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Monday, January 26, 2009

Posted by Jill | 7:19 PM
The National Republican Congressional Committee's web site still says "he U.S. economy is robust and job creation is strong."

Meanwhile, back in consensus reality:

Home Depot, Caterpillar, Sprint Nextel and at least eight other companies announced on Monday they would cut more than 75,000 jobs in the United States and around the world — a gloomy start to the workweek for employees anxious about holding their own as the economy sinks. Caterpillar, the maker of heavy equipment, is slashing its payrolls by 16 percent. Texas Instruments said late in the day that it would eliminate 3,400 jobs, or 12 percent of its work force.

Jobs began disappearing in home building and mortgage operations early in the recession, then across finance and banking more generally. Now the ax is falling across large swaths of manufacturing, retailing and information technology, taking out workers from New York to Seattle. Just last week, Microsoft announced its first significant job cuts ever.

Because companies like Microsoft have invested in their workers’ skills and knowledge, they usually delay major work force reductions as long as they can. But with orders for new products and services drying up and financing tight, employers are looking to shrink their costs drastically and are slashing their payrolls, anticipating a protracted decline for business in 2009.

Monday’s parade of negative news comes after months of announcements from other prominent companies like Citigroup, General Electric, Nokia and Harley-Davidson. As part of its acquisition of Wyeth, Pfizer said it would cut the combined workforce by 19,500 employees.

On Wednesday, the tally of mass layoffs for December will be released by the Bureau of Labor Statistics. Already, the bureau says the United States economy has shed 2.55 million jobs since the recession began, pushing the unemployment rate up to 7.2 percent last month.

The latest round of job cuts — and the additional rounds likely to come as these move through the economy — mean more pain ahead for states as unemployment insurance claims rise and deplete state budgets.

Congress has proposed setting aside $43 billion to assist the states and to provide for new and current recipients of unemployment checks. That money is intended to increase the weekly benefit amounts; to extend how long people can collect payments; to cover more types of workers, like part-timers; and to help states distribute benefits more quickly.

It is based largely on an estimate that the unemployment rate will rise to 8 to 9 percent this year even with a stimulus package, according to the proposal summary from the House Appropriations Committee. But if unemployment soars into double digits, as some economists expect, the financing may not be enough.

“The economy is deteriorating at a faster clip than even the most dreary forecasts had expected,” said Joseph Brusuelas, an economist who, bucking the current job market trend, will soon start a new job at Moody’s Economy.com. “At the current trend, $43 billion will not be sufficient should we breach 9 percent unemployment and maybe reach into the double digits.”

Think about what's going to happen WHEN we hit 9% stated unemployment (which will be about 15% when taking into account those who have given up or are scraping together an income of sorts with multiple part-time jobs) -- and there's no money to even pay unemployment benefits. We are headed to Great Depression II -- Electric Bugaloo, folks, and I'm not sure that even a stimulus package is going to do more than just cushion the blow just a bit. And we are ill-equipped as a nation to deal with it, after nearly a generation of supply-side politicians starting with Ronald Reagan saying you can cut taxes, raise spending, and balance the budget, or that you can fight two wars for free because oil revenues will pay for it -- and households creating a corollary of "You can buy anything you want by using your home equity, which will always increase in perpetuity." I wonder how a generation of kids raised on clothes from Abercrombie and Hollister, who have never had to so much as share a bathroom with a sibling; and who have known nothing but prosperity, are going to cope with what's coming.

Meanwhile, with even the mighty Microsoft announcing layoffs, you'd think that H-1B visas would become a nonissue, at least for the time being. But you'd be wrong:
The Black Monday announcement of more than 71,000 jobs lost is a stunner. Today it was Texas Instruments and Sprint Nextel adding their names to the listof tech companies handing out pink slips. Tomorrow? Anybody's guess.

In uncertain times, the only sure bet is that Congress is going to come under renewed pressure to revisit its practice of granting temporary visas to foreign workers. Already, Iowa Sen. Charles Grassley (R-Iowa) is pressing Microsoft to give Americans priority over foreigners working in this country with H-1Bs.

"My point is that during a layoff, companies should not be retaining H-1B or other work visa program employees over qualified American workers," Grassley wrote on Friday after Microsoft announced its first across-the-board layoffs. "Our immigration policy is not intended to harm the American work force. I encourage Microsoft to ensure that Americans are given priority in job retention. Microsoft has a moral obligation to protect these American workers by putting them first during these difficult economic times."

Microsoft said Monday it had no plans to change its position on H-1Bs.

Last year, when Bill Gates appeared before Congress, BusinessWeek reported that Microsoft had received 959 visa petition approvals, roughly "one fifth as many as Infosys (Technologies, the top participant), while Intel got 369."


When it reported its quarterly earnings last week, Microsoft announced plans to fire about 5,000 employees. A spokesman said that some of the employees let go held H-1B visas but declined to get more specific.

Intel, which last week announced plans to close two plants in the U.S., similarly said that layoffs resulting from the economic slowdown would not factor into the company's H-1B plans.

Kind of makes you wonder what "some" means, doesn't it? Two? Three? Half? Or are tech companies going to use this Depression as an excuse to jettison American workers permanently so that if things ever get better they are ready to gear up with an all H-1B workforce?

It's rare that a Republican in the Senate does something worth applauding, but in this case Charles Grassley deserves praise (and phone calls to his office) for his efforts on behalf of an American workforce that is ready, willing, and able to work, but is held at bay by corporations in search of ever more elusive profits who still, even after showing thousands of people the gate and taking their security badges, see lower-paid H-1B workers as their key to renewed profitability.

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Anonymous Anonymous said...
Jill - I think it's a mistake to believe that companies like Microsoft pay their H-1B employees less than standard scale. (The key word there is employees - I think most of the significant pay abuses occur with 3rd-party contracting firms.) Certainly the major tech companies I've worked for have recruited H-1B employees at the same general pay scale as other employees (based on the employment notices I've read) and generally worked to get them green cards (but not too quickly) in the hopes that they would remain as part of the permanent workforce once they were free to seek other employment. The key advantage of such employees, from the employer's perspective, is that they could be counted on not to leave for around a six year period while their green card application was pending, so that the company didn't need to worry about investing in training them only to see them jump to a competitor as soon as they got the necessary experience.

If that's what Microsoft has been doing with their H-1Bs, I can certainly see why they wouldn't want to replace someone who has lots of job-specific experience and is tied to the company for the next few years with someone else who would need several months to come up to speed and might leave as soon as the economy recovers.

The losers in this scenario are not American workers in general, but American workers who need additional training or experience to meet the company's needs. That is a real problem, but it's a different problem from believing that a competitive hi-tech company wants to replace all their workers with H-1Bs.