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.”

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20 thoughts on “Remarkable Congressional Briefing on H-1B

  1. Great info Norm, and truly startling in its brazenness.
    You are a little vague as to whether you looked at the briefing paper, or were actually listening to a recording of the session?! (“time period I didn’t catch”). If the latter it should absolutely be shared – Isn’t there a single staffer wise and brave enough (maybe with family member in IT industry) to record one of these sessions? Will the source at least clue in to which members’ staffers were in attendance? Participating in “skull sessions” like this against constituents’ own interests is clearly shocking and shameful (although probably sadly frequent). Members of congress caught with staffers participating should be pounded at every opportunity with the hard evidence of what transpired, whenever such evidence is available.

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    • The accounts of the briefing were those of my source, not me. I was not there, and have heard no recording. Interestingly, since I made the post, I acquired a second source, who confirmed what the first had said but also supplied new details, some of which I find quite significant and will post at the proper time.

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  2. Yep, I’ve been writing about this for over a week.
    I originally found it on a HR site, not on their page, but it showed up via my google H-1B search so I believe they tried to hide it as I couldn’t find it nowhere.

    Notice how my old friend Bjorn was once again the headliner?

    What caught my attention is this when they talk about creating jobs.

    http://keepamericaatwork.com/i-was-curious-who-echo-labs-was-because-i-had-never-heard-of-them/

    Echo Labs is another one of the headliners.

    If we look at his website, we see this little blurb.

    They are one of 8,474 startups hiring on angelist

    It is looking like the average (of the ones I’ve looked at so far) employee count is 10 jobs.

    If we multiply the two numbers we come up with 84,740 jobs that are being created.

    Folks, we bring in more temporary workers on temporary visas each year and I believe this is very important that we start talking about this.

    We need to create millions of jobs per year to catch up with how far we are behind.

    As an example, we have created 375,000 jobs if we compare 2015 to our high in 2007

    http://keepamericaatwork.com/ive-spent-six-and-a-half-years-trying-to-wrestle-this-economy-out-of-the-worst-recession-since-the-great-depression-and-rebuild-it-so-that-it-benefits-working-americans/

    I believe this is important because our tech industry tells the world that they create jobs.

    But I’ve been up and down both the seasonally adjusted and the non seasonally adjusted numbers in both our current BLS CES and our historical BLS OES databases.

    We simply have not created any jobs and I wish so much that I could be at these “corruption” meetings where the press is banned with my computer and an overhead projector or very large tv screen so that everytime they quote a number, I could say I am from Missouri – Show Me.

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  3. If the US had the same educational requirements for physicians as the MBBS in India (4.5 years of education and a 1 year internship), we could increase the number of medical graduates significantly. As it is, our physicians assistants and nurse practitioners have more education the many foreign medical graduates practicing as doctors.

    In addition, they can take the qualifying exams until they pass. Look at the reported first time pass rates for US trained verses foreign trained graduates. There is no shortage of Americans interested in the medical profession.

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    • The wife of a friend had been a successful physician in Latin America and is now taking the boards here. She said the ones here are much tougher, as they are more analytical.

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    • I am surprised that I have not read more about this but there are treaties such as TISA pending which require a “regulatory convergence” of different countries licensing laws to enable cross border services trade. (commonly known as “Mode Four” after the four modes of supply in the WTO GATS treaty.)

      The treaties typically contain language requiring that requirements be “no more burdensome than necessary to ensure the quality of the service”. There may not be any requirements at all that companies pay their workers any different wages while they are in the US, or even that they be paid in local currency, being temporary.

      If you go to the CUTS-Geneva.org web site there are a bunch of documents about the WTO implications of the pending TISA. (TISA is supposed to be merged with the stalled WTO GATS at a future date, so the large body of literature on “labour mobility” under GATS Mode Four is applicable.)

      I think there is a widespread perception in developing countries that the US is about to cave to decades of pressure and liberalize services in the TISA one way or another, and businesses are gearing up for it.

      If you look at the TISA ( http://data.consilium.europa.eu/doc/document/ST-6891-2013-ADD-1-DCL-1/en/pdf ) and TTIP “mandate” documents ( http://data.consilium.europa.eu/doc/document/ST-11103-2013-DCL-1/en/pdf ) they both make extensive references to GATS- the now stalled 90s era “General Agreement on Trade in Services” GATS was also the reason the Clinton Administration repealed the Glass Steagall Act, ushering in the 2008 world financial crisis, and its also the reason US health care right now is so horrible, as it locks us into a model which has not worked in 20 years.

      GATS was and remains quite controversial. Perhaps its most controversial part is GATS Article 1:3 which mandates the privatization of most public services, those which do not pass a two part test, which follows.

      “For the purposes of this Agreement…

      (b) ‘services’ includes any service in any sector except services supplied in the exercise of governmental authority;

      (c) ‘a service supplied in the exercise of governmental authority’ means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.”

