Date: Wed, 10 Nov 2004 14:30:29 -0800 From: Norm Matloff To: Norm Matloff Subject: more on the industry's current push in Congress to expand H-1B To: H-1B/L-1/offshoring e-newsletter I've seen a lot of egregious outrages in the H-1B debate, but this one, from a press release by a lobbying organization, really hits a new low: Washington, D.C. - Leaders of American business and academia today urged Congress to take immediate action to end the ban on hiring of highly educated foreign professionals with advanced degrees from U.S. universities. End the "ban"? The "ban"???? This makes it sound like there is a law banning the hiring of foreign nationals with U.S. graduate degrees. What an outrageous manipulation of words! As most of you will know before reading the rest of the press release, this is part of the industry lobbyists' concerted effort to get Congress to exempt people having U.S. graduate degrees from the yearly H-1B cap. As I've stated before, such an exemption would NOT be warranted, but at least the actual wording of the request is accurate. But to call for an end to a nonexistent "ban" is really audacious. And no doubt this word has become part of their tactics. I can picture industry lobbyists meeting with Rep. XYZ, saying, "How can you even think of retaining the ban on hiring foreign nationals with U.S. graduate degrees when our country needs them to retain its world technological leadership?" And this is happening as we speak; recall a mini-session in Congress was scheduled for mid-November. Don't be surprised if you suddenly find that Congress enacts legislation adding the proposed exemption to the H-1B cap within the next week to 10 days. (I'll be surprised if they do NOT.) The lobbyists have been pushing for this for months. These people are very slick, getting newspaper editorial boards to write editorials supporting the proposed exemption, and "planting" articles supporting the exemption in newspapers and magazines, such as the article in the New York Times which I posted yesterday. By the way, I wrote that posting in a rush, and my list of main points was incomplete. Here is a more complete version: 1. There is no "shortage" of U.S. citizens and permanent residents with graduate degrees. On the contrary, those same employers who claim such a "shortage" are laying off programmers and engineers with graduate degrees in droves. Meanwhile, in the last few years, the terrible job market has resulted in university graduate programs in the tech areas being inundated with domestic applicants. reference: "Dot-Com Dropouts Go Back to School," Vanessa Hua, San Francisco Chronicle, January 27, 2002 2. The fact that typically about 50% of enrollments in U.S. PhD programs in engineering have been foreign students has been due to the fact that having a PhD causes a net lifetime LOSS in earnings. The salary premium for PhDs is not high enough to compensate for the five or more years of forgoing an industry salary while pursuing graduate study. For the foreign students, on the other hand, it is a large INCREASE in lifetime earnings, relative to what they would have in their home country. In addition, they get major nonmonetary compensation in the form of a green card. (And PhD holders are given priority for green cards.) For the same reasons, the availability of the large numbers of foreign students enables the universities to keep graduate student research assistant stipends low (typically aroud $15,000/year). The National Science Foundation, a government agency, actually promoted this situation, calling for the importation of foreign graduate students in order to keep PhD salaries and graduate student research assistantship stipends down. In other words, the high enrollment the H-1B program--AS ALWAYS--is about CHEAP LABOR. The obvious solution is to raise the stipends on graduate assistantships enough to make the financial tradeoff discussed above attractive to Americans. References: National Research Council, "Building a Workforce for the Information Economy," National Academies Press, 2001, http://books.nap.edu/html/building_workforce/ Eric Weinstein, "How and Why Government, Universities, and Industry Create Domestic Labor Shortages of Scientists and High-Tech Workers," NBER, Harvard University, 1998, http://users.nber.org/~peat/PapersFolder/Papers/SG/NSF.html Ed Frauenheim, "Brain Drain in Tech's Future?", CNET News.com, August 6, 2004, http://zdnet.com.com/2100-1104_2-5299249.html?tag=sas.email 3. The sizes of engineering graduate programs are decided by the universities' own selfish agendas. They want to build/maintain research empires, in which the goal is to get as much federal research money as possible. The number of graduate students in a program in a department is typically decided by multiplying the number of faculty in the department by an implicit "quota" of PhD production per faculty member. Thus the sizes of the graduate programs are set according to the universities' selfish "needs," not by society's economic needs. Indeed, contrary to the national-interest argument put forth by the universities and industry lobbyists, most holders of U.S. graduate degrees, whether foreign or domestic, end up doing work which does not require such a degree. references: William F. Massy and Charles A. Goldman, "The Production and Utilization of Science and Engineering Doctorates in the United