Date: Tue, 16 Oct 2007 20:28:50 -0700 From: Norm Matloff To: Norm Matloff Subject: "deja vu all over again," Part I To: H-1B/L-1/offshoring e-newsletter The world of H-1B politics is one of David and Goliath. "Goliath" here is the industry and the American Immigration Lawyers Association (AILA), with their huge clout stemming from campaign donations to politicians, and their hiring "the best and the brightest" slick, deceptive PR people in the world. "David" is programmers and engineers who lack money and time to spend, who sometimes are not completely informed about details, and who often are betrayed by organizations that putatively represent them. One key to Goliath's success is lack of continuity and memory. Anti-H-1B activists come and go; congressional staffers (if not the politicians) come and go; journalists come and go. So, for those of us who've been around for a while, we see a continuing succession of "news" which is old. I'm enclosing two articles here from BusinessWeek--first one from this month, and then one from 1998. The latter could easily have been written today. The first article below, dated October 10, is very long and of generally very good quality, but it can be boiled down to one point which I've tried to make repeatedly over the years: THE DIRTY LITTLE SECRET REGARDING H-1B IS THAT IT IS FUNDAMENTALLY ABOUT AGE. Younger workers are cheaper than older ones, and H-1B then gives the employers access to a large pool of young workers. That is the CORE of the H-1B issue. Yes, younger H-1Bs cost even less than younger Americans, but that's just icing on the cake. That's what's really going on with Rennie Sawade in that first article. Microsoft would probably say that they didn't hire him because his quality is not up to their standards. The article here implies that Sawade's problem is that he doesn't have specific skill sets of value to Microsoft. But those arguments just don't hold water, because Microsoft has hired Sawade for contract work. Instead, his real problem, in Microsoft's eyes, is that he is 44 years old. Actually, many people even in their mid-30s start finding barriers to employment in this field. Please note that I'm not faulting the journalist here. Overall she's done a very good job. And BusinessWeek itself deserves praise, for the many excellent articles it's run on this and related topics over the years. But it would be nice if there were some memory in the system. A number of us were pointing out the central nature of the age issue back in 1998. As a result, the bill passed by Congress that year to increase the H-1B cap directed that a study be done on the question, Do older programmers and engineers have trouble finding work in their field? The study was done, and even though the study was heavily biased in favor of the industry (the commission included reps from Intel, Microsoft etc.), THE ANSWER WAS YES. It was spun in a manner which protected industry, but the answer was YES, older programmers and engineers have trouble finding work in their field. Since that time other studies have elaborated on this central point, and have connected it to the H-1B issue. In my case, I analyzed this in detail in my 2003 article in the University of Michigan Journal of Law Reform (http://heather.cs.ucdavis.edu/MichJLawReform.pdf) and last year in an article written at the invitation of a branch of the California State Bar (http://heather.cs.ucdavis.edu/CLER.pdf). The first enclosed article below unfortunately buys into the standard arguments that industry lobbyists have used so well over the years but which have shown to be invalid. To cite just one example, the unemployment rate is NOT a good way to tell whether there is a shortage of programmers or engineers, for the simple reason that those workers leave the field when they can't find work; one does have to pay the mortgage or rent, after all. So, as Gene Nelson put it so well, the former programmer who is now working as a security guard counts in the government data as an employed security guard, not an unemployed programmer. (For a more scientific statement of the same point, see Carol Veneri, Can Occupational Labor Shortages Be Identified Using Available Data?, Monthly Labor Review, Bureau of Labor Statistics, March 1999.) Pass it on: H-1B is about age. Norm BusinessWeek, October 10, 2007 The Great Tech Worker Divide Is there really a labor shortage, or are tech companies lobbying Congress for more visas and green cards simply to avoid paying Americans better wages? by Moira Herbst With a B.S. in computer science, an M.A. in information systems management, and 20 years of experience, Rennie Sawade would appear to be a strong candidate for a job as a software development engineer. But all the 44-year-old can find these days are short-term, temporary jobs—like the 15-month contract he's currently on at a Seattle-based medical device company. At Microsoft, the most prominent employer in town, he's had contract jobs and even interviews for permanent positions. But after several failed attempts, he's given up on trying to land a staff position at the software giant. "I feel like my time is being wasted," he says. Just across town at Microsoft headquarters, in suburban Redmond, Wash., Kevin Schofield is grappling with what he calls a severe shortage of qualified workers. Schofield's job is to help develop recruiting strategies to stay ahead of rivals like Google (GOOG), IBM (IBM), Yahoo! (YHOO), and