Pro-H-1B Study Shows What’s Wrong with H-1B

Stuart Anderson has long written in favor of the H-1B work visa, and indeed makes his living from it, via his (apparently one-man) organization, the National Foundation for Public Policy. He also wrote the 2000 H-1B law as a Hill staffer, and later was at the USCIS. He’s getting publicity for his latest study in various places, including a Wall Street Journal blog.

Yet, oddly, the study confirms what I’ve been saying for a long time: The H-1Bs are generally NOT the best and the brightest, and the nation would benefit by changing the visa program to focus on the outstanding talents. Anderson’s findings, in other words, show exactly what is WRONG with H-1B and various proposals to reform it.

Consider:

  • Anderson finds that immigrants are founders (OR cofounders, a point I’ll come back to) of 51% of the billion-dollar startups. Yet immigrants form more than 51% of Silicon Valley techies, so once again we see that the immigrants are UNDERperforming.
  • Among those immigrant founders, 14 (out of 44) are from India, 32%. Yet Indians form 70% of the H-1Bs. So the Indians are underperforming too. Most of the founders are from countries from which we have rather few H-1Bs, such as Western Europe, Canada and Israel.
  • Only 1/4 of the immigrant founders came to the U.S. as foreign students, counter to the industry’s claim that foreign students are the best of the H-1Bs.
  • Of those with U.S. degrees, most are from the really top schools, such as MIT and Stanford — quite a contrast to the Staple a Green Card proposals, which would give an automatic green card to any foreign STEM graduate student, no matter how weak the school is.

As usual in these “studies,” anyone born abroad is considered an immigrant, such as an example Anderson cites, Kenneth Lin of Credit Karma. Lin immigrated to the U.S. with his parents at age 4, hardly the poster boy for the H-1B work visa program that Anderson implies. Others on Anderson’s listed cofounded their firms with Americans, yet he gives them full credit.

Before H-1B, we had the old H-1 visa, titled “Aliens of Distinguished Merit and
Ability,” basically the “best and brightest” theme. That did deteriorate over the years, so that anyone with a college degree because “distinguished,” but it certainly had the right intent. Anderson’s study shows that H-1B doesn’t fulfill that intent at all.

 

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22 thoughts on “Pro-H-1B Study Shows What’s Wrong with H-1B

  1. I saw this mentioned in Andreessen Horowitz’s otherwise useful newsletter, and it jolted me. The economics on this issue are not settled and Anderson’s piece clearly doesn’t try to engage with competing analysis, yet here’s a high profile VC firm touting it. No critical analysis. Seemingly no awareness.

    It occurred to me that this is disruption at work – smug VC people thinking they understand the issue, when actually they don’t.

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      • As a licensed realtor, I have brought subjects like this up to the national association of realtors and the texas associations of realtors and even my local mortgage experts to no avail.

        They simply blindly follow the government unemployment propaganda.

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  2. The things no one says in pro-H1B articles are this:

    1. H1Bs cannot start a company unless they get green card.

    2. Indians who applied for green card in 2004 are still waiting to get one. Usually the wait is 10-15yrs and its getting worse.

    3. Because Indians are majority of H1B crowd, they are slaving away at their employing companies and not starting companies. This fact directly contradicts people like Fwd.US who are asking for more H1B implying that more H1Bs = more companies and more jobs.

    4. The reason they want more H1Bs is due to the current restrictive rules, H1Bs work for single company for 10-15yrs, and they can’t take promotions, stick with initial pay (which will be inline with govt. set pay) but no increments after that.

    5. Overall, the corporate greed wants more H1Bs. They are not pro jobs or pro opportunity. They are just pro wealth for themselves and their shareholders.

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  3. What does it mean that immigrants are founders or co-founders of successful startups?

    If a business has 3 founders and one is an immigrant, why would we attribute success to the one immigrant, instead of the 2 native founders? If companies have many co-founders, then the odds of at least one being an immigrant go up correspondingly.

    Success might have been just as likely if the immigrant co-founder-to-be had found something else to do, and a native co-founder-to-be had stepped into that place in the company. Along those lines, 49% of successful startups managed to prevail without an immigrant co-founder. Is that a big number or a small number?

    Off-hand, I have no idea what it means, statistically, to say 51% of successful startups had [at least one] immigrant founder or co-founder.

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    • Without careful analysis, it means very little, for the reasons you cite and more. But people like Anderson know that it is an extremely powerful argument. I suspect, for instance, that Trump is very responsive to these arguments.

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  4. >>> Among those immigrant founders, 14 (out of 44) are from India, 32%. Yet Indians form 70% of the H-1Bs. So the Indians are underperforming too.

    The numbers, as accurate as they may be, do not depict the complete picture – All those founders (from india, a greencard backlogged country in this case) have to wait for several years, get their greencard to begin a startup. H-1s from backlogged countries cannot be entrepreneurs until such time they get their greencards. I’d love to see this argument when the 70% of H-1s from India are in a position to be founders (aka have greencards) and if the 32% still remains. Maybe it does – That’s when this argument would be valid, in my opinion.

