Florida State Taxs Used to Ship Jobs to India
Florida State Taxs Used to Ship Jobs to India
Date: Saturday, August 23, 2003 1:41 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Florida's First Data collected $300,500 in taxpayer-funded economic
incentives from Coral Springs in 1996 and 1998 by promising to create
450 jobs at its new call center and to relocate offices from Sunrise.
State and county tax refunds totaled $2.6 million. Now they are taking
the money and running off to India.
You would think that under the circumstances the mayor of Coral
Springs, John Sommerer, would be really steamed that Florida taxpayers
were swindled. That's not the case however, because he stated that
First Data is in complete compliance with the economic incentive
agreement.
This statement by the mayor is an all time classic:
"There is no requirement in the incentive package
that jobs are for American citizens," said the mayor.
"The requirement was to create and retain jobs."
In other words, if the jobs are created in India with Floridian's tax
bucks, that's A-OK with the mayor.
http://www.sun-sentinel.com/news/local/southflorida/sfl-sbvisa10aug10,1,648767.story?coll=sfla-home-headlines
Visa holders replace some U.S. workers
By Joan Fleischer Tamen
Business Writer
August 10, 2003
Just after 11 a.m. with the mercury already at 90, Phil Marraffini dips
his roller in a tray of white paint and begins work on his neighbor's
entryway ceiling.
"This wasn't the next career move that I had planned," says Marraffini,
47, wiping his brow and swallowing Gatorade.
The senior systems analyst is doing odd jobs in his neighborhood 10
months after he and colleagues at First Data Merchant Services Corp. in
Coral Springs were replaced by contract workers from India.
"What burns me is that I didn't lose my job because I wasn't doing it
well; I didn't lose my job because the company was losing money," says
Marraffini. "They got rid of me because they could put a guy in my seat
who was less experienced and a whole lot cheaper.
"The company says this is an alternative to having jobs go offshore,"
he adds. "But to me, it looks the same."
More and more American technology workers are blaming lax government
oversight for letting their jobs go overseas or to foreign workers
entering the United States under special work visas such as H1-B for
specialized skills, or more recently the L-1, intended for intracompany
transfers.
The Institute of Electrical and Electronics Engineers says the foreign
workers are paid considerably less and are jeopardizing U.S. leadership
in technological innovation.
The professional group says regulators have failed for years to enforce
federal law that prohibits H1-B visa holders from displacing American
workers, and now are letting companies flood the job market with
thousands of foreigners brought in under L-1 visas who are then
"outsourced" or leased to employers in the United States.
"There has been rampant abuse of the H1-B and L-1 visas," says James
Leonard, president of the 230,000-member group. He warns of possible
"irreparable damage" to hundreds of thousands of U.S. engineers and
technology workers -- and to the country's national and economic
security.
Even in a troubled U.S. job market that has lost some 2 million jobs in
the past two years, the number of L-1 visa holders has risen to 325,000
temporary workers, who are allowed to stay up to seven years.
technology ties to globalization
Multinational companies such as Siemens AG, the German communications
giant which has the U.S. headquarters of its Information Communications
Networks (ICN) division in Boca Raton, counter that they rely on Indian
outsourcing companies to bring in new technologies at lower costs.
"It's globalization," says Siemens spokeswoman Paula Davis.
Labor economists and workplace experts say two significant structural
changes have become intertwined in this country. One is the
technological revolution; the other is the global economy.
E-mail messages travel around the world in seconds. Companies can have
a global workforce of computer programmers, accountants and architects
working around the clock in different time zones.
Technology is "making inevitable the globalization of skilled jobs,"
says John Challenger, chief executive of outplacement firm Challenger,
Gray & Christmas. "To try and stop the globalization of the workforce
is futile. It is a natural force."
But the mounting controversy surrounding the issue has led a U.S.
Senate Judiciary Subcommittee to call for hearings next month on
potential fraud in the foreign worker visa programs.
And a handful of congressmen have introduced legislation to tighten the
rules and step up enforcement.
"Certainly the intent of Congress in creating H1-B and L-1 visas was
not to replace American workers," says one of those congressman,
Republican John Mica (R-FL).
Mica says he was moved by complaints from Siemens employees who were
replaced during a round of layoffs last summer by contract workers
brought in by Tata Consultancy Services, India's largest software
company.
Michael Emmons, a programmer who lives in the Orlando suburb of
Longwood, says he was among more than a dozen Siemens workers told they
were being let go to cut costs.
"But then they told us, `Before we give you a severance check, we want
you to train your replacements."
subhed
A South Florida Sun-Sentinel review of U.S. Department of Labor
applications shows that at a time of rising unemployment among
technology workers here and nationwide, employers in South Florida and
elsewhere in the United States were telling government regulators they
could not find qualified job applicants and needed to bring in skilled
foreign workers on H1-B visas.
