To: H-1B/L-1/offshoring e-newsletter Wed Apr 9 20:40:45 PDT 2014 In a recent post, http://heather.cs.ucdavis.edu/Archive/CompeteAmerica.txt I reported that the industry lobbying group CompeteAmerica had held a phone-in press conference, extolling the virtues of H-1B and urging Congress to expand the program. CompeteAmerica's featured speaker at the press conference was Matthew Slaughter of the Dartmouth business school. I pointed out that rather than being an academic with no vested interest in H-1B, Dr. Slaughter's research on H-1B had been paid for by CompeteAmerica. See Slaughter's Web page, http://faculty.tuck.dartmouth.edu/matthew-slaughter/research-publications/general-interest-sponsored-research-publications/ Slaughter and his research partner, Gordon Hanson of UCSD, have written a document, "Facts and Fallacies about High-Skilled Immigration and the American Economy," which you can download from the CompeteAmerica Web site, http://immigration.uschamber.com/uploads/sites/400/facts_and_fallacies_high_skilled.pdf In it, they criticize one of my research papers, one by Daniel Costa, one by Ron Hira, and one by Daniel Kuehn, Lindsay Lowell and Hal Salzman. They base that criticism largely on their own CompeteAmerica-sponsored paper, "Talent, Immigration and U.S. Economic Competitiveness." My research in the field is rarely criticized, which is a source of disappointment to me. The way academic research works, or is supposed to, is through a constant process of give-and-take, refinement, exchange of ideas and so on. I don't know whether to interpret the lack of criticism of my work as being due to there not being anything people can find to criticize, or because those writing on the other side know that my work has no influence. :-) In any event, I'm pleased that here is finally some feedback on my work, albeit feedback paid by a lobbying group that doesn't like my message, and albeit on just one immediately-refutable aspect. Mind you, statements of the form "You say X but I say Y" don't qualify as criticism. What I hope to see is someone saying that my statistical models are wrong, that my assumptions are flawed, and so on. Hanson and Slaughter have only one comment along those lines, either about my work or those of the people mentioned above: "Studies claiming to find that foreign-born STEM workers are paid less than their American coworkers have used data that are not representative of the entire U.S. labor market e.g. Matloff (2013) uses the National Survey of College Graduates, which covers only workers who have obtained degrees from American universities." They are correct, of course; my study did in fact mostly use the NSCG data. (Though I also used the USCIS PERM data, which is not restricted to those graduating from U.S. schools.) And most important, my study was restricted to those who first entered the U.S. as foreign students. But the reason I used that data is that the INDUSTRY ITSELF says that this is the most important category of foreign STEM worker. I state that in the opening sentence of my paper: "The technology industry, in lobbying Congress for expansion of programs to attract skilled foreign workers, has long claimed that foreign students graduating from U.S. universities in science, technology, engineering, and mathematics are typically “the best and the brightest,” i.e., exceptionally talented innovators in their fields." CompeteAmerica itself lists this as first legislative priority on its Web page: "1. Let's stop the brain drain this graduation season! After educating foreign-born students in key technical fields, American should retain them for the U.S. innovation economy. The latest data on advanced engineering degress awarded to foreign-born students by U.S. universities provides support for the argument that a green card should be stapled to these diplomas." CompeteAmerica's president, Scott Corley, made the same point repeatedly in his lengthy C-SPAN interview last week. The industry has been saying this for years. That's why a special 20,000-worker category, for foreign grads of U.S. universities, was added to H-1B in 2004. That's why the Senate immigration bill, includes provisions to greatly liberalize H-1B and green card rules for the foreign grads. That's why President Obama has brought up the topic in various speeches. Facebook's Mark Zuckerberg made a big point of retaining the foreign students in his Washington Post op-ed, April 10 of last year. So the industry itself, not I, singled out this group, and it thus makes sense to study it. In terms of the other authors they criticize, it's all of the "You say X but I say Y" category. A key example is that those authors have pointed out that STEM wages have been flat, indicating that we don't have a STEM labor shortage. H&S don't dispute that flatness, but they say that STEM wages are rising relative to non-STEM. Too bad for the non-STEM people, but this obfuscates the argument; a shortage is a shortage, and flat wages are flat wages. If the price of blue widgets is decreasing but that for red widgets is flat, it still doesn't mean we have a shortage of red widgets. In any case, the difference they find between STEM and non-STEM rates of changes is tiny, only about a half percent a year. Speaking of methodology, in claiming that H-1Bs are not underpaid, H&S make a classic mistake. In defining "immigrant worker," they take it to mean anyone who entered the country after age 18. The problem is that most of these immigrants in their data set already have green cards at the time their data is recorded--and thus are no longer subject to wage explotation. They also make the more subtle, but just as important, mistake of ignoring the fact that the H-1Bs are hired for rare skill sets, according to the industry itself. These skills typically command a premium of 15-25% on the open market. (See data in my papers.) If H-1Bs are found to be making the same as Americans, that means they are underpaid by roughly 20%. There is also the age issue, of course, where the savings to the employer accruing from hiring a young H-1Bs instead of an older American approaches 50%. Sadly, this is usually overlooked in discussions of H-1Bs as cheap labor. Not surprisingly, H&S make the usual "50% of engineering PhDs granted by U.S. universities are foreign students" statements that the industry lobbyists love so much. But as I've said so often, PhD study is a bad financial investment for Americans, with insufficient return on salary. Actually, Corley himself made statements tantamount to this in his C-SPAN interview. Or, if you prefer sound bites, here's a great one: "...a Ph.D. in computer science is probably a financial loser in both the short and long terms, says [Cisco Systems Vice President for Research] Douglas Comer" -- Science Careers, April 11, 2008. All this, as forecast in the 1989 NSF document, is due to the foreign influx, which has suppressed PhD wages. Again: H-1B is the CAUSE of the low numbers of Americans pursuing doctorates, not the SOLUTION. And H&S also point to low unemployment in some STEM groups. As I've explained, that masks the fact that workers having difficulty finding work have to leave the field. The former engineer now working as a sales clerk at Radio Shack counts as an employed sales clerk, not an unemployed engineer. I could make a number of other points on H&S' paper, but the above is quite enough. Norm Archived at http://heather.cs.ucdavis.edu/Archive/HansonSlaughter.txt