Yesterday was my second time in the “lion’s den.”
A couple of years ago, I was invited to participate in a private conference on foreign tech workers. The group consisted of two dozen or so Silicon Valley CEOs and other executives, and the meeting ultimately turned out to be a planning session for Mark Zuckerberg’s Fwd.us, a group lobbying for expansive policies on foreign tech workers and other types of immigration. That latter aspect gave the meeting a rather surreal air, given my presence, but people were friendly, and when I joked that I had wandered into the “lion’s den,” everyone laughed. Had I made the same joke in the forum at which I spoke yesterday, I’m not sure many would have found it humorous.
This second “lion’s den” was a meeting of the Engineering Deans Council of the American Society for Engineering Education. In other words, I was speaking to about 150 deans of engineering, certainly a remarkable audience. I spoke in a panel discussion consisting of the two men who had invited me — Jim Garrett and Amr Elnashai — and myself. Chad Evans of the Council on Competitiveness was supposed to be my counterpoint in the discussion, but he unfortunately had to cancel due to a personal issue.
Jim and Amr are Deans of Engineering at Carnegie Mellon University and Penn State, respectively. They are both very warm and open-minded people, and they really made me feel welcome. Unfortunately, some of the deans in the audience were somewhat less welcoming, and the Q&A session was rather tense. (I don’t know whether those who asked the questions were representative of the group as whole. In my account below, I am referring only to those who spoke up.)
In his remarks opening the session (titled Immigration), Jim made a point of asking for a civil discussion, and as an academic speaking to fellow academics, I assumed that the climate would be one of open intellectual inquiry. Since I usually speak to economists and the like, I had been looking forward to this interaction with engineers. Instead, the tone and content of the questions ranged from politely but clearly saying “I don’t believe you” to open hostility.
I must say before continuing that I do understand. Deans are hired in part because they are caring people who have a keen sense of social conscience (I’m sure that some of the academics reading this are questioning my judgment on this :-) but I stand by the statement). I am sure, for example, that the people who essentially said (both during the session and privately to me afterward) that age discrimination in tech is justified would have been appalled by such statements had they heard them in their pre-dean days. But if you are a dean, you need to accept the fact that money talks; indeed, money dominates. All major engineering programs rely heavily on industrial donations, ranging from the construction of buildings to endowed professorial chairs to lab equipment to sponsored research and so on. Many deans serve on corporate Boards of Directions, collecting nice fees.
I’ve mentioned before the engineering portion of the Stanford campus, for instance, with Gates Hall (you know who), Hewlett Hall and Packard Hall (one building each), the Gordon and Betty Moore lab building (Intel, Moore’s Law), the Huang Center (NVIDIA) and so on. I’m a great admirer of both NVIDIA the company and Huang the person, but it is clear that relations with industry are key for deans. Indeed, CMU just announced a $35 million donation from Tata Consultancy Services, one of the biggest users of the H-1B work visa.
So deans cannot ignore industry interests. When employers tell deans that there just aren’t enough qualified engineers for them to hire, the deans must listen. And after hearing a constant drumbeat of “engineer shortage, engineer shortage,” it is natural that a dean might internalize this, and dismiss naysayers like me as uninformed dwellers of the Ivory Tower, if not outright kooks. It’s easy for the deans to enter into a mentality in which they fail to notice that “the emperor has no clothes.”
Of course, I knew all this beforehand, but I was nevertheless quite taken aback by the comments, and the tone with which some of them were delivered.
My presentation had the following themes:
- There is no STEM labor shortage, not in general, not in computer science, not in Silicon Valley.
- Employers, including both the “Intels” and the “Infosyses,” use H-1B, OPT and so on in order to obtain cheap, immobile labor.
- A major driver of employing foreign tech workers is to hire younger, thus cheaper, foreigners so as to avoid having to hire older (age 35+), thus more expensive U.S. citizens and permanent residents.
- The average quality of the former foreign students who became part of the U.S. workforce is lower than that of comparable Americans.
- A Staple a Green Card policy (giving automatic green cards to all foreign STEM grad students in the U.S.) would be a terrible idea, as it would (a) exacerbate the above-mentioned age issue since new grads are young, (b) further discourage American students from pursuing graduate study, and (c) result in a decline in PhD production.
