Date: Mon, 29 Sep 2003 21:22:16 -0700 From: Norm Matloff To: Norm Matloff Subject: yesterday's H-1B debate on CNN To: age discrimination/H-1B/L-1 e-newsletter Enclosed is a transcript of my CNN debate yesterday with Thom Stohler, an industry lobbyist. If instead of the written word you would like to see the people themselves, with "body language" etc., Mike Emmons has the video at http://www.outsourcecongress.org:81/ Here are my comments on some points that Stohler made: STOHLER: Well, I don't agree with the underpayment argument. If you look at the most recent data released by what is the Bureau of Immigration statistics, the average H-1B visa holder in the computer field is making $60,000 a year, and that's more than the average U.S. worker makes in computer programming or assistance management. ^^^^^^^^^^^^^^^^^^^^^ The transcript is in error here. What he said was "systems management," by which, for reasons you will see below, he apparently meant "system analysts," which I responded to during the debate. Here is the background. Stohler is presumably referring to the DHS report cited in the Washington Post on September 18. The Post article said: At a Senate hearing on the issue Tuesday, several organizations worked to dispel criticisms of the program, including the belief that it allows U.S. companies to hire employees at below-market wages. The median annual salary of an H-1B worker in the computer field in 2002 was $60,000, compared with $58,500 for all computer systems analysts in the nation, according to Department of Homeland Security statistics. As I replied to Stohler in the debate (and pointed out in this e-newsletter when I first discussed the Post article) the title System Analyst is an old-fashioned term, stemming from the old IBM mainframe days. The people with that title today typically work in this kind of antiquated environment, and their pay is accordingly low. The BLS data is at http://www.bls.gov/news.release/ocwage.t01.htm That data is for 2001, the latest year on the BLS site. As I said in my reply, the BLS job category which is relevant to this H-1B issue is software engineer, in that this is the type of work typically done by H-1Bs. The BLS data break that down into two subcategories, with medians of $72K and $74K. That's a lot more than the $60K which Stohler correctly said is the median for the computer-related H-1Bs. See http://www.immigration.gov/graphics/shared/services/employerinfo/h1b.htm for the source of this $60K figure, and the 47% figure below. Now look at this one: STOHLER: No, I don't agree with that assertion. You have to go back to who the H-1B visa holders are in the United States. Forty- seven percent of these individuals have a masters degree or higher. They are very well educated, they're the type of employees that high- tech companies hire for very specific, very skilled, very highly educated positions. That 47% figure is for H-1Bs overall, NOT for the computer-related H-1Bs, for whom the figure is, as I said in the show, about 8%. Why is there such a big difference between the overall figure and the computer-related figure? First, there are many H-1Bs working as postdoctoral researchers in biology etc. at universities, and of course they have PhDs. Second, some workers who work in the computer area have a graduate degree from another field, say economics. About 3/4 of software developers have a Bachelor's degree from a field outside of computer science, and though I don't have the exact figure at the Master's level, it too is quite high. This is why I made the qualifier "in the field" in citing the 8% figure in my remarks on the show. Someone with a Master's degree in economics who is now in the computer field of course does not count as having advanced training in the computer field, the theme of Stohler's claims. See Sec. 6.3.3 of my updated congressional testimony, http://heather.cs.ucdavis.edu/itaa.html for details. Stohler's claim to hire H-1Bs because there aren't enough Americans with graduate degrees in engineering and computer science are wholly disingenuous. If the industry is so interested in graduate degrees, why aren't they encouraging the universities to get more of their undergraduates to continue study after getting their Bachelor's degrees. Our university has a close relation with industry, featuring an an Advisory Board and Industrial Affiliates Days (next one, October 10). I have never heard any of them say that more Americans should go to graduate school. On the contrary, when we approached Intel about funding special fellowships for top PhD students, Intel declined. Moreover, ever since the tech economy went bust in late 2000, graduate programs in computer science and engineering have been inundated with American applicants. See for example the article in the San Francisco Chronicle, January 27, 2002. The article reports, for instance, that applications to