Date: Wed, 9 May 2007 23:46:04 -0700 From: Norm Matloff To: Norm Matloff Subject: three articles in National Journal's Technology Daily To: H-1B/L-1/offshoring e-newsletter Many of you may not have heard of the National Journal. It is obscure to the general public, who generally don't like to fork out $1,885 per year to subscribe to a magazine, but it is influential in DC. (You may have seen their Stuart Taylor interviewed often as a "talking head" on legal affairs on TV.) Enclosed below are three articles that appeared this week. I must say that I was horrified when the reporter sent me the first article. She had seemed quite careful, actually doing fact-checking before she published the piece--a quaint practice these days--which I had been glad to see. Yet her lead said this: # Technology companies that think the immigration system severely # restricts them from employing smart, foreign-born individuals and many # groups that oppose boosting the number of skilled-worker permits agree # on one thing: The nation's elementary and secondary schools are failing # to produce enough homegrown mathematics and science whizzes. What? I wasn't aware of any groups opposing expansion of the H-1B program that say this. The notion of saying that we need H-1Bs because the schools are failing in math and science is a famous industry lobbyist talking point--NOT a line used by people on my side of the issue. Fortunately, the reporter's fact checking saved me from being egregiously misquoted in an influential publication. She had asked me to confirm that (a) I agree with the "we need H-1Bs to make up for bad schools" philosophy and (b) I agree that the problem with H-1B is lack of enforcement of the law. I corrected her on both points, and her quote of me below is correct. But I didn't realize that she would quote Mark Krikorian of the Center for Immigration Studies (CIS) as subscribing to philosophy (a) above. Technically, she didn't, as she correctly quoted his word "if." He was saying that (even) IF the schools were failing, H-1B would not be the right solution, as it would just give kids even less incentive to excel in math and science. Nevertheless, Mark's comment is juxtaposed with the lead sentence which claims that even H-1B critics think the schools aren't producing the science and math talent we need. This is really unfortunate, as many readers won't notice the "if." I must say I don't blame the reporter. Instead, I would point out that this incident shows just how slick the lobbyists--not only from industry, but also from academia (I've explained before why the education sector has a huge investment in H-1B) and of course from the American Immigration Lawyers Association--are at hoodwinking the press. As I've often pointed out, the lobbyists know that people will fall for anything if you couch it in terms of "America's failing schools." In any case, that set things up perfectly for Compete America's Hoffman to give the line the industry lobbyists have been using for years, that we need H-1Bs for the short term, and educational reform for the long term. And, you'll notice, the long term is the year 2019! The article says that proposed legislation would give certain foreign students green cards upon graduation. This is not true. There would still be a three-year period of de facto indentured servitude, similar to the H-1B case now, so it is not a fix. And as I've said, it would exacerbate the role that H-1B currently has in age discrimination. The dirty little secret of H-1B is that it allows employers to avoid hiring older (age 40, or even 35) and thus more expensive Americans, by hiring younger and thus cheaper foreign workers. The green card provision, by focusing on new graduates, who are young, makes the problem even worse. The article states, regarding a CIS study by John Miano showing H-1Bs working for wages well below the median American wage for the given occupation: # Tech companies dispute the analysis, saying that the numbers are # incomplete, outdated and cherry-picked. The companies maintain that they # are required by law to pay foreign and U.S. workers the same salaries. None of those claims in the first sentence is correct. As to the second sentence, that's where the loopholes come in. The law does appear to have such a requirement, but it actually does not. Even the 2003 report recognized this, pointing out that employers they surveyed admitted to hiring "H-1B workers in part because these workers would often accept lower salaries than similarly qualified U.S. workers; however, these employers said they never paid H-1B workers less than the required wage." So, the legally required wage is NOT the same as what Americans make. I've explained elsewhere what some of the major loopholes are, and there are many more. As usual, lobbyist Hoffman then tries to steer the conversation to enforcement, which as I said above is NOT the issue; LOOPHOLES are the issue. But the lobbyists want to distract attention from the loopholes, so they focus on enforcement. They know that this sells; the notion that the law itself is sound and we just have to track down the scofflaw firms is plausible. Absolutely wrong, but plausible, and thus very effective. No wonder the reporter thought, in her fact-checking e-mail message to me, that I agreed that it's an enforcement issue! The industry lobbyists had really set her up for that. Again, not her fault, given the complexity of the issue and the fine-honed skills of the PR people. I agree with IEEE-USA that the Durbin/Grassley bill is excellent (actually 10% of it is, the other 90% being a waste, devoted to enforcement). But as noted above, I disagree on the green card issue. The second article below reports on a show put on by the industry lobbyists. To the uninitiated, it looks just like an innocent presentation by a group concerned with education. But as I said, the PR people know that Pushing