During the past three years, the Bureau of Citizenship and Immigration
Services has processed some 856,000 H-1B visa applications (407,500 new
petitions and 448,500 renewals).
At the same time, the U.S. unemployment rate shot up from 4 percent to
6 percent -- to 8.2 million unemployed workers.
Especially hard-hit: the technology and telecom industries. More than
450,000 technical workers have been jobless for six months or more, and
account for one of every three long-term unemployed, according to the
Bureau of Labor Statistics.
In South Florida, in the past year computer-related professionals such
as systems managers, programmers and software engineers became the
largest group of unemployed white-collar workers at state employment
agencies.
An H1-B visa petition requires employers to submit a "Labor Condition
Application" to the U.S. Department of Labor attesting that they could
not find a qualified U.S. worker for the available job and that they
will pay prevailing market wages.
But no one in the federal government verifies the accuracy of those
applications.
A labor department spokesman said that by statute, they are limited to
look only for omission or errors.
In other words, the applications are just scanned to make sure boxes
are checked off and all lines filled out.
A review of H1-B applications from South Florida during the past two
years shows that some petitions were to fill specialized job functions,
such as an RF (radio frequency) design engineer at Nortel Networks in
Sunrise last January (salary, $73,930) or a foreign tax specialist at
KPMG Consulting's office in Fort Lauderdale (salary, $43,000).
But requests for most H1-B visas to fill South Florida jobs weren't
from Florida-based companies. They were from large computer consultant
companies that do software development in India and also contract out
technology workers.
subhed
For example, government records show that Cognizant Technologies
Solutions Corp., headquartered in Teaneck, N.J., sought visa
applications over two years beginning in June 2001 for more than 500
computer-related jobs in Coral Springs, Miramar, Orlando and Miami.
Nearly 279 of the jobs were for systems analysts (average salary,
$48,500), and a work assignment for three years, with possible
extensions. Remaining positions were for assistant project managers and
senior systems analysts (average salary, $58,900).
Cognizant ranks among the top five suppliers of Indian-based software
development and maintenance services in the United States, along with
Indian companies such as Infosys Technologies, Wipro Technologies and
Tata Consultancy Services, all of which have U.S. headquarters and
stock that trades on U.S. exchanges.
Larry Gordon, vice president of corporate marketing for Cognizant,
questioned the government data, saying the number of applications
seemed high. He confirmed that the company outsources IT workers to
employers in South Florida, but citing client confidentialitydeclined
to name the local companies.
He did, however, confirm that First Data Merchant Services Corp. in
Coral Springs is a client.
That's where Marraffini of Coral Springs and James Victor of Margate
used to work.
Marraffini helped train the Indian workers who replaced him. "They're
young, single guys and a few women from India willing to work 12 hours
a day at wages far below what we were making," he said.
Marraffini, who first joined the company in May 1994, was making an
annual six-figure salary at $53 an hour, when he was let go.
First Data collected $300,500 in taxpayer-funded economic incentives
from Coral Springs in 1996 and 1998 by promising to create 450 jobs at
its new call center and to relocate offices from Sunrise. State and
county tax refunds totaled $2.6 million.
Coral Springs Mayor John Sommerer said city officials recently looked
into complaints from laid-off First Data employees that the company was
not complying with the economic incentive agreement.
"There is no requirement in the incentive package that jobs are for
American citizens," said the mayor. "The requirement was to create and
retain jobs."
The Coral Springs business is a subsidiary of First Data Corp., the
largest processor of bankcard transactions, with more than 325 million
credit, debit and other accounts. The company posted $7.6 billion in
revenue last year.
Jeff Fowler, a spokesman for First Data said some 1,100 employees are
working in Coral Springs, and guessed that less than 1 percent or 10 to
11 jobs were affected during a reorganization this July that may have
included outsourcing some jobs. He also guessed that the company let go
a similar number of employees a year earlier.
"Not to minimize anyone's job loss, but that is a very small part of
our workforce," he said.
subhed
Marraffini, his wife, Carol, and their three children, ages 15, 12 and
8, live just minutes away from First Data in the Cypress Run
neighborhood of Coral Springs.
When they moved from New York nine years ago, the couple thought they
had found the American dream: a spacious suburban home, good schools
and a job for Marraffini that let Carol stay home with the kids.
Now, Carol works full-time as a nurse at Broward General Hospital in
Fort Lauderdale and Marrafini is juggling odd jobs around the
neighborhood so he can be the stay-at-home parent.
"We're living on half of what the family income used to be," he said.
"I don't see much in my future anymore."
He's doing better than his former co-worker.
