Correcting the Corrector

Prominent libertarian writer Stephen Moore recently wrote an op-ed lavishing praise on the H-1B work visa program, “…arguably the most successful [immigration program] for the U.S. economy has been the H-1B program.” A strong statement even for a libertarian, reminiscent of physicist Michio Kaku’s calling H-1B “our secret weapon” for US world economic leadership. Now  LA Times writer Mike Hiltzik is taking Moore to task for “parading his ignorance” on H-1B, a program Hiltzik calls “a cynical sham.” No voices of moderation among Messrs. Moore, Kaku and Hiltzik!

Sadly, though, Hiltzik too has his facts wrong. His statement,

…visa holders can work in the U.S. for three years, with the goal of obtaining permanent residency and, ultimately, citizenship.

is way, way off base, not even on the ball field. H-1B is a temporary work visa, good for three years and renewable for another three. It is separate from the employer-sponsored green card program. It is common for a sponsor of an H-1B to also sponsor the worker for a green card, but they are separate programs, and sponsorship for one does not imply sponsorship for the other. And, note that even if there is an application for a green card, this comes from the employer, not the worker.

This is not splitting hairs. In the green card case, the worker is in essence tied to the employer, whereas if the worker is just an H-1B, she has much more mobility and thus less chance to be abused.

Moore said, “There is little evidence that these foreign workers displace Americans from their jobs,” to which Hiltzik retorts that on the contrary, there have been some celebrated cases (Disney, SCE etc.). Yes, but Moore’s general statement is correct; in fact there is widespread displacement (direct and indirect), but hard evidence is limited.

Hiltzik says the NFAP study finding a big jobs multiplier effect from hiring H-1Bs was invalid because it wrongly attributed cause-and-effect, when actually  “tech companies were adding jobs at the same time they were hiring H-1B workers,” i.e. both stemmed from a boom tech economy. Fine, but Madeleine Zavodny’s study showing each H-1B hire produces 2.62 jobs used more sophisticated statistical methods, which she claimed did show cause-and-effect. Her study had tons of other problems, but still Hiltzik has not done his homework. (He’s written a number of articles on H-1B over the years.)

Of course, regular readers of this blog will immediately spot my biggest objection to his column, the “Intels Good, Infosyses Bad” syndrome, a view under which the Indian outsourcing firms are the main abusers of H-1B, an incorrect and dangerous view. Granted, he doesn’t let the Intels off the hook completely, but mostly so (“The H-1B program continues to be an outsourcer’s dream”). To me, that error tops any of Moore’s.

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The Old (Age 35) American Software Developer

A friend called my attention to an article, “The Plight of the Graying Tech Worker,” by Prof. Bill Kerr of HSB. Most economists writing on a controversial topic will be rather (or very) strongly on one side or the other. On H-1B, Bill is pro-, as evidenced by a string of published papers, as well as his recent book, The Gift of Global Talent: How Migration Shapes Business, Economy & Society (Stanford University Press, 2018).

I first “met” Bill in 2009, when he and I were virtual guests on Lou Dobbs’ TV show, following the publication of Bill’s first paper on H-1B. I disagreed with its finding (which in any case has been widely misinterpreted to mean that the H-1B program increases US innovation), but was rather harsh in saying so. This I regretted later when I met him in person, as I found him to be a warm, friendly guy of high intellect and a genuine desire to get at the truth. I’ve continued to appreciate these qualities ever since.

Yet I tend to find fault with some his analyses, as in this 2013 post to my old e-newsletter. (Be sure to see Bill’s rejoinder.) One point I made in particular is worth including here (“KKL” refers to the three authors — Bill, his wife, and a collaborator, Bill Lincoln; by the way, this 2013 working paper appears to be Reference 8 in the current article):

Congress and the press will take KKL’s research to have implications specific to the hiring of engineers on temporary work visas–even though KKL’s work does NOT do this. People in Congress and the press are not going to read the disclaimers in the paper.

Even more importantly, KKL omit what should be an obvious analysis. They spend 46 pages measuring what they claim to be the effect of hiring immigrants is on a firm’s subsequent hiring. The obvious question is then what the effect of hiring NATIVES is, compared to hiring immigrants. If, for example, the native impact on hiring is greater than the immigrant one, then policymakers should be reluctant to expand foreign skilled immigration in any long-term sense; indeed, in such a scenario, H-1B would bring net harm to the economy.

