Date: Mon, 29 Sep 2003 21:22:16 -0700
From: Norm Matloff <matloff@laura.cs.ucdavis.edu>
To: Norm Matloff <matloff@laura.cs.ucdavis.edu>
Subject: yesterday's H-1B debate on CNN

To: age discrimination/H-1B/L-1 e-newsletter

Enclosed is a transcript of my CNN debate yesterday with Thom Stohler,
an industry lobbyist.  If instead of the written word you would like to
see the people themselves, with "body language" etc., Mike Emmons has
the video at http://www.outsourcecongress.org:81/

Here are my comments on some points that Stohler made:

   STOHLER: Well, I don't agree with the underpayment argument. If you look
   at  the  most  recent data released by what is the Bureau of Immigration
   statistics, the average H-1B visa holder in the computer field is making
   $60,000  a  year,  and that's more than the average U.S. worker makes in
   computer programming or assistance management.
                           ^^^^^^^^^^^^^^^^^^^^^

The transcript is in error here.  What he said was "systems management,"
by which, for reasons you will see below, he apparently meant "system
analysts," which I responded to during the debate.  Here is the
background.

Stohler is presumably referring to the DHS report cited in the
Washington Post on September 18.  The Post article said:

   At a Senate hearing on the issue Tuesday, several organizations
   worked to dispel criticisms of the program, including the belief that
   it allows U.S. companies to hire employees at below-market wages. The
   median annual salary of an H-1B worker in the computer field in 2002
   was $60,000, compared with $58,500 for all computer systems analysts
   in the nation, according to Department of Homeland Security
   statistics.

As I replied to Stohler in the debate (and pointed out in this
e-newsletter when I first discussed the Post article) the title System
Analyst is an old-fashioned term, stemming from the old IBM mainframe
days.  The people with that title today typically work in this kind of
antiquated environment, and their pay is accordingly low.

The BLS data is at http://www.bls.gov/news.release/ocwage.t01.htm  That
data is for 2001, the latest year on the BLS site.  As I said in my
reply, the BLS job category which is relevant to this H-1B issue is
software engineer, in that this is the type of work typically done by
H-1Bs.  The BLS data break that down into two subcategories, with
medians of $72K and $74K.  That's a lot more than the $60K which Stohler
correctly said is the median for the computer-related H-1Bs.  

See http://www.immigration.gov/graphics/shared/services/employerinfo/h1b.htm
for the source of this $60K figure, and the 47% figure below.

Now look at this one:

   STOHLER:  No,  I don't agree with that assertion. You have to go back to
   who the H-1B visa holders are in the United States. Forty- seven percent
   of these individuals have a masters degree or higher. They are very well
   educated,  they're  the type of employees that high- tech companies hire
   for very specific, very skilled, very highly educated positions.

That 47% figure is for H-1Bs overall, NOT for the computer-related
H-1Bs, for whom the figure is, as I said in the show, about 8%.  Why is
there such a big difference between the overall figure and the
computer-related figure?  First, there are many H-1Bs working as
postdoctoral researchers in biology etc. at universities, and of course
they have PhDs.  Second, some workers who work in the computer area have
a graduate degree from another field, say economics.  About 3/4 of
software developers have a Bachelor's degree from a field outside of
computer science, and though I don't have the exact figure at the
Master's level, it too is quite high.  This is why I made the qualifier
"in the field" in citing the 8% figure in my remarks on the show.
Someone with a Master's degree in economics who is now in the computer
field of course does not count as having advanced training in the
computer field, the theme of Stohler's claims.  See Sec. 6.3.3 of my
updated congressional testimony, http://heather.cs.ucdavis.edu/itaa.html
for details.

Stohler's claim to hire H-1Bs because there aren't enough Americans with
graduate degrees in engineering and computer science are wholly
disingenuous.  If the industry is so interested in graduate degrees, why
aren't they encouraging the universities to get more of their
undergraduates to continue study after getting their Bachelor's degrees.
Our university has a close relation with industry, featuring an an
Advisory Board and Industrial Affiliates Days (next one, October 10).
I have never heard any of them say that more Americans should go to
graduate school.  On the contrary, when we approached Intel about
funding special fellowships for top PhD students, Intel declined.

Moreover, ever since the tech economy went bust in late 2000, graduate
programs in computer science and engineering have been inundated with
American applicants.  See for example the article in the San Francisco
Chronicle, January 27, 2002.  The article reports, for instance, that
applications to UC Berkeley's graduate program in electrical engineering
and computer science were up by 50%.  When Sophia Choi asked Stohler
what can be done to get more students in the field, Stohler should have
said, "Well, in fact in the last few years it's been much better."

