More on SCE and Related Topics

After the SCE debacle, in which the giant utility laid off American IT workers and replaced them with H-1B (and likely L-1) workers, 10 U.S. senators wrote a letter to DOL and other key federal agencies, asking for an investigation and suggestions on how the law should be changed. I was skeptical at the time that the letter would have much effect, and sure enough, DOL declined the Senate request.

Here are some recent developments:

• There is now a ruckus over an SCE-style action by Disney.
• Senators Sessions and Durbin have issued a press release expressing disappointment that the Dept. of Homeland Security has joined DOL in refusing the Senate request.
• A group of the SCE victims have now joined a lawsuit against the recent executive action by the Obama administration to grant work rights to spouses of H-1Bs. The linked article has some interesting details about the SCE layoff. (By the way, the suit cites the action as making U.S. work even more attractive to the H-1Bs, thus further harming American workers. But the suit seems to miss the fact that many of the H-1B spouses are also in the STEM field, and thus will have more direct adverse impacts.)
• Interestingly, Infosys, one of the firms that supplied foreign workers to SCE, is contributing to coding education in the schools, with the message essentially being, “Don’t worry about the programmer shortage, America, we’re going to help K-12 produce more programmers.” When the firm wrote that press release last December, little did they know that its own actions with SCE would dramatize the falsity of the “programmer shortage” myth.

The Obama people seem oblivious to the growing perception that the Democrats are ceding their role as the pro-labor party to Republicans. Odd world we live in.

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The WSJ, Like Congress, Has a Short Memory

There are two reports, requested by Congress, that do a fairly good job in explaining the problems with the H-1B work visa:  One by the NRC in 2001, and another by the GAO in 2003. Yet I believe one could knock on doors all day on Capitol Hill and not find a single staffer who is aware of those highly-relevant studies. Congress, it seems, has no memory.

The Wall Street Journal seems to suffer from amnesia too, as evidenced by an editorial it ran recently, blasting Wisconsin governor Scott Walker for changing his mind on the immigration issue (basically from pro- to con-).  Now remember, folks, I’m a lifelong Democrat, and thus am not out to promote Walker here, but fair is fair — and the WSJ is not being fair at all.  Or consistent, which is my topic here.

The editorial uses as its main source the National Foundation for American Policy (NFAP), “a pro-immigration think tank.” That latter description is right, but the grandiose title of the organization masks the fact that it is little more than a one-man operation consisting of Stuart Anderson.  Much more important, though, is that this same WSJ has roundly criticized Anderson’s past research.

And this was not ordinary research. It was of the “each H-1B creates x new jobs” genre, so popular in the current debate.  To my knowledge, Anderson was the pioneer in this type of research.  And the WSJ gave an excellent analysis of why Anderson was wrong. There were also some major flaws in Anderson’s study that the WSJ missed, but it certainly showed well why vested-interest funded research like that should not be taken at face value.  And yet the recent WSJ editorial does exactly that.

The rest of the editorial cites “the usual suspects,” studies done by researchers who either funded by vested interests or have an ideological motivation to support H-1B. And it yet again gets into the childish debate over which fields do or do not consistute STEM; I’ve repeatedly urged both sides of the H-1B debate to stick to the computer fields, which form the plurality of H-1B jobs.

As to Walker and his dramatic policy shift, I know almost nothing about the man, other than his prominent battle with state workers (on which I don’t know enough to take sides). But a friend of mine mentioned to me the other day that Walker had helped him get smoking banned at the Milwaukee Brewers stadium, Miller Park, in spite of pressure by Phillip Morris, then owner of Miller. Apparently Walker is not afraid to go up against Big Business. Should be interesting to watch.

DOL Refuses Senate Request on SCE Case

There was an uproar after the utility SCE laid off American workers and replaced them with imported ones working under either H-1B or L-1 visas. This was the subject of part of a Senate hearing, and 10 senators wrote an open letter to the Dept. of Labor (and other agencies), asking them to investigate the case.

My blog about the letter had what might now be considered a prophetic title, “Unclear Goal in Senators’ Letter Regarding SCE Case,” as DOL has now refused to conduct an investigation, pointing out, among other things, that SCE’s actions appear to be perfectly legal. I had said the same thing in my blog:

The letter essentially asks whether SCE, and the Indian IT services firms, TCS and Infosys, that provided the workers, dotted all their i’s and crossed all their t’s. The answer is almost certainly Yes — SCE is a huge company with lots of careful lawyers. For instance, the letter asks whether TCS and Infosys are maintaining an employer relationship with the workers sent to SCE, as required by law and regulations. They are almost certainly doing so, assuming the plan, as typical, is to use the onsite foreign workers to serve as liaisons to offshore workers.

