To: H-1B/L-1/offshoring e-newsletter Fri Apr 4 22:37:04 PDT 2014 Recently I reported on a phone-in press conference held by CompeteAmerica, a consortium of big tech firms that wants Congress to greatly expand the H-1B work visa program: http://heather.cs.ucdavis.edu/Archive/CompeteAmerica.txt My post focused on their featured speaker, Matthew Slaughter of the Dartmouth business school. I pointed to the fact, obtained from his Web page, that his research on H-1B was in fact sponsored by CompeteAmerica, and that he does a lot of "sponsored" research. (I also mentioned that I would make a later posting on his research itself, which I will do soon.) But also in that posting I actually defended CompeteAmerica president Scott Corley, who had been criticized for his reply to a question as to why the tech industry doesn't retrain American techies for these specialized jobs rather than hire foreign workers. His reply was interpreted as meaning that this would be too expensive, and that the industry hires cheap foreign workers instead. But if you read it carefully, he said nothing of the kind. He simply said that the high wages paid to specialized workers shows that it is not easy to train for these jobs. But I continue to hear people saying that Corley made a "smoking gun" confession, which he did not. Well, a few days later, Corley gave a 40-minute interview to C-SPAN, at http://www.c-span.org/video/?318595-6/washington-journal-h1b-work-visa in which he did make some rather damning statements. Corley responded to the researchers who say that the industry's fervent claims of a tech labor shortage are contradicted by the fact that wages, adjusted for inflation, have been flat. This arose in one of the call-in questions to the show. In his reply, Corley hemmed and hawed, stammering a lot, sometimes saying nonsense and hinting that there is economic theory to support the notion that there could be a labor shortage without having rising wages. ("I have a background in economics...") But he did concede, several times, that indeed tech wages are NOT rising. Eventually, though, he got his point out: "Wages aren't rising...but there is a relief outside the country," meaning offshoring. Even if he were correct (he isn't, as I'll explain shortly), just think about what he is saying: the current American workforce + the current H-1B workforce + the offshored workforce is ENOUGH to fill the demand. Then that would imply that we do NOT need to raise the H-1B cap, right Mr. Corley? :-) That would still leave open the question as to whether the American workforce alone is sufficient to meet current demand. Corley's analysis fails on two counts: 1. As Wharton's Peter Cappelli keeps pointing out, it's a matter of how much employers are willing to pay. The H-1Bs are young, and younger is cheaper, so from the employers' point of view there may be a "shortage" of young/cheap workers even though there is not a shortage of qualified workers overall. 2. The offshoring is not the safety valve he claims it is. Most jobs done by H-1Bs in the tech industry CAN'T be offshored, as the constant face-to-face contact is crucial. That's why the H-1Bs are hired in the first place, rather than instead sending the jobs now filled by H-1Bs to overseas (where labor is REALLY cheap, even by H-1B standards). Later in the show Corley echoed a statement made by Texas Instruments in congressional testimony a year or so ago. Let's review that: The TI rep had testified that TI has NO shortage of applicants for its engineering jobs at the bachelor's level. Instead, they were short at the masters/PhD level. One of the House panel members then asked the TI rep why the Americans don't pursue graduate degrees, and she replied that they just want to go out and start earning money. In reporting her statement at the time, I pointed out again that the influx of foreign students keep salaries at the graduate level so low that it's not worth pursuing grad degrees for the Americans. Well, here is what Corley said: "A lot of Americans stop at the undergraduate degree level. I used to wonder if they were less motivated [than the foreign students]. I don't think that's true at all...A lot of American students leave after undergraduate study because they can get jobs very quickly [snaps his fingers] with that degree." He went on to explain, correctly, that for foreign students the equation is quite different, because possession of a graduate degree can place them in a different green card category in which the wait time is drastically shorter. As I've often mentioned, a 1989 NSF internal document correctly forecast this, that the big influx of foreign students were drive the Americans away from grad school while immigration considerations still made graduate study advantageous for foreign students. In other words, when the industry lobbyists claim the industry needs H-1Bs because Americans don't go to grad school, it's exactly backwards: H-1B is the CAUSE of the problem, not the SOLUTION. The above also shows that all the talk about a tech "shortage" being due to a failure of the U.S. educational system is a smokescreen. TI, and now CompeteAmerica, say we have plenty at the bachelor's level. The industry knows all that, of course, but the line sells well with Congress and the press. By the way, speaking of stable wages, the latest news from NACE is out: http://www.naceweb.org/s04022014/starting-salary-class-2014.aspx In contrast to three months ago, when NACE reported that wages for new computer science graduates were dropping, the latest survey has CS up by 2.9%. But the figure for the humanities and social sciences was 3.5%. Engineering, by the way, had a 0.3% increase. None of these are at "shortage" levels, much as Scott Corley might want to say we have a "shortage" of humanities graduates. :-) Norm Archived at http://heather.cs.ucdavis.edu/Archive/CompeteAmericaCSPAN.txt