Date: Sat, 21 Jul 2012 14:28:02 -0700 From: Norm Matloff To: Norm Matloff Subject: Jared Bernstein responds re Brookings To: H-1B/L-1/offshoring e-newsletter The other day I reported on a clash at the Brookings conference betwen Vivek Wadhwa and Jared Bernstein, http://heather.cs.ucdavis.edu/Archive/BrookingsGeo.txt Jared wrote to me the next day, stating that my account was inaccurate and incomplete. He graciously offered to allow me to post his message here, which I am doing below. Following it, I am enclosing my reply to him, minus a bit of personal material. I apologize for offending Jared, which certainly wasn't my intention. I was simply giving an honest report. I still stand by that report, but I agree I could have elaborated in some places and perhaps inserted some softening disclaimers in others. I also thank a reader who sent a detailed, articulate defense of Jared along similar lines. Jared closes his message to me by saying that he and I "are fighting a similar fight." I was pleased to see him say this, but the central point in my report on the Brookings conference was that actually there is only a small degree of commonality in Jared's and my views. The theme that arose repeatedly in Jared's remarks at Brookings was "the Intels are the Good Guys and the Infosyses are the Bad Guys." This came up explicitly, e.g. when he cited Tata, Infosys and "Indian companies," and implicitly, in statements like "most [employers of H-1Bs] are ethical, law-abiding people" (i.e. the Indians aren't) and in his support for issuing green cards instead of temporary work visas (the Indian firms rarely sponsor for green cards). My central point was that the problem is industry-wide, including BOTH the Intels AND the Infosyses. Underpayment of wages of course must be gauged according to the skills of the worker, but the result is that the Intels underpay their H-1Bs on the high end, and the Infosyses do so on the low end. I've shown this in many ways: via my statistical analysis of the PERM data; by citing economic principles, e.g. the negative impact limits on mobility can have on H-1B wages; and anecdotally, such as the David Huber incident with Cisco, http://youtube.com/watch?v=OhGG2O2jaCU&feature=related The abuse occurs perfectly legally, due to gaping loopholes in the legal definition of prevailing wage, in the recruitment requirements of the green card process and so on--all in laws that the Intels wrote. See http://heather.cs.ucdavis.edu/SloanDCPaper.pdf for details. It is also one of the topics covered in my slide presentation, http://heather.cs.ucdavis.edu/CIIPSlides.pdf In my posting on the Brookings conference, I noted blatant misrepresentation by the Microsoft panelist regarding wages, not the first time they've done this. How can anyone regard Microsoft as among the Good Guys? Much is made of the fact that the Infosyses are prominent near the top of the H-1B league tables, but that doesn't show the big picture. Actually, only 12% of H-1Bs are sponsored by Indian firms. (This is from a Washington Post article. However, later, starting in 2013, data came out that indicates the figure is more like 50% currently.] Jared is not the only one with this Intels Si!, Infosyses No! viewpoint. On the contrary, it has become the Conventional Wisdom in DC and among some academics. (Ron Hira, by the way, has assured me he does NOT have this viewpoint.) It is the convenient stance to take. I could write a detailed analysis of the sequence of events that led to this stance, interesting dynamics. (I've in fact been planning such an article, actually, but haven't had time to explore it with any news outlets yet.) But this Conventional Wisdom is greatly at odds with the facts, and is unconscionable scapegoating. Indian and Indian-American groups have objected to that scapegoating, as has Vivek, whom I solidly supported. Again, if the Infosyses were indeed the main abusers of the system, I'd have no problem with pointing that out, but they are in the small minority. No question about it, the Intels project a better IMAGE than do the Infosyses. They have savvier lawyers who wear nicer suits. They are less overt in their restricting American hires. As noted earlier, they hire a higher class of H-1Bs (e.g. better educated). But the Intels are still abusing the H-1B program and green card programs, still paying below-market wages, still preferring foreign workers to Americans of equal quality, still reducing wages and job opportunities for Americans, still using the programs to handcuff their foreign workers from moving to other firms. Here is the bottom line: In pure numbers, far more American programmers and engineers are being hurt by the Intels than by the Infosyses. You should not be let the sleazy image (partly real) of the Infosyses divert you from the fact that 12% is just that--only 12%. To ignore the 88% that are also harming American workers via foreign worker programs is just wrong. Norm Date: Fri, 20 Jul 2012 11:52:40 +0000 From: Jared Bernstein <***********> To: Norm Matloff Subject: RE: the Brookings conference Norm, With respect, this is a very unfair and unrepresentative review of my position in the Brookings debate. The whole thrust of my argument was that the current system is quite deeply flawed. In fact, I began be describing H1-B as “an inelegant solutions to something that I’m not even sure is a problem.” It’s true that at one point I misspoke and conflated the weak attestation rule of H1-B Dependency cases with the whole program. But I must have said “there’s no labor market test” 20 times! In fact, on my list of flaws in my opening statement, that was #1! And fixing that was #1 on my list of fixes. Same thing about the impact of the program on depressing wages—that was #2 on my list! And you completely ignored my key point which I hammered on to the point of being obnoxious—it was my main critique of the Brookings