UC Berkeley's graduate program in electrical engineering and computer science were up by 50%. When Sophia Choi asked Stohler what can be done to get more students in the field, Stohler should have said, "Well, in fact in the last few years it's been much better." In other words, folks, Stohler's emphasis on graduate degrees was just one more in a long series of attempts by the industry to push the Education Button, a tried-and-true lobbying trick. The fact is that we are producing far more students in the field than we need, at all levels, PhD, Master's and Bachelor's. By the way, it's too bad we ran out of time, as I was planning to present an analysis of the H-1B salaries of one of Stohler most prominent clients, Intel. Go to the Dept. of Labor H-1B database, at http://www.flcdatacenter.com/casesearch.asp and check out Intel. For those of you readers who are not in the tech field, ask someone you know what they think of those H-1B prevailing wage numbers for Intel, i.e. whether they think the numbers are consistent with Stohler's claim (made many times by Intel) that these firms are using the H-1B program primarily to hire Master's and PhD holders in engineering and computer science. Or just consider these numbers. In the analysis I did recently, I found that the median prevailing wage quoted by Intel for its H-1Bs was $65K. Not only does that look low compared to the $72-74K figure I cited above, but it's even worse: Remember, Intel claims that these people have Master's and PhD degrees, and $65K is way lower than what people with Master's and PhDs in engineering make. The NSF data, for instance, show a national median of $100,000 for PhDs in engineering; only 5% of Intel's H-1B prevailing wage figures were even above $90K, let alone $100K. In fact, the 75th percentile for the Intel H-1B application forms was $73K; in the other words, the top 25% of Intel H-1Bs only make as much as the top 50% of Americans nationwide in this field. Moreover, the wages Intel wrote for "actual wage" in their H-1B applications were always 95% of what they wrote for "prevailing wage." This is legal, a famous loophole in H-1B law, allowing the employer to pay 5% under prevailing wage. My point is not to focus on that 5%, but rather to show that Intel, just like the other employers, is quite adept at exploiting all those loopholes I referred to on the show. The 5% is paltry compared to the savings incurred by using all the other loopholes, so that the prevailing wage itself is very low. Once again I refer to the reader to the outstanding analysis by the Programmers Guild, "How to Underpay an H-1B," at http://www.programmersguild.org/Guild/h1b/howtounderpay.htm This shows in detail how the Bank of America was able to lay off Americans and get H-1Bs at salaries approximately 50% below what the laid-off Americans had been making. And remember, the bank even made the laid-off Americans train their foreign replacements. Norm http://www.cnn.com/TRANSCRIPTS/0309/28/nac.00.html Aired September 28, 2003 - 17:00 ET THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. SOPHIA CHOI, CNN ANCHOR: Welcome to NEXT@CNN for this Sunday, September 28th. I'm Sophia Choi. And coming up this hour: the United States and ... ... Foreign workers hold a lot of high-tech jobs in the United States. Are they the only ones qualified, or are they taking jobs that should be filled by Americans? There's a lot of debate on the H- 1B visa that lets individuals with specialty occupations into the U.S. A number of those visas is set to decrease soon. Joining us to talk about this issue, Thom Stohler, vice president of the American Electronics Association. He's in our Washington bureau. And in San Francisco, Norman Matloff, professor of computer science at the University of California at Davis. Thanks to both of you for joining us. Tom, let me start with you. You represent high-tech companies with lobbying and government affairs. What are these companies telling you, and why are they still using these foreign workers? THOM STOHLER, AMERICAN ELECTRONICS ASSOCIATION: Well, why they use the foreign workers is they use them to hire a small but significant part of their work force, primarily individuals that graduate from American colleges and universities with masters degrees and Ph.D. degrees in fields like computer science, electrical engineering, mathematics. CHOI: Norman, this was supposed to be a temporary program. Are they really needed still, these foreign workers? NORMAN MATLOFF, UNIV. OF CALIF. DAVIS: Well, they never were needed in the first place. And, by the way, the statement that most of the H-1Bs in the computer area are people with post-graduate degrees is absolutely false. If you look at the computer-related H- 1Bs -- this is the I.N.S. data -- only about one percent of them have a Ph.D. in the field and only about seven percent have a masters. So a total of eight