Massive layoffs rumored for Qualcomm

Could be 4000 — 13 percent of employees

Paul Jacobs and Steven Mollenkopf of Qualcomm
  • Paul Jacobs and Steven Mollenkopf of Qualcomm

San Diego communications giant Qualcomm could announce coming layoffs of 4000 people on Wednesday, according to rumors racing around the internet.

July 22 is the date of the company's release of its third-quarter earnings. It will have a conference call with securities analysts from 1:45 to 2:45 p.m. that day. An earnings call would be a logical time for such an announcement.

The company has 31,300 employees. A layoff of 4000 would be almost 13 percent of the workforce.

Qualcomm is under pressure. The company paid almost $1 billion to settle an antitrust dispute with Chinese regulators. Now Europe is looking into going down the same path. According to Motley Fool, "With one antitrust investigation in the rear-view mirror, another has popped up in its place. European antitrust regulators have now decided to take a look at Qualcomm's business practices."

Jana Partners, a hedge fund with a $2 billion investment in Qualcomm, has been pressing management on many fronts. In late June, Qualcomm said it had no plans to spin off chipmaking and tech-licensing businesses, thus annoying Jana.

Thestreet.com stated Thursday that "Qualcomm could end up as the biggest proxy fight ever." Jana Partners would be the aggressor. Announcing a huge layoff would be a method of appeasing Wall Street and staving off a proxy fight.

Fudzilla.com says "Qualcomm may lay off around 4,000 people." Govtslaves.info reports the same number. Investor message boards speculate whether the announcement of a layoff will run up Qualcomm stock.

A layoff of this magnitude would stir up more criticism of Qualcomm's excessive top executive compensation. Last year, chief executive Steven Mollenkopf was paid $60.7 million. Former chief executive and now executive chairman Paul Jacobs was granted almost as much as Mollenkopf, bringing their combined compensation to $117.7 million. The company argues, correctly, that all this money would not come to the executives in one year, but nonetheless, it is the kind of pay that could — and should — rattle workers, especially those facing a layoff.

Also, Qualcomm is one of the nation's largest users of the H-1B program. This government program permits importation of foreign workers, but opponents argue that the process has the effect of lowering the pay of all engineers and scientists, particularly American ones.

The company refused comment.

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I've heard as a rule-of-thumb it costs a company about $250K / person / yr for engineering staff (salary + benefits + taxes + office space, CAD software, IT suport, etc).

So Mollenkopf + Jacob's combined compensation alone would work out to what it costs to keep almost 500 engineers. Certainly a lot fewer than the 4000 rumored to be getting layed off but a significant number nonetheless.

ImJustABill: Again, their compensation is tied to such things as stock performance, and they won't rake it in in one year.

If this rumor turns out to be true, the company's stock should rise, and the hedge fund Jana may be thwarted, at least temporarily.

This whole exercise tells us what is wrong with American capitalism as practiced today. If Qualcomm makes these job cuts, it would be acting purely for the sake of the stock -- trying to fend off a Wall Street firm that has no interest except the price of the stock. This short term, quarter-by-quarter thinking -- which often leads to phony accounting, among other sins -- is harming American corporations and the economy.

I can remember the day when chief executives would tell me, "Our job is to run the company for the long term. The price of the stock will take care of itself." Amen. Best, Don Bauder

The investment philosophy of buying a stock because the company has good fundamentals and is well run seems to have changed as well. Now, the investment philosophy seems much more short-term. Jana's philosophy seems to be that they can get some short term price spike by dismantling QCOM - probably with little regard for the long-term success of QCOM.

ImJustABill: Of course. Wall Street only thinks about the short run these days. The disease has now afflicted U.S. corporations -- even blue chips that should be run for the long term.

Just the other night I was talking with a guy who owns as couple of banks. We were talking about how the purpose of Wall Street was originally to raise money for new companies to sprout and existing companies to grow.

That noble objective is now a fraction of Wall Street's business. Now, Wall Street firms get their profits from corporate takeovers, private equity scams, and trading -- a bunch of youngsters sitting at computers, trading derivatives. Ad nauseam.

I would argue that much if not most of Wall Street activity now actually detracts from the economy, rather than bolsters it.

And keep this in mind: firms like Goldman Sachs and Morgan Stanley, traditional private investment banking firms, are now commercial banks that can borrow from the Federal Reserve for near-zero interest rates. They can borrow from the Fed and gamble any way they want to with the funds. Best, Don Bauder

Typical traitorous employer hiring low wage foreign workers instead of American workers. All employers who hire foreign non-citizen workers should lose all tax deductions for all workers. America first - American workers first. These are the same "family values" people except when it comes to cheap labor. All H1-B workers should be laid off before one American citizen worker.

