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October 2012, Volume 19, Number 4

Labor, H-1B

US employers added more than 114,000 jobs in September 2012, and the unemployment rate fell to 7.8 percent. Job growth averaged 146,000 a month in the first nine months of 2012, and total employment is again at the level of January 2009. President Obama noted that almost five million of the nine-million private sector jobs lost during the recession have returned.

There were 243 million US residents 16 and older in August 2012, and 154 million or 64 percent were in the labor force. If the labor force participation rate had been 67 percent, as between 1997 and 2002, the labor force would have been nine million larger, that is, 163 million. With workers dropping out of the labor force, the unemployment rate is lower than it otherwise would be.

Between June 2009 and June 2012, over 80 percent of the net 2.6 million jobs added in the US went to men. Reasons include the rebound in construction and manufacturing, sectors hard hit during the 2008-09 recession, the concentration of women in the public sector, which has been cutting jobs, and the fact that more men are entering what had been female occupations. For example, over half of the almost 15 million retail sales jobs in the US are filled by men.

Manufacturing employed a third of US workers and generated 28 percent of GDP in the 1950s. Today, manufacturing employs nine percent of workers and generates 12 percent of GDP.

The unemployment rate for Latinos peaked at 13.1 percent during the 2008-09 recession, while the rate for whites peaked at 9.3 percent.

There was a "Day of Action" July 24, 2012 to mark the need for an increase in the federal minimum wage, which has been $7.25 an hour since 2009. If the federal minimum wage were at its 1968 inflation-adjusted value, it would be $10.50 in 2012.

The proposed Fair Minimum Wage Act (HR 6211) would raise the federal minimum wage in three $0.85 steps to $9.80 over three years, after which it would rise with inflation. A full-time worker whose wage went from $7.25 to $9.80 an hour would have annual earnings rise from about $15,000 to $20,000. Almost 90 percent of those earning the current $7.25 minimum wage are 20 and older.

Many of the occupations adding the most jobs in recent years pay less than the average $45,230 earned by full-time workers in 2011. Personal care aides and food preparation and serving workers earned less than half of the average annual wage.

The federal government faces a so-called "fiscal cliff" on January 2, 2013, when the Bush tax cuts expire and federal spending is to be reduced. The total impact is expected to be $5 billion more in taxes and $3 billion less in federal spending.

If the tax hikes and spending cuts occur, most economists expect the US to fall into recession. The Bush tax cuts were extended temporarily, and the Budget Control Act approved in summer 2011 required automatic cuts if the so-called Super Committee failed to agree on a package of spending cuts and revenue increases to reduce the federal deficit over time.

Under the Worker Adjustment and Retraining Notification Act, federal contractors with at least 100 employees must warn them at least 60 days before anticipated layoffs, which would typically be before November 6, 2012 elections for early 2013 layoffs. DOL in August 2012 told federal contractors that they do not have to issue WARN notices to their employees, prompting protests from Republicans.

Rising trade or globalization reduces the prices of goods and services, but also puts downward pressure on US wages as US workers compete more directly with lower wage workers abroad. American workers displaced by freer trade often wind up worse off, losing health insurance and often forced to accept lower-wage jobs.

H-1B. Both major presidential candidates, Barack Obama and Mitt Romney, support expanding the H-1B program, which provides 65,000 visas a year to foreigners with Bachelor's degrees coming to the US to fill jobs that require such degrees. Another 20,000 are available for foreigners who earn MS and PhD degrees from US universities, plus an unlimited number of H-1B visas for universities and nonprofits.

Romney's platform says "Raise visa caps for highly skilled workers" and Obama also supports allowing more foreigners who earn advanced degrees in the US to obtain immigrant visas. Senator John Cronyn (R-TX) in June 2012 introduced a bill to add 55,000 immigrant visas for foreign students who earn graduate degrees from US universities in science, technology, engineering or mathematics (STEM). Cronyn would keep immigration at current levels by eliminating the diversity lottery visa program. The House rejected a version of Cronyn's plan in September 2012.

Over half of H-1B requests are in STEM fields, which employ about five percent of US workers.

The 65,000 H-1B cap was raised temporarily to 195,000, but reverted to 65,000 in FY04. Employers have been trying to raise the cap since then, but have been unwilling to agree to the provisions of a bill introduced by Senators Richard Durbin (D-IL) and Chuck Grassley (R-IA) that would tie an increase in H-1B visas to a requirement that employers not lay off US workers and then replace them with H-1B visa holders.

Infosys employee Jack B. Palmer sued after what he claimed was retaliation for complaining to his managers in October 2010 that Infosys was unlawfully using B-1 business visitor visas to bring Indian workers to the US. Infosys has about 15,000 US employees, mostly Indians. Palmer charged that Infosys paid the B-1 Indians low Indian-level salaries while Infosys charged the US firms where they worked the higher wages required for H-1B visa holders.

An Alabama judge in August 2012 dismissed Palmer's suit without ruling on whether Infosys violated US immigration laws. The judge decided that Alabama law did not support criminalizing Infoys' actions.

The Indian software association Nasscom in October 2012 complained that US consulates were making it harder for Indian multinationals to move workers from India to the US using L-1 visas. Indians employed by the firm in India at least one year can come to the US for up to five years with L-1A visas (senior managers) or L-1B visas (skilled workers with specialized knowledge). Multinationals can request individual L-1 visas or seek blanket petition status, which simplifies visa issuance for individual workers.

The Washington Post on July 7, 2012 explored the difficulties that new PhD scientists have getting jobs that use their skills. A 2009 NSF survey found that fewer than a sixth of those earning PhDs in biology and the life sciences find an academic job within five years of graduation. Another survey reported that less than 40 percent of newly graduated PhD chemists had jobs in chemistry in 2011.

Between 1998 and 2003, the budget of the National Institutes of Health doubled to $30├┐billion per year. More PhDs were trained, and the number of new PhDs in the medical and life sciences nearly doubled between 2003 and 2007. Many became "post-docs," working for less than $50,000 a year for up to a decade. By some estimates, there are 100,000 PhDs working as post-docs.