Some New Perspectives on the Age Discrimination Issue in Tech

The national engineering accreditation agency requires that curricula provide students with some exposure to ethics.  My department decided to fulfill this requirement by teaching our own, in-house ethics course, and it’s my turn to teach it.  I’m taking the theme of ethical decisions the students may need to address as future engineers, engineering managers, tech entrepreneurs and so on.

As you can see from the course reading list, I’ve chosen age discrimination as one of the topics.  This generated an especially lively class discussion, including on a couple of points that I believe are new to the tech age discrimination debate, which I will bring up here.

A few weeks ago, I reported on STEM shortage naysayer Michael Teitelbaum’s visit to Davis, including a visit to my ethics course.  Among other things, the students were startled to hear from Michael that Microsoft automatically rejects half of its job applicants by computer algorithm, unseen by human eyes.  I believe it’s a safe bet that a major portion of those rejected in this way are older, which as many readers will recall I define as being over age 35.

One of my course’s reading items, from a 2011 Computerworld series, is titled, “Recession Hit Older Tech Workers Harder, Labor Data Shows,” concisely summarizing the data compiled by the Computerworld reporters.  One quick point to make on this is that it counters a commonly heard assertion, that “Yes, there is age discrimination in tech, but hey, that’s a problem in any profession.”  No, it IS worse in tech, specifically in the computer fields, which I’ve shown before have careers are much shorter than in say, civil engineering.

But the content of  another reading item, a 2012 AP article, was especially interesting in our class discussion.  Specifically, the students were intrigued by the claims, both in research studies and in perceptions by some, that older engineers are less innovative.  This can’t be the case for all older engineers, the students argued, and thus automatic rejection of older applicants is unfair and can amount to lost opportunities for employers.

We then discussed a remarkable point that to my knowledge has never been raised in discussion of the age issue:  What if the AP article, instead of quoting and making assertions that older workers are less innovative, had discussed similar assertions for specific racial or cultural groups?  There would have been an uproar!  Or actually, the AP would simply not run such a piece in the first place.

In other words, why is age fair game but not race?  A case could be made that on average, East Asians are less innovative — there is research along these lines, and all East Asian governments have tried to remedy the problem — but no AP article would defend the blanket rejection by employers of East Asian applicants.  Not only would this be counter to American racial sensitivity (including my own), but also it would — just as my students pointed out in the case of age discrimination — result in missed opportunities for employers.  Whatever the average level of innovation among East Asians is, there are many who are quite talented in that regard.

So, why does the industry get a free pass on age by the press?  As I do in various other matters, I attribute this to the slick job the industry PR experts have done in mesmerizing the press into giving credence to the Youth Culture notion in tech.

Which brings me to the other remarkable issue that arose in that class discussion on age.  I mentioned that the standard line given by the industry for not hiring older engineers is that the latter don’t have the up-to-date skill sets that the employers need.  I cited a New York Times article, for instance, that claimed a shortage of Python programmers (even among the young).

Well, my students were outraged that employers would reject an otherwise high-quality applicant simply because he/she didn’t have experience with Python.  A typical student comment was, “Python is such a simple language, something you can pick up really quickly.  What’s the big deal?”

The reality, of course, is that employers are willing to hire YOUNG applicants who lack Python background, whereas the older ones will be ignored unless they have actual work experience (not just coursework or self study) in the language.  Python etc. are largely just pretexts for rejecting the older workers.  But the fact is that my students, all of them Computer Science majors who have learned a number of programming languages, were shocked that employers would screen so stringently on such things (or at least claim to do so).  And their shock is even more profound because most CS programs tell their students, in the words of a department that prominently echoes the industry claim of a labor shortage, “The department will prepare you well to adapt to the new technologies, tools and methodologies…”, i.e. that older engineers who stay current won’t have trouble finding work.