It turned out that Staple a Green Card (SAGC) is a key ASEE issue. Indeed, ASEE (specifically some of the people I met yesterday) has been meeting with congressional staffers to lobby for such a program. So, given item (a) in the last bullet above and my repeated emphasis on the age issue in my slides, it is not surprising that many of those in the audience seized upon my age issue.
They openly defended the fact that employers are bypassing older Americans in hiring young new foreign grads. (Interestingly, no one challenged my statement.) The first one to speak in the Q&A, a woman with an Australian accent, spoke quite forcefully, saying (this is close to verbatim),
We live in a global economy! We need more young workers! Our birthrate is below replacement level! Nations with an older workforce have stagnant economies!
Another, a man from Georgia, said to me after the session,
Employers are going to strive to save in labor costs. They want the lowest-cost workers, at acceptable quality, that they can get, and that is young new graduates. That is the reality.
When I asked him whether government policy should aid and abet this by allowing employers to hire young foreign workers, he gave the standard lobbyist answer (Paul Donnelly, you’ll love this): “With SAGC, they WON’T be foreigners; they’ll be Americans!” Somehow, even a sophisticated engineering professor doesn’t see this as a shell game argument. This dean also added, by the way, that immigration would “equilibrate” wages around the world — ours go down, those in the Third World go up (though he did add that he doesn’t necessarily approve of this).
In my presentation, I stressed how important it is to complement data analysis with qualitative insights into the processes that generate those numbers. I used Ptolemy’s epicycles to show how disastrously analyses can go wrong from fitting equations to data. Surely, I thought, this is something engineers can relate to. And if the topic at hand weren’t so fraught with issues of money and power, I believe my point would have been readily understood.
Instead, whenever I gave specific examples, e.g. of older American engineers who fall victim to policies of H-1B and the like, to illustrate the hard data that I presented, I got the standard response: “You can’t extrapolate from a couple of individual cases!” — completely ignoring the fact that I had in fact presented studies with lots of hard data.
And when I reminded the audience of that fact, the response was to attack my data (which was not just mine, but that of many researchers). This statement of one woman, spoken in a rather nervous tone, was typical:
Something must be wrong with your statistics. Your findings are completely different from what we are told by people in industry. There is a problem in your analysis somewhere, something is missing.
One woman claimed that many of the statistical papers I had cited were “20 to 25 years old,” which wasn’t true at all. Most were less than 10 years old, and the oldest, 1998, had been updated and expanded to a full book in 2009.
As a statistician, I had been particularly counting on the high level of numeracy of a group of engineers. I noted, for instance, that industry-cited (and typically industry-sponsored) studies analyzing the percentage of patents with at least one immigrant inventor, or tech firms with at least one immigrant founder, are badly distortionary, and that one must look instead at per-capita rates of patenting, entrepreneurship and so on. Though that might have been an effective point had Chad Evans been there, instead those who spoke relied more on their own experiences (“I had a brilliant student”) or claims (apparently never questioned) made to them by the industry. One gentleman from Utah said that someone from industry had told him of there being 15,000 unfilled software developments in the state, and that all foreign students could be absorbed. (When I asked whether the older Americans could be absorbed, he said nothing.)
Since National Science Foundation research funding is so vital to engineering schools, they also didn’t like my noting that a 1989 internal NSF report called for SAGC in order to attract foreign students, in turn in order to hold down engineering PhD salaries. A side effect, the report said, would be that stagnant salaries would drive Americans away from doctoral study. The foreign students came in large numbers even without SAGC, and today we see that most graduate programs consist heavily of foreign students. SAGC would make that even worse. I asked the audience, “Do we want a policy that would discourage Americans from pursuing graduate study?”
Interestingly, there was one point of apparent agreement. As noted above, I had stated that SAGC would reduce PhD enrolment. Currently a PhD will typically get the foreign student his/her green card in two or three years (EB-1), as opposed to ten years or more (EB-3). If the foreign students could obtain an automatic, quick green card after just a Master’s, why bother with a doctorate?
I mentioned to one person after the sesssion that there is a previous historical experience to guide our thinking, the Chinese Student Protection Act of 1992. This gave automatic green cards to all Chinese nationals who had been in the U.S. during the 1989 student protests in Beijing, and lots of students quit their doctoral study as soon as the act was signed into law.
