Just One Data Point, But…

Sorry for my lack of posting for a while. I have a ton of material to discuss, but just don’t have the time. But I couldn’t resist posting this one. Bear with me, as it takes some setting up.

Some of you know, or know of, Mark Regets, retired from the National Science Foundation. In his heyday, he was NSF’s biggest booster of the H-1B program (a high bar!). Well, both Mark and I recently got into using Twitter. I’ve had an account for years (@matloff), but didn’t really use it until an unrelated issue came up.

A week or so ago, journalist Noah Smith (@Noahpinion) and I were discussing PhD production in the US. Though Noah has been a big promoter of H-1B in his Bloomberg View column, the conversation wasn’t really about H-1B or foreign students. But I did state that we are overproducing PhDs, and in jest I wrote “Look at all those PhDs working as barristas!”

Well, Mark saw that, and said this a myth, the PhDs are mostly in decent jobs, etc. I replied that it was just a joke, but seriously many PhDs are UNDER-employed.

I am quite active in the R programming language, which is widely used in the data science field. The annual worldwide R conference, useR!, is currently in progress in Brisbane, Australia. One of the attendees tweeted, I believe seriously, the following:

BARISTA: What are you doing today?

ME: I’m at an conference .

B: Oh I love R, I just moved from SPSS and Stata!

(SPSS and Stata are two commercial products that are fast losing ground to the open source, better quality R.)

ūüôā

The Fate of STEM PhDs (and More)

My post this evening will mainly involve a new report from the National Science Foundation (NSF) on how well STEM PhDs are faring in the job market, both short- and long-term. ¬†But first I’ll bring in a couple of news items, and then connect them to the NSF, with the common theme of spinning almost any kind of news in a manner aimed at implanting in the American consciousness a positive view of expanded immigration policies.

So, first and foremost, congratulations to¬†Kira Kazantsev, Miss America 2015. ¬†She was my daughter’s classmate in high school and even junior high school, and though I’ve only seen her a few times, it has always been clear that she is headed for big things, and deservedly so.

But I was a little irritated to see the manner in which Ms. Kazantsev’s victory was announced by FWD.us: ¬†“Did you know? The new Miss America 2015 is a first generation American¬†and daughter of Russian immigrants.” ¬†What possible relevance can that have? ¬†It’s just PR indoctrination. ¬†I’ve been critical of FWD.us in this blog before for their manipulative ways, as many of you know. ¬†By the way, FWD.us is hiring interns for such work, which is troubling.

Maybe I need my own PR firm, which would make a proud announcement, “Did you know that H-1B critic Norm Matloff is the son of a Lithuanian immigrant?”

My second item before turning to the NSF report is this job-seekers advice column by Laszlo Bock, Senior VP of People Operations (read “HR”) at Google. ¬†(I learned of this from an alert reader, thanks.) ¬† The advice itself is good, but rather at odds with the Google/Bock stance on the labor market. ¬†Bock writes

The toughest part is that for 15 years, I’ve continued to see the same mistakes [in re’sume’s] made again and again by candidates, any one of which can eliminate them from consideration for a job. What’s most depressing is that I can tell from the resumes that many of these are good, even great, people. But in a fiercely competitive labor market, hiring managers don’t need to compromise on quality. All it takes is one small mistake and a manager will reject an otherwise interesting candidate.

Huh? ¬†Does Bock work for the same Google that insists there is a tech labor shortage, so severe that it must hire lots of H-1B visa workers? ¬†Indeed, Bock testified to Congress in support of expanding the H-1B program. ¬†In fact, in his testimony he talked about Google being in competition with other firms, here and abroad, for talented workers — a huge contrast to his statement above that even great workers are competing with each other for jobs, rather than employers competing to hire them.

Bock’s testimony, by the way, is laced with the term foreign-born in referring to the H-1Bs, rather than foreign. ¬†I explained in an earlier post, titled “When Did Foreign Students Become ‚ÄėInternational‚Äô?”, that even this is calculated PR; nothing is left to chance.