I asked Bill about this omission back in May. He replied, “The main rationale for pursuing the immigrant hiring calculation [but not] the native hiring is that the former is more proximate to a policy action and its consequences than the latter is. Given that the ‘creates 4 jobs’ statements are at the center of the policy debate, they will tend to get the most attention from economists.”

Proximate, schmoximate, I strongly disagree. The policy debate focuses in large part on the industry lobbyists’ claim that the foreign workers are especially innovative, “the best and the brightest,” and thus have special job-creating powers. It would thus be natural, indeed imperative, to compare the job-creating powers of the immigrants to the job-creating powers of the natives. Arguably, KKL’s failure to do so suggests an unconscious bias on their part.

The friend who brought this new article of Bill’s to my attention presented it as a “man bites dog” piece, quite out of character. Yet its theme, the adverse impact of the H-1B program on older US techies, is not new to Bill at all. Indeed, his 2013 paper cited above found such an impact.

I highly appreciate that previous work, and the current article, as I have over the years maintained that age is a, arguably THE, core issue in H-1B. Older workers cost more than younger ones, not only in wages but also in health care and other benefits. Since most H-1Bs (and almost all H-1Bs in the tech field) are young, basic economic principles apply — employers will prefer the young H-1B to the older (read 35+) US citizen or permanent resident.

So, good for Bill for addressing the issue, one that most critics of H-1B (writers, think tank people, researchers) studiously avoid.

Nice. But sorry, I don’t like Bill’s current article. First, he states that he is focusing on the adverse impact of H-1B on older Americans because young ones are not affected much. In fact, employers have strong incentives to prefer young H-1Bs over young Americans. One major benefit of hiring an H-1B is that she is a de facto indentured servant, trapped with her employer, who then need not worry that she might jump ship for another firm, a huge advantage. And Bill’s assurance that wage underpayment is not an issue, due to the H-1B statute’s prevailing wage requirement, is not correct; the legally-defined prevailing wage is typically well below the wage the H-1B would command on the open market.

Second, I am disappointed by Bill’s two main recommendations: (a) the government should dole out the H-1B visas in order of offered salary, and (b) the harm to older US workers should be ameliorated by retraining programs funded by H-1B user fees.

To be sure, I myself support (a). However, the subtext of Bill’s support seems to be the “Intels Good, Infosyses Bad” idea that I have criticized so much — the thinking that the Indian outsourcing firms are the main abusers of the program, while the US mainstream firms use it responsibly. Bill is missing the boat here, and I believe it colors his other analyses.

Bill’s advocacy of (b) is puzzling. Doesn’t he know that this has been tried before (in the 1998 H-1B bill) resulting in failure? Even more importantly, it was pointed out — beforehand by me and in retrospect by Sun Microsystems — that such a program CANNOT work. An older programmer, say, who had been passed over by employers because he was too expensive will STILL be too expensive (and even older) after retraining. Actually, most software developers do have modern skill sets; they tend to be the types who love tinkering and learning new technologies. But employers won’t touch them, due to their perceived salary requirements, not to mention their health care costs and so on.

Again, all this is old news. See for example my comments in another post to my old e-newsletter, in which I said regarding Microsoft,

More subtle, but equally important, is what the article says MS will do in expanded MS operations in Vancouver: “This month [MS] announced plans to more than double its roughly 300-employee office in Vancouver, where video games have been the focus. There, Microsoft will hire and train 400 software developers from around the world to work on mobile and cloud projects.” What? “Hire AND TRAIN”? Bear with me while I explain.

The training issue–a phony one, for reasons I’ll discuss shortly–has been central to the H-1B debate ever since the industry’s first push to expand H-1B in 1998. The legislation that was enacted included an H-1B user fee, so that employers would fund training that would allow Americans to do these jobs in the future. I stated at the time that this would never work, because (1) good programmers can learn new skills on the job, very quickly, without formal training, and (2) employers wouldn’t hire them even with their newly acquired skills, as the employers wanted cheap foreign workers.

As Bill’s book title makes clear, he does indeed view the “Intels” as good economic citizens, and views America’s world tech dominance as due in substantial part to H-1Bs hired as foreign students from US universities. But no, sadly the “Intels” tend NOT to be  good economic citizens. I’ve written, for instance, that Google openly told a group of us researchers that it prefers to hire foreign workers due to their “trapped” nature, and need I mention the name “Facebook”? And though I’ve always strongly supported hiring “the best and the brightest” from around the world, the vast majority of foreign-student H-1Bs hired by the Intels are ordinary people doing ordinary work. Without understanding these key points, it’s impossible to formulate good solutions to the age problem, even if it were politically feasible to do so.