SAP (SAP). The 40-year-old says Microsoft is desperate to fill 3,000 core technology jobs in the U.S., and there are so few Americans with the specialized skills required that the company needs to bring in more workers from overseas on temporary visas and permanent green cards. "There just aren't enough people," says Schofield. Reform Likely Sawade and Schofield's contradictory viewpoints highlight a deepening fault line in the technology industry. While American tech companies say they can't find enough qualified people, many tech workers say there aren't enough good jobs. Employers point out that the unemployment rate in the sector is extremely low, a mere 1.8% in the second quarter of this year. Workers counter that salaries in the sector are still below their level in 2000, adjusted for inflation, a sign that companies haven't had to bid up wages to get staff. The frustration is growing on both sides. Bill Gates, Microsoft's founder and chairman, testified in Washington earlier this year (BusinessWeek.com, 3/7/07) that he feels "deep anxiety" over the competitiveness of the U.S. and says that the country needs to do more "to attract and retain the brightest, most talented people from around the world." Meanwhile, John Miano, founder of the Programmers Guild, which represents tech workers, calls the idea of a labor shortage in technology the "big lie" that U.S. employers are trying to use to hold down labor costs. Is there any way to satisfy both sides? It may seem like an impossible task, but that's precisely the challenge ahead for Congress and public policy experts. The Senate and House of Representatives are considering whether to try to overhaul the immigration policies for high-skilled workers. The question is whether there's a way to help U.S. tech companies recruit the talent they need to stay competitive, while also easing American workers' anxiety. Representative Zoe Lofgren (D-Calif.), chair of the House subcommittee on immigration whose district includes Silicon Valley, says "there is a greater willingness to move forward on immigration reform" (BusinessWeek.com, 9/11/07). Outsourcing Abuses? Radical options are on the table. One reform could be to ban outsourcing companies from using temporary visas (BusinessWeek.com, 5/25/07), since the firms have been accused of using the U.S. program to send American jobs overseas. Another could be to eliminate temporary visas altogether and allow high-skilled workers to come to the U.S. only on permanent green cards. There's even talk of limiting visas to positions in which a demonstrated shortage exists so the market isn't flooded with workers and wages driven down. "The question is how the workers will be brought in," says Ron Hira, assistant professor, public policy at the Rochester Institute of Technology. "Are we just increasing the supply of workers or increasing a particular kind of supply?" The distinction is crucial. While the political debate often seems like one between those for and against immigrant workers, reality is much more complicated. There is no single "tech job market," but rather a collection of markets for workers with different kinds of skills. There may be shortages for certain kinds of workers, but there are way too many with other skills. For example, demand for network systems analysts, the people who design and set up computer networks, is surging. But the number of computer programming positions in the U.S. has tumbled 25% since 2000. While the differences among tech workers are growing as jobs become more specialized, public policy hasn't kept up. For one popular visa, known as an H-1B, any worker from overseas with an undergraduate degree qualifies. There's no need to try to hire an American first or demonstrate that such workers are in short supply. In addition, the visas are doled out to the first companies that ask for them, not those most important to the U.S. economy. Questionable Searches The loose criteria have opened the door to potential problems. Earlier this year, senators Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) launched an investigation (BusinessWeek.com, 5/15/07) into how companies have been using the H-1B program for temporary visas. They disclosed that the most active users of the visas are Indian outsourcing companies, led by Infosys Technologies (INFY) and Wipro (WIT). The senators said the visas were being used not to make the U.S. more competitive but to save money by hiring cheaper workers from abroad and to facilitate the outsourcing of jobs to other countries. Grassley cited the "high amount of fraud and abuse" in launching the investigation. Wipro and Infosys say they are simply helping their clients become more competitive and have done nothing wrong. In June, a startling video leaked out. It showed a corporate law firm coaching employers (BusinessWeek.com, 6/22/07) on how to get around the requirement of trying to hire an American before bringing in a worker from abroad for a green card. "[O]ur goal is clearly not to find a qualified and interested U.S. worker," said the firm's director of marketing in the clip. Such cases are taken by American tech workers as confirmation of their worst fears. In Seattle, Sawade thinks many employers he talks to don't really want American workers; they just want cheaper labor from abroad. "It seems companies are going through the motions so they can be free to hire guest workers," he says. Where Are the