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H-1B Study (All you US Citizen IT Workers are TOAST!)
U.S. House Judiciary Committee Testimony ^ | September 10, 2002 | Dr. Norman Matloff

Posted on 11/13/2002 10:28:24 AM PST by dark_lord

Debunking the Myth of a Desperate Software Labor Shortage

Due to an extensive public relations campaign orchestrated by an industry trade organization, the Information Technology Association of America (ITAA), a rash of newspaper articles have been appearing since early 1997, claiming desperate labor shortages in the information-technology field. Frantic employers complain that they cannot fill many open positions for computer programmers.

Yet readers of the articles proclaiming a shortage would be perplexed if they also knew that Microsoft only hires 2% of its applicants for software positions, and that this rate is typical in the industry. Software employers, large or small, across the nation, concede that they receive huge numbers of re'sume's but reject most of them without even an interview. One does not have to be a ``techie'' to see the contradiction here. A 2% hiring rate might be unremarkable in other fields, but not in one in which there is supposed to be a ``desperate'' labor shortage. If employers were that desperate, they would certainly not be hiring just a minuscule fraction of their job applicants.

Here is a table showing the actual number of job applicants hired for a variety of companies:

American Management Systems 2%
Broderbund Software 1%
Cisco 5%

Cohesive 2%
Datascan 5%
Deltanet 4%
ECbridges 2%
Flashpoint Technology 2 to 5%
R.D. Raab 1%

H.L. Yoh 4%
Inktomi less than 5%
Microsoft 2%
Net Perceptions 2%
New England firm 1%
Qualcomm 4.5%

Radiant Systems under 1%
Red Hat Linux under 1%
Tangis under 1%

Table 1: Percent of software applicants hired

In other words, there is no shortage of ``bodies,'' i.e. there is no shortage of experienced computer programmers. The problem is that employers are not willing to hire them. Employers are only willing to hire from three narrow categories of programmers:
* New or recent (within a few years of graduation) college graduates, who have cheaper salaries. Note, though, that even among new computer science graduates, fewer than half are hired as programmers.
* Foreign nationals on work visas, who have cheaper salaries.
* A relatively small number of experiencedprogrammers who have background in certain highly-specialized software technologies.

Dr. Matloff says: "Hiring managers have often complained to me that their firm's Human Resources Dept. screens out resume's of applicants who the managers feel qualified. HR apparently decides to screen out the applicants who are too expensive or too old - and then complains that there is a ``shortage'' of applicants...There does seem to be coordination among the HR departments of the various firms. The HR departments of the major firms in Silicon Valley hold monthly meetings, at which the firms exchange information with each other on policy, salaries and so on. (Personal communication from Paul Donnelly, IEEE-USA, June 30, 2000.)...All the firms hire an extremely low percentage of their programming applicants, due to the fact that all the firms overstate job requirements...Almost all firms aim for applicants having three to seven years (or two to eight) of experience."

He says: "It seems safe to say that experience may not be the most valued commodity, according to a survey of 200 IT managers nationwide conducted by InformationWeek Research in May. Though age wasn't specified in the question, only 2% of the managers said they would most likely hire a worker with 10 or more years' experience. Almost half-46%-preferred to hire a worker with four to 10 years' experience, while 26% said they would hire a worker with less than three years' experience, and another 26% wanted an entry-level worker or recent college graduate."

TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Foreign Affairs; Government; Politics/Elections; Technical
KEYWORDS: h1b; jobs; programmers; unemployment; uselessolderfolks
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Some points made in the testimony by Dr. Matloff:

(1) Question: Are the H-1Bs paid the fair ``prevailing wage,'' as claimed by the industry? -- "There is a broad consensus that the H-1Bs are indeed exploited in terms of wages and working conditions." Exploitation of H-1B's

(2) Question: The industry says that it will need H-1B visas temporarily, until more programmers can be trained. Is this true? -- No, it's false and dishonest. The employers know that this labor ``shortage,'' in the manner they have defined it, will be permanent; they intend to rely heavily on H-1Bs permanently. H-1B usage not temporary

(3) Question: Why are the H-1Bs de facto indentured servants? -- Most H-1Bs hope to get U.S. permanent residency status, i.e. green cards. But during their sponsorship by employers for greencards, they are in essence indentured servants: The green-card process takes several years, so H-1Bs dare not change employers. Changing employers would mean starting the green-card clock all over again.