AlexClarke: But the H-1B program has enthusiastic backing in Washington, particularly from those "family value" people -- the so-called conservative Republicans. Best, Don Bauder

Actually, a rather odd alliance of conservatives and labor unions are the most vocal opponents, for different reasons.

tibu: Actually, liberals and progressives seem to be the loudest opponents of H-1B. Sen. Dick Durbin of Illinois, for example, is a stern critic of H-1B.

I find it interesting that so-called conservatives who want to restrict immigration are all in favor of expanding H-1B. This means that the reason they label themselves "conservative" is that they are in the back pockets of large corporations. Best, Don Bauder

Must be why obama raked in the cash at Jacob's mansion in 2014, at $32,000/couple. You know, the president who 'cares so much about the average joe', right Don?

briannaferry: Actually, Obama talks a good game when he speaks of Wall Street. He just doesn't act it. The plutocracy's grip on America is probably worse now than it was in the days of the robber barons. Best, Don Bauder

According to H-1B records, Qualcomm (and its entities and subsidiaries) submitted 577 applications for various engineer disciplines in 2015. A majority of those applications where filed in March, 2015 with start dates listed beginning in Fall of 2015.

Although several of the applications are for facilities in San Jose (CA), Austin (TX), Boulder (CO) and Raleigh (NC), the San Diego facilities have 400 certified applications. Over the past 7 years, Qualcomm has submitted 3,541 H-1B applications for San Diego facilities.

Qualcomm also off-shores jobs to its campuses in India. I don't know how to get figures for the number of employees they have overseas. However, I have noticed in the past with companies like Microsoft, Oracle and IBM, that when they lay off a contingent of their domestic workforce, they continue to post jobs in the foreign locations. As of today, Qualcomm is advertising 65 positions for direct-hire in India.

"With offices in Bangalore, Hyderabad, Chennai, Mumbai and Delhi, the opportunities at Qualcomm India are wide open for you." (From the Qualcomm India career website).

Ponzi: Yes, Qualcomm is a big user of H-1B immigrants. They come cheap. They drive down the wages of other engineers and often drive them out of the company and perhaps the industry.

The H-1B program is based on a lie: that there is a shortage of U.S.-trained engineers. There is no shortage. There is a surplus of such engineers. Best, Don Bauder

Don, Respectfully, while this may be the perception of the industry, it is not true of Qualcomm. I worked in the engineering department from 1992-2010 and was intimately involved with hiring and compensation. The immigration status of an employee was NEVER a factor in determing compensation. Rather, compensation (salary, bonus, stock) was tied entirely to performance. While employee salaries typically fluctuate from country to country (i.e. the salary of an employee in San Diego reflects local market conditions, while an employee in the UK, India, or elsewhere is based on compensation in that part of the world), an engineer in San Diego on an H1 is compensated using the same scale (depending on performance) as one born in the U.S.

Likewise, when hiring engineers our focus was ALWAYS on finding the most capable candidates, and candidates were expected to pass through a fairly rigorous round of very technical interviews to earn an offer, regardless of immigration status.

Regards.

johnpurlia: Every company says it is a meritocracy. You say that about Qualcomm. I won't say I disbelieve you. I will only say that I cock an eyebrow every time I hear somebody in human resources make such a claim.

Remember, Qualcomm appointed the son of the co-founder as chief executive when he was in his 40s. His pay then shot up to among the highest in the nation. After he was booted upstairs, his compensation, as well as the compensation of his successor, remained extremely high -- a combined $117.7 million last year. Staggering. I realize the board does the hiring of the CEO. But human resources may get in on certain matters, such as salaries. Best, Don Bauder

John my perception is that QCOM tries to find the best candidates for engineering jobs, has a rigorous interview process, and hires the best possible candidate at a competitive, but not excessive wage.

The problem is the law of supply and demand.

By lobbying for more H1B visas, QCOM greatly increases the supply of engineers - which shifts the prices of engineering labor (i.e. salaries) lower. Basic economics.

To me, I would say that means that QCOM, similar high tech companies, and the US government are actively working together to lower engineering wages.

Perhaps that has some net benefit to society in the long run. But the story is not presented that way. The story presented by large corporations such as QCOM that there is a dire shortage of engineers - which is simply not true.

ImJustABill: Yes, the claim that there is an engineer shortage is a lie -- not an untruth, but a bald-faced lie.

