Fascinating Article Showing Exploitation of Foreign Students

Some years ago, I quoted a university dean who was amazingly frank on why academia loves foreign graduate students (Computerworld, Feb. 28, 2005, emphasis added):

Most of the students enrolled in the New Jersey Institute of Technology’s graduate program are foreign nationals. The Newark-based school has so far received 208 applications for admission in computer science master’s degree programs next year, with about 165 of those applications from foreign students, said Stephen Seideman, dean of the school’s college of computing science. The foreign students “will do everything they can to stay here,” he said.

Anyone who has been an academic or a grad student knows this, but what was amazing is that the dean would “speak out of school” like that. But that is nothing compared to the comments in an ASEE Prism article by Beryl Benderly whom some of you may know of through her excellent work at Science Careers magazine.

The article, though mainly on Georgia Tech’s use of online instruction (on which, by the way, I’m a skeptic), there are some fascinating quotes that made Dean Seideman’s remarks look tame. Again, I use the word fascinating here not because the content is surprising, but rather because the man quoted is speaking so…well, loosely (emphasis added):

Nearly three quarters of the online students are Americans, with 26 percent international. In the much smaller on-campus program, 87 percent of students hail from overseas, most from India and China.

The divergence may reflect differences in motivations. For international students who “pay a huge amount” (over $30,000 for out-of-state tuition plus living expenses) to come to Atlanta, the “number-one goal is not the master’s degree, [but to] get into the U.S.,” Galil explains, noting that student visas are not granted for online programs. “If they could get in [otherwise], not all of them would pursue a master’s.” Studying in America has long been a key route into the U.S. labor market, particularly in the information technology fields, for foreign nationals, who can “explore opportunities” through Optional Practical Training and other programs, writes University of Michigan economist John Bound in a 2014 National Bureau of Economic Research paper. Indeed, nearly three quarters of Silicon Valley’s computer and math workers between the ages of 25 and 44 are foreign born.

(While it is possible to get an H-1B work visa with just a bachelor’s, for various reasons it is much easier with a graduate degree.)

The industry lobbyists have always made a big point of the fact a large proportion of U.S. tech graduate programs consist of foreign students, with the latter group earning about 50% of the doctorates and 30% of the master’s degrees. I’ve explained before that this is actually a consequence of the H-1B visa, which has impeded wage growth at the graduate level (more on this below). But my point here is that it is remarkable that the figure is near 90% at Georgia Tech, and there are other similar schools, such as Cal State East Bay, where not only are 90% of the master’s students foreign, but also are reportedly of very low quality. I have also noted other master’s programs that seem to have been created for foreign students.

But there is something much deeper in the GA Tech dean’s statement. The industry has implied that there is “something wrong” with American students for stopping at a bachelor’s degree rather than pursuing a master’s or even a PhD. For instance, Texas Instruments, in 2011 testimony to Congress in support of raising the H-1B cap, made such an argument. Here is how I reported it:

Yet, without fully realizing it, Texas Instruments V.P. for HR Darla Whitaker has now essentially admitted that all that “Johnnie Can’t Do Math” stuff was just slick PR. At the October 5 the House Subcommittee on Immigration Policy and Enforcement hearing titled, “STEM the Tide: Should America Try to Prevent an Exodus of Foreign Graduates of U.S. Universities with Advanced Science Degrees?”, Ms. Whitaker stated that TI has plenty of engineering applicants with Bachelor’s degrees, and thus does not hire foreign workers at that level. She stated TI does hire H-1Bs, and sponsors them for green cards, at the Master’s and PhD levels, where she says there is a shortage. This naturally led one of the congresspeople on the committee to ask Whitaker, why don’t the American engineering students go on to grad school? She replied that she supposed that the American students were anxious to get out and start making money.

The fact is that for most tech jobs, one does not need a master’s degree. (As we all know, Gates, Jobs, Zuckerberg, Ellison etc. never even completed a bachelor’s.) So the American students are acting quite rationally in foregoing grad study — and as Dean Galil explains so vividly above, the foreign students would forego grad study too if they could get work permits and green cards. In other words, there is “nothing wrong” with either group; both are acting in a manner consistent with the settings they deal with. But in the case of graduate study and foreign students, that manner is a consequence of U.S. immigration policy. Again, no surprise to people involved, such as myself, but quite startling to see the dean say it publicly.

Many of you will recall my frequent citing of the 1989 NSF internal memo that called for reducing wages at the grad degree level by bringing in a lot of foreign students. The memo also pointed out that the resulting stagnant wages would drive many of the domestic students away from graduate study. That is what has happened since then, and the comments by TI, Dean Galil, Dean Seideman and so on all converge in that context. In other words, the system was designed so that graduate degrees in tech would eventually become intended largely for foreign students, benefiting the industry with young, cheap labor and benefiting academia with workers who “will do everything to stay here.”

Since the foreign students are young, this then becomes the basis for the core role of H-1B, which is to enable employers to avoid hiring expensive older American workers. This came up in an ironic, “What goes around comes around” way in a 2010 CNN report. There, a Georgia Tech student, Christine Liu, noted that her Chinese-immigrant father could not get engineering work, because employers preferred to hire the young new Georgia Tech grads.

By the way, ASEE is the same organization that invited me to their annual deans council meeting to present regarding H-1B in February 2016.