In other words, folks, Stohler's emphasis on graduate degrees was just
one more in a long series of attempts by the industry to push the
Education Button, a tried-and-true lobbying trick.  The fact is that we
are producing far more students in the field than we need, at all
levels, PhD, Master's and Bachelor's.

By the way, it's too bad we ran out of time, as I was planning to
present an analysis of the H-1B salaries of one of Stohler most
prominent clients, Intel.  Go to the Dept. of Labor H-1B database, at
http://www.flcdatacenter.com/casesearch.asp and check out Intel.  For
those of you readers who are not in the tech field, ask someone you know
what they think of those H-1B prevailing wage numbers for Intel, i.e.
whether they think the numbers are consistent with Stohler's claim (made
many times by Intel) that these firms are using the H-1B program
primarily to hire Master's and PhD holders in engineering and computer
science.

Or just consider these numbers.  In the analysis I did recently, I found
that the median prevailing wage quoted by Intel for its H-1Bs was $65K.
Not only does that look low compared to the $72-74K figure I cited
above, but it's even worse:  Remember, Intel claims that these people
have Master's and PhD degrees, and $65K is way lower than what people
with Master's and PhDs in engineering make.  The NSF data, for instance,
show a national median of $100,000 for PhDs in engineering; only 5% of
Intel's H-1B prevailing wage figures were even above $90K, let alone
$100K.  In fact, the 75th percentile for the Intel H-1B application
forms was $73K; in the other words, the top 25% of Intel H-1Bs only make
as much as the top 50% of Americans nationwide in this field.

Moreover, the wages Intel wrote for "actual wage" in their H-1B
applications were always 95% of what they wrote for "prevailing wage."
This is legal, a famous loophole in H-1B law, allowing the employer to
pay 5% under prevailing wage.  My point is not to focus on that 5%, but
rather to show that Intel, just like the other employers, is quite
adept at exploiting all those loopholes I referred to on the show.  The
5% is paltry compared to the savings incurred by using all the other
loopholes, so that the prevailing wage itself is very low. 

Once again I refer to the reader to the outstanding analysis by the
Programmers Guild, "How to Underpay an H-1B," at
http://www.programmersguild.org/Guild/h1b/howtounderpay.htm
This shows in detail how the Bank of America was able to lay off
Americans and get H-1Bs at salaries approximately 50% below what the
laid-off Americans had been making.  And remember, the bank even made
the laid-off Americans train their foreign replacements.

Norm

http://www.cnn.com/TRANSCRIPTS/0309/28/nac.00.html

   Aired September 28, 2003 - 17:00   ET

   THIS  IS  A  RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND
   MAY BE UPDATED.