The sad truth is that the industry knows that “Python programmer shortage” claims sell.   Journalists tend to be easy prey in this regard, since, as one NPR reporter told me only half jokingly “We’re innumerate and proud.”  If they are told that prior background in Python is crucial, who are they to question it?  And the industry has been so effective in shopping around this celebration of “innovation” — President Obama uses the word often in his speeches — that reporters can give credence to industry claims that age discrimination is justified on innovation grounds.

The press would do well to consider a statement by one of my students:  “Do all the engineers in a company need to be innovative?  You maybe want a few who might come up with ideas, but you need a whole lot of engineers to implement those ideas.”  Well put.

Maybe the press should interview a few CS students for these articles.

Things Chinese — One Light, One Not

I’ll cover a couple of China-related items in this post, first briefly discussing Mark Zuckerberg’s humorous but admirable efforts to learn to speak Chinese, and then on a more serious aspect, give my view of the Hong Kong protest movement.

So, in case you haven’t heard, Facebook’s Mark Zuckerberg held a Q&A at China’s Tsinghua University the other day — completely in Mandarin Chinese!  No, this isn’t a joke.  Zuck has been learning to speak Chinese in the last few years, using a private tutor.  The ostensible reason is that he would like to be able to converse with his Chinese-American wife’s grandmother.   I’m sure that Zuck is sincere in that, but since Mrs. Zuck’s family speaks Cantonese, purely family issues might suggest Cantonese as the language he should learn.  And as a Cantonese speaker myself (I speak Mandarin when I need to, but that’s not often and I’m never comfortable in it), I favor that particular brand of Chinese.  But Zuck is undoubtably aware of the salutary effect his linguistic efforts will have on developing business in China, especially the all-important right for Facebook to be freely used within China, and Mandarin is the official language of China.  Mandarin is of course the obvious choice.

So, how did Zuckerberg do in the Q&A?  Well, his accent is truly awful, so much so that I stopped listening after the first 30 seconds or so; it was too painful to watch.  He seems oblivious to tones, a core aspect of any Chinese language.  It made me think, “OMG, do I sound that bad too?” :-)

But other than creative tonal structure, he wasn’t bad at all.  He was fluent — i.e. his sentences flowed well, without pauses — and I was able to understand him.  His level is well above that of, say, a university student with two years of coursework and no prior background.  If he keeps up with this, I’ve no doubt that he will become quite skilled at the language.  While I disagree with some of his political views, I say 加油, 加油 Zuck!

While Zuck was cavorting linguistically in Beijing — he constantly had a broad smile on his face while wowing the crowd — on the other end of China the pro-democracy protests were continuing in Hong Kong, much longer than many people had expected. What’s the real story there?

To begin with, I hesitated when I typed the phrase pro-democracy above, because this is something the Western press often gets wrong.  As a notable example, the comparisons we’ve been seeing on CNN etc. the last few weeks of the Hong Kong protests to the 1989 student movement in Beijing are way off base; those students in Beijing were just as anti-democratic as Deng Xiao-ping was, elitists who opposed enfranchising the populace with real voting rights.

The motivation in the 1989 protests was primarily economic:   There was ravaging inflation that threatened the civil service sector, at the time the main source of jobs for them after graduation.  They didn’t use the term democracy until they noticed that it was a magic word with the Western press.  I won’t go into the whole mythology that was built up, such as the post facto claim that the protests arose spontaneously upon the death of pro-reform party official Hu Yaobang, but let’s just say that a lot of what you read is incorrect, much of it calculated.  (I’m also not going to get into the issue violence that ensued on June 4; a pox on the houses of all sides.)  If you wish to know more, I recommend J. Unger’s academic book on the demonstrators, or even a careful reading of TIME and Newsweek of that period.

By contrast, my strong impression is that the students currently protesting in Hong Kong are sincere.  I’ll go into some of the reasons, including a quite central one that has rarely been mentioned in the U.S. press.

Before beginning, some disclosure:  I’m highly partial to Hong Kong, have been for 30 years. My wife is from the area and still has family there.  We visit often, and I’ve given talks at HK universities a number of times.  I love the mixture of East and West, and never tire of riding the Star Ferry from Kowloon to Hong Kong Island, with the thrilling view of the city skyline and the mountain backdrop.

