In Reforming H-1B, Don’t Forget OPT

OPT (“Optional Practical Training”) is part of the F-1 student visa program, allowing foreign students to work in the U.S. for a certain period of time, ostensibly to get practical internship experience before returning to their home country. Last year the Obama administration extended OPT to a 3-year period for STEM students. More on the details below, but first here is the central point of my post this evening.

I was startled today to read the following in the Chronicle of Higher Education (“From China to America. Then What?”,  January 29, 2017):

Last year there were more than 52,000 Chinese graduates on OPT alone. One in every six student-visa holders from China is, in fact, working, not studying, in the United States.

52,000! And 16% of the Chinese students working rather than studying. These numbers are not new, or are at least deducible from published figures, but seeing them described in these terms really took me aback.

And according to the pro-F-1 organization IIE, the overall number is 147,000. Since the number of workers holding the H-1B visa is on the order of several hundred thousand, it is clear that OPT is a major issue.

I’ve emphasized that H-1B is largely about age — employers hire young H-1Bs in lieu of older (35+) U.S. citizens and permanent residents. Since OPT is for new graduates, who almost always are young, OPT has a big impact on older American workers.

The impact is also on the American new graduates. A number of people have pointed out that OPT workers, as “students,” are not subject to FICA tax, thus making foreign students somewhat more attractive to employers as hires than domestic students. But there is a more subtle, and much more harmful impact of OPT as well: A foreign student can use OPT time for an internship, say during a summer, BEFORE she graduates, as Ms. Wu is doing in the Chronicle article. Since internships are hard to get in STEM (the article uses the word coveted), the competition between foreign and domestic students for internships, enabled by OPT, is a very serious issue.

Note carefully that OPT did not arise out of legislation. Instead, the executive branch, many years ago, devised it on their own, declaring a post-graduation internship to be part of being a student. The original duration was one year, but was increased to 29 months by George W. Bush and then 36 months by Obama. As Prof. Ron Hira has pointed out, the idea that someone graduating with a Master’s degree then needs a 3-year “internship” is preposterous.

Not only is the extra-legislative provenance of this policy suspect, but also the original intent has been completely ignored. Supposedly the idea of OPT was to give foreign students practical experience to take back to the impoverished Third World. Yet last year even the DHS admitted that OPT is now used mainly as a holding pattern by employers of F-1 graduates who are waiting to “win” the H-1B lottery.

In other words, OPT is basically a farce — a 147,000-worker farce.

The Chronicle article profile of Wendy Wu, and a type of case I’ve seen many times: The student drifts around in the U.S. from one school to another (3 in Wu’s case), or from one academic field to another, buying time until something comes through that allows her to stay. My aim here is to criticize policy rather than Ms. Wu, and some here know that I am partial to the Cantonese :-). Good for her for her persistence and grit, and I am sure she is a competent worker.

But her LinkedIn profile indicates that she is typical of the phrase I use for the foreign tech workers — ordinary people doing ordinary work, from ordinary schools. The vast majority are not The Best and the Brightest.

Some may object, pointing out that Wu does have an internship at Google, a firm with high standards. But it’s just an internship, not necessarily leading to a permanent job, and frankly, often coming largely from having the right connections. And as I have stated before, Google gives unwarranted preference to hiring foreign workers.

I will take Wu individually to task on one point. She is quoted in the article as follows:

She had come to the country legally, paid her taxes, and followed its laws. It frustrated her to be labeled a job-taker, an interloper. In fact, a recent lawsuit, filed by a group of high-tech workers, accuses foreign graduates in the optional practical training program of snatching opportunities that would have gone to Americans.

Wendy found such anger misplaced. Thousands of technology-sector positions, she says, are going unfilled, and workers from overseas are helping meet the demand. (Whether or not there is a talent drought in the high-tech work force has, unsurprisingly, become embroiled in political debate.)

Besides, she wasn’t looking for a leg up. When, at the end of her first year of graduate school, she won a coveted Google internship, she knew she had earned it, through perseverance, focus, and hard work.

“This is a competitive market. Nothing’s handed to you,” she says. “Stop arguing about where I am. Look at how I got there.”

It is this sense of entitlement that has often bothered me. That 147,000 figure vividly shows that foreign graduates working on OPT do have an adverse impact on new American graduates (not to mention the impact on the older Americans). And of course her claim that there is a tech labor shortage is simply false, as has been shown statistically and otherwise.

