As many of you know, prominent journalist Michelle Malkin and long-time H-1B activist John Miano have a new book out, Sold Out: How High-Tech Billionaires and Bipartisan Beltway Crapweasels Are Screwing America’s Best and Brightest Workers. I highly recommend it.
Some may object to the book’s title as being too in-your-face, and not sufficiently staid. “Is ‘crapweasel’ even a slang word,” I asked myself (the answer is yes).
Malkin just rubs some people the wrong way. Yesterday a reader on my e-mail list (where I announce blog postings) angrily demanded that I remove his name from the list, due to my having spoken positively of Malkin. I remember vividly a friend telling me, circa 1999, “She’s drop-dead gorgeous — but her views are laughable.” I’m a liberal, and I strongly disagree with a lot of what she has said over the years, but she’s very smart, takes no guff from the vested interests, and has collaborated with John to produce an outstanding book.
This morning I was shocked and saddened to receive another angry e-mail request to remove the e-mail writer’s name from my mailing list. The writer is a Hill staffer, whom I’ve known and admired for a number of years, but who took great offense at one recent blog post of mine, and presumably at another as well. I must reluctantly take this as possible confirmation of my recent speculation that both major parties are worried that the H-1B issue could mushroom in next year’s election campaign, with the Malkin/Miano book playing a part. Passage of the Durbin/Grassley bill would solve that “problem,” and we’d never hear about H-1B from Trump, Rubio, Cruz and Huckabee again. Yet, the hiring of foreign workers would continue unabated, and likely increased in the coming year or so.
If the book’s strident, muckraking style bothers you, then you really don’t get it about H-1B. People are getting hurt and the national interest is being harmed, so you shouldn’t let the book’s very personal ravaging of specific “crapweasels” worry you.
The material in pp.66-72 alone would make the book well worth reading. Some of it appears on Malkin’s Web page, concerning the oft-cited finding by economist Madeleine Zavodny that each H-1B hired creates 2.62 new jobs for the nation. I’ll close with an excerpt:
NFAP’s Zavodny study was published by the American Enterprise Institute, sponsored by open-borders billionaire Michael Bloomberg’s Partnership for a New American Economy…
Zavodny’s study initially examined data from the years 2000 to 2010. She hypothesized that states with more foreign-born workers would have higher rates of employment among native-born Americans. Initially, she was unable to find a significant effect of foreign-born workers on U.S. jobs.
So what changed? In correspondence with John Miano, co-author of our new book “Sold Out” on the foreign guest-worker racket, and I, Zavodny revealed that when she showed her initial results to the study sponsor, the backers came up with the idea of discarding the last three years of data — ostensibly to eliminate the effects of the economic recession — and trying again…
Voila! After re-crunching the numbers at the sponsor’s request, Zavodny found the effect the study sponsor was hoping to find.
To her credit, Zavodny provided her data to a curious software developer in Silicon Valley who was interested in immigration policy. The blogger, R. Davis, discovered a number of serious methodological deficiencies in Zavodny’s work.
Most importantly, he documented that Zavodny’s results are highly sensitive to the date range selected. When she studied the years 2000-2007, she found 100 foreign-born workers in STEM fields with advanced degrees from U.S. universities were associated with 262 additional jobs for native-born Americans. But change the date range a little bit to 2002-2008, and the exact same regression model shows the destruction of 110 jobs for natives, according to the independent researcher.
Upon Closer inspection 
That’s still an incompetent analysis, as you may have heard once or twice, correlation is not causation, so don’t tell me about shifting the time window and getting this or that result, in NO case is that result valid.
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I would suggest that you read the entire analysis regarding the time ranges at http://econdataus.com/amjobs1.htm#section16 . Then, following that is a section titled “Correlation Does Not Imply Causation”. In fact, you can read the entire analysis at http://econdataus.com/amjobs0.htm and find links to the R code that replicates these results. No where in the analysis is it claimed that this is proof that such foreign workers destroy jobs. Likewise, the book “Sold Out” states the following:
“Normally, when a researcher finds that a regression model produces conflicting results, depending upon the data range chosen, he would conclude that the model does not fit the data. Such a model cannot show H-1B is creating (or destroying) jobs.”