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52 thoughts on “Fascinating Article Showing Exploitation of Foreign Students

  1. Norm: I appreciate your commentary regarding the exploitation of younger foreign-origin students – that also harms the employment prospects of experienced American citizen technical professionals, Here’s an in-depth 04 June 2017 CNN story regarding the controversial H-1B visa that also obliquely discusses the abuse of foreign national students. Despite the “whitewashing” in this article, the employment age discrimination against U.S. workers is a prominent theme. “Why the highly coveted visa that changed my life is now reviled in America” By Moni Basu, CNN Updated 9:31 PM ET, Sun June 4, 2017
    http://www.cnn.com/2017/06/04/us/understanding-the-h-1b-visa/

    I hope that you will be discussing the CNN article, Norm. Here are the pair of comments that I posted to my Facebook page regarding this article, now that CNN no longer permits reader responses:

    The CNN article discusses how natives of India look after each other – just like the nation of India only allows about 40,000 “guest workers” in a nation of over 1.1 billion people. I became concerned with the employment rights of American citizens in around 1980 as I learned that people that earned Ph.D.s at SUNY Buffalo in my department were having difficulty finding any jobs other than as poorly-paid “postdocs.” I worked to empower Ph.D. candidates at 3 annual meetings of the American Association for the Advancement of Science in 1984, 1985, and 1986. My activism continues . . . . . .. The problem that I see is that some greedy economic elites have chosen to NOT take care of their fellow Americans, but to pursue selfish enrichment instead. I have particular scorn for a person known as William H. Gates, III, popularly known as “Bill Gates.” William is the wealthiest person in the word and will be 62 in October. https://en.wikipedia.org/wiki/Bill_Gates

    While the H-1 Visa is described in glowing terms in the above CNN article, the “Eilberg Amendment” made my hard work to earn a scientific Ph.D. in 1984 into an investment yielding a NEGATIVE return! The economic elites procured legislation and government policies that destroyed good American careers and replaced those careers with short-term positions that make scant use of American’s training and experience. Exhibit “A” is the controversial H-1B Visa program, created with the assistance of a corrupt U.S. Representative, Joshua Eilberg (D-PA) in 1976 via the “Eilberg Amendment.” This legislation adapted the obscure “Sheepherder Provision” of The Immigration and Nationality Act of 1952 (Pub.L. 82–414, 66 Stat. 163, enacted June 27, 1952), (also known as the McCarran–Walter Act, which allowed up to 500 unskilled Basque Sheepherders to be imported into the U.S.) to apply to colleges and universities importing UNLIMITED numbers of college professors and researchers via the “H-1” Visa program (a provision that still applies today.) Corporate elites procured the same privilege via the Immigration Act of 1990, albeit with cosmetic limitations on the annual number of imported workers. To learn more please use Google and search for BOTH phrases “H-1B” and “Gene Nelson” There were 1,210 results as of 03 June 2017.

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    • No, I will NOT be discussing the CNN article, which is yet another “Intels Good, Infosyses Bad” analysis. As I have explained, this focus is both factually unwarranted and destructive, as it will lead to “Staple a Green Card” legislation.

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      • Dear Norm: I agree that approach was one of the things that led me to label the article as one that “whitewashed” the problems with the controversial H-1B Visa.

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    • Of the immigrants I know from the 1970s, invited to work in the US due to their skill/talent, they were offered the job with a green card. No intermediary visa tether.
      The funneling of foreign students for university PhD curriculum profit is ballooning into more dysfunction. Note not only does industry falsely claim there is a “skills shortage” while having citizens train H-1Bs, but are now branching to a further bogus facade: 7 weeks of “training”, paid for by them, makes a university foreign student glut a “data scientist”.
      http://insightdatascience.com/
      This preying on immigrant population just gets more bizarre by the day.

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  2. Hello Norm,
    Latest fact polishing attempt by the media on H1-b:

    http://timesofindia.indiatimes.com/business/india-business/top-7-indian-outsourcing-firms-received-fewer-h-1b-visas-in-2016-report/articleshow/59012249.cms

    By National Foundation for American Policy – a Washington-based non-profit think-tank whose executive director is Stuart Anderson.

    ————————————————————————
    Quotes from the report:

    “It said, the 9,356 new H-1B petitions for the top seven Indian-based companies approved in fiscal 2016 represent only 0.006 per cent of the US labour force.”

    “While the threat of job loss has long been exaggerated by critics, it reaches illogical proportions when discussing fewer than 10,000 workers in an economy that employs 160 million workers nationwide,” the National Foundation for American Policy said in a statement after releasing the report. ”

    National Foundation for American Policy said the April 2017 unemployment rate in the US for “computer and mathematical science” occupations was 2.5 per cent – a very low rate, even lower than the 4.4 per cent for “all occupations,” according to the Bureau of Labor Statistics data.

    The unemployment rate for “architecture and engineering” occupations is even lower at 2.1 per cent, it said, adding this illustrates a disconnect between reality and claims that high-skilled foreign nationals are preventing US workers from pursuing careers in tech fields.

    According to Code.org, Bureau of Labor Statistics data indicate there will be “1.4 million more software development jobs than applicants who can fill them by 2020 … and there are more than 500,000 open computing jobs nationwide.”

    The report disputed the figures of the Trump Administration that about 80 per cent of the H-1B workers are paid less than the median wage in their fields.

    “This statistic is misleading as it relies on a Department of Labor database that includes multiple applications for the same individuals, since a new filing is generally required when an H-1B professional moves to a new area,” the report said.

    ————————————————————————–

    That’s a lot of fine polishing and some outright false statements like

    “disconnect between reality and claims that high-skilled foreign nationals are preventing US workers from pursuing careers in tech fields”

    Adding in the mix, the further claims of STEM shortage:

    “According to Code.org, Bureau of Labor Statistics data indicate there will be “1.4 million more software development jobs than applicants who can fill them by 2020 … and there are more than 500,000 open computing jobs nationwide.”

    Would be interesting to know how code.org is sponsored? Let me take a crude guess: Tech companies?
    From code.org website: (https://code.org/about)
    “code.org is supported by generous donors including Microsoft, Facebook, the Infosys Foundation, Google, Omidyar Network, and many more. ”

    One thing you have taught me through your articles Professor Norm is the ability to connect the dots laser fast and see through the fine lobbyist sophistry with the prism of truth and I thank you for that.