Did the senators who authored the letter expect DOL to respond this way, washing its hands of the whole SCE mess? Maybe; there is no naivete in DC, and maybe the intent was to show DOL, and by extension the Obama people, just doesn’t care about H-1B abuses (and that the good senators do care).

Yet I am surprised that DOL simply ignored the request at the end of the Senate letter, which asked DOL and the other agencies to identify any “obstacles in existing law” to preventing abuse such as that in the SCE case. DOL’s lack of a reply on this point is in sharp contrast to DOL’s 1998 House testimony, in which it agreed that there were lots of abuses but the DOL’s hands were tied by the language of the law. In other words, whereas in 1998 the DOL was sympathetic to critics of H-1B, today there is no such feeling. The “obstacle” is now partly DOL itself.

But even those 10 senators, well-intentioned as they may be, are not helping matters either, in their failure to notice the central issue in the SCE case.  As I wrote in my earlier posting, “what really enabled the hiring of H-1Bs to work at SCE was the four-tier system of determining prevailing wage, which makes young foreign workers cheap.” The Senate and the DOL letter have focused on the special H-1B-dependent category in H-1B law, which covers the firms that provided the foreign workers to SCE. Yet the real point is, regardless of whether the rules in that special category are flawed, the foreign workers in the SCE case were still subject to the GENERAL wage requirements for H-1B, and use of young foreign workers for cheap labor is legal under those requirements as well.  In other words: What most needs fixing is GENERAL H-1B wage law.

That law, as I’ve said, makes it legal to hire young foreign workers in lieu of older Americans, as young workers are cheaper. So any legal reform to H-1B that concentrates on the H-1B-dependent class, which I’ve been warning for quite a while is what Congress is headed for, will completely miss the boat.

This includes the proposals to give an unlimited number of visas (temporary and permanent) to newly-graduated foreign students earning STEM graduate degrees at U.S. universities. Even if Congress were to severely clamp down on the H-1B-dependent employers, SCE would have plenty of young foreign workers to hire from.

Remarkable Congressional Briefing on H-1B

A source on Capitol Hill has informed me of an amazing briefing today by a “Who’s Who” of industry lobbying groups (PNAE, CompeteAmerica, American Immigration Lawyers Association, FWD.us etc.), presented to congressional staff. The meeting was closed to the press, which is surprising at first — what lobbyist doesn’t want his/her message to be spread far and wide? — but the reason for excluding the press turns out to be quite startling.

The TITLE of the briefing says it all:  FACTS YOU CAN USE To Prove That High-Skilled Immigration Is Good for the Economy. Prove to whom? Since the “you” is the congressional staff, it’s clear that the briefing is intended to help politicians convince their skeptical constituents that H-1B is good for them. I assume there is nothing illegal in that, but it is incredibly sleazy.

The document itself consists of a rehash of “studies” done by various industry-funded researchers in the last couple of years (even some of the misquotes are rehashed). I’ve refuted those arguments before and thus won’t do a point-by-point rebuttal here. But what is fascinating is the arguments presented verbally at the briefing, ranging from the silly to the bizarre. I’ll discuss a few of them here.

H-1B workers increase native-born worker wages because, while it is true they do push some STEM workers out of their field, those workers counterintuitively go on to higher paying jobs…

The reason only 1 in 4 STEM graduates work in STEM fields is also largely because our economy is so flexible they can instead go into fields like management, healthcare, law, or finance.

This is a standard Giovanni Peri argument, in which he says displacement is fine because the Americans can then become lawyers and the like. (The written briefing document says that they become IT managers and executives, but of course there aren’t enough such jobs to accommodate even a small part of the American workers.)

It’s amazing that the lobbyists actually admit H-1B displaces some Americans out of STEM. In a sense they have to admit it, since this was the major finding of one of Giovanni’s own early papers, and of course incidents like the recent one in which SCE replaced American ITers by foreign workers make the point obvious. But still, quite remarkable that the lobbyists have gotten to the point of admitting this, albeit only verbally and without the press present.

Equally amazing is the apparent concession that H-1B does reduce overall STEM wage levels. Again, they have to admit this, as even the pro-industry Brookings researchers and even the NRC report (with representatives from Intel and Microsoft on the commission) admitted so.

But in making these concessions, the lobbyists seem to be working at cross purposes with themselves. On the one hand, they say that tech is vital to U.S. interests and thus they promote getting more Americans into STEM, while on the other hand saying that it’s not a problem that H-1B suppresses STEM wage growth and thus discourages Americans from pursuing STEM careers.