The Trump administration is currently working on reform of the alphabet soup of work visas. Hopefully they won’t forget OPT. At a minimum, the Bush/Obama extensions of OPT need to be rolled back.

Identity Politics and Foreign Students from China

UC San Diego has invited the Dalai Lama to be its commencement speaker this year, enraging the Chinese Students and Scholars Association at the campus. CSSA is vigorously protesting, raising some interesting issues.

One tack taken by CSSA is rather novel, invoking “diversity” issues. Having the DL speak would be anti-diversity, they argue. CSSA’s Chinese-language statement seems to imply that UCSD’s action has even offended Chinese-Americans, not just Chinese foreign students. So far, though, invoking Diversity has not been the showstopper CSSA expected it to be.

Particularly interesting is this aspect:

In a statement it posted on WeChat, the Chinese Students and Scholars Association at UCSD said it contacted the Chinese consulate in Los Angeles for guidance and engaged in negotiations with “relevant departments” at the university.

It is interesting in these days of Mike Flynn and related controversies, with the Trump administration accused by some in terms tantamount to treason, that a foreign government — one that all major presidential candidates exhibited some hostility to in 2016 — has close ties with the largest (by far) group of foreign students in the U.S.

Mind you, for the Chinese foreign students, the Chinese consulate is THEIR consulate, representing THEIR government. They have every right to “seek guidance” from the consulate.

But on the other hand, the vast majority of students from China do stay in the U.S. after graduation and become Americans. This has always been a point of ambiguity, ever since the first wave of Chinese students came to the U.S. in the 1980s.

For example, after the violent protests and quashing of same in Beijing in 1989, the Chinese students demanded that Congress give all Chinese foreign students in the U.S. green cards (though, curiously, not political asylum), on the grounds that the Chinese government was spying on them. Yet a few years later, green cards in hand, the Chinese protest a report on CBS News that claimed China was sending a lot of spies to the U.S., many of them students.

The other irony, of course, is that the Chinese students speak of the DL as “wanting to split our country” as if such a desire were evil, at the same time that in California, where these students are living, there is an active Calexit drive aimed at exactly such a split. Not to mention the fact that in the UK, such drives were on the official ballot, first for Scottish independence and then for Brexit.

UCSD may have underestimated the pressure the Chinese government can bring to bear on this issue. Granted, it didn’t work with Obama, but at a university things can be very different, especially with the large number of students and faculty at UCSD who are originally from China. The university’s chancellor will likely stick to his guns, but this will be interesting to watch.

Hatch Talking Trump into Going Lightly on Tightening Up on H-1B?

Thanks to an alert reader of this blog for bringing to my attention the article, “Hatch Doesn’t Expect Trump to Weaken H-1B Visa Program,” in Morning Consult. Some excerpts:

Hatch believes his friendship with Trump — he was one of the first senators, along with Sessions, to endorse his candidacy — means he can convince the president that the data on H-1B visas shows how the program benefits American workers and the U.S. economy.

“You count on me getting that across to him,” Hatch said during Tuesday’s phone interview. “I think I have already, but I’m going to continue until there’s no question he understands me.”

A Hatch aide said last week’s meeting was one of several since the election, and Hatch said there have been other occasions where he presented Trump with data showing how the H-1B visa program promotes industry growth and creates American jobs by filling the high-tech “skills gap.” He pointed to a 2012 study estimating a shortage of more than 220,000 workers in the science, tech, engineering and math fields by 2018…

“While some have expressed some reservations about the impact of high-skilled immigration on American jobs, I believe we can and will be able to make a convincing case for reform,” said Hatch. “The data is on our side.”

Well of course the data is on their side — they paid for it. That study they are referring to is funded by a pro-H-1B advocacy group. I’m told the group pays researchers $50,000 to write a study favorable to the group.

Immigration Lawyer Concedes That the Intels Underpay Their Foreign Workers

Yesterday an NPR piece featured an interview of Bay Area immigration lawyer Ann Cun. Her tone was refreshingly mild, and she made one big concession:

(host) SIEGEL: One criticism of the H-1B visa program – it’s a criticism against guest worker programs – is that they limit the visa holder to working for one employer. So the employee has no bargaining power over pay or promotions, unlike an American who would be free to go work for someone else. Is that a fair criticism?

