Excellent Illustration of Economic Principles in the SF Chron

The industry lobbyists like to say that foreign tech workers can’t be underpaid, because employers bid against each other to be able to hire the person. But I’ve pointed out many times that this flies in the face of economic principles. One of those principles involves nonmonetary compensation.

An American worker might go with Company A instead of a higher-paying Company B if A has onsite childcare services, or if the commute to A is much shorter, and so on. In the case of the foreign worker, a huge source of nonmonetary compensation is green card sponsorship.

This is vividly illustrated in an article in today’s San Francisco Chronicle. There is more than a little irony here, in that the article is clearly intended to present pro-H-1B arguments. Various pro-H-1B individuals and organizations are cited, with no material at all on the other side. Or so the reporter thinks…

The reporter, apparently unwittingly, shows exactly how the foreign workers can be underpaid:

“If they have three offers, and one says, ‘We’ll process your green card in the first 90 days,’ they’ll pick that company 9 times out of 10,” [tech recruiter Jason] Stomel said.

“If people are in a reasonably good place and at a job they like and are feeling reasonably secure, why would they put themselves at risk by chasing an extra $25,000 in salary?” said Andy McLoughlin, a partner at SoftTech VC, a venture capital firm with offices in Palo Alto and San Francisco.

Many Americans (including former H-1Bs) who feel harmed by the H-1B program complain to me that the press is highly biased in favor of the industry. I usually reply that most journalists want to write the truth but are easily duped by the industry CEOs and their lobbyists. These days I am less convinced that most journalists are unbiased, but I must say that the industry is finding it easier and easier to fool them.

Case in point: This op-ed by GoDaddy CEO Blake Irving. Every argument he makes is based on analyses from “researchers” who take money from the industry. Sadly, Fortune never chose to question him about sources. And what he writes in his piece is what the lobbyists are telling Congress and the President.

And sure enough, Irving promotes the Intels Good, Infosyses bad approach to H-1B reform, a deception that would be disastrous to American workers if adopted. And keep in mind, President Trump has stated his support for that approach many times. On the other hand, he has asked AG Sessions to investigate the entire foreign tech worker issue, and hopefully he will make use of data and analysis that isn’t tainted like Irving’s are.

 

 

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9 thoughts on “Excellent Illustration of Economic Principles in the SF Chron

  1. It has become clear that the “news” isn’t really news anymore. The same people who are benefiting from low cost labor also seem to have a lot of influence on what propaganda is distributed through the once trusted media.

    The author of this “article” is just doing what he was told to do.

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  2. > Case in point: This op-ed by GoDaddy CEO Blake Irving. Every argument he makes is based on analyses from “researchers” who take money from the industry. Sadly, Fortune never chose to question him about sources. And what he writes in his piece is what the lobbyists are telling Congress and the President.

    Agreed. For example, the op-ed at https://fortune.com/2017/02/09/godaddy-immigration-h-1b-visa/ claims that “[t]here are currently more than half a million high-skilled IT and computer science jobs sitting unfilled in the US today”. The graph below the claim shows that it came from the labor analytics firm Burning Glass Technologies. I posted information about this claim at http://econdataus.com/claim600k.htm . The following is from the Summary:

    > [T]he Burning Glass database and methodology are proprietary and cannot be examined or verified. For example, there is no way to verify that Burning Glass properly accounts for duplicate or fake ads and a number of other problems. It’s fine for a private company to purchase and use their services since they are free to do whatever due diligence they feel is necessary. But it is not proper to use proprietary data to set public policy and not make it available for public scrutiny.

    As mentioned there, a Computerworld Analysis at http://www.computerworld.com/article/2896517/behind-the-white-house-s-claim-of-545-000-unfilled-it-jobs.html likewise looked at the claim and found serious problems with it.

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  3. “…why would they put themselves at risk by chasing an extra $25,000 in salary?” doesn’t quite say it all. How much lower could the offer be, with green card, and still be acceptable to H-1Bs? If supply exceeds demand there might be an even greater negative impact on wages. But interesting that the reporter buys the party line but accidentally reveals details that support the opposite argument. It’s sort of a Kellyanne Conway moment with alternative facts, or buy Ivanka’s stuff.

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  4. The article by Blake Irving is embarrassing. It trots out simple claims from 15 years ago with no attempt to address known criticisms. It comes across as an industry campaign where more experienced CEOs declined to be the spokesman.

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  5. In the SF Chron article, a tech recruiting firm says, “From the employer side, there are a lot of concerns about COST, long-term viability of the (H-1B) program ……”

    Costs?? We are talking about $5000 max per employee for fees and attorney work. Spread out over 3 to 6 years and the cost is very low. So the H1-B is about low cost labor.

    At the end of the SF Chron article it says, ““Anyone with a master’s degree or a Ph.D. in computer science or engineering should have a green card stapled to the diploma ….” This will save employers even more money.

    Also, it appears that the SF Chron has disabled viewing of comments. The SF Chron is a Hearst Corporation, same as the Houston Chronicle (I subscribe to the paper-in-the-driveway version of the Houston Chron). On the Houston Chron website one can press “View Comments” to view the comments. This appears not to be true of the SF Chron.

    Also, many IT news related websites have appeared to have removed their comment section. H1-B related stories used to generate dozens or even hundreds of negative comments.

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  6. A couple of years ago, major tech companies were sued for conspiring to keep salaries low by agreeing NOT to try to hire each other’s employees away, a violation of anti-trust laws. The companies agreed to settle for $300 million, but last I heard, the judge in the case had decided that wasn’t enough. Just shows the lengths to which some companies will go to avoid the “free market” for wages and salaries.

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