Date: Mon, 30 Aug 2010 22:02:30 -0700 From: Norm Matloff To: Norm Matloff Subject: the forgotten central issue in H-1B visas--age To: H-1B/L-1/offshoring e-newsletter In spite of all the interest in the issue of foreign tech workers in the U.S.--both among affected parties such as engineers and programmers, and analysts such as journalists, academics or policymakers--very few understand that the issue is fundamentally about AGE. Young workers earn lower wages (and cost less in benefits) than older ones, so employers use the H-1B and other programs to greatly expand the pool of young workers to hire from. In my article for the California Labor & Employment Law Review (see http://heather.cs.ucdavis.edu/CLER.pdf) I showed the stark age/wage difference in the computer field: group 25th percentile median 90th percentile new grads $45,000 $50,664 $61,5000 all workers $65,070 $82,120 $120,410 As a result, in the last 20 years, a rampant age problem has arisen in this profession. "Old" in this field now means 35, not 55. Though there are certainly counterexamples, programmers typically find that their employability decreases markedly 10-15 years after they finish school. Again, the problem is that they have become too expensive. The two press items enclosed below, a column by Vivek Wadhwa and a WSJ piece by Pui-Wing Tam, show the age story well--even though the second does not explicitly mention age. The title of Vivek's column says it all-- "Silicon Valley's Dark Secret: It's All About Age"--and what he writes is correct (save for one detail). But the material in the Journal piece is actually the more important of the two, as it vividly (though unwittingly) shows how employers manage to avoid the older workers without running into age discrimination suits. By the way, Vivek is correct about Microsoft's hiring mainly young people, but he lets them off the hook too easily, saying they hire mainly the young because the positions they have are mainly for the young. That's backwards; they have positions mainly for the young because they WANT to hire mainly young workers. Connection to H-1B What about the connection of age to H-1B? There are of course other reasons why employers hire so many H-1Bs, not just the age issue. For instance, academic and government studies have shown that young H-1Bs have lower salaries than young U.S. citizens and permanent residents. (This is a complex issue, with a number of faulty studies on both sides. If you are are recently-added subscriber to this e-newsletter, contact me for the details.) In addition, the de facto indentured servant nature of the H-1Bs is a big factor with many employers too. Furthermore there is a lot of ethnic favoritism as well, with Indians hiring Indians, Russians hiring Russians and so on. But the age issue is huge, and in my long observation of this issue, I've found it to be the prime reason for the popularity of the visa among employers. It is no coincidence that the DOL data show that most H-1Bs are young. Mind you, neither of the two articles below mentions H-1B. But Vivek has mentioned the relation between the H-1B and age issues before, and the connection is obvious and simple: When employers run out of young Americans to hire (meaning those employers who don't already favor hiring the foreigners to begin with), they hire the young H-1Bs--in lieu of older Americans. One point Vivek misses is that those short programming careers he describes did not used to be the norm. In the old pre-H-1B days, it was common for programmers to work in the field for their entire careers. But now with large numbers of young H-1Bs available, the employers tend to shun the older workers. If you wish to look at this statistically, see my University of Michigan article (http://heather.cs.ucdavis.edu/MichJLawReform.pdf). There I show that civil engineers have much longer careers than do programmers, even though the two fields require the same talents, such as attention to detail, strong analytical skills and so on, and rise to management at similar rates. See the article for details, but the point is the reason for the difference in career longevity between the two professions is that rather few employers of civil engineers hire H-1Bs, whereas it is standard in the computer field. An interesting surprise reaction to Vivek's piece on ageism came from Greg Siskind (http://blogs.ilw.com/gregsiskind/, Aug. 28, 2010), a prominent immigration attorney. Lo and behold, even Siskind concedes the connection between H-1B and the age issue. Commenting on Vivek's age column, Siskind says: # Vivek Wadhwa writes a piece that while not about immigration, # certainly is relevant to the debate regarding skilled worker # immigration. He discusses the ruthless beast that is the high tech # world when it comes to how older engineers are treated and why the # industry simultaneously faces a shortage and a surplus of talent. # Regardless of whether immigrants are in the picture or not, the # questions regarding how best to address the career problems faced by # older tech workers are serious and difficult. When we can get our # hands around this issue, we might be able to start making decisions # on skilled worker immigration that meet the country's long term # needs. The Skills Issue One of the industry lobbyists' favorite lines is that the reason older tech workers have trouble in the job market is that they have let their skill sets become out of date. The lobbyists know that this line sells well with the public, because the public has this image of the computer field being one of blindingly-fast change. But the fact is that the issue of changing skill sets is mainly used as a pretext to avoid hiring the older workers. Let's take a look at the validity, or lack of same, of the skills issue. Vivek correctly says employers prefer to hire a new grad with no skills than an older worker with out-of-date skills, but he's stating only