Conference on Global Entrepreneurship: Economic Development for Asia and the U.S. – Session 3B: Global Entrepreneurship and Corporate Social Responsibility

Erik F. Wang: I hope you guys have had a fruitful conference as I’ve had. Today, it’s been to for me such an exciting time to be up here. My name is Erik Wang, I am the Deputy Director for the White House Initiative on Asian Americans and Pacific Islanders and I am going to be the presider for this panel entitled “Global Entrepreneurship and Corporate Social Responsibility.” We have three wonderful panelists that are going to cover various aspects of corporate social responsibility practices and how to look at that from a global perspective and from an entrepreneurial perspective as well, and the importance of the CSR practice for entrepreneurs to think about. I’m going to start off by making a few comments, brief comments, that will lay the foundation for our panelists. I think we have a great set of scheduled presentations that will flow very nicely.

First off, I would like to go into a definition of what corporate social responsibility is, and that is as achieving commercial success in ways that honor ethical values and respect people in communities and natural environment. I also added CSR also means addressing the legal, ethical, and commercial, and other edifications that society has for business and making decisions that fairly balance the claims for all key staples. CSR can really be thought of as a comprehensive set of policies, practices, and programs that are integrated into business operations, supply chain, economics, and the decision-making throughout a company, wherever the company does business, and as we know from today’s subject, that means globally in many instances. It also means including responsibility of that company for their current and past actions as well as the future impacts they are going to make as they move forward.

The issues that often define and represent a company’s CSR focus vary by businesses just based on their size, their sector, even their location from geographic region to geographic region. In the broadest senses we weave it altogether, it includes issues related to business ethics, community investment, the environment, governance, human rights, and the work place. What I think we really have here today that’s great, is panelists that can talk about each segment of that that I just mentioned.

Over the last decade, that practice of corporate social responsibility has grown exponentially, and more companies than ever before are engaged in serious efforts to define and integrate CSR into all aspects of their businesses. There is a huge growing body of evidence that is both qualitative and quantitative that demonstrates the value of CSR practices to bottom line benefits, in terms of revenue standpoints and bottom line dollars that affect corporate performance. I’m just going to name a few and then going into our first panelist.

One demonstrated CSR practice has really shown to improve financial performance. It was a 2002 DePaul University Study that showed that overall financial performance of the 2001 Business Ethics Best Citizen companies was significantly better than the remaining companies on the S&P500. Two, a reduction in operating costs. Some initiatives, like recycling, cut waste disposable cost and generate income by selling recycled materials for the companies. Third, enhancing brand image, and this is really, I think, a key, and to me, somewhat shocking area when I looked at the demographics and the numbers, and the most eye-opening data on why companies and entrepreneurs. You really look at CSR practice in terms of bottom line and as they start to develop.

With everything that entrepreneurs have going on this might not be at the forefront of the thought process in their business planning and as they move forward. But as you will see and as these panelists will discuss, it is really an area that should be integrated at the very beginning of your idea stage, and your development stage, and your business planning stage because it means real gain and real value for your company later on down the road. It’s easier to instill these practices at the very beginning as you move forward with them and evolve them than it is to wait and then put them into place later on.

When we talk about enhanced brand image, there is one consultant called [Code Roker] that is specifically a marketing public relations firm based in Boston that deals a lot with grant image and corporate social responsibility. They did a longitudinal study that covered a period of ten years interviewing American consumers. What their study showed was that ninety percent of those surveyed would consider switching to another company’s products or services based on CSR practices. That means, if I’m buying Aquafina and they don’t employ good CSR practices, but I find another bottled water company, say Dasani, and I know that they’re employing very good CSR practices, ninety percent of those people surveyed said that they would switch brands. Isn’t that important you to gain market share as you’re first starting out, to know that you could market yourself as a corporately social responsibility practice.

Eighty-one percent of the people surveyed said that they would speak out against the company to family and friends that didn’t employ good CSR practices. Now wouldn’t you rather be on the one end rather than that other end right there, having people talk bad about your product. This is perhaps one of the most startling… seventy-three percent of those surveyed said that they would boycott a company’s product all together if they found out that that company doesn’t employ good CSR standards. So as you can see this is really a bottom line issue that can affect the growth and development of your business.

Lastly, and the fourth point I’ll mention before we move forward, is increased ability to attract and retain employees. Companies that are perceived to have strong CSR practices and commitments often find it easier to recruit and retain employees. What that means is also a bottom line view –you spend less money having to hire new employees because you lose people, you spend less money having to train these new people, and your employees are much more productive because they enjoy the company and the workplace that they are working for.

With that I’m going to move into our first panelist, let’s stop there. You heard from him earlier, Alejandro Reyes, Mr. Reyes is a Hong Kong-based journalist and consultant, and specializes in Asian politics and economics. He was the youngest foreign senior correspondent in Time Inc.’s Asian magazines operations. He received an A.B. in economics from Harvard and a Masters from the University of Oxford. He is much more eminently qualified than I am to talk about this. So I will turn it over to him. What he is going to do is set this up for you by giving you an overview of global perspective of CSR and where Asia stands in right now in the evolution of the CSR movement. So Mr. Reyes, welcome, thank you…

Alejandro Reyes: Thank you so much. I’m going to sit down. Can everybody here me okay? Just to keep it informal. I just wanted to start by talking a bit about the organization, Pacific Base and Economic Council, PBEC as it is known is a business organization of about a thousand companies in the Asian Pacific region, including East Asia, primarily Australia, New Zealand, up in North Asia, Korea, China, Japan, as well as the United States, Canada, and South America, say about a thousand companies. It’s been around since 1967, and it recently moved its headquarters from Hawaii to Hong Kong. So I’m going to make my remarks from the perspective of PBAC because the big thing that PBAC does every year is run the conference like this once a year, its annual meeting. But, in fact, when it’s not running conferences, or meeting, or networking, as it were, a lot of the work, strangely enough, that business people are doing has to do with CSR. Particularly, PBAC has done a lot of work on the corruption issue, has done a lot of work on environmental protection, and on regulatory reform.

