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.

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11 thoughts on “Yet Another Pro-H-1B Study, Seemingly Tied to Industry Money

  1. Thank you again for highlighting salient points in which we can use against the clapping H1B cheerleaders.

    On a related front, I’ve noted that the presidential candidates are starting FAR away from H1B. Quite likely because many middle class voters see through the smoke and mirrors, even if they don’t work in tech.

    I’m keeping H1B at the forefront with each candidate’s cheerleaders. I had several express their exasperation with me by saying “Is there a single candidate that can pass this acid test?” To which I answered, “Only if they aren’t dipping into corrupt corporation dollars. You candidate X looks very much like Obama & Clinton in this respect.”

    Don’t let up on any candidate! If they refuse to listen to opposing viewpoints and facts on H1B, then they quite likely will cave in on other important issues such as going to war or applying heavy handed executive actions.

    Keep up the great work and communication!

    Liked by 1 person

    • It is NOT just tech that is getting hammered.

      The following map is for 2014 LCA applications for H-1B, H-1B1, & E-3 temporary worker visas for the occupational group Education, Training and Library Occupations

      http://keepamericaatwork.com/is-your-future-as-a-teacher-in-america-safe/

      So far, in preparing these maps, it looks like any job that pays more than 35,000 per year has been targeted.

      We really need to understand as a society that India has over a billion people.
      Whether their education is comparable to ours is besides the point.

      They have diplomas from their colleges, whether they are good or not.

      And they do not have jobs in India.

      And we do have jobs in America.

      And the temporary worker visa allows them to displace us.

      Liked by 1 person

      • Virgil,
        I do understand the attack on Americans across several job categories. I mention high tech due to this forum, but see plenty of education jobs offered only to H1Bs, and many of them are in Federal subsidized Native American education roles. Irony rings like mad!

        As for “open jobs”, you well know that anyone in our age group is invisible, even if we make it abundantly clear we’re comfortable in a step down or two.

        So much for Federal laws when CONgress is bought off on both sides of the aisle.

        Liked by 1 person

  2. Edited (am on a phone)
    Thank you again for highlighting salient points that we can use against clapping H1B cheerleaders.

    On a related front, I’ve noted that the presidential candidates are staying FAR away from H1B. Quite likely because many middle class voters see through the smoke and mirrors, even if they don’t work in tech.

    I’m keeping H1B at the forefront with each candidate’s cheerleaders. I had several express their exasperation with me by saying “Is there a single candidate that can pass this acid test?” To which I answered, “Only if they aren’t dipping into corrupt corporation dollars. You candidate X looks very much like Obama & Clinton in this respect.”

    Don’t let up on any candidate! If they refuse to listen to opposing viewpoints and facts on H1B, then they quite likely will cave in on other important issues such as going to war or applying heavy handed executive actions.

    Keep up the great work and communication!

    Liked by 1 person

  3. I posted this at their web site but I do not see it

    10 Reasons Dave Bier got it wrong – the H-1B harms Americans.

    1. Basic law of supply and demand. The H-1B injects additional supply of labor into the market. When supply increases the price declines. Thus American STEM workers find a lower price for their labor. In a free market those Americans with the required skills would have employers bidding up their wages. The H-1B supply increase stops that from happening and produces lower wages for Americans.

    2. Most H-1B labor comes from third world countries. The low wages being offered to H-1B labor attracts few workers from countries with wages at or near those of American workers. A wage 20-30 percent below American STEM workers is not attractive to workers in Western Europe but very attractive to workers in India and other third world countries that supply most H-1B labor.

    3. Employers have shown they are willing to break the law to avoid free market wages for STEM workers. Check out the Silicon Valley’s No-poaching agreements. Those willing to break the law to get cheap labor are going to have no moral qualms about buying shill studies showing a need for H-1Bs.

    4. There is no rational reason to think that a foreign worker has more impact on economic activity than an American worker. If economic activity improves after an H-1B fills a position there is no reason to think that that same improvement would not have taken place if an American has taken the job.

    5. There is ample reason to believe that if the H-1B was canceled and employers were forced to hire Americans that economic activity would improve more than if H-1Bs had been hired. More money would be injected into the economy both by higher wages paid to Americans over H-1Bs and H-1B workers send lots of money home which is a cost of having them.

    6. Aside from pushing Congress for cheap foreign labor STEM employers are doing none of the things traditional done to address worker shortages. Most important, they are not bidding wages up as is normally done in times of shortage like the dot com boom. Nor are they bringing back retired workers, recalling laid off workers, being less picky about skills, or training workers in house.

    7. Milton Friedman said of the H-1B: “There is no doubt, that the [H-1B] program is a benefit to their employers, enabling them to get workers at a lower wage, and to that extent, it is a subsidy.”

    8. Senator Robert Bennett (R-Utah) said about the passage of H-1B legislation: “Once it’s clear (the visa bill) is going to get through, everybody signs up so nobody can be in the position of being accused of being against high tech. There were, in fact, a whole lot of folks against it, but because they are tapping the high-tech community for campaign contributions, they don’t want to admit that in public.”

    9. Repersentive Tom Davis (R-Va.) said about the passage of H-1B legislation: “This is not a popular bill with the public. It’s popular with the CEOs. This is a very important issue for the high-tech executives who give the money.

    10. The Department of Labor says this about the H-1B: “H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of the foreign worker.”

    Liked by 1 person

    • For point 11, Kamal Nath, the Commerce Minister of India, correctly called the H-1B visa the “Outsourcing Visa” in an April 15, 2007 New York Times article.

      Liked by 1 person

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

    I agree. I’ve only had a short time to look at it but I was struck immediately by Charts 2 and 3. In those charts, Bier is exploring the correlation between the foreign-born employment and the total employment in Computer and Engineering. Does Bier realize that the total employment INCLUDES the foreign-born employment? That is, he is effectively comparing apples with apples and oranges. That’s one way to increase correlation! Of course, he should compare two independent groups, like foreign-born and native-born workers. I also, notice that he did something a bit misleading in Chart 2. The casual observer would think that foreign and total employment went up at about the same rate. That would be a mistake. I had time to post a quick table and graph with Bier’s data that show the rate of increase at http://econdataus.com/bier1.htm . As you can see, foreign-born employment increased about 46 percent during the ten years but native employment increased just about 7 percent.

    Liked by 2 people

      • Speaking of wages, I noticed that Bier referenced Peri’s study, “Foreign STEM Workers and Native Wages and Employment in U.S. Cities”. That is the study for which Peri declined to release the calculations to me because he and his team were still working on them in preparation for a journal article (which I am yet to see). It seems that the results are good enough to release for discussion by those who agree with them but the calculations are not quite good enough to release to anyone, especially to anyone who might be skeptical. I did post an initial look at the study at http://econdataus.com/forstem.htm . As can be seen, there was a relatively strong correlation while wages were increasing strongly during 1990 to 2000. However, wages appear to have generally stagnated in 2000 to 2005 and shrank in many areas in 2005-2010. In 2000-2005, there was a slightly negative correlation and in 2005-2010, there was a slightly positive correlation. This may represent an example of Simpson’s Paradox in that the regression slope of each of the 3 time spans is less than the regression slope of the entire time period.

        Liked by 1 person

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