Do the lobbyists think it’s important for Americans to go into STEM, as they’ve said repeatedly, or not?  They can’t have it both ways.

Another statement made by the lobbyists at the briefing:

Wage growth in STEM jobs has been higher than in other fields in recent years. It’s just been slow because the economy has been so weak.

Hal Salzman and others have cited government data showing that STEM wages have been flat, including specifically in IT. I’ve cited NACE data showing that salaries for new Computer Science graduates are DECLINING. The lobbyists are apparently conceding this too, and trying to obfuscate by putting this ridiculous spin on the data. But they cannot get around the salient point:  Lack of wage growth means we do NOT have a labor shortage. Period.

Defining what constitutes a STEM graduate is tricky because things like majoring in Medieval Studies counts as STEM.

Clearly, the speaker didn’t mean this literally, and his/her point was that even if there is no shortage in lots of fields defined as STEM, some areas like Computer Science do have a shortage. But again, I point to the fact that CS salaries are not rising, thus NO SHORTAGE.

Immigrants (over a recent time period I didn’t catch) are responsible for 80 percent of economic growth in the STEM economy, and 40 percent of the growth in the overall economy.

Critics of high levels of immigration interpret such statistics (if true) as saying that immigrants are taking most of the new jobs. As Hal Salzman has shown statistically and I’ve observed anecdotally, it’s certainly true for software engineering jobs.

This is a classical example of a fallacy stemming from lack of a counterfactual. What if we had NO immigration? Would the STEM economy grow 80% less? Do they really believe that?

But again, putting these absurd arguments aside, what is most troubling about this briefing is the message, which seems to boil down to, “We in the industry are paying you in Congress good money, so you had better vote our way. If your constituents don’t like it, here’s how to fool them into seeing things your way.” I must again quote Senator Grassley, “No one should be fooled.”

A Paper on H-1B of Great Importance But Likely to Be Ignored

A couple of people have brought to my attention a new research paper on H-1B by Kirk Doran (Notre Dame), Alexander Gelber (UCB) and Adam Isen (U.S. Treasury). Its findings are certainly provocative, as they directly contradict most (or all) of the recent major work that is positive on H-1B.

Though some might expect me to automatically endorse every paper with findings on H-1B similar to mine, on the contrary, I tend to be rather critical of such work. For example, Georgetown’s Tony Carnevale found that a sizable number of Computer Science graduates are not finding work in their field. This would seem to starkly contradict the industry PR line that there is a dire shortage of CS grads, but I’ve pointed out that (a) a large number of CS grads are simply not sharp enough to do software development and (b) many aren’t suitable for the CS “talking jobs” (say, customer support) either, as they are not the outgoing articulate types that are needed.

In the case of this paper, though, it is one of the most careful, insightful works I’ve seen on either side of the H-1B field. No, not perfect by any means, as I will discuss below, but a fine job at the end of the day.

Contrary to the results — real or misinterpreted — of previous work on whether H-1B increases patenting, the authors here do not find such an effect. Similarly, they find that H-1B does NOT increase employment, and in fact the arrival of new H-1Bs causes some displacement of existing workers, both American and foreign — quite contrary to the obligatory statement in every pro-industry press release, editorial and research paper that “each H-1B creates 2.62 new jobs.”

But mark my words — you won’t be hearing much about this paper. I doubt that it will be highlighted in the press, or even mentioned as counterpoint in articles that bring up the claimed 2.62 figure. The problem is that these authors don’t have the massive PR machine that the pro-H-1B researchers have, in which journalists, editorial boards and above all, offices on Capitol Hill are constantly bombarded with “educational” material featuring H-1B poster boys (rarely girls), tales of woe that “Johnny Can’t Do Math,” and of course the ubiquitous 2.62 figure. I make this point here specifically for the activist programmers and engineers hoping for reduction of H-1B, who often don’t realize that, sadly, facts are not enough in politics.

Well, what does the paper do specifically, and what are its weaknesses as I see them?  First, what are its main findings?

• “Winning additional H-1B visas has an insignificant effect on patenting within eight years…”
• “H-1Bs substantially crowd out employment of other workers.”
• “We find some evidence that additional H-1Bs lead to lower average employee wages while raising firm profits….and rules out the scenario in which H-1Bs replace natives one-for-one.”