So I’m going to start from there. I’m also speaking from my work as, I guess, a student of globalization, like many of us are. It’s something that we are all students of; it’s something that nobody is really an expert on, something that is so new in a way that is changing the world. I’m working on a book on the movement against globalization, in fact that’s one of the places I wanted to start because I think for many people, many of these CSR issues bubbled to the surface in 1999 when we saw the demonstrations in Seattle against the World Trade Organization, which really brought the meeting to a halt. Sadly I wasn’t there, it was one of the tragedies of my journalistic life, that I missed that story even though I was all ready to go and had my bags packed by my editor said “Oh nothings going to happen, so don’t go.” So I didn’t go and then of course it was a big story, but that tragedy I’ll have to regret from the rest of my life.

But about a year later I was in Melbourne for a meeting at the World Economic Forum which is less famous as an anti-globalization event but, in fact, was no less serious because the same sort of things happened where we had thousands of protesters who came along, and prevented people, they linked arms and prevented people from entering the venue. I was one of those people who came in a bit late, and I couldn’t get in, so I spent the morning walking around, talking to the protestors, the journalists, and just trying to do my job, walking around asking them, “Well why are you here?” The explanations were as many as there were people. It was “save the turtles,” “save the spotted owls,” “save the whales,” “feminism,” labor unions, environmentalists, I mean a hodge-podge of people, many of them complaining about governments about corporations. So it’s hard to talk about it as a movement, people are against globalization. But I think some responses struck me in terms of what links all of these people, what makes the anti-globalization movement, or the movement critical of globalization is the way I like to put it because I don’t think they really like to roll back globalization, I don’t think that’s possible.

But what links them? What makes the movement? In many ways it is the fear, the global phobia if you will, the fear that somehow we’re losing control or a lot of the decisions that are being made are being made by corporations or states where there are people who we haven’t elected or have no accountability to us. Just as an example, a political example, the British just had an election yesterday, so the whole idea of direct democracy is you go and you cast your vote for your representative, and your representative sits in Parliament and helps make laws. But now there’s such a thing as Brussels, and who elected those people? Or there’s the European Central Bank in Frankfurt, so suddenly Brussels and Frankfurt people are sitting there who were not elected by someone sitting in Basils or Bah or whatever. Somehow our democracy has been sub-verged.

I want to start with that whole idea, that there is some kind of fear about the loss of control of our lives. So then I want to zip over to 2001 and another World Economic Forum conference that was held just here in the Waldorf-Astoria. After 9/11 the World Economic Forum moved its Davos annual meetings to the Waldorf. The most memorable speaker there was in fact my boss at the time, my theoretical boss. I have to get this right because he has the same name as my seventh grade science teacher… Dick Parsons, the chairman or Time Warner, AOL Time Warner then. He said something interesting, and my this is first point, he said “it used to be that the church that ran people’s lives and they made life and death decisions.” For those of you seeing things happening in the Vatican recently, you can sense the difficulty, the enormous power the church used to have. Then became nation state and states were the ones sort of telling us what to do and ordering our lives. He said, and this is quite plain, and something one rarely hears from captain of industries, he said “well, nowadays it’s the corporations that in many ways have made decisions that have some life or death bearing on individuals.” who with the globalization of corporate power, of corporations. In some ways, sometimes you have people making decisions in boardrooms in New York that might be affecting the lives of people in a small town in India or Pakistan or what have you.

That’s I think another of the areas that we have to think about because in many ways the whole CSR issue has arisen globally in tandem with emergence of relentless, in some ways merciless, globalization. The CSR movement, if you will, has grown in tandem with that. What I would like to also notice, in many ways companies have moved from just being responsible to shareholders and the bottom line as it were, to also thinking about wider constituents, stakeholders if you will, the communities in which they operate, people who have any interest in what the companies do or who use their products, not necessarily those people who own stock.

That’s why I call it a globalization effect, because it’s a movement that’s really expanding, because you can’t really stop, because if it starts here in New York, it moves onto Columbus or San Francisco, wherever you other companies take it up. An American company takes it to Hong Kong, and a Hong Kong company suddenly realizes, for us to compete, for us to get the best employees, get the best [above-par] staff and [above-par] workers, we also similarly have to pick up these best practices. The idea behind globalization is that these best practices start spreading. People say that for us to be competitive we too have to do the same thing as these companies that practice good CSR.

It’s not just governance issues. I divide them into governance issues, issues of corporate management, proper transparency, disclosure, accountability, and awareness of how to deal with corruption. But also issues that have come up, everything from… if you’re into fishing, are you harming the dolphins in any way. Sustainable development issues, protecting the environment, natural resources management, and the impact of technology. So there’s a whole wide range of issues involved here so it’s hard to compartmentalize them.