James Victor, 51, lost his home in Margate after exhausting
unemployment benefits, depleting his retirement savings and selling off
his prized collection of DVDs and electronics at a yard sale.
He was out of work for more than a year after being laid off from his
$52,000-a-year job as a senior programmer at First Data Merchant on
April 13, 2002.
After being evicted, he moved into a friend's spare bedroom. This
spring he finally found a job doing phone surveys for $8-an hour for a
local company called BeSatisfied. His computer skills impressed his new
boss, so recently he was given a new job building the business' Web
site. He earns a little more than $500 a week.
"I'm doing entry-level computer work at this stage in my career," he
says. "I blame Congress for allowing this visa fraud to do this to our
technology industry."
At Broward County WorkForce One, the state training and employment
agency, "we're desperately trying to get the word out" about technology
workers anxious for jobs, says Mason Jackson, executive director of
Broward County WorkForce One, the state's training and employment
agency.
A recent tally by the agency showed 11 available computer-related jobs
and 2,038 unemployed IT applicants.subhed
The recent acceleration of job losses can be traced to the late 1990s
when shortages of qualified U.S.-based workers led companies to turn
overseas to countries such as India and Ireland to fix Year 2000
glitches and write code for booming Internet companies.
In 1998 and again in 2000, Congress increased the number of foreign
workers authorized to work in the United States on H-1B visas. The cap
reached a high of 195,000, but reverts to 65,000 on Oct. 1.
While the use of H1-B visas is on decline, many companies have switched
over to the L-1 that is much less restrictive, less costly -- and much
less public.
"The L-1 visa is really the dream visa," says Rebekah Poston,
immigration attorney with Steel Hector & Davis in Miami.
There is no annual cap on visas granted. And unlike the H-1B, the L-1
does not require a $1,000 fee earmarked for technology training of U.S.
workers. By far, the greatest advantage is no labor certification
process agreeing to pay prevailing wages.
The L-1 is supposed to allow companies to transfer workers from
overseas offices to the United States. The company can continue to pay
workers their home country wage plus cover their living expenses while
in the United States.
So an Indian worker who is then "outsourced" to a U.S. employer could
be receiving as little as one-sixth to one-third the hourly wage of the
average American programmer, who makes about $60 per hour in wages and
benefits.
The number of L-1 visas granted rose nearly 40 percent in 2002 from
1999. Through June 1 of this year, some 36,901 L-1 visas have already
been issued.
Both the L-1 and H-1B are dual-intent visas, meaning they can be
adjusted to permanent residency.
In addition to Rep. Mica's legislation that would curtail companies
from contracting L-1 workers to other employers, Rep. Rosa Delauro, a
Democrat from Connecticut introduced a bill that would place an annual
cap of 35,000 L-1 visas.
Delauro's bill also would prohibit companies that have laid off
American workers in the prior six months from using L-1 workers,
require prevailing wages and that L-1 workers must have been employed
by the petitioning firm for at least three years.
subhed
But the National Association of Software and Service Companies, or
Nasscom, which represents the Indian software industry in Washington,
D.C., is already lobbying against the tighter restrictions.
"Any kind of rule that your employee can't work on the premises of a
client will have an adverse impact on technology, and other
industries," said Sunil Mehta, vice president of Nasscom. "It should be
left to market forces."
He goes on to call Florida Congressman Mica's legislation "draconian."
Whatever Congress does regarding visas, little can stem corporate
America from seeking advantages by going overseas.
United Technologies Corp., parent company of defense contractor Pratt &
Whitney in northwest Palm Beach County, is profiled in the June issue
of CIO Magazine as an "Indian outsourcing success story." The company
said it has already saved $50 million and attributes $30 million annual
savings to it.
"You can get crackerjack Java programmers in India right out of college
for $5,000 a year versus $60,000 here," says Stephanie Moore, vice
president for outsourcing at Forrester Research.
Estimates are that anywhere from one-half to two-thirds of all Fortune
500 companies are already outsourcing to India, and that's expected to
more than double this year, according to the research group.
Joseph Riano says he got out of the technology field "before it was too
late."
Last summer, the 48-year-old from Boca Raton, a former senior director
of software development for call-center operator Precision Response,
gave up waiting for a technology rebound. He's now a mortgage broker
and earns about one-third of his former six-figure salary.
Workplace experts believe the American worker will adapt to the new
realities of the global marketplace.
But that's a hard sell to displaced technology workers like Marraffini.
"First manufacturing went overseas, and now that IT is going overseas,
along with engineering, accounting, and almost everything else the
middle-class does, what is the next big thing?" he asks. "My children
will be part of the first generation in recent American history to not
have more opportunity than my generation had."
Joan Fleischer Tamen can be reached at jtamen@sun-sentinel.com or
305-810-5030.
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