A scheme to lower engineers’ wages

The (false) case for foreign tech workers

Steve Mollenkopf
  • Steve Mollenkopf

Congress will shortly be taking up a bill that is based on a blatant lie. (It won’t be the first time that has happened.) During a period in which both political parties bemoan declining middle-class incomes, Congress will consider legislation, introduced January 13, that will hammer the middle class economically.

The bill, called the Immigration Innovation (I-Squared) Act of 2015, would permit American corporations to bring in more foreign workers for three- to six-year stints in low- to moderate-pay science, technology, engineering, and mathematics positions. They would get in through the H-1B program. I-Squared was part of last year’s comprehensive immigration-reform bill that did not get through both houses of Congress.

Ron Hira

Ron Hira

Under I-Squared, if it passes, the annual base cap on H-1B visas will rise from 65,000 to 115,000 but subsequently could escalate up to 195,000, says Ron Hira, professor of public policy at Howard University. If a number of loopholes and exceptions are included, “300,000 is a high estimate, but it isn’t out of the question,” says Hira. In any case, I-Squared will provide the tech industry “a huge increase in the supply of lower-cost foreign guest workers so they can undercut and replace American workers at lower pay.” And that means that salaries of all tech workers, including those trained in America, could be pulled downward.

Large American tech companies hire armies of lobbyists to convince politicians that there is a shortage of United States–based science, technology, engineering, and mathematics graduates, and hence companies need lower-wage foreign workers.

That is the lie.

A 2013 study by the Economic Policy Institute showed that American universities graduate 50 percent more students in computer, information science, and engineering each year than are hired in those fields. Of computer-science grads not entering the information-technology workforce, one-third say it is because such jobs are unavailable. Inflation-adjusted tech wages remain at 1990s levels. “The data strongly suggest that there is a robust supply of domestic workers available for the [information technology] industry,” concludes the Economic Policy Institute.

The National Association of Colleges and Employers projects that the starting wage for new computer-science graduates will drop 9 percent to $61,287 this year. Says the journal Science, “Ordinarily, rapidly falling salaries indicate a glut, not a shortage.”

Norm Matloff

Norm Matloff

Professor Norm Matloff of the University of California Davis states on his website that corporations claim they are hiring the “best and the brightest” through the H-1B program. But it’s not so. “The average quality of the H-1Bs is lower than that of the Americans’,” he says. H-1Bs “are not doing work for which qualified Americans are unavailable. There is no [science, technology, engineering, mathematics] labor shortage.” Indeed, replacing higher-quality American workers with lower-quality foreign workers is harmful to the economy, Matloff says.

Estimates vary on how many trained science, tech, engineering, and math workers are in the United States. Hira goes with five to six million. He thinks there are 500,000 to 600,000 H-1Bs in the country. It’s easy to see that the H-1Bs could produce downward pressure on engineers’ wages.

Some critics say H-1B is basically a ruse to lower engineering-related salaries so companies can please Wall Street with higher earnings — thus driving up the stock. Since top executive salaries are increasingly tied to stock performance, driving down labor costs is a route to driving up stock prices and top executive pay. Consider San Diego–based Qualcomm, one of the largest American corporate users of H-1Bs. Between 2011 and last year, the company filed for 4743 H-1B applications.

In March of last year, Steve Mollenkopf took over as chief executive of Qualcomm from Paul Jacobs, who became executive chairman. According to Bloomberg Business, Mollenkopf and Jacobs were paid a combined $117.7 million last year. Mollenkopf was awarded total calculated compensation of more than $60.7 million and Jacobs $56.9 million. Mollenkopf is 46 and Jacobs 52. Both had modest cash compensation but restricted stock awards of more than $50 million. The stock awards could depend on a number of future variables, and there could be invidious comparisons, but still, the total sum is staggering.

Basically, H-1B involves “a massive transfer of wealth from the middle class to Wall Street,” says Russell Harrison, director of government relations for the Institute of Electrical and Electronics Engineers–USA.

Amy Klobuchar

Amy Klobuchar

Chris Coons

Chris Coons

Jeff Flake

Jeff Flake

The I-Squared bill has bipartisan support. The main force behind it is Senator Orrin Hatch of Utah, the number-two-ranked senator in the Republican-controlled chamber and a reliable friend of corporate managements. Cosponsors are Democratic senators Amy Klobuchar of Minnesota, Richard Blumenthal of Connecticut, and Chris Coons of Delaware and Republicans Marco Rubio of Florida and Jeff Flake of Arizona.

However, H-1B opponents “are sitting in very good seats,” says Harrison. The bill would go first to the Immigration Subcommittee of the Senate Judiciary Committee. The subcommittee is headed by senator Jeff Sessions of Alabama, an H-1B opponent. The next step would be the Senate Judiciary Committee, headed by senator Chuck Grassley of Iowa, a longtime H-1B foe. Democratic senator Dick Durbin of Illinois, who has opposed H-1B for a long time, is a member of the Judiciary Committee.

If the bill is taken up in the conventional way that legislation progresses, it “could have a hard time. But corporations are figuring out ways to go around Sessions and Grassley. I wouldn’t quite say we [opponents] are optimistic,” says Harrison.

