Google’s Eric Schmidt Wants H-1B Cap Lifted

Last September,  in attending a research conference on the MIT campus, I was startled to see that Google had recently opened a major new office near the university. Since I am a big fan of both the school and the company, I was pleased to see this; in fact, Google is located right across the street from my favorite Cambridge hotel.

That pleasant image, though, is now somewhat marred by remarks made last week at MIT by Eric Schmidt, Chairman of Alphabet, Google’s parent company. CNN Money reports that Schmidt said, “The single stupidest policy in the entire American political system was the limit on H-1B visas.”

Again, I am a big fan of Google. I use it many times per day, still the best search engine out there for me, not only in general but also for Google Scholar, Google Books, Google Maps and so on. I greatly admired the company for taking its financially risky but principled and courageous stand in refusing to censor the Web in China.

But whenever one sees a company with an audacious motto like “Don’t be evil,” one must suspect that it cannot be completely true. The firm has been accused of age discrimination at various times, and as many readers of this blog know, the H-1B visa is in large part motivated by a desire hire young foreign workers in lieu of older U.S. citizens and permanent residents.  In this post, I’ll discuss both the age issue and H-1B, with regard to Google.

The firm fired one of its directors, Brian Reid, right before its IPO, depriving him of a multi-million dollar windfall. Claiming that he had regularly been subject to ageist remarks, Reid sued the company for age discrimination. Among other things, according to a New York Times article,

…[Reid’s] supervisors, including the company’s vice president for engineering operations, allegedly called him a poor “cultural fit,” an “old guy” and a “fuddy-duddy” with ideas “too old to matter.”

In addition, a report on the case by a law firm stated,

According to Reid, during his two years at Google, an executive to whom Reid occasionally reported (then aged 38) made age-related comments to Reid “every few weeks,” telling him that his ideas were “obsolete” and “too old to matter,” and that Reid was “slow,” “fuzzy,” “sluggish,” and “lack[ed] energy.”

Reid’s counsel retained me as an expert witness in the case. The case was eventually settled. I must make a disclaimer: I don’t know the terms of the settlement, and of course could not divulge them even if I did. I was asked to perform statistical analysis, which I did, but that was the extent of my involvement. I never even met Dr. Reid. However, for those who are interested, the appellate court’s decision is a matter of public record, and some of my findings are cited there, as well as Google’s criticism.

If Google had been engaging in age discrimination before, did they adopt more equitable policies afterwords? There are those who claim otherwise. Fortune reports there is another age discrimination suit currently in progress against the firm, and I do believe that ageism is rampant in the industry. The above NYT article paints a disturbing picture of the situation at Facebook (whose CEO Mark Zuckerberg once said that young people are the best programmers, though he later apologized):

Lori Goler, the head of human resources and recruiting efforts at Facebook, said her company was looking for the “college student who built a company on the side, or an iPhone app over the weekend.” The company also hires more-experienced workers, if “they are results-focused and can deliver again.”

Regardless of age, Ms. Goler said, “We ask: Are they going to get to do what they love to do for fun at work?”

Some observers say much of this language is just code for age discrimination.

The judge in the current litigation against Google seems to suspect this. According to the Fortune piece,

…U.S. District Judge Beth Freeman asked how age factors into a person’s “Googleyness” (a word used to describe the intangible factors that someone a good fit at Google)…

Keep all that in mind as we turn to H-1B, and Schmidt’s call for eliminating the cap on the visa. Again, there are two main senses in which employers abuse the visa.:

• Younger workers are cheaper than older workers, and most H-1Bs are young.
• If an H-1B is being sponsored for a green card, she becomes effectively immobile, tethered to the employer. This is a huge advantage to many employers. (Most of the firm’s green card sponsorees are H-1Bs, so for simplicity I will simply refer to them as H-1Bs.)

Let’s take the second of these points first. Google admitted, actually volunteered, to a group of us researchers in 2012 that they view the tethered nature of the green card process as a major reason to hire H-1Bs. Note that Google and Schmidt were found guilty of colluding with Apple and others to not “poach” each other’s engineers.

Concerning age, as I wrote in my recent Fortune op-ed, 96.1% of Google’s green card sponsorees are at Levels I and II. (The Facebook figure was 91.1%.) Level III represents the 50th percentile of wages for a given occupation and region, so Levels I and II represent below-median salaries. But my focus here is not on the wages in those levels, but rather that the levels represent experience levels, a proxy for age.

Like most Silicon Valley firms, Google tends to hire its H-1Bs as foreign students studying at U.S. universities, typically with a Master’s degree. Holders of that degree are generally considered Level II rather than I, since the degree takes one or two years to complete, time taken to be equivalent to that amount of experience.

In other words:

• Virtually all (96%!) of Google’s H-1Bs are young.
• If the company is indeed engaging in ageism, the H-1B visa program is the firm’s enabler for this.

Google may pay more than, say, the Bank of America, for the same job. But the relevant comparison is Google to Google. Young workers at Google of course generally make less than older Googlers. Data compiled by Payscale, while rough, shows the point: For Google’s Mountain View campus, workers with less than a year of experience have a median salary of $89,665; for the 5-9 years range, the figure is $112,478; and for 10-19 years the median is $134,426. So Google saves a ton of money by hiring young H-1Bs (who also will be even cheaper than young Americans).

In addition to the wage savings and the tethering, another attraction of the visa to employers is convenience of hiring. Students at university campuses are almost all young, and plenty of them are foreigners who hope to acquire green cards. In other words, the universities have exactly what the employers want — and thus there is no incentive to beat the bushes for Americans, especially those in the dreaded over-35 crowd.

I am certainly am not saying Google is hiring the “wrong” workers. The Google interviewing process is quite rigorous (though again, some say, either consciously or unconsciously aimed at the young), and the workers they hire are first-rate. They’ve hired excellent foreign students from my department. But I do submit that in most cases they could have hired an excellent American instead.

As I have said so often, reform of the H-1B visa program is impossible without addressing the age issue. It’s not just Google and Facebook. The much-publicized hiring of H-1Bs at Disney, Southern California Edison and so on also involved young foreign workers, much younger than the Americans they replaced. The notion, popular in some quarters, that we should protect American workers at Disney but not American applicants to Google, is just plain wrong.

Schmidt is wrong too. The H-1B cap should be cut, not lifted.

 

.