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AP Investigation: Banks sought foreign workers

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By FRANK BASS and RITA BEAMISH, Associated Press Writers
Sun Feb 1, 8:10 am ET

SANTA CLARA, Calif. – Major U.S. banks sought government permission to bring thousands of foreign workers into the country for high-paying jobs even as the system was melting down last year and Americans were getting laid off, according to an Associated Press review of visa applications.

The dozen banks now receiving the biggest rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers over the past six years for positions that included senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. The average annual salary for those jobs was $90,721, nearly twice the median income for all American households.

As the economic collapse worsened last year — with huge numbers of bank employees laid off — the numbers of visas sought by the dozen banks in AP's analysis increased by nearly one-third, from 3,258 in the 2007 budget year to 4,163 in fiscal 2008.

The AP reviewed visa applications the banks filed with the Labor Department under the H-1B visa program, which allows temporary employment of foreign workers in specialized-skill and advanced-degree positions. Such visas are most often associated with high-tech workers.

It is unclear how many foreign workers the banks actually hired; the government does not release those details. The actual number is likely a fraction of the 21,800 foreign workers the banks sought to hire because the government only grants 85,000 such visas each year among all U.S. employers.

During the last three months of 2008, the largest banks that received taxpayer loans announced more than 100,000 layoffs. The number of foreign workers included among those laid off is unknown.

Foreigners are attractive hires because companies have found ways to pay them less than American workers.

Companies are required to pay foreign workers a prevailing wage based on the job's description. But they can use the lower end of government wage scales even for highly skilled workers; hire younger foreigners with lower salary demands; and hire foreigners with higher levels of education or advanced degrees for jobs for which similarly educated American workers would be considered overqualified.

"The system provides you perfectly legal mechanisms to underpay the workers," said John Miano of Summit, N.J., a lawyer who has analyzed the wage data and started the Programmers Guild, an advocacy group that opposes the H-1B system.

David Huber of Chicago is a computer networking engineer who has testified to Congress about losing out on a 2002 job with the former Bank One Corp. He learned later the bank applied to hire dozens of foreign visa holders for work he said he was qualified to do.

"American citizenship is being undermined working in our own country," Huber said in an AP interview.

Beyond seeking approval for visas from the government, banks that accepted federal bailout money also enlisted uncounted foreign workers, often in technology jobs, through intermediary companies known as "body shops." Such businesses are the top recipients of the H-1B visas.

The use of visa workers by ailing banks angers Sen. Chuck Grassley of Iowa, the senior Republican on the Senate Finance Committee.

"In this time of very, very high unemployment ... and considering the help these banks are getting from the taxpayers, they're playing the American taxpayer for a sucker," Grassley said in a telephone interview with AP.

Grassley, with Sen. Richard Durbin, D-Ill., is pushing for legislation to make employers recruit American workers first, along with other changes to the visa program.

Banks turned to foreign workers before the current economic crisis, said Diane Casey-Landry, chief operating officer for the American Bankers Association. The group said a year ago that demand exceeded the pool of qualified workers in areas like sales, lending and bank administration. Now with massive layoffs, the situation is different, Casey-Landry said.

The issue takes on a higher profile as the government injects billions of dollars into the economy and President Barack Obama pushes for massive government spending to create jobs nationwide, on top of the $700 billion already approved for the ailing banks.

"You're using taxpayer dollars and there's an expectation that there are benefits to the U.S.," said Ron Hira, a national expert on foreign employment and assistant public policy professor at the Rochester Institute of Technology. "What you're really doing is leaking away those jobs and benefits that should accrue to the taxpayers."

But New York Mayor Michael Bloomberg believes more access to "worldwide talent pools" will better position U.S. financial companies against global competitors, spokesman Andrew Brent said.

The U.S. Customs and Immigration Service declined to disclose details on foreign workers hired at the banks that have received federal bailouts. The AP has requested the information under the U.S. Freedom of Information Act.

Nearly all the banks the AP contacted also declined to comment on their foreign hiring practices. Arlene C. Roberts, spokeswoman for State Street Corp. of Boston, which has received $2 billion in bailout money, said the company has reduced H-1B hiring in recent years, and just hires for specialized positions.

Jennifer Scott of Yreka, Calif., a retired technical systems manager at Bank of America in Concord, Calif., said in 2004 she oversaw foreign employees from a contractor firm that also sent overnight work to employees in India.

