Date: Wed, 21 Mar 2007 00:06:36 -0700 From: Norm Matloff To: Norm Matloff Subject: Shh...it's really about cheap labor, but don't tell anyone http://www.boston.com/business/globe/articles/2007/03/14/greenspan_let_more_skilled_immigrants_in/ Data is fine, but there is nothing like a good old incriminating statement to shorten the process. A case in point is Alan Greenspan's remarkably candid statement, enclosed below, in which he says that we need H-1Bs and F-4 in order to hold down tech salaries. That's the real goal folks. All that talk of labor shortages, lack of PhDs, the need for innovation, American eighth grade math test scores, Baby Boomer programmers on the verge of retirement with no replacements in sight, etc. is pure smokescreen. What the employers really want is lower labor costs. That's all it's EVER been. Let me remind you of a similar candid statement by our own governmental National Science Foundation, which back in 1989 pushed Congress to create the H-1B program (which it did the next year) in order to keep PhD salaries down. The NSF remarked that "A growing influx of foreign PhDs into U.S. labor markets will hold down the level of PhD salaries...[The Americans] will select alternative career paths...[as] the effective premium for acquiring a PhD may actually be negative." In 1998, CNN reported: # Robert Walley, executive vice president of Gemini, says that unless # his company and others are able to find a new source of workers # [H-1B] "it would increase the prices of the resource pool. The people # out there looking for jobs, they're demanding premium salaries now, # and it will just drive that higher." In 2002, Sun Microsystems, always at the vanguard of pushing Congress to expand the H-1B program, wrote on a Web page at Mission College, encouraging students to train to be system administrators: # Costs continue to rise....At Sun we clearly feel the hiring pinch. # Qualified SA professionals have thinned out in the Silicon Valley # over the years. This smaller pool of candidates has driven salary # expectations even higher than they are in other parts of the # country...Contractors continue to inflate local salary expectations. Again, Sun is not saying here that no one is available. They just don't want to pay the price. Even the ITAA report of 1997, which launched the first big H-1B increase the next year, had moments of candor amid its extensive claims of a labor shortage. It said that "`We can anticipate further increases in the salaries of IT workers [which may make U.S. companies risk their profitability." In other words, there are workers available, but not at the price they want to pay--quite a contrast to the ITAA's repeated insistence that the bodies just weren't there. Also in the ITAA report there was this passage: # Training employees in IT would seem to be a win-win for both worker and # employer. And often that is the case. However, extensive training # creates other issues. "You take a $45,000 asset, spend some time and # money training him, and suddenly he's turned into an $80,000 asset," # says Mary Kay Cosmetics CIO Trey Bradley. That can lead to another # problem. New graduates trained in cutting edge technologies become # highly marketable individuals and, therefore, are attractive to other # employers. In other words, it's not that they can't get someone trained in what they want. No, again the problem is that they just don't want to pay him $80,000. So they hire an H-1B with the training and pay him $45,0000. So even with the ITAA, a close inspection shows that the real issue involving H-1B is CHEAP LABOR, not a shortage. As I've said, the data are very clear that we don't have a computer industry labor shortage. Starting for new graduates, including both Bachelor's and the graduate level, have been flat since 1999. The Duke University national employer survey found that employers themselves did not claim a shortage. But if you want to see the issue most clearly, forget the data and go straight to Greenspan et al. Norm The Boston Globe Greenspan: Let more skilled immigrants in By Bloomberg News | March 14, 2007 WASHINGTON -- Former Federal Reserve chairman Alan Greenspan said allowing more skilled immigrants to work in the United States would help keep the income gap from widening. Inequality of incomes is the "critical area where capitalist systems are most vulnerable," Greenspan said yesterday in Washington at a conference on maintaining the competitiveness of US capital markets convened by Treasury Secretary Henry Paulson. "You cannot have a system that we have unless the people who participate in it believe it is just." Allowing more skilled workers into the country would bring down the salaries of top earners in the United States, easing tensions over the mounting wage gap, Greenspan said. "Our skilled wages are higher than anywhere in the world," he said. "If we open up a significant window for skilled workers, that would suppress the skilled-wage level and end the concentration of income." Income inequality has risen in the past three decades. Kathleen Newland, director of the Migration Policy Institute, a Washington think tank, said she was skeptical of Greenspan's proposal. "In theory, increased skilled immigration should help contain wage rises at higher levels, but there is little empirical evidence," she said. "If you want to reduce political concern, it would be better to deal with the problem by helping to raise the wages of the lowest earners, by helping to improve productivity and raising the minimum wage."