A well-placed industry source reached out to me today with some very interesting data, timely information given that Steve Daines is talking about a possible run for U.S. Senate.
When Steve Daines was running for Congress in 2012, the Democratic Party accused him and the company he helped run, RightNow Technologies in Bozeman, of outsourcing jobs overseas. Daines had been a senior vice president there, and had also been stationed in Asia.
For this assertion, the Democratic Party was sued by the CEO of RightNow, Greg Gianforte, for defamation to his company. They settled the case recently, for an apology; the Chair of the Party, Jim Elliot, wrote a public letter apologizing to Gianforte for having claimed without proof that RightNow outsourced jobs.
At any rate, the company was recently bought by Oracle, the silicon valley giant. But the campus in Bozeman, which employees over 1,000 people, is still in operation. The sale of the company was for a reported $1.5 billion dollars, and is believed to have made Daines a very rich man, for he was a big stockholder.
What we learn today is this: Oracle has applied for a total of 605 special visas, for the purpose of importing foreign workers to Bozeman to work at the former RightNow campus. You can see the data here, which is downloaded from the US Government’s visa website. I reached out to the Oracle media department to seek more information about these applications, but have received no reply.
The type of visas that Oracle applied for are known as an H-1B visa. H-1Bs are highly controversial and mightily opposed by workers-rights advocates in America, including organized labor and many members of Congress. Companies use these visas to import foreign temporary workers without any chance of a path to citizenship and often for the purpose of simply saving money, since the worker can usually be paid less than an equivalent American worker.
Here’s what the Boston Globe wrote this month about a company that used H-1B applications to alter its workforce:
ON JAN. 14, 2010, senior executives at Molina Healthcare in Long Beach, Calif., called their staff together for a somber meeting. The company had done poorly the previous quarter, they announced. Dozens of people in the IT department would have to be let go. What the fired employees didn’t know was that the previous day, the US Department of Labor had approved applications for 40 temporary workers from India to be placed at Molina, through a company called Cognizant.
The fired employees — all US citizens or green card holders — were earning an average of $75,000 a year, plus benefits; the new workers, brought on H-1B visas, earned $50,000, with no benefits, according to a lawsuit filed by the ex-employees. The lawsuit alleges that Molina was flush with cash at the time, and that the real reason employees were fired was their nationality.
Here is a spreadsheet that shows every H-1B approval received by RightNow (2011 and 2010) and Oracle in Bozeman (2012). It appears that in 2010 and 2011, RightNow received permission to hire several foreign workers in Bozeman each year. One of the spots in 2011, for example, was for a market researcher. Then, in 2012, Oracle received permission to hire 605 engineers for the same location.
Now look at the salaries (column F). In 2011, RightNow said the prevailing wage for “Computer Software Engineers: Applications” in Bozeman was $71,000. The next year Oracle said the prevailing wage for “Software Developers, Application” was $52,739.” That’s a 25% discount.
So you can see how Oracle might be planning to abuse the H-1B system. By defining down the job, they can pay 25% less. Keep in mind that the wage is attached to the job, not the person. Oracle can hire the most qualified Computer Software Engineer on the planet for their Software Engineer position, and still legally pay the Software Developer price. This Indian press release shows that the average H-1B worker makes 25% less than equivalent American workers – a bit less than the discount Oracle is going to get by taking these jobs from people in Bozeman.
Whether this information creates a reason to reevaluate Gianforte’s lawsuit against the Democratic Party, and the apology that settled it, is something that we will let Chairman Elliot deal with. The lawsuit did include other allegations of defamation beyond the statements about outsourcing.
What does appear certain is that the sale of RightNow Technologies to the Oracle Corporation (a sale that made Congressman Daines some big bucks) has led to, or is quickly leading to, the outsourcing of Bozeman jobs to foreign workers. If you sift through some of the data on these websites, you will also see that significant savings from the hiring of H-1B workers will accrue to the applicant company Oracle.
Because when you import foreign temporary workers and thereby save money, you are outsourcing. Even if Oracle claims to be simply finding workers with specialized skills that are not otherwise findable in the domestic workforce, it is an economic fact, a law of economics, that at some price, whatever that price may be, Oracle could get similarly qualified Americans to answer the want ad. It’s just that it’s cheaper to import foreign labor, cheaper precisely because the option exists legally.
Just like it’s cheaper to import fruit pickers from Mexico. You hear people say that “Americans don’t want to do the work” that migrant foreign laborers are hired to do. In fact, Americans will absolutely do the work, just not at the meager wages that companies offer. And the wages remain meager because foreign laborers can invariably be recruited, whether legally or illegally, to do the work for dirt cheap. It is a story that has played out over most of American history–when wages get too high, bring in foreigners who will work for less, or can be paid less because of loopholes in the law.
Predictably, Congress is helping Oracle with all of this. Last week, the Senate quietly amended the H-1B law, to make it easier to import workers, to help multinational companies import many more of them, and to lower the burden of proof (regarding shortages in the domestic workforce) that companies must meet to be granted the right to import a foreign worker. The amendments were inserted into the comprehensive immigration reform bill. S. 744. Dick Durbin, D-Illinois, railed against the entire H-1B scheme as nothing more than a scheme which allows the largest companies in America to circumvent the normal immigration rules–and the U.S. market wages. Orrin Hatch, who is famous for screwing middle class Americans for the benefit of large Fortune 500 corporations, led the charge, and Oracle’s lobbying team was right there with him, prodding him.
When it gets to the House, perhaps we’ll see what Daines has to say about the Bozeman H-1B situation.