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  3. It is foreign students who are exploiting the US higher education system. They do so willingly. They are not victims; they choose to come to the US knowing the costs and perceived benefits. It is American students and workers who are being harmed.

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    • >> It is foreign students who are exploiting the US higher education system. They do so willingly

      Yes and unfortunately, it’s all “legal”.The one place where foreigners don’t have a voice is at the ballot box (yet). Everywhere else they seem to have made significant presence in having their voices heard (starting with WH).

      And we are still not sending enough folks to the Congress to make all of this “exploitation” illegal.

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  4. Why are American grad students so often foreign? It’s not really hard to understand, unless you don’t want to understand it.

    In the US, we charge HUGE fees for undergrads, although the undergrad degree is not always useful today to get a job. In the US, a state university (UC-Davis, UI-UC) can charge 12K for tuition and 12K for R&B. 4 years – 100K. There are scholarships, but these are quite deceptive. They are “bait and switch” – they get the student to attend the university, but fail to tell the student that maintaining a B average in college is MUCH harder than in high school.

    By contrast, foreign undergrads pay nothing or very small amounts.

    So, at the end of 4 years, US undergrads have huge debt and a degree that is of marginal value. Foreign grads have no debt.

    So, along comes grad school. In grad school, in many cases, students are paid. Except not enough to both live and pay off their undergrad debts. So, foreign grads come and take the spots.

    The system is rigged terribly against US undergrads. They pay a lot to get a degree that means little except to get them to grad school, which they cannot afford to go to. Plus, since most of the TAs and a lot of the professors are totally incomprehensible with some variant of Chinese accent or Indian accent AND have a huge contempt for American undergrads, they are turned off about academia. The system has gotten much worse than it was 40 years ago when a lot of us complained about the TAs.

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    • The problem of an accent is easily remedied: Just have the person speak more slowly. I’ve found that this simple solution is quite effective.

      There is a real question of whether students even SHOULD go to graduate school. As with many issues in life, the various actors in the grad school issue have their own motivations. The NSF is in the research business, so they want to maximize their “bang for the buck” in terms of research output. That does not necessarily mesh with the national interest.

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  5. > For international students who “pay a huge amount” (over $30,000 for out-of-state tuition plus living expenses) to come to Atlanta, the “number-one goal is not the master’s degree, [but to] get into the U.S.,” Galil explains, noting that student visas are not granted for online programs. “If they could get in [otherwise], not all of them would pursue a master’s.”

    > … In other words, the system was designed so that graduate degrees in tech would eventually become intended largely for foreign students, benefiting the industry with young, cheap labor and benefiting academia with workers who “will do everything to stay here.”

    Good post. It really does make the case that universities and tech companies are taking advantage of the desire of many foreigners to get into the U.S. The sad part is that the price is being paid largely by the American STEM worker.

    > Indeed, nearly three quarters of Silicon Valley’s computer and math workers between the ages of 25 and 44 are foreign born.

    According to the numbers at http://econdataus.com/stemsv15.htm, this is pretty close to being the case for ALL of Silicon Valley’s computer and math workers. In 2015 in Silicon Valley, over 70 percent of all Software Developers, Applications and Systems Software workers were foreign-born as were about 63 percent of all computer and math workers. Perhaps more surprising, 45.4 and 35.2 percent, respectively, were not even citizens.

    Still, it’s good to hear someone else mention this stat that’s probably suspected by anyone who works in the Valley but is largely unknown and unreported outside it. If one were get their information from the HBO show “Silicon Valley”, they would probably think that the foreign-born percentage is more like 25 percent. If you look at the cast at http://www.hbo.com/silicon-valley/cast-and-crew/index.html , the only obviously foreign-born are Dinesh (who is Pakistani) and Jian-Yang (who is Chinese). The one other one that I know of is Gilfoyle who is supposed to be Canadian. I generally like the show because they do cover some issues in the tech world. However, I always feel like I’m watching a sitcom of Silicon Valley from twenty years ago. Of course, non-residents are likely not aware of this.

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  6. I am a believer that an “entry” level degree in most STEM fields involved in the creation of new knowledge and requiring high analytical skills should be a masters degree. There is simply too much information needed now. There are many STEM jobs that are more repetitive and need only specialized training in that specific area to solve the recurring problems that occur and fit into basic patterns,

    I believe first in being a generalist and using the later years to specialize. Several years ago for a friend teaching engineering at a foreign institution, I surveyed the graduation requirements of about a dozen highly regarded EE programs. I found a distinct difference in direction with the institutions about evenly divided. There was the group that required a broad basis in the various disciplines (electronics, semiconductors, telecom,…) and those with a very limited program with students specializing even as sophomores. Interestingly at the time, the reputation of the university (of course based on its graduate program) had little to do with the undergraduate approach. I believe that those who specialize early limit themselves in the future because they do not have the basis to adapt or to make analogies to other fields.

    Liked by 1 person

  7. Dear Professor Matloff:

    Let us say all of the above is true. Foreign students come here to get a PhD or an MS with an intent to stay in the US.

    Why is this not a huge benefit to the US? Why does the US not jump at this massive transfer of productive resources from other countries to it?

    I ask this question as somebody that is agnostic about “foreign” people. Full disclosure: in spite of my very British sounding name (or because of it actually) I am an Indian American. I am a part of a small minority called ‘Anglo Indians’ (two out of my four grandparents are Brits).

    Back to foreign students. I have asked this same question to four Economists: Card, Freeman, Cappelli and Krugman. All four unequivocally said that it is a huge economic benefit to America and we should welcome ALL the grad students that we get. Cappelli (Upenn) alone added a caveat that we should be open to all grad students, but must make sure that they do not get used to suppress wages of the less educated Americans (he favored wage floors, weighted by seniority).