      Few will pass the second part so they will need to be privatized. The changes will likely also involved joining the WTO procurement system GPA. A number of US state governments have begun participating in GPA in April 6, I think. So, we can probably expect a huge amount of that business to be funneled to the low bidder firms in developing world.

      These FTAs pose a huge threat to public education. See http://www.eua.be/Libraries/Publication/EUA_Statement_TTIP.sflb.ashx and http://www.ictsd.org/downloads/2008/06/cassim_steuart_part3.pdf

      GATS also contains the usual standstill and other clauses which implement the core ratchet and rollback functions. It also includes a compensation for “lost expected profits” as a result of any government action which is found b a closed WTO tribunal to have resulted in”indirect expropriation” of a market. (Article XXI)

      Was this the reason crises had to occur now in healthcare and education? Its possible.

      These jobs will be traded for market access and they represent the long awaited payback to developing countries for participating in globalization..

      There is an overview of TISA here: http://www.wti.org/fileadmin/user_upload/nccr-trade.ch/wp2/publications/TISA_P_Sauve.pdf

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  4. > 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?

    Yes, if these are truly facts, why not open the briefing and post the document online? The answer, of course is that these are the type of facts that you don’t want to get too much scrutiny. Sort of like a deck of cards that a magician displays quickly to the audience before his magic trick!

    Anyhow, I notice that two of the cards are those old favorites from the Zavodny study. Those are the claims that each of certain foreign workers create 2.62 jobs for native workers and that each H-B visa holder creates 1.83 American jobs. By the way, as is often the case, they can’t even state the first claim correctly as it involves U.S. ADVANCED degrees, not U.S. STEM degrees. In any case, the last table at http://econdataus.com/amerjobs.htm shows that Zavodny cherry-picked the very best 7-year or greater span for her study. Had she picked a span 2 years later, from 2002 to 2009, the same calculation would have shown a 1.21 job LOSS for each such foreign worker. The 1.83 number has similar problems. In addition, it has an error in its calculation and is based on the number of workers on the Labor Condition Applications, something very different than the actual number of H-1B visa holders. I’ve posted references to both the 2.62 and 1.83 numbers at http://econdataus.com/claim262.htm .

    > 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.)…

    At least several of those groups are also in a “Who’s Who” of shoddy research. PNAE helped fund the Zavodny working paper, FWD.us posted a video called “Know the Facts: H-1B Visas” that references the 2.62 number (see http://econdataus.com/fwdusvid1.htm ) and Compete America has built a permanent monument to the 2.62 number in the top right of their Facebook page at https://www.facebook.com/competeamericaorg . Of course, none of them will defend those numbers openly. It seems that having lots of money means never having to answer questions.

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  5. In speaking with a family friend who had a child in medical school, I was told told that if they did not pass the STEP exams on the first try, they were dismissed from the program; this may not be the practice everywhere. However when FMGs are allow to retake and retake and retake the exams, what level of competence are we importing when we could be creating medical professionals in our own institutions.

    I expect the universities – not just medical schools – have an interest in maintaining the status quo rather than adapting to reflect international accepted standards that are being touted as creating high quality physicians that we must admit to the US because the universities and medical schools cannot graduate enough candidates. Then they whine about not having enough residency slots yet they admit FMGs into the slots while Americans are denied placement.

    It is frustrating that in the US we create our own problems, wring our hands, and decide to import a so called solution when a changes in the root cause of the problem to what is standard in the countries from which we are importing the solution would make a dramatic difference to US workers and the country as a whole.

    Liked by 1 person

    • Actually, our family friends, with a daughter at a major medical school told us the opposite — the students can keep repeating the exam until they pass.
      One thing we’ve heard from several families with children in med school is that there is fierce competition to get residencies in California. Maybe the presence of the FMGs plays a role here?

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  6. A failure on Step 1 (after 2 years med school) would result in dismissal only if there are significant problems with grades from the first two years as well. If not, they would be allowed to retake at least once (maybe twice) – the first two years are the only substantial hurdle at which med students are dismissed in significant numbers, unless there is serious misbehavior later on. The steps 2 and 3 can generally be retaken until passed – and are probably mostly what your friend’s daughter was referring to.

    And yes – FMG’s (IMG’s is the politically preferred term…) definitely increase the competition for the most favored residencies, although those in competition for these slots are really the “cream of the crop” from around the world.