One disappointment I have with the paper is that it doesn’t sufficiently treat the question of the variability of the quality of the H-1Bs, and of corresponding variability of the firms that hire them. The authors do perform some separate analyses in which they omit the large IT services firms, but they do so only because such firms don’t do much patenting. That is true, but it ignores the point that the quality of the H-1Bs hired by those firms is low. Why didn’t the authors do separate analyses in which they kept only the mainstream firms that are most vocal in pushing Congress to expand H-1B, such as Google, Facebook, Intel, IBM, Oracle, Cisco and Texas Instruments? Conceivably they might find a salutatory effect of H-1B on patenting in those firms. For that matter, assuming the authors’ data separated visa counts for the main 65,000 cap and the 20,000 supplementary cap for foreign MS/PhD grads of U.S. universities, they should have done separate analyses here too. This is the industry lobbyists’ favorite group, so it would have been useful to see if H-1B had a postive effect on patenting in those firms.

There is also no recognition in the paper about the role of the OPT extension to the F-1 student visa, which serves as a buffer to a “shortage” of H-1B visas. If there were a positive effect of H-1B/foreign workers on patenting, it might be missed if the OPTs are being granted a lot of patents. The time period for OPTs was extended during the George W. Bush administration, and now the Obama people want to lengthen it even further. So, this is a very important factor policywise.

Mind you, my own position is that the H-1Bs who were formerly foreign students are actually WEAKER than their American peers, thus causing a net LOSS in patenting for the nation, due to the displacement effects (the latter of which, I hope you recall, even Giovanni’s research has shown). This was the subject of my EPI paper, and of work by John Bound, who ironically is prominently acknowledged by the authors as being helpful to them. So, I believe H-1B should be curtailed, not expanded, and I feel the same about OPT. But though confirming this with the data of the present paper may have been difficult, if they had at least found that H-1Bs don’t increase patenting even at firms like Google, this would have been very significant.

I was also disappointed at the authors’ weak understanding of H-1B wage law and the manner in which H-1B displacement of Americans works. The authors remark that the wage laws “may not be effective,” but they seem to have no inkling of the central role of age in the use of H-1Bs as cheap labor, in which young H-1Bs are hired in lieu of older (35+) Americans, in full compliance with the law. And while the authors seem surprised that new H-1Bs often displace earlier-hired ones, it is probably due to the same problem; those earlier H-1Bs may have gotten enough raises in the last couple of years to make them likely targets for dismissal too.

The phrase “hired in lieu of” above is quite different from the “replace Americans by H-1Bs one-for-one” model the authors seem to have in mind. This model of course likely stems from the huge publicity given to cases like SCE, in which that phenomenon does indeed occur, but the much more common use of the H-1B program is at the hiring stage. This is something the authors should have pursued, though again it’s not clear that their data would have been sufficient for this kind of analysis.

The authors use the word causal, something I’ve taken my colleague Giovanni Peri to task for. The authors seem to believe that this is justified by the “random treatment assignment” nature of the data, in which visas were awarded by USCIS by random lottery, but I still consider use of the word to be reckless.

Consider for instance a point I’ve made before on Giovanni’s “lottery” analysis. (By the way, the authors of the present paper don’t consider his paper to be truly based on randomization.) He found that the cities that “won” the H-1B lottery saw the wages of Americans in IT rise. But consider a scenario in which a firm fires most of its American IT workers except for the managers, and hires a number of H-1Bs to replace them. (Again, it does occur sometimes, as we’ve seen.) Then, since the managers tend to make more money than the programmers, the wages of Americans at that firm — those Americans who REMAIN — does rise, even though none of the retained Americans got a nickel in raises. In such a scenario, the claim that the H-1Bs “caused” the American salaries to rise might be technically correct, but certainly not in the sense people assume upon hearing the claim.

Bottom line, though, this paper is generally done extremely carefully and its results are highly remarkable. It flatly contradicts the work by Peri and Zavodny (“2.62”!), and for that matter, contradicts the inaccurate interpretation by the industry of Bill Kerr’s paper on patenting. Too bad no one will notice.

Attention, Walmart Shoppers!

For those who might not get the allusion in my title above, it’s the phrase used on a PA system in the store to announce special sale items and so on. It’s often used as a prop in comedy routines. But it may take on a new meaning in light of an April 11 CIO Story blog item, which says in part,

“Walmart and its IT contractors are driving down standards in the tech industry in the U.S. by using H-1Bs visas excessively to keep costs low. Walmart is among the companies seeking an increase in the H-1B cap,” commented Greg Penner, the vice chairman of the Walmart board of directors

Is this a case of a rogue director, an egregious misquote, or what?

To me, what is more interesting is the paragraph that follows the one above:

Efforts are being initiated by Congress to raise the H-1B visa cap and also restricting its use by offshore outsourcing firms.