    Katz of Berkeley dismissed the nay sayers and called it “a new restrictionist agenda dressed up in fancy compassion costume.” Bradford De Long (also Berkeley) gave several examples from Economic History that similar concerns were raised from between 1890 to 1972 about various groups of migrants. With exactly the same claim of wage suppression.

    These are some of the most respected names in Economics.

    So my question remains: why do you not see this as a huge benefit for the US? I expect that you will perhaps not publish this. After all I am of Indian origin and this is self-serving stuff right?

    Derek

    P.S. I am a double PhD in Computer Sc and Economics (I was one of the earliest PhDs in the then emerging domain of Computational Economics). I am now retired and work with a bunch of insurance firms – I own a small firm consisting of 7 employees that does ML related work for insurance firms. And yes, four of those 7 are H1-Bs and of the remaining three two are naturalized Americans. The third and the only ‘real’ American is, well, my daughter 🙂

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    • Thanks for the very interesting comments and background! And I like that double major, though if you don’t mind my saying so, your analysis here is a little simplistic.

      Actually, some of those economists have been negative about the H-1B program and related issues. Cappelli in particular has repeatedly disputed the tech industry’s claim of a shortage of qualified workers. And Card has admitted that as a foreigner (Canadian), he was underpaid by his first U.S. employer, who was sponsoring him for a green card.

      As to your question, let first make an analogy that you may not like: We’d all like to have more good drivers, wouldn’t we? But if we have too many of them, all our roads will be hopelessly clogged.

      As I said in my post, H-1B is used as an enabler for age discrimination; this is one of its major goals from employers’ point of view. Young workers are cheaper, and most H-1Bs are young.

      I often see tech employers offer jobs to my foreign students while rejecting older Americans who are equally qualified, often more qualified. This is intolerable.

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      • Professor Matloff: Thank you for posting my comments and for responding to them. I appreciate your courtesy.

        Let me address a couple of issues that you raise.

        > As to your question, let first make an analogy that you may not like: We’d all like to have more good drivers,
        > wouldn’t we? But if we have too many of them, all our roads will be hopelessly clogged.

        There is a well developed body of knowledge in economics to address this point above. Scarce resources -such as road space in your example – are non regenerative and non substitutable. Therefore, excess usage (or consumption) leads to negative externalities. The well studied – and often implemented – solution to this problem is congestion pricing.

        The dominant view among labor economists is that (i) human resources, even in an over supply context, are NOT a case of consumption of scarce resources and (ii) if factors of production (including specialized labor) drive down the cost of production of goods and services there is net benefit to the economy. The net loss to the economy are always less than the productivity gains. As to who benefits from the lowering of cost of production depends on the extent of competition between firms and the capture (or not) of the regulatory state mechanisms (read legislatures) by politically vested interests.

        Perhaps a simple thought experiment will clarify this. Consider a machine that requires exactly one person to operate it. Let us say that this machine can produce all the goods and services needed for an economy thereby making all but one person unemployed. The marginal cost of all products and services produced by this worker-machine combination will always be less than the loss of mean wage lost. In other words, such a situation will always lead to a net benefit to the economy (I do not deny that the gains will be unevenly distributed – this is best addressed by what economists call ‘side payments’ or taxes and transfers; that these taxes and transfers do not happen is a result of the political dynamics in our land).

        The idea that excess labor leads to congestion is an intuitive – but incorrect – belief this falls under the rubric of a well studied economic fallacy that the economists call “Lump of Labor” fallacy. There is a lot of scholarship – both empirical and theoretical – on this topic that is easily accessible.

        There is a reason that economists are united in their belief that the following are always beneficial – (i) productivity gains, even productivity shocks (ii) lowering of costs of one or more factors of production.

        Now about age discrimination.

        > As I said in my post, H-1B is used as an enabler for age discrimination; this is one of its major goals from
        > employers’ point of view

        Yes this is very wrong. What is wrong is age discrimination, not H1-B. The situation is analogous to one that prevails in the case of Zolpidem Tartrate. The molecule has legitimate and widespread uses. However, it can also be abused and used to take human life. The way we deal with this is to categorize the abuse as a crime and require its usage to be approved by appropriate experts (not by the prevailing political opinion but by experts). The same goes with many practices, employee stock options, employer funded benefits, employer loans for education, severance pay, no compete agreements and so on. All of these are legitimate but can be and often are, misused.

        We need to distinguish between a legitimate instrument of business practice and its abuse. Age discrimination does not justify action against H1-B visa, it requires action against age discriminators.

        Best, Derek.

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        • What I am telling you, Derek, is that the age issue is behind most H-1B hires. There is also the issue of immobility of the foreign workers, a convenience factor (find all the H-1Bs you want on college campuses, rather than having to cast a wider net for Americans, especially older ones), etc.

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        • Derek, you correctly write that gains from production efficiency will be distorted by firms attempting to manipulate government.

          Has it occurred to you that H1-B is precisely one such attempt?

          I and many others argue that H1-B, as it currently exists, protects firms from having to compete for talented workers. As with any protection, this weakens the economy. For example, it lets many average firms capture enormous revenue from lucrative government projects, often at cost to the taxpayer and consumers.

          Economists lack the qualifications to assess these developments. They can’t assess projects or where mistakes were made. They also lack the qualifications to determine the extent to which H1-Bs are “productive resources” and instead fall back on credentials, which are not a direct substitute.

          Economists also frequently confuse the discussion by comparing degree holders against the general working population, when the relevant comparison is against the local technology workforce.

          Obviously there is a great range in abilities and productivity, and many H1-Bs do an excellent job. But it is dishonest and naïve for economists to pretend they are all the same.

          Economic theory also presumes executives will hire the productivity-maximizing worker, but that is not how firms always work. There are many cases where low productivity workers will return more career benefits for the executive.