The legislation passed in late 2000 tempers the indentured servitude problem somewhat, but is far from a solution. Immigration attorneys estimate that H-1Bs will still typically have a period of indentured servitude of 3 or 4 years.

Starting in early 2001 (or late 2000), the industry experienced a sharp slowdown. There were now many more H-1Bs than jobs which employers wished to fill with H-1Bs. Accordingly, many employers no longer offered green card sponsorship when they hired H-1Bs. Though this would at first appear to at least give the H-1Bs more freedom of movement, they now had a new problem - deportation. If they were laid off or fired from one job, they would have to find another within 10 days, or face deportation. (Some immigration attorneys challenged this, but the INS chose not to respond.) So, it was de facto indentured servitude all over again. [This means that US citizens are competing against indentured servants who dare not ask for higher wages or anything else because they cannot change jobs. Guess who the employers prefer. --dl]

(4) Question: Since the industry says that the H-1Bs are so important to them, has it lobbied Congress to expedite the greencard process? -- Very few employers have done this. On the contrary, the ITAA's Harris Miller, in an interview with the press, said to the H-1Bs in essence, ``If you don't like it, go home'':
"They don't have to use the H-1B program They can stay in their own country or they can go to another country. They are trying to turn this into an entitlement program."
This is an amazing statement for Miller to make. He has repeatedly claimed that the H-1Bs are vital to the U.S. economy, so why would he invite them to leave the U.S.? His emotional outburst illustrates the fact that ISN's lobbying exposes the real reason why Miller's clients want H-1Bs, indentured servitude.

(5) Question: The industry says H-1Bs comprise only a small percentage of their workers. If that is true, why is there such a controversy? -- The Department of Commerce, in their report Digital Economy 2000 (June 5, 2000), found that H-1Bs now account for 28% of all information technology industry hires requiring at least a Bachelor's degree. Moreover, many of the large employers claiming that only a small proportion of ``their'' work forces consists of H-1Bs are hiding behind the fact that they ``rent'' many H-1B workers from agencies.

(6) Question: How has the high-tech slowdown since 2001 affected H-1B usage? -- Since jobs were now scarce, the H-1Bs were even more beholden to their employers than before.
The industry lobbyists, embarrassed by the fact that massive layoffs occurred almost immediately after the lobbyists got Congress to approve an increase in the H-1B quota, tried to spin the news their way. They predicted that the new larger quota would not be used, and ``therefore'' employers must be hiring Americans instead of H-1Bs. But the facts show this analysis to be incorrect.
In 2001, the number of new H-1B visas issued was up, while job openings were down. Clearly, American employers in 2001 were even more keenly interested in H-1Bs than in the past. This is apparently due to the fact that the economic tightening caused employers to have increased interest in hiring cheaper labor.
One firm, ADEA, even issued a press release in May 2001 in which it blatantly announced it would actively recruit such workers, in order to take advantage of their desperate status. Thus, although the numbers of H-1Bs hired may have been down, the percentage of new openings being filled by H-1Bs may have actually increased.
Also in 2001, in the midst of a recession, Dun and Bradstreet admitted to (legally) laying off American workers and replacing them with H-1Bs. The firm also forced the American workers to train their H-1B replacments, a common action in such situations.
The number of new H-1B visas issued did fall in 2002, but that was simply a result of the precipitous drop in job openings that year, even relative to 2002. But again this did not mean employers were acting any more responsibly than before. Indeed, a rough analysis indicated that the percentage of new IT jobs filled by H-1Bs was increasing, not decreasing.