One suspects the U.S. government and the Federal Reserve are trying to keep salaries down. As long as salaries for the little guys and gals -- those not in the 1 or 2 percent -- stay low, the Fed can continue to crank out money on the printing press without causing inflation. Consumers don't have enough income to take advantage of the low interest rates and money sloshing around.

The inflation shows up in stock market values, which are not captured in the consumer price index. It also shows up in the rise of housing prices, which are part of the CPI, but the statistics are jiggered, thus understating the impact of housing prices. That is deliberate. Best, Don Bauder

I worked as IT director in two companies and I have first hand knowledge of how the ("wink wink") people were selected. I respect those with engineering educations but I also realize how so many are naive.

2014 profit per employee at Qualcomm was $243K

JoeWeil: And if they announce as many job cuts as expected this afternoon (Wednesday), that number will go up, unless the cuts go into the bone.

I yearn for the good old days when companies adjusted their workforce to fit their productivity needs, not to appease Wall Street. Best, Don Bauder

I think a reasonable rule might be that if a company lays off more than 100 people, or more than 10% of their staff (whichever is smaller) then that company shouldn't be allowed to have any H1-B hires for a period of 12 months. I don't know if any such rules are on the books.

Don't have a big layoff then turn around and say you're desperate to hire people.

There are challenges to letting the H-1B people go. They are under different employment arrangements and those contracts are (supposed to be) for 3-years and can be renewed for another 3-years. Many bring their families over. I believe the sponsors may have to pay fees and relocation if they have to terminate them prematurely. Just as there is a small industry bringing over pregnant Koreans (and other foreign nationals) to California cities to give birth (anchor baby industry) there is also an ecosystem for H-1B's to remain here and get the naturalization process started. Even though they originally agreed to be "temporary labor." One of the problems is this also creates an unfair immigration policy because it allows those with H-1B's to skip to the front of the line.

In the past I worked at three different companies, two of which had no business hiring any H-1B's. In each case there were small layoff's and the H-1B's stayed on. I protested to their respective HR and legal departments. Which I found was a nice way to become unpopular with upper management. So, most employees remain quiet and try not to rock the boat. Is Qualcomm going to cancel the certifications is has lined up for start dates in the fall? From my years of following this wage-diminishing scam, I would bet that very few H-1B's will be sent packing.

Yeah, I guess in practice every time I really think these things out I come to the conclusion that the only way to prevent H1B workers from lowering American wages and/or increasing American unemployment is to reduce the number of H1B's.

Anything you do to protect American workers could potentially also be construed as discriminating against foreign workers and may have it's own set of legal problems.

ImJustABill: I believe the number of H-1Bs should be reduced for the sake of other engineers whose level of pay falls because of the low pay of H-1Bs. Best, Don Bauder

Ponzi: Yes, because H-1B workers are sent for specific terms, they are more difficult to terminate. Best, Don Bauder

ImJustABill: There are rules that are meant to hold down growth of the H-1B program, but they are not very effective. Best, Don Bauder

The source of these rumors is an internet blog, it will be interesting to see if he is correct.

I'm still curious about the two employees that committed suicide by jumping off the top of Qualcomm buildings in 2010 and 2012, similar to what happened at Foxconn in China. The suicide in 2012 was withheld from the press, you can't find any reporting on it. The suicide rate per number of employees was higher for Qualcomm than Foxconn.

pencil_puller: That is very interesting. I haven't heard that suicides at Qualcomm had been shielded from press scrutiny. I would like to know more. My email address is [email protected] Best, Don Bauder

JoeWeil: Whose pants are on fire? Who is a liar? I think that was aimed at me. Best, Don Bauder

Brianna Ferry: I believe Obama favors the H-1B program. The big companies such as Qualcomm and IBM really lobby hard for H-1B. Best, Don Bauder

BTW of GOP Senators Orrin Hatch (R) is a big pro-H1B guy. Grassley (R) and Sessions (R) of the Senate's judiciary committee want to place limits on the H1B's but it's a difficult fight.