paper: the H1-B (and L1, etc…) program blocks the organic market adjustments that should occur, most importantly rising earnings! How many times did I say something to the effect of: “we don’t even know if there are labor shortages here, but if we did, why would we want to jam the market signal by tweaking up labor supply through raising the H1-B cap!!??” I even got my over-the-top counterparty to admit that the program is broken, although I really couldn’t make sense out of much of what he was talking about. It’s true that I took a “mend it, don’t end it” position. As I stressed—again, from my opening statement and throughout the hour—I don’t like guest worker programs in general, but I wouldn’t end H1-B without fixing the broken immigration system first. We may disagree on this point, but I think there needs to be a mechanism where some workers of various skill levels can get temporary visas to work here. (For the record, I’ve spoken extensively with leading H1-B critic Ron Hira about this and he agrees with mend-it-don’t-end-it.) Finally, I thought I was consistently explicit when I was talking about the White House and DC politics favorable views on high-skill immigration. I wasn’t at all saying that’s how the public views this. Your interpretation of my positions in this note reminds me—uncomfortably--of Vivek’s, but from the other side! It’s not for me to say how effective I was, but I thought I fought very hard to defend a sensible and quite critical position re temporary guest worker visas in general, and the H1-B programs in particular. Your note doesn’t honestly reflect the positions I took nor the arguments I made. Feel free to share this with your list. I know we're fighting a similar fight here and I continue to support and respect your work. Best, Jared Date: Fri, 20 Jul 2012 09:51:03 -0700 From: Norm Matloff To: Jared Bernstein <**************> Subject: Re: the Brookings conference Thanks for the reply, Jared, and the offer for me to share it with my list, which I'll do. For the record, I've never advocated "ending" H-1B. I too would "mend" it. More on this below. You did indeed say, several times, that H-1B suppresses wages. I debated whether to mention this, though, because it didn't make sense. You were perfectly OK with granting more green cards to tech workers. Obviously that would suppress wages too. As to the labor market test, this depends on one's definitions. In the eyes of some critics, Durbin/Grassley does not do a labor market test either. To me it's not an interesting issue (again, see below), so I didn't bring it up. I agree that I should have, given that I pointed out your stating that H-1B employers must hire Americans first. Now, here is what IS important, in my view: I think you missed my point (my fault, I think): You are in the "the Intels are the Good Guys, the Infosyses are the Bad Guys" camp. This is inaccurate scapegoating. H-1B is abused across the board, with the Intels underpaying at the high end and the Infosyses underpaying at the low end. I'd have no problem with singling out the Infosyses if they were the only abusers, but that is absolutely false, as my analysis of the DOL PERM data shows. It's unfortunate that you regard me as extreme, Vivek's counterpart. I know some others have this view of me too, but either we are going to address the foreign tech worker issue or we won't. Pretending that the problem is limited to a politically weaker group--the Infosyses are not without clout, but their clout is minuscule compared to that of the Intels--is just wrong, doubly so when a minority racial/ethnic group is involved. As a lifelong liberal Democrat, I'm quite disappointed with people like Schumer and Lofgren who take that "Intels good, Infosyses bad" stance. Zoe at least knows better. I was glad to see that you support the Durbin/Grassley bill. I have publicly endorsed it on numerous occasions. So you can see that I am with you in terms of "mend it, don't end it." (I made my own mending proposal back in 2003 in my University of Michigan Journal of Law Reform article.) As I said in my e-newsletter posting last night, the absolutely central issue is the definition of prevailing wage, which currently enables the rampant abuse of H-1B. Durbin/Grassley would change that definition to the 50th percentile of the given occupation, with NO splitting into various experience levels. This is key, as it would go a long way to address the age issue. The AFL-CIO (DPE) proposal would be even better, setting the legally required wage to the 75th percentile. I should also note that I have always strongly supported the notion of bringing in the best and the brightest from around the world. I've personally acted on that conviction. But the vast majority of the foreign tech workers are NOT the best and the brightest. They may be good, competent people, but not brilliant. My proposal has been that we should give an automatic green card to any foreign STEM student who gets a job offer in the 90th percentile of their occupation. But I am strongly opposed to the "staple a green card to their diplomas," which have the same problems as H-1B: They would suppress wages (by swelling the job market) and have the same negative impact on the over-35 programmers and engineers (since most of those getting diplomas would be young). The real value of the Post story on the life science post docs is that young Americans would have to be crazy to go into that bio research today. With 60% of the post docs being foreign, it is clear that foreign worker programs are a major cause of this. Do you really think it's OK that young Americans interested in science see it as untenable as a career? And most importantly, would things be any better if we gave those foreign post docs automatic green cards? I assume your answer is no to both these questions. If so, I hope you re-evaluate your stance on "Intels and Infosyses." Norm