To: H-1B/L-1/offshoring e-newsletter 157

As many of you know, when Microsoft announced it would be laying off
some of its workers, Sen. Grassley sent the firm an open letter, asking
them to lay off H-1Bs before Americans.  Microsoft has now replied, in
the letter enclosed below.

Nothing surprising, of course, the usual "We don't hire many H-1Bs, but
the few that we do hire are crucial to our success, etc."  That includes
the standard line, "We recruit largely from U.S. university campuses, and
since not enough Americans study computer science, we must hire the
foreign students."  The industry lobbyists long ago decided that the
American public would accept hiring a foreign worker as long as he/she
has a degree from a U.S. university.  I've never understood the logic
behind that, but in any event, here it is in the current Microsoft
letter:

#  ...as one recent study found, in 2005 temporary residents earned more
#  than 40 percent of the engineering and computer science degrees at U.S.
#  higher education institutions.  For doctoral degrees, that number was
#  even higher, as temporary residents accounted for 59 percent of the
#  degrees awarded in these fields that year.

That 40 percent figure is blatantly false.  You can get exact figures
in the Digest of Educational Statistics, published by the U.S. Dept. of
Education, http://nces.ed.gov/programs/digest/d07/tables_3.asp  Select
Degrees, then look at the tables whose titles include the phrase
"degrees conferred by degree-granting institutions, by sex,
race/ethnicity, and major field of study."

The percentages of foreign students are in the single-digit range for
bachelor's degrees, in the 30s for master's, and around the high 50s for
PhDs.

For example, here are the figures for 2005-2006 in Computer and
Information Sciences (Tables 275, 278, 281):

level           total degrees     foreign student degrees      % foreign

bachelor's             47,480                       3,093             7%
master's               17,055                       6,649            39%
PhD                     1,416                         865            61%

total                  65,951                      10,607            16%

So the percentage is 16%, not the 40% Microsoft claims.  The engineering
figures are similar.

In the CS area, there is also data available at www.cra.org, in the
Taulbee Reports, issued every year in May.  These data are for the
"better" universities, where the foreign student percentages are
somewhat lower.

Now, why did Microsoft send Grassley wrong numbers?  Here are some
possibilities:

1.  Microsoft misread the study it's quoting.

2.  The author of that study, likely Stuart Anderson, got his data
merely by casually asking a couple of his friends who gave him an
off-the-cuff guess.  Anderson has often made such statements in his H-1B
studies ("People in the industry tell me..."). 

3.  Microsoft is being deliberately deceptive, which it demonstrably has
been in the past, such as:

*  At the same time Microsoft claimed they need H-1B to keep jobs in the
   U.S., and only resort to offshoring if they can't find workers here,
   they said in an internal presentation made to managers, "Pick
   something to move offshore today."  See
   http://heather.cs.ucdavis.edu/Archive/MicrosoftClaimBelied.txt

*  At the same time Microsoft claimed they couldn't find software developers
   and thus needed H-1Bs, they asked their contractors to take a week's
   furlough to save money.  See
   http://heather.cs.ucdavis.edu/Archive/MicrosoftClaimBeliedMore.txt

*  Microsoft admitted that most of the developers it hires are young.
   As I've often mentioned, it is not generally understood, even by
   critics of the H-1B program, that H-1B is largely used as a way to
   avoid hiring the older (age 35 or 40) American workers.  See
   http://heather.cs.ucdavis.edu/Archive/MicrosoftLetsTruthSlipOut.txt

Concerning the high percentage of foreign students at the PhD level, I
must once again point out that this was deliberately planned by the
National Science Foundation with the explicit goal of keeping PhD
salaries down.  The NSF was advocating bringing in large numbers of
foreign students in order to swell the job market and thus restrain
salary growth.  The NSF recognized that the effect the greatly slowed
salary growth would be to drive away the domestic students, and that's
exactly what happened.  See quotes at
http://heather.cs.ucdavis.edu/Archive/ForeignStudentGreenCards.txt

Back on the age issue, when I mentioned the other day that the rampant
age discrimination in this field is fueled largely by the H-1B program,
which provides a large pool of young workers, a reporter that a reader
sent my posting to questioned it.  The reporter pointed out that he had
written about age discrimination in tech in the 1980s, before the advent
of H-1B and the Indian body shops.  But H-1B merely replaced the earlier
work visa, H-1, which was very similar and which was highly popular
during the 1980s.  As to the body shops, once again I must point out
that most H-1Bs are NOT employed by body shops, and that the abuse of
the program comes at the hands of all the big mainstream firms too, not
just the body shops.

