Increasing Returns

Recently a number of articles in the press (many undoubtedly “planted”) have been warning that more foreign students earning degrees at U.S. universities are returning home (CNBC) after their studies, or “worse” (in the view of the press), not coming here to study in the first place (New York Times).

A few weeks ago, I mentioned to an old friend and fellow educator another article reporting a decrease in foreign applications to U.S. schools. His answer stunned me: “GOOD!”

Now before you leap to the conclusion that this friend is a redneck racist/xenophobe, let me assure you that he is none of those things. Instead, he is well aware of the pain that the foreign student program, as an H-1B/green card enabler, has brought on many Americans. He also understands that many of the foreign students are weak academically, and are not always models of good behavior, points I will return to later in this post.

As usual, these claims, e.g. of increasing return rates, are based on misleading statistics, and more importantly, on hidden assumptions. One big hidden assumption, of course, is that the populace wants, and benefits by, the large population of foreign students now in U.S. schools. Again, I’ll return to this point below, but first let’s look at a couple of concrete examples from the above CNBC article. It says,

A report released by the Chinese Academy of Social Sciences showed that only 30 percent of Chinese students studying abroad between 1978 and 2006 chose to return to China after graduation. That figure has jumped nearly a decade later: According to data provided by China’s Ministry of Education, more than 500,000 Chinese students went overseas for education in 2015, and another 400,000 returned home.

Well, not so fast. Until recently, most students from China would come to the U.S. for a Master’s degree, typically in STEM, and then “transition” to a STEM job and a U.S. green card. We still have that, but in recent years, the number of undergraduate students from China has skyrocketed. They are less likely to be studying STEM, less likely to be employable in the U.S., and less likely to have immigration to the U.S. as their goal. So the quoted statistics do not necessarily imply that the return rate for the grad students, i.e. the old figure, has increased.

The CNBC article also says,

Columbia University alumnus Hongli Lan will have no choice but to leave the United States if he loses the H-1B visa lottery again this year.

The young Chinese quantitative analyst, who says he graduated in 2014 with a master’s degree in Mathematics of Finance and GPA of 3.9, was just ready to get his feet wet on Wall Street before a letter from U.S. Citizenship and Immigration Services (USCIS) notified him of the H-1B lottery rejection.

“Certainly it’s not fair,” Lan told CNBC. “Chances of winning the lottery are too low for Chinese students and I don’t see how the current system benefits high-skilled workers.”

 

To non-cognescenti, this looks quite convincing. The U.S. is about to lose a highly talented potential American because of our “unfair” visa system, right? Actually, not really. That entire passage is misleading.

To begin with, the H-1B lottery does not discriminate against Chinese students. Every applicant has an equal chance of “winning.” (Mr. Lan is confusing H-1B with green cards, which have country caps, causing a problem for the Chinese students due to their huge numbers.)

But much more importantly, let’s look at this student’s credentials. Lan’s 3.9 GPA is a red flag for us academics, as grad school grades tend to be quite liberal and not useful as a measure of the strength of a student. But even more of a red flag, for those in the know, is Columbia. That university seems to have jumped in with both feet into the “Master’s degree for sale” waters, especially marketing the program to foreign students. I reported on this earlier. pulling comments from student discussion boards. Here are some (again, these are comments by Chinese and other students, not my remarks):

…most Chinese believe this program has quite low threshhold [for admission]…I heard that the program is not on par with the reputation of the school and that over half the students are Chinese international students…I believe that many of the courses offered are taught be adjunct faculty and that the purpose of the program is to make money for the department.

 

In short, Mr. Lan, whom CNBC paints as an exceptional talent that the U.S. is on the verge of losing due to — in the standard words of immigration advocates — “our broken immigration system,” the truth is that he is likely — in my own standard words — one of the “ordinary people doing ordinary work.”

It is fair to say, I believe, that over the years, the American public has been quite welcoming of foreign students. To this day, one of the most well known writers who advocate reducing yearly immigration levels — I won’t “out” him but many readers here would recognize the name — volunteers his time to help local foreign students with their income taxes.