As many of you know, the core of HK was granted to Britain “in perpetuity” in the 19th century, as the spoils of war.  Then in 1897 further lands were leased to Britain, with the leases expiring in 1997.  At that latter point, Britain handed all the lands, even the core, over to China.

The Basic Law, a mini-constitution for Hong Kong developed after the 1997 handover, promised that HK would continue to enjoy its freedoms, e.g. freedom of speech and the press, for 50 years.  But the document’s call for “universal suffrage” in elections, like lots of terms in legal documents,  is open to interpretation.  And as has been pointed out often in recent weeks, most HKers had been quite content under British rule without democracy.  (An interesting side issue recently discovered is that even in the 1950s Britain felt pressured by China not to institute democracy, under the threat of China fomenting civil disorder in HK.)  But the difference is that HKers never felt the need for it before now.

Today, a big issue is “immigration,” i.e. migration from inland China to HK.   The complaints are quite similar, unsurprisingly, to what we hear in the U.S. about immigrants:  “They’re taking our jobs!  They’re flooding the housing market!  The schools are becoming overcrowded!”  And indeed, these things aren’t disputed, while they are in the U.S.  (Also missing in HK:  the Race Card, which advocates of expanded immigration policies sometimes play in the U.S.)

Both within China proper and between China and HK, migration is restricted in various ways.  But the popular perception in HK is that the government is allowing too much migration into HK from inland China, creating great resentment.  Even tourists who visit HK from China are disliked,  accused of boorish behavior.

Thus democracy has suddenly become a big issue for what had been one of the most apolitical peoples in the world.  This is why the recent protests have enjoyed so much sympathy from the HK populace (though many are beginning to think enough is enough).  Though again part of the motivation is economic, the aim is to give the people a say in economic issues, rather than restrict power to the elites as the 1989 Beijinger students wanted.

But the “elephant in the room,” perhaps THE central issue, is that most HKers don’t identify with China as the Motherland.  They regard themselves as Chinese culturally, of course, but to many China is rather like a foreign country.  Before 1997, they were OK with rule by a foreign country that largely acted benevolently, but today are uncomfortable under rule by what they see as a less benevolent foreign power.

As is often the case, language plays a key role, as seen for example in what occurred in 1997 with HK elementary and high schools.  With the handover, many schools switched from English to Chinese — but meaning Cantonese, not Mandarin.  The latter is China’s national language,  thus arguably the natural candidate for a new China orientation in Hong Kong.  For reasons of commerce, most HK adults today can speak Mandarin, but the refusal to switch the schools to Mandarin speaks volumes.  And the action, eventually reversed, of the Chinese government a few years ago to suppress use of Cantonese in neighboring Canton (Guangdong) Province must have made many HKers even more leery of China.

Indeed, the official slogan devised by China for Hong Kong’s status after 1997, “50 years, no change,” 五十年不變, flows and rhymes much better in Cantonese than in Mandarin.  Some might argue that the concept itself behind the slogan flows better in HK than in China.

One small, personal observation I’d offer as the pride HKers take in their home involves the many ethnic Chinese foreign students we’ve had in our Computer Science graduate program.  A number of those from HK have returned home after graduation, while I’m not aware of a single example of this among students from China.

I would argue that the Chinese government would benefit from understanding this “Hong Kong pride” in the current crisis.  This leads to the broader question of how those in the Chinese government — and for that matter, many ordinary citizens in China — are viewing the situation.  One irritant to them is that there appear to be U.S. connections to the HK protestors.  By all accounts, these ties are quite weak, and no one really denies that the concerns voiced by protestors are heartfelt.  Yet such ties add one more obstacle to resolution of the crisis.  And besides, American preaching about democracy must sound hollow to people in China, given our perenially deadlocked Congress, and the legal bribery of the members of that body via campaign donations.  Yes, the press in China exaggerates this, and really doesn’t fully understand it to begin with, yet we must admit democracy in the U.S. isn’t working too well these days.

