Today’s Senate Hearing

In spite of my posting title here, I won’t go into detail on the hearing.  I haven’t watched the whole thing yet, and won’t post a detailed analysis until I do so.

Before I get to my main point, which will concern H-1B wages, I’ll say that the hearing apparently turned out exactly as I expected: Praise the Intels and blame the Infosyses.  This is the tactic the mainstream industry lobbyists have been using since back in the 1990s, designed to deflect attention away from their own abuse of foreign tech worker programs, and various senators employed this tried-and-true approach. The H-1B critics — researchers Hira, Miano and Salzman, and H-1B victim Jay Palmer — did a great job during the portion I’ve watched so far, with Palmer being especially good for a “non-pro.”  Nevertheless, people hear what they expect/want to hear, and I predict that most of the senators came away thinking (incorrectly) that the four critics believe in the “Intels are good, Infosyses are bad” dichotomy.

My main point in this posting, though, is to discuss the Intels-vs.-Infosyses issue in terms of wages and other kinds of abuse.

First, there is no doubt that the Intels pay their H-1Bs higher wages than the Infosyses pay theirs.  However, that doesn’t mean that the Intels don’t underpay their foreign workers.  The two types of companies hire quite different H-1Bs, with the Intels typically hiring workers who have a Master’s degree from a U.S. school and the Infosyses hiring people with three-year Bachelor’s degrees from India.  But both are underpaying for their respective levels of workers.  See my Migration Letters paper for details. (By the way, I did a quick analysis of the 2014 green card data this evening, and it was pretty much the same as the 2011 data I used in that paper.)

The other point is that for many of the Intels, the immobility of the foreign workers is much more important than saving in wages.  If you are an employer, having an engineer leave you in the lurch during an urgent project is disastrous.  Immigration attorneys openly urge employers to give hiring preference to foreign students over Americans for this reason.  So the entire notion that the Intels are “better” because they hire foreign students turns the truth on its head.

By the way, the committee invited me to submit a letter discussing my views. You can download it here.

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14 thoughts on “Today’s Senate Hearing

  1. I would add one more point, Norm.

    When an Intel underpays its H-1Bs, it underpays *everyone*, because they are not about to pay you as an American a whole lot more than your H-1B alternative.

    Actually this is only half my argument (as you know), because the effect is MUCH more pronounced than that, but I know that politically this is just too much bad news and it can’t be argued, but I’ll post it here for good luck anyway:

    The *little* underpayment of $20,000 or 20% or whatever that you *see*, is only a tiny part of the story.

    The *big* underpayment is this – before 1991 and H-1B STEM wages averaged MUCH higher.

    We can argue the inflation numbers (the official government numbers are absurdly low), but the trick is the H-1B black hole – salary levels go in, and they never come out. Let’s say prevailing salary for a senior engineer today would be about $400,000 in a 1980 salary structure, today that number is only $100,000, even for an American. Why? Because a “senior” H-1b is getting $80,000. So yes, the H-1B is “underpaid” by $20,000, BUT WHAT ABOUT THE OTHER $300,000?

    Now, there are additional reasons for this, and let’s say those other reasons, including globalization, the Internet, and a “maturing of the field” as economists say, would have cut it in half anyway.

    American STEM workers, H-1B has cut your income in half, if you have a job at all.

    Have a nice day.

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    • Richard Freeman of Harvard, whom I mentioned recently, has done research showing that wages grow more slowly in occupations having a large number of immigrants.

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  2. Norm, nice letter! You’ve really accumulated (sadly) enough specific, documented examples that these summaries now carry some bite, I think even for the average reader. And maybe you’re starting to write more in the public pronouncement style, too. 🙂

    One thing I didn’t know from this post but learned from the letter is the title of the hearings:

    Senate Judiciary Hearing
    Immigration Reforms Needed to Protect
    Skilled American Workers

    Well, that’s promising, right there!

    And second, well, there’s the question of what should they do. You propose a list. On all of those, I dunno. Frankly I’m afraid I can’t really endorse “mend it don’t end it”. And on one point, I think you need to rethink or reword or something. Talk of “liberalizing” the other categories, is extremely dangerous. Already there are rumors, at least, that the L-1 and O-1 categories are increasingly abused, and there’s even a buzz about the EB-5’s (which in principle I think are just great, except that the accounting for them can be nine kinds of bogus). Just renaming the current H-1B to something else is the danger here. The REAL “best and brightest” are probably a tiny fraction of those on the O-1 category alone. So here’s MY “liberalization”: if they’re so freakin’ bright, then allow them in if they are paid at least 300% of the prevailing wage.