He notes that Blumenthal caught some flak when Boston-based Northeast Utilities, which serves Connecticut, brought in H-1B workers. Klobuchar has been criticized for Minnesota-based Cargill taking in H-1Bs.

How about the presidential race of 2016? Hillary Clinton supported H-1B in the past. She “has a problem disassociating herself from Wall Street. The fact that she supported H-1B will help Wall Street,” says Harrison. On the Republican side, Rubio “is the leading cheerleader for H-1B,” but the other presumed candidates haven’t been involved in it that much.

In 2013, San Diego County Republican representative Darrell Issa introduced the Skills Visa Act, which boosted the H-1B cap. It died last year. He will introduce another Skills Visa Act, probably soon. It is likely to be heard along with other immigration bills. Issa was embarrassed when Southern California Edison chopped heads through H-1B, and that may slow down his bill’s introduction, says Harrison.

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Comments

Keeping the people down and out. Lying corporate pigs.

Another argument is the internationalist claim that over-privledged Americans are not as deserving as disadvantaged foreigners from developing countries. Setting aside the relative competence of the two cohorts, the problem with that view is, in aggregate, Americans don't get the jobs and yet have to pay the same for the goods/services as if fully-paid workers were part of the cost. The capitalist pockets the savings. Rising stock and corporate compensation values show that the "savings" on labor go to those true internationalists, the capitalists who profit by ownership rather than work. They are free to invest the earnings off-shore and live a tax-sheltered, company-subsidized life, and they don't have to show up at work 8am every day. The foreigner skilled worker is still disadvantaged (especially if they want to live in a house while they work in San Diego, rather than under a bridge like the other imported labor) and the American worker is SOL.

History is replete with examples of countries and governments destroyed from within by importing cheap labor and in turn destroying the way of life if its citizens.

Absolutely correct Don. The engineering shortage is a myth. A couple of more data points:

Hiring at QCOM has been slow for at least a year and is certainly expected to remain slow for the immediate future.

Electrical engineering as profession is projected to have only 4% growth from 2012-22 (per BLS) http://www.bls.gov/ooh/architecture-and-engineering/electrical-and-electronics-engineers.htm

Clearly importing more engineers hurts engineering wages.

However, I think if they let in engineers who intend to become U.S. citizens and stay it could potentially help the U.S. as a whole.

Letting in temporary workers is the worst thing that could possibly be done. Not only do wages get depressed in the U.S. but other nations get invaluable training for workers who return to their native countries. A temporary worker who works 3-5 years in the U.S. can return to his/her native country with skills and experience learned here. Those skills and that experience can be used to compete with U.S. companies.

But hey, that all takes much longer than the next quarterly earnings statement to happen so who cares?

I'm no bigot: I don't think we should let in additional future citizens from any country. The USA's population is now massive, and we have many problems caused by letting in millions legally and illegally. Let's use the resources we have, rather than importing them.

Mike Murphy I think the 9/11 hijackers were here on a variety of visas - student, tourist, and business visas.

Moore's Law will come to an end someday. Probably in the next 20 years.

I don't hear many people in business talking about Moore's Law ending but everybody in the semiconductor industry is well aware of this.

Moore's Law is the prediction made by Intel CEO Gordon Moore that the semiconductor industry will continue to double the number of transistors on a chip every 2 years. Amazingly, this trend has held true roughly since 1970. While innumerable technical obstacles have been made to continue this trend, and there will certainly be more breakthroughs made, there may be some fundamental limits approaching.

Minimum device sizes (the smallest dimension of a transistor) on modern chips are approaching 10 nm (that's 10 billionths of a meter). How much smaller can these devices get? Most people can see devices getting down to maybe 3-5 nm, maybe around 2025, but there do seem to be some fundamental hurdles beyond that point.

For one thing, these devices are starting to approach atomic size. A silicon atom is about 0.1nm across so we really are starting to approach atomic limits. Of course, there is always room for some fundamental innovation that ushers in something completely new.

But I think that most people now - and in particular Wall Street - takes blazing fast technological improvements for granted.

I don't know if that's a good thing or not. At some point this era of blinding fast technological change will slow down - and then all hell is going to break loose.

Moore's Law WILL come to an end. We can't keep making chips twice as fast every year or 2 forever. It's just a question of when.

Maybe technology will get to the point that everything is so small we can't use it. LOL

That certainly has been the case with CONgressional brains.

I'm not sure if the problem is the size of their brains or the size of their greed. I think a lot of legislation is done to directly benefit whatever special interest is lining the coffers of key legislators.

Don, You were right about the state PUC and the utilities and I have no doubt that you correct about the misuse of H-1B's. Keep up the good work!

I am an early middle-aged, "obsolete", "unemployable" American programmer. The H1B visa has destroyed my career.

The H1B visas have made it much more difficult for American engineers to find jobs. There is a virtually limitless supply of relatively inexpensive foreign engineers who are recent engineering graduates of American universities. You are not competing with ~300M people in the U.S. you are competing with 300M US + ~2600M (India + China). Unfortunately you may have consider a career shift but that's difficult during mid-career.