The ASEE people apparently have the same concern, and they told me that they have been pressing Congress to restrict SAGC to PhDs, so far without success. I explained to them why they were being rebuffed: The Intels want people with MS degrees (a PhD is not of interest to most tech employers), and the Infosyses want to get their hands on all those H-1B visas that would be liberated by SAGC (which would have its own special visa); the number of PhDs is paltry compared to the Master’s.
In spite of the somewhat strained atmosphere, I think that I did succeed in getting people to think about issues they had either taken for granted or not thought about at all. I hope the “silent majority” were not as negative as those who spoke up.
I must again thank Jim and Amr for the very gracious hospitality. Mi casa es su casa is deeply appreciated, even if the “casa” is a lion’s den. :-)
Those who view the issue of foreign tech workers in the abstract — meaning many policy makers, researchers and so on — should be assigned two news items as required reading. The first article, an op-ed on an independent Connecticut news site, directly addresses the H-1B work visa, and questions CT Senator Richard Blumenthal’s judgment on this issue. The second, in the Wall Street Journal, is not about H-1B but it just as relevant, actually more so.
I’ve characterized the current Durbin-Grassley H-1B reform bill as woefully ineffectual, for a number of reasons. I pointed out that the only really useful provision, to reform the prevailing wage requirement, was the first thing to be emasculated when the authors introduced legislation in previous Congresses, and other provisions were not just unhelpful but actually harmful.
In the above-linked op-ed, John Miano gives an excellent explanation of how the lobbyists and the politicians horribly mislead the public on legislation dealing with H-1B and the like:
…if you read the statute, it says right at the top, ‘All H1B workers should be paid the prevailing wage,’ so if you speak to an industry lobbyist, they say ‘this can’t be used for cheap labor, it says so right there at the top, they have to be paid the prevailing wage!’ But then when you scroll down, you find further down that they have a special prevailing wage system that allows them to pay H1B workers at the 17th percentile, so yes, they can be underpaid. The whole statute is written so that it looks like it’s doing one thing but then contains other provisions that undermine what it said before.
Miano’s remarks may not apply to Durbin-Grassley, but it is cogent description of the deception which is rife on this topic. Unfortunately, the article, in quoting Blumenthal’s response to the author’s query, does not really explain how the senator is being so misleading. The between-the-lines thrust of his remarks is that he thinks the “Intels” (mainstream U.S. firms) are using H-1B legitimately, while the “Infosyses” (Indian-owned firms that “rent” programmers to U.S. companies) are the main abusers. The Durbin-Grassley bill, sad to say, takes that point of view.
The WSJ article is dynamite. The first two paragraphs are fraught with relevance to H-1B (even though the author is likely unaware of this):
After more than 20 years as an electronics engineer, Pete Edwards reached the low six-figure pay level. Now, as he looks for a job following a layoff, he finds that salary success a burden.
Although his experience includes the sought-after field of 3-D printing, the 53-year-old hasn’t been able to land a permanent full-time job. Time and again, he says, employers seem to lose interest after he answers a question that they ask early on: “What was your last salary?”
This is the story of H-1B in a nutshell. Age — read wage — is one of the two central issues of H-1B; employers hire younger, hence cheaper, foreign workers in lieu of older (age 35+) Americans. (The other major reason employers like hiring foreign workers is that, if the worker is being sponsored for a green card, he/she is essentially immobile.)
Moreover, did you catch that part about 3-D printers? Whenever the industry lobbyists are asked about older Americans, they dismiss the latter as having failed to keep their skill sets up to date. In most cases, that is simply false.
It’s really unfortunate that even critics of H-1B rarely if ever mention the central role of age. I’ve noted, for instance, that in spite of all the hoopla over companies like Disney replacing American ITers by H-1Bs, it is almost never recognized that the prime reason the foreigners are cheaper is that they are YOUNGER.
Read these two article, both highly informative.
I’ve often emphasized the age issue for H-1B; employers hire young H-1Bs in lieu of older (age 35+) Americans. There is also a preference for young Americans, of course, and I’ve cited many public statements, ads and so on showing that when Intel, Facebook, Microsoft and so on say there is a shortage of Americans in tech, they mean YOUNG Americans.