Regarding correlation not being causation, the analysis of the dates did turn up another interesting fact. As you can see from the table, all of the spans starting in 2000 and 2001 show a positive correlation (of “jobs being created”). However, those starting in 2002 and going up to 2011 mostly show a negative correlation. I believe this is because of the very steep job loss for both foreign and native workers following the tech crash of 2000-2001. The following explanation is at the end of the date range analysis:
A job increase for both foreign and native workers will result in a regression finding a positive association between the two. However, a steep job loss will result in a regression finding a similar positive association. Since time is not included in the plot, both cases are essentially identical from a mathematical point of view. Of course, the study is not claiming that foreign job LOSSES lead to native job LOSSES. Hence, it makes sense to focus on periods of gains in the jobs of foreign workers. As mentioned above, when looking at periods of growth in the level of the foreign stem worker being studied, the level of native workers dropped according to the study’s formula.
Again, this analysis is not purporting of showing proof that the specified foreign job gains cause job losses. But, if one insists on using this model to judge the effect of such foreign job GAINS, then native job LOSSES would seem the better conclusion, at least since 2000. Of course, it would probably be best to just conclude that the model is flawed and search for a better one.
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A regression coefficient is basically a correlation, on a different scale. So JR Stern’s comments do hold.
Many economists, including Zavodny, like to use something called instrumental variables, which is supposed to demonstrate causation. Needless to say, many statisticians find this highly suspect.
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I agree. However, Zavodny’s 2.62 calculation comes from an OLS (ordinary least squares) regression and doesn’t use instrumental variables anyhow. In addition, the 1.83 number that she comes up with for H-1B workers likewise uses and OLS regression and no instrumental variables. In any case, I have begun to think that the basic approach taken in many of these studies is extremely deficient. The common approach seems to be to take two variables, declare one of them independent and the other one dependent, add various dummy variables and instrumental variables, do a linear regression, check the p-value and, if the p-value is below 0.05, declare causation. As can be seen in the last table at http://econdataus.com/amjobs1.htm#section16 , both 2000-2007 and 2002-2008 have very low p-values though they produce coefficients with opposite signs.
I’ve been reading recently about the use of training and test sets. Following is an excerpt from https://en.wikipedia.org/wiki/Test_set :
“Regression analysis was one of the earliest such approaches to be developed. The data used to construct or discover a predictive relationship are called the training data set. Most approaches that search through training data for empirical relationships tend to overfit the data, meaning that they can identify apparent relationships in the training data that do not hold in general. A test set is a set of data that is independent of the training data, but that follows the same probability distribution as the training data. If a model fit to the training set also fits the test set well, minimal overfitting has taken place. A better fitting of the training set as opposed to the test set usually points to overfitting.”
The Zavodny and other studies I’ve seen only use one set of data. Looking at different time spans isn’t exactly the same as using two or more sets of data to validate the model since they are not randomly selected as the training and test set are supposed to be. Still, it seems to be greatly superior to the simple method used in the Zavodny and other studies. I would be curious if anyone knows if this is recommended by any authorities in the statistical community.
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Regression analysis is used for two different goals, Prediction and Description. The idea of training and test sets is aimed at the Prediction context, while our context and Zavodny’s is Description.
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Thanks for clarifying that as I’m not a statistician. Still, for studies that are used to set future policies, it would seem more important that they be able to accurately predict future relationships than simply describe past relationships. In any case, it does seem that all such studies should look at multiple time periods. I’ve read and worked on enough economic analyses to know that it’s often considered important to look at entire business cycles when analyzing economic data. Alternately, it can be instructive to look at all time spans over the period being studied, especially when the business cycle may not be the best time span to look at. For example, the conclusion of the Zavodny paper states:
“Specific, incremental changes to immigration, such as more permanent and temporary visas for highly educated immigrants, especially those in STEM fields, and expanded programs for both skilled and less-skilled temporary foreign workers, can lead to job growth even in the short run.”