CUN: I would say initially not necessarily. When you’re in a very competitive market and you’re negotiating with a particular employer, you have the upper hand to negotiate a compensation package that is consistent with the industry and consistent with your peers. Now, on the other hand, if you’re tied to one employer long term for X number of years and you’re relying on that employer to continue to sponsor you for a visa, I could see over a long term period that power of negotiating can diminish over time.

As I pointed out in a recent post, even at the time of hire, the foreign workers have less negotiating power than do U.S. citizens and permanent residents, because the work visa and possible green card are of huge value to them. Indeed, even a pro-H-1B person quoted by the San Francisco Chronicle article I discussed in my post said a foreign worker might be willing to take $25,000 less in salary in exchange for green card sponsorship.

So Cun is being naive here in saying that starting salaries will be equal for equally-qualified Americans and foreigners. But at least she admits that, once hired, the foreign worker’s negotiating power rapidly goes away.

Unfortunately, most of the report has the “Intels Good, Infosyses Bad” theme that I have been saying is so destructive, and that issue matters here in terms of mobility issue Cun brings up. The fact is that immobility is worse under the Intels.

If the employer is simply sponsoring the worker for the H-1B work visa and not a green card, the worker is fairly mobile. He will not be subject to the H-1B lottery or cap if he moves, and the bureaucracy involved is minimal.

But if the worker is also being sponsored by the employer for a green card, the picture changes dramatically. He now would have to begin the green card process all over again if he were to switch employers. Though he may be able to retain his priority date, he still would have to go through labor certification and so on again.  Even more important, there would be lots of uncertainty involved. What if the new employer reneges on his promise to sponsor for a green card, or drags his feet? What if the new labor certification hits a snag? What if the new employer is a startup, with funding in hand for two years but merely hope for what happens afterward?

The Infosyses almost never sponsor their workers for green cards. (See Ron Hira’s work if you need numbers.) Unfortunately, some people use that as an argument supporting the “Intels Good, Infosyses Bad” point of view — the Intels are claimed to use H-1B responsibly, because they sponsor for green cards. But it is exactly the opposite — since the Intels sponsor for green cards, and then use that sponsorship as a way to trap their foreign workers, the Intels’ abuse of the foreign worker system is actually WORSE than that of the Infosyses.

But, you might counter, isn’t it true that the Infosyses generally pay less than the Intels? True but irrelevant. The two sectors are hiring different classes of people. I’ve made a car analogy on this in the past: The Infosyses are buying Toyota Corollas while the Intels are buying Camrys — but both are getting a 20% discount on the classes of cars they are buying.

And once again, the wages are not even the major point. A much bigger issue is loss of job opportunities for Americans.  To suddenly lose one’s career at age 35 or 40 is far worse than having to take somewhat lower wages. Both the Intels and Infosyses are employing foreign workers in jobs that could be filled by Americans.

And in turn, one of the most dangerous aspects of the “Intels Good, Infosyses Bad” mythology is the emphasis on the word replace, as in “The Infosyses are using H-1Bs to replace Americans.” But the Intels hire H-1Bs instead of Americans. There is no difference.

The end of the NPR piece is priceless:

SIEGEL: And we should acknowledge NPR has a small number of H-1B workers. Last year it filed for three applications for H-1B visas with the U.S. Department of Labor.

Yes, H-1Bs are hired in the journalism field too. My favorite example was given to me by a reporter at the Dallas Morning News. Turns out the paper was hiring an H-1B as a “bilingual sports photographer.” No qualified Latino-Americans down there in Texas? Wonders never cease.

Mike Flynn

If I had to bet on it, I would guess that Mike Flynn is toast. Possibly crossing ethical/legal boundaries is one thing, but lying to VP Pence may well turn out to be a much bigger issue.

So I am not here to defend Flynn, but I wonder where the boundaries are for presidential candidates, presidents-elect and their surrogates. Didn’t Obama economic adviser Austan Goolsby tell the Canadian government during the 2008 election campaign not to worry about Obama’s public anti-trade statements? Obama later tried to smooth it over, but it looks like that did happen.

And what about Obama’s visit to Israel, and meeting with Netanyahu, in that same election campaign? What, you think Bibi and Barry just talked about hummus?

Again, the situation with Flynn is probably different for a number of reasons. But the press would have us believe that there is a solid firewall in such situations, and this seems quite misleading.

Diversity All Around Us

In my recent post, I noted the absurdity of Nexdoor CEO Nirav Tolia’s claiming to hire H-1Bs on “diversity” grounds:

The notion that Nextdoor, located in San Francisco, has to resort to hire foreign workers because the locals lack diversity is laughable.