This of course is exactly what I’ve been warning about: The unwarranted focus on the IT service firms, oblivious to the industrywide nature of the abuse, will be used as an excuse to INCREASE the H-1B cap (and to create additional H-1B workaround visa programs, such as automatic green cards for foreign students, extension of the OPT period and so on).

Unclear Goal in Senators’ Letter Regarding SCE Case

Sometimes I receive so much mail about a certain topic that I feel compelled to write about it, even though I had not been planning to do so. Such is the case with a letter sent by 10 senators to Attorney General Eric Holder and other top officials, raising questions about the legality of Southern California Edison’s recent replacement of American IT workers by foreign workers.

The letter essentially asks whether SCE, and the Indian IT services firms, TCS and Infosys, that provided the workers, dotted all their i’s and crossed all their t’s. The answer is almost certainly Yes — SCE is a huge company with lots of careful lawyers. For instance, the letter asks whether TCS and Infosys are maintaining an employer relationship with the workers sent to SCE, as required by law and regulations. They are almost certainly doing so, assuming the plan, as typical, is to use the onsite foreign workers to serve as liaisons to offshore workers.

So, one must ask what the point of the letter is. I don’t see any point, which is why I originally had not planned to write about it. Perhaps the point lies in the closing sentence of the letter, which asks the recipients to notify the senders as to any “obstacles in existing law” to preventing abuse such as that in the SCE case. But does the Senate really need “permission” from the Executive Branch to fix the problems with current law?

To me, the only interesting aspect of the letter is who did NOT sign it. As pointed out in a Computerworld article, neither California senator was a signatore. A few years ago, a top aide to Senator Barbara Boxer told me that Boxer would never support any legislation that tightened up any aspect of immigration policy whatsoever, but I am somewhat surprised to see that Senator Feinstein didn’t participate in this very innocuous letter. Even more interesting is that the two most strident senators in expanding H-1B, Hatch and Schumer, didn’t agree to sign what, again, is what we in CS call a “no-op” (a placeholder machine instruction that does nothing).

As I have been warning for so long, there is far too much attention paid to the IT services firms, who provide H-1B and L-1 workers to mainstream firms. Why is it that people think it’s fine for an employer to hire a foreign worker directly but terrible for the same employer to hire a foreign worker through an agent?

And for that matter, why is overtly REPLACING Americans by foreign workers any worse than hiring foreign workers INSTEAD OF Americans? For example, does anyone really think that none of the 18,000 Americans laid off by Microsoft could have done the Microsoft jobs being filled by H-1Bs (and OPTs, etc.)?

Senators, please step up to the plate! Trying to tweak the H-1B program around the edges will only result in some kind of Rube Goldberg-style mechanisms that don’t work. As I explained in a recent post, what really enabled the hiring of H-1Bs to work at SCE was the four-tier system of determining prevailing wage, which makes young workers cheap. The ability to hire cheap young H-1Bs in lieu of older Americans is CENTRAL to the attractiveness of the program to employers, and to their ability to abuse it. Changing prevailing wage to a single number, an overall mean wage rather than four wage levels tied to experience, would have prevented the SCE fiasco in a very simple, direct manner.

And senators, if you do want to stop the abuse (a big “if”), such reforms need to be applied across the board, to ALL hiring of foreign workers. Don’t enact legislation that targets only the IT services firms, and don’t create H-1B workaround programs such as fast-track green cards for foreign students. Don’t create an “out of the frying pan and into the fire” situation for American STEM workers.

All this presumes that those senators have a genuine desire to protect American workers, which is questionable. Senator Sessions, in announcing the letter, noted that “There is no ‘shortage’ of talented Americans, only a shortage of officials willing to protect them.” Senators Sessions and Grassley are the only ones I can see with such a will, sad to say.

Yet Another Pro-H-1B Study, Seemingly Tied to Industry Money

The tech industry may claim a shortage of STEM workers, but they seem to have no shortage of researchers in pro-industry think tanks who can write reports promoting the H-1B work visa program. The new kid on the block in this speciality is David Bier.

A couple of people called my attention yesterday to Bier, asking me, “Who is this guy, and who funds him?” He is with a new libertarian think tank, the Niskanen Center, and though there doesn’t seem to be information about the source of their initial funding, there is something interesting in that regard about Bier’s employer until recently, the Competitive Enterprise Institute. Though CEI doesn’t make their funding details public, they do state who funds their annual dinner: Google gave the largest contribution, $50,000, and Facebook chipped in $25,000.