Since the study is focusing on the effect of expanding these programs, it might be best to focus on time spans where those programs were expanding. As the first table at the aforementioned link shows , 2002-2009 was one such time. The second to last table shows that Zavodny’s model calculates 1.21 native jobs LOST per foreign worker for this period. It was only by looking at all of the time spans (above some minimum length) that this relationship became apparent. It would likely be similarly helpful to look at all time spans for other studies as well.
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My earlier comment was not meant to defend Zavodny’s analysis. As I’ve stated before, it has tons of methodological problems, and on top of that, the unconscionable censoring of negative results.
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>The idea of training and test sets is aimed at the Prediction context,
>while our context and Zavodny’s is Description.
When Zovodny says “H-1B creates jobs for Americans” that is prediction, description only allows you to name the correlation not the causation.
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No, people don’t look at it that way. The Description aspect of regression is used to set policy.
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Just to be clear, I’m not an angry reader. I enjoy your blog and if we disagree on the finer points, well who agrees on everything?
As for the book, if I have any concerns it would be that people think this is a “Republican issue” simply because of the tie to a conservative writer. But that concern is far outweighed by the fact Malkin will attract vast numbers of readers to learn about an issue that we frankly never could reach and wouldn’t resonate with. The book is a huge win for the profession. And that’s coming from a card carrying Democrat. I don’t feel entirely at home in any party because of the cronyism on both sides.
Malkin has a formula to sell books that reach the New York Times best seller list. She has mouths to feed too. If she and John profit from raising awareness on this issue, I call that a win-win.
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I never thought you were an angry reader, Roy. 🙂
H-1B was being called a Republican/conservative issue ever since Trump brought it up, and yes, that does concern me. As I’ve mentioned, several Democrats used to be in the vanguard of criticizing H-1B (Harkin, Pascrell, Stabenow etc.) but ever since the party tied H-1B to amnesty for the illegals, they’ve all clammed up.
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> As for the book, if I have any concerns it would be that people think this is a “Republican issue” simply because of the tie to a conservative writer.
I am concerned that it seems like the book has only gotten coverage in the conservative press. Even there, the only press outlets that I have heard of are the National Review and Townhall (though I admittedly don’t read much from the conservative press). I don’t know the normal timeline that the coverage of new books usually takes but the coverage so far is not encouraging.
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I’m told that some mainstream, i.e. nonconservative, outlets were going to interview the authors but then abruptly canceled.
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Amazing story about Zavodny. What an unethical person she must be!! Dropping data!! That’s disgusting.
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Perhaps that “Hill Staffer” is the reason why people are getting hurt and the national interest is being hurt as well.
Feel free to remove their name as requested and add my name in their place.
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Malkin is often spot on, such as her observation concerning open-borders advocates: Republicans want cheap labour, and Democrats want cheap votes.
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OT: Norm, you might want to review in detail the Ted Cruz revision in his H-1B position:
https://www.tedcruz.org/cruz-immigration-plan/
You will see that it’s all about “enforcing the law”, which of course is NOT the problem, and with “replacing” American workers, with a nice one-year waiting period. Sounds nice, but is unworkable, you can hardly ban people from hiring a service to perform that job after you fire your American.
(in fact, just how you would write such a law is a good question, and the threat has always been just to outsource the entire division to workers located offshore)
But as it stands, the Cruz text is offensively stupid and fraudulent, though perhaps a first step in the right direction. IF we hear it from Cruz, and not just from whoever puts stuff on his web site.
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I agree with you on all counts here.
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I reviewed his new plan at the site you gave and dropped this in his contact box:
The problem with the H-1B is that it is a government central planning solution to a problem that should be solved by free market capitalism. It is not a solution I would expect a true conservative to embrace as you have.
In 1776 Adam Smith in the “Wealth of Nations” warned us about employers banding together and sometimes with government to reduce worker wages. The H-1B is such an undertaking. The first computer language, FORTRAN, became commercially available in 1957; the second, COBOL, two years later. Each immediately created a shortage of computer programmers. From 1957 to 1990 that shortage was worked out by free market capitalism with those having the most economic need paying the high price demanded in the free market. High price (wage) encouraged Americans to become programmers to alleviate that shortage. In 1990 the government began manipulating the STEM labor market by increasing the supply with H-1B foreign labor thereby driving down the price employers pay and reducing jobs and wages for Americans. The H-1B is more government central planning than free market capitalism.
