DOC report released - sort of
DOC report released - sort of
Date: Wednesday, July 26, 2006 6:46 PM
<<<<< JOB DESTRUCTION NEWSLETTER No. 1527 -- 07/26/2006 >>>>>
As all of you that have received this newsletter know, the ITAA has been
our enemy #1 ever since H-1B came into existence. The infamous Harris "the
Shiller" Miller was president of the Information Technology Association of
America (ITAA) until he resigned his position and tried politics by running
for the Democratic Senatorial candidate of Virginia. Fortunately the
Shiller failed, but as these two Matloff newsletters illustrate, the
influence that the ITAA has within our government is pervasive.
Matloff's source described the ITAA moles in our government as a "revolving
door" but a better term would be "revolting shillism".
Matloff and I often cover different ground on offshoring and H-1B/L-1
issues, so I highly recommend you sign up for his newsletter in addition to
this one.
P.S. - Sorry about the lousy formatting but I didn't feel like correcting
for the line breaks. Your email client might chop the lines so that there
are some short ones.
+++++++++++++++++++++++++++++++++++++++++++++++++++
> -----Original Message-----
> From: Norm Matloff [mailto:matloff@cs.ucdavis.edu]
> Sent: Wednesday, July 26, 2006 4:27 PM
> To: Norm Matloff
> Subject: Re: administration finally allows DOC report to be released
In my posting I mentioned that former Undersecretary of Commerce Bond is
now President of the ITAA. It was pointed out to me today that the new
Undersecretary, Robert Cresanti, is former Vice President and General
Counsel for the ITAA. (See www.technology.gov/UnderSec.htm) As my
source pointed out, "Talk about a revolving door!")
This former ITAAer Cresanti's duties at DOC include, according to the
above Web page, "carrying forward President Bush's vision to grow the
economy through the American Competitiveness Initiative." That
initiative, as many of you know, includes a drive to facilitate the
immigration of foreign scientists and engineers.
His duties also include "[serving] as a one-stop-shop for U.S. industry
representatives to discuss and resolve critical issues that challenge
their ability to thrive." In other words, the lobbyists come here.
That presumably includes the ITAA, now headed by Cresanti's predecessor
at the DOC. How cozy.
The press will never notice, and will quote Cresanti as a skilled
bureaucrat who has the good of the citizenry in mind.
Norm
+++++++++++++++++++++++++++++++++++++++++++++++++++
> -----Original Message-----
> From: Norm Matloff [mailto:matloff@cs.ucdavis.edu]
> Sent: Wednesday, July 26, 2006 12:22 AM
> To: Norm Matloff
> Subject: administration finally allows DOC report to be released
Even those of you who are incorrigible cynics about abuse of power in
the executive branch will raise eyebrows over this one, both for the
primary theme and for an interesting secondary one. (Don't stop reading
halfway through, at least not without going to the material on the
secondary issue.)
Through both the Clinton and Bush administrations, the Dept. of Commerce
has been remarkably even-handed in issues relating the the industry's
claims of a tech labor shortage, and the offshoring issue. Remarkably,
this is largely due to two career researchers in DOC, and their
principled insistence on doing objective analyses. Even more
remarkably, their political appointee bosses have usually stood by them,
albeit with occasional blips. You can read the history of this at
http://heather.cs.ucdavis.edu/Archive/DOC.txt
http://heather.cs.ucdavis.edu/Archive/DOC2.txt
http://heather.cs.ucdavis.edu/Archive/DOC3.txt
However, two years ago, a lengthy analysis on offshoring produced by the
two researchers was suppressed by the administration. Refusing to
release the report, the administration offered a 12-page "summary."
Based on a slide presentation that the researchers had made earlier,
it was clear that the "summary" was actually a highly sanitized version
of the real findings. Congressional Democrats, anxious to find a way
to embarrass the administration, kept pushing for the release of the
original, unexpurgated report, but to no avail. You can read about
this in
http://heather.cs.ucdavis.edu/Archive/DOCPoliticized.txt
Well, the administration has finally agreed to release the original
report, as discussed in the article and press release below. The
release was achieved based on a Freedom of Information Act request.
The administration had fought the FOIA request but finally relented.
The bits and pieces mentioned in the article here are intriguing,
especially the material on the semiconductor industry. That material is
especially interesting because it had been assumed in some circles that
hardware development was more difficult to offshore than software. I'll
leave it to you to read the details below.