A couple of days ago, a prominent journalist for whom I have enormous respect said to me, “The H-1B program has strong mainstream support.” ¬†The above incidents show how such support is created by deft PR work and lots of money.

Which brings me, at last, to the new¬†NSF report. ¬†Keep in mind that the NSF has always been pro-H-1B, and it shows here: ¬†The press release headline reads, “Unemployment for Doctoral Scientists and Engineers Below National Average in 2013.” ¬†Wonderful! ¬†But definitely misleading, for a number of reasons. ¬†For example, those who bother to read the actual report will find that the NSF is counting someone as “employed” even if they are working just part-time.

Moreover, the comparison to the national average is inapropriate, since highly-educated people tend to be resourceful types, who will find some kind of job. ¬†But WHAT kind? ¬†The report actually answers that question, and there the picture is not so rosy. ¬†Let’s look at computer science (CS), both because it’s my field and because it is the field with the largest number of H-1Bs.

Begin with Table 2, which shows that nearly 7% of CS PhDs are either working part-time or are unemployed (but seeking employment). ¬†That’s a rather high rate, considering that the industry PR people say CS is such a red-hot field, and in light of the fact that the PR people often point to the high proportion of CS doctorates granted to foreign students by U.S. universities as a reason for hiring H-1Bs.

Things then get worse in the second half of the same table, where there is a breakdown by age. ¬†I’ve emphasized many times that one of the major reasons employers like the H-1B program so much is that enables them to hire young H-1Bs instead of older (age 35+) Americans, and sadly, the table shows employment for PhDs declines markedly with age.

Table 3 compares, among other things, Americans to workers with temporary work visas (H-1B, L-1, F-1/OPT, J-1 etc.).  Look at the dramatic difference!  The percentage who are either working part-time or are unemployed is over 12% for U.S. citizens and permanent residents, but under 4% for the work visa people.  (Most of the unemployed in the latter group are presumably F-1s.)  A large part of this discrepancy is likely due to the age effect, but it is compelling in any case.

Finally, go to another NSF report, in data titled “Table 32-2, Involuntarily Out-of-Field Rate among Doctoral Scientists¬†and Engineers, by Occupation: 2013,” ¬†There we see the remarkable statistic that 11.3% of CS PhDs are involuntarily working outside the field. ¬†Again, consider this in the context I described above — CS is supposed to be a hot seller’s market for employment, especially for PhDs.

The reality is that getting a doctorate in CS is overkill for most nonacademic jobs. ¬†An HP manager told me, “The ‘sweet spot’ is the master’s degree,” and an Intel recruiter remarked, “Intel is not very interested in PhDs.” ¬†Indeed, an HR person at Google told me that CS PhDs hired at Google typically get Software Engineer titles, just like bachelor’s-level workers. ¬†And as I report in my Migration Letters paper, a study commissioned by the Computing Research Association (a consortium of university CS Departments across North America) found that the job market for CS PhDs is tough and will continue to be so.

I’ve often mentioned that a 1989 internal NSF report forecast (and spoke approvingly) that an influx of foreign doctoral students would keep PhD wages down, making doctoral study unattractive to Americans. ¬†That is exactly what has occurred, as noted in the congressionally-commissioned NRC report in 2001, and put bluntly by¬†Cisco Systems Vice President for Research Douglas Comer: ¬†“…a Ph.D. in computer science is probably a financial loser in both the short and long terms, says Douglas Comer” ¬†(Science Careers, April 11, 2008).

If having a PhD doesn’t add much value in CS jobs, then why does the industry hire them? ¬† As noted, they actually don’t hire so many as they want the public to believe. ¬†But the answer also lies in another point I often make about the attractiveness of the H-1B visa to employers — the visa (coupled with sponsorship for a green card, typical in firms like Cisco, Google etc.) renders the worker IMMOBILE, a status of tremendous value, as the employer doesn’t want an engineer leaving for another firm in the midst of an urgent project. ¬†This is often pitched to employers by immigration attorneys as the advantage of hiring foreign students; the ad at the site http://hiref-1students.com/ should be required reading for anyone who wishes to understand the real dynamics of the H-1B visa and employer-sponsored green cards.