percent. The graduate issue -- the post-graduate degree issue is a just a non-issue. CHOI: But if Americans are qualified, Norm, then why wouldn't companies give them the job? Does this come down to dollars and cents? MATLOFF: It's totally an issue of cheap labor. You know the H- 1B law supposedly requires that you have to pay prevailing wage. But the definition of prevailing wage is so loose that the whole thing is just a series of giant loopholes. And the companies, large or small, make use of these loopholes. A number of studies have verified that, university studies. And, most interestingly, Congress's own commission study by the National Research Council. They all found that the H-1Bs tended to be paid less than comparable Americans. CHOI: Thom, I know the argument from companies is that there just simply isn't enough U.S. grads to fill the positions. What's being done to lure more student then? STOHLER: Well, I don't agree with the underpayment argument. If you look at the most recent data released by what is the Bureau of Immigration statistics, the average H-1B visa holder in the computer field is making $60,000 a year, and that's more than the average U.S. worker makes in computer programming or assistance management. But the high-tech industry -- part of what happened with the H-1B bill in 2000 is that there was a $1,000 fee put on every H-1B visa application. And that money has gone in to train about 55,000 American workers through the Department of Labor grants. And it's through the year 2000 provided about 8,000 scholarships for students that are getting undergraduate degrees in engineering and computer science. CHOI: All right. We know the numbers have changed over the past few years. In fact, the industry says it's self-correcting. And we have some numbers of how this actually plays out in the real world. Let's take a look at them. Pre-1998, 65,000. And the numbers go up as the high-tech boom got started in 1998, as you see there, with a high of 195,000 in 2000. This week, that number is set to go down again with 65,000 remaining. Norm, there's a lot of concern out there about outsourcing U.S. computer jobs to places like Southeast Asia and India once these numbers do go down. Wouldn't it be better just to keep those jobs and tax dollars in the U.S.? MATLOFF: Well, first of all, very few of the jobs are being offshored. Only about one percent. It's very difficult do, and that's why it hasn't been more. The issue really is that you to have the people here for face-to- face interaction. But, at the same time, the employers want cheap labor. The statistic that Thom cited from the I.N.S. talked about computer system analysts. That's a very old fashioned. The people that have that title generally paid less. What he really should have cited was the Bureau of Labor statistics data on software engineers. The medium there is $74,000, compared to $60,000 for the H-1Bs in that area. There is absolutely no doubt that the H-1Bs are forming a source of cheap labor here; that's what is really going on. That is the core issue. Everything else on training -- training, for example, is a non- issue. Let me tell you why. As the -- there are a number of big companies that are admitting that they are replacing Americans by foreign nationals and forcing the Americans to train their foreign replacement. So, clearly, it's the foreign nationals that need the training rather than the Americans. So the training issue is just a smoke screen, nothing more. CHOI: Thom, what's your take on this outsourcing concern, that once the H-1Bs are booted out, and essentially the numbers are so low, and if these companies, indeed, can't find qualified workers, will they begin doing more outsourcing to countries like India and Southeast Asia? STOHLER: No, I don't agree with that assertion. You have to go back to who the H-1B visa holders are in the United States. Forty- seven percent of these individuals have a masters degree or higher. They are very well educated, they're the type of employees that high- tech companies hire for very specific, very skilled, very highly educated positions. And to say that these -- that if they're booted out that we're going to follow them is just not true. What would be better would be, since about half of the individuals receiving masters degrees and Ph.D. degrees from American colleges and universities in fields like engineering and computer science and mathematics, those individuals are foreign nationals. It would be much better if we had a program that allowed companies to hire these individuals without fear of a cap or fear of not being able to hire them and then bring them through the citizenship process quicker. That would be better for the high-tech industry. CHOI: Well, this is a very sensitive topic and we thank both of you gentlemen for joining us and giving us your opinions on it. Thanks. STOHLER: Thank you.