the Education Button is one of the most effective tools they have. And so back we are to the "failing schools" claim. What the press at that event didn't realize is that the speakers were a collection of "the usual suspects" used by the industry lobbyists. First and foremost there is Rep. Tom Davis. He has been one of the most strident people in Congress in pushing expansion of the H-1B program. He has stated explicitly that Congress should expand the H-1B program to please their (i.e. people in Congress') corporate "patrons," in spite of, for example, a Harris Poll that showed Americans are overwhelmingly opposed to expanding H-1B. He said (interestingly, in part to the same publication), "This [bill to expand H-1B] is not a popular bill with the public. It's popular with the CEOs...This is a very important issue for the high-tech executives who give the money." ("Committee To Address Bill Eliminating H-1B Cap," National Journal Technology Daily, May 5, 2000 and Lars-Erik Nelson, "Pols Are Going Overboard On Visa Program," New York Daily News, May 3, 2000.) Rep. Davis was chair of the Republican Congressional Campaign Committee. Now, what about Alan Merten? He is personally beholden to industry, as he sits on the boards of various high-tech firms. One of those firms, according to Dept. of Labor data, submitted an application to hire H-1Bs as Computer Engineers at a salary of only $30,000, Project Engineers at $37,000, and Programmer Analysts at $43,000, all ridiculously far below the market rates for these professions. He always toes the industry party line, so not surprisingly, Merten is a favorite of the industry lobbyists. He is often cited by them, and they often call on him for events like the one you attended today. He is one of "the usual suspects" at events like this. Merten was Chair of the congressionally-commissioned National Research Council report released in 2000, which was set up to assess whether there was a tech labor shortage, problems faced by age 40+ engineers, the state of the H-1B program and so on. Among other things, the commission found that H-1B was negatively impacting wage levels in the field (see page 187 of their report, "Building a Workforce for the Information Economy," National Academy of Sciences, 2001). Yet he told the Washington Times that the commission had found that there was no impact on wages (Washington Times, Nov. 4, 2005). I'm not saying he deliberately lied, necessarily, but at the least it's clear that he can be counted on to give the industry point of view, even if it contradicts his own commission's findings. In addition, as I've explained before, university presidents have huge incentives to support the industry on H-1B. At Stanford University, for instance, you can find recently-constructed buildings named after Bill Gates, Wm. Hewlett and David Packard, all within 100 yards of each other. Lieberman has been a big supporter of H-1B in the Senate. His public statements on H-1B come straight from the industry lobbyists' book of talking points, and he once wrote a letter to the U.S. India Political Action Committee, saying, "I also oppose any efforts to eliminate or diminish the H1-B visa program," after which he praised the program. The third article is about Vivek Wadhwa. Again, I agree with him on many points, but not on the green card issue. I also disagree with him on the immigrant entrepreneurship issue; see http://heather.cs.ucdavis.edu/DukeImmEntrepStudy.txt Norm Issue Of The Week: Monday, May 7, 2007 Hiring Today's Workers, Educating Tomorrow's by Aliya Sternstein Technology companies that think the immigration system severely restricts them from employing smart, foreign-born individuals and many groups that oppose boosting the number of skilled-worker permits agree on one thing: The nation's elementary and secondary schools are failing to produce enough homegrown mathematics and science whizzes. "If our schools are not working well, then we need to fix the schools," said Mark Krikorian, executive director of the Center for Immigration Studies, which favors strong immigration enforcement. "Importing the foreign labor doesn't help fix the long-term problem for the country of doing a better job in math and science education." He said employment-based green cards and visas remove the incentive for businesses and society to mend the education system. Businesses counter that they are just as concerned, if not more concerned, about repairing the state of U.S. science, technology, engineering and mathematics education -- or STEM education -- as they are with hiring more skilled foreign workers. "For us, the changes in the immigration law are about facing the challenges that exist today," said Robert Hoffman, a vice president with Oracle. STEM funding; improving the quality of education in elementary and secondary schools; and increasing young people's interest in math and science are the "long-term response to our skilled-worker challenge." But tech companies won't see tangible results of any teaching turnabout for a decade or two. "Do the math. ... No pun intended," Hoffman said. Fourth grade is where children typically start to lose interest in math and science. If the United States reverses that trend, even as early as this year, today's fourth-graders will not enter the workforce until around 2019, he said. "So what do we do in between?" Hoffman said. "The answer is we need to recruit and retain, starting with the foreign-born individuals who are coming out of our universities." The H-1B Question: To Cap Or Not To Cap In April, House and Senate members introduced identical bills that would amend current immigration law to provide market-based caps for skilled worker visas, or what are called H-1B visas. The measures also would let employers obtain green cards for new hires who are studying science, technology, engineering or mathematics. In introducing the Senate version, John