Once again, Senator Grassley’s comment about H-1B applies: ¬†“No one should be fooled.”

Gaming the College Admissions System, Big Data Style

The current issue of Bloomberg Businessweek has a provocative article titled, “How to Get Into an Ivy League College‚ÄĒGuaranteed.” ¬†No, this is not some commercial on late-night cable TV, paired with an ad for the slice it/dice it knife. ¬†Instead, it’s about entrepreneur Steven Ma, who runs a booming business on how to scientifically game the system for admission to the nation’s top universities.

A few posts ago, when I wrote about Joe Green, president of the ruthless lobbying group FWD.us, I confessed that I had already had a pre-existing bias against Green back when he was in high school. He and some classmates had been the subject of a CNN documentary on the pressure on kids applying to elite colleges. To me, the students came across as cynically desiring the prestige these schools bring, rather than a wish to experience the intellectual stimulation imparted by world-class leading professors.

I am certainly not implying that most students in prestigious universities are like the ones in the CNN show, and I think the admissions officers usually manage to select students who genuinely add something to the academic, social and cultural atmosphere of their institutions.  But clearly these gatekeepers are having to scramble, what with the likes of Mr. Ma on their heels.

Ma simply applies statistical principles (call it “machine learning” if you insist) to data on applicants and their success or failure in getting into the school of their desires. ¬†The more data he has, the more powerful his predictions are, so he’s constantly improving an already-strong track record.

Skeptical? ¬†Surely the admissions officers don’t make decisions in such a formulaic way, you say? ¬†Let me tell you a little story.

Way back when I was in grad school, I was employed as a Teaching Assistant, and part of my duties was to help grade exams. ¬†One day I was grading papers, and an undergraduate happened to be in the office I shared with a fellow grad student. ¬†The undergrad watched me grade a particular problem, say Problem 3, for a while, and after a few minutes he got to the point at which he could predict with remarkable accuracy what score I would give on Problem 3 to each student. ¬†I was quite taken aback to learn that I had been grading on the basis of some formula that even I myself had not been aware of. Thus, in reading the BW article now, it doesn’t surprise me to learn that admissions officers at these selective schools are also unconsciously using formulas, all while thinking that they are evaluating each applicant individually.

And maybe some of it IS conscious. ¬†I remember a friend of mine in the South San Francisco Bay Area telling¬†me about 10 years ago that word had been circulating among his social set that Stanford was placing a major premium on applicants who had done well in a debate team. ¬†Supposedly someone in the admissions office had leaked the word. ¬†I’ll never know whether that rumor was accurate or not, but based on the successes my friend cited of kids acting on that tip, it may well have been legit.

One can hardly blame Mr. Ma, who is simply applying his quantitative skills to ¬†a very lucrative market¬†in the Asian-immigrant community. ¬†There are many such companies, such as IvyMax, one that I pass by all the time in Fremont. (The Chinese name ť£õťĀĒ means “fly to achieve”.) ¬†Ma also is engaged in admirable philanthropic work. ¬†However, I do blame the Tiger Mom type among his clients, as I have written here before. ¬†Which brings me to one more story:

One Saturday in March a few years ago, when my daughter was a senior in high school, she participated in the local Science Olympiad. ¬†One event consisted of building a catapult. ¬†As I was watching, a pleasant fellow parent from another school ¬†struck up a conversation with me. ¬†“Which one is your child?”, he asked. ¬†I pointed to my daughter, and mentioned that she and her teammates were high school seniors. ¬†The other parent was dumbfounded that they were seniors, asking me “Then why are they here?” ¬†Joe Green would know immediately what that parent meant: ¬†It was March, way past the deadline for submitting admissions applications, so participating in that competition was “useless” from that parent’s point of view. To him, participating in the contest was simply a cynical act to build up a re’sume’ that college admissions committees would find attractive. ¬†But I answered simply, though probably with an edge in my voice, “They’re here because they love science,” ¬†The other parent recovered from his faux pas, and said, “Yes, that’s a good reason.”