ImJustABill: Yes, I wrote about Grassley and Sessions in my last column about this topic. They are Republicans who are critical of H-1B. Best, Don Bauder

So the best advise would be this: If you work for Qualcomm, and think you are about to get laid-off, buy a bunch of Qualcomm stock. The ultimate "taking it for the team." It's pretty easy to see why entry-level wages are so stagnant across this country. Even if the CEO of Burger King wanted to pay his fry-cooks 20 bucks per hour he couldn't because Wall Street would kick his companies butt into non-existence. Once I had the thought that the government could reward companies that are known for paying their employees well and treating them fairly by enacting some sort of exceptional business dividend in conjunction with the stock market. Basically, investors who bought stock in these companies that displayed exemplary behavior in these realms would receive an additional dividend which would come out of the feds pocket. Where the money would come from...hmmm...maybe actually prosecute some white collar crime every so often? One interesting method would be to pool money brought in via whistleblowers, tax-fraud, fines and other corporate crimes. It would be a bit of a Robin Hood scenario as the bad would be rewarding the good. In conjunction with the positive list, you could also shame companies that treat their employees like garbage by perhaps giving them a zero on a scale of zero to five in terms of "quality company to work for." Of course, Wall Street would obviously clamor to all the "zero" companies since they would be the most likely to live by the corporate bottom line and not their employees well-being. In short, we're screwed.

Dryw Keltz: There should be some way to punish companies that give their employees horribly low compensation. But I wouldn't know what it would be.

You can't expect consumers to stop shopping at companies that bring in goods from China and treat and pay employees badly. The consumers are told that they are not saving that much shopping at Walmart stores, because employees are paid so little that the company shows them how to apply for welfare. Government welfare comes out of taxpayers' pockets. But consumers don't grasp the message.

Attempts to rein in obscene CEO pay through government action haven't worked, either. Best, Don Bauder

I think overall that free market capitalism, despite it's flaws, works better than other economic systems which have been tried.

But I think the free market capitalism needs to be reigned in by regulation in a lot of ways - for example setting reasonable minimum pay and working conditions,reducing environment damage, etc.

Basically I think the free market works well IF the government lets the free market do things that it does which are good for society BUT limits the things the free market does which are bad for society. The government, should put checks and balances on the securities markets, and businesses to limit unfair and destructive practices.

But I think the way that government, securities markets, and business work together now has gotten dangerously unstable. I think rather than trying to limit business and the markets from doing things which harm society - over the past few decades the government has jumped on the "next quarter's results are all I care about" bandwagon with big business and big finance.

We are drifting into becoming a plutocracy - if not there already.

ImJustABill: The free market does not work in the case of CEO compensation. If it worked, the situation would not be insane. In the 1960s, CEOs made about 65 ot 70 times what the average worker made. Now that is up to around 300.

Almost everybody agrees that CEO salaries are out of control. Any CEO wants to make more than a CEO in the same industry. So he or she hires a consulting firm that puts together a package that tops the other guy or gal. The consulting firm gets a fat reward. The board routinely OKs the salary, which is only loosely tied to performance. A genuinely free market would do better than that. Best, Don Bauder

I stopped shopping at WalMart and other companies that mistreat employees for exactly those reasons. And work very hard to not buy cheap crap from China. I still try to reward US made products and companies that pay and treat employees well.

The only way things change is if we speak out and act in accordance with our values. And elect those who are willing to do the same.

darwinwoodka: I take my hat off to you. I wish more Americans would refused to shop at retailers that mistreat their employees, and are an outlet for Chinese goods. Best, Don Bauder

Finding things NOT made in China is unusual. I know a junior high school kid whose new Master lock for school is still made in Milwaukee. I was amazed and heartened. Still a great product.

2014 Walmart profits equaled $57.8K per employee.

JoeWeil: Does that mean that the company is run efficiently -- or ruthlessly? Best, Don Bauder

Costco is an example of a company that treats its employees well. Under the leadership of Jim Sinegal, Costco pays wages that have been responsible for a loyal and stable workforce. Sinegal retired as CEO, but his protégé Craig Jelinek has agreed to continue the winning formula.

In terms of how Costco treats its workers, Mr. Sinegal said, “It absolutely makes good business sense. Most people agree that we’re the lowest-cost provider. Yet we pay the highest wages. So it must mean we get better productivity. It’s axiomatic in our business—you get what you pay for”

By the way, other than some warehouses that were closed many years ago and some jobs lost or transferred (as well as the cuts during the Price Club/Costco merger), Costco has never had a wide-scale layoff.

As Sinegal wisely choose to pay better for employees who would work hard and be loyal which means the customer service to the warehouse member would be excellent. He put his employees and customers ahead of the demands of shareholders. Shareholders who have held Costco stock have been handsomely rewarded. You can be nice to your employees and make a profit for your shareholders.

Sol Price's favorite saying was "take care of your employees and they will take care of your customers". Costco has very low employee turnover mostly due to retirements. WalMart has a reported turnover of 150%. As for the fast food types read the book on In-and-Out. Both companies are examples of how you can succeed and treat your employees well.