What I want to focus on just briefly is the impact on Asia. It’s pretty clear to us at PBAC that many of our companies are at different stages of adoption of CSR and CSR standards. Whether you like it or not, it’s true that in the Americas, many of the companies are really far more advanced in corporate governance standards and adoption of environmentally sensitive policies. In Asia, the word’s just really moving into this, partly I think for many Asian companies, the idea of CSR, is still an idea that it’s philanthropy or giving money. We heard about Li Ka-shing giving one billion Hong Kong dollars for education. It’s a great job, a great charitable work, but it’s a little bit different. Philanthropy is not necessarily CSR, it may be part of it, but the CSR movement really has more to do with the transparency, disclosure, corporate governance, sustainability practices. So one could have the most generous tycoon, but yet his company may not be run in a socially responsible way. I think these are many issues that need to be discussed in Asia in particular.

The profit motive is coming up. As Erik mentioned, many companies are realizing that it does help the bottom line that they adopt some of these sustainability practices. But one of the problems is that there is in Asia, for many of these companies there is a dominant shareholder issue. They may be listed, they may adhere to all of the listing rules and transparency rules, but there remains a dominant shareholder that may be a family, a single person, or even just different other groups, who may not necessarily have it in their interest, to put it diplomatically, to adhere to CSR principles. Again, the globalization effect that I mentioned is operating because basically what’s happening is that for many of these companies, if they want to gain investor confidence, if they want to raise money in the markets, they themselves have to start adopting the best practices and really move towards improving governance as well as improving their operational practices.

One problem that I want to highlight is the difficultly of achieving regional standard. That’s one of the things that have been tried by organizations like PBAC. Trying to create regional codes of conduct, codes of ethics, or even corporate governance standards. Can you achieve a regional standard? I was actually involved with a group of very senior business people, similar to PBAC, a business association based in Hong Kong. Twenty tycoons got together in Manila and tried to hammer out, I mean these were very senior people, tried to hammer out a regional standard for corporate governance. Issues like how many independent directors you should have, how should management committees be set up, what should be the qualifications for directors, all these sorts of nitty-gritty governance issues.

They discussed this whole thing for a day and hammered out a set of rules, a lot of it was technical and you should have so and so, certain proportion of independent directors. At the end of it, when they were trying to decide “are we going to make this public, our discussions public and say that these are the common governance rules that we agreed on.” Surprisingly, at the end, they decided not to. Why? Because a number of them, heads of companies that were listed in New York, said that, for me, a CEO, to come out and say that I’m supporting these common rules for Asian companies… they’re actually the least common denominator rules because the standards of governance in Asia are still quite low for many companies, in companies to what you might have in developed markets. It would look really odd if I, as a representative of a listed company in New York, were to say that I support these rules that are in fact lower than the standards you have in the New York Stock Exchange.

So a number of the participants said, “I object, it’s been a nice discussion, but sorry we can’t do this.” So that’s one of the problems, there’s still a reluctance, sort of a least common denominator effect that could bring up other companies to meet standards you might have in more developed markets that are still not there. But things are changing, and one example I wanted to mention is the equator principle, that a number of banks, like HSBC, I think HSBC signed up too, but certainly Citibank has. A number of banks have signed up to these principles where basically they say if we are going to finance any sort of project, these projects must adhere to certain standards of environmental protection and certain standards of practice.

To conclude, in age of the CSR may still be lip service. You can’t do it to a business conference any more in Asia, certainly any of the PBAC conferences without talking about these issues, about environment, about sustainable management of natural resources, about corruption issues… these are now sort of staples of the agenda of any business conference. But has it going beyond lip service? I don’t think so at the moment, but we shall see.

I’d like to just end by talking about opportunities for the US. Because the way I see it is, the United States for many companies here has a great advantage, because this is really CSR central, if you will. This is where you have companies and people who know exactly how to implement some of these practices, the best practices, know what they are, know how to help companies move from dominant shareholder, family-owned management, to more professional management, to raise management standards. It’s in development studies what people were talking about, capacity-building, both creating the legal frameworks in countries, to corporate frameworks and trying to shepherd corporate responsibility along. It’s part of public diplomacy, I think it’s a great opportunity for the United States. We talk about how the image of the United States is so battered around the world but I think in many ways this is an opportunity for the United States to really lend a lot of its expertise in an area that I think there is hunger for around the world and where the United States can really do a lot of good and American corporations can do a lot of good.

Again, I would emphasize it’s the globalization effect, it’s the spread of best practices. It’s a long-term process, but it’s going to happen, inevitably you can’t really stop it. It’s a matter of convincing people of the wisdom of adopting CSR bestt practices. It’s one of the things that I try to emphasize to people when I talk about globalization. As I mentioned this morning, the wave of globalization that we are in the midst of at the moment, the impact is so intense, it comes in and can affect people’s lives, individuals, and in many ways it becomes then a moral thing, an ethical issue, and it’s not just a matter of bottom line, although for business people it’s the bottom line. But really beyond the bottom like there are ethical and moral issues involved. So with that, thank you very much.