I have posted this to prompt some FReeper discussion. I think that:
(a) IT is the point of the wedge - the H-1B program has been successful for industry for IT, so logically they will attempt to extend it to other occupations.
(b) The studies clearly show that US Citizens are being pushed out of an entire job sector by "indentured servants".
(c) The studies clearly show that older IT workers are doomed. For example: "...Five years after finishing college, about 60 percent of computer science graduates are working as programmers; at 15 years the figure drops to 34 percent, and at 20 years - when most are still only age 42 or so - it is down to 19 percent. Clearly part of this attrition is voluntary, but most are forced to seek other work when they see the handwriting on the cubicle wall: Employers do not want to hire older programmers. It should be noted that other technical fields do not show this rapid decline of work in their area. For example, consider civil engineering majors. Six years after graduation, 61% of them are working as civil engineers, and 20 years after graduation, the rate is still 52%; compare this to the decline for computer science majors from 57% to 19%..."

From a politically conservative perspective, what is the solution? Do you think this is a real problem or not? Do you think it will remain only an IT issue or will it move into other areas where lobbyists may claim a "shortage"?

Thoughts? Comments?

1 posted on 11/13/2002 10:28:24 AM PST by dark_lord
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To: dark_lord
I have seen major companies in Phoenix using hordes of workers of Indian extraction. I'm sure they are H-1B workers. I am against expanding H-1B legislation because it skews the labor market in favor of immigrants willing to serve as indentured servants, stifling competition. This is an example of the Congress giving itself special powers that companies then can then conveniently "purchase." The labor marked should be a level playing (or working) field. Labor law is so convoluted, though. I'm also for lowering the minimum wage to zero and rescinding a lot of EEOC and OSHA regulations so the labor market can govern itself. But them I'm a dreamer and a lot of this probably is contradictory. Sigh.
2 posted on 11/13/2002 10:40:36 AM PST by TenthAmendmentChampion
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To: dark_lord
With large companies outsourcing their IT requirements to IBM and EDS the market for IT talent will be consolidated down to a couple of major players instead of individual companies. What does that mean? It means that they can lobby more effectively for more H1B visas as they have a huge financial incentive to do so.
3 posted on 11/13/2002 10:45:35 AM PST by lelio
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To: dark_lord
American companies want to increase the supply of IT workers in order to keep costs down (more supply, lower price). Its that simple. Over time price will allocate scarce resources and people will get the education and training to do these jobs at a market price. I think the real question is does the US need to increase its population? I think not. A corallary question is why has the government done favors for these companies by allowing them to import labor? I think it shouldn't.

I am an IT manager and have worked with plenty of H-1B coders (primarily Indians and Chinese). They are fine people and work hard. No problem with them or their work. I just think charity begins at home.
4 posted on 11/13/2002 10:46:14 AM PST by RKV
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To: dark_lord
H1B is now, and always has been a fraud, I am severely disappointed, but not overly suprised, that Bush extended this law. There are some allegations of payback to big business and donors that are not democratic inventions... administrations H1B actions and the origional H1B act in the first place, definately are evidence of that.
5 posted on 11/13/2002 10:47:39 AM PST by HamiltonJay
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To: dark_lord
I have come around on this topic in the past couple of years. I now agree that H1B visas are being terribly abused, and may not be needed at all.

Oddly enough, I was in favor of H1B's when I worked for a company that barely used them at all. It was when I switched to a company using them heavily that I noticed the undeniable abuse. In my ignorance, I was willing to believe the PR spin about the need for more H1B's. More knowledge opened my eyes to the point that I can cite examples for every point made above.

6 posted on 11/13/2002 11:00:02 AM PST by Snuffington
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To: Snuffington
The H1b Hall of Shame
7 posted on 11/13/2002 11:13:15 AM PST by FlyingA
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To: dark_lord
I've been at it for 23 years now, and yeah, I'm the old man in the shop (at age 47). I'm also the one many of the coders come to for help.

I'm not going for more training, will not invest the time to learn any new languages or technologies. No ROI in terms of time or money for that. My next move will be self-employment, in whatever I can make a go in.

You parents with H.S. or college kids who are considering an IT career: think carefully about it. Ten years ago jobs were plentiful and well-paid. Not now. And you bust yer a$$ 1) getting there and 2) staying there.