So, is his study any good? Much of it consists of rehashing old arguments — as with most research tied to advocacy funding, it cites only pro-H-1B research in its references — but it does have one approach which is rather novel (though one that is interpretable as critical of H-1B, contrary to his goal).

Here Bier tries to correlate unemployment rate in computer-related occupations with the months until the H-1B cap is filled (Chart 1). Since in recent years the cap has been filled right away, that second variable is a bit difficult to interpret, and as I’ve said before, unemployment rates in this field aren’t very useful, since tech workers find it necessary to bail from the field after encountering major obstacles in finding work; the former engineer now working as a sales clerk at Radio Shack counts as employed, even though he/she is UNDERemployed.

But putting that all aside, what Bier’s numbers suggest is that as the filling of the H-1B cap approachrd, unemployment in the computer fields goes down. Yet, contrary to Bier’s contention that American tech workers aren’t harmed by H-1B, Bier’s numbers could naturally be interpretable as indicating that as visas become hard to get, employers finally break down and hire some Americans.

Bier does concede that many might reach such a conclusion, but he dismisses the notion:

Opponents of the H-1B could respond that perhaps companies would have hired more American workers if they had no H-1Bs available to them. But if companies were hiring H-1Bs to save money rather than increase production, we would expect to witness, in the aggregate, more H-1B requests at exactly the time that companies are seeking to cut back on labor costs through layoffs when unemployment is rising. The fact that we see the opposite is strong evidence that companies are not basing their decision to hire H-1Bs on a desire to lower the cost of labor.

But this isn’t the way businesses work with H-1B at all. They ALWAYS are keen on hiring H-1Bs (provided they are doing any hiring in the first place). I’ve mentioned often that a central appeal of H-1B to employers is that the program greatly expands the pool of YOUNG workers, who are cheaper. In the tech field, the primary hiring target is the young, year in and year out, in good times and bad; they don’t hire older workers one year and younger ones the next. So, yes, they hire H-1Bs as cheap labor even in good times.

Speaking of age, I must give Bier credit for noticing that the primary way that SCE recently saved money by replacing Americans with foreign workers is that the latter are young. Again, younger is cheaper. Interestingly, Bier says that this was a matter of “penny wise, pound foolish” for SCE, as the foreign workers didn’t do too well at first, which he attributes to their lack of experience. Of course, this echoes the frequent observations by Americans that many foreign IT workers are not terribly competent. But what Bier doesn’t realize is that this won’t change SCE’s plan at all (indeed, they probably anticipated it); there will be a rough period at first, but it will work out to SCE’s satisfaction after a while.

Bier at least showed some novelty in his Chart 1, but Chart 2, unfortunately, shows no sophistication at all. He finds that tech employment rises and falls with the number of H-1Bs. He makes no attempt to bring in other variables, especially the overall state of the economy. So, his chart doesn’t seem to say anything more than, when the economy is good, there are more job openings, and thus more H-1Bs hired. To claim that the H-1B hiring “caused” the number of overall openings to rise, merely on the basis of this chart, is unwarranted.

Bier’s recurrent theme is that the H-1B program doesn’t harm U.S. citizen/permanent resident tech workers. At one point, he goes so far as to say, “…there is no evidence that foreign-born high-skilled workers are harming wages for American workers.” Bier just hasn’t done his homework. The congressionally-commissioned NRC report, written by a commission that included both labor economists and representatives from firms like Intel and Microsoft, did indeed conclude that H-1B was suppressing wage growth for American IT workers. Even the highly pro-H-1B Brookings report made such a statement.

And even though Bier stridently maintains that H-1Bs are not underpaid, he himself says that mobility issues with H-1B and especially employer-sponsored green cards impede the foreign worker’s ability to get the salary they are worth. You can’t have it both ways, Mr. Bier!

One of the arguments Bier rehashes is that wages in the computer field are not going down. He cites figures showing a 5% rise in the computer field (accounting for inflation) since 2003, compared to a 2% fall in the broader economy. It’s unclear why Bier thinks that tech occupations, and others requiring a college degree (lawyers’ wages went up much more than 5%, in spite of the glut), should be compared to wages of those who work at McDonald’s. But 5% is 0.4% a year, clearly contrary to the industry’s claim of a tech labor shortage.

All in all, one of the industry’s weakest offerings to the H-1B debate.

