The H-1B compromise reached by Congressional Republican leaders 
in July 1998 was not considered by the US House of Representatives after 
the White House threatened to veto the compromise.  The Senate approved a 
bill increasing the H-1B quota in May 1998, but it did not include the 
worker protection and training measures demanded by the White House.

   A spokesman for the National Economic Council said that the Clinton 
administration was "willing to raise the cap (on H-1B visas) to address 
the skills shortage as long as we couple that with some training for 
American workers and provisions to make sure the program is not abused."  
John Fraser, acting administrator of DOL's wage and hour division, said 
"There's no way to explain to people how it is that U.S. employers can 
reach out to India or Bangladesh or China or any other foreign country 
without even trying to find a US worker to fill the job.  And there's 
absolutely no way to explain to people why a US employer can fire or lay 
off US workers and replace them with foreign workers.  That's just 
ill-conceived public policy."

   An Intel vice president said that the probability of raising the
H-1B quota in September has dropped below 50-50.  However, in August, 
prominent California Democrats including Senator Barbara Boxer and 
Democratic gubernatorial nominee Lt. Gov. Gray Davis urged President 
Clinton to sign the Senate bill, which does not have the new worker 
protection standards.   

   There may be less industry interest in a higher H-1B cap because of
a slowdown in high-tech tied to the Asian economic crisis.  The management
consulting firm of Challenger, Gray & Christmas reported that the 
high-tech industry laid off 51,000 workers in July 1998, the largest 
number in five years.  Employment in electronic components manufacturing, 
which includes semiconductors, peaked at 681,000 in March 1998 and fell 
9,000 from that level by June.

   Under the compromise reached by Republican leaders, HR 3736, H-1B 
dependent employers--those whose work forces include 15 percent or more 
H-1B workers with less than a master's degree--must certify that they 
tried to recruit US workers and did not lay off US workers within the 
past 90 days to make room for the H-1B workers.  Other US employers 
requesting H-1B workers would not have to make these certifications.

   The Clinton administration threatened to veto the compromise bill unless 
worker protections were strengthened to reduce the threshold from 15 to 
10 percent, to permit US workers who think that they were laid off to 
make room for H-1Bs to recover lost wages if they can prove their case, 
and to require employers requesting H-1B workers to pay $500 for each 
application or $1,000 for each H-1B worker admitted, not the $250 for 
each application in the compromise.

   Economists associated with the Sloan Semiconductor Program at University 
of California/Berkeley reached the following conclusions:  "To determine 
if there is currently a shortage of high-tech workers, we looked at their 
wage growth in the economy.  If there is indeed a labor shortage, we 
would expect to see earnings of high-tech workers increase more rapidly 
than earnings of other workers.  This did not happen.  Although average 
earnings for engineers have increased over the last ten years, we find 
that the increased earnings for engineers have not been transmitted fully 
to the more experienced workers.  In addition, we find that high-tech 
engineers and managers have experienced lower wage growth than their 
counterparts.  This is strong evidence against the existence of a labor 
shortage."

   Since the H1-B program began in 1991, the Labor Department has
received about 300 complaints.  In 91 cases, investigators concluded that
companies owed almost $2.3 million in back wages and assessed about 
$215,000 in penalties.  "Job contractors" or "job shops" are the most 
frequent users and abusers of H1-B workers in high-tech fields.