This gaming of the system encourages cynicism among our young people, leading to even deeper cynicism when they become adults, Joe Green being a case in point. And I’m sure this article about Mr. Ma is causing much hand wringing among admissions officers; I don’t envy them.

Radio Shack Sales Clerk Wanted; Physics PhD Helpful

Yesterday’s Washington Post ran a piece titled, “Policymakers Hail STEM Education as a Strong Foundation, Pushing Innovation.” ¬†As I’ve warned before, reach for your Skeptic’s Hat whenever you see a politician, academic, industry-funded researcher,¬†industry lobbyist, immigration attorney and the like use the word innovation¬†in a STEM context.

This crowd¬†(discreetly referred to as “policymakers, advocates and executives” in the article, to be referred to as “policymakers and allies,” PAs, below) ¬†generally has some hidden agenda lurking—expanded work visa policy, increased funding for academia and so on.

My (skeptic’s) hat is off to the Post for warning the reader of trouble, right there in the lead sentence of the piece (though sadly, not in the headline). ¬†A synopsis of the article is this imaginary conversation:

PAs:  There is a natiuonal STEM labor shortage.

naysayer academics:  No, just look at the numbers, e.g. the flat wages and the percentage of STEM degree holders not working in STEM.

PAs:  Yes, but a knowledge of STEM is helpful in many non-STEM jobs.

One can’t argue with that second statement by the PAs. ¬†I know that my math background helps inform lots of things that I do in life that don’t seem outwardly mathematical. ¬†But the title of my post here, “Radio Shack Sales Clerk Wanted; Physics PhD Helpful,” is meant to convey the fact that the PAs’ image of STEM degree holders happily applying their background in some non-STEM profession, in an economy-boosting manner, can be highly misleading. ¬†On the contrary, the STEM-er in question may actually be quite unhappy in his/her job, and it may be an enormous waste of economic resources.

Actually, all of this is basically political rationalization on the PAs’ part. ¬†In order to explain, I’ll first give you a brief history of the shortage shouting. ¬†Later I’ll return to the issue of tragic waste of STEM resources.

The tech industry, led by the Information Technology Association of America (ITAA) began in 1997 by claiming a labor shortage in the computer science field, which they aimed to leverage an expansion by Congress of the yearly cap on new H-1B visas. ¬†They began the by-now time-honored theme of “the solution is more computer science education in the long term, but more H-1Bs for now.” ¬†The plan worked like a charm. President Clinton ordered the Department of Commerce to play ball with ITAA (I used to have a copy of an actual memo from him to this effect, now lost, sadly). ¬†Sure enough, DOC then produced its own report, very similar to the ITAA’s (though, interestingly, pretty much recanted by DOC a couple of years later). ¬†Congress then nearly doubled the H-1B cap in late 1998.

But the increase was temporary, and the industry wanted even more. ¬†They realized that a bigger umbrella would serve as a more powerful lobbying tool, so they broadened their claim to STEM in general. ¬†(I have the impression that it was the industry lobbyists who actually coined the STEM acronym, though I haven’t been able to confirm it.) ¬† They had no trouble selling this claim to Congress, the press, and the populace, playing the Education Card (citing international test scores in STEM, etc.).

The ploy worked for a number of years, until researchers Lindsay Lowell and Hal Salzman decided to check whether the STEM-shortage emperor was clothed; they found that he was not. ¬†None of the PAs’ claims really panned out. ¬†More recently, the authors (joined by Daniel Kuehn), did a more detailed study, again finding that shortage claim was not supported by the data, and that the H-1B program was adversely impacting wages. ¬†They found, for instance, the IT wages in 2013 were still at their 1998 level. ¬†Recently the Census Bureau added to such research by announcing that most STEM graduates are in non-STEM jobs.

And even the Microsoft-funded Tony Carnevale of Georgetown University found that the unemployment rates for new computer science and information systems grads was shockingly high (about 9% and 14%, respectively), given the tech industry’s shortage claims. ¬†As I’ve explained before, there is more to these rates than meets the eye—not everyone who has a CS degree is fit to be a programmer—but it certainly undercut the lobbyists’ claims.