Nevertheless, the Chinese government can easily afford to make concessions regarding the situation in HK.  China has much to be proud of economically — one new subway line in Shanghai every year! — and there has been some political progress as well. Surely there are some face-saving but concrete actions China could take to show the HKers that the latter’s concerns do have some validity.

Letting the Chinese populace access Facebook wouldn’t be such a terrible thing either.

EFI and Me

Though I write extensively on the H-1B work visa and related issues, I am generally not involved politically in the issue.  If an activist asks me to attend a meeting with a politician (locally), I sometimes make myself available, but I am not pro-active.

I do, however, offer my advice to the activists if they seek it, and one point I’ve made repeatedly is that they should NOT highlight cases like the scandal that emerged today with a Bay Area tech firm, Electronics for Imaging (EFI).  My point is that the industry lobbyists themselves, especially those representing the Googles, Facebooks, Intels and so on, LOVE such cases.  Why?  Because it gives them a chance to say, “Yes, isn’t it terrible?  Congress should allocate more money to the Dept. of Labor for enforcement of the law — which the record shows that WE strictly adhere to”  —  deftly distracting attention away from the law itself, which is full of huge loopholes that the lobbyists put there so that their firms could stay legal while abusing the program.  In one case, I even correctly predicted that the industry lobbyists would react publicly in this way, using a scandal to their advantage.

So, ordinarily I would not be making a blog posting about this EFI scandal.  But I can’t resist telling a story about my interaction with them some years ago.  (Long enough ago that few, if any, of the people involved are still there, so readers should not draw conclusions about the firm currently from this anecdote.)

It all started when a student of mine, “Jack,” applied for a position with EFI as a new graduate.  Jack was absolutely brilliant, but with poor grades.  He did get an interview with the firm, as he had friends there, but was rejected.  Jack asked me to write a letter to EFI, explaining why they should hire him in spite of the poor grades.  I stated that if they were to hire him, he would turn out to be their best engineer.  Well, they did hire him, and I was told that he did indeed turn out to be one of their top people.

A year later, I had another student, “Bob,” who was a very solid engineer with good grades, but who had not yet found a software development job.  (He had been offered a QA position at a very attractive salary.)  Through Jack, Bob did get an interview, but was rejected.  A manager then called me, apologizing for not hiring Bob in spite of my recommendation, but that Bob “wasn’t a good fit” (polite way of saying he didn’t measure up).

The manager then said he would like to take me to lunch sometime, to keep up the relationship so that I’d send EFI other job candidates in the future.  I said I didn’t see the point; since it was already clear from Bob’s case that EFI’s assessment of engineering talent and mine diverged (the case with Jack doesn’t really count), why should I send them anyone else?  The manager agreed, and decided to interview Bob again.

A few days later, a higher-level manager called me, profusely apologizing, as they had again decided against making Bob an offer.  I asked the manager whether he was aware of my writings, media interviews and so on regarding H-1B.  He replied that yes, he was quite aware of that.  I then said that what happened at EFI with Bob epitomized what I write about, American employers passing up well-qualified U.S. applicants in favor of hiring foreign workers who typically are not “the best and the brightest.”  The manager’s reply?  “I think we should hire Bob.” :-)

And in fact they did hire Bob, and gave him a good, challenging project to work on, and he worked out well.

Might Obama Use Secret Pacts to “Enact” His Own Green Card Reform?

President Obama announced a couple of months ago that he would postpone taking executive action on immigration — in essence, legislation by fiat — until after the election, apparently fearing his actions would move the electorate in some way.  Concerning H-1B and related issues, there has been much speculation as to what actions Obama would take, and whether he has the authority to take them.