Jobs? >From the outside, it would seem tech workers should have little trouble finding jobs. The unemployment rate for computer and mathematics-related work occupations has dropped steadily, from 5.4% in second quarter of 2002 to the 1.8% in the second quarter, according to the Bureau of Labor Statistics. The total number of such jobs is higher than at any point in the last seven years. The type of jobs being created, however, is shifting dramatically. As more technical jobs like programming are outsourced, new opportunities in the U.S. require additional or more specialized skills. The biggest job gains in information technology in the past year have been for software engineers, IT managers, and network systems analysts. IT management jobs are up more than 50% since 2001. Meanwhile, programmers and support specialists—the easiest categories to outsource—continue to shed positions. Computer programmer employment tumbled to 396,020 last year, from 530,730 in 2000. The result is that even as some are thriving, other U.S. tech workers are falling behind. The mean salary for computer and mathematics-related jobs was $69,240 last year, or $850 per year less than in 2000 adjusted for inflation. Tech worker advocates and some economists say the reason for the stagnation is that U.S. tech companies have been able to manipulate the labor market by bringing in guest workers. "Employers are asking the government to intervene in the labor market to ensure they have a steady supply of cheap workers," says Marcus Courtney, co-founder and president of WashTech, a Seattle-based union with 1,500 members. "This is not about a labor shortage—it's about political power." Shortages Worsen Microsoft's Schofield says that such assertions simply don't make sense. The company has one of the largest stashes of cash in the world and gushes profits every quarter. Saving a few thousand dollars in salary is much less important than finding the next hotshot techie who can help dream up a new billion-dollar business. Microsoft is one of the most active American companies in the H-1B visa program, receiving 3,117 certifications in fiscal year 2006. But Schofield says that H-1B workers are on the same pay scale as U.S. workers. Government records show that the median salary for Microsoft's H-1B workers was $82,500, typically at or above the prevailing wage for similar positions. In the U.S., Microsoft is currently seeking employees in five main areas: software development engineers, who design complex software; research software development engineers, who research advanced software design and theory; software architects, who design large-scale projects at the highest levels; program managers, who develop software and lead teams of engineers, and localization software engineers, who customize software for foreign languages. Schofield is concerned that if Congress does not offer relief by raising the annual cap on H-1B visas and boosting the number of green cards, Microsoft will have to source more employees overseas. Microsoft, along with Intel (INTC), Texas Instruments (TXN), Motorola (MOT), and others, has been pushing for the H-1B cap to be raised from the current 65,000 a year to at least 115,000. Schofield feels the shortages may get worse. Statistics show declining interest in tech degrees at all levels, and he is worried the hunt for talent will only get harder. In math, science, and engineering, for example, 50% or more of the post-graduate degrees at U.S. universities are now awarded to foreign nationals. "Enrollment in computer science and engineering is dropping like a rock," says Schofield. "There is already huge competition for people with really deep skills, and it will only get worse." Change Needed In addition to advocating for more visas and green cards, Microsoft is trying to boost enrollment in computer degree programs and help U.S. midcareer workers update their skills. Schofield says Microsoft representatives, including Gates himself, are visiting high schools and colleges in an attempt to dispel three myths: that offshoring means the future for tech work is bleak, that tech jobs are mundane and not "cool," and that there is little opportunity left to innovate in computer science. "We're sending the message that this is a vibrant industry doing creative things," says Schofield. "Exciting things are happening, and individuals can have a real, lasting impact." Critics say the emphasis should be on public policy changes, not public relations. "The presumption is that American students are irrational, and that they are leaving great opportunities on the table," says Hira. "I find that hard to believe. Is there a shortage of investment bankers? No, because they are paid a lot of money. Wages do matter." As advocates and politicians take up the issue of immigration reform for high-skill workers, the one thing that Schofield and Sawade can agree on is that the current situation needs to change. The question now is what additional common ground can be found between them. Herbst is a reporter for BusinessWeek.com in New York . Business Week: June 29, 1998 IS THERE REALLY A TECHIE SHORTAGE? Yes--but it's not as dire as the computer industry says Don't tell Steve D. Schultz about Silicon Valley's labor crunch. The 48-year- old programmer spent five years designing software for a large drugmaker. Then last year the company brought in a junior programmer from Taiwan at half the $160,000 Schultz earned