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US: To give or not to give more visas

By Peter Elstrom, BusinessWeek
March 15, 2007 08:07 IST
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The U.S. has begun a ferocious debate over immigration. Senators John McCain (R-Ariz.) and Ted Kennedy (D-Mass.) have introduced legislation into the Senate for what they're calling comprehensive immigration reform, an ambitious effort to address everything from illegal immigration from Mexico, and the estimated 12 million undocumented workers now in the country, to technology companies' request for more visas for programmers and engineers.

The House is likely to follow with its own legislative effort. And President George W. Bush has already said he supports immigration reform.

Hopes are high that the reforms will actually become law this year. Similar bills were proposed last year, passing in the Senate before stalling in the House. Today, however, there may be more common ground between Congress and the President, since the Democrats who now control both houses are closer to Bush on the issue than some Republicans.

"The prospects are very good," says Robert Hoffman, vice-president for government and public affairs at software giant Oracle, which has been pushing for an overhaul of the current regulations.

Still, there's a risk that reform could suffer the same kind of defeat this year as in 2006. While plenty of people are frustrated with the current policies, it's not clear that there is anything close to a consensus on how to change them.

The most controversial part of the reform effort is what to do about the 12 million undocumented workers already in the country. The McCain-Kennedy legislation is expected to provide those workers with a way to stay in the country under a temporary worker program, if they pay certain penalties. Republican opponents in the House object to any law that lets undocumented workers benefit from coming into the country illegally.

"A Vote Tomorrow Would Pass"

Peter King, a Republican representative from New York, is part of a group of House Republicans who opposed the McCain-Kennedy bill last year. He plans to fight this year's legislation, too, if the provisions for undocumented workers are similar. "My position has not changed," he says. "Once we start legalizing the people here, to me that's amnesty."

Even King says there's probably support in Congress for an immigration bill along the lines of last year's effort. "If there were a vote tomorrow, it would pass," he says. But he thinks that Democrats want assurances from the White House that enough Republicans would support legislation that it would pass, so Democrats can call it a bipartisan effort. "The White House will have to do this on their own," he says.

In advance of this year's immigration legislation, BusinessWeek talked to experts in academia, business, and beyond about the coming battle. The idea was not to build support for a particular agenda or political stance.

Rather, the goal was to press beyond the partisan politics and grandstanding to collect fresh ideas from outside the Beltway on the hotly contested topic. Here are a few of the more intriguing thoughts and concerns on the eve of the debate.

Singular Economic Impact: A Myth

Most people talk about the economic impact of immigration as if there were only one kind, whether it's good or bad. Paul Samuelson, the Nobel Prize-winning economist from the Massachusetts Institute of Technology, says that's a big mistake, one that can lead to misguided public policy.

One important distinction, Samuelson says, is that wealthier Americans tend to benefit from the current wave of immigration while poorer Americans tend to suffer. A farmer in California may benefit from the inexpensive labor of illegal immigrants, while a construction worker in Texas sees fewer jobs and lower pay.

A well-off suburban family may get lower-priced house cleaning or lawn care, while an engineering student has fewer companies offering positions. "There are obviously great advantages to the winners socioeconomically to have immigrants doing work cheaply," says Samuelson.

This isn't necessarily an argument against immigration; rather, it makes the point that immigration policies need to differentiate between the people who benefit and the people who suffer.

Don't Overlook the Highly Skilled

Most of the attention in the immigration debate has been focused on the low-skill workers who enter the country illegally. In contrast, the programs for high-skill workers are getting relatively little attention. There are, however, issues that experts say need to be addressed with the policies for both temporary and permanent high-skill workers.

One example is the H-1B program, which are temporary visas allocated to people with specialized skills. Frustration with the program has been building in recent years because there's a cap of 65,000 visas (with some exceptions). This is down from 195,000 a few years ago, and U.S. companies haven't been able to hire as many foreign workers as they would like.

The tech industry wants to boost that number, and President Bush has said he fully supports an increase. "We hit the cap in May almost two months after the applications opened," says Oracle's Hoffman, who is also a spokesman for Compete America, a group that advocates for more high-tech worker visas. Compete America's other members include Intel, Motorola, Texas Instruments, and Hewlett-Packard.

But very little attention has been given to the criteria for H-1B visas. While the program was set up to help tech companies and others hire the workers they need, it appears that many of the visas are not being used to that end. The most active applicants for the visas are outsourcing companies, particularly those based in India, including Infosys Technologies and Wipro.

Critics say the outsourcing firms may be using the H-1B program to facilitate the outsourcing of U.S. jobs to other countries.