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    • Don’t be too encouraged by the wording. About 15 years ago when I testified in Silicon Valley against increasing the H-1B quota, they called that law ‘The American Competitiveness and Workforce Improvement Act’. I told them it was a good title because the law was all about teaching other countries to compete with America, and an enormous amount of American jobs and technology have flowed to Asia of course. Not just high tech – if you can train a handful of industrial engineers you can move a whole factory to Asia at great wage savings.

      I got a few laughs from the pro-industry crowd when I said the name of the law reminded me of a famous Twilight Zone episode. There strange but benevolent-seeming aliens persuaded humans to journey to their planet, based on their book ‘How to Serve Man,’ which was written in the aliens’ language. Just after the alien rocket ship took off a linguist who had translated the book ran up saying ‘It’s a cookbook!’

      The pro-industry panel members were going to hold their ‘public hearing’ without letting the public know about it, but Norm’s Washington connections tipped him off.

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  3. Depressed wages, rampant age discrimination, and reduced retirement benefits are going to gut this countrie’s ability to compete in S.T.E.M. Will students want to enter a field without a future, especially with a burden of student loans to carry forward? Today Mitch Daniels, ex Indiana Governor, and President of Purdue University, states that investors can support student’s by loaning them money for their higher education expenses to be repaid by employment in their field upon graduation. Now investors will decide what lucrative fields students enter, where they work and what salary is acceptable and fields like social work or education may well suffer from lack of “supported students”. Indentured servitude in all aspects, but name.

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  4. Thank you Matloff for sending this letter. The information about “INTELS” is 100% accurate.The suggestions you provide on “What SHOULD be done” are wise, well thought and in true terms a “Common Sense Approach”

    Just a few concerns
    1) Based on my understanding (correct me if I am wrong) the current law also uses geographic location of the position in determining the prevailing wage. If that law still holds, then your proposed method to allocate H1B’s based on worker wage might give an unwarranted advantage to a position based in SFO over one based in Nebraska or North Carolina

    2) If employment based GC’s are shifted to worker based GC’s, what happens to the GC applicants who are currently in the waiting period of the older employment based system ?

    I heard the entire congress hearing on the 17th and unfortunately none had raised much concerns about the age factor that you have been talking and writing about for so long. I truly hope they read your letter more carefully before making any conclusions.

    However based on the arguments at both ends I foresee a stalemate on any sort of legal immigration issue for the time being.

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    • The awarding of visas by wage ranking would have to be pro-rated by region, yes. By the way, this is CWA’s idea originally, not mine.

      Those currently in line would be grandfathered, of course.

      Sadly, very few people even among H-1B critics bring up the age issue, even though it’s central.

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      • Norm, are we all overthinking this?

        What if ALL H-1B is required to pay 20% over the average rates, and if not an auction some extra priority is awarded if you pay dramatically more?

        Of course likely this would reduce it by 90%, but as far as it kept going it would also be self-limiting, negative feedback!

        Just fold in the O-1. Maybe even find a way to apply it to L-1.

        Have to fiddle the numbers to carry over between years and not do a reset and cause an annual land rush, but that’s all doable.

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      • Additionally I think the Prevailing wage should be determined by only one body that is the DOL. Currently for filing H1B you can use calculations from any third party companies to determine the PWD without any DOL supervision on the accuracy of those calculations.

        Secondly if the employment based LPR process still persists in the future the laws should be clarified. For instance, based on current law the prevailing wage determined by DOL during the Labor certification process is only applicable once the employee receives the Greencard in hand. Thus people from India and China can be easily exploited

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        • Single authority, yes.

          As to my own numbers, even 20% is too low, probably 50% is better, since it will be finagled.

          Yes employers will howl, their claim is NOT that they want excellence, but “they can’t find ANYBODY!”

          I’m answering Norm’s answer to my last message here instead of there, but – Norm, this is a much stronger rhetorical argument than it looks. Don’t make the mistake of thinking that a good political argument should be reasonable, that’s actually about the one thing it does NOT have to be. Much better if it is *clear* in what it claims and in at least some of its impacts … and of course it needs to benefit somebody or some group with great political strength. But a great idea generates its own strength.

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