          Lump of Labor is a weak argument in the field of skilled temporary immigration. H1-Bs are hired to specific roles, not as long term increases in the size of the economy. By definition, someone misses out. Lump of Labor also presumes instantaneous adjustment, which does not occur. Changes take 5 to 10 years to propagate through the economy.

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    • Derek,

      Who is ‘the US’. That is always my first question when I hear that term. Is it the 1%? The 50%? The 100%?

      The Americans displaced by H-1B/OPT — either by firing or non hiring — don’t disappear or die off.
      If unemployed (less likely) they extract government resources at a loss.
      If underemployed they displace other native workers. I’ve worked at IT helpdesks where the personnel (Americans) had undergraduate and graduate degrees in computer science. The exact same type jobs (which are really vocational) in the military were done by 18 – 20 year olds with 3 months of IT training. So college graduates who couldn’t get software engineering jobs were displacing vocational workers. And so the misery goes down.

      In areas like the Bay Area the Americans displaced by H-1B/OPT have to contend with immigrants for living space and suffer higher rents.

      So it seems like ‘the US’ to economists is just the tech elite and the FIRE industry. Because they seem to be the only people who benefit. But it’s all for the greater good, right?

      I have a master’s degree (in geophysics, field work, 400 page thesis, yadda yadda) and am also not that impressed with getting a master’s degree. In many cases it is not a mark of scholarly achievement at all, especially at schools where it is treated as money making professional program. I will not name the multiple programs (one in the Bay Area) whose CS master’s degree holders are not even at the level of American undergraduates from Tier 2 state schools.

      A PhD is a different matter and thankfully I think professors still give a damn about quality. I think OPT should be limited to PhD and H-1Bs limited and also auctioned off. That seems like a reasonable compromise, don’t you think?

      And 1924 to 1965 — a turbulent but phenomenal time in American history — was a period of extreme immigration restriction and overall growth for the United States. So — and I know who Brad Delong is — I’m not impressed by looking at a cycle from 1890 to 1972. Most — but not all — economists have ignored the quite apparent negative impacts of immigration on the American people. I think you will find economists will increasingly be ignored in the future. But I’m sure the average American will be denounced as anti-intellectual, as always.

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        • I think my sample size of PhDs is probably several orders of magnitude or more smaller than yours. I’m disappointed to hear that rigor is declining there too. I just haven’t seen that in person yet.

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      • SXBXWX

        > Who is ‘the US’. That is always my first question when I hear that term. Is it the 1%? The 50%? The 100%?

        The economic system – the sum total of economic activity that takes place within the system – is referred to as “The Economy.”

        You make a valid point; the gains are not shared evenly. As to who benefits by those gains and how much depends on several factors:

        1. The extent of competition between firms – in an efficient economy firms should not benefit disproportionately from lower costs of production; the gains should “competed away” to other parties. It does not happen enough in the US because of the capture of the policy making body (the state and its politicians) by vested interests.

        2. The criticality of the factors of production (cheaper labor in this case): – generally, the more upstream they are the more the economy benefits. Higher costs upstream cascade as even higher costs towards the consumers and result in what economists call a “dead weight” loss.

        3. Yes, unemployment lowers the value of gross economic activity. But the substitution effects of lower factors of production are always higher (again to the economy, the distress to the laid off programmer is real and I do not mean to discount it).

        Please consider the following situation. Suppose IBM (or Oracle or some other firm) comes up with a new RDBMS. Let us call it “Sherlock RDBMS” in a bow to Watson. This new system does not require somebody to master languages such as SQL to operate it. It has a fully developed NLP capability that will allow users to ask for data in English language (“Mr. Sherlock get me all customers that applied for Master Card and group them by region and add a row with regional average incomes …”). Yes, there is no such system now and nor will one happen in the near future. But this system will result in about 80% of the DB Admins being laid off and about two thirds of data extraction folks – people that use SQL to extract, organize and present data – being laid off. You are looking at job losses of about 400,000 people in the next year.

        Will you ban this system? Everything that you said about unemployment and underemployment caused by H1-Bs holds here – on much larger scale. This is a typical labor supply shock. If you describe this situation to any well trained economist he (she) will tell you that this is an absolute economic bonanza to the country.

        If you think we should permit the massive supply side shock and resulting loss of 400,000 incomes through this productivity gain (Sherlock), then tell me why should H1-Bs not be permitted as well?

        Best, Derek

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        • I do have some background in economics. I studied it in college — more than a minor, less than a major — and basically have always hung around economists. I do this frequently in connection with H-1B.

          Frankly, I am not impressed by economic models of the type you cite here. They are based on too many assumptions and often have objective functions that are questionable.

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          • I was a double undergraduate major in both CS and Economics. As a CS student my math requirement was that of an applied mathematics major. As an economics student my math requirement was Calculus I and Statistics.

            Now, I would like to inject a comment about economic modeling, having had some experience with it on Wall Street. Most consumers of economic models think they are static, carved in stone, irrefutable. That is not even close to the truth. The first time I was asked to “change” a model, it required a “material” change in the data and calculation. As a well educated professional, I assumed older data assumptions would be “restated”. Nope. Never.

            One of my colleagues referred to the models we worked on as, “the model du jour.’

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          • In addition to Keynes’ famous line, “If all the economists of the world were laid end to end, they would never reach a conclusion,” there is something my favorite economics professor came up with on the spur of the moment, while he was lecturing. He said, “Hmm, not a bad little model…Worse have been published.” 🙂

            Let’s not forget all the prominent economists who (a) convinced Bill Clinton to remove long-held safeguards on Wall Street and (b) thought all the reckless behavior of the early 2000s was just fine.

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        • Derek Wellington,

          Economists — at least when speaking to the public through the news — always claim to care about the displaced worker. Nothing wrong with the models, just the government isn’t doing something it should be doing to protect workers while maximizing the benefits of the model. To soften the blow of globalism.
          And this is, like it has been for 40 years or more, pure deceit.