Cornyn, R-Texas, said news that U.S. Citizenship and Immigration Service hit the 2008 cap for H-1B workers in the record time of one day "makes clear that we urgently need to reform our policies for highly-skilled workers in the scientific and technology fields. Because the U.S. has already met the cap for H-1B visas, foreign students graduating from our universities this spring are virtually shut out of the U.S. job market." According to the Information Technology Association of America, the scarcity of H-1B visas is causing tech companies to delay and cancel projects, or expand overseas. Yet there are critics of the skilled-worker program who categorize the current set-up as a scheme to import cheap labor. Norman Matloff, a computer science professor at the University of California at Davis, said: "It is fully legal to use H-1Bs as cheap labor. ... The law says you have to pay [H-1B holders] the prevailing wage, but the definition of that term is riddled with loopholes, so the 'prevailing wage' is not the true market wage." Unlike other adversaries of the H-1B program, he does not agree that U.S. elementary and secondary schools are unable to generate enough talent. Matloff asserted that the United States does not have a tech labor shortage. He cited recent reports showing that salaries for new tech graduates, adjusted for inflation, have been flat since 1999. "If we had a shortage, wages would be shooting upward." Krikorian said the government needs to decrease the number of H-1B visas and tighten the standards so that only very highly skilled individuals are allowed entry. An April report by his organization on the wages and skill levels of H-1B computer workers found that in fiscal 2005, prevailing wage claims for such visas "averaged $16,000 below the median wage for U.S. computer workers in the same location and occupation." Using the Labor Department's skill-based prevailing wage system, employers "classified most workers -- 56 percent -- as being at the lowest skill level -- Level I," the paper continued. "This suggests that most H-1B computer workers are low-skilled workers who make no special contribution to the American economy, or that employers are deliberately understating workers' skills in order to justify paying them lower salaries." The Tech Industry's Bottom Line Tech companies dispute the analysis, saying that the numbers are incomplete, outdated and cherry-picked. The companies maintain that they are required by law to pay foreign and U.S. workers the same salaries. They also must pay extra to hire H-1B workers so the companies are not profiting from the program. U.S. employers typically spend thousands of dollars to secure an initial H-1B approval. Hoffman said critics of the H-1B program have made a good case for starting discussions with the Labor Department and Congress to achieve better enforcement. "We would be all for [stricter enforcement] without imposing undue costs on employers for hiring H-1B workers," he said. The U.S. division of the engineering group IEEE is reformulating its high-tech immigration and H-1B positions and thus is not saying much about the issues publicly, IEEE-USA spokesman Chris McManes said. "But I can tell you that we do support" new H-1B legislation introduced by Sens. Richard Durbin, D-Ill., and Charles Grassley, R-Iowa. The legislation would give priority to American workers and increase H-1B oversight to ensure that companies are not hiring foreign workers at lower wages. "We favor permanent immigration over temporary guest-worker programs for helping to meet our nation's high-tech workforce needs." Hoffman said that without higher H-1B and green card allotments, tech companies "either let jobs go unfilled -- we have roughly 1,000 job openings here in the U.S. at Oracle -- or we go where the workers are, which is moving the work offshore. And those aren't the best choices for us." The Oracles and Microsofts can afford to move operations overseas, but small businesses and startups -- think Google circa 1998 -- may be forced to relocate entirely, Hoffman said. "We ask for these reforms to lower our costs of doing business but, more importantly, in the interest of growing our economy." Moving innovation elsewhere "would sap the economy," he said. The Potential Upside For Developing Nations For Oracle, the current backlog of green-card applications is even more troublesome than the H-1B cap because the green-card crisis impacts employees already working for the company in the United States. "What we worry about is that those who are holding H-1B visas -- and are waiting for a green card -- are picking up and leaving out of frustration," Hoffman said. Krikorian's response to tech jobs moving elsewhere: "I'm not against India having a software industry. I want them to develop. That is how economic development has worked for hundreds of years." The American Council on International Personnel, which represents large multinational employers, said lifting the cap on H-1B visas actually would help developing countries. It "allows global companies from all countries to transfer employees to the United States to work on projects" if they have a U.S. office, council Executive Director Lynn Shotwell said. "For some companies, especially in the financial and consumer goods industries, the goal is to send [employees] back" after temporarily working in the United States for training. Education Science, Tech Advocates Call For Education Reform by Aliya Sternstein High-profile advocates of educational reform in science and technology continued their calls Wednesday for more rigorous instruction to maintain America's competitive edge. George Mason University President Alan Merten, National Academy of Engineering President William Wulf, Sen. Joseph Lieberman, I-Conn., and Rep. Tom Davis, R-Va., were among the speakers who participated in a discussion about the importance of top-notch mathematics