   SOPHIA  CHOI, CNN ANCHOR: Welcome to NEXT@CNN for this Sunday, September
   28th.  I'm  Sophia  Choi. And coming up this hour: the United States and
   ...
   ...
   Foreign  workers  hold a lot of high-tech jobs in the United States. Are
   they  the  only  ones  qualified, or are they taking jobs that should be
   filled by Americans? There's a lot of debate on the H- 1B visa that lets
   individuals  with  specialty occupations into the U.S. A number of those
   visas is set to decrease soon.
   Joining us to talk about this issue, Thom Stohler, vice president of the
   American  Electronics Association. He's in our Washington bureau. And in
   San  Francisco,  Norman  Matloff,  professor  of computer science at the
   University of California at Davis. Thanks to both of you for joining us.
   Tom,  let  me  start  with  you.  You represent high-tech companies with
   lobbying  and  government affairs. What are these companies telling you,
   and why are they still using these foreign workers?
   THOM  STOHLER,  AMERICAN ELECTRONICS ASSOCIATION: Well, why they use the
   foreign workers is they use them to hire a small but significant part of
   their  work  force,  primarily  individuals  that graduate from American
   colleges  and  universities  with  masters  degrees and Ph.D. degrees in
   fields like computer science, electrical engineering, mathematics.
   CHOI:  Norman,  this  was  supposed  to be a temporary program. Are they
   really needed still, these foreign workers?
   NORMAN  MATLOFF,  UNIV. OF CALIF. DAVIS: Well, they never were needed in
   the  first  place. And, by the way, the statement that most of the H-1Bs
   in the computer area are people with post-graduate degrees is absolutely
   false.  If you look at the computer-related H- 1Bs -- this is the I.N.S.
   data  --  only  about  one percent of them have a Ph.D. in the field and
   only  about  seven  percent have a masters. So a total of eight percent.
   The  graduate  issue  --  the  post-graduate  degree  issue  is a just a
   non-issue.
   CHOI:  But if Americans are qualified, Norm, then why wouldn't companies
   give them the job? Does this come down to dollars and cents?
   MATLOFF:  It's  totally  an issue of cheap labor. You know the H- 1B law
   supposedly  requires  that  you  have  to  pay  prevailing wage. But the
   definition of prevailing wage is so loose that the whole thing is just a
   series  of  giant loopholes. And the companies, large or small, make use
   of these loopholes.
   A  number  of  studies have verified that, university studies. And, most
   interestingly,  Congress's own commission study by the National Research
   Council.  They  all  found  that  the  H-1Bs tended to be paid less than
   comparable Americans.
   CHOI: Thom, I know the argument from companies is that there just simply
   isn't enough U.S. grads to fill the positions. What's being done to lure
   more student then?
   STOHLER: Well, I don't agree with the underpayment argument. If you look
   at  the  most  recent data released by what is the Bureau of Immigration
   statistics, the average H-1B visa holder in the computer field is making
   $60,000  a  year,  and that's more than the average U.S. worker makes in
   computer programming or assistance management.
   But  the  high-tech industry -- part of what happened with the H-1B bill
   in  2000  is  that  there  was  a  $1,000  fee  put  on  every H-1B visa
   application.  And  that money has gone in to train about 55,000 American
   workers  through  the  Department  of Labor grants. And it's through the
   year  2000  provided  about  8,000  scholarships  for  students that are
   getting undergraduate degrees in engineering and computer science.
   CHOI:  All  right.  We  know  the numbers have changed over the past few
   years. In fact, the industry says it's self-correcting. And we have some
   numbers  of  how this actually plays out in the real world. Let's take a
   look at them.
   Pre-1998,  65,000.  And  the  numbers  go  up  as the high-tech boom got
   started  in 1998, as you see there, with a high of 195,000 in 2000. This
   week, that number is set to go down again with 65,000 remaining.
   Norm, there's a lot of concern out there about outsourcing U.S. computer
   jobs  to  places  like Southeast Asia and India once these numbers do go
   down.  Wouldn't  it be better just to keep those jobs and tax dollars in
   the U.S.?
   MATLOFF:  Well,  first of all, very few of the jobs are being offshored.
   Only about one percent. It's very difficult do, and that's why it hasn't
   been more.
   The  issue  really is that you to have the people here for face-to- face
   interaction.  But, at the same time, the employers want cheap labor. The
   statistic  that  Thom cited from the I.N.S. talked about computer system
   analysts.  That's  a very old fashioned. The people that have that title
   generally paid less.
   What he really should have cited was the Bureau of Labor statistics data
   on  software engineers. The medium there is $74,000, compared to $60,000
   for  the H-1Bs in that area. There is absolutely no doubt that the H-1Bs
   are  forming  a  source of cheap labor here; that's what is really going
   on. That is the core issue.
   Everything  else  on training -- training, for example, is a non- issue.
   Let  me tell you why. As the -- there are a number of big companies that
   are admitting that they are replacing Americans by foreign nationals and
   forcing  the  Americans to train their foreign replacement. So, clearly,
   it's  the  foreign  nationals  that  need  the  training rather than the
   Americans. So the training issue is just a smoke screen, nothing more.
   CHOI:  Thom, what's your take on this outsourcing concern, that once the
   H-1Bs  are  booted  out,  and essentially the numbers are so low, and if
   these  companies,  indeed, can't find qualified workers, will they begin
   doing more outsourcing to countries like India and Southeast Asia?
   STOHLER:  No,  I don't agree with that assertion. You have to go back to
   who the H-1B visa holders are in the United States. Forty- seven percent
   of these individuals have a masters degree or higher. They are very well
   educated,  they're  the type of employees that high- tech companies hire
   for very specific, very skilled, very highly educated positions.
   And  to say that these -- that if they're booted out that we're going to
   follow them is just not true. What would be better would be, since about
   half of the individuals receiving masters degrees and Ph.D. degrees from
   American  colleges  and  universities  in  fields  like  engineering and
   computer   science   and  mathematics,  those  individuals  are  foreign
   nationals.  It  would  be  much  better if we had a program that allowed
   companies to hire these individuals without fear of a cap or fear of not
   being  able  to  hire  them  and then bring them through the citizenship
   process quicker. That would be better for the high-tech industry.
   CHOI:  Well,  this  is  a  very sensitive topic and we thank both of you
   gentlemen for joining us and giving us your opinions on it. Thanks.
   STOHLER: Thank you.