But things are not necessarily that great for new American grads in tech either. Analyses, e.g. those of Tony Carnevale, indicate that most computer science grads are working outside the field. Some such grads do so by choice, of course, and some others may simply not be highly skilled enough. But many are in neither of these categories, and are being passed over in favor of new-grad foreign students, who are cheaper and, if sponsored for a green card, immobile. And being cheaper, they hold down overall wages.
Thus the salaries of new grads provide a key window into conditions of the labor market. Fortunately, excellent data is available from the National Association of Colleges and Employers. Detailed data requires NACE membership, but the organization releases several summaries per year.
Over the years, I’ve cited these summaries, which have consistently found that salaries for new CS grads are flat (including the case of very mild increases) or actually falling. The latest NACE data show that this trend is continuing, in spite of the increasingly load drumbeat from the tech industry lobbyists that the universities are not producing enough CS grads. The mean new-grad CS wage actually fell slightly. Yet you can knock on doors on Capitol Hill all day and not find a single staffer who’s ever heard of NACE.
A couple of other news items:
First, the judge in the OPT lawsuit has granted DHS’ request for an extension, giving the government until May 10 to fix the technical errors in its 2008 extension of the work-rights period for foreign students. John Miano, chief attorney for the plaintiffs, is doing a great job, deftly citing the law, but it would appear that the law just doesn’t matter.
I forecast earlier that this might happen, and wrote the following to John after the judge postponed her deadline, concerning what I believe the likely scenario was:
- Judge looks at law, facts, decides (sort of) in your favor.
- Judge’s colleagues and friends say to her, “How could you possibly have made that ruling? These foreign students are geniuses, and they are keeping the U.S. tops in the world in technology! You are just helping Donald Trump! Your picture will be on every TV news show, juxtaposed with footage of the foreign students sadly going home, and their employers angrily denouncing you! How could you have been so stupid?!”
- Judge finds a way out, law or no law.
Note the lead paragraph of the above link to PIE (emphasis added):
The 17-month extension of a year-long US post-study work programme for STEM graduates will stay in place until May 10, it was announced this week. The decision by Judge Ellen Segal Huvelle gives international educators in the US an extra three months to campaign for longer post-study work visas for STEM students.
“Campaign”? In the context, it would seem that the “international educators” (read: foreign-student advisers at universities, whose jobs rely on having a large population of international students) are campaigning with the judge or the Justice Dept. Scary.
Finally, a news item about the category of companies I call the “Infosyses,” the “rent a programmer” firms that I contend are being scapegoated for what are industry-wide abuses of H-1B, OPT, green cards and other foreign worker programs. The Obama people have now accepted (actively sought?) funding for a low-level educational program in computer technology from Infosys and TCS — in spite of the huge negative publicity about such firms during the last year, concerning incidents in which Disney and other firms replaced American ITers by foreign workers.
Fired Disney workers recently brought a lawsuit against Disney and Infosys over the incident. I’m sure many readers have wondered when I will cover the suit in this blog, but the really perceptive ones know that I think there has been far too much publicity on Disney/Infosys already; this gives the wrong impression that abuse of H-1B etc. is mainly limited to the Infosyses, an impression that I don’t want to foster by writing about it here. (Also, I don’t think the plaintiffs have any chance of success.)
But when the Obama administration has the gall to embrace the Infosyses, then yes, I do feel the need to comment, as I am doing so here. See the numerous insightful remarks by Professor Ron Hira in the Computerworld article linked to above, to which I would add one more point: By tipping its hat to the Infosyses, the administration is not only punching the laid-off Disney workers in the gut, but also giving credence to the idea that H-1B is needed to remedy a tech labor shortage.
As we know, large philanthropic donations can buy respectability for the unrespectable. But did you know that TCS has been doing this for years? It started at least as far back as 2004 at Carnegie Mellon University, and has recently been growing ever since. According to the consistently pro-H-1B Pittsburgh Post-Gazette, (which by the way is the most consistently pro-H1-B paper I’ve seen, much more so than the San Jose Mercury News), TCS recently gave a $35 million donation to CMU, the fifth-largest in the institution’s history.
I must again cite my favorite Lily Tomlin quote: “I tried to be a cynic, but I couldn’t keep up.”
