H-1B Study (All you US Citizen IT Workers are TOAST!)

U.S. House Judiciary Committee Testimony ^ | September 10, 2002 | Dr. Norman Matloff

[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."

[discostu]

That's a start but you're never gonna sell massive termination of people because their "ferenners" (which is basically what no extensions means). The GOP is fighting to hard to dump the racism label. Tax insentives will work better because it's more subtle, and helps reduce taxes always an easy sell. And what happens if the density gets too high again, while I agree that there was no national IT crisis we do know that within the "hubs" there just weren't enough people for the jobs. I had a friend trying to lure me out to the Bay and he would send the job listings, it was scary, especially how often you'd see the same jobs week after week. Meanwhile out here things were in a good equilibrium. Now things are tight for workers here, but it's a disaster in the Bay, glad I stayed.

Things like this have a lot of tough calls, can't forget political feasability.

[FormerLurker]

I may be wrong but I think this all started at Microsoft. The concept of working 24/7 was also started at Microsoft. If you ask me Bill Gates has done more damage to this industry than any person alive on this planet. Also, the Indian and Chinese governments have a plan in place to become technologically superior to America. We are actively supporting their goals (much to our own demise).

Now THAT is a very astute observation. Let's look at some recent artices concerning Bill Gates, India, and China.

From ‘India has key role in next wave of computing’

Microsoft chief Bill Gates believes India has a key role to play in the next wave of computing.

In an interview to the Hindustan Times he said: "You are the best in class in software, now you need to complement this with a stronger presence in the world manufacturing market. Software is giving you high-paying jobs, balance this with other sectors and you can create 100 million jobs."

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China Related Issues

Watch China's progress: Bill Gates     The Hindu    11 November 2002
The chairman of the global giant Microsoft, Bill Gates, has urged India to watch the progress of China in the software field, while constantly improving the education of its people to stay in the lead. Replying to questions submitted by The Hindu on the eve of his third trip to India, Mr. Gates said: "India is the leader by far but it should track the progress China is making."

Highlighting the importance of a proper regulatory regime and education, he said governments should create laws and policies to encourage research and development (R and D), support the development of businesses and protect intellectual property rights. The software billionaire will focus on his support to programmes to prevent the spread of HIV/AIDS during this visit. At the same time, he will be meeting a large number of technocrats and Government leaders, giving rise to expectations that Microsoft's activities in India are set to expand. Significantly, this time he is spending as much as four days, compared to barely a day-and-a-half during his last visit.

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Microsoft says to invest $750 million in China

BEIJING, June 27 (Reuters) - Software giant Microsoft Corp (nasdaq: MSFT - news - people) announced by far the biggest Sino-foreign software tie-up on Thursday, saying it would invest $750 million in China over the next three years.

Redmond, Washington-based Microsoft signed a memorandum of understanding with China's powerful State Development Planning Commission (SDPC) during a two-day visit by chief executive Steve Ballmer to a market which has often confounded his firm.

No further details on the $750 million investment were immediately available.

But Microsoft also announced a separate 200 million yuan ($24.15 million) three-year investment in Chinese educational and research institutions, plus a $480,000 investment to set up a software college in Shanghai.

"Microsoft has a long-term approach to its commitment to China and this is reflected in our strategic investments," Ballmer said in a statement.

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Microsoft has mega plans for HiTec City unit

HYDERABAD, Nov.14 MICROSOFT Corporation has announced plans to grow its India Development Centre (MIDC), currently located in the HiTec City here, to its largest facility outside the US. This will involve an investment outlay of Rs 500 crore over the next three years, ramping up the facility to 500 people and probably a new centre.

[FormerLurker]

According to your "real world", most fully qualified engineers in the USA are unemployed and on food stamps. Bunk. Garbage. Swill. Period.

Maybe not MOST, but MANY. MORE than there should be, especially when the ITAA is telling the American people and Congress that there is a severe shortage of IT workers.

BTW, what is it that you do exactly?

[Red Jones]

client has been a gift since 1995.

But different programmers have all kinds of careers and experiences because of the very wide diversity of languages, purposes and industries and even mediums. And different programmers have different levels of education. And even traditionally pre-h1b there was big turnover in 5 year period, I believe 50% or more. It is a rough trade for most, including myself.

I think the best strategy on fighting h1b is as follows. We gotto get congressmen to rally around tancredo's legislation. Get lots of co-sponsors, both parties. It's not going to be an anti-h1b legislation. Instead, it is a pro high tech law that is broad that only includes h1b revisions and enhancments as follows. Because h1b is currently 195,000. We simply go back to 65,000 per the treaty. We memorialize 65,000 in law forever. We treat it like minimum wage. We don't increase it with time. Then, we allow the corps to keep indentured servants for 10 years instead of 6. That way the corps get a reward. You know the repubs wouldn't agree to it otherwise. Hopefully the democrats should now want to bolt to the right and populist on various issues, including h1b. But the corps need a reward to get the repub votes. If we extend it to 10 and limit the number, then we increase the value of h1b to the corps. This means they'll take the time to recruit the best people. In this way we all benefit. I am in full agreement also that it is fair to the home country to let them collect all payroll taxes from the employee's american labor for the full 10 year period. In this manner the 65,000 would all be worth $100,000 a year and would probably have agreed to come here for a pretty penny as well. So, we enhance h1b, we don't destroy h1b.