          Economists know nothing will be done about it politically.
          Economists know nothing will be done about it politically.
          Economists know nothing will be done about it politically.
          If they don’t I question the judgement of every single one. Perhaps as a profession they do lack empirical qualifications.

          My question to you: since decades of empirical data has shown the American political class is incapable of agreement on how (or even if) to help the American worker being displaced by globalism, shouldn’t various models now take this into account? Or would that tarnish the socially acceptable view of globalism in developed countries?

          And — your final example was automation. Not replacement by other people. They are not the same. They will never be the same. If economic models treat them the same then the models are flawed and simply do not reflect reality.

          Your final example is literally the same as suggesting that importing millions of poor farm workers into the United States (to replace American farm workers) in the first half of the twentieth century would have had the exact same economic benefit as introducing the tractor or cotton picker did in reality. Because both would have been cheaper and freed up American labor, right? That’s crazy — I mean that seriously.

          Would you say — and I know you’re in the US — that India would benefit from importing tens of millions of farm laborers from even poorer countries? Would that be the exact same economically as the poorer Indian farms mechanizing? Many Indians would lose their jobs either way, correct? Would Indian society be better off?

          I have to stop here because the comment is getting too long and far afield of H-1B/OPT. But I’m constantly amazed by the verbal gyrations undertaken to cloak screwing the worker over in some abstract beneficial terms. I know your opinions are shared by most in the economics profession so don’t take any of this as a personal attack. I just think you’re wrong — PhD or not.

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          • You might add that Derek’s argument is not too different from the one the American South gave as an economic argument for slavery in the early 1800s.

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        • Another observation, Derek,

          A voice queryable database such as “Sherlock” is not rocket science. It could be readily built using available technology. A single developer could have a working prototype in 12 hours.

          More importantly, though, your “well-trained economists” do not understand software economics. A system like Sherlock would not reduce the demand for DBAs; it would increase it. Most of the role of DBAs is to safeguard data quality and availability for the organization, regardless of how it’s accessed.

          Voice querying would impose stricter demands on data quality and expand the user base. Far from sacking your DBAs, you would be hiring more.

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    • “Cappelli (Upenn) alone added a caveat that we should be open to all grad students, but must make sure that they do not get used to suppress wages of the less educated Americans”

      I did some research on obtaining a work visa in India. India’s bureau of immigration requires, “The employee’s salary must be in excess of U.S. $25,000 per year.”

      The median yearly salary in India for a computer programmer or engineer is about $7.5K versus about $80K in the US. Doing some simple math (80K * 25K / 7.5K = 266K). So we should require guest workers to be paid in excess of $260K per year. In high cost SF the pay should be at least $316K per year.

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    • How wonderful. Since you are an employer, you must have open positions occasionally. And for those positions, you must get applications. Why don’t you share publicly the applications you receive? You can easily conceal names, etc. There is one truth that employers conceal: They get thousands of applications, and many of them are highly qualified.

      Share your applications, or shut up.

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      • Someone, I think DOL, once proposed a system where the jobs would have to be publically advertised. One step better would be every job would have to be in a publically visible DB, and then WHO got the job also listed. I think we would find it interesting to see that in STEM jobs nearly every job would have an Indian or Chinese name on it, which would prove EEOC and Civil Rights laws are being violated nationwide.

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        • There is currently a lawsuit against Harley-Davidson (of all companies) based on that kind of analysis. Infosys hired a high proportion of Indians, even though there are very few Indians in rural Wisconsin. But if one believes the employers claim that the locals didn’t have the needed skills, that arguments doesn’t seem to work.

          An Indian or Chinese surname doesn’t mean the person is non-American, though.

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      • Paul,

        I employ 7 people. My company uses techniques drawn from Machine Learning (ML) and more conventional econometrics for helping insurance companies deal with large volumes of data. This sort of work falls under the rubric or “big data and analytics” a portmanteau category created by the business press.

        Four of my 7 employees are on H1-B visas. All four positions were advertised several times. The requirements were as follows:

        1. Need to know ML techniques both ensemble learning and non-ensemble learning methods.
        2. Need to know the use of basic ML modeling techniques such as SVM.
        3. Need to know econometric and statistical modeling (starting with basic OLS and GLM models through Logit, Probit and related techniques and familiarity with time series data and estimation models).
        4. Need to have a functional knowledge of SQL.

        Desirable Skills:

        1. Experience with Tableau
        2. STATA and SAS

        Compensation for the four positions varied depending on experience and qualifications. The lowest paid of the four programmers draws a salary (*excluding* benefits and profit sharing options) of $ 89,200. The highest paid draws a salary of $ 1,73,680 (*excluding* benefits and profit sharing options). Their ages ranged from 27 to 36 at the time of application. [Aside: On an average I spend about 54% of the gross revenues of a project on salaries. After benefits and overhead, my gross margins are of the order of 19 – 23% and net returns would be about 15% of the total billing.]

        I received 17 applications. Shortlisted 11 (including 3 of these 4) and interviewed every one of them in person. 7 of them made it past the interview into a second round. I had prepared two data sets based on my work with clients and used these to test them with structured problems slightly harder than the ones that they would face at work. Two were outstanding – both were from a reputed MS program (in Data Science) from a well known US university. Both were Turkish students with bachelor degrees in economics and masters in IE from Turkey. In addition to their MS degree from the US university. They were absolutely the best of the pack.

        In the second place was an American Citizen and a Chinese American international student. My read was that the American was slightly better than the Chinese student, possibly because of better comprehension that a native speaker of English enjoys.

        The American had one year of work experience between his UG and MSs degrees. The Chinese student had an UG degree in Math and Stats (from the mainland) and was an ABD in a CS PhD program in an Ivy League university in the US.

        I offered the position to the American. I told Chinese student that a position would be open to her if she wanted it when she completed her PhD.