Norm

http://microsoftontheissues.com/cs/blogs/mscorp/archive/2009/03/03/microsoft-responds-to-senator-grassley.aspx

Microsoft On The Issues

Economic Hard Times and the Global Technology Workforce

   Microsoft is not sheltered from the unprecedented crisis battering the
   global economy.  In response to challenges we are confronting in
   markets around the world, we announced last month that we would cut
   jobs and reduce our overall employment level for the first time.  This
   was a difficult decision, and it was not one we made lightly.  But the
   long-term health of the company - like the financial fate of the
   country as a whole - requires prompt and decisive action to adapt to
   the changed economic reality. On January 22, Sen. Charles Grassley
   wrote to us asking for more information, particularly about how our
   plans would affect U.S. workers and non-U.S. citizens working for
   Microsoft.  Here is the text of our response:

March 3, 2009

The Honorable Charles E. Grassley
United States Senator
135 Hart Senate Office Building
Washington, D.C. 20510-1501

Dear Senator Grassley,

Thank you for your letter of January 22, 2009. Steve Ballmer asked
me to respond on the company's behalf.

Your letter expressed concern about Microsoft's recently announced
lay-offs and asked us to provide you with information about them.  I
have included that information below, but first I'd like to provide
a bit of context.

Since the company's founding in 1975, Microsoft's consistent growth
has enabled us to increase employment every year.  In the last three
fiscal years, for example, our employment in the United States
increased by 40 percent.  Today we have more than 90,000 employees
worldwide and over half of them are in the United States.  The vast
majority of these U.S. jobs are filled by American citizens.

Because of our partner-based business model, our impact on
employment is even larger than these numbers indicate.  For every
dollar that Microsoft earns in the United States, our business
partners earn $6.  This creates many additional jobs.  One recent
study found that 4.2 million people in the United States are working
in jobs that are the result of Microsoft's business model (IDC IT
Economic Impact and Microsoft Country Footprint: United States,
October 2007.  The figure includes individuals who work at IT
companies and IT professionals who create, sell, or distribute
products that run on Microsoft platforms).

This year, in response to the economic crisis, Microsoft is reducing
its employment level for the first time.  This was a difficult
decision and it was not one we made lightly.  We are deeply
committed to our employees and we place the highest value on the
contributions they make to the company's success.  We understand the
impact that each layoff can have on an employee and his or her
family.  Nonetheless, we concluded that the long-term
competitiveness of the company - like the country as a whole -
requires prompt and decisive action to adapt to the changed economic
reality.

We announced in January that the company would eliminate up to 5,000
jobs over 18 months.  It's important to note that we also expect to
create 2,000 to 3,000 new jobs during this same timeframe, as we
continue to invest in innovation.  As a result, the total net impact
on our employment will be a decline of about 2,000 to 3,000 jobs,
not 5,000.

Microsoft employees whose positions are eliminated may apply for the
new jobs that are being created.  In addition, like any employer, we
will continue to see some ongoing voluntary attrition as employees
retire, accept jobs elsewhere, or for other reasons end their
employment. Often, these positions are filled by current employees,
but the company will also need to continue to fill these vacancies
by hiring new employees, including both U.S. workers and a smaller
number of visa holders.

You asked about the kinds of jobs that will be eliminated and how
many employees will be affected in each area.

Because the job reduction decisions will be made over 18 months, we
do not yet know all of the specific jobs that will be eliminated.
We do know, however, that the 5,000 positions that will be
eliminated will include jobs in marketing, sales, finance, Legal and
Corporate Affairs, HR, R&D, and IT.  In addition to the 5,000
figure, our workforce in support, consulting, operations, billing,
and manufacturing will continue to change in direct response to
customer needs.

We also know that the 5,000 figure likely will include positions in
a large number of countries.  Given the distribution of our jobs,
however, it is likely that the Puget Sound region in Washington
State will see the largest number of job eliminations.  Of the
roughly 1,400 positions that were eliminated in January, which are
part of the 5,000 total, over 800 were in Washington State.

As we add new positions to support key investments, we will
prioritize R&D investments that promote long-term innovation.  That
is why we plan to invest over $9 billion in research and development
this year, one of the highest such figures in the world.  Over
two-thirds of this total will be spent in the United States.

