The War on the Middle Gets Interesting

For years, the assertion from the plutocrats that we needed more cheap STEM labor went unchallenged. Both political parties gushed about how wonderful it is to bring in scads of foreigners to work in technology. They would trot out the old canards about how foreigners founded most of the new businesses and so on. The truly strange part of this romantic narrative is how no one ever considered the implications. That is, the natives are too stupid and lazy to do these jobs.

It was always nonsense. There never has been a shortage of STEM workers. Certain segments in certain areas will experience shortages and overages. That’s how labor markets work. People  move around chasing demand and wages eventually reach equilibrium. Importing vast numbers of new labor is the economic equivalent of price fixing, which is what makes libertarians just another type of central planner. They love free markets until those markets result in things they don’t like or want.

Anyway, this being posted on a mainstream news site looks like a big change. The anti-immigration sentiment is growing and the pop culture chattering skulls are trying to get in on it.

Business executives and politicians endlessly complain that there is a “shortage” of qualified Americans and that the U.S. must admit more high-skilled guest workers to fill jobs in STEM fields: science, technology, engineering and math. This claim is echoed by everyone from President Obama and Rupert Murdoch to Mark Zuckerberg and Bill Gates.

Yet within the past month, two odd things occurred: Census reported that only one in four STEM degree holders is in a STEM job, and Microsoft announced plans to downsize its workforce by 18,000 jobs. Even so, the House is considering legislation that, like the Senate immigration bill before it, would increase to unprecedented levels the supply of high-skill guest workers and automatic green cards to foreign STEM students.

As longtime researchers of the STEM workforce and immigration who have separately done in-depth analyses on these issues, and having no self-interest in the outcomes of the legislative debate, we feel compelled to report that none of us has been able to find any credible evidence to support the IT industry’s assertions of labor shortages.

Stagnant wages

If a shortage did exist, wages would be rising as companies tried to attract scarce workers. Instead, legislation that expanded visas for IT personnel during the 1990s has kept average wages flat over the past 16 years. Indeed, guest workers have become the predominant source of new hires in these fields.

Those supporting even greater expansion seem to have forgotten about the hundreds of thousands of American high-tech workers who are being shortchanged — by wages stuck at 1998 levels, by diminished career prospects and by repeated rounds of layoffs.

The facts are that, excluding advocacy studies by those with industry funding, there is a remarkable concurrence among a wide range of researchers that there is an ample supply of American workers (native and immigrant, citizen and permanent resident) who are willing and qualified to fill the high-skill jobs in this country. The only real disagreement is whether supply is two or three times larger than the demand.

Unfortunately, companies are exploiting the large existing flow of guest workers to deny American workers access to STEM careers and the middle-class security that should come with them. Imagine, then, how many more Americans would be frozen out of the middle class if politicians and tech moguls succeeded in doubling or tripling the flow of guest workers into STEM occupations.

Redundant reforms

Another major, yet often overlooked, provision in the pending legislation would grant automatic green cards to any foreign student who earns a graduate degree in a STEM field, based on assertions that foreign graduates of U.S. universities are routinely being forced to leave. Such claims are incompatible with the evidence that such graduates have many paths to stay and work, and indeed the “stay rates” for visiting international students are very high and have shown no sign of decline. The most recent study finds that 92% of Chinese Ph.D. students stay in the U.S. to work after graduation.

The tech industry’s promotion of expanded temporary visas (such as the H-1B) and green cards is driven by its desire for cheap, young and immobile labor. It is well documented that loopholes enable firms to legally pay H-1Bs below their market value and to continue the widespread age discrimination acknowledged by many in the tech industry.

When considering the credibility of the industry’s repetitive claims of “shortages,” it is worth recalling its history of misbehavior in hiring and employment. The most recent example was the proposed $300 million legal settlement of a class action against companies such as Google, Apple, Intel and Adobe for anti-competitive collusion to suppress the pay of highly skilled employees, including unlawful agreements to not recruit each others’ workers.

IT industry leaders have spent lavishly on lobbying to promote their STEM shortage claims among legislators. The only problem is that the evidence contradicts their self-interested claims.