The prevailing wisdom originally was that the foreigners would mix with the Americans, to the cultural enrichment of both sides, and that we were educating the Third World, with the foreign graduates returning home and improving conditions for their impoverished countrymen. We’ve lost a lot of that. Once a foreign student nationality reaches critical mass, notably the Chinese, the incentives and opportunities to mix with the Americans diminish rapidly. And over the years, instead of returning home, most Chinese and Indian grad students came to view U.S. schools as steppingstones to a U.S. job and a green card.

The statistics on foreign student university applications and return rates must be viewed in that latter context. Though the narrative is that international students come here because of the world-class nature of our educational institutions, that has never been the real draw. Instead, a U.S. education is viewed as a conduit to a U.S. green card, which in turn means being able to afford a car or two, a large single-family home and so on, i.e. a materially richer life than the students would have back home. Without that draw, most of them simply would not be in U.S. schools. (Though the official line from the ethnic activist groups has been that elderly people immigrate here “to join their families,” Chinese-American political activist Yvonne Lee once told Asianweek “Without access to welfare, the seniors would not come.”)

Given the “shortage” (from the viewpoint of the foreign students and U.S. employers) of H-1B work visas and employer-sponsored green cards, there is indeed reason for the prospective foreign students to think twice about coming here, and about staying here if they do come. The CNBC and New York Times articles above are right in that sense. Their statistics may be exaggerated and misleading, though.

 

But if that trend were to occur, what about the question I raised earlier, concerning whether Americans welcome and value the large influx of international students in recent years? These points have been of increasing concern in U.S. academia. The Chinese students in particular are viewed on the whole as weaker academically and more prone to cheating, according to Wall Street Journal reports, compared to their American peers. Though no data was offered in those articles, my own research has found that the foreign grad students in general, and the Chinese ones in particular, are somewhat weaker than their American peers.

In addition, the California Legislative Analyst’s Office found that the admissions bar in UC had been lowered for undergraduate foreign students (who pay higher tuition without much if any financial aid), displacing domestic students, and other sources indicate that this is happening at the Master’s level as well. I wrote at the time,

This was recently illustrated in information sent to me concerning the Master’s degree in Statistics (leading into jobs in Data Science, a hot field these days) at UC Berkeley. Like the programs described above, the UCB program seems aimed at foreign students, and no wonder! Each international student in the program brings in a total of $28,000 above and beyond what a domestic student in a nonprofessional program pays…

Curiously, the department itself raises the question of the concentration of foreign students in the program, but then refuses to answer. But one can get a good idea from the department’s Web page listing its graduate students, where clearly the proportion of Chinese students (most or all of whom are likely foreign) is much higher at the MA level than the PhD level.

It should be clear that departments have incentive to lower admissions standards, especially for foreign students. Recently the California State Legislative Analyst’s Office issued a scathing report, accusing the UC system of lowering standards for nonresident students, most of whom are foreign students. The report’s subtitle, “[UC]s Admissions and Financial Decisions Have Disadvantaged California Resident Students,” caused quite a stir, but that is only half the story. The untold part is that graduates of the UCB Master’s program in Statistics, and a similar one at UC Davis, are getting jobs while equally qualified (and typically older) Americans are rejected by the same employers.

It used to be the case that there would be at least two students from China among the top students in any undergraduate class that I would teach. That does not seem to be occurring as much these days.

I would miss the foreign students if they were to leave en masse. I have often helped highly talented international students and other foreign nationals get jobs in Silicon Valley. But certainly the bar for university admission should be raised somewhat, and in terms of work visas and green cards the bar should be raised quite substantially.

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25 thoughts on “Increasing Returns

  1. Look also at the labs of faculty members from Asia and South Asia; their students and post docs are predominately from the faculty member’s native country. Many foreign born faculty use their US tax funded research travel money to make presentations in their native country and recruit individuals while there. Their bias also goes to the junior faculty in the area.

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  2. I should have noted that I have not reviewed the travel patterns of faculty from the Middle East. I have noticed a bias towards students from their native countries.