8 posted on 11/13/2002 11:13:40 AM PST by banjo joe
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To: dark_lord
9 posted on 11/13/2002 11:21:15 AM PST by RippleFire
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To: banjo joe
I've just wrapped up a 23 year career in high-tech, and I'm also looking to do something else. A small business seems like the most likely thing, maybe HVAC or something like that. As far as high-tech goes, forget it. The field has been destroyed by our insane immigration policies, our H1-B policies and our "free trade" policies.
10 posted on 11/13/2002 11:31:10 AM PST by Billy_bob_bob
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To: dark_lord
Another 'fringe benefit' to companies with an H-1B workforce - they can point to all the Indian and Chinese people in their cubicles and crow about their orgainzation's 'diversity'. Ever so important in today's PC world.
11 posted on 11/13/2002 12:02:49 PM PST by GaltMeister
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Comment #12 Removed by Moderator

To: dark_lord
So the fact that the vast majority of applicants for a position are hideously under qualified is supposed to mean what exactly? When I was hiring for QA positions I'd get 30 to 50 resumes, prune down to 5 that I'd bring in for an interview and hopefully hire 1. The hardest part was generally getting 5 worthy of interview, I sorted resumes into 3 piles: yes, maybe, and no. If I got 30 resumes the yes pile on first pass would usually be 2 or 3, about twice that many maybes and everybody else was no (then there were the one or two I made fun of, there are some bad resumes out there).

For a high profile company I'm sure the numbers are much worse. I know Pima College gets as many as 200 applicants to a position. But there's nothing that garauntees even 1 is worth hiring.

Most of the people applying for jobs are simply not qualified for them. The percentage of applicants hired is pretty meaningless, all it really tells you is how much garbage the HR department has to wade through.
13 posted on 11/13/2002 1:40:58 PM PST by discostu
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To: MRAR15Guy56
" I'm telling my children to get a REAL TRADE. NO ONE will be able to remodel a kitchen or wire a
garage from effin India."

No, but Mexicans will do it cheaply.
14 posted on 11/13/2002 1:51:47 PM PST by Anomaly in Illinois
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To: FormerLurker
15 posted on 11/13/2002 2:01:22 PM PST by ThinkDifferent
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To: dark_lord
Good job, am marking to read in more detail later.
16 posted on 11/13/2002 2:03:12 PM PST by dirtboy
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To: dark_lord; Red Jones; SR71A; BrowningBAR; Robert Lomax; No_Doll_i; getgoing; madfly; RLK; ...
17 posted on 11/13/2002 2:05:33 PM PST by FormerLurker
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To: discostu
The percentage of applicants hired is pretty meaningless, all it really tells you is how much garbage the HR department has to wade through.

The only thing that qualifies a applicant these days is their H1-B visa. Americans need not apply, and that IS the way it is. I doubt you actually work in the IT industry, as back on a previous thread you didn't even know what a database was and how it was used. You're analytical skills are sorely lacking, and for you to pass judgement on others technically is ludricrous.

18 posted on 11/13/2002 2:10:00 PM PST by FormerLurker
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To: dark_lord
My daughter is an animator in Hollywood. She tells me much of the work that was done by Americans is going overseas or that many animators are here on special visas from Europe, etc, competing with union animators for jobs, keeping jobs scarce and pay low. This is a real burden for people who have spent a fortune for specialized education, and will continue to pay college loans for years to come. Much work has been exported to Canada because of tax breaks they give production companies, leaving Americans working in entertainment industry without work here. It goes on in every industry. This is one of th reasons so many people are screaming about huge corporate salaries. Those at the very top enrich themselves at the expense of those who do the work. The more things change, the more they remain the same. Or so it would seem.
19 posted on 11/13/2002 2:13:01 PM PST by vharlow
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To: FormerLurker
According to YOU. According to everybody else in the world at least 90% of ALL applicants for ANY position will be rejected.

Take your insults elsewhere, I'm TYRING to have a reasonable conversation here and your jag-off routine isn't cutting it.
20 posted on 11/13/2002 2:20:05 PM PST by discostu
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