H-1B Cap Would Make US Workers 'Privileged Elite', Greenspan Says

Former Federal Reserve Chairman tells Senate subcommittee that H-1B quota too small, would protect workers from global competition.

Former Federal Reserve chairman Alan Greenspan Thursday offered a spirited defense of the controversial H-1B program, telling a U.S. Senate subcommittee that the visa quota is "far too small to meet the need," and that it protects U.S. workers from global competition, creating a "privileged elite."

Greenspan, testifying on immigration reform before the Subcommittee on Immigration, Border Security and Citizenship, said more skilled immigration was needed "as the economy copes with the forthcoming retirement wave of skilled Baby Boomers."

This hearing was called by subcommittee chairman, U.S. Sen. Chuck Schumer (D-NY), to encourage the U.S. senate to take up immigration, despite the economy. Greenspan was the marquee witness.

Greenspan provided a list of reasons for increasing skilled competition. One in particular, would help fix a problem—the housing bubble—that grew on his watch as Fed chair, a position he held from 1987 to 2006.

Skilled workers from overseas "will, out of necessity, move into vacant housing units; the current glut of which is depressing prices of American homes," said Greenspan. In 2005 Greenspan characterized rising housing prices as "froth."

But what will likely be the most controversial aspect of Greenspan argument will be his call for more wage competition.. He said that increasing the numbers of skilled workers from "would address the increasing concentration of income in this country," he said.

"Greatly expanding our quotas for the highly skilled, would lower wage premiums over lesser skilled," said Greenspan. "Skilled shortages in America exist because we are shielding our skilled labor force from world competition,' he said.

Greenspan said Visa quotas, "have been substituted for the wage pricing mechanism. In the process we have created a privilege elite whose incomes are being supported at non-competitively high levels by immigration quotas on skilled professionals," he said. "Eliminating such restrictions would reduce at least some of the income inequality."

The views cited by Greenspan are in sharp dispute. H-1B opponent say there is no skills shortages, and the H-1B visa has been used to reduce wages, especially by replacing older workers with younger workers from overseas. One recent study found that H-1B workers are depressing wages for some occupations, including programmers.

Greenspan cited failures in the U.S. educational system, in part, for the need to bring in more foreign workers. He cited the high percentages of foreign graduates of advance degree programs.

Sen. Charles Schumer (D-NY), who chairs the Subcommittee on Immigration, Border Security and Citizenship, cited the role in of immigration in the U.S. economic development. "Because of immigration, Google, Yahoo, Intel and eBay, are American success stories," he said. "In New York, one quarter of all business of immigrant owned."

Similarly, Sen. John Cornyn, (R-Texas), said the U.S. should "offer more visas to highly skilled students who have studied at our colleges and universities and when then can't work here they go back to their native land and they compete with us and create jobs there rather than here, in the United States."

Sens. Charles Grassley (R-Iowa) and Dick Durbin (D-Ill), recently introduced legislation that would restrict the use of the H-1B visas. The measure is particularly aimed at offshore outsourcing companies, and would require them to increase the size of their U.S. workforces under a rule that would prohibit them with having more than 50% of their workforce from using H-1B or L-1 visas, which are used for company transfers. They argue that the visa is displacing workers.

This story, "H-1B Cap Would Make US Workers 'Privileged Elite', Greenspan Says" was originally published by Computerworld.

Copyright © 2009 IDG Communications, Inc.

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