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  3. > Each international student in the program brings in a total of $28,000 above and beyond what a domestic student in a nonprofessional program pays…

    This sounds similar to the problem that H-1B workers can be paid less than the true prevailing wage. Just as this will motivate companies to prefer H-1B workers, so will the higher tuitions cause colleges to prefer foreign students. Are there any rules or proposals that limit this disparity?

    > The young Chinese quantitative analyst, who says he graduated in 2014 with a master’s degree in Mathematics of Finance and GPA of 3.9, was just ready to get his feet wet on Wall Street before a letter from U.S. Citizenship and Immigration Services (USCIS) notified him of the H-1B lottery rejection.

    It may be unfair to question how much, if any, the U.S. will suffer from having one less quant on Wall Street. But I’m sure that I’m not the only person to whom that question has occurred.

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  4. Many thanks to Norm for his elucidation of the multiple (and not always open nor honest) agendas in play.

    It is interesting to see the thorough representation our society gives to the political and financial interests of:

    * US business
    * US academia
    * foreign governments and businesses
    * to a certain extent, foreign students and workers in the USA

    Completely missing from much of this seems to be any representation of the political and financial interests of US students and US workers – a situation which has persisted for more than a quarter-century (since the creation of the H1B visa in 1990 or the earlier NSF decision to flood the market with foreign PhDs).

    Is this not a massive failure of American democracy?

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  5. It’s too bad that they end up concentrated in Chinese programs.
    I believe that there is a small percentage of these graduates that are really interested in assimilating and make outstanding contributions to society.
    I would support giving the most interested of them a chance in the labor market to improve integration. Even more, I would support giving nationals from other nations an opportunity to intern and get a feel for what it’s like to live and work outside the grad school cocoon.
    The problem with the visa system now is that it is really being swamped by Indian companies. I don’t have the stats, but I do observe that nearly 100% of the contractors at our company are from India. I look forward to a day when I could meet Europeans, Koreans and even Chinese as coworkers.

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  6. Contorted emotive, “Why are we sending them home?!?” by Manhattan’s press, infers the US can/should absorb some of the billions in India and China, AND that there’s not another just like them, staying in India and China.
    “How can the US be competitive?!?”, as though siphoning off a relative drop in the bucket of population of Asia makes any sense.
    There’s a reason why industry shouldn’t be running a country, because it is nothing like running a business.

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  7. Suppose, in the future, there are American companies which provide jobs to Afghans in Afghanistan and contribute significantly to their economy. Due to wave of multiculturalism, the government decides that companies can dictate whether their female employees wear Hijabs (my idea from what’s currently happening in the UK). In this future world, women who wear Hijabs in Afghanistan are a tiny minority. They feel that it would be devastating for them and they could potentially lose their jobs. In this case, shouldn’t the Afghan society take some responsibility and disallow such a rule from being enforced? Otherwise, they would be cutting off source of income for such women, forcing them into poverty. These women weren’t born with a Hijab on their head. My apologies to any Muslim women if they feel offended in anyway due to me using them as a purely hypothetical example.

    Similarly, in Asia and North America, there should be responsible and gradual change towards multiculturalism. Force feeding multiculturalism to such minority population may lead to people dropping out of society, condemned to live in poverty. Introduction of multiculturalism should be all-inclusive and should not affect a citizen’s means of livelihood. What bothers me is the attitude in the west (imitated by east) towards dealing with complexity arising out of rapidly changing cultural identities of their country. They will show people a few selective case studies in movies, television or articles, then avoid the hardwork of presenting any further deeper studies. They have faith in order evolving out of chaos in their society (just like the scientific explanation). But, any responsible government should care about wasted lives. The excuses like they are ‘mentally ill’ or ‘incompetent’ or ‘deplorables’ shouldn’t be used to deflect.

    I also believe that US should be a secular country, where people should have choice of living their life by a particular philosophy.

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  8. Why isn’t there a cap on student visas, like there is on other visa types?
    My opinion – American universities should be teaching American students. Non-citizens are welcome here if space is available.
    Buy American, hire American – and EDUCATE American.

