WALL STREET JOURNAL: MORE VISAS, MORE JOBS

As we hear the grim predictions from folks like Alan Greenspan that the US may be heading in to the worst economic downturn since World War II, Congress should be looking to promote free trade policies that will stimulate world economic growth rather than pushing protectionist policies that will only hurt our economy. That includes ending the artificial shortage of H-1B workers and letting market forces determine how many highly educated workers come from abroad. 

The Wall Street Journal has called on Congress to increase H-1B numbers. They are just the latest voice calling for action. But there are labor cartel members - the Programmer Guild, IEEE-USA and others - who would rather use legislation to maintain a scarcity situation in order to push up salaries beyond what the market dictates and preserve jobs for individuals unable and unwilling to compete. They are even willing to  see US companies fail before compromising. Unfortunately for them and for America, companies will do what it takes to survive. And for many, that means simply moving operations overseas. The ONLY responses the antis have to the outsourcing argument is that outsourcing is unpatriotic and the threats are idle. The threats are not idle. Moving operations overseas is a reality and you can hear Lou Dobbs whine about it on a nightly basis. As for patriotism, make it economically viable for companies to stay in the US and you'll see the pace of outsourcing drop precipitously.

Comments

[R. Lawson]

"Also, the value of the Rupee has been falling. "

Reverse that.

[R. Lawson]

"If there is full employment in an occupation, job growth simply drives excessive wage inflation and increases the pressures to outsource"

I agree with that part. But in our occupation, we haven't seen wage inflation. We have seen wage stagnation.

Also, the value of the Rupee has been falling. So that alone should relieve pressures to offshore. The offshoring argument isn't one we take seriously because as people working in the industry, we understand that the H-1b helps offshoring firms. Maybe if you took them out of the equation it would alter my view. It's really theory as to what will happen when you make changes.

[Greg Siskind]

The job growth which you think is so important only matters to the extent there is unemployment and to the extent the number of new workers in a field is keeping pace, something which you seem to dismiss. If there is full employment in an occupation, job growth simply drives excessive wage inflation and increases the pressures to outsource unless you loosen up immigration rules. Someone has to actually fill those new positions. So you need to show that the number of new workers entering the field is keeping up with job growth and that there is not an unemployed work force depending on that growth.

[R. Lawson]

"No amount of proof will make Mr Lawson budge from his rigid stance. "

Wait a second. You haven't provided proof. We have provided data from the BLS indicating flat job growth in IT. There is also data indicating that salaries aren't keeping up with inflation in IT.

Your proof is anecdotal evidence from CEOs of major corporations and lobbyists who stand to gain from their position.

It is you who lacks proof.

[Pete]

Gosh, Its surprising this thread has gone on for this long. What do you guys intend to achieve? Let Mr Lawson live in his own world and deny the shortage in labor. The natural order of things will materialize despite Mr Lawson's protestations. After all Gerg did well to quote George Costanza. You cannot fault Mr Lawson for writing what he believes to be true even if it does not reflect reality. No amount of proof will make Mr Lawson budge from his rigid stance. I think it is futile to justify the logic to someone like him.

"Roy - I'll just check your blog for the data. I'm sure you posted it there."

Sounds good. I have numbers back to 2006 - and I think I have links to the pdf files - and I think they are still online. Let me know if you have trouble finding anything.

[Greg Siskind]

Roy - I'll just check your blog for the data. I'm sure you posted it there.

[R. Lawson]

"Roy - Still waiting on those numbers."

You will get them, but not this week. It will take me some time to show you employment numbers by occupation since that data must be pieced together. I literally must copy from a pdf that they send me into Excel since they don't track data at such a granular level over time. The data I'll use is quarterly - so 4 surveys a year.

Also, I have a public speaking engagement this week that I am preparing for. So hopefully next weekend I'll find some time to piece it all together.

I've sent an email to my contact at BLS. He sent me CPS data at an occupational level last time - will need more up to date data again. Assuming I get that, all should be well.

The problem with the OES survey is that they changed the methodology during the last recession and it makes historical analysis impossible for someone who wasn't intimately involved with the survey. They did the same thing to the CPS in the late 90s, but at least I have more time there.

We also have unemployment data by occupation, so I'll include that as well. The last time I went through this exercise (2006) job growth was flat (very slight decline, but the OES said we had a slight gain). Software engineers were gaining but programmers were losing an equal number.