Erik F. Wang: Thank you, Mr. Reyes. It’s a great overview on where we stand and some interesting points for me, about how corporations are now becoming decision-makers in people’s lives and other areas. Our second panelist is Professor Allan Wernick. Professor Wernick is a widely published author and a foremost expert on immigration and citizenship. He writes a weekly column “Immigration and Citizenship”, that is syndicated by King Features and a column “Immigration Advice” that appears every Thursday in the New York Daily News. He also teaches here at Baruch College and practices law in a firm here in New York. He has served on the national Board of Directors of the American Immigration Lawyers Association, as Chair for the Immigration Committee of the Association of the Bar of the City of New York, and President of the New York Chapter of AILA. As a noted expert in this field, Professor Wernick will focus his remarks on one of the key aspects of the CSR practice which we talked about, workforce diversity, and how immigration factors can affect and lead to more workforce diversity as well as outsourcing and other areas and what immigration means in these terms. So Professor Wernick, thank you for joining us.

Allan Wernick: Thank you so much for the wonderful introduction. I love when they call me an expert. I was asked to be a speaker at this workshop I think because the organizers felt that they couldn’t have a program on global entrepreneurship without having somebody talk about immigration and law. I was asked to be on this panel about corporate responsibility. I was thinking about based what on my expertise is, which is in immigration law field, what I could bring to you that would be interesting and useful. So I hope you’ll find it so. What I’ve decided to talk to you a little bit about is one of the programs in the immigration law policy area which is how they debate it now, very controversial, which is the H-1B temporary worker program. I’ll talk to you about that because I think it is symbolic of some of the debates going on in general in the United States around immigration, and I know if you watch Lou Dobbs every night, you think that it is the only debate going on, especially in the United States. It is not the only debate but it’s one of the most important, and it’s understandable that it is.

Just some numbers from a recent report, February report, from the 2005 Economic Report of the President, nearly a quarter of the U.S. population is either foreign-born or the child of somebody who is foreign-born, in 2004, 14.9 percent of the labor force was foreign born, that’s 21.8 million workers. Between 1996 and 2003, the foreign-born accounted for 58 percent of the eleven million new workers in the United States. I’m not going to talk about social security but just think of those of us that are getting closer to that age. Fifty-eight percent of the new workers from 1996 to 2003 were foreign-born in the United States. Of course in New York, forty percent of the total population of New York City is foreign-born. Fifty-seven percent of the households of New York City have foreign-born members.

So immigration is a big issue and I’ve said enough to try and talk about the global issues that Lou Dobbs talks about, and there are a lot of people writing and talking about those issues. Again I thought it would be more helpful to focus just on H-1B temporary worker debate. Before I go into it in more detail I want to say in deference to our host, our moderator from the White House, if I say anything negative about US immigration policy, it’s a non-partisan negative-ness. Things were very bad under Bill Clinton, things are very bad under George Bush, mostly in terms of law and policy and the practice. So don’t think that, again, that if I say something negative about immigration that I’m saying that this particular administration is any better or worse. In some ways their better, in some ways their worse.

Erik F. Wang: Don’t worry Allen, men with badges won’t show up.

Allen Wernick: Well, sometimes I worry about that, actually, not too often, that’s why I try, as long as I am in the Daily News, I figure I’m okay. Try and stay visible, try and stay visible. So I just wanted to be clear about that because I think it’s an important point to make because I think a lot of us see the current period of restrictionism in the United States and it is as Chancellor Goldstein mentioned a real big problem for the business community, I think for the student community. While it’s a little bit more extreme in certain areas, it’s not the fault of the Republican Party. I can assure you that that’s true.

Let me just explain for those of you that don’t know, just briefly, what the H-1B program is. It allows for foreign professional workers to come into the United States to work for a temporary period, up to six years in intervals of three years. Sometimes there can be extensions of seven, eight, and nine years depending on different factors. Professional is defined as a person with a college degree or higher in a particular field that is required by the employer to do a particular job. The degree could be a combination. There could be an equivalency with education experience [via] foreign degree. The important thing is that a job which requires a particular degree, a four-year degree or higher, the employer must pay the prevailing wage or the actual wage, the higher of those two. The prevailing wage is the wage in the community. The actual wage is the wage that similar workers are being paid. So that’s the first point that we need to recognize, that the employer is obligated by law and there are penalties if he or she doesn’t do this. The higher of the wage paid in the community and geographic area for that particular job or the wage paid to workers doing similar jobs with that particular company, and the purpose of that is to protect the wages of American workers.

The thing that is controversial about the H-1B program, to start off with, is that there is no requirement of showing the unavailability of US workers. So if there are ten thousand people applying for the job and the employer’s cousin’s sister has the bachelor degree that is required for the job, the employer can hire the cousin’s sister because that’s what the law says. The law does not require showing of the unavailability of a qualified US worker. That’s different than most permanent immigration visas that are available. Not all, but most permanent labor-related immigration visas require showing of the unavailability of a qualified US worker; that’s not true in the H-1B program. So that means that the employer basically chooses whom he or she wants, and then the issue with that is, is the employer going to choose someone who they can exploit because the person is a foreigner and needs immigration sponsorship.

The H-1 program is not new. It was part of the 1952 Immigration Act which was the basic act that we operate under today. It’s been modified a number of times, the most recent and most important modifications were in 1999. That’s the requirement that required wage be paid because before that the clerk could be paid any wage. Also in that year, the law required what’s called the “public access file”, which gives the public unions and other interested parties, co-workers, the right to look at documents that are required to be kept by the employer. There are penalties for employers who violate these laws, and the law put a cap of 65,000 visas per year in this H-1B category. That happened in 1990.