 

Chickens Coming Home to Roost on Staple-a-Green-Card

I’ve written for years now that the political winds would increasingly blow in the direction of enactment of some form of Staple-a-Green Card policy, under which STEM foreign students in the US would receive automatic green cards. I’ve made these points:

  • The consequences of Staple would be disastrous. It would flood an already-overfull labor market with large numbers of workers of mediocre quality. (I do strongly support bringing in the Best and the Brightest foreign students. More on this below.)
  • Critics of the H-1B work visa who accept and even promote the notion that foreign students are the “good” H-1Bs are contributing to the pro-Staple “winds.”
  • Pres. Trump has consistently backed that notion of foreign students as the “good H-1Bs.”

In that light, this thread of tweets (read the entire thread) on a White House meeting with industry allies is remarkable, to say the least. 

It comes on the heels of yet another “study” from NFAP, an industry advocacy firm. It’s authored by Madeleine Zavodny, who has written a number of advocacy pieces purporting to show that foreign tech workers are good for the American economy and even for US tech workers. This one is on OPT, an H-1B workaround, and of course Zavodny finds it brings no harm to American techies.

Zavodny has admitted in the past to changing her analysis in order to suit the industry people who funded it. This is a grievous academic transgression, yet major news outlets such as the San Jose Mercury News report it as impartial research. Her analysis on OPT is riddled with major errors, and does not even attempt to address statistical issues such as sample size. I’ll post more details later.

Some prominent critics of the H-1B program, such as the engineering organization IEEE-USA and some immigration reform groups like the Center for Immigration Studies, justify their “good H-1Bs, bad H-1Bs” stance — read, “The Indian outsourcing firms are the main bad actors” — by saying legislation to clip those firms’ wings will at least cut down on a major part of the abuse. But as I’ve explained before, it will NOT. Even if those firms are not granted loopholes (a huge “if”), they will simply hire the Staple students.

I’ve been saying for years we’re heading for the edge of a cliff. Is it imminent? I don’t know. But that White House meeting should be a concern for everyone, including US tech workers (native and immigrant), including US students (native and immigrant), including the academic research community, and including those who want the US to maintain its technological lead. (I’m not referring to spying in that last, but if you want to throw in “including the security of the nation,” be my guest.)

As mentioned, I strongly support facilitating the hiring of, and granting of green cards to, foreign students of extraordinary talent. I’ve called for broadening existing programs for such workers (O-1 work visa, EB-1 and NIW green cards).

DOL OFCCP Against Oracle

Back during the Obama administration, the Dept. of Labor’s Office of Federal Contract Compliance Programs starting bring suits against some major tech industry players regarding various discrimination charges, in many cases related to the H-1B work visa. Remarkably, OFCCP has been able to continue this work under the Trump administration. Their latest move is even more remarkable. Some excerpts from the article:

…[OFCCP now accuses Oracle of] favoring recruitment of Indian workers in the country on visas so it could suppress their wages…

The company “preferred Asian recent college and university graduates to all others,” the OFCCP charges. To back that claim it offered this statistic: of some 500 hires of recent grads between 2013 and 2016, 90 percent were Asian.

The population of recent grads Oracle would be targeting based on their relevant studies and the type of available positions is 65 percent Asian, by contrast, the complaint states.

Making matters worse, for several years Oracle didn’t hire a single black or Hispanic recent graduate.

The preference for hiring Asians is even more pronounced among those working in the country on Visas.

That includes a program within Oracle that looks to hire a set number of graduates every year from Indian academic institutions, the complaint states.

Because those people are dependent on Oracle to work in the U.S., their wages are easier to suppress.

DOL’s view of H-1B has oscillated heavily over the years, from one administration to another. In fact, Bill Clinton’s first Sec. of Labor Robert Reich himself has oscillated over time in this regard. To see OFCCP’s actions has been both surprising and gratifying.

You can read my previous posts on OFCCP (I have been slightly involved) here and here. By contrast, EEOC has been profoundly disappointing, due I believe to severe bias in its director.

To Get Rich Is Glorious

My post title here is of course Deng Xiaoping’s slogan celebrating the opening of China’s economy to private enterprise. It is also an allusion to the tendency of prominent academic economists to line their pockets by serving as (typically secret) “hired guns” for controversial entities, be they corporations, trade groups or nations. Alan Tonelson’s latest blog post on Columbia University’s Jeffrey Sachs’ troubling defense of China in the Huawei case combines both of these aspects.