“We’re Desperate to Hire — Unless You Refer Applicants to Us”

One of those testifying in the recent Senate hearing on H-1B was German immigrant Bjorn Billhardt, CEO of Enspire, a startup the develops e-learning software. Apparently, during the course of his testimony, Billhardt offered to introduce American IT workers to employers.  IT worker Virgil Bierschwale, who lives in Billhardt’s general region, wrote an open letter to Billhardt on his blog, asking to avail himself of Billhardt’s offer of introductions. According to Bierschwale’s blog posts, Billhardt never responded. And even after American IT worker Jay Palmer, who also testified at the hearing, personally met with Billhardt and asked the latter to contact Bierschwale, there was still no response.

Billhardt may or may not know someone worth introducing Bierschwale to. But given Billhardt’s claims, he at the very least owes Bierschwale the courtesy of a reply.

One can’t blame Bierschwale for being reminded of the old saying, “Talk is cheap.” In fact, I’ve seen this pattern — someone from the industry claims employers are desperate to hire, but when one offers to connect them with qualified workers, they aren’t interested — occur many times. I’ll give a couple of examples, which I believe will be illuminating.

Some years ago, something like the year 2000, I was invited to appear as a guest on a Bay Area TV talk show, hosted by the late Pete Wilson, a prominent local anchor. The other guest was Coetta Chambers, VP for HR at Intel. A very high-level Intel executive, Tracy Koon, was also present, but not on camera. She said she was Chambers’ ride, though I suspect her job was to make sure Chambers didn’t say something “wrong.” Yet what was most damning was what Chambers  did NOT say.

I told Chambers, on camera, that I could help remedy the desperate labor shortage she described at Intel, as I had CVs for five or six well-qualified engineers and programmers that I could forward to her. She greeted my offer with awkward silence; she just sat there. I repeated the offer, but again no response for her.

Similarly, a March 17, 1999 PR Newswire statement stated (I’ve adapted this material from my University of Michigan Journal of Law Reform article),

“Something is wrong when you put an ad in the Washington Post for a software engineer and the only qualified applicants you receive are from non-U.S. Citizens,'” said John Harrison, CEO and co-founder of Ecutel, one of the nation’s most promising high-tech companies.

In testimony before the House Science Committee today, Harrison told of the extraordinary cost and difficulty he has experienced trying to keep his company staffed with engineers. Harrison asked our nation’s lawmakers to proceed on a two-pronged approach — dramatically stepped up math and science education for today’s students, and for the short-term, eased immigration laws…

Ecutel’s Web site said that the firm was seeking people with the following skills:

Intermediate and Senior Engineer Positions Looking for several energetic and self-motivated Software Engineers with at least 5 years of experience or familiarity in 2 or more of the following: C/C++, TCP/IP, Mobile IP, IPSec, Device Driver, Internet RFC, Mobile Computing, GUI, RDBMS, Networking, Security, Web Development, Microsoft/Unix OSes, general Internet communication protocols.

Bill Halchin had years of work experience in six of the skills this ad expressed interest in, considerably more than the threshhold of two stated by the ad itself. Yet he was not even called for an interview when he applied to the firm, even after two followup e-mail messages to Harrison. A subsequent inquiry under the Freedom of Information Act (FOIA) showed that Harrison was paying many of his H-1B programmers only $35,000 per year, far below the market rate.

And of course, the following year, Congress, apparently trusting people like Harrison (not to mention Intel), enacted the second increase in the H-1B cap in two years.

And here’s one I’ve told before. In 1998, I spoke at a conference organized by the industry and the Dept. of Commerce. Afterward, a man approached me and said, “You’re wrong. I’m a tech employer, and I really am desperate to hire.” I replied, “My wife is a software engineer. I’ll ask her to apply to your firm. Her surname is different from mine, so you won’t know it’s my wife, and we’ll see how desperate you are.” He immediately backpedalled, saying, “She’s probably too expensive for us!” THAT of course was the nature of his labor “shortage” and “need” to hire H-1Bs.

As the French say, “The more things change, the more they stay the same.” Today we see the industry making exactly the same pitches to Congress as they were doing 17 years ago (more H-1Bs in the short run, develop STEM education for a long-run fix to the “shortage”), and moreover, we see Congress giving credence to the disingenuous statements of people like Billhardt, and 17 years earlier, Harrison.

And one more point about Billhardt: In his verbal statements during the hearing, he said that it wasn’t enough for an American applicant to his firm to have the desired technological skill sets. No, what is also crucial, Billhardt said, was that the applicant be a “cultural fit” into Billhardt’s team. A quick glance at Billhardt’s YOUNG team would seem to indicate that the culture he was referring to was that of 20-somethings, with maybe the odd 32-year-old being marginally acceptable. He may have one or two older accountants, say, but older programmers need not apply. Once again, the age issue is central to H-1B, a tragically overlooked point by not only Congress but also even the critics of the H-1B program.