In 1998, the law was amended again substantially because the employer community was very upset about this cap, so there was a lobbying done and Congress increased the cap to higher amounts. But that increase in the cap was a limited number, what Congress calls the “sunset clause provision”, so in October 2003 the number went back down to 65,000. That 1998 law also required training fees which is another thing to consider because the complaints that trade unions from certain sectors of American society were, “well, if we don’t have enough high-tech or qualified workers, why don’t we train them?” So the 1998 law imposed a training fee, so in addition to having to pay the legal fees and the regular filing fees, the employer now has to pay a training fee. And I’ll talk to you a little bit more about that in a minute.

Now, what is the impact of the H-1B worker program? And I will tell you that there’s not very much data. So the first thing, if any of you are in a position to support research on this area, I encourage you to do it, the data is very weak. I’ll give you some numbers in a minute. We know that almost no data showing that there is a depression of wages or working conditions. That’s primarily because the number is so low. Even when it was at its height, the H-1B program brought in 160,000 to 170,000 workers every year. That’s just not enough to impact wages and working conditions on the national level. Now it’s only at 65,000. In this fiscal year that we are in now that started on October 1, 2004, the 65,000 visas were used up on November 23, less than two months. In an average of less than two months, there were no more visas. So if you’re a corporation who wanted to bring quickly… Now the reason the H1-B program is so important is that it’s very fast. You pay a thousand dollar expedite fee and the government will do an H-1B processing in fifteen calendar days. To get a green card for somebody whom you need to work in your employment, a permanent resident visa is going to take a couple of years at least. So the point of this H-1B program is to get people in quickly, but how can you do that if you use up all the numbers in seven weeks and then you have to wait till the next fiscal year? So that’s one problem facing corporate America regarding the H-1B program.

Just recently, just last month, Congress passed a law to increase the H-1B numbers by twenty thousand, but only for people who have a masters degree attained in the United States, and the predictions are that those numbers are going to be used up in two or three weeks. Now when I say I have criticism of the administration, Congress passed a law that went into effect March 8, very simple, you have a masters degree, there are twenty thousand more visas, right? They’re not even accepting applications until May 12. It took them two months to write a short regulation which basically says if you have a masters degree, your employer can sponsor you now for the H-1B, that’s basically what the regulation says, it took them two months to figure it out. I don’t think it’s very responsive, and so one of the points that I would make is if we can convince government that these H-1B workers are important in the economy, I think they are, we need to do something about making the system a little bit more efficient and possibly increasing the numbers.

Let me just tell you a bit more about who these H-1B workers are because there was a mention about diversity. A third of the H-1B beneficiaries that were approved for fiscal year 2002, where the most recent numbers are available, were from India, almost one-third of the H-1B visas are from India. The other countries in the top five were the People’s Republic of China, nine percent, Canada, six percent, the Philippines, five percent, United Kingdom, three percent. Sixty-five percent were here in another non-immigrant status, mainly students. So what were doing is we’re training these people and then they’re coming to work for us, but when you start cutting off the numbers what we do is we’re training these people and then they’re going to go work at home. See what I’m saying?

So the City University of New York puts all this money because it is a public university. Even though international students pay a higher fee, they are still being substantially subsidized by our tax dollars. Out tax dollars are going to train these workers, they are getting excellent training here at Baruch college –I’m a professor here I have to say that, but it is in fact true, it’s one of the top public colleges in the country. But there is no job that can get visas for them so they’re going to have to go back. This is an interesting number, of the PhDs candidates in all graduate programs in the United States in math, engineering, and computer science, forty percent are international students. Now what’s going to happen when they graduate? No H-1B numbers available, sorry you have to go home. Think about it…

What I want to do is take a look at corporate responsibility and see how corporations responded. For a number of years, and you saw with the expansion of CAFTA, there’s a whole lobbying group that meets in Washington every month to talk about it. Microsoft put a lot of money into this, I’m sure friends of the White House know about this. They put a lot of energy into pushing more numbers for the H-1B program and making the claim that they were needed. After 9/11, there has been a little bit of reluctance, the lobbying hasn’t been quite so intense, and it’s part of this question of corporate responsibility, that corporations don’t want to be appearing to the American public, especially when there is so much unemployment, that they are looking abroad to bring in foreign workers. But I think that the numbers indicate that there is still a tremendous need, but nonetheless, there has been a little bit less lobbying, despite the fact that all of the studies that have been done, show, as I mentioned before, that the H-1B program does not negatively impact wages and working conditions.

I can give you some of the sites, there have been few really good studies. The most comprehensive study was done in 2000 by the National Research Council at the National Academy of Science, and they said that there’s very little effect on wages and working conditions for the US workers, not surprising. Like I said, there have been a number of other studies that say the same thing. There’s been no research that I was able to find on the question of outsourcing, in other words, we’re not letting the workers come here, so as Chancellor Goldstein was mentioning, if we don’t educate the workers here, business is going to go abroad. If we don’t let the workers buy their dinner in a restaurant New York, they’re going to go buy their dinner in a restaurant in Beijing, and the Beijing restaurateurs are going to get that money and buy cars with that money and it’s going to have a negative impact on the US economy.

But here are the issues that are raised by a number of commentators, like I am, I’m a commentator, there’s no data on this, but this is what is people say is what’s great about the H-1B program. They say it increases the quality of the workforce, people bring new ideas and know-how to US firms, they transfer new skills and knowledge, they increase diversity in the workplace, but again there’s no real hard data on this. Again, no hard data on outsourcing, but it makes sense. Anecdotally, it makes a lot of sense that if we don’t allow workers to come here then the businesses are going to go abroad where the strong workers are, and that was one of the things Chancellor Goldstein mentioned.

