Following a BusinessWeek article quoting researchers who claim the tech labor shortage is a myth, tech entrepreneur Yuri Sagalov has responded with a blog post, “Immigration is about talent, not costs.” The shortage is real and H-1Bs really are hired purely on the basis of talent rather than wage savings, insists Sagalov. As “proof,” he cites the generous salaries some Silicon Valley companies are paying some of their interns. I did use the qualifier some here twice, but let me assure you, if you are, say, an MIT student interning at Google, the firm is going to pay you quite handsomely. But of course, Sagalov has set up a straw man here, a variation of the old “programmers make more than bus drivers argument.”
As I’ve often pointed out, the attraction of the H-1B program, at least in Silicon Valley, stems mainly from two factors:
- The program supplies them with a YOUNG labor pool, and since younger is generally cheaper, H-1Bs are cheap relative to older (over age 35) U.S. citizens and permanent residents. Yes, young H-1Bs do also come somewhat cheaper than Americans of comparable quality (verified by, among others, two congressionally-commissioned employer surveys), but the real wage savings comes from the young nature of the H-1Bs.
- Green card sponsorship provides employers with IMMOBILE labor, which is extremely valuable to the firms. In fact, this is pitched by immigration attorneys as a major virtue of hiring foreign workers.
So, hiring H-1Bs is indeed more than an issue of simply obtaining talent. I’d add, as I sometimes do, that another factor is convenience; firms like Sagalov’s like just recruiting foreign students from a local university, rather than having to spend genuine effort finding Americans to hire.
Worse, Sagalov’s firm, and his comments, follow the pattern so familiar by now in the industry: His company defines a Senior Software Engineer title as corresponding to only 4 years of experience, so you can see that 35 is way past “senior.” Sagalov says (if it was indeed he who wrote this, rather than a lobbyist supplying this boilerplate prose) that the law requires that H-1Bs be paid the prevailing wage, but he doesn’t tell you that the legally defined prevailing wage is a lowball figure, typically well below the real market value of the worker, given his/her talents, skill sets and so on. He cites $8,000 in legal fees as “evidence” that employers are not hiring H-1Bs to save money, but do the math: If the employer is saving, say, $25,000 per year over the 6 or more years it takes to get a green card, a one-time cost of $8,000 is nothing.
As my favorite quote of Sen. Grassley goes, “Nobody should be fooled.”