AlexClarke: It's true -- particularly true of retailers. Employees who are treated well will treat customers well, and probably not steal as much merchandise as employees steal from other, less enlightened retailers. Best, Don Bauder

Costco profit per employee in 2014 was $11K.

JoeWeil: So does that mean Wal-Mart is a better company than Costco? Best, Don Bauder

Ponzi: Agreed. Sinegal started in San Diego under Sol Price. Then he outdid his mentor, as Costco essentially took over the Price Club warehouses. Sinegal was the model of an enlightened CEO and his replacement is the same. Best, Don Bauder

I worked for Robert Price at Price Club corporate on the other side of the warehouse on Morena. I probably was the guy that shut the lights off before moving to Issaquah. Om January 2, 1995...merger, acquisition, whatever. Those were some fun days seeing Sol eating hot dogs with his son, Robert, at the food court on Morena.

Ponzi: You got in on some important San Diego history. Best, Don Bauder

It is unfortunate for those who are going to be laid off. Hope they will find new opportunities sooner than later. Coming to the couple of people who have been commenting on H1Bs, it is pretty obvious that you have never worked for a large tech-corporation. So, get your facts right. I am sure you wouldn't care for due diligence. If you did, you wouldn't comment like that in the first place. Secondly, these are private companies, not government agencies. They simply mean business and keeping it profitable. Everybody wants good job and good life. If you have any grudge, then raise it to the employers, not the employees.

What comments about H1Bs do you claim are incorrect and what proof do you have that they are incorrect?

Obviously companies are in business to make money - they have a right to do that. But the companies lobby and bribe government officials to expand the H1B levels - which I believe is in the best interests of the company but not necessarily in the best interest of the US citizens supposedly represented by those officials. I feel that's unethical and isn't right for the companies or the government officials.

Again, if you have any specific comments which you claim are wrong and you want to post data which contradicts other comments then feel free to do so.

ImJustABill: We welcome a robust discussion of the H-1B program. We have had them before and they have been intellectually stimulating. If Qualcomm will announce big layoffs tomorrow (Wednesday) -- and I think it will -- the H-1B topic will get hot again. Best, Don Bauder

DueDiligence: I suspect that our blog commenters talking about the H-1B problems have indeed have had experience working for big companies. Best, Don Bauder

In all candor, I have to say I have no idea of what you have tried to articulate in your befuddling comment.

In fact, it sounds like you have a communication problem (deficiency) with the English language.

I would love to hear your point of view, but please say something comprehensible and coherent.

Ponzi: I think you are talking about DueDiligence; I hope you are not talking about me. Reminds me of the poem: Behold the happy idiot; He doesn't give a damn; I wish I were an idiot; My God, perhaps I am!

Best, Don Bauder

You've got one of these hilarious threads going, Don, where the left hand is out to lunch. (I think I've mixed a metaphor here, but this is funny as well as interesting reading.) I'm sure Ponzi doesn't think you have any trouble with the English language.

This Institute of Electrical and Electronics Engineers (IEEE) article is a good read regarding the H1B / supposed STEM shortage issue, http://spectrum.ieee.org/at-work/education/the-stem-crisis-is-a-myth

ImJustABill: Yes, the IEEE has done a good job dissecting the H-1B program. Best, Don Bauder

Why is the Obama administration allowing China to cripple Qualcomm with this $1 Billion fine on bogus charges??

Just another battle won by the Chinese in their long, subtle war for domination.

Sjtorres: The U.S. could not have stopped China from issuing its fine, and it can't stop Europe from doing the same. Best, Don Bauder

so, lay off the persons that do the real work , and the higher ups that don't do much get bonuses ?

Murphyjunk: Unfortunately, that happens far too often. A company tells its shareholders and the public that its executive compensation is based on performance. Then when corporate performance goes to hell, the company will decide that top executives should get a raise for retention reasons: the company doesn't want to see them go.

A classic case was a column I did a couple of years ago on Callaway Golf. It claimed executive compensation was based on performance. Then when performance crumbled, Callaway switched to retention as its argument to keep top executive pay ridiculously high. Best, Don Bauder

I welcome your comments. Just for the argument sake with regards to ethical point of view, why don't everyone in the US buy automobiles from the US car makers? Nobody forces consumers their choice. They do what is best for them. Then, why can't corporations do the same? Ethics should apply the same to everyone. Isn't it? Besides, every year only 85,000 H1-B visas are awarded each YEAR. Petitioners include not only foreign workers but also foreign students who graduate from US colleges and universities. Majority (95%) of the direct foreign workers go to work in IT field only. In comparison, US economy creates around 200,000 jobs a MONTH. And it boggles my mind that the bloggers always talk how this is adversely effecting the whole US economy.