I am not impressed with your new H-1B position although it is much better than a 500 percent increase. I believe you still have a fundamental misunderstanding of how the H-1B works. You seem to think that it is being abused by users who are breaking the law. That is not the case. That has never been the case. Under your solution the same number of American jobs go to foreigners. The only difference is which employers get the right to hire H-1Bs instead of Americans. There is no macroeconomic difference between a Disney worker being fired and replaced by an H-1B and a new job opening going to an H-1B.
You claim to be a conservative. It appears to me that that is not the case. Rather, your support of the H-1B causes me to think that you are an advocate of latter day version of the “divine right of kings.” That is the right of corporate kings to do whatever they want.
Sorry but I am still with Trump.
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All fine, but the libertarians feel that any restriction on the movement of labor between countries is a violation of free-market principles.
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Professor Matloff,
I am very libertarian minded. The issue is that, you can’t have jobs being offshored in manufacturing, cheap guest workers being brought in for many other professions while completely disregarding things like borders, cultures, languages, the innate feeling of helping our kin with nepotism, and of course, most importantly if millions of other jobs in teaching, medicine, policing, firefighting, cooking, government administration are left untouched from competition.
This is the uber vs taxi argument. Taxis may be able to compete if their hands aren’t held down by licensing fees, insurance, and feudal plate lords.
Free, unfettered movement of labour and goods would be a boon to us all if we didn’t have for eg. – fixed price municipal employees with their entitlements and all sorts of other costs imposed on the workers who face competition while others are immune.
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Indeed they would. I have never won an argument with a libertarian and except for a cousin do not try. I do not comprehend how their minds work. But for those who claim to be influenced by the arguments of Adam Smith I would point out that Smith was an outspoken supporter of a set of law called the Navigation Acts. The purpose of these laws was, in part, to allow England to monopolize international trade thereby keeping all the benefits of trade inside the Empire, and minimizing the benefits going to foreigners.
Smith wrote two classic books. The first sentences of his first book “The Theory of Moral Sentiments” is:
“No matter how selfish you think man is, it’s obvious that there are some principles in his nature that give him an interest in the welfare of others, and make their happiness necessary to him, even if he gets nothing from it but the pleasure of seeing it.”
Smith is vague about what he means by the word “wealth” but I agree with those who believe he means the “well-being of the people.” Both outsourcing and the H-1B are antithetical to that goal and I do not believe he would approve of either one.
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I have never heard an American libertarian make such an argument, they tend to be at least loosely nationalistic as well as libertarian. The “movement of labor between countries” is mostly an argument given by self-interested H-1Bs.
Paradoxically it may be accepted by many American STEM workers whose understanding of politics and economics tends to be minimal, but may view the world as meritocratic. This is sometimes called “libertarian” but it isn’t really. And we know well that the virtue of the H-1B is not merit but price. In the techno-libertarian world this does not compute, either the H-1B option should fail of itself, or else it wins by merit. It turns out neither is true.
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No, really, I’m talking about “real” libertarians. And yes, they tend to be nationalistic, but this all fits in to that — “We’ll take lots of immigrants to make the U.S. huge, thus powerful, and get all the world’s STEM people, who become our STEM people.”
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Problem is, they do not believe in the assimilation that is discussed here
It would be one thing if they came here and created jobs, etc., but what happens is they are either not paid and/or forced to live 12 to a room, and even when they are paid, they send most of their money home and live like they did in their home country.
This loyalty to our country is something that I believe is missing from the conversation that is being held.
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It’s a mixed situation, Virgil. One thing I watch when I talk to immigrants is whether they refer to the U.S. as “we.” Some never do, but most do (eventually), I believe.
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@vbierschwale,
>>> even when they are paid, they send most of their money home.
Almost all of the visa holders are of non-immigrant type (H-1/L-1/J-1..) and *whatever* these folks get paid, the money goes out of US because of the very nature of their presence here – being on a ‘non-immigrant’ visa.
They may “assimilate” as much as they like within their minds and hearts, but they cannot leave a single penny*** in this country since they are supposed to be heading back due to the nature of their visa.