The other thing is, and again this is anecdotal, there’s no data on this, periodically I talk to my colleagues in the immigration law bar, and those who represent individuals from China and India are telling me that their business is going down because the workers are going back. Yes, they get their green cards, they want to be permanent residents, and as soon as they do they hop on a plane and they go get a job abroad because one, being bilingual, which they are, they are able to translate those skills and their education that they got in the United States into relatively high paying jobs in their developing countries of origin. But of course the money they make goes a lot further in developing countries.

The trend now is… and also the climate we’ve created, we’ve made it so miserable for the immigrant population here. Now, Congress is passing this new law, you can’t get a driver’s license until you show you’re lawfully in the country, and if you have a visa that’s going to expire in six months, they give you a driver’s license for six months. So when you get your extension on your visa, you have to get a new driver’s license, and when you change jobs, you going to have to get a new driver’s license. We’ve made it so miserable and uncomfortable for the immigrant community here. By the way, Bush hasn’t signed this law yet, but it will be signed, I don’t know if it’s passed Congress yet, I haven’t seen today’s news, it will be law though, I assure you. We’re making it so miserable, that people are going abroad.

Now there are protections built into the H-1B program, just that you should know about, to penalize employers. As I mentioned earlier, there is an active effort to go after employers who violate the laws. Interestingly enough, the research, studies and reports that have been done by the government on these issues show that by and large the violations that occur are one of two types. There will be a few employers, like for instance in the first six months of 2003, seventy-one percent of the violations were three employers. So there will be a few employers who really go out of their way to exploit or rip off their workers, and those are the ones that are being punished. Most of the other ones being punished, they don’t follow the rules closely enough, it’s not that they’re exploiting their labor, but they’re not filling out the forms right, they’re not keeping the records. It’s very, very complicated. In fact, one of my projects here at Baruch is to make sure that at the City College of New York and Baruch College we follow the rules; and we do, I can assure you.

I mentioned the training program, which is the other side of what’s good about the H-1B program. Employers have to pay a training fee, which just reinstituted in the fall and went into effect in March. The total fees paid in the last five years are almost three-quarters of a million dollars, over fifty-five thousand US workers have been trained, close to thirteen thousand students in science and engineering have received scholarship and funding. Do employers have an ethical approach to the H-1B program? I don’t know, I’m not sure. If you’re a high tech worker and you’ve been laid off and you know that there’s an H-1B worker from a foreign country that’s working in the company you were laid off from, obviously you’re going to be pretty unhappy. But clearly in a global sense within the United States, when I say global I don’t mean around the world, but I mean a macro sense within the United States, this is not why there’s high tech workers, if you there are any who are unemployed or whose wages are repressed, it’s not because of the H-1B program. And I am genuinely concerned as a citizen of this country that we’re becoming so restrictive in our immigration policies, in our social and cultural policies, that we are driving the entrepreneurial spirited, highly motivated foreign labor market away.

So that’s how I would conclude expect I want to make two more points. One, unfortunately, I apologize, but I have another commitment so shortly after, I’ll hang out a couple minutes, but shortly after 4:30, I’ll be heading out. So I want to give you my email address, so in case you want to write to me or have any questions, or something you think I can answer for you or help you with, or if you want to donate some money to set up a research agenda on this topic, my email address is wernick@earthlink.net. So that’s one thing I want to say. Secondly this issue is not going to go away, but I have to give you my prognosis because people ask me about this all the time in my columns and some of you may ask me about it afterwards, it’s going to get worse before it’s going to get better. I don’t see positive immigration reform, I don’t see temporary worker program, I don’t see expansion of the H-1B program right away, although if the economy picks up in the next couple of years we may see them. We did see those 20,000 visas didn’t we, even though you have to have it from a US university, it’s going to be great for international students.

But I don’t see a lot of movement in this direction, again until the economy picks up, and I don’t see that happening, I mean I’m not an economist, but when I’m reading the Wall Street Journal and New York Times it looks like we’re in this weak period for the future.

If the economists are right, we’re not going to see very much good happening in immigration, so don’t count on it. That means cross your t’s dot your i’s. If you have friends that have these issues, follow the rules, be very careful, speak to your lawyer well in advance of the expiration of whatever status. On the other hand we have to keep pushing on this issue. I think it’s very, very bad for the US economy, these policies, I think it’s very, very harmful. It’s very harmful for the university, I had the chance to print out, our numbers are down here in the graduate programs and in the undergraduate programs here at Baruch and throughout the city universities and throughout the country and that can’t be a good thing. Thank you very much.

Erik F. Wang: Thank you, professor. I feel like a prize fighter that’s just taken a couple body shots. Well I have to say that immigration obviously has taken on a new light since 9/11 with the administration and the President weighing various new factors that have to be weighed in. I will say that part of the President’s advisor commission, which he had summoned and created, is to look at issues that affect Asian Americans. Professor Wernick gave you the numbers that a lot of these H1B visas are predominately being used by Asian countries. As the commission travels around we hear of the need for other types of immigration reforms around having the ability to have more nurses come here where there’s a shortage of nurses and others. Especially from the Philippines and other areas, where there is actually a pool of very talented and qualified individuals and teachers that can come here and fill voids in those particular professions. Rest assured that the commission has heard these from the community and they are charged with looking at policy recommendations to the President. As it affects Asian Americans and Pacific Islanders, the commission certainly will look at these issues and as we go around the country, I would imagine, I will look at this very seriously and bring the attention of the President to their report, so it is there.

