Category: globalization

The US government just awarded a $1.2 billion contract to the outsourcing company Serco to help the United States’ Department of Health and Human Services sift through consumers’ applications for health insurance. Serco is a UK-based company. With the new contract, it plans to hire 1500 people.

This was a story in the New York Times today, and it wasn’t completely ignorable because of two currents running through the country lately. These past few weeks have seen people fretting over the security of their personal data. Edward Snowden’s whistleblowing made sure that everyone was aware of that. Meanwhile, spurring job growth has influenced recent months’ discussions over immigration reform as well as served as a keystone for economic and fiscal policy over the last few years. The recession did us in on that one.

Under Obamacare, states were asked to set up exchanges, or places where individuals and small businesses could shop around for insurance. Some states set them up, and others didn’t, so the federal government is picking up the slack. And they need people to do it. That’s where Serco comes in.

Under the contract, Serco will be in charge of administering incoming applications for health insurance, or operating an exchange. The company will help the Department of Health and Human Services determine who is eligible for health insurance and tax credits. (Tax credits will be given to those people who would have incurred a tax penalty this year for not having been on health insurance.) Some of the tasks will be reviewing and troubleshooting applications, but the bulk of the work, according to the NY Times, will be to digitize all incoming applications and maintaining consumer data. It will also help states with existing exchanges to with their applications.

These applications are important because a some states won’t be expanding Medicaid next year, and large companies are not yet required to offer healthcare coverage to their employees. There will be more than a few of them rolling into Serco’s offices.

The American branch of Serco is based in Reston, VA, and is strategically placed there. They have worked for other parts of the government before, such as the Department of Defense and other intelligence agencies. They control air traffic towers in a few states, and they even review visa applications for the State Department.

Serco is a typical consulting company. They make it easy for other companies to hire and use employees for a short amount of time, without a permanent commitment to employ them. Here in Europe, the European Space Agency counts Serco as one of its largest suppliers of manpower. They contract out their people and services to other organizations.

So, will Serco hire Americans or fly in some of their British and European brethren on H1-B visas to do the dirty work of health insurance administration? One would like to think that 1500 jobs would be created for Americans in the United States, on the one hand, but on the other hand, one would not. Having a job for a limited period of time isn’t the best deal in the world. People should generally be entitled to job security and a chance at career progression. Short-term contracts don’t do them justice, but, hey, a temporary job is better than no job. I would say that it’s ok for consultants to fly in, but make sure they get paid the same rate that an American would in their places.

What do we make of private income and citizenship data becoming available to these companies? So far, no one has had qualms about Serco working in other parts of the government – especially at those “intelligence agencies”. And it seems that foreign companies and employees have been active in the US government outside of Serco. The CGI group has headquarters in Canada. The American Quality Software and Services, Inc., has an Indian branch. Surely, there are security protocols that these companies follow in order to keep Americans’ information safe. And if not, then we can count on whistleblowers to hold companies accountable for invading our privacy (That might hinge on whether Snowden is accused of spying.).

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I hold a four-year STEM degree from an American institution, and I find myself working as an engineer in Europe. I’ve always been gainfully employed, but the opportunities were – quite absurdly – in Europe and not in the US in the late 2000s. To this day, I still can’t decide whether or not it was the American system that failed me or if a sweeping global force was at work. This is the debate that’s been going on the States since the end of last year.

Politicians in both the House and the Senate have been working on several drafts of a comprehensive immigration reform bill for a while. It wasn’t until recently that the so-called Group of Eight, a – you guessed right – group of eight senators agreed on a bipartisan immigration bill. It was passed last week in the Senate, with 68 supporters, 14 of whom were republicans.

Now, the bill has to make its round through the House of Representatives. It is thought that the republican-led house may squash the bill, but now, people looking for reform are hoping to sway their party to pass the bill. Mother Jones reports that the Republicans for Immigration Reform super-PAC plans to work the House in order to drum up support for the bill. Co-founded by the prominent republican Carlos Guttierez, former Secretary of Commerce in the Bush administration, the super-PAC hasn’t really seen the money roll in quite yet, but they’re working on it.

Republicans for Immigration Reform sounds a lot like Fwd.us, the Mark Zuckerberg-backed political lobby firm, who, as the Times‘ Somini Sengupta reported yesterday, was still looking for supporters. It has been floundering at getting republicans and democrats to come together on the immigration reform point. The company has lost liberal supporters because of advertisements that Fwd.us created to support unrelated issues, like the Keystone XL pipeline. One would be hard-pressed to find a liberal that supports that one.

Amazingly enough, there are other conservatives supporting the immigration reform bill. The cream of the crop, David Koch, is using his foundation, Americans for Prosperity, to financially pad the House’s deliberation.

So is this related to there not being enough Americans to fill these hi-tech jobs? It might not be.

For at least a couple of years, we’ve been hearing that there are too many vacant STEM positions and too few qualified people to go around in the United States. Much of this disquiet has been inspired by Silicon Valley CEOs lobbying in Congress to facilitate the administration of temporary work visas, called H1-B visas.

However, an April 2013 study from the Economic Policy Institute reported that STEM-educated people are not in short supply, as had previously been thought by the public. If they were, then you would have seen wages in the STEM fields go up in recent years. But wage growth has stagnated.

The study also found that around 50 percent of all US STEM graduates work in non-STEM fields after graduation. So, we have a surplus of engineers, scientists, and mathematicians.

Is this related to hiring the best candidate possible? Hmm.

If this is the case, then the best candidate isn’t necessarily the one that has the best formal training. The report showed that 36 percent of all IT workers had less than a four-year degree, and of the four-year degree holders, 38 percent had a STEM degree. These IT jobs represent 59 percent of the US’s STEM workforce.

STEM companies generally train people on the job, so a bachelor’s degree is not telling of talent. (However, all H1-B visa holders need to have the equivalent of a four-year degree – everyone except models!).

Or is it about paying foreign-born workers less? Maybe.

On average, the H1-B visa holder gets paid 20 percent less than an American who holds the same job, according to critics of the proposed policy.

The current immigration reform bill proposes making it easier for companies to sponsor H1-B visas for their employees. That means that the US would be opening its doors to foreign STEM graduates.

Good? Bad? The provisions look good for the most part. H1-B visas would be available in limited quantity to outsourcing companies, like Wipro but more widely available to all other kinds of STEM industry firms. That would ensure that talent, once it arrives in the US, stays there. But somebody has to ensure that these new workers get paid the same as American candidates. It’s hard to prove that on a case-by-case basis, but if wages stay flat or go up over the next few years in STEM industries, then that might be a good indicator.

I’m all for it if that means that technological innovation benefits from the wider pool of STEM labor. But I’m against if that means that it’s easier for a non-US citizen to start a life in the US than it is for a US citizen to return just because a visa holder will accept a lower pay grade than a passport holder.

 

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