In his post introducing his recent research on the Mariel boatlift, he has a great graph, right off the bat. Pictures can be deceiving, of course, but I think that Card, Peri et al would have a hard time disputing the implications of this graph.
Fun to watch a public spat between two immigration economists, Giovanni Peri and George Borjas, with others chiming in on one side or the other. As Giovanni pointedly told me last year, I am not an economist. But I am a statistician (and, for what little it’s worth, was an econ minor in college), and equally importantly, “I know where some of the bodies are buried,” and I claim to be able to add some value to this debate. By the way, since I know both parties to this debate, it will be more comfortable to me to refer to them by first names.
First, some background: In 1980, Fidel Castro, essentially said to the U.S. president Jimmy Carter defiantly, said “You want Cubans? Well, I’m going to give your Cubans!” (China’s Deng Xiaoping also said to Carter, “You want Chinese immigrants? Excellent. How many millions do you want?”, knowing that Carter did NOT want so many.) So Castro opened the floodgates, including at his jails and mental health facilties, motivated at least in part by a desire to cause political trouble for Carter. It also later caused political trouble for then-Arkansas governor Bill Clinton, whose resulting defeat in the next election Hillary Clinton is said to keep foremost in her mind today.
One of the main fears, of course, was that the Marielitos would depress wages. (Immigration from Cuba has enriched the already-colorful Spanish language, another example being balseros, Cubans fleeing on balsa rafts.) Economist David Card analyzed the data in Miami, in part based on other cities he considered to be comparable to Miami, He found that there really was no appreciable effect on wages, a finding that made him one of the most famous names in immigration economics, and which played a role in his being selected for the Clark Medal, given to the best economist under age 40. By the way, the linked tribute here is by Richard Freeman, ironically George Borjas’ fellow immigration skeptic.
Giovanni Peri, my UC Davis colleague, is a relative newcomer to the field of immigration economics, and is quite stridently on the pro- side. He has become the go-to man for politicians seeking an academic imprimatur for a stance favoring expansive immigration policies. A notable example is that the Obama White House report on the projected impact of their administrative action on immigration cited Giovanni 38 times, basically citing no one else. It did mention George once — but negatively. George, on the other hand, has been cited often by the “restrictionist” side.
George did a critical analysis of the Card paper last year; Giovanni responded; George rebutted; and yesterday it was Giovanni’s turn (though the latter was not a rebuttal, in that he did not address or even mention George’s latest analysis).
Unlike some economic debates, this one can actually be followed fairly easily by noneconomists, because it basically boils down to a “he said, she said” argument as to exactly which set of workers should be studied. As I’ve said before, I’ve never liked the regional comparison method of analysis, because there are too many uncontrolled variables, leading wild inconsistencies from one study to another; I have cited state-by-state studies on capital punishment, for instance. Yet some things are highly factual and stick out like a sore thumb.
Notable among these is George’s discovery of a major flaw in Giovanni’s analysis: In assessing the impact of the Marielitos on native high school dropouts in Miami, Giovanni treated as “dropouts” those who actually are still in school, i.e. are NOT dropouts. You don’t have to be an economist to see that this is major trouble for Giovanni’s findings.
Giovanni is a serious player in this arena. He uses sophisticated methods, and I found the approach he took in one of his papers to be especially clever (though also flawed). But my criticism of his work has often been that there are decisions he makes in his analysis process that potentially matter a lot but which he does not reveal to the reader in his subsequent writeups. I presume that he consciously chose to include the nondropouts as dropouts as described above; well, fine, but it is required academic protocol that one explain such a thing. In another one of his analyses, a regional approach to the question of whether the H-1B work visa program harms or helps native workers, he omitted from his data the most prominent H-1B using region of all — Silicon Valley! — again without disclosing that omission to the reader. The bibliographies in his papers almost never cite any work that has findings that are unfavorable to the H-1B program, when in fact one is supposed to cite all relevant prior work. These are major academic transgressions.
Indeed, Giovanni fails to cite his own relevant work. One particularly germane example is his 2012 paper, “Immigration, Labor Markets, and Productivity,” in which he finds (indeed takes it as universally agreed upon) that immigrant labor is cheap, and in fact lauds it as a boon to employers:
One common empirical finding in the literature is that immigrants
are paid less than natives with similar characteristics and skills.
