Laws: April, 2003 - Number #6

The US unemployment rate was six percent in December 2002, 5.7 percent in January 2003, and 5.8 percent in February. In 2001-02, the US lost a net 1.6 million jobs, the majority in the high-tech and manufacturing sectors, and in early 2003, the US was losing 10,000 jobs a day. Some 260,000 Americans with college degrees were out of work more than six months at the end of 2002; their unemployment rate doubled to three percent.

President Bush wants to overhaul US employment and training programs, and in January 2002 he proposed $3,000 "personal re-employment accounts." Individuals with PEAs could use the money for expenses that help them find new jobs, such as job training, transportation or child care, and keep what is left of the $3,000 once they are rehired. They would receive 60 percent of their PEA funds as soon as they start work, and the remaining 40 percent after six months employment. The federal government spends about $800 million a year on employment services, and $2 billion on training programs.

Unemployment insurance partially replaces the earnings of laid-off workers, usually for 26 weeks, with 13-week extensions in times of high unemployment. States set the benefits, a maximum of $205 a week in Arizona and $768 in Massachusetts, and collect taxes from employers to pay them. The self-employed do not get UI benefits; some 6.2 million US workers were self-employed early in 2003.

President Bush proposed the first changes in wage and hour rules since 1975. The proposal would require workers to earn at least $22,100 a year to be exempt from overtime pay of 1.5 times the usual wage after 10 hours a day or 40 hours a week, up from the current $8,060 a year. If adopted, 1.3 million more lower-income workers would receive overtime pay, but many of the 640,000 workers earning $65,000 a year or more would no longer qualify for overtime. About 70 million US workers qualify for overtime because of automatic provisions or because their jobs are not considered exempt executive, administrative or professional ones.

The Santa Fe City Council approved an ordinance requiring businesses and nonprofit organizations with 25 or more employees to pay workers a minimum of $8.50 an hour beginning on January 1, 2004. Alaska has the highest statewide minimum wage, $7.15 an hour.

The US had 16.1 million union members in 2002. The AFL.-CIO's 65 member unions reported organizing 520,000 workers in 2002, led by the 135,000 organized by the Service Employees International Union, for a total 13.2 million members, only slightly more than the AFL-CIO's 12.6 million members in 1955, the year the AFL-CIO was formed and the labor force was about 65 million.

The American Textiles Manufacturers Institute says that the number of US textile workers fell from 663,00 in 1995 to 425,000 in 2002, while apparel employment dropped from 936,000 to 510,600. The US travel industry, from airlines to hotels and restaurants, had revenues of $555 billion in 2001, and accounted for 7.9 million jobs. It has been shrinking since September 11.

California. California's unemployment rate was a revised to 6.9 percent in December 2002. Payroll employment was 14.6 million, down in both 2001 and 2002; the US also lost jobs in 2001 and 2002. The transition from the Standard Industrial Classification to the North American Industry Classification System, which provides more detail by industry, showed that employment in some California high-tech areas fell 15 to 30 percent between 2000 and 2002 (the recession began in March 2001).

Santa Clara county lost 175,000 jobs between 2000 and 2002, 16 percent of the nonfarm jobs in the county, making job losses in Silicon Valley worse than those associated with the aerospace industry's decline in Los Angeles in the early 1990s, when 400,000 jobs or 10 percent of the county total were lost. The number of people working in Silicon Valley by 2003 was back to the level of 1996, when the dot-com boom was barely underway. Unemployed workers are starting to drift away to lower cost-of-living areas.

Between 2000 and 2002, government employment in California rose three percent a year, compared to one percent a year for private employment. A major contributing cause was that schools cut the size of classes and hired more teachers and other workers. California has 2.5 million federal, state and local government employees, a sixth of the nonfarm workers in the state.

H-1Bs. The H-1B program allows most US employers to bring foreigners with a BA or more into the US to work for up to six years in jobs requiring a BA or more. The process is fairly simple. US employers must attest that they are paying the prevailing wage and that there is no strike in progress, and fax the appropriate form to the US Department of Labor. They do not have to seek US workers, and may lay off US workers to open jobs for the H-1Bs, unless the employer has 15 percent or more H-1B workers, making him "H-1B dependent", which requires a search for US workers.

The employer's request for H-1B workers must be approved by DOL unless it contains obvious errors. There has been a backlash against US firms that lay off US workers and hire H-1Bs. Sun Microsystems Inc laid off 2,500 US workers in 2000 while retaining and hiring additional H-1B workers, prompting suits by some of the laid-off US workers. Sun says that it makes employment decisions based on applicants' qualifications, and hires Indians because they are: "an essential part of our competitive nature in high tech."

Almost 60 percent of the H-1B visas are issued to Indians, most of whom are employed by companies operated by Indian immigrants who bring workers into the US, and then send them to US employers where they fill computer-related jobs for one to six months. About 75 percent of the H-1Bs in computer-related jobs earn less than $57,000 a year.