I hope you return to India. It is your destiny.

Your mind is boggled because you have snorted too much curry.

The 200,000 jobs "we create" are not the jobs your ilk are stealing. They are service jobs like tourism, retail, low-wage service, Uber, and so many other no-benefit, low wage jobs.You may think these are great jobs coming from the slums of India. But they are not jobs that pay wages consistent with the once American dream. The stagnant wages, while CEO pay rises, are a direct effect of hiring "so-called skilled workers" from India.

You speak English, but you write spaghetti code. Your degrees are fake or embellished, usually should be disregarded like our own diploma mills.

Keep whining, you cannot outrun your deceptions.

Ponzi: Yes, those 200,000 jobs created each month are, unfortunately, largely low-paying jobs, many in the service industries. Best, Don Bauder

Ponzi, I see that you lack argument against the automobile analogy and resorted to personal attack. Keep the topic in focus, not the person.

Put pressure on your congress men and politicians scrap the H1-B program. I don't care. It is the fact that they don't care either. Your helplessness is evident in picking on those foreign workers.

I personally haven't seen one single GOOD American engineer unemployed. If someone is not good, then why would a corporation pay thousands of dollars to hire him/her. This is not socialistic country. It is pure capitalism.

DueDiligence: What we have now is not really pure capitalism. It is corporate socialism. ..welfare for the superrich. Best, Don Bauder

DueDiligence: H-1B opponents in a way are sticking up for the immigrants. The opponents say the H-1Bers are living in a state of domestic servitude. Best, Don Bauder

I agree with you to some extent. People fail to see that those come here on H1-B are hardworking people too. Actually, the H1-B approval procedure is such that the corporation has made every effort practically possible to find an American citizen before offering the position to foreign worker. And there is a requirement on the minimum salary based on the occupation and education. If the companies act in good faith, this is fair practice. The H1-B applicant has no control over this hiring process. My whole point is that why would common American go after the H1-B applicant, who has no control over/influence the approval. That is all I wanted to share with the bloggers here. I have friends in the university who couldn't get a H1-B visa and had to leave the US after doing Master's because the quota was over much before the deadline. Hope people see that the gaming of the system not only hurts US citizens but also the foreign students who complete advanced degrees.

DueDiligence: We are delighted you are sticking up for the H-1B program. We may not agree, but we believe in healthy debate. Best, Don Bauder

Let's say we look at the two extremes - full isolationist protectionism vs. complete open markets for everything. I think you're basically saying that if we have open markets for some things - say car buying - then why not have complete open markets for everything. Buy anything you want with no tariffs, hire anyone you want, etc.

In principle that could work great. Problems are

1) We really don't have a free market in the U.S. We have a manipulated free market. "Crony capitalism" is a good term for it. The wealthy and powerful strongly advocate for no regulations and complete free trade and no government interference. Unless the government interference benefits them.

2) The complete open market / open borders thing doesn't really apply to H1-B's anyway. I'll admit that I don't perfectly understand the H1-B system but I do know that it is harder for an H1-B worker to change jobs from one U.S. employer to another. It sets back the time scale for when the H1-B worker might be eligible for a "green card". Thus, the H1-B workers are at an obvious disadvantage relative to US born workers when it comes to salary. It's harder for an H1-B worker to "jump ship" to get a quick 15% raise than it is for an US citizen or green card holder. This obviously will tend to hold down the H1B workers' pay. I don't think many HR departments are brazen enough to intentionally go out of their way to exploit this fact but there's obviously a big difference in the negotiating leverage an H1B worker has vs what a US citizen / perm resident has.

Ultimately, wealthy leaders of the high tech industry have manufactured the false "STEM crisis" to lower wages for engineering and science labor. The results are clearly that engineering wages are kept lower and the majority of engineering hires at many major high-tech companies are H1-B and/or foreign born students.

I suppose the optimists' view could be that it's a good thing that the USA is going out of our way to bring in the best and brightest from other countries. But I think that argument would really only hold if those coming to the USA for engineering jobs were given immediate permanent legal status rather than having to play the H1B game. As I've said, the H1B workers have restrictions which weaken their negotiation position. Also, eventually some of the H1B workers will return home and take expertise with them.