half the problem here. The other half is that employers also prefer the younger worker with current skills to the older workers with current skills. In both cases, it's a simple matter of money. Vivek has stated this for instance in a radio interview (http://www.wnyc.org/shows/bl/episodes/2009/05/01/segments/130690): #...even if the [older] $120,000 programmer gets the right skills, # companies would rather hire the younger workers. That's really what's # behind this. See my University of Michigan article for the long version of why it is NOT a skills issue, but here are two quick "sound bites" to give you an idea of the situation: * There have been a number of documented cases in which mainstream U.S. firms such as the Bank of America have laid off older Americans, replacing them with young H-1Bs or L-1s--and forcing the Americans to train their younger replacements. Clearly it's the foreign workers who lack the skills, not the Americans. * Even the ITAA industry lobbying group's report quoted an employer, Avon, as saying that it doesn't pay to train a programmer in new skill, as the person then may jump ship for higher pay at another employer. Clearly, Avon just doesn't want to pay the higher wage. The WSJ article is a great mini-case study of how skills fads--and "shortages"--develop in Silicon Valley. The article reports that just a couple of years ago, those with skills in Flash video technology "had thin job prospects," and yet now there suddenly is a "shortage" of these workers. Among other things, this refutes the industry lobbyists' other favorite line, that the "shortages" are due to the universities' not graduating enough students in tech fields. Instead, the industry is creating its own "shortages," by setting inappropriate hiring criteria, either out of HR action (see below) or deliberately in order to justify a green card sponsorship. Let me elaborate on these points. Vivek says, "Talk to those working at any Silicon Valley company, and they will tell you how hard it is to find qualified talent." Unfortunately, this is like the parable of four blind boys touching an elephant; Vivek doesn't realize that the people he talks to aren't seeing the whole elephant. The engineers and hiring managers are at the mercy of HR. The latter receives tons of CVs via the Web or mail, and needs weeder-outers. They then toss out anyone who's not an exact or near-exact fit to the "required" skill set. The more CVs they receive, the more HR adds job requirements, to keep the number of applicants they work with down to a manageable size. And most importantly, they put aside the older workers, typically even those who are an exact/near-exact fit. As a result, the hiring managers don't receive these CVs from HR, and mistakenly conclude that there were no qualified applicants. Also, as mentioned, if the company is sponsoring a worker for a green card, they'll overdefine skills requirements to insure that only the sponsoree is "qualified" for the position. Vivek is correct in saying that new skills can be picked up in a month. I've said it can be done in a couple of weeks, in the sense that the programmer will be productive in that skill within that time; he/she will learn more facets of the skill as the need arises. Most programmers work in teams, on only one little slice of an overall project, and thus don't need to immediately know every nook and cranny of a programming language or whatever the skill involves. I've got data on this in my University of Michigan article. Employer Hsu in Ms. Tam's piece below states the time needed for learning Flash is six months. I doubt that, but in any case what's interesting is that his figure is for people who don't know Flash at all, whereas elsewhere in the article it states that there are plenty of Flash programmers around, but they just don't know the power management aspect. The latter can't be that deep, and should be learnable within a week. So where is the alleged "shortage," and why is Mr. Hsu hiring people who don't know Flash at all, when he could hire those with Flash experience and allow them to pick up the power management aspects on the job? The answer likely is the one given by Vivek; Hsu simply doesn't want to pay so much. Even Vivek's figure of $150,000 shows up in the WSJ piece. I don't know whether Hsu is hiring H-1Bs, but I'll bet dollars to doughnuts that he's hiring young. Norm Silicon Valley's Dark Secret: It's All About Age Vivek Wadhwa An interesting paradox in the technology world is that there is both a shortage and a surplus of engineers in the United States. Talk to those working at any Silicon Valley company, and they will tell you how hard it is to find qualified talent. But listen to the heart-wrenching stories of unemployed engineers, and you will realize that there are tens of thousands who can't get jobs. What gives? The harsh reality is that in the tech world, companies prefer to hire young, inexperienced, engineers. And engineering is an "up or out" profession: you either move up the ladder or face unemployment. This is not something that tech executives publicly admit, because they fear being sued for age discrimination, but everyone knows that this is the way things are. Why would any company hire a computer programmer with the wrong skills for a salary of $150,000, when it can hire a fresh graduate--with no skills--for around $60,000? Even if it spends a month training the younger worker, the company is still far ahead. The young understand new technologies better than the old do, and are like a clean slate: they will rapidly learn the latest coding methods and techniques, and they don't carry any "technology baggage". As well, the older worker likely has a family and needs to leave by 6 pm, whereas the young can pull all-nighters. At least, that's how the thinking goes in the tech industry. In their book Chips and Change, Professors Clair Brown and Greg Linden, of the