    Too, VCs stay away from H-1s for funding startups. So they have to ‘cofound’ their startup with some one else, get themselves sponsored as H-1 in that startup and then wait a lifetime (esp for backlogged countries).

    Another interesting aspect to study is how the greencard “wait times” helped(or hindered?) these so-called founders from backlogged countries. Would an entrepreneur (from say, Chile – an “always -current” country) get better chances at finding success from a startup since s(h)e gets an greencard, almost on arrival vs someone from a greencard backlogged country who has to wait (almost) until rebirth to begin a startup and then find success….

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    • Yes, the green card backlog is an issue, but most of these entrepreneurs are older, and got their green cards long ago.

      You may find my presentation at http://heather.cs.ucdavis.edu/georgetown.pdf of interest. There I find that the Indians received 14% of the ACM CS PhD dissertation awards yet form 19% of CS PhD students, and other similar numbers. I should add, though, that this may have changed since 2011.

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      • Thanks for pointing me to that preso, @matloff.. I had seen it in the past. Would like to comment on one of the policy implications mentioned in that paper towards the endg – especially the moving greencard quota for EB3 vis-a-vis EB2.

        As pointed out in that preso, EB3 (backlogged or otherwise), is for the ‘low’ talented (per law). But employers are stuffing H-1s including Ph.Ds (esp. from backlogged, populous nations) into that queue given it’s life long wait times – “It’s what the job requires, not what the candidate’s qualifications are”.

        DOS stats suggest that EB2 wil be the new EB3 pretty soon and EB1 (yes the einstein category) will be “retrogressed” as well, all thanks to “porting”. This sand timer can go on for eternity.

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  5. > As usual in these “studies,” anyone born abroad is considered an immigrant, such as an example Anderson cites, Kenneth Lin of Credit Karma. Lin immigrated to the U.S. with his parents at age 4, hardly the poster boy for the H-1B work visa program that Anderson implies.

    Yes, and Peter Thiel of Palantir Technologies moved to the U.S. with his parents at age one according to https://en.wikipedia.org/wiki/Peter_Thiel . Also, I noticed some sloppy math in the article at http://blogs.wsj.com/digits/2016/03/17/study-immigrants-founded-51-of-u-s-billion-dollar-startups/ . It states:

    > The study also estimates that immigrants make up over 70% of key management or product development positions at these companies.

    No, the study at http://nfap.com/wp-content/uploads/2016/03/Immigrants-and-Billion-Dollar-Startups.NFAP-Policy-Brief.March-2016.pdf says the following:

    > Immigrants have started more than half (44 of 87) of America’s startup companies valued at $1 billion dollars or more and are key members of management or product development teams in over 70 percent (62 of 87) of these companies.

    There’s a huge difference between “immigrants make up over 70% of key management” and “are key members of management or product development teams in over 70 percent”. Also, first part of the study’s statement that “Immigrants have started more than half” is incorrect. They “founded or co-founded”, not “founded”. The study states this correctly in the list of key findings but makes the above misstatement in the second sentence of the study.

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  6. If the “Staple a Green Card” provision goes through, expect to see a bunch of new “charter” or “online” universities run by shady scammers to provide a new pipeline for imported replacements. No need to waste time or money, or risk rejection, by a legitimate university, right??

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    • No, if such a law is enacted, it will be restricted to “legitimate” schools, but it is estimated that there will be about 200 of them! And they will make scam Master’s programs, and in fact are already doing so.

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  7. Dr. Matloff,

    Have you written about the current scam that Indian nationals are currently are participating in? It is described as follows:

    Unemployed Indians who have in fact lost their H1B status immediately try to set up a “payroll”.
    1. Indian national gives a fraudulent h1b sponsoring company 5000-15000$ or so. These companies operate in the USA.
    2. Company starts cutting checks to the fraudulent unemployed Indian living in the United States with his own money. This makes it appear as if the Indian is on payroll with a paying company.
    3. Using these stubs, a fraudulent H1B sponsorship is maintained. (“Look, Indian on H1B is ‘gainfully employed’. Look at the paycheck stubs)
    4. Repeat 1-3.
    5. Fraud complete.

    I know at least 3 examples of this happening based on my interactions with former colleagues.

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  8. A WSJ article pondering the low rating of India’s best universities, the IITs, which have been heavily praised in NYT H-1B stories, quotes IIT grad Narayan Murthy, founder of Infosys:

    “Is there one invention from India that has become a household name in the globe? Is there one technology that has transformed the productivity of global corporations?” he said. “Folks, the reality is that there is no such contribution from India in the last 60 years.”

    http://blogs.wsj.com/indiarealtime/2015/10/13/how-could-indias-iits-do-so-badly-in-a-global-ranking-of-engineering-schools/

    The IITs are vastly above typical Indian [& most Asian] universities, which are plagued by PC quotas for India’s caste system, rote-memory based, and just all around bad.

