Why Not Keep the Talented?

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As we head into the New Year, there are signs that Congress may finally allow an increase in legal immigration. Specifically, it now appears that Congress is becoming increasingly aware that it is folly to kick out foreign students who achieve science, technology, engineering, and math (STEM) degrees.

In fact, both Republicans and Democrats have now sponsored bills to reform immigration laws to encourage STEM workers to immigrate here. And a very recent report by the Information Technology Industry Council, the Partnership for a New American Economy, and the US Chamber of Commerce provides ample evidence that the time is ripe for reform.

The report, “Help Wanted: The Role of Foreign Workers in the Innovation Economy,” looked at three questions: Is there a STEM worker shortage? If so, how bad is it and in what fields is it the worst? Does hiring foreign STEM workers take jobs away from native-born workers?

Take the issue of whether there is a general STEM worker shortage. A number of the report’s findings indicate there is indeed such a shortage, and that it is pervasive across the various STEM fields. Remember that economists typically hold that an overall unemployment rate of about 4% represents essentially full employment (with people who are out of work being mainly in transition between jobs in a fluid market). Our current national unemployment rate has hovered around 8% for four years, which is high by recent standards (those of the 1990s and 2000s).

Well, the report notes that the unemployment rate for American citizens with STEM PhDs is only 3.15%. For those with STEM MS degrees it is only 3.4%.

As to whether foreign-born STEM workers are taking jobs from American-born workers, the data the report surveyed show no such effect. While only 6.4% of non-STEM workers with PhDs are foreign-born, 26.1% of STEM workers with PhDs are foreign-born. (For workers with Master’s degrees, the figures are 5.2% of non-STEM versus 17.7% of STEM.) But even though a higher percentage of STEM than non-STEM workers are foreign-born, STEM workers still have a lower overall unemployment rate.

The job market is not a zero-sum game. There is no set-in-stone number of jobs, so that if an immigrant takes one, there is one less for you or me.

In some STEM fields, the figures are especially dramatic. While 25% of medical scientists are foreign-born, medical scientists generally have a 3.4% unemploymnent rate. In fact, the unemployment rate is lower than the general STEM average of 4.3% in 10 out of the 11 STEM fields with the highest percentage of foreign-born workers.

Moreover, the data indicate that immigrant STEM workers on average earn $3,000 per year more than equivalent native-born workers, putting paid to the myth that they “drive down wages.”

The reason none of this should be surprising is that the job market is not a zero-sum game. There is no set-in-stone number of jobs, so that if an immigrant takes one, there is one less for you or me. No, talented immigrants create jobs, by starting new companies, creating new products, or making our industries more competitive than foreign ones.

In this regard, the study argues that every foreign-born student who graduates from an American college and stays here creates an average 2.62 jobs for native-born workers. At the top 10 patent-producing American universities, more than three-fourths of all patents awarded last year were invented or co-invented by an immigrant.

Why can’t the Republicans and Democrats at least agree on removing the obviously counterproductive caps on foreign students who graduate from American colleges with STEM degrees and who want to remain here to work?

In short — why send the most talented and innovative students home — to start businesses that will only compete with ours?




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Comments

Brandon

I have a background in Strategic Human Capital Management and by extension an interest in immigrant labor impacts on America’s domestic labor force. While I certainly agree that congress should finally act, I respectfully take issue with your analysis and conclusions warranting increases in foreign STEM workers.

Looking past STEM [for the moment], consider three basic facts. First, BLS Statistics show 21,969,000 foreign-born workers employed in 2010. Second, going forward, consider the compound impacts of immigration to our existing workforce. Annually the U.S. issues 1.25 million visas of all stripes; AND the impacts of 7+ million illegal aliens [many overstaying legal visas] taking non-farm jobs in construction, manufacturing, services, hospitality, and yes STEM. Third, that the argument for increasing immigration numbers, particularly STEM related, is a fraud enabled by K-Street lobbyists like [convicted] Jack Abramoff who directed $100 million to politicians between 1995 and 2000; promoting the marketing hype of a gap in labor supply relative to demand. The talent shortage argument is intended for one purpose only; to provide Microsoft and other employers with a Government sponsored Corporate Welfare program of employer-friendly changes to H-1B visa legislation enabling EXCESSIVE importation of foreign labor.