Our third panelist is Alex New. Mr. New is the president of Wen-Parker Logistics based here in New York. Wen-Parker is a leader in the logistics and transportation field. They are a global company with global connectivity, infrastructure, and lift capacity and engineer a lot of customized logistic solutions for clients all around the world. As a business owner of a successful global company, and I’m excited to hear about this, Mr. New will share some of his real-world experiences in implementing CSR practices within his company. So Mr. New thank you for being here, and I will turn it over to you.

Alex New: Thank you. That’s too generous a description. We are by no means the leader but definitely we have a presence in the apparel industry [inaudible] transportation. Some of our bigger accounts are the likes of Ralph Lauren, Tommy Hilfiger, Ann Taylor and so forth, they are blue-chip retailers. I’m not an expert on labor law, but I think we fall below fifty employees so there are not a lot of things we do no have to comply to with federal law. What we have basically is a small business, it runs like family. There’s no strict structure as to, you have to come in at nine, leave at five, and things like that.

Basically it’s more like a relaxed environment. But having said that, it does not mean there’s no balancing problem from the business. The most basic one is definitely healthcare; it’s fully covered. None of the employees has to contribute anything to it. I heard from Chase Manhattan bank, our business relationship manager, say, “Wow you are doing great on this one.” Even they have to contribute three or four hundred dollars depending on whether you are single coverage or family. Healthcare costs us a quarter of million dollars a year. I was told that since we fall under fifty employees, we have no obligation to provide that for employees but we go on and I thought that’s important.

I was proud on one thing about my business, we had very little turnover, if any. When Al Qaida struck New York in 2001, we lost 65 percent of our revenue compared to September 2000. We laid off troopers; one of them I relocated to a friend’s company in the same industry. The other one wanted to migrate to Africa. Apparently she had taken a vacation there and she realized she loved it. She moved her kids and herself, she’s a single parent, to Africa. That’s as far as turnover is concerned in my business.

Since we are on the topic of social responsibility, we have 12 offices in Asia, four in India and so forth. Basically what we established there is whatever the labor law is in that country we comply. For example, in India, somehow there’s a labor law that we have to provide [8.23 percent] of our bottom line each year as bonuses to employees, so we give that and we slap on ten percent more for higher ranking managers with greater responsibilities. There it goes; I don’t know how much it buys in terms of social responsibility, but that does contribute to their individual family health and so forth. In Indonesia, because of the relatively low salary at beginning, so at the end of the year, I normally give an extra eight to twelve [percent of their salary] on top of what they are making. That’s only when what they’re making is not… a dollar a day. [The apparel industry] is not manufacture assembly line, it tends to be in the middle of the economy, the extra bonuses that makes them much better. We have very low turnover even in Asia. In China, there are very basic requirements that we comply with. We do all those things in Hong Kong which basically has very standardized labor law and we just comply. We don’t do extra in terms of out of the ordinary, we just basically comply to what is the minimum requirement. Plus, if there’s a good year, fatter bonus, that’s about it.

What I can talk about is my business account. I think we can come closer to home in island of Saipan. Does anyone know where Saipan is? It’s west Pacific, slightly east of Philippines. Before January 1, 2005 we have a quota system in place for apparel imports into this country. Saipan apparently is a commonwealth of United States and any product that’s made there are duty-free and quota-free coming in here. Therefore, one time in the late 80s and 90s that was a booming industry. I don’t remember correctly, I think there was seven percent of the industry in that island. But then, apparently the workers are all Chinese, Sri Lankan, Bangladeshi… the Asian flavor, imported there and they’re put in a room with eight bunk beds and so forth. So who’s buying from there? Liz Claiborne, Polo, Tommy Hilfiger… they are buying from there again because of the quota issue and duty issue. Some [human rights activists], I don’t know who, basically raised an issue and Liz Claiborne and Polo take the initiative to implement, I don’t remember what declaration, somehow with the basic, so-called working rights for employees even if they are sourcing away from the United States. That is one thing that came up. Since that came on Saipan’s production volume went down drastically because what you are talking about is the image. If Polo… I’m buying a sixty dollars Polo shirt from you, I don’t want you to be abusing labor in that sense and so forth. So a lot of them retracted and the production in that island went down a lot. After the whole thing, the apparel industry got together to bring on this so-called basic standard of working conditions, they have to give back a little bit. Now with deterioration of the quota system, now Saipan is in trouble. That’s basically my experience in terms of social responsibilities.

Erik F. Wang: I don’t know about anybody in this room, but for Mr. New, I think I would like to work for an employer that pays a hundred percent of my healthcare, and 8.3 percent of revenue in bonuses at the end of the year. So obviously he’s doing something right in many of the areas. I’d also like to work for a company that has almost no turnover, especially in the post-9/11 era here. To only have two employees having to be cut and then finding employment for one of the individuals and the other deciding to move, I think he is definitely doing something right at his company. Also, for him to look at what some of his big clients are doing from a labor standpoint with that. At this time, we have a few minutes, I’d like to open it up and see if anybody has any questions for our panelists around this issue or other things that we’ve disused or we might not have touched upon too much that you might have questions on. Yes…

Male Audience Member [Terrence Martell]: Just a quick comment… As a life-long Republican living and working in bluest county in the world, if you could sneak in and just take a pen and just add a zero to that twenty thousand it would make my life a lot easier. Alright… so see if you can pull that off.

