Date: Wed, 15 Jul 2009 21:43:34 -0700 From: Norm Matloff To: Norm Matloff Subject: Washington Monthly runs infomercial To: H-1B/L-1/offshoring e-newsletter This past April, I was interviewed by T.A. Frank for the Washington Monthly. We talked for close to an hour, I think, but I didn't give it any further thought at the time. His piece came out a couple of weeks ago, which I learned from the Google Alert news service. But other than skimming through the piece and noticing it was rather one-sided, I again didn't pay much attention to it. But...today I was browsing through the Inst. of Governmental Affairs Library at UCB, and I noticed the Washington Monthly. Well, guess what? That Frank piece was part of a four-article Special Report in that May/June issue, titled How Washington Can Jumpstart Entrepreneurship, at the beginning of which is a startling statement, # This special report was made possible by the generous support of the # Ewing Marion Kauffman Foundation. What, the Washington Monthly ran an "infomercial"?! For those of you who don't recognize the name, Kauffman is a major funder of the research of Vivek Wadhwa, the critic-turned-supporter of H-1B visas and liberalized employer-sponsored green card programs. The foundation certainly has a point of view. It sponsored a World Entrepreneurship Conference this year, and it states (see www.kauffman.org/research-and-policy/immigration-and-the-american-economy.aspx) that it is funding Vivek in order to promote ("recognize the contributions of") high-skilled immigration. No problem there; most if not all foundations do have definite points of view on various topics. But it is improper, not to mention unbecoming, for the Washington Monthly a respected mainstream magazine, to run an "infomercial" funded by the foundation. And the journalist, T. Frank, should have made a disclaimer about the funding when he interviewed me. And Frank should have made the disclaimer that the "Duke University research" he cites is funded by that very same foundation. It seems to me that all of this is a serious breach of journalism ethics. Now, following are some comments on the article itself. I believe I brought up most or all of the points I'll make below during the interview. # The United States provides advanced degrees to thousands of the world’s # most gifted students Only a tiny percentage of foreign students are "the world's most gifted." On the contrary, the work by David North showed that most are concentrated in the less-prestigious universities. I've shown in many other ways that the vast majority are NOT "the best and the brightest." # According to a recent report issued by Duke University and the # University of California at Berkeley, roughly a quarter of technology # and engineering start-ups in the United States have founders who were # born abroad. Over half of Silicon Valley start-ups have at least one # immigrant founder. Again, Frank fails to disclose the fact that his "infomercial" sponsor is funding that work. In any case, as I've pointed out before, 62% of Silicon Valley engineers were foreign-born as of 2000. That says entrepreneurship rates are about the same for immigrants and natives, with the immigrants even lagging slightly behind. # Because the H-1B relies on employer sponsorship, which can easily be # revoked, foreign workers are vulnerable to exploitation... Well, I have to give T. Frank credit for saying this, even if he has the details wrong. I wonder if he knows that Vivek himself has stated this at www.american.com/archive/2008/july-august-magazine-contents/america2019s-other-immigration-crisis where he says "I know from my experience as a tech CEO that H-1Bs are cheaper than domestic hires. Technically, these workers are supposed to be paid a `prevailing wage,' but this mechanism is riddled with loopholes." # And once the clock runs out on an H-1B visa, the line for an # employment-based green card is daunting, with more than a million # applicants waiting for just over 100,000 spots each year. Again, ignoring some of the incorrect details here, the salient issue is that there are fast tracks for "the best and the brightest," and as I've shown numerically before, they don't have an inordinately long wait. The rest are ordinary people, of ordinary talent, doing ordinary work; while I sympathize with them, they are displacing U.S. citizens and permanent residents from their careers. And again, many of those displaced Americans are themselves "the best and the brightest." # One especially prominent opponent of increased H-1B immigration is # Professor Norm Matloff, a computer scientist at the University of # California at Davis. Matloff believes that Silicon Valley is blinded by # two vices: greed and ageism. Because of greed, technology companies hire # H-1B immigrants, who save them money. Because of ageism, Silicon Valley # pushes out older programmers who are perfectly qualified to do the work. # Such practices not only force talented older Americans out of the # technology industry, they also discourage bright young Americans from # entering it, thus squandering some of the country’s