Now, to your question: Is there a STEM worker [talent] shortage? I mean no disrespect, but sighting industry advocacy organizations e.g. Technology Industry Council, the Partnership for a New American Economy, and the US Chamber of Commerce, is hardly unbiased proof or universal agreement that such a shortage or needs really exists. There’s a long history of credible sources that would disagree. ONLY industry sponsored studies show a shortage.

Go back to 2002. Nobel economics laureate Milton Friedman correctly identified the 1990 H-1B visa program as a “government subsidy” because it allows employers access to imported, highly skilled labor at below-market wages. This and later policies created a work force glut resulting in lower wages and increased unemployment for U.S. born labor/talent.

There’s plenty of evidence supporting Freidman’s assessment.

Credible academics support the argument. For example, American Scholar, CalTech Vice Provost David Goodstein pointed out that the American taxpayer is forced to support extremely expensive research universities whose main purpose is to train students from abroad who will stay here and take jobs that could have gone to Americans, or go home and take our knowledge and technology with them.

Rochester Institute of Technology, Ron Hira has studied the dark side of the H-1B program. He wrote an article “Immigrants Learn Jobs, Take Them Back Home“. The professor of public policy at the Rochester Institute of Technology notes that the top applicants for visas are outsourcing companies, such as Wipro Technologies of India and Bermuda-based Accenture. The companies bring recruits in from, say, India to learn about American business. After three years here, the workers go home better able to interact with their U.S. customers.

While you might argue Goodstein and Hira provide supports to the argument for policies that retain foreign STEM talent, others would argue for policies that support jobs going to home grown talent, first; which, in turn, would better protect American labor/IC and retention of IP.

Another strong advocate exposing the abuses in STEM immigration is UC Davis, Computer Scientist, Professor Norman Matloff who says the War for Talent, in America, is a red herring. In December 2003 he published a 99 page report titled “ON THE NEED FOR REFORM OF THE H-1B NON-IMMIGRANT WORK VISA IN COMPUTER-RELATED OCCUPATIONS”. You can read the 2003 report at: http://heather.cs.ucdavis.edu/Mich.pdf. In a 2008 interview Norman Matloff tells what's wrong with the H-1B visa program, and Professor Norm Matloff's H-1B Web Page web page provides a great summary on the issue.

A 2007 Urban Institute study found that the universities are producing more than enough graduates at the bachelor's level in STEM.

Recently Immigration Policy Analyst Daniel Costa wrote STEM labor shortages?, exposing how a Microsoft report distorts reality about computing occupations skills/talent shortages in the U.S.

As you rightly point out, it’s hard to argue that employment is a zero-sum game. On the other hand, arguing that because there is no set-in-stone number of jobs, doesn’t support an argument that immigrants don’t take jobs from the pool of domestic talent. Likewise, low unemployment among American’s holding STEM MS and PhDs degrees doesn’t prove a shortage either! The reality is quite different. Evaluating broad labor force requirements is situational and a function of many complex factors. Examining the most recent two years, the number of H-1B acceptances increased from 114,000 visas (2011) to around 130,000 (2012). While these numbers, by comparison to total immigration, are small, what does it prove about absolute STEM talent/labor deficiencies? NOTHING! How many of these jobs were filled by foreign MS or PhDs at the expense of U.S. citizens and permanent residents? And for those jobs that were filled by foreigners holding MS or PhD level educations how many jobs REALLY required these advanced degrees? FEW! Then consider the impact of fictitious job postings. Evidence is clear that the tech industry overstates the number of job openings specifically to influence immigration quotas? Similarly, there is a broad industry practice of overstating job function and education requirements for the same nefarious purposes.

Who Benefited from Job Growth In Texas? A recent CIS report exposes in real terms the significant impact on native born job seekers as it explores job growth in TX between 2007-2011, and how immigrants (particularly newly arrived non-citizens) were the primary beneficiaries of this growth. The Bureau of Labor statistics estimates that most of the growth in jobs over the next decade will come in the form of low-paying jobs. For instance, nearly 400,000 food preparation and service jobs will be created by 2018 (average pay: $16,430), while only 11,100 financial examiner jobs (average pay: $70,930) will be created over the same period. If the trend of the last decade continues, all of the net gains in those jobs will go to foreign-born workers.

