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Blog: Workforce Washington - Labor Law
 

May 10th, 2008

Father of E-Verify Mixes It Up With SHRM Over Government’s Electronic System

It wasn’t the typical rapid reaction that has become a staple of Washington life since Bill Clinton’s 1992 presidential campaign.

Usually in political combat, the advocates on opposing sides of an issue attack and counterattack within the same news cycle, sometimes within the same hour.

It took Rep. Ken Calvert, R-California, two days to push back against a coalition of HR groups, led by the Society for Human Resource Management, that wants to replace the government-run electronic employment verification system that he authored, E-Verify.

In a hearing on Tuesday, May 6, the HR Initiative for a Legal Workforce was among critics that called E-Verify inefficient, prone to error and incapable of detecting identity fraud.

In an announcement released late on Thursday, May 8, Calvert’s office called on the organization “to end their campaign of negative advertising and often exaggerated claims against E-Verify.”

On May 6, the coalition led the charge for a bill written by Sen. Sam Johnson, R-Texas, that would replace E-Verify with a new electronic verification mechanism and eliminate the I-9 process.

Companies would be required to submit new-hire information to the Social Security Administration through a child-support enforcement system that about 90 percent of U.S. employers use. But before that happens, the Social Security database would be cleaned up through a congressional appropriation.

The problem with E-Verify, opponents argue, is that it relies on the current database, which has a 4.1 percent error rate and could mistakenly declare millions of people ineligible for employment. They also say that the Johnson bill avoids many other E-Verify deficiencies.

At the hearing, Calvert defended his creation, testifying that 92 percent of employees put into the system are immediately approved and less than 1 percent successfully contest a nonconfirmation.

About 61,000 employers voluntarily use E-Verify. The law that established the system expires in November. Calvert has introduced a bill that would reauthorize it and mandate that all 7.4 million employers sign up over a seven-year period.

Most of the input at the hearing came from people who were concerned that such an expansion of E-Verify would overwhelm the Social Security system.

After mulling it over for a couple days, Calvert issued a pointed statement on Thursday.

“While I appreciated the opportunity to testify, it was clear that the hearing, as evidenced by the second witness panel, was slanted against E-Verify,” he said. “The fact remains that E-Verify is the only tool available for employers, who are required to hire a legal workforce, to check the veracity of identification documents presented by a new employee.”

Then the shot across SHRM’s bow: “There are certain interests that simply do not want employment verification. That is why they will denounce E-Verify and assert that there is a perfect system out there somewhere, when in fact there is no perfect system.”

But SHRM is standing its ground. The world’s largest HR organization has never said it is against verification; but it will continue to oppose the current government system.

“Our opinions are not politically motivated,” says SHRM president and CEO Sue Meisinger. “They are based on what our members say. We think there’s a better way than E-Verify.”

The disagreement between SHRM and Calvert may intensify as November, and E-Verify’s expiration date, approaches.


May 5th, 2008

Tussle Over Verification Highlights Hill Return to Immigration Issues

War and medical metaphors tend to dominate Washington parlance. For instance, partisans are constantly “attacking” someone else’s position or “defending” their own.

Sometimes, one side “inoculates” against an attack by doing something that is meant to neutralize the opposition’s argument.

On the eve of a hearing on employer verification that will kick off a renewed Capitol Hill focus on immigration policy, the Department of Homeland Security announced improvements to its electronic employer verification system on Monday, May 5.

The DHS program, known as E-Verify, has come under withering criticism from employers and HR organizations. The voluntary system, which has been in place since 1997 and now boasts 64,000 participating companies, checks information from I-9 forms against databases at the Department of Homeland Security and the Social Security Administration.

The Society for Human Resource Management and several other HR groups charge that E-Verify is inefficient, prone to error and incapable of being ramped up to handle traffic from all 6 million employers in the country. They cite statistics from a study showing that the Social Security database, upon which E-Verify relies, has a 4.1 percent error rate, which could amount to 6 million people being denied employment by mistake.

So, in typical Washington fashion, the DHS decides to inoculate against such criticism by unveiling two enhancements to the system the day before a Tuesday, May 6, House Ways & Means subcommittee hearing on employer verification.

The U.S. Citizenship and Immigration Services (USCIS), a division of the DHS, will add naturalization data to E-Verify in order to augment the Social Security databases. It also will allow nonconfirmed workers to resolve mismatches directly with the USCIS rather than going through the Social Security Administration.

“Naturalized citizens who have not yet updated their records with the Social Security Administration are the largest category of work-authorized persons who initially face an SSA mismatch in E-Verify,” the USCIS said in a statement.

The agency also said real-time arrival data from the border inspection system will be added to E-Verify in an effort to reduce mismatches for newly arrived workers.

The improvements are unlikely to assuage SHRM and the other members of the HR Initiative for a Legal Workforce. They are advocating a bill written by Sen. Sam Johnson, R-Texas and ranking member of the House Ways & Means Social Security subcommittee.