Ultimately at this point an engineering job market has been created such that it's not worth it for young Americans to start an engineering career. I wouldn't recommend an engineering career to someone starting out now. It's clear that for the forseeable future lawmakers will work with big tech companies to make sure that wages are low enough relative to education levels and technical abilities that most jobs will come from developing countries with large populations and strong primary math education

ImJustABill: You are absolutely right that the big companies have created the STEM crisis. It is a falsehood, deliberately concocted to get Washington to boost the H-1B quotas. Best, Don Bauder

You need to do some studying. The students come over on yet another highly abused visa program, the F-1 visa. Pushing our the children of our U.S. citizens into higher and higher educational/tuition costs and loading it all on and ever increasingly burdened student loan system. So we can have Chinese, Koreans, Indians attending the state universities that were once the realm of US citizens. The institutions were built on the premise of educating state residents, but have been hijacked by university administrators drunk on higher and higher pay, while professors can't attain tenure and completing a degree takes size years. Yes, thank you for coming over here with your money from slave-labor industries to pay for your children to be educated in the institutions that were intended for the children of our veterans and families. You H-1B workers and sympathizers disgust me.

Ponzi: The question of our educating foreign students is not divorced from the H-1B question, because our legislators vote that foreign workers educated at our higher education institutions can get special breaks to remain here. Best, Don Bauder

May be you propose US Government closing down the borders and live in isolation from the rest of the world. Find out where your ancestors came to the USA and return to that country, because I am sure you are not native Indian. Fair and square.

There's a middle ground between complete open borders (which is what we have right now for both high tech workers and low tech manual laborers) and complete isolation. Personally I think somewhere in that middle ground is where we should be. With existing immigration policy the US gov't is ignoring what's best for middle class Americans and struggling lower class Americans - in order to help big businesses attain higher profit margins.

DueDiligence: I don't think those speaking out against H-1B abuses are isolationists. Best, Don Bauder

The H-1B Visa used to be a legitimate vehicle to bringing foreign talent to the U.S. for a particular vocation that had a short supply of workers. In the 1980's, a similar program brought in sushi chefs and language translators. Now we have enough of those people being trained her. Today we bring in engineers and medical professionals.

Today there is a lot of corruption in the H-1B and other visa programs because many large Indian outsourcing and consulting firms have established a powerful lobby in our capitol. Employers are suppose to conduct an earnest hunt for a candidate before they can apply for an H-1B recruit. So what all the employers are saying is "they are unable to find a candidate in the U.S." that has the qualifications to do the job they have a need for. It may be that simple for the Department of Labor to believe, but it's vastly more complicated. What are we saying as a nation when many of our largest employers are saying there are better ("best and brightest?", please) that our own citizens in a country with the best educational and research institutions. Europe has some of the brightest engineers in the world also. Germany has excellent engineering, Italy has some of the brightest designers. Why don't they come over? Because they would be even more expensive. They also enjoy 6 weeks of paid vacation.

So by bringing over hundreds of thousands of "engineers" from India and inserting them into the large U.S. tech workforce, you can make the job market more competitive and that tends to suppress wages. Imagine clipping 20 to 25 percent off the wages of an entire tech workforce, that's quite a savings. And we know that Apple, Google, Facebook and Yahoo have been caught in schemes to keep their own engineers from job hopping between the companies.

As far as the "captive" nature of the H-1B. There's always Lindbergh Field. If you are feeling captive, just pack your bags and fly home. No one is captive. The H-1B can hold the employer captive by waiving his employment contract, but trust me, the H-1B is free to go. In fact many land other jobs quickly. I have seen it happen. They get the next employer to pick up their sponsorship. Or they just fall off the radar and go into another field.

My understanding is that H1B workers can be hired on an "at will" employment basis. I think for the most part companies don't differentiate between H1B workers and other workers in hiring / firing decisions.

Whoever does the most work for the least amount of money will get hired and whoever does less work for the most money gets fired.

The H1B program makes a vast shift in the supply curve for engineering labor and thus lowers the price (salary) - I bet 20-25 percent is a low estimate.

I was an IT manager for a large insurance company in my last job. I was instructed to interview and select applicants from an H-1B pool. The whole purpose was to set the bar for the pay scale for the other tech workers. I can't really get into all of the details, but my experience with this scam goes back over 25 years. There are "husband and wife" H-1B teams where one of them is a useless worker, but gets a job so the spouse can be here. There are fake diplomas, fake transcripts and fake references.

Sure, there are some good engineers. But in many of the cases I worked in I could not understand why saving ten or twenty-thousand dollars was worth the trouble of bringing these people over. Want "good communication skills?" Sure, they speak English, but we can't understand them and they are from a totally different culture and different educational program structure. They get a degree without civics, with US history and other burdens our US college students must study.