Unemployment for programmers in 2001 rose to over 8%. I wouldn't be surprised if it is headed up right now. Of course, I don't think it will be that high. We've already absorbed the .com bust, so we don't have that to deal with again. Also, the H-1b cap is at a more sustainable level than it was in 2001. Yes, in 2001 a highschool dropout had better job prospects than a computer programmer. You don't suppose 195,000 workers flooding a weak labor market had anything to do with that, do you?

So things might get tough for us this year and next, but not as bad as last time. That's my prediction anyways. If we were in a shortage, the unemployment rate would not rise beyond 3%. We'll see what happens.

[Greg Siskind]

Roy - Still waiting on those numbers.

[R. Lawson]

"Finally, why do you make the argument for green cards instead of H-1Bs if you think these people shouldn't be coming in the first place? "

That is a total mischaracterization of what I have said. I have said that we need greencards instead and that numbers should not be arbitrary. I have not advocated that we lower immigration numbers - the solution I proposed would in fact raise immigration levels from current levels.

Your unarbitrary solution simply lets the market decide. It is demand driven. My unarbitrary decision looks at more than the demand for cheap and exploitable labor. Numbers with my solution are based on labor market conditions, as well as the skills of the immigrants.

At my level in my career, the solution I proposed would expose me to more cometition, not less. The reason is because higher level people would be granted the visas, as opposed to entry level developers.

You have done your best to call me anti-immigrant in any way possible. Stop while I'm still being congenial about it.

"But if salaries in the American sub-region become too high, MSFT will simply move all of its OS/Office development work to India. That will mean a huge job loss in the American sub-region. "

Your point about job loss is valid, but the reasons behind it are not. MSFT is not as sensitive to cost as other companies are. And at best you can pay for two people in India for every head in the US. In fact for higher level people India located staff makes between 0.75x to 1x of the salary as US located staff because that kind of talent is very rare in India.

If jobs are moved somewhere today it will not be because of cost but because hiring managers are unable to staff groups in the US with the type of talent they want. Many positions including those of quite a few hiring managers have been "virtually" offshored for many years since those people are on H/L/TN/E3 and unable to transition to green cards.

But this is the scenario today. Indian investment in public education is slated to rise 500% from current levels in the next 5 years. As India continues to produce ever increasing numbers of engineers, salary costs may keep going down providing a decisive cost advantage even for MSFT.

[USC]

"A shortage would be indicated by the following factors:

Rising salaries
Rising employment
Decreasing unemployment"

As a matter of fact, all three are happening. Salaries of IT workers in the Indian sub-region are going up. Employment is rising and unemployment decreasing.

Once salaries in the Indian sub-region catch up with those of US workers then salaries will also rise in the American sub-region of the global economy.

I know we have been around in circles over this. But if salaries in the American sub-region become too high, MSFT will simply move all of its OS/Office development work to India. That will mean a huge job loss in the American sub-region.

Of course, PG might accuse them of being unpatriotic. However, the reverse is true, if they were not to off-shore in the face of artifically high US salaries, you, I and every American consumer would be faced with a tripling of the cost of Vista.

[Greg Siskind]

And where is the magic data in the Wadwa report you seem to bank on? I've been reading all four reports and all hurt your case. The one report that says we don't have an engineer shortage says that this is the case because of all the foreign engineers in the US workforce:

"In the United States, close to 60% of engineering PhD degrees
awarded annually are currently earned by foreign nationals,
according to data from the American Society for Engineering
Education."

Have you read these reports or not? Honestly Roy - show us the numbers. And to say employment data is not reliable sounds like sour grapes. You're asking Congress to enact protectionist legislation. The burden is on you to make the case. Otherwise, the market should be free.

The report says we should couple H-1Bs with access to green cards. It is taking a position that we should make it EASIER for immigrants to get here and stay and is saying completely the opposite of what you preach.

Finally, why do you make the argument for green cards instead of H-1Bs if you think these people shouldn't be coming in the first place? That part always strikes me as strange. You argue over and over again that we have too many foreign workers here and then you push for visas to allow them to come permanently. At least be consistent.

[R. Lawson]

As I've said a hundred times, unemployment statistics aren't reliable. As of 3rd quarter of 2006 there was a net loss of software jobs:

http://photos1.blogger.com/x/blogger2/2795/2310/1600/31127/Q3_2006_Software_Job_Growth.jpg

The question isn't if unemployment is average or if there is modest growth in IT. The question is if there is a shortage. A shortage would be indicated by the following factors:

Rising salaries
Rising employment
Decreasing unemployment

None of those three factors exist at this time. I don't know if you want to use unemployment to support your position - after all it is on the rise right now in IT. As we all know, it usually follows a recession but we are already starting to see it rise.