As Alan points out, there is nothing inherently wrong with an academic writing in support of some entity. But as I have noted, if the academic in question is accepting funding from that entity, serious ethical issues arise:

If one takes money from a given source and wants to continue receiving the funds, one cannot do work antagonizing the source. It’s that simple.

And the corollary is that, if the entity asks the academic to write on something specific, it’s difficult if not impossible to decline.

Well, then, was Sachs accepting money from Huawei/China? As Alan reports, the Washington Post‘s Isaac Stone Fish asked Sachs point blank on Twitter,

Hey : you just published an article praising Huawei and criticizing the U.S. government…Last month, you wrote the forward to a Huawei report Did Huawei pay you for that? If so, don’t you think you should disclose that?

Alan notes that Sachs then blocked Fish from following Sachs’ Twitter feed. But there’s more.

Sachs did reply that he had received no Huawei funding. But then I wrote,

Just to be clear: Huawei has not funded Columbia or your organization?

He did not respond.

Then, after having taken so much flak on Twitter, Sachs actually closed his own Twitter account, quite a move in view of the fact that he reportedly had 250,000 followers.

In spite of China’s many recent troubling actions, there are things that economists might praise. The question is whether the praise is given in full sincerity.

US Media Missing the BIG News

Last Wednesday at 10 pm, I decided to check the TV news. Here’s what I found: The Chinese-language channel KTSF led with the latest on Canada’s arrest of Huawei’s CFO, with a US request to extradite; the local English station KTVU (Fox, but liberal) led with the Bush funeral; and CNN…well of course, it was Mueller, Mueller, Mueller as usual.

Arguably, only the Chinese program got it right. US-China relations are spiraling out of control. China is threatening” severe consequences” for Canada’s cooperation with the US, taken to mean arrest of Canadians in China, and of course denounced the US for “illegally” requesting Canada to extradite Meng Wanzhou, the Huawei CFO. The US State Dept. had previously issued a Travel Advisory for Americans considering going to China. And who would dare go even if the advisory is lifted, not only with this event but many other troubling actions by China in the last couple of years, e.g. the disappearance of the Interpol chief, a Chinese national?  At great risk is the already-shaky US-China relationship, with potential major economic, political and even military adverse impacts for both parties. China is fiercely demanding Meng’s release.

The evidence revealed so far is scant, as it is just for the bail hearing. Meng is accused of directing the financial aspects of Huawei’s secretly violating its agreement with the US not to sell sensitive equipment to Iran, and in so doing, engaging in bank fraud.

In addition to the possible global implications, the case is certainly making for good high drama. Meng owns two homes in Vancouver, one valued in the  millions and the other in the tens of millions. One was the subject of a mysterious home invasion attempt over the weekend. Meng has been married two or three times. Her half-sister is a Harvard debutante. Meng has at various times been in possession of about seven passports.

Meanwhile, tragedy: Stanford professor Zhang Shoucheng committed suicide last week. He was originally from China and had close ties to the Chinese government and, it is reported on the Chinese-language news in the US, ties to Meng as well. He co-directed China’s Thousand Talents Program, itself the object of controversy. According to the South China Morning Post, a respected English-language paper in Hong Kong,

Zhang’s contribution to the quantum field earned the recognition of not only his peers but also of the Chinese government. In 2009, Zhang was hand-picked to be part of an expert panel for the state-run “Thousand Talents” programme that aims to attract overseas scientists. US Pentagon and intelligence officials have branded the decade-old recruitment drive as a platform to “facilitate the legal and illicit transfer of US technology, intellectual property and know-how” to China, according to reports earlier this year.

Zhang was head of the VC fund Danhua, a firm that had been mentioned negatively in a 301 trade practices report involving connections to China. Many rumors are going through the Chinese-immigrant community that he was murdered rather than having taken his own life.

Chinese President Xi Jinping is shrilly demanding Meng’s release, all charges dropped. This seems uncharacteristic of him, so what is the driver? According to controversial Chinese dissident Guo Wengui, the real impetus is coming from the family of former Pres. Jiang Zemin, who supposedly have huge financial interests in Huawei and related firms. It could also be that China is afraid that even more damning information will emerge if Meng is brought to trial in the US.

And of course, there is national pride involved, as Huawei is viewed as the epitome of China’s emergence as a tech power. That pride has also been seriously wounded of late, with a similar case involving the Chinese firm ZTE, in which among other things was a major wakeup call to China, exposing just how dependent Chinese tech is on the US.

