Dr. Norm Matloff On NBC Nightly News On H-1B, Then And Now
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March 04, 2011, 07:53 PM
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Dr. Norm Matloff writes:
Back in 1998, when Congress was considering (and ultimately approving) the first increase in the H-1B cap, the NBC Nightly News ran a very balanced piece on the issue. They interviewed both industry lobbyists and critics (including me). I`m enclosing it at the end of this message.

This evening, by contrast, the show ran a completely one-sided report, claiming that the long wait for green cards and the filling of the H-1B cap is making the U.S. lose brilliant entrepreneurs by the planeload. See Can America keep best, brightest immigrants? America`s visa restrictions lead to reverse brain drain Not a single critic was interviewed or even cited.

Vivek Wadhwa was interviewed in the piece, mourning what he considers to be a great talent loss. Unfortunately, he didn`t mention that he agrees with us critics that H-1B is about cheap labor. He has said, for instance,

"I was one of the first [CEOs] to use H-1B visas to bring workers to the U.S.A. Why did I do that? Because it was cheaper."

Vivek should be credited for being so frank. But he has used that frankness to illustrate his point that we need a fast-track green card program for the foreign workers. This would take them out of the de facto indentured servitude of the long green card process, thus removing the yoke that enables underpaying them and enables their displacing of the American workers.

The yoke Vivek speaks of is indeed real (though his conclusions on the remedy are incorrect, as I will explain shortly). I recently ran into a nice example of the yoke when I was reading The Big Short, by Michael Lewis, a fast-paced account of some traders who got rich by anticipating the financial crash of 2007-8. One of the traders, Michael Burry, decided (long before he started buying CDSs) that a firm named Avant! was greatly undervalued, so he bought its shares. Lewis writes (my emphasis added):

"...even if [Avant!`s] executives went to jail (as they did) and the fines were paid (as they were), Avant! would be worth a lot more than the market assumed. MOST OF ITS ENGINEERS WERE CHINESE NATIONALS ON WORK VISAS, AND THUS TRAPPED—there was no risk that anyone would quit before the lights were out."

Of course, anyone in the industry knows that H-1B/green card process traps the workers, resulting in their exploitation, but it was interesting to see that even Burry, at the time an MD doing his residency at Stanford, knew it. Yet Congress doesn`t have a clue.

So, Vivek`s pitch for fast-track green cards sounds plausible, but the problem is far more complicated than that—due to the age issue:

Vivek also agrees with me that there is rampant age discrimination in the tech industry; see for instance his recent essay here. But WHERE do the employers get all those young people to hire instead of the old (age 35+)? Answer: The H-1B program, in which the vast majority of tech workers are young.

The fast-track green card programs, often described by the sound bite, "Staple a green card to every U.S. diploma in STEM earned by a foreign student," would by definition have mainly the YOUNG as beneficiaries. In other words, fast-track green cards would not solve the core problem with H-1B at all.

Of course I`ve discussed this with Vivek, and though he doesn`t make the H-1B/age connection in his essay above, the person he quotes there, Prof. Clair Brown, has made the connection; see (reproduced by permission of Prof. Brown).

As I reported recently, I`ve seen indications that Congress wants to move on the fast-track green cards soon. Big mistake.

That old NBC report follows below. It`s funny to read it now. Cindy Yu, the college freshman who assumed in 1998 she`d have her pick of jobs by the time she graduated, presumably did graduate in 2002, right in the midst of the dot-com bust, and a time when over 100,000 H-1Bs were still hired. I wonder how she fared. Given that she was presented as evidence that the industry lobbyists were right in their shortage claims and "need" for H-1Bs, I wonder if she wound up as a victim of the H-1B program in the end.


And here`s Jonathan Alter`s piece, forwarded by Dr. Matloff:
Older workers: tired or wired? Age discrimination is a growing issue in high-tech industry By Jonathan Alter NBC NEWS CORRESPONDENT

Is there a labor shortage in the high-tech industry? The answer may affect the hiring practices of America`s most profitable companies. IN THIS BOOMING American economy, graduation season is a great time to be young and in the job market. In fact, you don`t even need to graduate to start a hot career.

"I won`t be looking for a job," says Cindy Yu, a college freshman. "They`ll be coming after me when I graduate. Ms. Yu is already working part-time in the high-tech corridor in Richardson, Texas, near Dallas, where dozens of telecommunications firms are eagerly recruiting students.

Jack Walters, of MCI (Ms. Yu`s employer) says the job market here in Richardson is hot. They could increase three-fold the engineers they`re graduating in the local area and the marketplace would pick them up.

Harris Miller, a computer industry lobbyist for the Information Technology Association of America (ITAA), says there is a dramatic shortage nationwide. "There are 350,000 openings for these high tech workers today," he says. "Every Sunday the newspaper is filled with dozens of columns of help wanted ads."

But appearances may be deceiving.

"Employers say they`re desperate but look at the facts," says Norman Matloff, who teaches computer science at the University of California Davis. "They hire only 2 percent of their applicants whether they`re a large company or a small one. Does that sound desperate to you? Of course not."

A new report from the Institute of Electrical and Electronic Engineers, the largest association of high tech engineers, says that "the pool of available talent should be sufficient for years to come."

So which is it? Shortage or surplus? High-tech types who have passed the ripe old age of 40 say it`s a matter of your age — and your wage.

Take Ted Sumner, 47, who took a voluntary buyout after 20 years. He had risen through the ranks at Motorola because he heard the market was hot.

"I started looking in October and, gee, this is June. The job market ain`t hot for me," he says. "And don`t let anyone tell you that it is."

Sumner has nine patents to his name and a family to support. He finally got his first job offer this week, for slightly less than he was making before.

How bad is the problem for people Sumner`s age?

"I don`t see people in Silicon Valley or route 128 in Boston walking the streets saying `will program for food because I`m an older worker,`" says the ITAA`s Miller.

Maybe not, but is it possible that the industry is pretending there is a labor shortage to keep wages down and profits up?

Bob Lerman, labor economist at American University, says it is possible. "Between 1988 and 1997, there was a rapid rise in employment but no rapid rise in salaries," says Lerman. "It means there was no shortage. They were able to hire enough people."

This means that computer programmers and systems analysts have surprisingly short careers. Indeed, within 20 years of graduation, more than four in five end up doing something else.

To fill the ranks, lobbyists for the high-tech industry are pushing Congress to nearly double the number of special visas already granted to a quarter of a million high-tech workers from overseas. Some of them have hard-to-find skills; but most don`t.

"The main thing is to depress the wages of the rest of the people," says Kumar Babu, who runs a software company. Babu is a naturalized citizen, but thinks the foreign nationals are mostly brought in because they work cheaply.

"Paying them $20,000 for two years is an extremely good deal for them," says Babu. "If you got somebody from here it would probably cost you $100,000 for two years."

Even in the computer age, labor is still the most important business ingredient: "If we don`t have enough skilled people it`s like running out of iron ore in the industrial revolution," says Miller.

"If they went to Congress and said, `there`s a shortage of cheap labor and here`s what we want` at least they`d be honest. But they`re not being honest," says Matloff. "They`re saying there`s a shortage of labor—period—in this field, and that`s wrong."

College kids see the high-tech boom and are majoring in computer sciences at double the rate of just three years ago. They represent another surge of workers with rosy prospects in high-tech America—at least for now.