finest potential # talents. American technology workers would be doing better if there were # fewer foreign workers, says Matloff, and Silicon Valley would be just as # profitable and innovative, if not more so. # Now, there’s no way to say for sure that Matloff is wrong. The long paragraph again is off a bit on the details, but overall is a fairly accurate summary. But the backhanded phrasing in the next paragraph ("no way to say for sure he's wrong") is uncalled for. It implies that I'm just talking off the top of my head, rather than doing research. Frank refers to Vivek's "Duke University and University of California studies," while the reader gets the impression that I don't do studies. Putting aside the biased phrasing, the more important point is that my research findings (and my University of Michigan law journal article is the most extensive peer-reviewed study ever published on H-1B) have been obtained in similar forms by many other researchers, both at universities and government agencies. The underpayment of H-1Bs has been shown repeatedly by these researchers (as even Frank seems to concede), as have been the problems that older workers have in getting jobs in the field. Ditto for my research showing that we don't have a shortage of engineers (I've praised Vivek's study on this), and so on. # But two points work against his overall line of thinking. The first is # that high-skilled U.S. workers have enjoyed tremendous increases in # wages in the past few decades, while low-skilled workers have seen # losses and stagnation. Actually, it's the opposite. Engineers have lost ground in the last 20 years, in terms of inflation-adjusted wages, And keep in mind that that is deliberate. Alan Greenspan has said many times that we need H-1Bs to how down tech wages. In his recent Senate testimony, for instance, he said, "Greatly expanding our [visa] quotas for the highly skilled would lower wage premiums over lesser skilled." And it's ironic that Frank would use the last two decades as the time window to examine the situation, as in 1989 the National Science Foundation explicitly called on Congress to establish the H-1B program and bring in more foreign grad students in order the hold down PhD salaries. And the NSF noted that the resulting salary stagnation would drive American students away from pursuing a PhD, which of course is what did happen. # even if Matloff is right about ageism in Silicon Valley (and if he # is, we have a legal system to address such claims) Doesn't work that way. Age discrimination laws are very, very narrow, and hiring the younger worker is legal if he's cheaper. Frank then goes on at least about hiring the best. He and I talked about that quite a bit, and I assured him that I too support rolling out the immigration red carpet for geniuses (though again, they're rare), but I explained that hiring in Silicon Valley doesn't work like it does in the NBA. Engineers and programmers are viewed as commodities, and I've profiled here some of them who were forced from the field in spite of having a proven track record of innovation and contribution. Unfortunately Frank never understood this. He was clearly quite enamored of the tech industry, and actually said to me, "The tech industry has been good to us." The key point that Frank misses, then, is that H-1B is causing an internal brain drain, forcing out our own best and brightest, and causing many talented young people to not go into the field in the first place. # And high-skill workers who are displaced can at worst usually move down # the job chain: an unemployed nuclear physicist may take a temporary job # as a cashier. This is supposed to be comforting, an argument for displacing high-skilled Americans? With statements like that, I don't think Kauffman got its money's worth. Norm http://www.washingtonmonthly.com/features/2009/0905.frank.html Washington Monthly, May/June 2009 Special Report: Green Cards for Grads The U.S. educates brilliant students from around the world, then sends them home to work for our competitors. By T. A. Frank I recently spent several days in Northern California and came down with a mild case of wealth poisoning. This often happens when I travel to places like San Francisco and Palo Alto. The greenness, tidiness, and modernity of the Bay Area start to chafe, like a Barbra Streisand interview, and I become homesick for the soothing grime of Los Angeles. The feeling is especially strong in Silicon Valley, which seems determined to show the world how rich you can get without having any fun. But I'm not actually complaining. Thanks to innovation in places like Silicon Valley, the United States remains economically competitive in the world. It's the Bay Area that allows California to lead the nation in high-tech exports, pulling in nearly $50 billion annually. Last year, 39 percent of all venture capital in the United States found its way to Silicon Valley, an indication that the companies there are doing something right. This would all be very comforting, were the prosperity of America's technology hubs not so fragile. Unlike heavy industry, which relies on