I would also point out that every BLS estimate was later lowered when it came to IT job growth. Every estimate for the last 8 years was off by up to double.

If you cherry pick data - which I'm sure you will - software engineering jobs are on the rise. However, it is offset by an almost equal reduction in programming jobs. I think the explanation is rather simple - people are changing their classification from programmer to software engineer.

In short, there isn't massive job cuts at this time - the market is rather flat. Employment and unemployment remains steady, while salaries are falling slightly. Hardly a shortage.

[Greg Siskind]

Here are excerpts from the Wadwa 08/2007 paper. This is hardly helpful to Roy's case. In fact, I'd say this is one of the best studies I've seen in a while on why we need to make it EASIER for foreign nationals to get to and stay in the US:

Our earlier papers, “America’s New Immigrant
Entrepreneurs” and “Entrepreneurship, Education,
and Immigration: America’s New Immigrant
Entrepreneurs, Part II,” documented that one in
four engineering and technology companies
founded between 1995 and 2005 had an
immigrant founder. We found that these
companies employed 450,000 workers and
generated $52 billion in revenue in 2006.
Indian immigrants founded more companies than
the next four groups (from the United Kingdom,
China, Taiwan, and Japan) combined. Furthermore,
these companies’ founders were very highly
educated in science, technology, math, and
engineering-related disciplines, with 96 percent
holding bachelor’s degrees and 75 percent holding
master’s or PhD degrees.2

The analysis of the World Intellectual Property
Organization (WIPO) database in this earlier work
revealed that the percentage of foreign nationals
contributing to U.S. international patent
applications increased from an estimated 7.3
percent in 1998 to 24.2 percent in 2006. The
largest foreign-born group was from China
(mainland and Taiwan). Indian nationals were
second, followed by Canadians and the British. As
the WIPO database records inventor nationality at
the time of filing, these numbers do not include
the contributions of immigrants who became U.S.
citizens before filing patent applications.3

Foreign nationals residing in the United States
were named as inventors or co-inventors
in 25.6 percent of international patent
applications filed from the United States in
2006. This represents an increase from
7.6 percent in 1998.

Foreign nationals and foreign residents
contributed to more than half of the
international patents filed by a number of
large, multi-national companies.

• In 2006, 16.8 percent of international patent
applications from the United States had an
inventor or co-inventor with a Chineseheritage
name, representing an increase
from 11.2 percent in 1998. The contribution
of inventors with Indian-heritage names
increased to 13.7 percent from 9.5 percent
in the same period.
• Chinese inventors tended to reside in
California, New Jersey, and New York. Indian
inventors chose California, New Jersey,
and Texas.
• Both Indian and Chinese inventors tended
to file most patents in the fields of
sanitation/medical preparations,
pharmaceuticals, semiconductors,
and electronics.

Evidence from the “New Immigrant Survey”
indicates that approximately one in five new legal
immigrants and about one in three employment
principals either plan to leave the United States or
are uncertain about remaining. Moreover, media
reports suggest that increasing numbers of skilled
workers have begun to return home to countries
like India and China where the economies are
booming.

Given the substantial role of foreign-born
residents in the United States in international
patent creation, and the huge backlog in granting
visas to employment-based principals, the
potential exists for a reverse brain-drain of skilled
workers who contribute to U.S. global
competitiveness.

Our estimates indicate that, as of the end
of Fiscal Year 2006, there were about half
a million employment-based principals
awaiting LPR in the United States, and
more than half a million family members.
These numbers suggest that what has
been viewed as a visa processing
problem is actually—and formidably—a
visa number problem. The approximately
120,120 visas available annually are no
match for a million persons in line.

Finally, some commentators suggest that a
portion of the demand for employment-based
visas is generated by the ban on employment for
spouses of H temporary workers. That is,
employment-based principals adjusting from H
worker visas may not intend to live permanently in
the United States, but instead may desire to
obtain work authorization for their spouses. If that
is the case, then the three employment categories,
which differ greatly in the proportions adjusting
from H-1B (Table 8), also should differ in the
intention to stay in the United States. Indeed,
EB-2, which has the highest proportion adjusting
from H-1B (89 percent), has the lowest proportion
who intend to stay in the United States—
48.8 percent. In EB-1 and EB-2, the proportions
intending to stay are 60 percent and 73 percent,
respectively. These figures contrast with
76 percent among adjustee spouses of U.S.
citizens and 86 percent among all other adult
adjustee immigrants.