What were the PAs to do? ¬†Their quest for an expanded H-1B visa program (and a fast-track green card program for foreign STEM grad students at U.S. schools) depended crucially on their claims of a STEM labor shortage. ¬†So they came up with the spin that we see in the Post article: ¬† a STEM education is helpful in non-STEM professions: ¬† In fact, if my memory is correct, it was Carnevale who first offered this explanation. The¬†Post piece quotes university president¬†Freeman Hrabowski, who supports H-1B expansion so strongly that he has discussed how to sell it to the American people, expressing the same view rationalizing the surplus of STEM degrees. ¬†(I’ve written elsewhere why universities are so anxious to attract foreign students. ¬†It’s much more than simply that many pay full freight.)

All this is of supreme importance. ¬†Those of you who listened to yesterday’s broadcast of the Marketplace radio show,¬†in which DOC chief Penny Pritzker said we have a STEM labor shortage, must have wondered how she could be so poorly-informed. Had the interviewer asked her how she reconciled her statement with the studies showing the contrary, I believe that at least part of her answer would have been that many STEM graduates work in non-STEM fields.

This theme was already common in government circles as of 2011, I found at an invitation-only research conference in 2011.  The attendees, about two dozen in number, included policymakers from relevant government agencies.  Many of these policymakers were high-level, key people.

The contrast was interesting: ¬†Roughly speaking, the academic researchers had one point of view, that of being skeptical of a STEM labor shortage, while the government policymakers generally took the opposite position, that either we had a shortage or if not, then having a surplus was beneficial anyway. ¬†I’d been researching the H-1B issue since 1993, and have been a political junkie since age 12, if not earlier. ¬†But even I was not prepared for the stark difference between the two groups. ¬†I was particularly struck by the comment of one of the attendees, who when challenged about his claim of a STEM shortage, frankly replied that he must implement what comes from “the top,” meaning the President.

(I urge you to read my report on the conference.  Some readers of this blog were present; if any of you saw things differently, please let me know, and I will post your comments here, anonymously.  I believe that my report is consistent with the official report.)

The attendees from government had already coined a new (somewhat Orwellian) term, diversion, for the STEM people in non-STEM jobs, and were trying to spin diversion as a good thing.  Quite a bit of the discussion was on this topic.

One government analyst, for instance,¬†pointed to molecular biology PhDs now working on Wall Street, covering the biotech industry for investment firms. ¬†The fact that this was a questionable return to the huge government and other investment in the education of these scientists didn’t bother him.

Another government researcher in attendance, a young woman not far out of her own engineering PhD work, claimed that many people with STEM PhDs really DON’T WANT to work in STEM. ¬†Though I have no doubt she was sincere about her own case—I got the impression that she had pursued a PhD largely due to parental pressure—I don’t think her claim is generally true. ¬†Most people don’t go through the huge time commitments, expense and opportunity costs of a PhD program unless they find their field to be captivating. ¬†I submit that most “diversion” is involuntary (and that most of the “diverted” don’t even have a Wall Street salary to ease their sorrows and frustration).

In short, the “diversion” concept, and the STEM-helps-you-help-Radio-Shack notion, are rationalizations, formed to excuse what the PAs want: ¬†expansion of the H-1B and green card programs, as we saw with Sec. Pritzker.

So there is indeed a human toll to having a STEM surplus, and as mentioned, a terrible waste of precious resources.

What Do You (Falsely) Take for Granted Regarding U.S. Outsourcing?

The loss of manufacturing from the U.S. costs American jobs but at least brings big cost savings to American consumers, right?  And anyway, the U.S. is too advanced an economy to do its own manufacturing, right?  Well, not so fast.  That first assumption is false in most cases, and the second is questionable.

What prompted me to devote this evening’s blog post to this topic is an article, “The Human Toll of Offshoring,” that ran in the New York Times on Labor Day. ¬†It in turn was triggered by a new book,¬†Factory Man: How One Furniture Maker Battled Offshoring, Stayed Local, and Helped Save an American Town, by Beth Macy, a longtime reporter for the Roanoke (VA) Times. ¬†An alert reader of this blog called my attention to the NYT article, though I had heard Macy interviewed on NPR a few weeks ago.

