Date: Tue, 12 Feb 2008 21:33:42 -0800 From: Norm Matloff To: Norm Matloff Subject: "Should the U.S. Be Training Its Competitors?" To: H-1B/L-1/offshoring e-newsletter The average person who read the title of Liz Peek's column enclosed below would have guessed that her answer was No, meaning we should reduce or eliminate our foreign student program, but it's actually Yes, as you'll see halfway through the piece. I have comments on a few points: # American universities are the envy of the world, which is why the # number of foreign students they attract is again increasing after a # brief slowdown induced by the terrorist attacks of September 11, 2001. The vast majority of foreign students in tech fields came here in masses not because American universities are so good but because the schools were steppingstones to immigration and a higher standard living. There's nothing wrong with this, of course, but it is important to understand what attracted them here, because the reason for the post-2000 (not post-2001) decline in foreign student enrollment was the slowdown in the U.S. tech job market, not tightened visa requirements. Foreign students in tech are no different from the domestic ones--their enrollment rises and falls with the economy. Though overall international student enrollment has risen in the last few years, this has been attained only by way of extensive recruitment efforts and lowered admissions standards. # That has changed. These days, many if not most foreign students are all too # excited to return home and participate in their own local booming economies True, but she is missing the point: It's not just that they are starting to go back, but more importantly, many are not coming here in the first place. The economies back home are booming, and tech careers in the U.S. do not provide good long-term prospects. So their entire point of coming here in the first place is gone. # Keep in mind that 26% of the tuition of these foreign students # is paid by the schools they attend. In the case of graduate students in tech fields, the percentage is even higher. At any big research university, most foreign students in tech fields have their tuition paid by the federal government. So, Peek's questioning of why we are bringing foreign students here (at this point in her column she hasn't yet let the reader know that she actually supports it) is quite on point. But Peek eventually gets to the point: She supports the H-1B visa program and especially the proposed F-4 visa. The latter would basically give foreign students who study tech in the U.S. automatic green cards. To her (or to her husband, who according to Rob Sanchez's newsletter is an employer of H-1Bs), H-1B is "obviously" good, with no downside. She dismisses critics out of hand: # You may be wondering who in the world could be opposed to expanding the # H1-B visas. There are some who argue that employers want to hire foreign # nationals because they can pay them less, and others claim that the visa # program reduces employees to indentured servant status. # The numbers do not support these objections. The National Foundation for # American Policy put out a study in December full of facts and figures that # indicates the abuse of the program is minor. It also shows that thousands # of job searches are under way at the tech companies. During the tech boom, # as salaries for hard-to-find programmers and engineers went through the # roof, it is likely that foreigners were hired at below prevailing rates. # That is now illegal. Further, the founder of Immigration Voice, Aman # Kapoor, says abuses could easily be cleared up by establishing protections # for whistleblowers. Ahh, I knew Stuart Anderson/NFAP would pop up in there somewhere. What Peek is not telling her readers is that Anderson is hardly some objective researcher. He has been making a living writing pro-H-1B articles for years, starting with his work with the pro-business Empower America and the major tech lobbying group ITAA. As to the underpayment of H-1Bs, Anderson is completely obfuscating the issue. He points to the fact that ILLEGAL underpayment is rare, which is true, but he draws people's attention to this in order to hide the fact that LEGAL underpayment is widespread, due to huge loopholes. I've written at length on this before, but suffice it to recall that the GAO found in their survey that employers were openly admitting to "[hiring] H-1B workers in part because these workers would often accept lower salaries than similarly qualified U.S. workers," but that employers were quick to add that "they never paid H-1B workers less than the required wage"--because the legally required wage is much lower than the market wage. This is what a good industry advocate does--divert attention from the real issue by focusing on something minor. But Peek's statement, # During the tech boom, as salaries for hard-to-find programmers and # engineers went through the roof, it is likely that foreigners were # hired at below prevailing rates. suggests that Anderson has now outfoxed himself. Here's why: Academic and government studies have shown repeatedly that H-1Bs are paid less on