Conclusion
In the global economy, America’s greatest
advantage is its ability to push the frontier of
knowledge and its application. In contrast to
current debates about trade, international capital
flows, and illegal immigration, we have analyzed
the role that highly educated immigrants to the
United States have in creating knowledge and
innovation. By combining evidence from several
data sets, we illuminate this contribution, and
then highlight the problems these immigrants face
in attaining permanent status and the country’s
risk in losing some of them.
Specifically,
1. Using data from WIPO, we find that in 2006,
foreign nationals residing in the United States
were inventors or co-inventors of one in four
U.S. PCT applications—a more than three-fold
increase over their proportion in 1998.
2. Using data from U.S. immigration statistics,
we estimate that more than half a million
skilled immigrants are awaiting legal
permanent employment status, and more
than a million principals, including family
members, are in this situation. The
immigration backlog is not simply a visa
processing problem—which government
agencies are working to reduce—but a visa
shortage problem: Only 120,000 or so visas
are available annually for the million or
so applicants.
3. Using data from the “New Immigrant
Survey,” we estimate that, in 2003,
approximately one in five new legal
immigrants in the United States, and about
one in three employment principals, either
planned to leave the United States or were
uncertain about remaining.

We would expect that at least some of those
who considered leaving have actually returned to
their homelands. Though we don’t know how
many of those who have contributed to patents
are discouraged by the visa process, we see no
reason to expect them to be markedly different
than other foreign residents working in the United
States. Some are undoubtedly discouraged by the
visa backlog and are considering leaving the
United States. They constitute the possible
“reverse brain-drain” of our title.

The United States benefits from having foreignborn
innovators create their ideas in the country.
Their departures would, thus, be detrimental to
U.S. economic well-being. And, when foreigners
come to the United States, collaborate with
Americans in developing and patenting new ideas,
and employ those ideas in business in ways they
could not readily do in their home countries, the
world benefits. Therefore, foreign national
departures from the United States also reduce
global well-being.

Given that the U.S. comparative advantage in
the global economy is in creating knowledge and
applying it to business, it behooves the country to
consider how we might adjust policies to reduce
the immigration backlog, encourage innovative
foreign minds to remain in the country, and entice
new innovators to come.

[immigrant]

"There have been plenty of studies dicrediting shortages"

Yeah whatever.

Are you referring to those stupid Prof Norm Matloff studies?
How much do you pay him for your cooked up studies. You blame Anderson. We can blame your experts who cook up studies to try and desperately prove their point and fail every time miserably.

Why doesnt Programmers guiild, ALIPAC, FAIR etc disclose their full finances on their website with their donors? Lets see how upright you guys are

[Greg Siskind]

By the way, the study Roy touts has some interesting findings that seem to not help his case so much. Here's one from the 1/08 report:

In the United States, concern has been raised over the large proportion
of graduate-level science and engineering degrees that are
earned by foreign nationals. This preoccupation has been exacerbated
in recent years because of the perception of an increased likelihood
that these engineers may return to their home countries in response
to new incentives to develop high-technology fields there.
This “export” of the fruits of their American-earned education
abroad for the benefit of other economies marks a reversal of the
traditional international “brain drain” from which the U.S. hightechnology
community has long benefited (Pollak, 1999).
While engineering, CS, and IT degree production in the United
States has been stable or increasing at all degree levels over the past
ten years, a sizable percentage of these degrees are indeed being
awarded to foreign nationals. Statistics collected by the ASEE on
bachelor’s, master’s and Ph.D. degrees in engineering indicate that
during the 2005–06 academic year, 7.2 percent, 39.8 percent and
61.7 percent of these degrees, respectively, were awarded to foreign
nationals (Figure 4). As these figures indicate, the percentage of
foreign nationals is significantly higher at the graduate level, especially
for Ph.D. degrees.
The high percentage of U.S. engineering degrees earned by foreign
nationals becomes an even greater concern, however, if these
individuals do not remain in the United States after they graduate.
How many of these foreign degree-earners actually return to their
home countries? According to research by Michael Finn from the
Oak Ridge Institute for Science and Education, the number of
Chinese and Indian nationals who received science and engineering
doctorates from U.S. universities who were still in the United States
five years after receiving these degrees was quite high—90 percent
for Chinese and 86 percent for Indian graduates in 2003.
By field, most of those areas with the longest five-year stay
rates were all engineering-related: computer science (70 percent),
computer/EE engineering (70 percent), and other engineering
(67 percent) (Finn, 2005). These numbers, however, contain a
significant time lag, since the 2003 statistics chart the stay rates of
individuals who received their doctoral degrees in 1998. Given the
changes in the U.S. visa system since 2001 and the rapid ascent of
the Chinese and Indian economies, there are serious concerns that
the U.S. visa landscape is greatly limiting the country’s capacity to
retain exceptional individuals once they graduate (Wadhwa, Jasso,
Rissing, Gereffi and Freeman, 2007).