Sadly, even the NYT buys into myth that offshoring brings U.S. consumers big cost savings. ¬†Generally, this is not the case. ¬†The typical profit margin for manufactured goods is so small that the savings in labor costs accrued from offshoring make a big difference proportionally to the manufacturer, but the difference in consumer price is small, as the labor costs are a small portion of the overall cost.¬† More generally, labor cost savings don’t bring big reductions in retail price. ¬†For instance, my UC Davis colleague Phil Martin, an agricultural economist, once calculated that consumers save about a nickel per head of lettuce grown with unauthorized-immigrant labor. ¬†Negligible savings for the consumer, but the growers win big. ¬†Labor is a small part of retail price even in some service industries;¬†Card and Krueger, writing in support of raising the minimum wage, found that a 19% increase in labor costs led to only a 2% rise in fast-food prices.

Of course, the politicians’ and unions’ favorite boogey man in such discussions is China. ¬†Yet an investment analyst estimated that Chinese labor forms only 2-5% of the retail price of an iPhone. ¬†I’ve seen other similar analyses. ¬†A 2011 analysis by the Boston Consulting Group (BCG) stated that “…labor¬†accounts for a small portion of a product’s manufacturing¬†costs.” ¬†Since the NYT article is about the furniture industry, note that the profit margin in that industry is said to be 2%. ¬†If one combines this fact with the BCG statement, one sees that the savings to consumers is very small. ¬†Again, remember that it is the manufacturer who wins from offshoring, not the consumer.

Significantly, a BCG survey found that Americans are willing to pay considerable premiums for products made in the U.S.  In fact, the amount they are willing to pay extra actually exceeds the small savings they actually get from offshoring.  Apple is moving some of its Mac production back onshore, presumably at least in part from this consideration.  BCG claims that this is a coming trend, as does The Economist.

So, the economics professor cited in the NYT article (requoted from the Macy book, and endorsed by the NYT reporter) seems to be rather off base in his statement: ¬†“In reality, we shouldn‚Äôt be making bedroom furniture anymore in the United States. Shouldn‚Äôt we instead be trying to educate these workers‚Äô kids to get them into high-skilled jobs and away from what‚Äôs basically an archaic industry?‚ÄĚ ¬†Moreover, his apparent attitude that all Americans should get an education and pursue one of the professions is of course absurd on its face, and ¬†frankly, is amazingly naive. ¬†Should more Americans go into the science research field, for example? ¬†No, they can’t get jobs as it is, as a National Institutes of Health study found a couple of years ago.

Moreover, the NIH stated that foreign-worker programs were part of the problem.  Importation of foreign labor is just like offshoring, really; whether cheap labor is used abroad or brought to the U.S., the losers are U.S. citizen and permanent resident workers.  UC Berkeley economics professor Clair Brown and her coauthors have found that the H-1B work visa program negatively impacts American engineers, and the congressionally commissioned NRC report found that H-1B was adversely impacting IT wages.  (See references on NIH, Brown and the NRC in my Migration Letters paper.)

Apologists for offshoring, such as the NYT’s Tom Friedman, try to excuse all this not only by the old “the labor costs savings are passed on to the consumer” canard, but also by saying that the workers abroad will be enabled to afford American products, thus creating U.S. jobs. ¬†That is true to some extent, but the benefit is probably not as great as the loss. ¬†Friedman, for instance, has noted that software development work offshored to India is compensated by the fact that the Indian software “factories” use Carrier brand air conditioners. ¬†But the extra Carrier sales arising from this are probably not going to result in Carrier hiring more engineers; the engineering is largely a fixed cost. ¬†So, we are losing engineering jobs in this scenario but MAYBE gaining some manufacturing jobs (assuming those are not in India, which would be counter to Carrier’s best interests)–not a very good trade, is it?

Is the solution to place restrictions on globalization, in the form of imposing tariffs on goods and tightening policy on importing foreign labor? ¬†As I’ve emphasized before, those questions should be for the American people to decide–based on full information, not¬†on¬†misleading NYT articles.