Billhardt’s testimony, of course, repeats the claim that “for every 100 H-1B workers, an additional 183 jobs are created for workers born in the United States.” omitting mention of the fact that this figure is from an industry-sponsored study. Sadly, none of the senators called him on that point.

The H-1B/Age Connection: So Simple to Explain, So Hard to Understand

If you are a serious follower of the Great H-1B Debate, you may have seen the recent pair of dueling op-ed pieces, one by Ross Eisenbrey  of EPI and the other by Alex Nowrasteh  of the libertarian Cato Institute, concerning the H-1B work visa. Eisenbrey has generally been skeptical about the visa, while Nowrasteh is an outspoken supporter of both an expansive H-1B policy and of liberalized immigration policies in general.

I have points of disagreement with both of the essays, and as you might guess, find most of Nowrasteh’s piece to be based on faulty premises and misinformation. However, there is one kernel of wisdom in his article (emphasis added):

Migrants with H-1Bs are typically young, highly educated and earn high wages. In 2014, 94 percent of new H-1Bs were under the age of 40, while 99.8 percent had at least a bachelor’s degree and 54 percent at least a master’s degree.

This really amounts to a Freudian slip by the pro-industry Nowrasteh. Yes, indeed, this is one of the two primary appealing aspects of H-1Bs for employers — they are young. And young means cheap. Even with a (hypothetical) employer who might give wage parity to his young foreign and domestic workers, that employer is saving a bundle, in both wages and benefits, by hiring young H-1Bs in lieu of older (35+)  Americans.

Though there are other factors, notably a desire for immobile labor, for many employers, H-1B is fundamentally about age. Unfortunately, it’s very difficult to get even those who are critical about H-1B to keep this simple fact foremost in mind.

Take for instance the much ballyhooed recent incident in which the giant utility Southern California Edison laid off American IT workers and replaced them by much cheaper imported foreign workers. People were properly outraged, but in all the discussion I haven’t seen anyone seriously raise the question of WHY the foreign workers have such low wages. Yes, some people have correctly mentioned loopholes in the legally-required prevailing wage, fine, but the overwhelming reason SCE can get away with paying those foreign workers much less than the Americans they replaced is that the foreign workers are much younger than the Americans.

Just as Nowrasteh let the cat out of the bag on the age issue, “planted” articles in the press promoting H-1B often unwittingly do the same. An excellent case in point brought to my attention this evening is an April 3 Houston Chronicle piece, “Scramble Is On for Coveted Work Visas,” by Lomi Kriel, containing the priceless passage:

But though [medical device startup Cognita CEO] Gaurav Patel] cast a wide net, 80 percent of the eligible pool turned out to be foreigners. The only American applicants had decades of experience, not a good fit for the entry-level position. So Patel hired a 24-year-old from Mumbai who had just graduated with a master’s degree in engineering from the University of North Carolina at Charlotte, where he specialized in robotics.

And there you have it, a perfect example of Americans being shunned in favor of a foreign worker (and by the way, NOT involving an IT services outsourcing firm). The fact that Patel considers the Americans overqualified should be Patel’s problem, not something for the U.S. Congress to solve for him. On the contrary, Congress should be wondering how in the world they ever wrote laws that allow such a thing.

This is, as I said, one of the core elements of H-1B, which I see all the time, including coincidentally this afternoon, when a well-qualified American applicant told me he had been rejected from a certain up-and-coming employer because he was, in the words of the phone interviewer, “overqualified” for the job in question. Since this American has also applied for other positions in the company without even a phone interview, he is presumably underqualified for those jobs. So my friend is both underqualified and overqualified to work at that firm — doesn’t leave much, does it? And yet I happen to know that this firm does hire foreign workers, who somehow have “just the right amount” of qualification.

What a sad but telling example of how, as pointed out by Neil Ruiz of Brookings from a different point of view, “Our immigration system is broken.”

Interestingly, this would be embarrassingly easy to fix:  Abolish the four-tier experience levels system used in determining prevailing wage, i.e. remove the financial incentive to give hiring preference to young foreign workers over older Americans. Define the prevailing wage to be the 50th (or better, the 75th) percentile for the given occupation in the given region — WITHOUT breaking it down according to experience levels. No solution is perfect, and there would still be room for employers like Patel to play games, but this simple solution would be a big step in the right direction.

But NO useful steps will be taken if the age issue is not on the radar screen of even the critics of H-1B, in spite of being so central to the problem. I urge those of you readers involved in proposing policy to keep in mind HOW those foreign replacements at SCE could be so cheap; the answer is a three-letter word.