and science education. The event was hosted by the Center for Excellence in Education, a nonprofit that funds summer programs to help talented youths pursue careers in science and technology. The center cited claims that more than 90 percent of all scientists and engineers in the world will be living in Asia by 2010, if current trends continue. The group also noted that although U.S. fourth-graders score well in international competitions, they fall near the bottom or last by 12th grade in mathematics and science. "Why help the academically achieving student?" said Joann DiGennaro, the center's president. These children are not included in any government funding program, "but they need mentors. They need assistance." Davis said of the center's work, "Your investment is well spent" because today's bright students will be the key to the future. Merten noted that the cost of producing a scientist is significantly higher than producing other professionals. "We have to be more aware that engineering and science is hard," he said. Merten stressed the need to foster "an early excitement in the sciences." Wulf, a computer science professor at the University of Virginia, announced that he will be starting an engineering class for liberal arts majors. "No equations. It's the concepts behind the equations that matter. My objective is not to make these liberal arts majors into engineers." His goal is to reach beyond the technical population to the rest of the country and endow them with enough understanding to support tech-friendly policy and funding. But Norman Matloff, a computer science professor at the University of California at Davis, who was not at the event but has been an outspoken skeptic of claims about a shortage of skilled U.S. tech workers, said Wednesday: "Those international test comparisons are highly misleading. The reason American kids look only mediocre in international comparisons of math and science scores, relative to some kids in Asia, is that the U.S. must deal with a large and sadly neglected underclass." He added that the test scores in states like Utah, Iowa and Nebraska, which don't yet have large underclass populations, are similar to those of the top Asian countries. Matloff is a leading critic of industry efforts to increase visas for skilled foreigners to deal with the claimed shortage of skilled U.S. workers. "The education issue is a red herring deliberately used by the lobbyists from industry, education and [immigration lawyers] because we're not using the scientists and engineers that we have," Matloff said. The same firms that are lobbying "are laying off tons of engineers who were indeed science and math whizzes when they were kids." Labor Study Claims U.S. Companies Outsource For Profits by Heather Greenfield For years, U.S. companies have told Congress they must move engineering jobs to other countries because there are not enough engineers here. But a newly released study , headed by a former technology executive, says profits, not the number of engineers, are driving the trend. Vivek Wadhwa, a Duke University executive in residence, said he did the study because of misinformation about China graduating 12 times as many engineers as the United States. The study, featured in the latest issue of the National Academy of Sciences magazine, said companies outsource engineering jobs because it is cheaper. "How can you fault companies for acting in their own self-interest?" said Wadhwa, the founder and former CEO of the enterprise software firm Relativity Technologies. He was among the first tech executives to outsource jobs to Russia 20 years ago. "I was one of the guys going around screaming, 'We need more H-1Bs'" for high-skilled immigrant workers, he said. Now he says, "Forget H-1Bs and fix the green-card system," reasoning that people with temporary visas don't start companies. The report emphasizes the contributions of foreign-born tech workers. Based on interviews with 2,054 tech companies founded from 1995 to 2005, 25 percent had one foreign-born founder, and among semiconductor companies, it was 35 percent. Instead of more engineers and H-1B visas, though, Wadhwa said the answer to maintaining U.S. competitiveness globally is finding incentives for companies to keep research and development here. He said losing production jobs is much different than losing innovation jobs. "When I took my technology CEO hat off and [put my] Duke researcher hat on, I started to worry," Wadhwa said. "We're about to lose major new industries. The next Internet is likely to be developed abroad." The report analyzed salary and employment data, and found no shortage of engineers in the United States after comparing engineering graduation data in the United States, China and India. Another part surveyed 58 companies who hire engineers in China and India and found most companies trusted hiring engineers from any university in India but only from 10-15 of China's universities. The demand for engineers from the top Chinese universities is so high that employers complained it is hard to actually get them. Tech executives listed the reasons for outsourcing jobs as personnel savings, access to new markets and proximity to markets. When hiring engineers, 75 percent of those surveyed said India had an adequate supply, 59 percent said the United States did, and 54 percent said China did. "I'm not trying to say there is nothing to worry about, but we're worrying about the wrong things," Wadhwa said. "It's not the education level of our workers that's driving jobs overseas." He said he is worried "lawmakers will pass the SKIL bill and think they're done" instead of looking at ways to fix the green-card system and encourage businesses to keep R&D jobs in the United States. The bill, S. 1083, would make it easier to import and retain skilled foreign workers and foreigners who have received post-graduate degrees from U.S. schools.