These things have been brewing for years, of course. Huawei has been accused of stealing technology long ago from Cisco and Nortel, contributing to the demise of the latter. And recently, fearing backdoor spy channels in Huawei equipment, the US and several other nations have banned the use of that equipment in military use.

But now things are coming to a head, suddenly and dramatically.

It is also bringing out the old and sensitive question of loyalties of immigrants to their adopted countries. Vancouver has a very large Chinese-immigrant community, and there have been protestors from that community, again demanding that the charges against Meng be dropped and she allowed to go free. They say there is “no evidence” against Meng, though again they would have no way of knowing this. Some Chinese in the audience at the bail hearing have been conspicuous in that a patriot song is played as the ringtone when their phones have incoming calls. A UBC professor who is originally from China, in an interview with a local (English language) TV news program, flatly stated that the sole motivation of the US in the Meng case is to stifle economic competition from China, hardly the impartial, nuanced analysis one would hope from an academic.

The Mueller probe won’t have big effects, I believe. It won’t contain any smoking guns about Trump, and will be milked by House Democrats just for publicity. But the Meng case could indeed have serious, long-lasting global impact. At least TIME has noticed, with an article titled “It’s Hard to Overstate How Big a Deal the Huawei CFO’s Arrest Could Be.”  Maybe CNN et al ought to devote more than a minor mention of the case.

 

 

Making Things Worse

Sorry, everyone, but this will be another “Told ya so!” post, commentary on yesterday’s unanimous jury decision in favor of Tata Consultancy Services, finding that TCS does not discriminate against US workers.

I’ve long warned activist critics of the H-1B work visa program that they were shooting themselves in the foot with their obsession with the IT outsourcing firms such as TCS — what I term the “Intels Good, Infosyses Bad” syndrome (IGIB). Under IGIB, it is presumed that the outsourcing, “rent a programmer” firms like Infosys and Tata are the main abusers of H-1B, while the “Intels,” firms that hire H-1Bs from the foreign student populations at US universities, use the program responsibly.

I’ve explained numerous times that, not only is the IGIB premise incorrect — the Intels are highly culpable too — but also the activists’ emphasis on IGIB will be a political disaster. In the end, Congress will enact some mild sanctions on the Infosyses while rewarding the Intels, with an expanded H-1B program and a “staple a green card to their diplomas” act. In short, the activists’ IGIB strategy/mentality will make things worse, with MORE foreign workers than before.

Well, with the TCS verdict, now it’s happened, though in a slightly different manner. The jury unanimously sided with Tata, setting a (moral if not legal) precedent. Sorry, H-1B activists, but you have indeed made things worse for yourselves.

I’ve long held that cases like this one do not have a firm legal basis. More on that shortly, but first, how could the plaintiffs’ legal counsel possibly have chosen Oakland as a venue? This is one of the most liberal areas in the nation — large minority population, and very liberal whites — and as a liberal myself I say, good for them. But apparently the jury saw this in solidarity-with-People-of-Color, resist-Trump terms.

As reported by Bloomberg,

The trial casts a spotlight on work-visa programs that companies use to bring overseas workers to the U.S., a practice President Donald Trump has criticized in his protectionist push. TCS, Asia’s largest outsourcer, and rival Indian information technology staffing firms Infosys Ltd.and Wipro Ltd. have all been squeezed by the Trump administration…

Mumbai-based TCS denies any unlawful bias in its U.S. operations and says in court filings that the Caucasian American leading the lawsuit was removed from one of its projects and ultimately terminated over “performance concerns.”

Ah yes, Trump is working to protect lazy, incompetent whites against competition from Immigrants of Color. This would resonate with any upstanding progressive Oaklander. How could a juror show her face around Lake Merritt or the Temescal district after voting for the plaintiffs and thus failing to support minorities and quelle horreur, siding with Trump?

Suing TCS in Oakland? What was lead plaintiffs’ counsel Daniel Kotchen thinking?

Actually, I had warned Kotchen (he and I have served on a couple of panels together) that I’ve long believed that discrimination on the basis of national origin is the wrong grounds for a lawsuit, going way back to the Guy Santiglia case in 2002. Yes, there is discrimination involved, but NOT on the basis of national origin. Instead, it’s discrimination on the basis of immigration status (US citizens and green card holders vs. work visas)  He found my comment interesting but has proceeded anyway.

The H-1B-critic activists, notably including the immigration reform organizations, have viewed the Infosyses as the low-hanging fruit, the most obvious abusers. Now with this verdict endorsing TCS’ hiring practices, a JURY verdict mind you, the activists have shot themselves in the foot.