A possible hint as to what Obama might do regarding foreign tech workers may lie in a letter to the editor published in the October 21 edition of the Wall Street Journal by Bruce Morrison, a former congressperson who was involved in crafting the Immigration Act of 1990.  That legislation created the H-1B program (replacing the old H-1), and expanded employer-sponsored green card programs.  Morrison wrote

President Obama can move the lines for green cards much faster. How? In 1990 Congress authorized the president, if he chose, to stop counting dependents of the principal immigrant n both the family and employment-based legal immigration categories. I know because I was part of the team that wrote the statutory language when I was in Congress.

The Wall Street Journal op-ed by Michael Malone, to which Morrison was responding, itself raises some interesting questions, which I will address shortly.  But first, let’s look at Morrison’s claim.

Since I have high respect for certain people close to Morrison who read this blog, I do not relish portraying him in a negative light.  But the fact remains that Morrison is not the innocent former public servant making a helpful point, but rather a highly-paid lobbyist for an organization whose leaders have a vested interest in the green card issue.  I’m told he or his firm has made over $500,000 through lobbying on this and related issues; I’ve not done a tabulation myself, but interested readers can do so at the Lobbying Disclosure Act Database.   Morrison and the organization, IEEE-USA, have been pushing Congress to enact legislation to automatically award green cards to foreign STEM students at US universities, which I have explained is harmful to the rank-and-file members of IEEE-USA, who are not even aware of the lobbying efforts.  Morrison mentions none of this in his letter.  All’s fair in love, war and lobbying, I guess.

Given all that, I certainly look at Morrison’s WSJ letter with some cynicism.  He uses the term statutory language, but the statute appears to have no provision for excluding the dependents.  (See a blog post by John Miano at  CIS for details.)  Yet presumably the well-connected Morrison has the White House’s ear regarding his dependents claim, so what does he have in mind?  Is there some internal House document from that era that indicated an intent to give presidents some leeway on this issue?  Granted, the courts sometimes give weight to legislative intent, but when privately expressed intent is starkly counter to the actual wording of a statute, executive action based on a claimed intent would seem to be on shaky legal grounds.

But what about the larger question, the possible merit of Morrison’s proposal?  As a strong believer in process, especially regarding the Constitution, I basically dislike the proposal; the President is supposed to implement the laws, not make them.

But on the other hand, it does address an issue I have strongly emphasized in my writings on foreign tech workers:  One of the major attractions to employers in hiring the foreign workers is that that H-1Bs who are being sponsored for green cards are de facto indentured servants, IMMOBILE.   This makes a foreign applicant for a position much more attractive to an employer than a similarly-situated U.S. citizen or permanent resident.

On paper, the auto-green card proposals in Congress would appear to remedy this, by expediting the process of making the foreign workers free agents in the labor market.  However, they would be YOUNG free agents, thus exacerbating the other major type of harm that foreign worker programs bring to Americans — age discrimination.  I’ve thus strongly opposed such proposals.  Excluding dependents from the caps would not directly have that effect, but since the H-1Bs are overwhelming young, the adverse impact would be similar.

Now to the Malone op-ed:  Malone is the author of a major book on Intel’s founding, so he does know something about the industry, but his piece on H-1B and green cards is quite poorly-informed.  His main source seems to be Vivek Wadhwa, but he seems not to have made any attempt to get the other side of the story.  He cites the usual misleading points, which I won’t list or discuss here.  Instead, the point worth mentioning is that Malone accuses the industry of the same thing I write so much about — the industry’s exploiting the foreign workers for their immobility.  He claims that the industry always pushes Congress and the President for more H-1B work visas, rather than more green cards.

As I said, Malone is correct in claiming that the industry likes, indeed exploits, the long waits that many foreign workers have for green cards.  But they have at least paid lip service to supporting reform in this regard, and in fact may actually support Morrison’s proposal.  Here’s why:

  • As mentioned, the industry uses the H-1B program as a means to avoid hiring older (age 35+) U.S. workers, who are more expensive, not only in wages but also in benefits.  The H-1Bs who have been waiting for green cards for 5 years or so (for many, it’s close to 10) are starting to be problematic to employers, taking on exactly the characteristics the employers were hoping to avoid by hiring the young foreign workers.  These H-1Bs have gotten some raises — smaller ones than Americans get, according to the NRC report, but still of some size — and they now are more likely to have families, which increases the cost of medical benefits.  In short, they have largely outlived their usefulness.
  • A number of those in the waiting line are in the very last stage of the process, under which the law does give the worker mobility in the labor market.  Thus the employers’ hold on them is gone.
  • The workers experiencing long waits are concentrated in the EB-3 green card category, the one for “ordinary” people, as opposed to EB-1 and EB-2, which are designated for those of outstanding ability.  So, Morrison’s proposal would primarily affect workers whom the employers are not that keen on retaining anyway.
  • Much as the employers love the foreign workers’ immobility, some are beginning to worry that this will become a disincentive against the foreign workers coming to the U.S. in the future.  Having a mechanism with which to render workers immobile isn’t very useful if they don’t come here in the first place.
  • Supporting Morrison’s proposal serves as a shield against charges against the industry like those leveled by Malone.

There actually are actions that President Obama could, and should, take, things that are squarely in the realm of regulation rather than legislation.  For example, he could greatly tighten up the procedures for determining whether an employer seeking to sponsor a worker for a green card demonstrates that no qualified, willing American worker could be found to fill the job.  He should have the Department of Labor pounce on every job ad that specifies new or recent graduates (read young), examples of which I’ve shown for companies like Intel and Facebook.   He could direct that “hot” skill sets be taken into account in prevailing wage determination, for both H-1Bs and green card sponsorees.  He could direct government agencies to use their purchasing power to pressure firms to give real priority to hiring American workers.  And so on.

I’ve said this many times:  If government were to take actions limiting the use of H-1B and employer-based green cards to legitimate cases, the H-1B cap would never come close to being filled, and green card waits would be short for all.  Quotas simply would not be an issue.

NPR (Thinks It) Has Solved the Mystery of Declining Female Enrollment in CS

A topic of increasing angst in computer science academic circles has been declining percentages of women in undergraduate CS curricula.  Various programs have sprung up to counter the trend, such as Girls Who Code.  But although these efforts are laudable, they overlook the major cause — economics.

I share the concern about the gender lopsidedness in the profession.  This quarter I’m teaching an advanced undergraduate elective course, and have 13 women out of 59 enrolled.  If that seems passable to you (not to me), note that I had 3 women out of 44 in my course on parallel processing last year, another advanced undergraduate elective course.  Actually, I started voicing this concern to my department chair a bit before the issue became a nationwide topic around 2008.

My theory at the time was that women are more practical than men, and that the well-publicized drastic swings in the CS labor market are offputting to women more than men.  This was confirmed by a 2008 survey in the Communications of the ACM, a professional magazine of the Association for Computing Machinery, which found that in choosing to enter the IT field, women placed significantly more emphasis on job security.

Last Friday NPR ran a piece titled “When Women Stopped Coding.”  It was quite engaging, but was long on Political Correctness, blaming things ranging from boy-oriented toys to sexist institutions, and short on real evidence.  Mind you, I don’t disagree that a sexist element runs through parts of the field, but NPR’s explanations are just wrong.

For example, the piece cited a woman who, as a first-year undergrad, had been intimidated by the presence of a fellow student, Lee Van Dorn, who already had years of programming experience under his belt.  The young woman, who had planned to major in CS, bailed.  NPR’s message was that the Lee Van Dorns of the CS world drive out potential female majors in the field.

Well, it just ain’t so.  I’ve been teaching hundreds of CS students per year, every year since the early 1980s, and at least at my institution, the vast majority of male students are not like Lee Van Dorn in the slightest; some of them have had one course in high school, usually of very weak quality, and nothing else, and many other male students enter with no background at all.  Yes, we do have some Lee Van Dorns too, but they are not typical.