Unfortunately, though, the report itself apparently is STILL not
available to the public. The rumor I heard was that the report is not
available in electronic form. Now, why wouldn't the administration
provide it in electronic form? Was this just to humiliate the
Democrats, the equivalent of a schoolboy throwing something on the floor
and saying, "You can have it, but you'll have to bend down to get it"?
Or...is it because there's material in there which doesn't make the
Democrats look so angelic either? Recall that John Kerry's bluster
against offshoring in the 2004 election turned out to be fake, and that
the presumptive Democratic front runner for 2008, Hillary Clinton, is a
strong supporter of major offshoring firms such as Tata. (See the files
with names beginning with "Kerry" and "Hillary" in
http://heather.cs.ucdavis.edu/Archive)
Now, here is the secondary issue:
# Phil Bond, who was in charge of the Technology Administration at the
# time, said he had nothing to do with re-writing the report. He has since
# been named president and CEO of the Information Technology Association
# of America (ITAA), an organization that took the lead in Washington in
# defending the practice of offshore outsourcing of IT jobs.
So Bond went from DOC (where he was the boss of the two researchers) to
the ITAA, a classic case of a government official going to a lucrative
position in the private sector where his job is to exploit his
government connections. I had been aware of this move, but the article
here prompted me to go back and see what I had said about him in the
past, in
http://heather.cs.ucdavis.edu/Archive/DOC3.txt
Back in 2002, Bond had originally implied that there was a tech labor
shortage, but later reaffirmed that DOC's position was that there never
had been data confirming a shortage. But then in 2004, he was again
talking like there was a shortage. At the time I wrote the following:
% The CW article here says that Bond made those comments at "this week's
% conference." Apparently due to an editing error, the article does not
% say which conference it was, but presumably it was that ITAA conference.
% [Added later by NM: The print edition did indeed state it was the ITAA
% conference.]
%
% So, the ITAA seems to be following an established pattern, repeating
% their strategy from 1998: They hold a national conference, at which
% they invite a top DOC official to speak, during which he denies that
% the administration supports an H-1B increase, thus giving (false)
% assurance to those who oppose such an increase...
%
% While I have numerous major objections to many things in the [DOC]
% report, I do agree with its major theme. That theme is that if there is
% an IT labor problem at all, it is a "skills shortage" rather than a
% worker shortage...
%
% Yet last week Bond gave the standard ITAA party line--let's get more
kids
% interested in math and science in order to remedy our alleged IT labor
% shortage.
%
% In other words, Bond chose to send the ITAA message, rather than the
% message of his own department's report.
Isn't that last statement interesting, in light of Bond's subsequent
move to the ITAA?
Norm
+++++++++++++++++++++++++++++++++++++++++++++++++++
http://www.manufacturingnews.com/news/06/0724/art1.html
July 24, 2006 Volume 13, No. 14
Commerce Department Report On Offshore Outsourcing Finally Sees The Light
Of Day
BY RICHARD McCORMACK richard@manufacturingnews.com
After nearly two years, Manufacturing & Technology News has obtained a copy
of the elusive Commerce Department report on offshore outsourcing of high
tech jobs in the information technology, semiconductor and pharmaceutical
industries. The report, which was required by an Act of Congress, was to be
submitted to Congress in July 2004. But it was never released, due to fears
within the Bush administration that the controversial subject would hurt
the president's re-election campaign. Senior officials in the Bush
administration, including the head of the Council of Economic Advisors, had
publicly embarrassed the Bush team with cavalier statements describing
offshore outsourcing of high tech jobs as being good for the U.S. economy.
The $335,000, 336-page report obtained last week never saw the light of
day. Manufacturing & Technology News submitted a Freedom of Information Act
request to the Department of Commerce on March 17, 2005, seeking release of
the study, but that request was denied. Eventually, what was produced and
provided by the Commerce Department in September 2005 was a 12-page
document bearing a July 2004 publication date that bore little resemblance
to the work done by analysts at the Technology Administration, all of whom
have recently been told they will be laid off due to severe budget cuts for
the agency and the issuance of a reduction in force (RIF).
Although that 12-page report (at $28,000 per page) was provided to MTN and
Congress, it was not made available to the public and an electronic copy
has never been posted on the Commerce Department's Web site. That summary
put a positive spin on offshore outsourcing and includes analysis written
by political appointees that was not in the original work.