        The American – let’s cal him Bob – took the job. After a month, he started working with a client’s team (a large insurance firm in Hartford, CT), and had run ins with the folks in the team. Calling their data analysts “dorks with crapy math skills driving Lexus cars” in an e-mail (used those exact words). During a client presentation and review meeting, he called their director of analytics – a lady in her late 30’s – “a typical Harvard MBA, dumb chic with ‘attitoood’ and low IQ” to her face (exact words again). When he refused to apologize, I let him go. He told me that ‘she was exactly the sort of upper class chic, that got him mad and pushed his buttons’ and refused to apologize to her “as it was a class thing.” [Aside: at first I though Bob’s analysis was more accurate than the lady’s, but on closer inspection both were wrong – even if he had been entirely right and she wrong, that kind of language is unacceptable in my firm.]

        That client engagement was saved for our company by one of the two Turkish H1-bs. I will not elaborate further here as this post is already quite long.

        The Chinese international student – let us call her Cindy – joined us recently. She is on her OPT. I am sponsoring her for an H1-B. Cindy and my daughter go on weekend shopping trips together and on Bike rides in Northern Connecticut. Our dog Terry has transferred his affections from my daughter to Cindy in short order (so much for Border Collies being loyal :-)). And Betty (my wife) will adopt her well before the H1-B materializes. So perhaps the H1-B will not be needed after all!

        As Cindy’s people would say, we live in interesting times.

        Derek.

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        • Derek

          I’m troubled by your recounting of the tale about “Bob.” In my experience staff do not insult clients unless provoked. As an employer, you have a duty of care to ensure your staff are not demeaned or harassed, including on client sites. In an incident such as you describe, there should be an investigation by your legal department or an independent outside law firm. Did that occur?

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    • How is it of “benefit to the US”? Break that down.

      – As students, it is of benefit to the university, only. F1s are restricted to working on campus, yes? Who benefits? The university, who does not have to pay competitive wages to their legislatively captive workers.
      – As OPT visa’d, their chief value to industry is as no-min-wage labor. And, OPT visa was intended as industry experience to bring back to their own country. As such, no OPT should be eligible for H-1B transfer, because to do so is in violation of the _purported_ intent of an OPT in the first place. Who benefits? Industry, as they do not have to pay competitive wages to their legislatively captive workers.
      – As Masters and PhD students specifically, universities are filling curriculum for which there are no jobs. If they had Masters/PhD programs in Clown Makeup, does that mean it’s a valuable endeavor? No. There is a reason they’re stuck at universities – there is no demand for their degrees in the workforce. Who benefits? Again campus employment restricted, universities not only fill their pointless curriculum but flesh out their adjunct/TA/post doc/RA work with legislatively captive dirt cheap labor.

      The only benefit to the US is to industry profits, and universities have become industrialized. It concentrates wealth, breaking the flow of wealth through the economy. Economic engines don’t run without the circulation of its oil, money. Hoarded in profits, and billions outbound in remittances.

      You are proposing that somehow, perpetual increase in immigration is of benefit “to the US”.
      Specifically, as to your second question, massive transfer of productive resources from other countries, if massive “productive resources” were beneficial to a country, India and China would be through the roof in productivity, yes? And we know that is not the case. And we know productivity is declining in the US.
      Absolutely throughout US history immigration has been used to suppress wages. I’m stunned that historians and economists alike appear to have no knowledge of that and it makes me question their education in their fields.

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      • Americans spend their pay into the US economy, many immigrants remit their pay back home, further breaking the flow of trade through the economy and reducing economic activity. Good for the other country, not so good for the US.

        IMHO all new immigrants should have to PROVE they are actually creating jobs since the US only has 160 million jobs and if the million+ who come in annually don’t create new jobs, then they obviously either have to take them from someone else or else go on welfare, both of which harm the economy and natives.

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        • >> many immigrants remit their pay back home, further breaking the flow of trade through the economy and reducing economic activity. Good for the other country, not so good for the US

          I recollect have read an article on two on remittances by non-immigrants, as they are on a lifelong non-immigrant status (applies mostly to indians/chinese and philipinos) that live in the US, but i am yet to find the same on “immigrants”/LPRs/Citizens remitting back to their country of birth. Appreciate if someone can share any research/articles on this subject.

          >> all new immigrants should have to PROVE they are actually creating jobs since the US only has 160 million jobs and if the million+ who come in annually don’t create new jobs

          Someone posted few days ago on this blog that many Indians who come here on ‘Employment based’/’High skilled’ visas start motels etc soon after they get their LPRs.

          Secondly, the current wait periods for, say, India born to get their LPRs spans ‘many’ years… They would essentially die before they can actually ‘prove’ that they can create anything..

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    • Because:

      1) Many of them are foreign industrial spies stealing trade secrets.

      2) Most of them remit their pay out of USA instead of spending or saving it here.

      3) Many of them set up consultancies used to train foreign workers and then ship the jobs and industries back to their home countries, which damages the US economy and harms US workers and the tax base.

      We need to employ our OWN people, we need to keep our trade secrets in the hands of our OWN people. We need to keep our cash and wealth in the hands of our OWN people – and not transfer it all out of our country to someone else’s.

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  8. So to sum up; there is a large faction of foreign individuals that are willing to work hard, go to grad school, get jobs, pay taxes and obey the law just for a chance to live in this country. Could somebody explain to me how this is a bad thing? If this is not the “right way” to immigrate then I fail to see what is? Historically most Europeans just “showed up” at Ellis Island with no money or prospects. Are we seriously complaining about this?

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    • My father indeed showed up at Ellis Island with no money or prospects, thank you very much.

