'Buy American' comes to TARP

By Moira Herbst for BusinessWeek It’s another attempt at requiring companies to “Buy American”, but in this case, not American iron or steel, but American workers. The US Senate voted on Feb. 6 to put stricter limits on banks and other recipients of taxpayer money through the Troubled Assets Relief Program, or TARP, that want to hire high-skilled workers from overseas under the H-1B visa program. The Senate approved the measure, introduced by Senators Charles Grassley (R-Iowa) and Bernie Sanders (Independent-Vermont), by voice vote as an amendment the economic stimulus package President Barack Obama is urging the Senate to pass. The vote came the same day that the government announced that that 598,000 US jobs were lost in January, the biggest one-month drop in 34 years. The unemployment rate reached a 16-year high of 7.6%. The amendment that passed isn’t as tough as the one Grassley proposed on Feb 5, which would have prohibited firms from hiring H-1Bs altogether. The modified amendment instead makes TARP recipients jump through extra hoops before they can hire those foreign workers. Specifically, it subjects recipients of TARP funds to the same rules so-called H-1B dependent employers must follow. (An H-1B dependent employer is one whose workers brought in with that visa comprise 15% or more of the employer's total workforce.) These rules include: 1. The employer can’t displace any similarly employed US worker with an H-1B hire within 90 days before or after applying for H-1B status or an extension of status. 2. The employer can’t place any H-1B worker at the worksite of another employer, meaning it can’t outsource a worker for a client, unless that employer first makes a “bona fide” inquiry as to whether the other employer has displaced or will displace a US worker within 90 days before or after the placement of the H-1B worker. 3. The employer has to take good-faith steps to recruit US workers for the job opening, at wages at least equal to those offered to the H-1B worker. The employer must offer the job to any US worker who applies and is equally or better qualified than the H-1B worker. “These are hardly onerous expectations,” notes Ron Hira, professor of public policy at the Rochester Institute of Technology and an expert on H-1B visas. Hira says the provision would affect about 1,000 jobs. The amendment falls short of preventing large banks from using H-1Bs brought into the US by outsourcing firms like India-based Infosys (INFY), Wipro (WIT), and Tata, which are among the top recipients of petitions for the H-1B visa program. “Most of the H-1B use, and abuse, happens through relationships banks have with outsourcing firms,” says Hira. “I don’t think [the amendment] restricts them from working w those firms.” In other words, a bank could still legally force a laid-off American employee to train a replacement worker who is on an H-1B visa. A related provision was passed in the US House on Jan. 21 as an amendment to a bill that passed to reform TARP. That measure, introduced by US Representative Sue Myrick (R-N Carolina), prohibits TARP recipients from outsourcing call-center work to foreign companies. The bill has not yet been taken up by the Senate. Rising unemployment is leading to more scrutiny of the H-1B visa program and its effects. On Feb 1 an Associated Press story said that the dozen banks now receiving the biggest TARP rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers over the past six years for positions such as senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. And in my story earlier this week, I wrote about the controversy surrounding Microsoft’s efforts to lift caps on the number of H-1B worker visas while it eliminates 5,000 jobs. 9 Feb 2009, 1435 hrs IST, BusinessWeek