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    • use your logic, no american citizen should be allowed to travel abroad because American people’s money should not be used as profits for foreign countries; no american citizen should be allowed to buy anything that is not made in america; no american citizen should be allowed to watch foreign movies; no american citizen should be allowed to go to restaurants that do not offer Amwerican food; you should not even go on the internet because a foreign H1b programmer is likely to be maintaining the website you visited

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      • This is a typical method of argument, reducing things to ridiculous extremes.
        I assume that you are not for open borders, allowing anyone to immigrate here without any restrictions whatsoever. If you do support that, please say so; it is an intellectually consistent view. But if you do NOT support open borders, that means you agree that we need to protect the interests of those who are already here (either natives or earlier immigrants).
        Concerning employment-based immigration, the official intent of the law is to protect the livelihoods of those who are already here. The question is then, Where do we draw the line?
        It is intellectually dishonest and disingenous for you to claim that the aspect of immigration law that makes sense is exactly the one you yourself are taking advantage of.

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        • You accuse people like me of having sense of entitlement because US citizens have ownership of this country while foreign students do not have this ownership and should be subject of decisions of US citizens. If this “ownership” argument is used, Then why you are so angry about companies who recruit h1b and foreign students? Companies, who have ownership of themselves, why they do not have the right of deciding who to recruit and/or who not to recruit under the current legal system?

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  9. It is very insightful that you pointed out the bars for admission (and graduation) for Columbia’s many master’s programs are not that high as many people would think. I haven’t seen many people noticing that. Instead, media and government refer to master and PhD students as “STEM grads with advanced degrees”. It’s HUGE difference between a STEM master’s degree and a STEM PhD degree, in both admission and graduation requirements. Columbia’s PhD programs are 100x harder to enter than Master’s. I don’t understand why masters and PhDs are often mixed and talked about together. They represent different levels of efforts and achievement. I would argue a master’s degree is closer to undergrad than PhD level, and there is also much larger variation from one master’s program to another.

    As for the fact you mentioned that there were more top Chinese students in your class before than now, I think part of the reason is China has developed a lot and narrowed its gap from developed countries like the US, therefore it has become more attractive for the top Chinese students to stay home than coming to the US.

    However, even though “Columbia masters” are not as fancy or rare as it sounds, I still think it’s a small number compared to the entire population of the US, and this group of foreign students with STEM degrees should overall post net positive economic effects to the country, even after accounting for displacement of some American workers. For Lan’s case, in a free capitalism market, the company that hires her probably just picked the best candidate available. The fact that the company was willing to pay extra fees and go through all the troubles of filing H1-B for her speaks more than anything else about her qualifications for the position. If you were the recruiter and there is an equally qualified American worker available, would you have gone through all the troubles of filing H1-B and pay extra fees to hire Lan instead?

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    • You must be joking. The legal fees are tiny compared to the salary savings the employer accrues, and the “loyalty” (de facto indentured servitude) of the worker.

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      • It really depends on what level of the position it is (like Columbia’s PhD vs Columbia’s Master). If you are talking about Google’s computer scientists, the bars are pretty transparent within the industry, and salary saving as a reason for Google to hire a foreign worker will sound more like a joke. If you are talking about IT workers like some at Disney whose work can be done by some one trained within 3 months, then it’s a different story. Those workers are more vulnerable and need more protection for sure.

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          • It’s maybe more an issue of immobile labor than of cheap labor, AND it’s more of an issue of what you are capable of doing than the issue of immobile (loyal) labor. Loyalty of an employee only goes that far in advancing the frontier of science and technology. True talent is the real driving force.

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          • >> It’s maybe more an issue of immobile labor than of cheap labor, AND it’s more of an issue of what you are capable of doing than the issue of immobile (loyal) labor

            What if Congress itself gives on a silver platter the most “talented” (?) labor from India is given to you (employer) which is highly immobile as well?

