To: H-1B/L-1/offshoring e-newsletter

Mon Nov 19 20:06:53 PST 2012

There is an excellent new paper from EPI on the H-1B/green card issue,
by EPI researcher Daniel Costa.  Go to

http://www.epi.org/publication/pm195-stem-labor-shortages-microsoft-report-distorts/

for a summary and to download the full paper.

The reason I consider this paper so important is that it focuses on
Microsoft.  In turn, The reason that is so significant is that, as I've
often lamented, the prevailing wisdom in many DC circles is that yes,
H-1B is abused, but only by the Indian "rent-a-programmer" firms.  The
mainstream U.S. firms such as Microsoft use H-1B responsibly, the
thinking goes.

Yet as I've shown, the big U.S. firms abuse H-1B too (albeit with a
better class of worker).  And the sad truth is that Microsoft has an
awful track record in terms of responsible business practices and
general credibility.  I'll return to this point later, but again, it's
very significant that this EPI calls out Microsoft on their recent
well-publicized STEM labor shortage claim.

I have a number of comments, and will begin with some material that I
wish had been in this EPI paper.

Let's look at Costa's analysis of the computer science unemployment
rate, in response to Microsoft's claim that that rate is low.  Costa's
approach here is, to my knowledge, quite novel:  Instead of comparing CS
unemployment to the rate for all types of jobs, Costa compares the
current CS rate to the historical CS rates, especially during times of a
strong U.S. economy.  He shows that the current CS unemployment is about
double what it should be in that sense.

However, Costa should have questioned the role of the CS unemployment
rate in the first place.  As I've often written, that figure is of limited
interpretability, because it doesn't account for the workers who have
been squeezed out of the field.  Gene Nelson once pointed it out well:
The former software engineer now working as a security guard counts in
unemployment data as an employed security guard, not as an unemployed
programmer.  (Another reason unemployment data are misleading is that
many programmers work as independent contractors.  When they are
underworked, or forced to drop their rates sharply, the unemployment
data show nothing of this.)

Granted, Costa's argument works today, but it would have said things
were just fine for software engineers in 1998 or 1999, which was not the
case.  I have no security guards, but I knew of an MIT grad working
packing boxes and a guy with a Harvard degree driving a school bus at
the time.  In other words, the H-1B program harms people even during the
good times.

And this is typically tied in to the age issue, which Costa doesn't
directly address but which I've shown is central.  (Recall that "old"
means age 35.) 

Costa does indirectly touch the issue, though, in the following
insightful point:

      It is noteworthy that although Microsoft laments its 6,000
      unfilled job openings, it laid off at least 5,000 employees during
      the recession (Sayer 2009). How many of these job openings are
      replacing employees who were laid off? 

It's a safe bet that few if any of those laid off by Microsoft were
rehired off by the firm--AND that those hired in their place were
younger than those who were let go.

My guess is that Costa didn't want to get into the age issue, itself a
good topic for a future project.  If he had included it, Microsoft would
say that those laid off simply don't have the newest skill sets that the
firm needs.  That's a red herring, as I've shown before, but Costa
likely felt his paper would be "cleaner" without addressing the age
issue.

Yet, again, age MATTERS.  Recall Microsoft's damning admission, made in
an unguarded moment (see
http://www.businessweek.com/technology/content/jan2008/tc20080115_576235.htm):

      Microsoft (MSFT) is known for the high quality  of its hires.
      Senior Vice-President and Chief Technical Officer David
      Vaskevitch...acknowledges that the vast majority of Microsoft
      hires are young, but that is because older workers tend to go into
      more senior jobs and there are fewer of those positions to begin
      with.

"...[F]ewer of those positions to begin with"!  Indeed.  As I've said
before, I certainly don't think that every older techie should be hired
(nor every young one), but the fact is that many do have up-to-date
skills but Microsoft and others automatically reject them as
"overqualified" (read:  too expensive, both in wages and benefits).

I also wish that Costa had not so easily accepted the BLS projections of
CS job growth, which have been shown to be unreliable before (and which
I believe have been "lobbied" by the industry).

Costa does a good job of showing that CS wages have been flat in the
last 10 year, growing only about a half percent per year, contrary to
Microsoft's claim of a labor shortage.  By contrast, here in California,
gas prices rose by 20-30% in just a couple of months when a couple of
refinery shutdowns caused a real shortage.  (I assume the same happened
during the aftermath of Hurrican Sandy.)  It's absurd to consider a half
percent annual increase as indicative of a "shortage."

Costa also reports that Microsoft has a 93% acceptance rate for the job
offers it extends, again contradicting Microsoft's claims that it can't
hire people.  Costa might have added that Microsoft's claimed 6,000
current job openings represents only about 6% of the company's
workforce, a normal figure; if anything, it's smaller than what is
typical.

Though many in DC have fallen for the blame-the-Indian-bodyshops PR
campaign (both out of gullibility and out of a need to believe that
companies like Microsoft are acting responsibly), the fact is that there
have been numerous occasions in which Microsoft has shown bad faith in
issues related to foreign workers.

First and foremost, there is Microsoft's repeated misstatement that its
H-1B engineers make salaries of more than $100K to start.  This has been
claimed by Bill Gates, by Microsoft Exec. VP/Chief Counsel Brad Smith,
and Microsoft Senior Director Bill Kamela.  The STEM green card data
show this to be false; for software engineers, for instance, only a
small percentage make $100K.

I won't give a litany of examples, but here is one more:  At the same
time Microsoft was telling the nation that it would only offshore work
if it couldn't find the workers it needs in the U.S., it was writing
internal memos saying things like "Find some to offshore today."  See
http://heather.cs.ucdavis.edu/Archive/MicrosoftClaimBelied.txt

As I wrote yesterday, none of these big American tech firms are the
angels the DC crowd views them as.  I'm glad to see EPI take on
Microsoft.

Norm