When national unemployment U-3 for December 2012 is 7.8% and U-6 is 14.4 is there any escaping the fact that legal and illegal immigrants competing for a finite number of jobs [the job market is not limitless] are putting enormous pressure on America’s long-term unemployed and under-employed citizens; the 79.8 million Gen Ys inheriting this workplace from 78.5 million boomers [many of whom would like to, or need to keep working]?

The fact is real wages in STEM fields have remained flat in the U.S. since at least 2000. According to the DOL compensation levels for a foreign student shifting to a work visa status ranges from 30% to 45% less than what it would be for U.S. student graduating with a baccalaureate degree? The implications are clear.

In short — the primary responsibility of any government is to protect and defend the citizens it governs. Respectfully, what Republicans and Democrats should engage in a bi-partisan effort that to control immigration across the board, and put a moratorium on sourcing foreign labor, restricting talent acquisition and retention efforts to only [means tested] “best and brightest” STEM or otherwise.

Fred Mora

Gary,

Law of supply and demand predicts that without the influx of foreign STEM workers, wages of US engineers, scientists and technicians would be higher. Yes, we STEM guys are close to full employment, but it doesn't logically follow that the extra supply has no effect on wages.

I should know: I am one of 'em foreign STEM guys. I once had a discussion with the person handling H1B visas and green card sponsoring at a former workplace. We were discussing the high cost of the H1B visa program for the company. He told me that it didn't matter since the goal of the program was to keep engineers' compensation to grow too fast across the industry. Refreshingly honest.

Congress understands perfectly the role of supply and demand in determining the wages of a profession. Did you notice that it's much harder for a foreigner to open a legal practice than, say, an engineering consultancy firm? Most congresscritters are lawyers, as you know...

Gary Jason

Fred, thanks for reading my piece.

While I respect your personal experience, I would make several points.

First, according to the Department for Professional Employees (with the AFL-CIO, hardly an industry-dominated source), there were in 2011 3,609,000 computer and math wokers, 2,785,000 architectuure and engineering workers, and 1,303,000 life/physical science workers. So the current limit on STEM workers--less than 100,000--means that STEM immigrant are at most a 1% new addition to the workplace any given year. Sorry, but that doesn't convince me thay play a role in keeping native-born STEM workers pay low.

Second, you don't take into account the role that foreign-born STEM workers play in creating new jobs. Consider Andrew Grove, of Intel. He created directly many thousands of jobs (and indirectly probably hundreds of thousands), that dwarf into insignificance the one job he supposedly "stole".

Visitor

Dear Gary,

I have a PhD in Biochemistry from Harvard and a postdoctoral degree from MIT and I have not found a job after a year of searching. Please find me a job before taking about the mythical shortage of STEM workers. H1b visas are really displacing American. How come companies such as Pfizer are full of Chinese on H1B while Americans with PHDs from Harvard don't even get called.

Brandon

The AFL/CIO, really? Allow me to suggest Dr. Norman Matloff’s 2003 99 page seminal study “On The Need For Reform Of The H-1b Non-Immigrant Work Visa In Computer-Related Occupations” [http://heather.cs.ucdavis.edu/Mich.pdf]; and Dr. Matloff’s current H1-B webpage including an “Overview: The H-1B work visa is fundamentally about cheap, de facto indentured labor.” [http://heather.cs.ucdavis.edu/h1b.html].

STEM workers--less than 100,000?-In 2011 there were a total of 269, 653 H-1B Petitions Approved. The breakdown was 163,208 continuing employment and 106,445 initial employment [57, 780 in the U.S. and 48, 665 outside the U.S.]. By education level 41% had only a bachelor’s and 42% had master’s degrees [http://www.uscis.gov/USCIS/Resources/Reports%20and%20Studies/H-1B/h1b-fy-11-characteristics.pdf]. Questions that beg answers include: how many Americans were displaced? How many is too many? Were the aliens hired any better educated and/or competent than the Americans displaced? Indeed, what were the criteria used in applicant selection? I could go on…

STEM labor shortages? by Immigration Policy Analyst Daniel Costa the actual full-employment unemployment in computer-related occupations—and especially for those who hold a college degree is closer to 2 percent, not 3.4 percent that prevails when the national economy is at full employment. Table 1 in his report shows 1,772,000 people with bachelor’s degree or higher employed across eight categories in computer science. Using this metric the impact is 15.2%. [269,653/1,772,000] not 1%. http://www.epi.org/publication/pm195-stem-labor-shortages-microsoft-report-distorts/

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