            Political correctness aside, the high skilled “immigration” discussion is always around Indians (and to some extent, the Chinese). You can get bright and best talent from anywhere in the world, but employers still don’t prefer them as much as they do Indians. Does that mean

            1) India borns are highly immobile (why?)
            2) India borns are best and brightest (why? how?)

            And no, these are not ‘trick’ questions

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          • Not sure what you are getting at, but there are a couple of factors at work. First, many immigrant managers like to hire from their own home country, as they know what cultural buttons they can push to get what they want. Second, much hiring is word-of-mouth, and people tell their friends, who are often of the same ethnicity.

            By the way, I have always strongly supported facilitating the immigration of the genuinely “best and brightest.”

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        • It’s important to bear in mind that a lot of Google development is normal development work, by normal people. In some cases those people are straight out of university with zero experience. Most of the other large companies have similar staffing profiles. So in that sense wages are a vital strategic issue for them.

          As to transparent criteria, Google’s own research showed that the criteria it used for about seven years were wrong.

          Also, it’s misleading to characterize displaced workers as people with three months training. They generally have university level training, years of valuable experience and high levels of capability.

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          • Yes, trained for several months AFTER finishing undergraduate degree in relative majors. I am not saying they are not valuable at all. I meant they are relatively more vulnerable and need more protection (than higher level computer scientists at Google, etc.) A college degree is valuable, but it’s not special. For example, 42 percent of the adult population in Washington DC has a college degree.

            So you are saying… Google has been hiring all the wrong people in the last 7 years, and their stock went from 800?

            Of course all levels of jobs are needed for a company, including Google. But do you really expect a company filled with “normal people” become extraordinary? The work that “normal workers” do might need more protection from foreign workers, but we also need many really smart people, whether they are American or not. In the well-paying silicon valley firms like Google, Facebook, Palantir, etc, you definitely see much higher concentration of graduates, US or not, from top universities like Harvard, MIT, CMU and Stanford. I am not saying every one is top talent in these companies, but the talents (American and/or foreign) in these companies are definitely the driving force in pushing these companies to the top of the world and they keep the lower-level “normal” jobs alive for many other American workers.

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          • What you are saying does not follow logically from my comments. I didn’t say that Google hired the “wrong” people; what I said was that Google could have hired Americans of equal quality for most of those jobs. I know Google’s hiring practices fairly well for various reasons, including serving as an expert witness. I can’t say anymore than this, but again, I’ll say that they could have hired high-quality Americans. And as I said, Google admitted giving preference to hiring foreigners for their immobility.

            By the way, if you think by “American” I mean white native, you are wrong

            Also by the way, that is a really clever screen name you have.

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  10. Have you caught wind of the lightning hot job markets in India? My firm (a large bank that ryhmes with “Chase”) is instructing us to grow our teams (Dev & QA) offshore in our corporate campuses in Hyderabad & Mumbai. So onshore we have a few senior QA & developers,BAs & Scrum masters; offshore our teams have multiple openings and can’t hire people fast enough,. Our on shore Corporate managers prefer articulate Americans for the senior roles. We’ve rolled off most mid level H1Bs on shore. The last laugh of Americans: H1B jobs offshored to India.

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  11. You are correct the Intels are among the worst H1B abusers, but mainly over looked. US corporations gain from H1B abuse in 3 primary ways, lower pay, immobile work force and no long term liability. The H1B is terminated automatically by design at the end of the term. No worry about wrongful termination or long term support. It’s cheap labor business model nothing more.

    The Bloomberg report seemed more like an ad for H1B than a report, very hard to watch. Vivek Wadhwa was unbelievable, first he asserts that all H1B are geniuses. So let’s look at that, India has been the main beneficiary of the H1B program for decades, nearly 70% of H1Bs come from India. There are far more candidates from India as there are H1B visas given out each year, so for decades India has been the main beneficiary of returning geniuses. But when Vivek listed out competing companies he didn’t name even one from India. After decades of returning geniuses, the main export from India is outsourcing companies and a desire for more and more H1Bs. Other than outsourcing, where is the technical innovation from India? I can’t think of even one.

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