factories that are expensive to launch and hard to move, the knowledge industry is mobile. It's also relatively simple to capitalize, because, fundamentally, information technology is all about the brains. Whoever gets the best ones wins. For years, the United States effortlessly excelled at this game. The governments of China and India made conditions too disagreeable for innovators, while Europe and Australia effectively coasted. But our run of lazy luck is long gone. Today, China, India, the European Union, Australia, and other competitors are all vying to attract the most promising talents to their shores. China and India have greatly improved conditions for would-be entrepreneurs, and the EU is considering a skills-based "blue card" to compete with the green card offered here. Now, we are starting to see our rivals pull ahead of us. In 2007, high-tech exports from the United States to other countries totaled $214 billion, but imports amounted to $333 billion. If we must do the math (and in this case we must, even if India offers to help), then we arrive at an ugly result: a high-tech trade deficit of nearly $119 billion. When the world's leader in innovation can't break even, it's a dubious leader. One way to regain our dominance in the tech sector would be to get more of the brightest people in the world to move here. According to a recent report issued by Duke University and the University of California at Berkeley, roughly a quarter of technology and engineering start-ups in the United States have founders who were born abroad. Over half of Silicon Valley start-ups have at least one immigrant founder. And, according to Microsoft, 35 percent of its patents filed last year came from visa and green card holders. Skilled immigration has become central to innovation and entrepreneurship in the United States. As things stand, however, we're not exactly making new talent feel welcome. The United States provides advanced degrees to thousands of the world's most gifted students and then sends them home, where they can work for our competitors. That we pursue such a policy only increases my concern that all the smart people in the United States have already left. Students who wish to stay here after graduating must undergo arduous procedures that encourage people to exit rather than stay. Some are lucky enough to obtain O-1 visas or green cards purely on the basis of "extraordinary ability," but requirements are so stringent that few students can meet them early in their careers. Most face years of working on H-1B visas, for which demand dwarfs supply. Because the H-1B relies on employer sponsorship, which can easily be revoked, foreign workers are vulnerable to exploitation, which makes the prospect of working here less attractive and drives down wages for everyone. And once the clock runs out on an H-1B visa, the line for an employment-based green card is daunting, with more than a million applicants waiting for just over 100,000 spots each year. What's more, a maximum of 7 percent of employment-based green cards may go to citizens of any one country, meaning that Chinese and Indians are at an immense disadvantage to, say, Tuvaluans. For many applicants, no option remains but to leave the country. Although precise numbers aren't available, newspaper reports and statements by college professors and students suggest that today, in contrast to only five or ten years ago, students from China and India are more likely to return home after completing their education in the United States. Capitol Hill isn't entirely oblivious to such problems. While there is immense disagreement over how to resolve the status of those who are in the country illegally, most members of Congress recognize that legally employed, accomplished immigrants are valuable to the economy. Even a hard-liner like Republican Tom Tancredo has conceded that "the kind of immigration that would have a positive impact would most likely be the kind that is made up of high-income, high-skilled people." Nevertheless, because the entire topic of immigration has become so poisonous, even the most milquetoast stand-alone legislative proposals have stalled. One bill that seemed to have a decent chance at passage was sponsored by Republican Senator John Cornyn in 2007 and would have removed caps on employment-based green cards for workers with advanced degrees. (The bill wouldn't have scrapped H-1Bs, but it would have made them more easily available, which is better than nothing.) This went nowhere. Arlen Specter proposed something similar. This went nowhere. Last year, congressional Democrats such as Zoe Lofgren of San Jose proposed lifting the 7-percent-per-country cap on green cards. Guess where that went. Lately, with the country in recession, Senators Charles Grassley and Dick Durbin have tried to restrict H-1Bs even further, stating that Americans should get an easier shot at available jobs. One especially prominent opponent of increased H-1B immigration is Professor Norm Matloff, a computer scientist at the University of California at Davis. Matloff believes that Silicon Valley is blinded by two