Instead, the reason for the decline in female CS enrollment was literally staring the NPR reporter in the face — his graph of female enrollment (apparently measuring graduations) over time.  The graph matches quite well the ups and downs, and accelerations and decelerations, of the CS job market.  Of course, given the huge PR efforts made by the industry portraying the CS field as a lucrative career choice, it’s no wonder the reporter didn’t think of ups and downs; it’s all up, right?

More Data on the Age Issue, Plus Clarification on H-1B Underpayment

As most of you know, I often point out that employers use the H-1B work visa program in order to hire young foreign workers in lieu of U.S. citizens and permanent residents over age 35.  Younger workers are cheaper, as a recent PayScale report illustrates.  (Note that older workers are more costly in terms of health benefits and the like as well.)  Though the analysis simply looks at college major, regardless of whether the person is still working in that field, the numbers (adjusted for inflation) are comparable to the report that I wrote at the invitation of the California Labor & Employment Law Review, a California State Bar publication.  Basically, the magnitude of  wage savings accruing from hiring the young is about 40%.

So you can see why the employers concentrate on the young H-1Bs, and for that matter new or recent grads in general.  Concerning the latter, see my recent blog post, “A Failed Recruitment,” particularly the material quoting Intel.

Which brings me to a point I’ve been meaning to make for a while.  I’ve always referred to what I call Types I and II wage savings accrued by hiring H-1Bs.  The former involves paying H-1Bs less than what comparable Americans make (the word comparable is key), while Type II arises from hiring young foreign workers instead of older Americans.  My Migration Letters paper estimated the Type I savings at something like 20%, and this is what I wish to clarify.

That 20% figure was based on a technique I like to use:  Take the industry’s claims at face value, and see where that leads.  I took that approach in my EPI paper on the technical quality of the H-1Bs, and used this technique in a different context in Migration Letters, concerning the wage savings issue.  In this latter case, I reasoned as follows:

  • The legally required wage for H-1Bs, called the prevailing wage, does not take into account special skills, say Android programming.  Yet the data show that most of the foreign tech workers are paid at or near the prevailing wage.
  • The employers claim that they hire H-1Bs because the foreign workers possess special skills that are rare among Americans.
  • The special skills typically command a premium of 20% or more on the open market.
  • Therefore, the Type I savings is about 20%.

What is often overlooked — including in my own statements, I must admit — is that the above analysis is predicated on the employers’ claims that they hire H-1Bs because qualified Americans are not available.  In reality, though, many employers are motivated not by Type I savings but by Type II.  And it’s no wonder, since the latter savings are much larger.  My point, then, is that even if an employer pays his young new grad H-1Bs the same as similar Americans, he is still saving something like 40% in the Type II sense.

In other words, if one drops the assumption that the employers are telling the truth :-) the overall Type I savings might be somewhat lower than 20%.  I say “somewhat,” because one must also note that most analyses, including mine above, are based on wage at the time of hire.  The NRC survey found that employers admitted to giving the H-1Bs smaller raises and so on, so there is a counter factor, making the 20% figure (or its adjusted version) actually too low.

To my knowledge, my papers are the only ones to take skill sets into account, even in the indirect manner described above.  Clearly, it is a key factor and cannot be ignored.

So, as is often the case with economic issues, we do not have a firm estimate of the magnitude of Type I savings.  But as I state in the Migration Letters article, the question of whether such savings exist should be considered settled, just from applying basic principles:

  • Immobile workers make less than mobile ones, all else being equal.
  • The H-1Bs who are sponsored for green cards (i.e. tech industry mainstream, e.g. Intel, Google etc.) are immobile.
  • Thus the mainstream H-1Bs are underpaid, compared to the market value they’d have if they were American.
  • In addition, the foreign workers tend to be willing to work for less, as a green card serves as large nonmonetary compensation for them.

So, again, the use of the H-1B program by employers to save labor costs ought to be considered a settled question.

In an upcoming post, I’ll present a “cookie theory” analysis of computer industry wage trends.  Stay tuned!

