Senator Wants Microsoft Job Cuts to Target Foreigners

Microsoft's cost-cutting move of slashing 5,000 jobs has attracted the attention of Republican senator Charles Grassley from Iowa. He wrote to CEO Steve Ballmer about the job losses, specifically concerned that, "Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan."

Microsoft's job-cuts were a reaction to lower than expected profits reported in its Q4 finances last week. Microsoft is the latest technology giant to demonstrate that it's finding the going tough, but it's certainly not the first to react by slashing jobs.

Microsoft has many foreign employees in the U.S. under the H1-B visa program, which is designed so that employers can recruit foreign nationals in "specialty" jobs. It allows foreign experts, who must have at least a bachelors degree, to work in areas of highly specialized knowledge — of which the sciences, IT and software are obvious examples — for up to six years. Furthermore, the regulations supporting the program state that "the statute does not require demonstrate that there are no available U.S. workers or to test the labor market for U.S. workers as required under the permanent labor certification program," which effectively makes it easier for employers to use this program than other visa systems.

But Senator Grassley is asking Ballmer to supply data on what jobs will be cut, and how many of those will be people in the U.S. under the H1-B program. Microsoft has a "moral obligation to protect these American workers by putting them first during these difficult economic times," he says.

It's an amazingly xenophobic argument in our modern world. Although Senator Grassley he uses the "similarly qualified" line, he's largely ignoring the fact that H1-B jobs are for highly-specialized workers — people who bring their own unique expertise in high-tech areas, and who may be hard to replace locally.


Grassley has a history of "thinking differently" about U.S. versus foreign employment situations. He's also introduced legislation that significantly increases the tax burden of U.S. citizens working abroad, irrespective of the impact that this would have on the expatriates, and independent of the tax situation in the country they're working in.

Microsoft's response to Grassley's maneuver was carefully crafted, and attacked the problem from a humanist angle: "We care about all our employees," said a company statement. The company will also be "providing services and support to try to help every affected worker, whether they are U.S. workers or foreign nationals working in this country on a visa," indicating that at least some of the 5,000 would be foreign employees.

[via Reuters]

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  • Kit Eaton

    @Darin Phillips: Nice point--I'd agree with you there. Microsoft's hiring has to be smart to maintain its cutting edge.

    Not so sure about the "best education in the world" though...Hasn't the education system been suffering too? Check out things like the QS top 100 global universities. With four placed in the top ten, and a country of only 60 million people, that kinda favors the U.K. as having a better system.

  • Darin Phillips

    From these comments, it sounds as if Obama could quickly create job opportunities for highly skilled Americans, but they would be overseas. That is clearly why the Middle East, who is still hungry for foreign expertise, has many countries that do not tax foreign nationals working in their countries.

    To the point of the article, Microsoft has a very savvy talent management group and I suspect that they have already met with executives to understand the near-term future of the company so that they can create workforce plans that meet those needs. Those decisions will be blind to visa status to some degree because MS will want to keep the people who have the best skills match to future needs and who are top performers in their current role. However, if they want to honor the spirit of the visa program, they will make final determinations based on who does not require a visa. It will be a tie-breaker, but not the initial determining factor.

    Long-term we will continue to provide the best education in the world and then export that education overseas. If MS cuts HB-1 visa holders first, expect a very talented group of foreigners to open competing shops overseas. Their MS experience, on top of what may well be US education and training, will make them a formidable competitor for outsourced jobs. Senator Grassley should think long-term and recognize all of the implications of his actions.

  • Patric Hale

    What can one expect from a Senator from Iowa? For him, New York and California are foreign countries. His myopia clearly knows no bounds. As an overseas executive for over 20 years who moved back because of his stupid rules, it is simply pathetic to see this kind of idiotic understanding of the world in which we live today. America has become more interconnected with the global economy than at any time in our history, and our economy more dependent on this interconnectivity. As Mr. Conklin rightly points out, we have an $800 billion trade deficit that has grown over the past 30 years - since Sen. Grassley was in the House and started his crusade against expatriate Americans. Think about the hoopla we've heard in the past several months about a mere $700 billion in TARP funds needed to save our financial system - we've been losing more than that on trade and no one in DC even notices. If our trade deficit weren't bad enough, we actually have an international investment deficit of $2.4 TRILLION and no one seems to notice. (That's the net amount of how much the rest of the world takes out of the USA in investment funds MORE than the USA takes from the rest of the world). So while Grassley tinkers with taxation of overseas Americans that "might" bring in a couple more million dollars we're losing markets and market shares virtually everywhere around the world. He wants Microsoft to get rid of foreign workers; yet he won't support sending Americans overseas to sell American products. This is like the USA having a global national security problem and relying on foreigners to implement it - just plain stupid! The best people to sell American products abroad are AMERICANS, not foreigners. Our trade and international investment deficits are as much an issue of national economic security as the war on terror. Instead of responding by incentivizing Americans to go out and sell more products, however, Grassley things overseas Americans are the enemy and must be punished for the mere audacity of going abroad to sell American products. Look at from a numeric perspective: According to the Dept of Commerce, each $1 billion in trade supports 12,000 domestic jobs; an $800 billion trade deficit = 9.6 million jobs LOST because of his myopia. According to the IRS, the Treasury receives only $2 billion from overseas Americans in taxes; the Federal government's take on economic activity is 18%; $800 billion = $144 billion in lost tax revenues. Consequently, Grassley, in order to maintain a stupid policy towards double taxing Americans overseas to maintain $2 billion in tax revenue means the US economy is LOSING $142 billion in potential tax revenue. I don't know anyone in their right mind who can look at those numbers and not see the stupidity of this attitude.