And there is a second category of immigrants-to-be who are stuck in eternal greencard queues. Same theory holds true for this group as well. They cannot start a company/create jobs nor can they invest in anything (including real estate) for the simple reason that the next time their H-1 visa is up for renewal, it can be rejected without assigning any sort of reason by the consulate.
Take the incentive out of employers to have indentured folks, the > 70B remittances/year would go down.
*** SS tax component stays here – The way the law is currently written, H-1s can be here for 6 years paying SS tax on what ever it is that they earn and they lose the SS tax component when they are ‘recycled’ by their employers (or) if they cannot get some employer to put them at the very end of the green card queue.
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Many do wish to stay, and H-1B allows what is called “dual intent,” meaning that although they are on a nonimmigrant visa, they are also being sponsored for permanent residence, i.e. a green card.
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@ Despicable Congress
Yes, I agree that is the law, but I’m hearing things like this.
Indians or Dunkin Donuts guy – 50 miles from here, condition is must stay behind the shop in a room where 15 members stay I believe.
$5 per hour cash.
Should not look for IT jobs.
Gujarathi owner.
Must give 6 months assurance.
and this:
Yes, all are doing this.
Guys on B1 or F1 are doing it because 1$ is 66 times higher in India.
1$ is better than 0$.
A student room mate told in Edison, NJ, Indian restaurants or hotels grab the tips also.
He said give cash TIP to students there instead of write it on credit card bill because owner takes it.
Folks, if we think we have it bad with no job, these slaves have it just as bad.
The only way I know to put an end to it is a lot of sunlight.
And the only way these slaves are going to talk to us if if we help them get out of their situation and into a proper job (no, I’m not saying an IT job if they’re not qualified)
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@Norm,
Agree on the concept of dual intent and the H-1s wishing to stay here and trying every way they can to assimilate – Investing back in this economy to begin with. All I am saying is that the system itself is designed to be against those that want to assimilate/contribute leading to that ~ $70B + /year remittances out of this country by forcing them to live in backlogs for decades.
@vbierschwale – Agree with you on the $1 > $0 theory. To have this leveled, I always keep bringing up the following:
1) having country caps in all visa types, not just green cards – L-1/F-1/every visa that is out there
2) remove incentives out of employers-lawyers nexus to have indentured folks – Hiking min wages etc
I have even heard of weird-er stories on the web – Recently some owner of subway was jailed since he had brought in folks on H-1 to work at his restaurant and made them sleep in a basement off his house. I am glad he was put behind bars, but I bet there are several out there.
But some reform must be passed. Fraud cannot be taken out completely in any system – Having a status quo worsens the system and leads to more of this fraud..
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We all know Trump’s stand on this issue, Rubio and Cruz have done U turn and are now against H1b. TPP the backdoor to more immigration is in trouble. I seriously doubt this bill will pass. Regardless of your political affiliation immigration is a huge issue for this cycle largely thanks to Trump the maniac. Sanders, Clinton and Carson worry me. Please keep the heat on. For me as a voter immigration in general legal and illegal is one of my top issues for this cycle. The numbers must come down across the board.
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However, Note that Trump has gone silent on H1B while he pushes OPT. I trust him as much as I would trust a scorpion in my pocket. He will say/do anything that he believes will help his latest hobby.
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Or better put, this is all about CHEAP LABOR.
I have been saying that for YEARS.
We (being the RICH) want IMMIGRANTS being illegals or legals to keep labor costs DOWN.
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So much well-financed lying. Lying from slick PR firms. Lying from high-tech billionaires. Lying from compromised politicians and from beholden media outlets. Dr. Matloff is one of the few beacons of truth out there.
The idea that an H-1b creates 2 jobs is absurd. I’ve worked with hundreds of H-1bs. They arrive on site. An American is forced to “walk the plank” by training the H-1b as his/her replacement. Then the American is let go and the foreigner moves into his/her cubicle. Does any of this create 2.62 jobs for America? What nonsense. It doesn’t add 2.62 jobs. It subtracts 1 job from the job pool available to highly skilled Americans.
At least 99.9% of H-1bs come to America and take jobs as regular worker bees in IT organizations. They do not start companies and hire Americans. I’ve never seen one H-1b who started a company. How can we make non-compromised politicians understand what should be obvious?