I guess I could write a book about it. It is so fraught with fraud. I had a mechanical engineer that was sent to my department because she was not working out in the engineering department. She would ask me the most stupid questions all day long, I finally asked how I could fire her. They told me that I should "giver her a chance..." I said, well if I am going to lose the leadership of my department over an H-1B mistake and you won't let me fire her, I quit.

With all the lost productivity and problems they cause, I cannot figure out why these companies bother. I guess it's just more cash for the CEO's to scoop up. To add insult to injury, when these Indian's finally get their green cards and leave a job, they open a company and discriminate. They hire only other Indians and then employ the H-1B scam to bring over their families and friends under falsified applications. Most folks hear about it. I have lived it, up close and personal. And I am disgusted by the whole spectacle.

Unfortunately I don't see things changing any time soon. I think the problem only gets mainstream attention when the abuse of the H1-B system is really blatant - like recent actions by Disney and Edison to fire IT staffs and immediately replace them with H1-B workers.

Oddly, I would say the cultural differences aren't really an issue now for H1B's from India or China, as those groups are well represented in most engineering departments. Cultural differences are more of a problem for me now as an American born engineer because I'm in a small minority group.

Engineering is not a really good profession for Americans to go into right now.

ImJustABill, I agree with you about the lack of mainstream attention. There's a shock and amazement, and then the story dies. Since I have seen this going on since 1989, it makes me wonder where the leadership has been that would make the "shortage" less of a problem. If we knew we had a shortage, why in over 25 years have we not been able to fix the problem with enrolling more people in STEM? Well, because we really don't need that many engineers and programmers. It just looks like a bunch of unfilled openings because of the shell game the big corporations HR departments play. There are always hundreds of positions advertised, but nobody fills them. This is to create an illusion of a shortage so they can then claim they can't find anyone qualified and then get certification for an H-1B. If there were no qualified candidates for a particular job, why do most technical positions get hundreds and sometimes as many as one thousand applications/resumes? Are there no qualified people in that stack of applications? Programmers and engineers are not very successful at organizing their labor so there is little power to fight the H-1B scam. Like you said, the only time someone complains is when their job is affected. Then we have the double-whammy of pushing our children to get an education in engineering, but they look at the stagnant wages and the assumption that the field is being dominated by foreigners and they opt out of the hard study for a job that may be outsourced or where they may train their replacement. That of course is if they can even get accepted to a university that is already making them compete with the flood of foreign students. This is not America anymore.

Employers can always create a "need" by changing job requirements. 20 years ago someone with a BS in CS or EE from a decent school would have plenty of opportunities. Now companies like QCOM require an MS or PhD from a top program to even get an interview. Then they can say they can't find enough qualified candidates to fill the job. It used to be companies would take decent candidates with BS degrees and train then the rest of the way to where they were good design engineers. Not any more. They expect applicants to have received that expertise from many years in grad school.

The way the system is set up there isn't much incentive for Americans to go into engineering as a career choice.

BTW I don't doubt your stories one bit and I hope I haven't given the impression that I have. I'm just looking at things from a different perspective which is as an engineer but not often involved in the hiring / firing process directly. And things may be done somewhat differently at different companies.

Ponzi: Yes, you could write a book about that. This is most interesting. There are a couple of groups battling the H-1B program. They would like to hear your experiences. Best, Don Bauder

ImJustABill: You may be right, but it is my understanding that laying off an H-1B can be difficult. Best, Don Bauder

Will the statistics for the QCOM layoff be public record? (e.g. full-time vs contract employees, H1B vs. permanent US resident / citizen) ?

ImJustABill: I doubt that the layoff information will be cut that finely. Best, Don Bauder

Don Bauder, there is no immigration provision that protects H1-Bs from lay offs. In fact, H1-Bs will have to leave the country within 1-2 weeks (not sure of the exact duration) unless they land another job within that period.

The CA WARN act requires that employers give at least 60 days notice to all full time employees for major layoffs - certainly the QCOM layoffs in CA will fall under WARN act.

ImJustABill: I haven't seen a Qualcomm WARN act notice yet. Best, Don Bauder

DueDiligence: We should get clarification on that point. Best, Don Bauder

I used to be a H1-B a long time back. I agree the STEM shortage is somewhat of a manufactured one. But you need to check your sources for law related points. It's as easy firing a H1-B as anyone else. Massive numbers of H1-Bs were let go in a company I worked for. And I know this from going through the legal process as well.

Ponzi: The so-called "head shops" or Indian companies providing H-1B candidates to American companies definitely are tainted with corruption. Best, Don Bauder

Ponzi: There is a lot of controversy about high tech companies making pacts that keep employees from jumping ship. Best, Don Bauder

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