Johnson’s measure would mandate that employers submit information electronically only for new hires to the Social Security Administration through a child-support enforcement system already in place in each state.

Advocates for the bill say that about 90 percent of U.S. employers already use the so-called “dead-beat dad” system. The identity of prospective employees would be checked against Social Security and Department of Homeland Security databases. The procedure would eliminate the paper-based I-9 process.

Under the bill, employers would be given the option of signing up for a secure electronic verification system that uses a network of government-approved private contractors to conduct background checks of workers and collect biometric identifiers, such as fingerprints.

At the May 6 hearing, supporters of the Johnson bill will face off against champions of E-Verify. The meeting will launch House consideration of immigration proposals, many of which focus on enforcement.

The hearing series is an attempt by House Democratic leadership to satisfy conservative Democrats—and Republicans—who are pushing for a vote on bills that would crack down on illegal hiring.

Top House Democrats don’t want to allow enforcement measures to move forward without including bills to increase legal immigration and to allow a path toward naturalization for the 12 million illegal workers in the United States.

But the immigration logjam may have to be broken when it comes to E-Verify. The law that established the program expires in November. Congress has to either extend E-Verify or scrap it this year.


April 23rd, 2008

Seeing an Unflat World in Bangalore IT Haven

At the risk of looking like a walking cliché, I am reading The World is Flat during a personal trip to India. And not just to India, but to Bangalore, the IT haven that inspired author Tom Friedman’s catchy title.

I am not an expert on India. In fact, my colleague Jeremy Smerd wrote an authoritative package of stories about people management trends in India last August. But my coverage in Washington often requires writing about globalization—and, hence, about China and India.

I decided a couple years ago that I had to get at least a glimpse of each place. I traveled to Shanghai in March 2006 and am in Bangalore now.

What I am offering is not academic analysis but my impression of India in the first days of my first trip to the country. After reading the beginning of Friedman’s book, I was expecting that Bangalore would be a mecca that rivals U.S. cities.

Maybe that’s what I’ll see later in IT office parks. But the images here that strike me are the paradoxes that infuse most developing countries. Expensive sports cars compete for the road with the teeming auto rickshaws.

I am staying in one of the “posh” sections of town with a friend. But a couple blocks over, a Louis Vuitton store is about to open on a dilapidated street.

On tours of the city, it is clear that many of the people here—perhaps a majority—live in abject poverty. Their neighborhoods aspire to step up to gritty. Your heart goes out to those who are battling such grinding poverty while making less than $2 a day.

Of course, I know that there is another large section of the town that is thriving in an IT boom. I am staying down the street from a call center. I see the workers there coming and going. Every day in the paper, there are stories about IT companies making billions of dollars and expanding their operations.

One of the primary reasons they can do this is because of a talented technology workforce. Many of the world’s best engineers and scientists come from India. Even in the first few days here, I can tell India is a society that values education.

Colleges dot the landscape. Billboards call out for people to enroll in courses. All around Bangalore, I get the feeling that education is seen as central to advancement.

Many thousands of Indian students also come to U.S. universities.

That brings me around to an issue I have covered extensively: the annual controversy over H-1B visa caps. U.S. technology companies—and firms in many other sectors—say that they are desperate for talent and can’t hire enough foreign-national workers.

U.S. computer programmers complain that H-1B visas for highly skilled immigrants reduce wages and job opportunities. That could be true.

But there’s another subtle argument that employers are making: By and large, foreign-national students are more talented and numerous than their U.S. counterparts.

Leaving aside whether that quality assessment is fair, there doesn’t seem to be any excuse for U.S. workers not to compete effectively with those from India. For one thing, Americans have a tremendous head start.

In the Bangalore area, down the street from signs encouraging enrollment in local universities often is a neighborhood that illustrates the dire economic straits of most Indians.

Just look at the numbers. The literacy rate in the U.S. is 99 percent. In India, it’s 60 percent. There’s 54 percent enrollment in Indian secondary schools, compared with 94 percent in the United States.

After seeing Bangalore for a couple days, it’s clear to me that a kid from a randomly selected American family has a much better foundation for success than a child from a randomly selected Indian family.

The complex and difficult task Washington must tackle involves reforming education and workforce development policies so that more Americans take advantage of the country’s blessings to become the talent that U.S. companies crave.


April 8th, 2008

Obama Would Strengthen Unions, Move Toward Labor Law Overhaul

The world has a way of intruding on Democratic presidential campaigns. Although Sens. Barack Obama and Hillary Rodham Clinton have cast skeptical eyes on trade liberalization, opposing a pact with Colombia and calling for a rewrite of the North American Free Trade Agreement, their aides have been sending different signals.