This is in part due to the fact that many immigrants, because of
less attractive outside options (such as having to go back to
their home country), have lower bargaining power with the firm. In
this case firms pay immigrants less than their marginal productivity,
increasing the firms’ profits.
Presumably the Marielitos especially didn’t want to go back home. Low bargaining power, indeed!
Again, you don’t have to be a rocket economist to see how contradictory this is to Giovanni’s recent research finding that the Marielitos did not adversely impact native wages.
I take issue also with Giovanni’s favorite argument, that immigrants don’t reduce native wages, because immigrants and natives play complementary roles in labor markets; in plain English, the argument is that immigrants and natives do different kinds of jobs, so “no harm, no foul.” But of course, the truth frequently is that the immigrants do different kinds of work because the natives are driven out. As the complementarity claim is an especially common argument with pro-expansive immigration policy researchers, some examples are in order.
A well-known example at the low-skilled level involves the Los Angeles hotel industry, in which employers fired the unionized, largely-black hotel janitors and replaced them with immigrant Latinos. A more recent, but equally egregious instance involved cleanup after Hurricane Katrina, where the African-American workers were told they were being let go, “because the Mexicans are here.”
At the high-skilled end, there is the 1989 NSF report that I often mention, which (a) advocated bringing in lots of foreign graduate students in STEM to hold down wages and (b) correctly forecast that the resulting stagnant wages would drive domestic students away from graduate study. I’ve taken even economists whom I highly admire, Bill Kerr and Jennifer Hunt, to task on this point, as their analyses fail to account for this gradual trend in the makeup of graduate programs. At any rate, you can see from this that the claim made by the industry PR people that foreign and domestic STEM workers play complementary roles (with respect to degree level) is highly misleading.
Another argument commonly made regarding the wage impact issue is “Immigrants are consumers too, thus generating more demand for goods, thus raising native wages and job opportunities.” This too is misleading, in a couple of senses.
First, consider the following “thought experiment.” Suppose immigrants were to live off the land, growing their own food etc. and engage in no consumer activity at all — but they did work for pay. To put things into even sharper focus, say they send all their earnings back home as remittances. Then once again, you don’t need to be an economist to see that they would depress wages. Of course, this is a very artificial example, but it has a real-life implication: If immigrants generate demand below a certain level, there will indeed be a decline in wages. And low-skilled workers, being poor, don’t generate much demand. It’s unclear just where the threshhold is for generating “enough” demand, but it is very clear that claim “Immigrants are consumers, so they raise wages” is a gross oversimplification.
Second, the argument doesn’t account for labor market segmentation, and inelasticities in demand for labor at the high end. The number of software engineers needed by a company, say Walmart, wouldn’t increase much, if at all, if Walmart’s retail sales were to double.
Finally, a note on sample size: Some critics of George’s analysis dismiss it on the grounds that his samples are too small. This ignores the fact that his findings are indeed statistically significant. I am not a fan of significance tests, but let me point on that even very small samples can yield statistical significance. Indeed, getting a statistically significant result with small sample is an indication of a large effect.
A little more openness to the reader, and to research done by those with contrary opinions, would make Giovanni’s work much more useful, in my humble opinion as a, ahem, noneconomist.
Another provocative column by Michelle Malkin, describing a textbook case of “follow the money,” very disturbing. The Gates-Rubio connection is especially troubling.
The long arm of Microsoft seems to reach everywhere. I’ve mentioned before, for instance, that the firm and Gates have been huge donors to the Brookings Institution, one of the most pro-H-1B think tanks in the nation.
I have nothing against the firm (and applaud their current trend of embracing open-source software), but their track record on issues that I care about has been quite poor. For example, take the age issue. I’ve often emphasized that H-1B is used as a vehicle to avoid hiring older Americans, with young H-1Bs being hired in lieu of older U.S. workers. Remarkably, Microsoft actually admitted that they hire very few oldsters. And when you couple that with their strident push for expansion of the H-1B program, well, it doesn’t look pretty.
Be sure to follow Malkin’s link to journalist Maria Bartiromo’s putting Rubio on the hot seat, with Rubio blatantly ignoring her questions. I’ve always liked Bartiromo, even more so now.