You also asked in your letter how we decide which jobs to eliminate,
whether employees with H-1B or other work visas are affected, and
how many of the jobs being eliminated are held by Americans.

Because these decisions will be made over 18 months, it's too early
to know the precise answers.  We do know, however, that the job
reductions will impact non-Americans who hold jobs outside the
United States, as well as both visa holders and U.S. workers inside
the United States.  The majority of Microsoft's workforce is made up
of U.S. workers, and therefore the majority of jobs eliminated in
January were held by U.S. workers.  Workers on H-1B visas and other
temporary work visas make up only a small percentage of our overall
workforce, but they were also among the employees impacted by the
reductions announced in January.  Employees outside the United
States were also impacted.

As I'm sure you'd expect, we take care to make all employment
decisions - including the termination of employment for any
individual - in a manner that complies with Title VII of the Civil
Rights Act of 1964.  In addition, we do not base compensation
decisions in the U.S. on an employee's citizenship.

Finally, you asked about Microsoft's plans for retaining H-1B or
other work visa program workers after the job eliminations.

H1-B employees have always accounted for less than 15 percent of
Microsoft's U.S. workforce, the level that is used in immigration
law to determine whether a company is "H-1B dependent."
Nonetheless, the ability to tap into the world's best minds has long
been essential to our success.  Although they are a small percentage
of our workforce, H-1B workers have long made crucial contributions
to Microsoft's innovation successes and to our ability to help
create jobs in this country.  We are confident this will continue to
be true in the future.

We focus our recruiting for core technology jobs at U.S.
universities, which continue to be among the best in the world for
computer science and engineering graduates.  However, as one recent
study found, in 2005 temporary residents earned more than 40 percent
of the engineering and computer science degrees at U.S. higher
education institutions.  For doctoral degrees, that number was even
higher, as temporary residents accounted for 59 percent of the
degrees awarded in these fields that year.

The substantial majority of H-1B petitions filed by Microsoft are
for core technology positions, and technology and engineering
positions account for about 90 percent of Microsoft's H-1B
workforce.  Many of these H-1B employees have been seeking permanent
resident status for many years and would no longer be dependent on
their H-1B visas but for multi-year delays in the green card
process.

With these factors taken together, we do not expect to see a
significant change in the proportion of H-1B employees in our
workforce following the job reductions.

I want to underscore that we are rigorous in our compliance with the
requirements of the H-1B program.  We are familiar with published
reports about abuse by some employers in the H-1B visa category.  We
believe that the H-1B fraud issue is important and needs to be
addressed.  We recognize that every H-1B employer has an obligation
to ensure that the program's rules are followed.  We support H-1B
reform efforts to ensure that users of the program follow both the
spirit and the letter of the law.

Finally, I want to convey our commitment to help broaden
opportunities for all Americans.  The country's long-term
competitiveness requires that the United States produce more
university graduates in science, technology, engineering, and math.
While government will take the lead in strengthening America's
public education system, the private sector should support these
efforts.

At Microsoft, we have a number of education-focused public
initiatives.  Through our Partners in Learning program, Microsoft
works closely with governments and non-governmental organizations
across the country to strengthen information technology training by
providing a wide variety of educational resources for teachers and
schools.  These include training programs and software tools that
have already reached over 3 million students and roughly 200,000
teachers.  Similarly, we have founded a public-private initiative in
Washington State to work with educators and businesses to develop
new approaches to improve middle-school math education.  And
Microsoft Research is deeply involved with important research
efforts at universities across the country.

In addition, we recently announced a new program called Elevate
America, which will provide technology training to 2 million people
nationwide during the next three years, working closely with state
and local governments.

Ultimately, as a company and as a country we need to combine
short-term adjustments to the economic crisis with long-term efforts
to strengthen our economic competitiveness.  We recognize the impact
that our decisions have on employees who are affected.  We strive to
make thoughtful employment decisions and then assist the individuals
who are impacted by them.  We also strive to take a long-term
approach that will enable Microsoft to remain a leader in technology
innovation and an important contributor to the country's
competitiveness now and in the future.

We hope that this information is helpful to you.  We look forward to
working with you and your staff if we can be of assistance in
addressing these important issues.

Sincerely,

Bradford L. Smith
General Counsel