Michael Teitelbaum Visits Davis — Invited by the Provost

Some of you may recall seeing Michael Teitelbaum’s name mentioned often in the ongoing debate on the H-1B work visa and related issues.  Among other things, he published a major book with Princeton University Press earlier this year, debunking the myth of a STEM labor shortage.  In it he also explains how desire to get Congress to expand the H-1B work visa program underlies the shortage claims made by those with vested interests and their allies, such as the tech industry, the immigration lawyers and so on.

Yesterday Michael gave the Provost Lecture at my institution, the University of California at Davis, a very prestigious honor.  Ordinarily this would not be surprising in view of Michael’s stellar international credentials (see the flyer link above), but his views on the H-1B shortage issues are completely antithetical to those of the UCD Chancellor and those of the dean of the UCD law school (where Michael’s talk was held), and of UC as a whole.  I thus commend Provost Ralph Hexter for inviting Michael to speak.

Michael’s campus talk will soon be available on video.  However, since he was speaking under the auspices of the Provost, he emphasized issues of lesser interest to readers of this blog, such as addressing the question of whether the U.S. is spending enough on basic and applied research.  He did briefly mention that the claims of the shortage shouters are incorrect regarding STEM study at the K-12 and university levels (and gave an interesting example of an outrageously unfounded piece by the New York Times editorial board), and he also spoke a bit about the powerful disinformation machine of the tech industry in promoting their claims of a shortage.

I believe that you readers will be much more interested in an informal talk Michael gave to my class earlier in the day.

The class itself is unusual, an in-house course on engineering ethics.  The Accreditation Board for Engineering Technology requires all engineering undergrads to get some exposure to ethics, and my department decided that this would best be done via establishing its own in-house course.  This is the first time I’ve taught the course, and have taken the theme that we cover issues facing the students as future engineers, engineering managers and so on.

Michael generously agreed to lead a discussion in my course yesterday, and it led to a lively student discussion on his hypothetical case involving a CEO or manager being pressured to hire H-1Bs when he knows that qualified Americans are available for the given job openings.  A number of students had comments and questions. One student strongly believed that his duty to the firm would be to ignore the Americans and hire the cheaper H-1Bs instead (though the other half of Michael’s question — should someone in that position tell Congress that the firm can’t find qualified Americans for its jobs? — apparently got lost in the shuffle).

But to me the highlight of the class came when my UCD faculty colleague Phil Martin, a prominent researcher on immigration issues, showed the infamous Cohen and Grigsby video, in which a major Pittsburgh law firm showed clients how to avoid the requirement to first seek qualified Americans to fill a position before sponsoring a foreign worker for a green card.

In the video, which the firm put on the Web for marketing purposes, unaware that it would be noticed and start a controversy, one of the partners in the firm says,

And our goal is clearly, not to find a qualified and interested U.S. worker. And you know in a sense that sounds funny, but it’s what we’re trying to do here. We are complying with the law fully, but ah, our objective is to get this person a green card, and get through the labor certification process. So certainly we are not going to try to find a place [at which to advertise the job] where the applicants are the most numerous. We’re going to try to find a place where we can comply with the law, and hoping, and likely, not to find qualified and interested worker applicants.

I had had no idea that Phil would show this video, but it certainly had an impact on the students, a number of whose facial expressions seemed to convey that they were profoundly shocked.  (Note by the way that the videos filmed by that law firm also showed how employers game the system to circumvent the prevailing wage requirements, which apply to both green cards and H-1B visas, and which are below market wage to begin with,)

Another notable aspect of Michael’s visit to my class was that he recalled for us how a Microsoft official had told him privately that the firm has tons of applicants, but that it rejects most of them by applying an automatic computer algorithm, with no human involvement at all.  One student was very surprised by this, and seemed to find the news a bit distressing.  Actually this is a common practice in the industry, but Michael made the important point that this information is in stark contrast to Microsoft’s testimony to Congress that qualified American applicants just don’t exist in sufficient numbers.  (See also a related incident with Dropbox.)

Michael was in meetings with various campus entities throughout the day, so I’m quite grateful that he took the time to address my class, and again I thank the Provost for his involvement.