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    • I have generally found IIT graduates to be quite sharp, but no better than, say, top UC grads [except that the IIT grads often have better English 🙂 ]. But that is the students; the curriculum is quite pedestrian, at best.

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  9. Are there any studies on how much fraud is committed by individual H1B holders?

    I am hearing the following situation quite a lot:
    1. H1B holder becomes unemployed (experience discrimination, turns out they have no skills, replaced by another H1B etc)
    2. Using previously saved funds, the individual contacts an H1B sponsoring company
    3. The individual gives the company some amount of money (maybe between 5000-10000$/month?)
    4. The company in turns, sets up a “payroll” using the individual’s money to make it appear as if said individual has been continuously employed without any gaps whatsoever. This payroll is in fact using the individual’s money to pay the individual so it appears that the individual is employed.
    5. Green card is finally granted to the individual some time later despite the rampant fraud/money laundering that has occurred.

    We normally only hear about funny stories coming out of New Jersey like “Indian brothers convicted in H1B benching case”, but we never hear anything about the complicit individual H1B holders who are actively, knowingly taking part in the scam. Is this just another case of “thou shalt not distribute pirated content, but if you are consuming it, we don’t care because it’s too hard to prosecute individuals”?

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  10. Excellent analysis Dr. Matloff.

    Thank you for pointing this out. Shows that the other side is still very active in continuing its campaign efforts to fool the public and collude with the corrupt politicians in Washington.

    As for efforts on our side, I just saw a TV ad by an organization called Federation for American Immigration Reform (FAIR). The ad showed their website address (www.fairchanceatjobs.com) which has quotes by former Disney, Southern California Edison, and Toys R Us employees. One can sign up to receive updates probably via a newsletter, and they ask a donation of $25 where one gets a copy of Michele Malkin’s book “Sold Out”.

    Is this an organization to get behind in/support? Besides posting comments here, what can we individually or collectively do to be more active in this front?

    With California being critical to a Trump win, I wonder if SCE employees & supporters along with anti-H1B people will communicate & connect with Trump either at his rallies or via Senator Jeff Sessions. It’s been over a month (since the debate in Miami) that Trump and the press/media has been quiet on the H1B issue.

    Since Trump will be doing rallies all over California over the coming months, should we organize/mobilize a group to connect with him? I know that pro-H1B types and Silicon Valley bigwigs will try to sway him. Silicon Valley and the SF/Bay Area is one big H1B hive.

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  11. Trump has now mentioned India as one of the countries we’re losing jobs to. He’s mostly mentioned China, Japan and Mexico, but recently he’s also mentioned Vietnam and India.

    Today in his rally in Harrington Delaware, he mentioned calling up his bank’s phone customer service support, and that he got an Indian phone rep on the line.

    The thing is, these are low paying jobs offshored to India. It’s bad to US workers, but I wish he would also mention foreign workers brought into the US by greedy US companies and corrupt politicians.

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  12. Dr. Matloff,

    Something that came to mind made me think back to this post. Anderson’s focus on billion dollar startup companies (unicorns) is a red herring. There’s only perhaps a couple of hundred of these unicorns which would represent less than one percent of the number of companies or businesses in the US. So, while they are behemoths in size in market cap, they only hold a very tiny share of jobs created. For example, WhatsApp which was bought by Facebook for close to $20 billion had around 50 employees. In contrast, take a company like Marriott which has a market cap of $16.6 billion but has 127,500 employees.

    The jobs these unicorns create are a drop in the bucket in relation to the number of jobs in the US economy.

    Maybe Anderson can crunch the numbers on companies that are below $1 billion in valuation? Or better yet, answer this: how many jobs in total have companies created by immigrants who came here on the H1B or F1 visa created (unicorn and non-unicorn)? And how many of these jobs went to Americans and not to new H1B or F1 visa workers or worse, gone offshore?

    And – it’s one thing if the company invents new technology that is of significant use to the US and the world or to society in general, but it’s another if the companies these immigrants create are just another IT services or consulting company that basically just becomes another competing company to the existing American owned companies.

    I say this because since the H1B problem came to my attention last year, I now notice companies with executives who look like recent immigrants or who came here on the H1B work visa or the F1 student visa. I see CEOs, CTOs, VPs, Directors, etc who are immigrants.

    These IT services or consulting companies are out there doing their sales networking, cold-calling or responding to RFPs/RFQs and basically increasing competition to the same pool of business opportunities. They win the contract solely on price and then send the work offshore. The only section of industry that these companies aren’t allowed to do business with, or at least offshore the work, is sensitive government or military contracts that require US citizens. And even in this area, one would think US citizens get priority in hiring, there are companies like SpaceEx that still hire H1Bs.

    These companies will hire the token 1-2 Americans to look like they’re doing their part, but the bulk of their employees are H1Bs, F1s, L1s or they send the work to their offshore team. Here are a couple of these companies:

    https://www.operasolutions.com/company/leadership

    https://www.xavient.com/xavient-leadership/

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