average than Americans. Assuming that Peek's statement above came from Anderson, apparently this is what he's come up with to "spin" those studies. His new line seems to be, "Yeah, during the late 90s wages were going up so fast that the government's prevailing wage figures lagged behind, and therefore the H-1Bs were paid less than market wage." Well, if this is indeed Anderson's new line, it makes no sense at all. (Not that it has to, given our gullible journalists and even more gullible Congress.) After all, the U.S. citizens and permanent residents were being paid market wage then (by definition of "market wage"!), so if the H-1Bs were indeed being paid the out-of-date government wage as Peek/Anderson say, then that jibes perfectly with the GAO comment above ("these workers would often accept lower salaries than similarly qualified U.S. workers")--certainly not the message Anderson wants to convey. Furthermore, if that line in Peek's column really did come from Anderson, then he is blatantly contradicting his own mythology, which is that the H-1Bs are savvy players who move freely in the open labor market to get the best deal, just like the Americans. For instance, in his 1997 article in International Educator, the house organ of the foreign-student adviser organization NAFSA, ironically titled "They Don't Work Cheap," Anderson wrote: % The issue of whether foreign-born professionals are paid less than % American-born professionals is best summed up by Ehud Yuhjtman, an % Israeli-born engineer at Chip Express who often interviews prospective % hires. "You cannot pay foreign-born engineers less. These are smart % people; if you try to fool with them, they will go someplace else." As I've written elsewhere, H-1B is a major factor fueling the rampant age discrimination in the tech labor market. Younger is cheaper, and cheap is what drives things. When employers run out of young Americans to hire, they turn to young H-1Bs rather than older (age 40+) Americans. That's why F-4, the automatic-green card-for-foreign-students proposal, is a bad idea. Since the vast majority of foreign students are young, this would exacerbate the already-egregious situation we have now, especially given that there is no labor shortage (which even Peek seems to accept). And the whole idea of F-4, to keep the foreign students with us instead of having them go back home and work for our competitors, doesn't make sense either. Research by UCB Professor Saxenian (who is quite pro-industry and a favorite of the industry lobbyists) shows that many former international students who get U.S. green cards end up helping our competitors anyway, either by going back home permanently or by providing consulting expertise and playing investor roles. Now, what about MY answer to the question Peek's title poses, "Should we educate our competitors?" First, I'm happy to have competitors. The tech industry has helped a segment (albeit a very small one) of Indian society prosper, and it is on its way to doing so in China. Good for them. My only objection is that cheap labor programs are displacing Americans in OUR tech industry, and for that matter in our graduate schools too. When the foreign students stop coming here, we'll be stuck with an industry with no workers. So, my answer to the foreign student issue is, as it has been, that we take only "the best and the brightest," which is only a small percentage of the current foreign student population. For those top talents, we should roll out the red carpet for them immigrationwise. And we DO. As Anderson and Immigrant Voice failed to tell Peek, we have special immigration categories for those of outstanding ability, which are fast tracks to green cards. The H-1Bs who've been waiting six years or more for a green card are the ones in the lowest employment-related green card category, for people of no special talent. Norm http://www.nysun.com/article/70731?access=892598 February 5, 2008 Should the U.S. Be Training Its Competitors? BY LIZ PEEK February 5, 2008 Should America educate its competitors? At a time of economic worry, this is a highly important question. American universities are the envy of the world, which is why the number of foreign students they attract is again increasing after a brief slowdown induced by the terrorist attacks of September 11, 2001. Because even those who pay full tuition do not actually cover the total cost of their education, will Americans at some point cry foul? This may seem an absurd notion, given the obvious good will generated when America hosts international students. However, in an era where America is increasingly counting on intellectual capital to compete in world markets, the notion of exporting that capital -- at a discount, no less -- may strike some as stupid. The question is especially pertinent today. In the past, foreign students attended American colleges and universities and then eagerly accepted jobs in America. Few foreign countries offered equivalent opportunities to so quickly benefit from higher learning, so students were easily tempted to set down roots in the U.S., many eventually becoming American citizens. That has changed. These