as a contract employee. In November, the drugmaker didn't renew Schultz's contract. For four months, he searched for a job but turned up nothing, even at far lower pay. Finally, in April, his former employer called him back--still as a temp--to train his replacement. ``The computer industry isn't begging for workers,'' says Schultz. ``It's looking for 20-year-olds who will put in 80-hour weeks or people from overseas who will be captives at one company.'' SHARPER PINCH. For several years, the computer industry has sounded dire warnings about labor shortages that could slow the high-tech juggernaut. In recent months, officials from Microsoft Corp., Intel Corp., and other high- tech giants have begged Congress to double the 65,000 visas for skilled foreign workers to help fill the 350,000 jobs now open. The Senate passed such a bill in mid-May, and the House seems likely to follow suit. High-tech ``firms do not have the talent to develop new products and grow their businesses,'' says Harris N. Miller, president of the Information Technology Assn., a trade group. But some analysts think that Schultz could be on to something: The high- tech labor crunch is bad, but it may not be worse than elsewhere. They point out that employment has jumped only for the highest-skilled computer scientists, not programmers or systems analysts--jobs that often go to immigrants on high-skills visas. Nor are shortages driving pay into the stratosphere ``There's no evidence that the computer industry has worse labor shortages than other high-skilled industries,'' says American University economics professor Robert I. Lerman. High tech may feel the pinch more acutely, say Lerman and others, because it's structured differently and relies on temporary employees more heavily than other industries do. Microsoft, for example, employs 5,000 contract workers alongside its 17,000 permanent U.S. employees. But finding temps isn't easy when full-time positions are plentiful. A severe shortfall would push employers to offer permanent posts to keep temps from taking other jobs. Indeed, ``if there really was a labor shortage, someone would hire me full- time,'' says Robert J. Wade, a systems analyst in Indianapolis with a masters in industrial engineering. Wade, 35, says he has sought permanent jobs around the country but only gets offers for half the $60,000 he makes now. But temps are a hallmark of high-tech culture, industry officials insist, and can earn up to 40% more than regular employees. ``They feel like they have more control over their careers,'' says Richard Schwartz, a vice-president at Excell Data Corp., a Bellevue (Wash.) firm that supplies temps to Microsoft and others. So the heavy use of temps may not be a reliable economic indicator. Even by the traditional measure of pay patterns, though, high tech isn't showing classic signs of a crunch. The ranks of computer scientists, for example, have tripled since 1988, but their weekly pay beat inflation by just 4.4% since then and by 1% in 1997, according to the Bureau of Labor Statistics (BLS). GRUELING PACE. Systems analysts and programmers have done better. Their real weekly pay climbed by 4.3% and 6.7%, respectively, in 1997. But that pales compared with other types of workers: Surveyors beat inflation by 20% and dietitians by 17%, according to the BLS. Programmers' pay has lagged inflation by 1.5% since 1988. ``If employers were desperate, they'd be willing to pay more,'' says Norman Matloff, a computer science professor at the University of California at Davis. Critics argue that age discrimination helps fuel the shortage. The industry's grueling work pace is difficult to maintain when families come along, tech workers say. Employers also prefer to hire programmers out of school who know the latest computer languages. ``I thought it would be easy to get a job, but I'm not 20 anymore,'' says William L. Spence, 47. The physicist was laid off last year after 13 years at a national lab at Stanford University and has had no offers after applying to hundreds of Silicon Valley companies. Industry officials deny any age discrimination, but they admit they like recent grads. ``They have good training and are open to new technologies,'' says Microsoft Recruiting Director David Pritchard. Plenty of immigrant labor already helps mitigate shortages--and holds down pay. The high-skills visa program, of which about 40% is high-tech workers, requires employers to pay foreigners the going U.S. wage for the same work. Yet three-quarters of employers couldn't produce evidence that visa workers' wages match U.S. ones, according to a 1996 Labor Dept. audit, and some 19% pay less than they had promised on the visa application. Pritchard counters that foreigners actually cost more than U.S. employees, since Microsoft, which has some 1,000 workers on visas, pays to relocate them. Lerman and others worry that more visas could turn off students from high- tech fields and even feed future shortages. Enrollment in college computer science courses jumped 40% in both 1996 and 1997, according to surveys by Computing Research Assn. in Washington. But as students see jobs filled by immigrants at lower pay rates, their interest could wane. For now, there's no doubt high-tech companies are hustling to find workers. But their predicament may be no more severe than that of other sectors. By Aaron Bernstein in Washington, with Steve Hamm in San Mateo, Calif., and bureau reports