Democrats on the House Science Committee asked for a copy of the full
report in October, 2005, but the Commerce Department denied that request on
a specious Freedom of Information Act legal claim that only the political
party in power in Congress could require the document's release.
After Republicans on the Science Committee acquiesced to Democrats'
demands, the Commerce Department provided Congress with the full document,
a copy of which has been provided to MTN.
That document is quite different from the original 12-page summary, and it
is apparent why Bush's political appointees so vehemently refused its
release. The administration "was scared of anything having to do with
outsourcing," says one source who is familiar with the report's travails.
The Bush team "could not afford even a discussion" of the outsourcing
issue.
"The report speaks for itself," said Ben Wu, who was in charge of the
report's demise while at the Commerce Department's Technology
Administration. Wu now works in the state of Maryland's economic
development organization. Phil Bond, who was in charge of the Technology
Administration at the time, said he had nothing to do with re-writing the
report. He has since been named president and CEO of the Information
Technology Association of America (ITAA), an organization that took the
lead in Washington in defending the practice of offshore outsourcing of IT
jobs.
"As leading companies locate in or contract with labor in other countries,
concerns about the shift of work include fears that higher value work may
shift from the United States to other locations, impacting U.S. industrial
strength and high-salary employment," states a passage in the full study
that was deleted in the 12-page version. "Layoffs in the United States,
especially in the IT sector, have only exacerbated this concern."
The 360-page version of the report describes the types of IT services and
software jobs that are being outsourced. It states the obvious: that Indian
outsourcing companies "are expanding staff annually by the thousands." The
report describes the reasons for the trend including the fact that "venture
capitalists are now encouraging U.S. IT start-ups to use lower-cost
offshore destinations for software development to reduce the 'cash burn
rate.' "
The report states that there is "growing pressure in corporate America --
from customers, consultants, and financial markets -- to offshore IT work,
as well as growing external and political pressure to stem the flow of
American jobs going overseas."
Yet the report also highlights the fact that the impact on U.S.
competitiveness "appears to be negligible."
The full report that wasn't released also contains a long (and sobering)
section on the shift of the U.S. semiconductor industry to offshore
locations. Again, the 12-page Bush administration release differs markedly
from the one the Commerce Department quashed. It states that U.S.
semiconductor companies "are hiring more engineers overseas than in the
United States" due to their need to "reduce labor and operations costs and
serve the growing customer base in Asia."
In the long term, the U.S. risks losing high-end R&D and design jobs
because, as semiconductor fabs move to Asia, high-skilled jobs move with
them, states the report. The design centers that U.S. companies are
"rapidly" creating in Asia "do not support local customers but support the
home office with lower-cost designers," says a section of the report that
was deleted from the one that was released. "The cost of employing a design
engineer in Ireland, Taiwan, China or India has been estimated to be 50 to
90 percent lower than in the United States." It further states that, "the
number of engineers employed offshore by U.S. semiconductor companies rose
by more than 10,000 between 2000 and 2003, while engineers employed in the
United States dropped by 4,000 during the same period, according to
estimates by the Semiconductor Industry Association."
The unreleased version of the report ventured into issues impacting the
continued loss of semiconductor industry jobs. "With fewer companies
investing in new wafer manufacturing in the United States, process R&D
co-located with leading edge facilities may also decline, resulting in
fewer high-skill jobs for U.S. graduates. Offshoring of design work can
also impose downward pressure on U.S. wages and reduce the demand for U.S.
design engineers. As the number of overseas design centers increases, it
may draw foreign talent from the United States."
The unreleased report also addressed the potential of offshore outsourcing
in the pharmaceutical industry. Deleted from the final version was a
discussion of how skyrocketing health care costs could lead to
pharmaceutical companies deciding not to make future investments in the
United States. "It may be...that investment incentives and the global
geography of capabilities and infrastructure will shift in the years ahead
in ways that will help other countries' pharmaceutical industries take on a
larger role than at present in the global pharmaceutical innovation
engine," says the report that the Commerce Department refused to release.
The unreleased report provides a comparison of the average annual pay for
global software workers: United States: $63,000 Japan, $44,000 Canada:
$28,174 Indonesia: $12,200 Thailand: $11,124 Russia: $7,500 Philippines:
$6,550 Poland: $6,400 Hungary: $6,400 Pakistan: $4,860 China: $4,750
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