University of California, Berkeley, analyzed Bureau of Labor Statistics and census data for the semiconductor industry and found that salaries increased dramatically for engineers during their 30s but that these increases slowed after the age of 40. At greater ages still, salaries started dropping, dependent on the level of education. After 50, the mean salary of engineers was lower--by 17% for those with bachelors degrees, and by 14% for those with masters degrees and PhDs--than the salary of those younger than 50. Curiously, Brown and Linden also found that salary increases for holders of postgraduate degrees were always lower than increases for those with bachelor's degrees (in other words, even PhD degrees didn't provide long-term job protection). It's not much different in the software/internet industry. If anything, things in these fast-moving industries are much worse for older workers. For tech startups, it usually boils down to cost: most can't even afford to pay $60K salaries, so they look for motivated, young software developers who will accept minimum wage in return for equity ownership and the opportunity to build their careers. Companies like Zoho can afford to pay market salaries, but find huge advantage in hiring young workers. In 2006, Zoho's CEO, Sridhar Vembu, initiated an experiment to hire 17-year-olds directly out of high school. He found that within two years, the work performance of these recruits was indistinguishable from that of their college-educated peers. Some ended up becoming superstar software developers. Companies such as Microsoft say that they try to maintain a balance but that it isn't easy. An old friend, David Vaskevitch, who was Senior Vice-President and Chief Technical Officer at Microsoft, told me in 2008 that he believes that younger workers have more energy and are sometimes more creative. But there is a lot they don't know and can't know until they gain experience. So Microsoft aggressively recruits for fresh talent on university campuses and for highly experienced engineers from within the industry, one not at the expense of the other. David acknowledged that the vast majority of new Microsoft employees are young, but said that this is so because older workers tend to go into more senior jobs and there are fewer of those positions to begin with. It was all about hiring the best and brightest, he said; age and nationality are not important. So whether we like it or not, it's a tough industry. I know that some techies will take offense at what I have to say, but here is my advice to those whose hair is beginning to grey: 1. Move up the ladder into management, architecture, or design; switch to sales or product management; or jump ship and become an entrepreneur (old guys have a huge advantage in the startup world). Build skills that are more valuable to your company, and take positions that can't be filled by entry-level workers. 2. If you're going to stay in programming, realize that the deck is stacked against you. Even though you may be highly experienced and wise, employers aren't willing or able to pay an experienced worker twice or thrice what an entry-level worker earns. Save as much as you can when you're in your 30s and 40s and be prepared to earn less as you gain experience. 3. Keep your skills current. This means keeping up-to-date with the latest trends in computing, programming techniques, and languages, and adapting to change. To be writing code for a living when you're 50, you will need to be a rock-star developer and be able to out-code the new kids on the block. My advice to managers is to consider the value of the experience that the techies bring. With age frequently come wisdom and abilities to follow direction, mentor, and lead. Older workers also tend to be more pragmatic and loyal, and to know the importance of being team players. And ego and arrogance usually fade with age. During my tech days, I hired several programmers who were over 50. They were the steadiest performers and stayed with me through the most difficult times. Finally, I don't know of any university, including the ones I teach at, that tells its engineering students what to expect in the long term or how to manage their technical careers. Perhaps it is time to let students know what lies ahead. Editor's note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at the School of Information at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. You can follow him on Twitter at @vwadhwa and find his research at www.wadhwa.com . AUGUST 26, 2010 Flash Back: Demand Up in Engineering Specialty By PUI-WING TAM (Excerpted only, due to "personal use only" restriction.--NM) ... Several years ago, Flash engineers--who work with Adobe Systems Inc.'s Flash technology, which is used on websites to add interactivity, animation and video--had relatively thin prospects, say headhunters and start-up executives. Many Flash engineers worked project by project but not many technology start-ups hired full-time Flash engineers at the time. That has changed. Top full-time Flash engineers can now command more than $150,000 a year in salary, says Stuart Liroff, a headhunter at GreeneSearch recruiting firm. That compares with $50,000 to $80,000 a year three years ago, several entrepreneurs say. ... At the same time, the supply of such engineers remains low. It is particularly difficult to find Flash engineers who have both an artistic and computer-science background, say executives. While there are many Flash designers with experience in artistic elements, few are trained in areas such as power and battery management, they note. ... To get around the lack of Flash engineers, Mr. Hsu says Mochi Media tries to hire engineers who know programming languages such as Java and then train them to use Flash. "It's a six-month time investment, but most can pick up Flash very quickly," he says. ... Write to Pui-Wing Tam at pui-wing.tam@wsj.com