I’d like to illustrate that with an incident that occurred in my office a few days later. There were four students in my office, all  undergraduates and all Americans except one. One was ethnic Chinese; one has Russian parents; one is a foreign grad student from India; and the fourth was your typical white girl.

Or so I thought. The “typical white girl’s” mom turned out to be Filipino. (Other than this student’s dark hair, her Asian background was invisible, so I was fooled.)

The Chinese guy speaks Cantonese, and he and I briefly chatted in that language. The Russian woman speaks Russian and has studied Korean and Japanese; the Anglo-Filipino girl understands Tagalog, and has picked up a fair amount of Chinese from her friends.

A few years ago, our then-chancellor (white) had the “brilliant” idea that all UC Davis students should be required to spend a quarter abroad, so as to broaden their cultural horizons. Well, he may have grown up in White Bread America but most UCD students did NOT.

Diversity is a great concept, and maybe we need more of it in some venues. (Social class is a separate issue.) But here in California we are ALREADY quite diverse. The misapplication of the Diversity Card, whether deliberate deception as in Tolia’s case or arising from just plain ignorance as in the chancellor’s case, is A Good Concept Gone Wild.

And by the way, when the chancellor presented his idea to a group of us campus committee chairs, an African-American professor in one of the social science departments said to the chancellor, in an irritated and not very polite tone, “I write and teach about the U.S. You are demeaning my work.” Indeed.

In discussions about H-1B, defenders of the program imply that those complaining are white males who don’t have a high degree of tolerance to those of other races. Again, this is playing the Race Card, whether deliberately or out of ignorance. Look at the picture of H-1B victims in the New York Times article the other day — how many white males do you see? Look in any undergraduate computer science classroom at a California university; how many white males do you see there? And no, the vast majority at the undergrad level are Americans, not foreign students.

And though Silicon Valley firms say they would love to hire more African-Americans, but they are nowhere to be found, this claim also sounds disingenuous. I’ve mentioned before the case of a young black man from a Top-5 university whom I know to be very talented. He actually was hired as an intern by Google when he was a student, but only for a management training program, not as an engineer.

As Senator Grassley once said, “No one should be fooled.”

Excellent Illustration of Economic Principles in the SF Chron

The industry lobbyists like to say that foreign tech workers can’t be underpaid, because employers bid against each other to be able to hire the person. But I’ve pointed out many times that this flies in the face of economic principles. One of those principles involves nonmonetary compensation.

An American worker might go with Company A instead of a higher-paying Company B if A has onsite childcare services, or if the commute to A is much shorter, and so on. In the case of the foreign worker, a huge source of nonmonetary compensation is green card sponsorship.

This is vividly illustrated in an article in today’s San Francisco Chronicle. There is more than a little irony here, in that the article is clearly intended to present pro-H-1B arguments. Various pro-H-1B individuals and organizations are cited, with no material at all on the other side. Or so the reporter thinks…

The reporter, apparently unwittingly, shows exactly how the foreign workers can be underpaid:

“If they have three offers, and one says, ‘We’ll process your green card in the first 90 days,’ they’ll pick that company 9 times out of 10,” [tech recruiter Jason] Stomel said.

“If people are in a reasonably good place and at a job they like and are feeling reasonably secure, why would they put themselves at risk by chasing an extra $25,000 in salary?” said Andy McLoughlin, a partner at SoftTech VC, a venture capital firm with offices in Palo Alto and San Francisco.

Many Americans (including former H-1Bs) who feel harmed by the H-1B program complain to me that the press is highly biased in favor of the industry. I usually reply that most journalists want to write the truth but are easily duped by the industry CEOs and their lobbyists. These days I am less convinced that most journalists are unbiased, but I must say that the industry is finding it easier and easier to fool them.

Case in point: This op-ed by GoDaddy CEO Blake Irving. Every argument he makes is based on analyses from “researchers” who take money from the industry. Sadly, Fortune never chose to question him about sources. And what he writes in his piece is what the lobbyists are telling Congress and the President.

And sure enough, Irving promotes the Intels Good, Infosyses bad approach to H-1B reform, a deception that would be disastrous to American workers if adopted. And keep in mind, President Trump has stated his support for that approach many times. On the other hand, he has asked AG Sessions to investigate the entire foreign tech worker issue, and hopefully he will make use of data and analysis that isn’t tainted like Irving’s are.