In addition, there have been reports that some companies pay H-1B workers lower wages than their American counterparts. This is prohibited under the program's rules, but companies that participate are rarely, if ever, audited. "If you had no chance of being audited by the IRS, how honest would you be on your taxes?" says Ron Hira, a research associate at the Economic Policy Institute and author of Outsourcing America. "I think you can devise policies to address this issue."

It's not just the temporary work visas for high-skill employees. Those seeking green cards often have to wait years while they're required to stay with the same employer in the same job.

On Feb. 25, Microsoft Chairman Bill Gates wrote an editorial in The Washington Post on how to keep the U.S. competitive. A key point was making it easier for U.S. companies to retain highly skilled professionals from other countries. "These employees are vital to U.S. competitiveness, and we should welcome their contribution to U.S. economic growth," Gates wrote.

Do We Need Comprehensive Reform?

Throughout Washington, politicians and their staffs are focused on comprehensive immigration reform, a push to address all the issues at once. One major reason is a concern that if one group gets the changes it wants, that group may stop pushing for reform elsewhere.

But this may end up being a strategic mistake. Most of the political tension is over what to do about illegal immigration and the undocumented workers in this country. By comparison, the debate over highly skilled workers is downright tame.

Robert Whitehill, chairman of the immigration group at the Pittsburgh law firm Fox Rothschild, argues that it probably would be easier to split the reforms in two. Whitehall suggests it makes sense to address the high-skill workers first, where the reforms are relatively simple.

"Why not go after the low-hanging fruit?" he says. "I think they should." He argues that the cap for H-1B visas should be raised substantially, and that foreign nationals who get masters or doctorate degrees in the U.S. in certain specialties, such as engineering, should be automatically granted residency.

"I think it would be in the best interests of the country for these boys and girls to stay," he says. He also says it's critical to speed up the process for temporary and permanent workers, so they don't wait years for their approvals.

Forget the Wall

Everyone likes to talk about the wall between the U.S. and Mexico. Anti-immigration politicians love to show how tough they're getting on illegals. Pro-immigrant forces use it to prove they take concerns over illegal immigration seriously.

But what does all the talk about the wall accomplish? Nothing, argues Tamar Jacoby, a senior fellow at the Manhattan Institute, along with plenty of others outside of politics.

Why? It is expensive and it doesn't work. The wall with Mexico can cost between $1 million and $10 million a mile, and it would cost billions to cover a reasonable chunk of the border. And yet immigrants from Mexico and other parts of Latin America continue to slip through. "People are going to get here as long as they have economic incentives to come," says Jacoby. "The only real way to get control is to recognize the reality of our economic needs for labor."

Jacoby is in favor of letting many more workers into the country to help boost economic growth. But you don't have to share her political stance to share her disdain for the wall. It is, she argues, a symbol that's become a distraction.

Politicians argue about the wall instead of addressing the tough questions, such as how to meet America's economic needs for more workers or how to stop the flow of illegal immigrants who enter on tourist visas. "It's like Prohibition or Victorian sex," Jacoby says. "If you pretend it doesn't exist, you can't control it."

Put a Hold on the Politics

In Washington, pundits say immigration reform has to get through Congress before the end of 2007 to have any chance of passing. That's because the Presidential campaign of 2008 will kick into high gear after that, curbing the chances of the politicians involved agreeing to any legislation that could alienate potential voters.

Trouble is, the 2008 campaign is already heating up. The camps of Senators Hillary Clinton (D-N.Y.) and Barack Obama (D-Ill.) have already tussled, and so many politicians from both parties have declared their interest in the nomination that the bare-knuckle competition may begin much earlier than anticipated.

That would be a shame, say those pushing for reform. They hope the presidential candidates and other politicians will put off the politics long enough to make a real push for new legislation. "We want to make sure that our immigration laws are consistent with our economic needs," says Oracle's Hoffman.

Lower the Volume

One fresh idea has been around for a while, but it seems to keep getting lost in the heated debate. Advocates on both sides say they want to lower the debate's volume, so they have a genuine chance to debate the issues and perhaps reach a resolution.

That was a point Bush raised last May when he gave a prime-time address on immigration. "America needs to conduct this debate on immigration in a reasoned and respectful tone," he said at the time.

"Feelings run deep on this issue -- and as we work it out, all of us need to keep some things in mind. We cannot build a unified country by inciting people to anger, or playing on anyone's fears, or exploiting the issue of immigration for political gain. We must always remember that real lives will be affected by our debates and decisions, and that every human being has dignity and value no matter what their citizenship papers say."

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Peter Elstrom, BusinessWeek

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