vices: greed and ageism. Because of greed, technology companies hire H-1B immigrants, who save them money. Because of ageism, Silicon Valley pushes out older programmers who are perfectly qualified to do the work. Such practices not only force talented older Americans out of the technology industry, they also discourage bright young Americans from entering it, thus squandering some of the country's finest potential talents. American technology workers would be doing better if there were fewer foreign workers, says Matloff, and Silicon Valley would be just as profitable and innovative, if not more so. Now, there's no way to say for sure that Matloff is wrong. But two points work against his overall line of thinking. The first is that high-skilled U.S. workers have enjoyed tremendous increases in wages in the past few decades, while low-skilled workers have seen losses and stagnation. To the extent that immigration has had a negative effect on the wages of American-born workers, the burden hasn't been borne by graduates of MIT. The second is that from the perspective of the United States as a whole, it's worth remembering that even if Matloff is right about ageism in Silicon Valley (and if he is, we have a legal system to address such claims), the point of nourishing such a place isn't only to provide American technology workers with employment. It's to provide the nation with wealth and a technological edge. It's to help right our trade balance through high-tech, high-income industries. And to do that, we need to do more than simply fill available vacancies with qualified applicants. For any endeavor that aims to be the best of its sort, an oversupply of talent is necessary. For every professional violinist in the United States, dozens of nearly-as-good--or sometimes even superior--violinists are out of luck in the quest for orchestral employment. If we examine a different sector, such as professional basketball, all these principles are taken for granted. Take Yao Ming of the Houston Rockets. He's a one-man multimillion-dollar business, and his talent creates work for hundreds of Americans who work for him directly or indirectly in support roles. Undeniably, though, he is also taking away a job that an American-born basketball player could do instead, and there are thousands of American-born basketball players unable to find employment in the field. If the point of having basketball teams is to provide as many American basketball players as possible with jobs, then the United States is following a very wrongheaded immigration policy. (Out of fewer than 500 NBA players currently employed in the United States, more than seventy are foreign-born.) But if the point is to create the most competitive teams in the world and to broaden the appeal (and export, and merchandising, and ticket sales, and broadcasts) of basketball to as wide a world market as possible, then our current policy is rather good. A sensible immigration policy would cease placing undue burdens on low-income Americans (in the form of millions of low-skill workers) and start adding to the ranks of high-skill workers, who generate greater innovation and wealth. An immigrant janitor competes for one of a limited number of janitorial jobs, and an oversupply of candidates merely drives down wages. But an immigrant inventor may devise a product that will be manufactured, distributed, marketed, and even exported--all processes that create jobs. While low-skill workers tend to take jobs, high-skill workers tend to make jobs. And high-skill workers who are displaced can at worst usually move down the job chain: an unemployed nuclear physicist may take a temporary job as a cashier. But low-skill workers who are displaced can rarely move up the job chain: an unemployed cashier cannot take a temporary job as a nuclear physicist. The way forward, then, should be pretty simple in principle. Any student with an advanced degree in science, technology, engineering, or math should be offered a reasonable chance at permanent residency in the United States, provided that she can obtain (and retain) employment in her field. The overall aim of any policy we devise should be to prevent an exodus of the people we've educated. Yes, we're in a recession. But that doesn't mean we can take a break in the race for economic and technological leadership--quite the opposite. The surest way to lose a battle is to forget that the primary goal isn't to make jobs for soldiers. It's to avoid getting one's ass kicked. Return to Special Section Table of Contents __________________________________________________________________ Subscribe & Save! Gift Subscriptions Make a Tax Exempt Donation Make tax deductible contribution with PayPal - - Advertisers - - __________________________________________________________________ IFRAME: http://harvest538.adgardener.com/daisies.aspx?isS=-1&s=94&p=c273f2e6-f8 83-dd11-a475-001a4befa6a0&c=b066c125-f983-dd11-a475-001a4befa6a0&ihr=1 [noscript.aspx?s=94&w=160&h=600&c=b066c125-f983-dd11-a475-001a4befa6a0] Liberal Blog Advertising Network T. A. 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