days, many if not most foreign students are all too excited to return home and participate in their own local booming economies -- economies that are thriving mainly because of the outsourcing of American jobs or because they are successfully undercutting American manufacturers. Consider: The top three countries sending students to America are India (no. 1, for the sixth year in a row), China, and South Korea. What do they study? Business, engineering, and the sciences, in that order. There is nothing wrong with India and China employing their natural advantages, which include large work forces, to compete on the basis of lower production costs. But someone is bound to ask why America isn't using its advantages, which include higher education, in the same way. Why not restrict the number of foreign engineering and technology students flowing through our campuses, and keep America's superior training ground its students? Americans are the ones who have built the endowments of private institutions that help pay for those degrees; Americans pay the taxes that bridge the gap between tuition and the cost of educating all those fertile young minds. Keep in mind that 26% of the tuition of these foreign students is paid by the schools they attend. Okay, so I don't really believe that America should chuck out foreign students. I do think that exposing young people from around the world to our great country is extremely positive for international relations. (Even though the anti-U.S. mindset of many, many university professors does not help the cause.) Think of King Abdullah II of Jordan, who attended Deerfield Academy and was so taken with it that he is building a copycat institution in Jordan. That has to be a good thing. But, if you believe that these international students should of course be granted access to America's schools, shouldn't we try to keep them in the U.S.? I'm referring to the controversy over H1-B visas, which allow highly skilled workers to get jobs in America. The immigration debate simply should not include highly educated workers. Congress has capped the number of H1-B visas at 65,000, down from 115,000 during the technology boom, when Silicon Valley was struggling to supply its ranks of software engineers. There are additional 20,000 visas available to students graduating with advanced degrees from American schools (compared to about 300,000 international graduate students). Last year, the visas were snapped up in one day. The government received almost 124,000 petitions before it closed the window. Why is this so important? Because the alternative path to hiring skilled workers, through regular immigration, can take many years. Few employers are willing to wait around for that long. In 2006, the Senate passed a bill that would increase the number of H1-B visas to 115,000, and would allow for greater flexibility going forward. It would have increased the number available for people with advanced degrees from American universities and allocated more visas to citizens of countries with whom we establish trade agreements. You may be wondering who in the world could be opposed to expanding the H1-B visas. There are some who argue that employers want to hire foreign nationals because they can pay them less, and others claim that the visa program reduces employees to indentured servant status. The numbers do not support these objections. The National Foundation for American Policy put out a study in December full of facts and figures that indicates the abuse of the program is minor. It also shows that thousands of job searches are under way at the tech companies. During the tech boom, as salaries for hard-to-find programmers and engineers went through the roof, it is likely that foreigners were hired at below prevailing rates. That is now illegal. Further, the founder of Immigration Voice, Aman Kapoor, says abuses could easily be cleared up by establishing protections for whistleblowers. There are, naturally, labor organizations opposing expansion of the H1-B program. The Programmers Guild and the Institute of Electrical and Electronics Engineers are two such groups claiming that foreigners drive down wages for their members. A spokesman for the IEEE, Chris McManes, argues that there are "no systemic shortages of electrical engineers" though he acknowledges that "there are shortages in some geographic areas and in some emerging industries." In propping up wage scales that are likely a hangover from the tech boom of the late 1990s, these organizations are of course pushing corporations to outsource. As the head of the National Foundation for Public Policy, Stuart Anderson, says, "It makes no sense to not view this as a global labor market." He says that while America refuses to welcome highly skilled workers, the European Parliament is currently at work on a provision that aims to attract such laborers. At the very least, we should be sure that foreigners who are educated in our universities are allowed to stay and work in our country. As Tamar Jacoby of the Manhattan Institute says, "Graduate students should have green cards stapled to their diplomas." Amen to that. peek10021@aol.com