Erik F. Wang: I will find somebody to try and do that, I can’t promise anything, but like I said, the commission looks at this issue. It in some ways disproportionately affects Asian Americans and Pacific Islander workers.

Male Audience Member [Terrence Martell]: It is also disproportionately affects cities based on the knowledge industry. This rule, this limitation, adversely affects a world city like New York. It doesn’t affect as much Columbus, Ohio, but it’s certainly true that world cities like New York that strive and attract… are the cities that are hurting.

Erik F. Wang: Point taken. We will certainly look at that. We will have further discussion. The commission is actually planning a full scale visit to New York to gather data and information in July, so we will certainly look at that issue and revisit it with you.

Male Audience Member [Edward Ma]: There are all these discussions about CSR and you were addressing and also Mr. Reyes was addressing. I wonder who is advocating for people’s lives or standard of living, organization and also promoting the interest, [the profits]. I wonder whose accountability is it for the environment for people dying or families for [inaudible].

Erik F. Wang: Do you want to start and then I’ll follow up…

Alejandro Reyes: I think this is one of the problems that raise more questions than resolutions. A few months ago I went to a high school in Massachusetts to talk to an ethics class, and we wanted to have a discussion about the unfairness of globalization. Globalization is inherently unfair because there are winners and there are losers. Not everybody is going to win, not everybody is going to lose. Unfortunately, with the losers, what are you going to do about them, that is the question. In this ethics class, I raised the issue of a chemical company going to India with all good intent. I mean they’re doing their business and basically they wanted to help improve the yield of Indian farmers, so they introduced their technology to some Indian farms, and these farms become more productive. But in the process, of these particular farmers becoming more productive, the smaller farmers run out of business. They can’t keep up with the productivity of the bigger farmers.

So now who has responsibility for helping out these small farmers? Is it the chemical company? Is it the Indian government? Is it the international agency? Who? And the kids were quite moved by the whole situation, and I think it should move people, but of course it doesn’t. I talk about the moral dimensions of globalization because the way globalization to me has become a personal thing, it’s no longer this thing that is up there in the sky. It actually can reach into our homes and affect our lives. Someone like myself, for example, I make my living out of a knowledge base. I live and die by my ability to come up with ideas, as many of us here do. But I have to keep thinking, is there going to be someone in Singapore who will be just as educated, just as hungry, who stays up later at night who gets up early in the morning. This is true in farming, in whatever. From manual labor to… even if you were speaking to yourself, “I’m just going to be a street sweeper, be the best god-damned street sweeper in the world.” But it could be that robots will take over sweeping our streets, we may no longer have street sweepers.

Even if you were the common duster as it were, you have to think, well, how is technology, how is globalization, how is all the global trends going to affect what I do and how can I improve my lot? Now the question is who is going to help these people, who is going to help the people in trouble, who is going to help the losers? Unfortunately I don’t have the answer to this, and I think this is one of the biggest issues that confronts humanity today. The AIDS problem in Africa, for example, tremendous, tremendous problem, but it’s not just a public health problem, but it’s a corporate problem. It’s hitting the workforce, hitting the productivity of agents, going to affect the future of an entire continent, and we are not really paying enough attention to it. My only recommendation is that we have to talk about these issues. What is the unfairness of things in globalization? How can we get together and solve the problems?

Erik F. Wang: I would agree with Dr. Reyes on his assessment, but when we look at CSR and quality of life, I think they are divided into two aspects. One is personal quality of life and how it affects you and what is community of life. From a personal quality of life standpoint it tends to be what he does with healthcare. Do you provide healthcare for your employees or does the company provide healthcare covering you and your family, in his case at one hundred percent which is wonderful, or at reduced rates so you’re not spending a significant amount of your income a month on healthcare. Those are personal quality of life issues. Do you have a good working environment or does the company provide you with a good working environment where you feel productive, where you feel like you have an ability to move up in the company, where you have the ability to be open, where there’s not a situation where discrimination can be created and so forth.

When you talk about community quality of life, that also affects your personal quality of life. Many companies, and some are do it to a better degree than others, are taking part of revenue, part of profits, and through corporate foundations, community foundations, investing them back into the communities where they operate business and where they are. Doing what kind of work? It could be education, they could be encouraging employees to act as mentors, they could be building parks and recreation facilities for kids. You look at what’s happening in terms of that and if the company is giving back to the communities where they operate and where they have facilities and where they are. Are they helping the community create a better quality of life for the community as a whole?

I think they’re two areas to look at, and if they’re not, then certainly as a community member you should be going to these companies and say “here are the needs. We need after school education programs that you could perhaps help fund. We need a new park for our kids to play, we need a safe environment for them to play after school. We need after school type programs that perhaps you could fund.” I think that’s the other important aspect of entrepreneurship in this arena. As an entrepreneur I know you are dealing with a whole host of issues to keep your business going. But as I said earlier, entrepreneurs should think about this as they begin their business plan, not as they move into their business plan. So as an entrepreneur you can give back as well as you should be giving back. It shouldn’t just be corporations that are providing quality of life or betterment to a community. You as an entrepreneur should also be looking at how do you do that and how you look at assessing it. It may not be on a grand scale that IBM can do it, but a little bit helps in all situations. I think that’s how I would answer your question as to quality of life in terms of CSR.

Male Audience Member [Terrence Martell]: We’re being asked to join the quality reception.

Erik F. Wang: I want to thank all my panelists [applause]. They’ll be here to chat and I think we will have to head over there.