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  7. Hello Mr Matloff, Thank you for doing your important work. As writer/reporter I write on US Foreign Policy issues and I happened to fly recently to India from the US next to executive of the company that was recently acquired by Indian IT services giant WIPRO. We have had a long conversation and what I was told was very interesting. Namely the issue is that Indian management is pressuring the executive to increase H1-B visa allotment to his clients’ projects despite the Indian staff not having proper skills and training to hit the ground running. He was simply telling me that he doesn’t want to lie to his clients knowing that the pressure he faces will result in a “train wreck in slow motion.” Also on the trip I was able to visit the Tech CIty in Bengalore which in itself is a gated city that would not be out of place of any suburb in North America. Here the IT and consumer service workers are trained not only in handling calls but are also taught basic elements of behavioral psychology so as to play on human emotions in order to either up sell the services or even do straight cold call telemarketing. The top prizes for the ” internal stars (top performers are” : H1B Visas and people are also told to bring their spouses or even get married to …..double their earning income potential. These types of stories are really a low hanging fruit but knowing how US business media works the conspiracy of omission is really not that surprising. So after all the big business is revolutionary enough in its MO to use social progressive notion of inclusion, multiculturalism and anti-racism to line its own pockets while destroying the idealism that originally started it. It is really a genius system on how it creates an inverted totalitarian model that winds up being race to the bottom on the ground. And when it is all said and done H1B visa workers are shipped out back to their locations so the newer and hungrier ranks can take their place. Personally I think it is new and improved re-run of 18th century slave trade with all the negative side effects and blowbacks shipped out and outsourced to someone else. Brilliant, indeed. DM
    PS. Modi’s “new India” economic plan is designed to create an impossible task of creation of 1 million of jobs per month.Notwithstanding the fact that around 50% of India’s workforce doesn’t have sufficient employable skills,period, All serious economists and analyst know that it is task impossible but everyone is keeping their mouths shut. Thus H1B Visa to US as well as other countries is used as element of buying the consent of ruling elite for appearance of upward mobility while the ponzi scheme of unmet expectations will be someone else’s problem to handle when it collapses (in Modi’s calculation it will be the Congress party).

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  8. Good catch on the wage ceiling: It is ABSURD to state that there is a labor shortage if wages (a price) does not increase — but is stagnant or declining.

    The most basic of economics — and common sense — will show that the way prices increase is if there is a decrease in the supply, a scarcity of supply. And in this case, to increase the wages (a price) of American labor, there cannot be a surfeit of labor. If the ratio is 1:1 then the worker can expect to bid up his wages; if the ratio is a 1000:1, the laborer will have to work for free (slave), if the worker wants to work.

    Obviously, there is a WAR against the American Labor Market and that war is being lost; Americans experience increasing costs (through inflation, increased money printing over time), while their wages are suppressed — artificially — as the government continues to flood the markets with more labor and more labor, never allowing wages to increase.

    And this is while (1) the labor participation reflects > 90m Americans on the sidelines, not working; (2) automation is making large impacts into markets, such as the legal industry, where there is less and less need for basic legal discovery work, with the advent of software automation tools.

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  9. Great work Norm. Please keep it up. 2 points/questions:
    1. Couldn’t someone file a racial discrimination case against these practices? Isn’t there something wrong when a DBA team has everyone of the same race? If they say, ‘We’ll they are all minorities!’, what about the African-American, Hispanic-American and Asian-American DBAs – where are they? On the latter, when I started in IT in the early 80’s, there used to be a lot of Asian-Americans in the field. Now most Asians I meet in IT are foreign-born.
    2. Cheap Labor = Cheap Ethics
    Has anyone every brought that up? I’ll admit that about 10% of citizen ITers have ethical issues, but the percentage is double or triple with H1Bs. While I’ve worked with some good honest H1Bs, the majority have no qualms about lying, and we’re talking big whopping lies, about their training, experience, education, background, skills, etc. Not only have I seen them try to throw citizens under the bus, they’ll throw their countrymen as well if will put them ahead. They are like lemmings. They come in, generate mediocre software at best and will leave you high and dry if there are better wages elsewhere. They don’t document, train, share knowledge, comment code, log actions, error check – just get it done quick and dirty. There are many large firm websites that are poorly designed, hard to use and buggy as heck. I think these companies don’t care about quality and just want the software generated at low cost and at a medium quality level.

    Norm, I’ll send you an e-mail on the latter issue illustrating my adventures with H1Bs.

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    • I’ve been pointing out for years that it is common to find large teams in Silicon Valley that are almost all immigrant Indian, almost all immigrant Chinese (or nowadays, almost all “PRC-ese”), almost all immigrant Russian and so on — but not teams that are almost all U.S.-native. (One does find some of the latter in SOMA in SF, but rare even there.) Is it discrimination? It’s partly due to networking, word-of-mouth advertising of jobs among one’s social group, which is typically all of the same national origin. But yes, probably a lot of it is pure discrimination.

      Of course, the ethics question is sensitive. Different societies do have different notions of ethics — not “better” or “worse,” just different. This does have an effect on the American children of the immigrants too. Some readers may be surprised to see in the yearly UT Austin statistics that Asian-American students are disproportionately more likely to cheat, for example. But this is not an argument to make against H-1B to our politicians, who of course are hardly the ones to point fingers. 🙂

      At any rate, the argument I find far more compelling concerns the quality of the H-1Bs. Even in the industry’s favorite H-1B group, the former foreign students hired by U.S. employers from American universities, are of somewhat lower quality than their U.S.-native peers; see my EPI study.

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  10. Despite the prior fines by Federal govt, if these Indian consulting companies are continue to do these things, then their profit outweigh their fines – it is time to ban them altogether.

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