      Please answer the point I made to the other reader who said, “What’s wrong with bringing in engineers etc.?” I said, H-1B is being used by employers as a way to avoid hiring older Americans, who are more expensive. I have data on these things, but even more important, I have personally observed a number of instances in which Silicon Valley employers hired my foreign students but did not even give a phone interview to some older Americans I know who were equally or better qualified than the foreign students. My question to you: Do you think this is proper?

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      • And has been noted, illegal under Title 8 if it “adversely affects wages or working conditions of Americans similarly employed” (i.e. in the same industry).

        My great grandfather also showed up at Ellis Island from Europe broke, but he spent 30 years of his life building his own business, and remained poor, as did my grandfather also. Neither of them came to USA, set up consultancies, and then moved US company jobs back to European countries. Nor did either take existing $100K jobs from natives who worked 20 years to earn them. Nor did either of them remit vast sums of $ back to Europe which would have meant it would not have been spent or saved into the US economy.

        Compare that to “immigrants” today: $100K job the instant they step off the plane, built and created by someone else, over decades of work, replacing or displacing existing natives in such jobs, and remitting vast sums of $ back out of the US, which harms the economy both in terms of capital flight, and in terms of reducing economic activity within the US. Not to mention the cases of industrial theft.

        I think we need to realize not all immigrants of today have the same motives as in decades or centuries past.

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        • Many of my immigrant friends share your sentiments in the last paragraph.

          People have always come here to make money, as my dad’s family did and people do today. There is the feeling among some people that immigrants today are less interested in being Americans. I personally have not observed that; most immigrants I know do want to become part of American society.

          I read today that China will be instituting a policy under which foreign students studying in China must undergo some cultural sensitivity training upon arrival. Assuming that is not a euphemism for political indoctrination/warnings, I think it’s a good thing. I’ve advocated that immigrants to the U.S. be required to undergo some instruction on U.S. culture too.

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          • Agreed. But since 71% of H1Bs go to Indians, and since we know many India Incs only hire vast majority of Indians, it could be useful in proving that EEOC laws are being violated.

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        • >> illegal under Title 8 if it “adversely affects wages or working conditions of Americans similarly employed” (i.e. in the same industry).

          A *simple* 2 line proclamation would suffice to ban (oops ‘suspend’) *all* alphabet soup visas from *all* countries using 8 US Code 1182 (f):

          “(f) Suspension of entry or imposition of restrictions by President
          Whenever the President finds that the entry of any aliens or of any class of aliens into the United States would be detrimental to the interests of the United States, he may by proclamation, and for such period as he shall deem necessary, suspend the entry of all aliens or any class of aliens as immigrants or nonimmigrants, or impose on the entry of aliens any restrictions he may deem to be appropriate.”

          Atleast the current ‘ban’ is being contested since it’s focused on a few countries. A ‘blanket’ suspension would force the congress to do *something*.

          (As much as I’d like this “suspension” to just be confined to Indians/Chinese, the current EO on travel ban being contested in courts makes me think that we should have the ‘same’ treatment for everyone — It should be about America and Americans and not about any other country, after all) ….

          oh well…

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      • No, I don’t think this is proper. But this article is not about H1-B! It’s about foreign students and how they (we) are using graduate programs as a pathway to becoming American. The tone of this article and the comments suggest that this is somehow objectionable and deceitful.

        Many of your foreign grad students have indeed come to realize their American dream, build a better life for themselves in this land of opportunity. Please tell me, how this their quest for a better life is any different from that of your father?

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        • The article absolutely is about H-1B. The point is that the employers prefer to hire the H-1Bs because they are younger (i.e. cheaper) and more exploitable than Americans.

          As to whether the foreign students’ desire for a better life is different from that of my father, the answer of course is that it is the same. I don’t know why you are asking this; it is obvious.

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  9. Indranil Banerjee,

    Ellis Island is romanticized. Most Ellis Island immigrants were not treated nicely, skilled or not, most joined a labor force (along with Americans) with hard industrial conditions, no governmental safety net, and many who came to the United States left eventually because they realized their culture would be forced to adjust to American culture and social conditions or be rejected. With violence. And yes, many stayed and became Americans and the country benefited. More than economically.

    I feel modern immigrants of the professional class are very annoyed about having to maneuver through the various government bureaucracies. And yep, those government bureaucracies sound very dysfunctional. Needing to spend a lot of money on immigration lawyers is stupid. I too want that done away with and it will never be a problem I’ll face.

    But I do get this vibe – that many modern immigrants feel that they understand the immigrant experience from earlier times, oddly enough, without having actually studied any American history.

    This is pure ignorance in my view. And pretty insulting to Americans who have studied their own county’s history.

    My feeling – and I’m not an immigrant – is historically this is literally the easiest time in hundreds of years of American history to be an immigrant – regardless of legal or not — socially or economically.

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    • “historically this is literally the easiest time in hundreds of years of American history to be an immigrant” –
      speaking as a “would be” immigrant waiting in line for a Green Card for 6 years, (after having lived, studied and worked in the US for 8) I beg to differ.

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      • I disagree. You did not have one of your little sisters die in steerage on the boat from Europe to Ellis Island and another be denied entry to join her mother only to die in the hospital there after the voyage as my grandmother’s sisters did. Then there were the ones who boarded a ship in the 1600s to travel into the unknown; their descendents walked from VA to NC to TN to TX and were Texans before it joined the Union.

        The only immigrants coming close to what the immigrants of 100 years plus ago experienced are those walking across the borders after riding “The Beast”. These are the people who have no legal way to enter.

        You are taking a 12-16 hour plane ride to a good job not working in the mines, factories and fields. You are not having to worry about having food to eat the first year you are in the US.

        They chose to come just as you do. Quit whining and count your blessings. You are one of the most privileged groups of immigrants in history.

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  10. Any year on a tech job generally outweighs the MS degree, assuming you are actually producing. Most HR recruiters go for the degree because they can’t assess the experience of the applicants. HR recruiting needs a huge overhaul especially in govt hiring.

    Like

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