Those who bleat that the U.S. will not keep up with the global competition unless we get more critically skilled workers are more concerned about making sure they get a bigger bonus by cutting labor costs. If there was a real shortage, salaries would skyrocket and not fall down as they have done over the last several years.

In our economy, the real issue is the correlation of people losing good-paying jobs and how it all interrelates to the housing market, foreclosures and the 20-year low in buying new cars. The “typical IT worker” who has been displaced by an H-1B worker is now at a much lower pay scale and his or her buying power has been acutely reduced.

The other observation is that this rush to hire H-1Bs has effected more than the IT industry. Some companies (like United Airlines) have used the H-1B program to fill jobs ranging from financial analysts and counter help to directors of fuel supply. These don’t sound like jobs where there is a shortage of U.S. citizens or critical skills to fill them.

Economy Has Been Stagnated

This is a real problem that has been growing for at least the last six years in the general economy. I have addressed job erosion in Illinois, which has affected foreclosures as well as new car sales and state tax revenues. Illinois, by the way, has more than a $1 billion shortfall.

The great “cost savings” that companies realized in hiring cheap labor has been figured into their profits across the last couple years. If you notice, some of the same companies have now shown poor growth and lagging profits. Hiring cheap labor was “last year’s solution” for many and they can’t make great cost reductions on the salary side any more.

In other words, the easy ways to look more profitable on paper than what you actually are have been exhausted.

Some CEOs are now faced with being creative and looking for new markets rather than implementing yearly cost cutting in order to justify an overly generous bonus that’s not earned. Cutting costs is a tactical function that can be accomplished by an analyst or a sharp clerk. It’s not a strategic initiative for which a CEO should be given a multimillion-dollar bonus.

Some high-tech companies are being looked at very differently by their once-loyal employees. At IBM, some are looking at a union as are others in multi-national companies.

Plainly stated, many IT software engineers and analysts who were being paid $80,000 to $100,000 in the early 2000s have now taken jobs for significantly less. Those who are still working in the industry may have been bounced from an employee status to a contractor status where benefits and pensions aren’t part of the compensation equation.

Flushing out employees who are eligible for benefits and pensions and hiring them back as consultants and part-time contractors for a flat hourly rate has been the strategy of many companies. I refer to that as the “Wal-Martization of the industry”.

These people aren’t looking at new cars or new houses. They’re not buying a lot of high-tech things and for the most part have taken a downgraded lifestyle. The amount of money they used to spend on landscaping, house additions, vacations and other expenditures has dried up. Other industries and jobs have now been affected and more and more small business owners see a decline in their business and then their lifestyle.

Everyone is talking about sluggish growth at their companies because they can’t slash any more to create the appearance of growth. The result is that the overall economy is stagnating and the buying power of the consumer has diminished. The great decisions of hiring a lot of H-1Bs are backfiring in the economy as money is being siphoned out of the U.S. economy and sent back to countries of origin where the H-1Bs came from (this is good for their economy but bad for ours).

There is very little or no recirculation of salaries into other segments of the U.S. economy. You don’t have to be a Nobel Prize winner in economics to figure out the impacts of that lack of circulation. If you’re a non-IT person, business owner or someone in a totally different industry, you’re now feeling the impacts that have cascaded over the last couple years from a couple high-tech industries into yours.

Want to sell that car? How many thousands do you want to knock off from the sticker price? The bargaining goes on and on while cars sit on lots. Dentists are another group affected as more and more people are losing dental benefits. Many already see more and more not coming in for regular checkups as they aren’t being picked up any more by dental plans that have been eliminated.

What Needs to Be Done

Can this downward trend be reversed? That’s what many are looking for in this presidential election. As we look at both parties, their candidates and their campaign rhetoric of hope and change, there is a lot of talk about magically creating good jobs for people but little substance on how that’s going to be accomplished.

Who talks about fixing the negative impact that the H-1B visa program has made on the economy of this country? The Republicans? Jay Leno had an interesting observation on that.

Hillary Clinton is for expanding the H-1B visa program. She says she’s willing to sacrifice more jobs and the well-being of families. It’s funny how the unions haven’t picked up on this. Barack Obama hasn’t really addressed H-1Bs and John McCain isn’t seeing it as a problem. Here is what needs to be done:

1. We need to curb cheap labor coming into this country. The reality is that the vast majority of these people aren’t wizards and only have basic skills that have been overrated or overhyped as critical for global competitiveness. The lack of managing this program correctly has added to the amount of illegal aliens in this country.

2. Make higher education cheaper and hold universities to educating the work force here. Instead of investing in foreign ventures that may be good as a secondary or tertiary strategy, their primary strategy should be to create a competitive work force here (from which they get their endowments, alumni gifts and state and federal funding).

   Those who don’t comply get their funding cut off. Some alumni who blindly give to their alma mater should look into where the schools are focusing their efforts.

3. Create a more cohesive working relationship between state, school and business groups to tackle the problems that are in our states (so all don’t wind up like Michigan). The video in an earlier column made by veteran TV reporter Vince Wade shows the problems in Michigan.

4. Encourage global competition and a sense of urgency to educate the work force by tightening up on curricula in higher education and public schools. Focus on programs that yield a crop of good graduates in areas that industries claim there’s is a shortage in instead of cutting out programs that could have helped these areas.

5. States should also focus on creating jobs programs that take highly skilled people and transfer them into appropriate-level jobs instead of aiming low-level jobs programs for limited-skilled workers to those who have degrees, certificates and critical experience.

   Taking someone with a master’s degree in computer science and offering them a menial job opportunity at the local Home Depot isn’t solving the problem or adding to the economy. There is a lot of talent sitting on the sidelines and unemployment figures don’t reflect this. Underemployment is skyrocketing while the politicians and business media point to “good numbers” in unemployment statistics.

While all the presidential candidates talk about developing new jobs, none seem to talk about specifics or fixing the H-1B issue. In listening to all of them, the best quote to keep in mind is Harold Geneen’s (the former chairman of ITT):

Carlinism: If there’s a shortage of IT people, wages should be through the roof and not in the cellar.