Date: Thu, 7 Dec 2006 09:33:57 -0800 From: Norm Matloff To: Norm Matloff Subject: dueling op-eds in the SF Chronicle To: H-1B/L-1/offshoring e-newsletter http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/07/EDGOULJ5BC1.DTL Should the U.S. increase its H-1B visa program? CON: Wages belie claims of a labor shortage Norman Matloff Thursday, December 7, 2006 Once again, the tech industry is putting heavy pressure on Congress to expand the H-1B visa program. Though the industry says the foreign workers are needed to remedy a tech labor shortage, for most employers the attraction of H-1B visa holders is simply cheap labor. The H-1B visa program allows skilled immigrants to work in the United States on a temporary basis. The program's scope is far more general than just the tech industry. For example, the San Francisco Unified School District has hired a number of H-1B visa-holding school psychologists, elementary school teachers and so on. But the most common field in which employers hire H-1B visa holders is software development. The visas granted in computer-related fields are 10 times more numerous than in the next most common tech field, electrical engineering. The industry claims that it needs to import workers to remedy a severe labor shortage. Yet this flies in the face of the economic data. A Business Week article has pointed out that starting salaries for new bachelor's degree graduates in computer science and electrical engineering, adjusted for inflation, have been flat or falling in recent years. This belies the industry's claim of a labor shortage. Additional analysis at the master's degree level shows the same trend, flat wages -- contradicting the industry's claim that workers at the postgraduate level are in especially short supply. Microsoft founder Bill Gates is personally leading the industry's charge for more H-1B visas. Yet Microsoft asked its contract software developers earlier this year to take a seven-day furlough, to save money. And the firm admits that its salaries are not keeping up with inflation. Again, none of this squares with Microsoft's claims of a labor shortage. The hidden agenda here is industry access to cheap labor. Several university studies and two congressionally commissioned reports have shown that H-1B visa holders are paid less than Americans. Though the law requires H-1B holders to be paid the "prevailing wage," the definition of that term is filled with numerous gaping loopholes, as a 2003 congressional report showed. Yet Congress added even further loopholes in legislation in 2004. Just think tax code, and you'll understand what I mean. The H-1B program does not require most employers to give hiring priority to qualified U.S. citizens and permanent residents. If the employer is also sponsoring the foreign worker for a green card, there is such a requirement, but again loopholes render the rule meaningless. As prominent immigration attorney Joel Stewart has said, "Employers who favor aliens have an arsenal of legal means to reject all U.S. workers who apply." The industry says the H-1B holders are needed to maintain its level of innovation. I, too, support facilitating the immigration of "the best and the brightest," but very few H-1B holders in the tech field are in that league. Government data show that the vast majority make, at most, in the $60,000 range (Intel's median is $65,000). Yet even non-techies know that the top talents in this field make far more than $100,000. And the vast majority of awards for innovation in the field have gone to U.S.-born workers. [Added later--NM: The per-capita level of entrepreneurship has also been higher for the natives.] The industry lobbyists highlight some of the famous immigrant entrepreneurs in the industry, such as Jerry Yang and Sergey Brin, co-founders of Yahoo and Google. Yet neither of them immigrated to the United States as an H-1B visa holder; both came to the United States as minors with their parents. Thus they are irrelevant to the H-1B issue. The lobbyists also like to cite Andy Grove, an early Intel employee, yet he came to the United States as a refugee, not under employer sponsorship. More important, none of these firms has been pivotal to the industry technologically. There are lots of good Web search programs. In fact, Yahoo bought the one it uses, rather than developing its own. Rest assured, we would all still be surfing the Web without Yahoo and Google. And we would have the hardware to do it too, without Intel; IBM could have chosen from many good chip vendors when it introduced the PC in 1981. Indeed, no one firm has been crucial to the tech industry in general. Why, then, is Congress now poised to accede to the industry's demands on H-1B visa quotas? As the saying goes, "Follow the money." As Sen. Bob Bennett, R-Utah, said after Congress enacted the H-1B program expansion in 2000, "There were, in fact, a whole lot of [members of Congress] against it, but because they are tapping the high-tech community for campaign contributions, they don't want to admit that in public." Meanwhile, a reasonable H-1B reform bill by New Jersey Rep. Bill Pascrell is being ignored, not only by the Republicans but also by his fellow Democrats. You may have thought that November's election changed things, but they aren't changing that much after all. Norman Matloff is a professor of computer science at UC Davis. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/07/EDGOULJ5BA1.DTL Should the U.S. increase its H-1B visa program? PRO: Skilled immigrants innovate Stuart Anderson, Michaela Platzer Thursday, December 7, 2006 In the waning days of the congressional session, Sen. John Cornyn, R-Texas, deserves support for his attempt to pass a measure to increase H-1B visas and employment-based green cards for skilled foreign-born scientists and engineers. A new study released by the National Venture Capital Association shows America gains from the entry of such immigrants. The study "American Made," which we co-authored, used objective data and found that in the past 15 years, immigrants started 1 in 4 U.S. public companies that were backed with venture capital. The market capitalization of such companies that have gone public since 1970 exceeds $500 billion, adding significant value to the American economy. This figure is higher than the gross domestic product (GDP) of all but 16 countries in the world. Some of the most well known venture-backed companies that had one or more immigrant founders include Google, eBay, Yahoo!, Intel and Sun Microsystems. The study found California, particularly Silicon Valley, is by far the most common location for the jobs and innovations brought to America by immigrant entrepreneurs, although such entrepreneurs can be found throughout the country, particularly in Massachusetts, Washington, D.C., Texas and New Jersey. Immigrant Ronnie Vasishta, CEO of eASIC in Santa Clara, said, "Once you're in America, the environment, particularly with the venture capital community and network that exists in Silicon Valley, encourages ambition. An environment for growth exists that encourages and accelerates ambition, which doesn't exist in other parts of the world." A survey in the study indicated that about two-thirds of the immigrant founders of privately held venture-backed companies have started or intend to start more companies in America. Despite this positive track record, U.S. immigration policy continues to function poorly. Congress has failed to allocate a sufficient number of H-1B visas, which are a key nurturing stage for future immigrant entrepreneurs. In nine of the past 11 years, employers used the H-1B quota for foreign-born professionals before the fiscal year ended; in the past three years, employers exhausted the quota before the fiscal year started. H-1B visas are essential -- there is no other practical way to hire an outstanding international student off a U.S.campus or a researcher/professional from abroad. The wait is five years or more in the skilled green-card categories (for permanent residence) because Congress also has failed to raise those quotas. Nearly two-thirds of respondents to our survey whose companies use H-1B visas said, "Current U.S. immigration laws affecting skilled professionals harm American competitiveness." Some argue that companies only want H-1B visa holders for "cheap labor." This tired argument ignores several factors: 1) Companies pay about $6,000 in government and legal fees to hire H-1B visa holders. 2) Firms legally must pay H-1B professionals the same as comparable Americans and Department of Labor data (1999-2004) show the number of serious violations remain low in total and as a percentage of H-1B petitions approved. 3) If companies hired based only on wages, then they would move all of their work outside the United States, because it costs $60,000 for a software engineer in Boston and only $7,200 for one in Bangalore, according to a March survey by PayScale, an online compensation information service. 4) H-1B professionals change jobs frequently in search of better opportunities, except perhaps when they have a green-card application pending and want to avoid re-starting an application. But that's the fault of Congress for not raising the green-card quota for employment-based immigrants, which both U.S. employers and skilled immigrants want increased. A key lesson of the study is the importance of maintaining an open legal immigration system, because few of the immigrant entrepreneurs identified came to America prepared immediately to start a company capable of attracting venture capital. As the data, profiles and interviews revealed, most entered the country either as children, teenagers or graduate students, or were hired on H-1B visas to begin a first job while in their mid-20s. It's clear that while immigrants shape America, America also shapes the immigrants. This year Congress can recognize the importance of skilled immigration to innovation, job creation and entrepreneurship in America by raising the H-1B visa and green-card quotas during the "lame duck" session. Next year, the new Congress should implement broader reforms to help international students and skilled immigrants come to America. Stuart Anderson is executive director of the National Foundation for American Policy, a public policy research organization based in Arlington, Va. Michaela Platzer is president of Content First, a public policy research firm in Washington, D.C.