Yet another fundamental flaws in the logic of the "Gathering Storm" report is the conclusion that since China and India are training more S&Es, the U.S. must also train more S&Es to remain competitive. Although the report mentions outsourcing by U.S. firms, it seems to naively ignore the fact that layoffs of U.S. S&Es often precede the outsourcing of such jobs to India and China.

The article below is a nice summary of a scenario that runs completely counter to conclusions and policy actions of the Gathering Storm report, namely, the movement of "perhaps 40 million high-skill American jobs to other countries."

This trend, if it plays out, begs the question of where all those "10 million minds" educated in the U.S. will find work, without moving to China or India-a trend that is occurring more frequently for some U.S. workers.

Bob

Highly skilled Americans in jeopardy

Tuesday, April 17, 2007 FROMA HARROP

http://www.dispatch.com/dispatch/contentbe/dispatch/2007/04/17/20070417-A7-04.html

The master plan, it seems, is to move perhaps 40 million high-skill American jobs to other countries. U.S. workers have not been consulted.

Princeton University economist Alan Blinder predicts that these choice jobs could be lost in a mere decade or two. These involve computer programming, bookkeeping, graphic design and other careers once thought firmly planted in American soil. For perspective, 40 million is more than twice the number of people now employed in manufacturing.

Blinder was taken aback when, sitting in at the business summit in Davos, Switzerland, he heard U.S. executives talk enthusiastically about all the professional jobs they could outsource to lower-wage countries. And he's a free trader.

What America can do to stop this is unclear, but it certainly doesn't have to speed up the process through a government program. We refer to the H-1B visa program, which allows educated foreigners to work in the United States, usually for three years. Many in Congress want to nearly double the number of H-1B visas, to 115,000 a year.

To the extent that the program helps talented foreign graduates of U.S. universities stay in this country while they await their green cards, it performs a useful service. But for many companies, the visa has become just a tool for transferring American jobs offshore.

Ron Hira, a professor of public policy at the Rochester Institute of Technology, has studied the dark side of the H-1B program. He notes that the top applicants for visas are outsourcing companies, such as Wipro Technologies of India and Bermuda-based Accenture.

The companies bring recruits in from, say, India to learn about American business. After three years, the workers go home better able to interact with their U.S. customers.

In other cases, companies ask their U.S. employees to train H-1B workers who then replace them at lower pay. "This is euphemistically called, "knowledge transfer, " said Hira. "I call it, "knowledge extraction. "

Another rap against the program is that it?s used to depress the wages of American workers. The program's defenders argue that the law requires companies to pay "the prevailing wage."

But prevailing wage is a legalism, Hira says. It does not translate into market wage.

The median pay for H-1B computing professionals in fiscal 2005 was $50,000, which means half earn less than that. An American information technology worker with a bachelor's degree makes more than $50,000 in an entry-level job.

Businesses bemoan the alleged shortage of Americans trained to do the work. But wait a second. The law of supply and demand states that a shortage of something causes its price to rise. Wages in information technology have been flat.

The companies fret that not enough young Americans are studying science and technology. Well, cutting the pay in those fields isn't much of an incentive, is it?

The threat that they will outsource if they can't bring in foreign temps is a hollow one. "There's nothing stopping those companies from working offshore anyway," Hira said. "They're not patriotic."

This vision for a competitive America seems to be a few rich U.S. executives commandeering armies of foreign workers. They don't have to train their domestic work force. They don't have to raise pay to American standards.

A provision for revving up the H-1B program is contained in the immigration bill that last year passed the Senate. The co-sponsors, Democrat Edward Kennedy of Massachusetts and Republican John McCain of Arizona, have contended that their legislation requires employers to search for U.S. workers first. It does not.

Skilled U.S. workers had better start looking out for their interests. No one else is.

Froma Harrop writes for Creators Syndicate.