[Greg Siskind]

Hmmm... You must have missed the question Roy. Point to some real data - Department of Labor data - supporting your contention that there is no shortage. Don't give me studies and then say they're obviously great because they come out of one professor at a decent school. Show me the numbers Roy. Actually, I know you well enough at this point to be able to tell readers that you have been scouring the numbers since I issued the challenge and have not been able to find anything helpful. So you're just ignoring the request. Folks, don't let him off the hook! Roy - What is the unemployment rate in IT? We're in a recession and what is the IT unemployment rate, Roy?

[R. Lawson]

"How's that blog going Roy?"

You'll see soon enough.

If you look at the citations in any of the studies I mention, they are over page long. I seriously doubt you've read the studies.

I have read every NFAP paper. In fairness, they are an easy read because they lack substance. The NFAP "studies" have very few citation - and many are dupes. It is the type of "research" that a freshman in college might submit. And they are full of fallacies.

I put more stock in an academic study from Duke than a "study" released by a lobbyist group - er I mean individual.

[Greg Siskind]

Roy will trot out the same one or two researchers every time he's challenged on the facts. But the real facts are the unemployment statistics. Roy - Show us the numbers that back you up. And if you dislike us so much - we're a "cabal", lack "class", etc. - you're welcome to post on your own blog and win in the marketplace of ideas. How's that blog going Roy?

[R. Lawson]

Siskind: "You can keep saying there is no shortage, but the data doesn't back that up. ... Now watch how Roy attacks me rather than presents facts."

FACTS:
http://www.globalizationresearch.com/ --> Where the Engineers Are

http://www.baselinemag.com/c/a/IT-Management/Is-There-Really-an-IT-Labor-Shortage/

Siskind: "Now watch how Roy attacks me rather than presents facts."

Greg, you mean attacks like these?

Siskind: "But there are labor cartel members - the Programmer Guild, IEEE-USA and others"

Siskind: "Roy wants short term benefits for his buddies even if it ultimately hurts our economy and drives employers to ship the jobs overseas."

Pete: "Mr Lawson, You and your ilk ..."

Anonymous: "Lawson you speak for yourself you dumbass"

Legal: "Its good to see Roy Beck (I think R Lawson is him)posting on this site and whining."

Siskind: "Folks, remember the one thing about Roy - He'll challenge your patriotism and he'll challenge your motives."

You guys are a real class act.

[Greg Siskind]

By the way Roy, how's that blog of yours? Are your ideas catching on? You seem to have a lot of time to post over here so I assume your own blog must really be busy.

[Greg Siskind]

You can keep saying there is no shortage, but the data doesn't back that up. But as George Costanza once said "It's not a lie if you believe it." Folks, remember the one thing about Roy - He'll challenge your patriotism and he'll challenge your motives. But he ultimately doesn't have facts to support his case. This is about one thing and one thing only - turf protection. Artificially create a shortage to inflate salaries and ensure less than qualified workers have jobs that they would not have in an open market. This is no different than any other form of protectionism. And every economist worth their salt will tell you that protectionism is bad for the consumers of the country even if it is helpful to the narrow interest being protected. Roy wants short term benefits for his buddies even if it ultimately hurts our economy and drives employers to ship the jobs overseas. Now watch how Roy attacks me rather than presents facts.

[R. Lawson]

There is no shortage of labor in the general IT labor market. Yet the solutions supported here are designed to fill a shortage that does not exist. It is designed to put downward pressure on American wages.

There have been plenty of studies dicrediting shortages. But nobody here seems to want to deal with facts - rather rhetoric and idle threats. Not to mention name calling.

I am tired of the ILW/AILA/ITAA/NFAP Cabal distorting facts.

[legal immigration]

Its good to see Roy Beck (I think R Lawson is him)posting on this site and whining.

This shows how powerful pro immigration and pro H1B lobby has become. These anti immigrants who are lazy and cannot compete are coming here and complaining..