States," Stanford Institute for Higher Education Research, Stanford University, July 1995 William F. Massy and Charles A. Goldman, "The PhD Factory," Anker Press, 2001 Anthony Ralston, "The Demographics of Candidates for Faculty Positions in Computer Science," Communications of the Association for Computing Machinery, March 1996 Richard Monastersky, "Is There a Science Crisis? Maybe Not," The Chronicle of Higher Education, July 9, 2004 material in http://heather.cs.ucdavis.edu/Archive/ForeignGradStudents.txt 4. The biggest factor underlying the drop in foreign student enrollment is not that visas are harder to get, but rather that the would-be foreign students see that future job prospects in the U.S. in engineering are very poor while job opportunities in their home countries are very bright. references: Jen Lin-Liu, "A Chinese University, Elite Once More, The Chronicle of Higher Education," July 9, 2004 material in http://heather.cs.ucdavis.edu/Archive/ForeignGradStudents.txt 5. The industry lobbyists often claim that the case of major U.S. firms hiring H-1Bs with graduate degrees is different from that of Indian firms like Tata Consultancy Services hiring H-1Bs who just have Bachelor's degrees. The claim is that firms like TCS underpay their H-1Bs while firms like Intel "need" H-1Bs with graduate degrees and pay them good wages. That claim is absolutely false, with Intel being a perfect case in point. references: my analysis of Intel's underpayment of H-1Bs with Master's and PhD degrees, http://heather.cs.ucdavis.edu/Archive/GradDegrees.txt 6. The industry lobbyists are claiming that since the H-1B cap for this fiscal year is already exhausted, the cap "must" be raised (including by making a new exemption category. But the fact is that with current unemployment and UNDERemployment (e.g. driving a school bus for a living) of American programmers and engineers, there really is no excuse for hiring H-1Bs other than in highly exceptional cases, especially given the fact that there are already various major exemption categories. 7. Most of the foreign graduate students are NOT "the best and the brightest." Virtually anyone in the world with a Bachelor's degree can can get accepted to *some* U.S. college Master's program. And the study by David North found that the foreign PhD students were concentrated in lower-ranked U.S. schools. The industry lobbyists' press release is enclosed below. Norm FOR IMMEDIATE RELEASE November 10, 2004 Contact: Eric Thomas 202/822-9491 Business and Academic Leaders Urge Congressional Action to Remedy H-1B Visa Crisis Washington, D.C. - Leaders of American business and academia today urged Congress to take immediate action to end the ban on hiring of highly educated foreign professionals with advanced degrees from U.S. universities. In a letter to all Members of Congress, the leaders cited the October 1st announcement that the annual cap on H-1B visas had been exhausted on the first day of the new fiscal year as evidence that the system needs an immediate remedy. The letter was distributed by Compete America. "Hitting the H-1B cap on the first day of the year creates a critical problem for U.S. competitiveness. H-1B professionals make a significant contribution to our economy, yet current visa limits prevent the United States from benefiting from their talents - even if they have been educated in this country," said Sandra Boyd, National Association of Manufacturers Human Resources Policy Vice President and Compete America Chair. "This issue cuts across all segments of our economy, including healthcare, education, research and engineering. By exempting foreign students receiving advanced degrees from U.S. universities from the H-1B cap, Congress can affect an immediate remedy to a critical problem." In the letter, the business and academic leaders stated: While our economy has become more dependent on medical, scientific and engineering talent, fewer U.S. students are pursuing advanced degrees in these fields. The shortfall has been made up in large part by foreign nationals, many of whom are now actively involved in advanced research in universities and laboratories across the country. It is imperative that U.S. industries, universities, hospitals and research facilities have access to these highly qualified individuals. And it is counterproductive to force these individuals, most of whom have multiple job offers, to return home or to work for our overseas competitors. "There is widespread consensus among America's business, academic and scientific communities that the United States benefits greatly by welcoming highly educated professionals from throughout the world," said Boyd. "The H-1B system is broken and there are no visa alternatives. The system does not accommodate the realities of the structural and demographic changes occurring in the workforce and in graduate education. Congress needs to fix it this year to avoid a crisis." A copy of the letter to Congress is available at www.competeamerica.org. Compete America ( www.competeamerica.org) is a coalition of more than 200 corporations, universities, research institutions and trade associations concerned about legal, employment-based immigration and committed to ensuring that the United States has the highly educated workforce necessary to ensure continued innovation, job creation and leadership in a worldwide economy. # # #