Forrester Research in 2002 predicted that "The IT industry will lead the initial overseas exodus [of US jobs overseas]… Over the next 15 years, 3.3 million U.S. service industry jobs and $136 billion in wages will move offshore to countries like India, Russia, China and the Philippines." One estimate is that a million US call center jobs will shift to India by 2008.

H-1B to L-1? There were 384,000 people working in the US on H-1Bs in 2001, and 329,000, on L-1s; the number of H-1Bs is down in 2002, while the number of L-1s is up. The INS is reportedly investigating whether the L-1 visa is being used as a substitute for the H-1B visa. L-1 visas are for intra-company transfers--executives, managers, and workers with "specialized knowledge" employed by multinational firms who are being transferred from foreign operations to US operations.

Tata Consultancy Services, for example, brings Indians to the US under two visa programs--H-1B and L-1. The L-1 program allows Tata to hire workers at its Indian company, and then transfer them to its US subsidiary. Once in the US, those with L-1 visas can be sent to work for US companies just as H-1Bs are. Tata had sales of $500 million in 2001, with 75 percent from supplying IT expertise to US firms.

Tata used L-1 visas for half of the 5,000 Indians it placed at US companies in 2002, Infosys Technologies used the L-1 visa for a third of the 3,000 workers, and Wipro Technologies used the L-1 for a third of 1,500 workers. Some lawyers believe that it is unlawful to bring foreign workers to the US under L-1 visas and then out-source them to US firms.

The State Department issues L-1 visas. New L-1 visas jumped by 50 percent between 1998 and 2002, to 58,000, while new H-1B visas plunged by 27 percent through 2002 and fell 17 percent in the first five months of fiscal 2003.

Sweatshops. Sweatshops are workplaces where employees work long hours for low wages under bad conditions. Most sweatshops in the US hire immigrant workers and violate immigration and labor laws. Among them are many garment sewing shops. One Los Angeles-area garment factory, American Apparel, says it is an exception to the rule, offering 70 percent of its 1,000 employees a guaranteed $7 an hour to make premium T-shirts- its workers earn an average $10 an hour on piece rates. The company says that, if teams of workers can make 275 dozen shirts a day, they can earn $20 an hour.

American Apparel encourages its Latino immigrant workers to enroll in government programs such as Healthy Families, which provides free health care for low-income children; critics say that the company then takes credit for providing "health care benefits." Workplace English classes in American Apparel shops are paid for and managed by the Los Angeles Unified School District.

There are about 90,000 garment workers in Los Angeles county, the largest sector of manufacturing employment. Los Angeles city has a $9.52 "living wage" requirement for firms doing business with the city.

T-Visas. John Pickle Co, a Tulsa-based manufacturer of specialized oil industry equipment, used Al-Samit International, a Travel Agency in Mumbai, to recruit Indian workers to be welders; they paid Al-Samit an average $2,500 for H-2C trainee visas. The workers said they were promised US wages and fringe benefits but, just before they left India, they were asked to sign contracts that listed them as trainees, with salaries of $550 a month, or $2.31 to $3.17 an hour for 11-hour days.

In Tulsa, the men were housed in a converted warehouse, and complained about the food. Various government agencies investigated and issued citations. In Fall 2002, the US government certified the 52 Indians brought to the US by Pickle as victims of trafficking, and they are now working in shipyards on temporary work visas.

Trafficking is defined as using fraud, force or coercion to lure people to the US and then keeping them in an unfree condition and exploiting them. Recent cases include charges that managers of Daewoosa Samoa Ltd. factory in American Samoa enslaved hundreds of Chinese and Vietnamese garment workers, that 70 Thais were enslaved in an El Monte sweatshop in the mid-1990s, and in 2001, three Florida citrus contractors were sentenced to prison for harboring hundreds of undocumented workers, threatening them with violence and holding them hostage over alleged $1,000 debts.

An estimated 50,000 foreign women and children are smuggled into the US each year for sex work, domestic service, or to work in sweatshops; the comparable estimate for the EU is 120,000 a year. The US Justice Department announced in March 2003 that it won 36 convictions in sex-trafficking cases in fiscal years 2001 and 2002, and granted 23 T-visas to smuggling victims who aided in the prosecution of their traffickers. (http://www.ojp.usdoj.gov/ovc/ AND www.ljr.net/cast/)

Brian Grow, "More companies are using L-1 visas to bring in low-wage foreign IT workers -- and replace Americans," Business Week, March 10, 2003. Sharon Cohen, "Workers from India accuse defunct U.S. firm of labor trafficking and file suit. Businessman tells a different story," Los Angeles Times, February 23, 2003. Y. Hong, "Is There Substance Behind Clothing Factory Owner's Brash Style?" Los Angeles Times, January 12, 2003.