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An H-1B really can’t start a company, due to not being able to sponsor himself for the visa. But many former H-1Bs have started companies.
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this chart shows the computer jobs that were gained or lost compared to the previous year
the blue lines show the gain/loss
the orange lines show the number of lca applications for h-1b, h-1b1 and e-3 non immigrant visas
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I remember when the Democratic party was considered the party of the working people. Years back I contacted my then Congressman Richard Gephardt about the harm from H1-B visas. His response back to me was ‘corporations informed me that there is a shortage of American technical workers and that I will vote in favor of increasing the number of visas'(I will need to find the letter to quote verbatim]. Gephardt was a huge favorite of the unions. It was at this time I realized we were not being represented by any party.
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Not to leave the Dems out: Hillary has apparently had support from both Infosys’s and Intel type corporations. In the recent Dem debate her defense of her Wall Street contacts against Sanders’ accusations was a bit lame. She would probably sound the same if confronted with the H-1B issue. People like Hillary must know Americans are harmed by the way corporations implement globalization. Hypocrisy all the way. I’m for Bernie…until he gets steam-rolled. Then it’s Hillary, not the best but the alternatives are far worse.
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Any coverage on L-1 in this book? Any? Or is it all about H-1. Am not complaining. Anything to highlight the plight at this stage, I guess. H-1 seems to be the ‘low hanging fruit’ with data to back it up.
I have not had a chance to read the book, hence this question.
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it is worth reading
they discuss the l, b, and opt visas and some others
more importantly, the name names with specifics
i am penniless and i have a copy thanks to kumar
if you have money and you work in the high paying jobs that america has, you need a copy
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Professor Matloff,
Amidst all the noise and anti-corporate brouhaha, what is lost on student visas among the alphabet soup of visas, is:
Professor and administration salaries and pensions. Untenable benefits that will make the whole system collapse.
This is not an attack on you or anyone who works for the government and has incurred a gargantuan liability on the taxpayer.
Universities are addicted to foreign students like crack cocaine because their pensions and salary budgets are bigger than a planet.
In the province of Ontario, they publish a sunshine list. Nary an instance when even the most junior janitor doesn’t manage to pull in 100k salary plus benefits plus pension plus an insane amount of time off, each year.
For that reason, my alma mater publishes, quite proudly, all the indian, chinese, and african students they took in. It’s caused native born and naturalized canadians to lose a lot of opportunities to people who had no roots in the country.
I wish the best for foreign students, but similar to how the wealthy arabs and chinese buy their way in with west coast real estate while we deride poor mexicans, foreign grads granted a work visas are actually a massive subsidy to businesses, and of course those platinum grade pensions and cosmetic dental benefits in universities from where useless theories have been coming out as of late.
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In UC, even the assistant professors don’t make 100K, so I assure you the janitors don’t either.
The issue of university pensions is complex, and one can make good arguments on both sides. But given the disparity between academic and industry salaries — huge for assistant professors, and still substantial later on — it is necessary to offer other compensation, a pension being a primary example.
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Maybe instead of just being upset & angry we all could do something ?
E.g. establish a central point where employers who are contemplating to hire H-1B workers can be reported.
These companies would then be contacted and asked what their motivation is for the hire. They could – if applicable – be issued information about US workers possibly a good fit for the job in question.
There is little to no use in blaming foreign workers already here – and their wives. It would be better to prohibit co.’s from bringing in these workers.
Almost all co.s that are hiring claim they are unable to find the workers they need in the US.
If you want the situation to change, do not wait for politicians to do something – but take initiative yourselves.
Bytheway, employers are already proactive when it comes to H-1B shortages. More and more employees are first hired abroad – and then brought in on L-1 visas.
Other possibilities to circumvent H-1B are the extended OPT, J-1 internships, and even B-visas.
Just talking H-1B’s – so yesterday.
Regarding student visas, that has turned into a $ 27 billion industry (according to information I found).
An important reason for many foreign students to come here, is that it improves their chance to land a job in the US.
Foreign students able to do a complete study in the US nowadays seldom originate from European countries with high tax rates.
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