What we have today is a modern form of resource extraction. These big tech firms are not inventing anything or creating anything. Mostly, they are harvesting ideas at a discount and commoditizing them. They can do this because they have the backing of the government. Microsoft would have gone bankrupt a decade ago without their monopoly power. In fact, they never would have become a dominant firm without monopolistic tactics. Google is deeply in bed with governments around the world.

Most likely, this is one of those brief mentions that allows the media to pretend they are open to all sides of the debate. They do this with conservatives. They have on one right-winger and ten left-wingers and call it balance. In this case, one story critical of immigration in a sea of cheerleading for open borders. It’s all part of the propaganda effort to keep the public asleep as what is happening.

8 thoughts on “The War on the Middle Gets Interesting

  1. They can switch jobs, they just have to have the new company sponsor them, and the green card time process starts anew.

    I think we’re due for a bubble bursting in Silicon Valley. Using this article as a reference:

    In tech, you can either go work for companies that make infrastructure(Cisco as an example), or you can go work for some app company. (This is an oversimplification of course) The young people want to go work for the latter. I work in the former, and it’s true that it’s hard to find young people/millenials that want to do something non-glamorous. Instead they’d rather be ‘changing the world’ with some app that revolutionizes dog-walking, or solves some other trivial problem urban hipster problem.

    So from what I see, we bring in plenty of H1B folks, as working on infrastructure software is considered boring grunt work, and they’re more than willing to do it of course and are qualified to do so just by sheer brute force numbers. India’s population being what it is. This can’t go on of course, eventually the VC money going to 22 year olds is going to dry up. I foresee a crash and many out of work app developers in the coming future. They’ll be forced to try their hand at other less glamourous areas of tech. They’ll hit a snag though when they see the jobs have all been taken or outsourced already though.

  2. Oh, and one more thing… as long as we America keeps hoovering up the top .1% of the rest of the world, they ain’t going to fix their own problems. They should be leading change and producing wealth in their home countries, not slaving for corporate America.

  3. Why aren’t we calling the H1B visa program what it really is? Bonded labor and a violation of the 13th Amendment. Poor Rajiv or Zhu get picked up for a STEM job and they are indentured servants until they get their green card or decide to go home. They can’t change jobs. They get paid below market. If they complain about pay or working conditions, they get canned and sent home. I’ve worked in a company where one of the divisions had become an H1B sweatshop. Everyone was miserable. Most were doing substandard work. Our competitors in this area mopped the floor with us. It wasn’t good for them, the shareholders, or the rest of us. Their presence just pumped up earnings for a few years as our cash cows slowly became dogs and we failed to launch any of the new technologies we needed to stay competitive.

  4. The flip side of this however: I applied for a position over at Roku for a position, I was absolutely perfect for(on paper anyway). Sure enough, I got a call back from their internal recruiter right away.

    The recruiter was from India, and spoke poor english. She had a hard time comprehending my skillset and experience. She mixed up the position I was interested in, for a different one. Of course, she gave me the “We will consider you for other positions” rejection line at the end of the call.

    I spoke with some other colleagues, and they have seen the same thing too. There is speculation that many of the Indian recruiters, will deliberately be obtuse and difficult for non-Indian candidates, so they can claim that they tried to hire native Americans, but just couldn’t find any with the right qualifications…

    • A cou8ple of years ago a firm was finally prosecuted for fraud over this. They were hired to recruit for tech firms. They would place ads in trade publications, round up resumes and screen applicants. They would report back to the hiring firm. Of course, they never could find enough local talent. This fact was used by the tech firms to get more H1B1 visas.

      It turns out the firm was never placing the ads or screening applicants. It was a scam.

  5. I work in tech, and have multiple H1B folks on my own team. (Note, I’m an individual contributor, not a manager).

    The hard part about all this at least from my corner of the tech world, is that engineers are not fungible. That is to say, software is so specialized, you can’t take someone experienced in say SaaS and then ask to go work on custom linux kernels. Even though they are both classified as software engineers, they may as well be in completely different fields.

    I don’t know if companies need to be more flexible or what, as obviously you’re not going to find your perfect candidate for a given position.

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