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.