The majority of H-1B’s do not return to their homeland. The “guest workers” usually apply for a “green card” and eventually become legal residents of the U.S. Most of the people in India and China who apply for H-1B visas are young, most in their 20’s. This fly against the face of the whole sales pitch the proponent’s pitch, that of being more experienced than Americans. How can someone beginning their career in IT or engineering in India be “more experienced” than similar 20-something college graduates in the U.S.?

Another phenomenon resulting from the H-1B program is that it evetibaly displaces far more than one America worker. Many of the H-1B workers petition to bring over family members. Eventually there is a wife, parents and other members of their family. These people often are the recipients of public services and aid, just like the other immigrants who arrive here without language or work skills.

Many of those who arrived as H-1B, after securing their resident status, completely abandon the high technology field they were recruited for (so “desperately needed’). They open other businesses such as restaurants, stores, and other non-tech related concerns. So the typical H-1B doesn’t just replace an American worker, they bring several mo9re family members who, if not on welfare, go out to open businesses that compete with U.S. citizens in our communities.

The H-1B program turns out to be a front-row pass to immigration more than any savior to innovation in our high tech industry.

I have worked among H-1B workers for years. I have seen the “husband and wife” teams that were brought over together and both have jobs lined up. However one (or both) is not qualified, but gaining employment for both spouses was part of the agreement. I have seen H-1B sponsors help their employees retain legal help, often corporate, to get residency papers, petition for family members to be granted residency and more. H-1B employees often purchase real estate and behave as if their 3-year stint is non-existent.

Moreover, many of the candidates are employing the use of false credentials. Fake diplomas or purchased diplomas. Many of the degree mills come complete with staffs that will answer phones and submit false transcripts.

Do a Google search for “false” or “fake” degrees in India and there are a host of stories about scandals at very legitimate universities where degrees have been bought instead of earned.

cont.

One of the things rarely discussed in comparing the H-1B educations is that the U.S. student must study civics, American history, and other non-degree specific “General Education.” The students that come from H-1B hotbeds, India in particular, have studied at institutions that emphasis the technical studies and do not require the credits in general studies as U.S. universities. So a U.S. student must study a much broader curriculum of subjects that the H-1B candidate they go up against after graduation.

The entire H-1B program is just a back-door immigration program for China, India and other low-cost labor sources and abused by cost-cutting-centric corporations in America. Hiring H-1B’s rather than training or apprenticeship programs is modern-day treason.

You are absolutely correct the program is purely intended to lower labor costs for US corporations by lowering wages of middle class engineers.

But I think the worst effects of the H1B program will come once engineers who have emigrated to the US start returning to their native countries. Eventually there will be a lot of companies in China that compete directly with U.S. companies and their development will be helped by Chinese engineers and executives who have learned invaluable skills from their training at U.S. universities and companies.

I'm not sure about competition from Indian companies yet - but there is certainly a high-tech startup boom in China.

I think the argument is often made that companies in the US must bring in plenty of foreign workers otherwise they will just have to off-shore jobs.

What they neglect to mention is that it's not that easy to just off-shore tasks. Complex projects required detailed coordination and that the time zone differences make that difficult.

Often some face-to-face human interaction and travel expenses can quickly eat up the savings from lower overseas labor costs.

There are times when I wish I could hire H1-Bs. When we announce an opening, we get no shortage of resumes, that's for sure. About half, we can toss immediately for being obviously unqualified or being so poorly written and edited we just don't want to waste our time. Of the interviews we set up, we get: People who show up late. People who show up looking ready for a day at the ball park. People who fall apart on the most basic questions. People who might interview well but wind up disqualified by a background investigation, reference checks, etc.

It's very, very hard to find someone who actually wants to work and who's actually prepared to be a contributing member of the team. Lots of people want to show up and collect a paycheck, but that's as far as their ambition extends.

The idea that companies want to hire foreigners through a government program is laughable. Sure, a government program is going to deliver "cheap slave labor". Uh-huh. They're required to pay H1-Bs the same as they would anyone else. But a lot of Americans who used to earn $50K really believe they're "worth" $100K, and when they see an H1-B get $50K the immediate reaction is, "Cheap slave labor!" Bull. Poppycock. Stuff and nonsense.

Want to make sure your job isn't "stolen by a dirty furriner"? Start by losing the entitlement attitude. It isn't "your" job, it's your employers', and you're there to create value for them. Knock off with the, "I've been here for X years!" So what? That means you did your job yesterday. It still needs to be done today. Keep your skills current... nobody cares that you were a whiz 5 years ago. That technology is dead and gone, and your unwillingness to learn the new way (yes, probably on your own time, I do it all the time) doesn't manufacture some sort of obligation to keep you on.

"Entitlement Attitude" LOL. It's the employers in high tech who are the ones with the entitlement attitude not employees - and frankly with the way that congress has done their bidding I can almost understand it.

There is supply and demand for labor as well as everything else. If the supply is artificially increased by government then the price (i.e. salary) drops.

I don't think it's fair for the government to single out specific groups (high tech workers) to have their salaries lowered by artificially increasing supply. Obviously you disagree.

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