"It had nothing to do with a shortage, but they didn't want to pay the U.S. rate," she said, adding that the quality of the work was weak. "It's all about numbers crunching."
 
I don't agree with that last conclusion. Can anyone working in finance around here definitively say that banks are somehow paying immigrant workers less than residents? Where is that happening? Bonuses? Base pay? Benefits?

It is true that the visa system is widely abused; that's not really news, either.
 
The question of overpaid/underpaid for foreigners is subjective anyway. Employers will always pay the least amount possible foreign workers or not. You have to factor in costs of sponsoring for visa etc. As for foreign sponsored VP's I dont know of any.
 
The article is one-sided trying to convince some angry American that they've lost their job because some foreigners took it.
This is an old subject has a pragmatic solution: minimal cost, maximum value.
It applies to any field from programming to engineering or financials.
One of main U.S. strengths is the graduate school system where you attract talents from entire world. It is a big loss if a lot of these people decide to return to their countries.

There will always be people that do not feel treated fairly, however I don't think American born employees can complain more than other nationalities. The process of getting H1-B -> greencard -> citizenship is not smooth and it takes a dozen years. In this time, many smaller companies will not even recruit people without greencard.
Adding to this there is a significant language barrier for many nationalities.
I don't really see an easy path.

It is ironical that the disgruntled employee says:
He learned later the bank applied to hire dozens of foreign visa holders for work he said he was qualified to do.

How does he know he can do the job just as well or how does he know qualifications for people that took his job? :)
 
Well, Stefan, given that Renaissance is reported to hire a lot of foreign-born quants, in fact, I believe Simons states that hiring an American is an anomaly, I'd say this article holds quite a bit of water.

That said, I find it disturbing that the engineering and scientific prowess which built this country has now been actively disdained by a huge majority of Americans of my generation and it disgusts me. America was not built on business, but on engineering. Some of the best fund managers are scientists, and the best one of them all is run for and by them.

That said, from my own personal experience, the Asian (be they south or east) faculty that I have interacted with have affected my GPA very negatively because of their ridiculous language barriers, while the European faculty have been my two favorite professors BY FAR AND AWAY within my university, and made going here, despite all the rest of the BS, worth it.

To put it into perspective, while my basic Prob and Stat course was being taught by an American professor, I got 95 on one exam and a 100 on the next. When the TA with a heavy Chinese accent came back from maternity leave, my top score in the class turned into a B+ by the end.

In my applied macro course, the professor had a very heavy Korean accent and put me to sleep since he became so monotonous just trying to explain the concepts. The result was a C+.

And of course, from my own MFE course (the second most important one next to stochastic calculus), the vast majority of the people in that class have English skills such that I'd cross them off a hiring list in a heartbeat.

On the other hand:

My statistics professor I had no trouble communicating with because we both speak Russian. Grades? A-, A, A

My MFE professor: UTTERLY PHENOMENAL. A in her undergrad senior level modeling course (took it as a junior), and now in her MFE course and doing a blue-sky financial engineering research project with her.

And here's where it really got to me: because of these MFE students, I didn't have the chance to enroll in stochastic calculus due to logistical reasons. So yes, I'm *extremely* bitter at the entire lot of them. I know it's unjustified. It's not their fault my school has a garbage MFE program that it puts on the back of two professors. But I'm still bitter.

So those are my own personal experiences. Take them for what you will.
 
That said, from my own personal experience, the Asian (be they south or east) faculty that I have interacted with have affected my GPA very negatively because of their ridiculous language barriers, while the European faculty have been my two favorite professors BY FAR AND AWAY within my university, and made going here, despite all the rest of the BS, worth it.

To put it into perspective, while my basic Prob and Stat course was being taught by an American professor, I got 95 on one exam and a 100 on the next. When the TA with a heavy Chinese accent came back from maternity leave, my top score in the class turned into a B+ by the end.

In my applied macro course, the professor had a very heavy Korean accent and put me to sleep since he became so monotonous just trying to explain the concepts. The result was a C+.

I like your honesty but this post says a lot about you. For instance that you are unable to deal with people that have a heavy accent. You will see a lot of them in your professional life.

It also says that you will need a lot of "hand holding" since you are unable to learn something by yourself. It shows that you have problems with motivation since your grade was really affected by the professors in those two subjects. The fact that you are blaming the professors and not yourself, says a lot.

I'm sorry if I'm a little blunt.
 
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