labor."

For their part, company executives and corporate recruiters say that even in slow economic times, they have nonfinancial incentives to hire foreign workers.

Some job categories and some regions, they say, are still so tight that companies have to fill holes by finding foreign workers. According to the Association of Bay Area Governments, a business research group in Northern California, Silicon Valley has 1.06 jobs for each employable resident, effectively creating a negative unemployment rate in the tech-heavy region.

"Primarily we are using these H-1Bs for highly skilled engineers who are still in short supply," said Laura Ipsen, Cisco Systems' director of worldwide government affairs.

"Since we're not hiring at the pace we were last year, my sense is that the number (of H-1B visas we obtain) definitely would be lower," Ipsen added. "But I think the cap will be reached again this year, just later."

Chuck Mulloy, a corporate spokesman for Intel, said that despite plans to reduce the work force by 5,000 workers, or 6 percent, the company will continue to look for workers from afar.

"We are still hiring for critical technology positions," Mulloy said. "The fact that the economy slowed down did not increase the supply of highly qualified technical people in the areas such as software development."

Room for more
According to the Center for Immigration Studies, an independent research organization, the number of immigrants living in the United States has almost tripled since 1970.

Today, immigrants make up around 13 percent of the U.S. work force--up from around 9 percent in 1990.

This rise in foreign workers is no surprise--especially in the tech industry, where the job market for computer programmers and engineers has been red-hot.

According to IT staffing and consulting firm Management Decisions, the tech industry will create an estimated 1.5 million new positions in 2001, and roughly half of those spots will go unfilled.

But opponents of the H-1B program say the recent layoffs prove otherwise. Given this climate, and the growing number of laid-off American workers, Miano and others question whether companies should continue to import talent from abroad.

"All these companies that were saying they were going to go belly up if they didn't get their H-1B visas are now laying off people in droves," said the Progammer Guild's Miano. "Now their big lie is coming back to haunt them."

In the past see story: Slower growth may shadow Dell earnings reporttwo weeks alone, bellwether technology companies Cisco, Intel and Motorola have announced either layoffs or work force reduction plans because of soft economic conditions and slower growth. Dozens of other technology companies have made similar announcements over the past several months, including Dell Computer, VA Linux Systems and JDS Uniphase.

Investment money has all but dried up, and the Nasdaq composite index recently fell to a two-year low.

"With the layoffs in the tech sector in particular, the H-1B program becomes politically less popular," the Center for Immigration Studies' Camarota said. "That makes people who don't like the program and have never liked it become more emboldened."

H-1B visas spurred bitter debate last year when the tech industry lobbied to expand the number granted. Congress approved a hike in the number of H-1B visas to 195,000 annually, from 115,000. The bill also made it possible for foreign workers to switch jobs once in the United States, thus allowing technology companies to woo employees away from others.

But it's unclear whether the current political administration will change the H-1B visa program, given the worsening state of the economy and the possibility of more layoffs.

"Some people might say (companies) kind of have egg on their face now because they kept saying how much they needed" more visas, said Norm Matloff, a professor of computer science at UC Davis. "But it's irrelevant if (companies) are going to continue to push for more visas anyway. They have publicly stated they want to lift the cap altogether."