In Obama’s case, one of his economic advisors told Canadian diplomats that his attacks on NAFTA are essentially campaign rhetoric and cooler heads will prevail on trade after the election. Clinton’s strategist was dismissed this week after it was revealed that he met with Colombia officials to talk about building support for that agreement, in his non-campaign role as head of a major public relations firm in Washington.

Despite fierce denunciations of trade on the campaign trail, we can’t be sure what kind of globalization policies Obama or Clinton would pursue in the White House.

The approach they would take on labor law is transparent. Neither they nor their aides waiver on backing the union agenda. The latest example comes from Obama.

He owes his lead in the polls and in fund-raising in large part to his soaring oratory. He says that words matter.

His language couldn’t have been clearer in an April 2 speech to the Pennsylvania AFL-CIO. He promised to change a system in Washington in which “corporate lobbyists use their clout to shape laws to their liking.”

He vowed to stand up for American workers and “play offense” for “a decent wage … retirement security … (and) universal health care.”

He also pledged to move the ball down the field for organized labor and back its top priority—legislation that would facilitate unionization.

“If a majority of workers want a union, they should get a union,” he said. “It’s that simple. Let’s stand up to the business lobby that’s been getting their friends in Washington to block card check. I will make it the law of the land when I’m president of the United States of America.”

The only thing likely to stand in the way of making that campaign promise a reality is a dwindling cadre of Republican senators. The Senate GOP may barely number enough to sustain a filibuster by the time the party loses several seats in November.

The business lobby argues that the so-called card-check bill would rob workers of the right to a secret-ballot election monitored by the National Labor Relations Board. But a Democratic member of that panel says that the Republican-majority board has been too sympathetic to management during the Bush administration.

In Senate testimony last week, NLRB commissioner Wilma Liebman previewed what may be in store next year for labor law, when Democratic majorities will be stronger on Capitol Hill and a Democrat might occupy the White House.

She cited rising income inequality as a reason for Congress to consider changing the National Labor Relations Act.

“I would welcome comprehensive re-examination of a law that has not been substantially revised for more than 60 years,” she said.

Liebman may get her wish, if Obama becomes president. Some of his opponents have accused him of not outlining specific policy amid his moving oratory. When it comes to labor law, however, Obama is precise. What you hear is what you will get.


April 1st, 2008

Bear Stearns Fiasco Lacks Characteristics of Executive Pay Abuse

As Congress returns to Washington from a two-week spring recess, worries about the housing market—and the economy—are more abundant than cherry blossoms. Congressional attention is focused on JPMorgan Chase’s takeover of Bear Stearns.

Most of the concern centers on the $29 billion guarantee that the Federal Reserve made to JPMorgan to cover what could be enormous amounts of bad debt remaining in Bear’s burning embers.

Another dimension of the deal that is drawing attention is the level of pay that Bear executives received even as their firm collapsed.

Rep. Barney Frank, D-Massachusetts and chairman of the House Financial Services Committee, has indicated that he will explore whether shareholders can reclaim hundreds of millions in executive compensation when a company fails. Frank is the author of legislation that passed the House last year that would allow shareholders to vote on executive compensation packages.

Republicans, too, are raising questions about Bear pay.

“I’ve instructed my staff to delve into the details of the deal,” said Sen. Charles Grassley, R-Iowa and ranking member of the Senate Finance Committee. “[A] longtime interest of mine is how insiders such as senior executives are treated in these kinds of deals. Corporate bigwigs shouldn’t be able to profit from a deal while employees, shareholders and creditors have to carry the burden of a company’s demise.”

But it may be difficult to make the case that Bear Stearns is an example of executive pay run amok. Last week, Bear Stearns chief executive Jimmy Cayne sold his company stock for $61 million at about $10 per share. True, you can make $61 million go a long way, even in New York, but Cayne has lost hundreds of millions of dollars on Bear shares, which sold for about $170 each in January 2007. About one-third of Bear stock is owned by employees, including executives. When the company tanked, so did their personal fortunes.

“It’s hard to say how [Cayne] made out [well] in all this,” says Alan Johnson, managing director of Johnson Associates, a New York compensation consulting firm. “If you looked at it objectively … you would say this is an executive compensation plan that worked.”

That may not be how members of Congress see it. During the spring recess, they likely met with constituents who are threatened with losing their homes, their jobs or both. During the economic downturn, the Democratic majorities on Capitol Hill are focusing on the difficulties faced by individuals.

From that point of view, the JPMorgan takeover of Bear may generate examples of folks, albeit Wall Street folks, getting tossed into unemployment as the two operations merge.

JPMorgan will try to keep revenue-producing Bear brokers. But many investment bankers, analysts, IT and other redundant staff will be shown the door in an effort to streamline the operation and make a quick profit for investors.

Barry Miller, manager of alumni programs and services at Pace University in New York and a private placement consultant, says JPMorgan has a reputation for being ruthless.

“They want to take [Bear] over and raid it,” Miller says. “They do what’s best for their bottom line.”

What’s best for business may make Congress queasy.



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