March 27, 2007

National Data, By Edwin S. Rubenstein

Bill Gates And The Tech Skill Shortage Lie

Microsoft multibillionaire Bill Gates says American immigration policy is backward: Our doors are open to low skilled workers while we keep out talent that’s crucial to our competitiveness.

He’s half right: Most immigrants to these shores are unskilled and poorly educated. But his assertion that foreign scientific and engineering talent is needed for U.S. economic success simply isn’t supported by the facts.

We deconstruct an op-ed Gates recently published on the issue: U.S. needs better schools, foreign-born talent, by Bill Gates, Cincinnati Post, February 27, 2007.

GATES: "Demand for specialized technical skills has long exceeded the supply of native-born workers with advanced degrees, and scientists and engineers from other countries fill this gap

NATIONAL DATA: Oh yeah? Economics 101 teaches that when demand exceeds supply, prices will rise. If, as Gates suggests, there is a shortage of scientists and engineers, the salaries paid to them should be rising. But they aren’t. Starting salaries offered to computer science BAs in the Class of 2006 were 2.2 percent above the prior year’s, according to the National Association of Colleges and Employers. With inflation at 3.2 percent, this translates to a 1.2 percent reduction in real salaries. And 2006 was a fairly good year for these folks. Over the prior four years (2001-2005) the real starting salaries of computer science BAs fell a whopping 12.7 percent.

Newly minted MAs suffered a similar fate. Real starting salaries for computer science MAs fell 6.6 percent, while those of computer engineering MAs fell a whopping 13.7 percent, between 2001 and 2005.

GATES: "This issue has reached a crisis point. Computer science employment is growing by nearly 100,000 jobs annually. But at the same time studies show that there is a dramatic decline in the number of students graduating with computer science degrees."

NATIONAL DATA: Bunk. Employment in what the Bureau of Labor Statistics calls "Computer and Mathematical Occupations" increased by 37,400 positions, or by 1.3%, from May 2004 to May 2005. (Table 1.) These are the most recent employment figures posted on the BLS website. The 100,000/year figure cited by Gates is based on a BLS’s forecast [Daniel E. Hecker, "Occupational employment projections to 2014," Monthly Labor Review, November 2005. PDF] of computer-related job growth over the 2004 to 2014 period. It includes jobs in software publishing, data management, and other largely non-technical support fields. Employment of software engineers is projected to increase by 369,000 – or by 37,000 per year—over the decade 2004 to 2014.  Moreover, BLS expects computer related employment growth to slow "…as the software industry begins to mature and as routine work is routinely outsourced overseas."

Similarly, Gates’ claim of "a dramatic decline" in the number of students with computer science degrees doesn’t hold. Between 1999 and 2004 (the most recent year of available data) the number of U.S. citizens enrolled in graduate level computer science programs rose by 5,930, or by 25.1 percent. (Table 2.)  This reflects a remarkable commitment to computer science education, especially given that 1999 was the peak of the dot.com bubble.

We can only wonder at how many more U.S. citizens would have entered the field had starting salaries been allowed to rise. Alas, Mr. Gates and his H-1b-dependent cronies will never allow that to happen.

GATES: "This [H-1b] program has strong wage protections for U.S. workers: Like other companies, Microsoft pays H-1B and U.S. employees the same high levels."

NATIONAL DATA: LOL! The law requires employers to pay H-1b workers either the same wage as other employees with similar skills, or the "prevailing wage," whichever is higher. Sounds good, until you realize that: a). employers write H-1b job descriptions so as to insure that no native workers have comparable skills, and b) employers are allowed to conduct their own wage surveys in calculating the prevailing wage.

In his comprehensive analysis  of this scam, author John Miano writes: "Through this mechanism, employers paying low wages are simply re-affirming their own low standards, rather than providing a real comparison to industry or wider labor market standards."

Miano reports that prevailing wages as calculated by computer industry employers are about $22,000 less than the median computer industry wage estimates of the Bureau of Labor Statistics.

GATES: "Education has always been the gateway to a better life in this country, and our primary and secondary schools were long considered the world's best. But on an international math test in 2003, U.S. high school students ranked 24th out of 29 industrialized nations surveyed."

NATIONAL DATA: International rankings conceal as much as they reveal. Thus, while our average test scores are mediocre, the U.S. is a leader with respect to the gap between our best and worst performers.  Our best and brightest are equal to, or better than, those of other advanced countries. Our worst rank, well, among the worst anywhere.

For several reasons, immigrants exert more of a downward test score drag here than in other advanced countries. First, they account for a larger share of the population. Only seven of the 27 OECD countries have larger foreign born population shares than the U.S.

Second—and more importantly—our immigrants do poorly on standardized tests compared to the immigrant populations of other advanced countries. The U.S ranked 18^th out of the 20 high income countries surveyed by the International Adult Literacy Survey. Our immigrants scored 25 percent below the mean scores of the top two countries (Ireland and Denmark), and statistically outperformed their counterparts in only one country—France.

Immigration is not the only factor in US underperformance. The test score gap between U.S.-born whites and Asians and their Black and Hispanic counterparts range from 19 percent to 25. Take out immigrants along with native-born Blacks and Hispanics, and our international rankings soar—to second highest in verbal, and fifth highest in math, on a test administered in 17 high income countries.

Gates might respond that reorienting our immigration policy towards skilled labor would stop the immigrant impact on US average test scores (although he has never called for unskilled immigration to be curtailed). But this would also mean more competition, not merely for our own tech graduates, but especially for Black and Hispanic Americans trying painfully to make their way into the profession.

What might be good for Microsoft shareholders is not good for Americans—or America.