    So now he wants Microsoft to stop training foreigners to sell its products overseas that he's forced them to hire because of his double taxation laws? Yeah - and I thought he couldn't get even stupider....

    Patric Hale
    Author, "It's the Economy! (Stupid)"

  • Kit Eaton

    @Roger Conklin: Very interesting stuff to read there, thanks. It's bizarre that Grassley's moves are both punishing to overseas Americans and resident foreigners-- it'd be fascinating to find out exactly what he thinks about this situation.

  • Roger Conklin

    More than any other person, Sen. Grassley bears the responsibility for the current US trade deficit. As a freshman Congressman he was a co-sponsor of the Tax Reform Act of 1976 which drastically increased the double taxation of US citizens living and working abroad, making them unable to compete with non-Americans for overseas postings. This Act destroyed the ability of US companies to employ Americans overseas to sell US exports and transformed the US from being the No. 1 exporter into a has-been. The US never in the 20th century had a trade deficit until the '70s. The last and largest-ever US trade surplus was in '75. It went negative in '76 as hundredes of thousands of overseas Americans lost their jobs because they could not survive this onerous double taxation - something no other country in the world does to its overseas citizens. This decimated the network of private US citizens working abroad that had always assured a foreign trade surplus for the US. They could not survive and didn't, as hundreds of thousands came back home. It for example, literally destroyed the labor-intensive US industry in the overseas engineering and project construction market where the US had always been No. 1. Along with that destruction the US lost the export mmarket for the equipment to implement these projects to foreign countires whose companies moved in to take over these projects and this whole industry. In the Senate he has been an ardent suporter of double taxing Americans working abroad. His most recent action, mentioned in this article, was a last minute addition to TIPRA, passed in 2006, that increased these taxes again and destroyed the jobs of even more overseas Americans as well as the jobs of Americans here at home manufacturing the products they were selling abroad for export. The bottom line is that with a $800 billion trade deficit the US today accounts for 60% of the total trade deficits of all the world. In 2007 both Germany and Switzerland established new record trade surpluses. The US stands alone in the industrialized world as the only developed country with an out-of-control trade deficit. In 2006 while the US had an $800 billion trade deficit, the other 7 countries of the G-8 group recorded a combined trade surplus of $212 billion. And while our leaders brlame it all on China, Switzerland is negotiating a free trade agreement with that country, to enhance its alredy positive trade balance and create more jobs for Swiss workers. Rather than double taxing its citizens so they will stay home, Switzerland encorages their brightest and best to go to China and sell Swiss products.

  • Bartram Simpson

    The only thing that will fix this country is for Americans to get back to work, and for us to start making and doing things again like we used to. For the past decade we kept buying and hiring foreign, every chance we got. Looking at the economic ecology of this nation, how could we not run aground doing this?

  • Kit Eaton

    History: "give me your poor, your weak, your hungry"
    Current events: It's interesting that among the myriad causes of the :global: economic crisis, the economic meltdown in the US is widely regarded as a key initiator.

  • Bartram Simpson

    Nothing xenophobic about it. A few H-1Bs are super sharp, but the vast majority are average workers, brought in to replace our average workers, and that ain't right. When the H-1B program was begun, nobody realized the increadible abuses that would follow. The intent of the program is to temporarily fill spot shortages in our skilled labor pool. If corporations had stuck to the intent, there would be hardly any of them to discuss. Far from being hard to replace if they are sent home, many of them were trained by an American who was then let go. Some have been here so long, they haven't just purloined a few jobs, they've grabbed entire career paths that should have gone to the Americans they bumped aside. There never was a shortage to justify bringing large numbers of them here, and with all the recent layoffs there certainly isn't a talent shortage in America now! This program is so flawed, it needs to end. They need to go home.