But to go along with this pill for business we do some other changes. In education we should test for aptitude kids at age 10-16. Each year we should invite some to special schools with synergy of other of high aptitiude. We need to systematically develop such people. It's like going to the moon. How much does it cost. If federal goverment gave $2500 scholarships for each kid selected, then local governments could shift the 5-10 grand a year they spend on the kid to a different school done with federal help if necessary to get these kids knowledgeable and developed at early age. It really costs the same to educate these talented few at an elevated ability & development in these talents etc. in mediocre schools as excellent. The 2500 is a bribe to local politicians to allow someone to do the job in reality. The legislation needs to implement this. Bush spends 60 billion a year on dept of ed. Maybe the bribe could be 4000! As current spending trends are keynesian this is the way to win on h1b, just turn up the dollar volume to win votes. we also need to through this big big instruct the bureaucracy to expedite approval of all h1b's green cards when they complete 6 years needs to be in the legislation to give something to everyone. today the government that gave us 195,000 h1b limit per year also fails to give promised green card status in 6 years today due to special legislation congress tookthe time to pass because the bureaucracy in the last 6 years hasn't had time to print out green cards for these people.

So, that's how pre-1996 newt gingrich would do it and that's how we should proceed.

Pennies from heaven.

[YankeeReb]

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.

I hear you loud and clear my friend, I'm in exactly the same situation. I've been in IT for 15 years and have had a wide variety of experience. Just finished up a Masters in CS, but haven't been able to find steady work now for 18 months. I've finally given up and I'vw started working towards my E-2 license. It's a long haul, at very low pay, but I've had it with all these IT hiring managers. With luck I'll be self employed in about 6 years.

[FormerLurker]

You're story is typical of what I have heard. It is a sad state of affairs when our own government has catered to the whims of a select few, resulting in the destruction of untold numbers of careers and opportunities for highly productive and intelligent US Citizens..

[blueriver]

I think the best strategy on fighting h1b is as follows....

I think it would be a great success if they did not vote to increase the quota when the current level expires. Given the way things are going I do not hold out much hope.

What I think we should be pushing for is an American Worker Protection bill. This bill should have the following two provisions: 1. It would require a company that is laying of workers to first lay-off the H-1B temporary workers. 2. When a company asks for an H-1B petition or a green card they would have to prove that they did not lay off an American worker in the previous 12 months.

The additional two provisions would be an added bonus but are more likely just pipe dreams: 3. retroactively implement the first two provisions for the last 2 years. 4. give a tax advantage to hiring laid off American workers.

The first two provisions would go a long way in protecting American jobs while at the same time allowing companies to hire foreigners when they have a legitimate shortage of workers.

Regarding education, I do not think the government should get involved. Also, what would be the point of training kids for a profession where career and job prospects are questionable?

[Red Jones]

what would be the point of training kids for a profession where career and job prospects are questionable?

Let me answer that question:

in order to get votes you put money in people's pockets

Also, when you educate people thus you build a constituencey against h1b type programs.

When liberals say 'yes' let's spend money like that, then they realize the foolishness of h1b.

when you educate people in this fashion you build a cadre of people that can compete, but also dominate if we do our best. we cannot train people to dominate if we use normal public schools and let people of mediocre ability work with the high aptitude people. High aptitude are the only ones who stand good chance of 1 day being valuable. It is also very much in the national interest to do this from purely economic point of view in that we need to produce and these people can help us produce.

Bush is going to spend the money some other way if you don't spend money on education like that.

Some politicians will support this just to get the federal claws in local schools. Perhaps so, you pay a price for getting rid of 195,000 limit. Local schools are a disaster for all but some upper income communities, how could federal be worse for others? To get school choice vote we simply offer a 4 grand voucher or better yet a 5 grand scholarship to the very high (top 1%) people. This is how you get the bill passed. Otherwise kaput.

You let tancredo be the first sponsor and then multiple people join him. If the repubs don't let it be on agenda, then you just vote 'no' on all politicians who won't sponsor it. When democrats are able to knock out 5-10 republicans on this issue, that's when it will be on agenda.

It will win soon afterwards.

humble pie will help us.

[RWG]

That's the way farmers who actually grow things get paid.

[Glenn]

Continue in your egotistical bliss... but please don't continue to claim to be an authority on the "real world" job market conditions.You're confusing optimism with egotism. There is a difference. Learn it.

[dirtboy]

Great news, Red, hope this snowballs into much more!

[Glenn]

BTW, what is it that you do exactly?

I bang keys until I get the outcome my employer desires and in my employer's timeframe. And I never turn down a combat assignment. I work for a company that must be missing the boat H-1B boat, I guess.

[bimbo]

dark_lord,
Thanks for an insightful analysis ... this is already a HUGE problem for ALL technical professions. The American Engineering Association, www.aea.org , has been on the leading edge of the H-1B issue for Electrical Engineers, and recognizes its devastating effects on all American Technology Employees.

A particularly difficult aspect is the fact that those who are in a position to correct this H-1B problem, have jobs and careers (Managers, HR Administrators, Politicians, Attorneys, etc) that are not directly threatened by H-1B.

[bimbo]

The last time I was on the street looking for technical work, I encountered HR Interviewers who asked questions such as: " How do you feel about working in an Asian environment?" ... "How do you plan to learn a little Mandarin?" ... and that was in '93 - the handwriting was already on the wall: Companies that could move overseas were moving; those that couldn' move were downloading workers.

[bimbo]

This says it all.

Absolutely! ... I hope Freepers realize that this was neither a campaign issue of the Republicans nor the Democrats.

[A. Pole]

Microsoft chief Bill Gates believes India has a key role to play in the next wave of computing. In an interview to the Hindustan Times he said: "You are the best in class in software, now you need to complement this with a stronger presence in the world manufacturing market. Software is giving you high-paying jobs, balance this with other sectors and you can create 100 million jobs."

At least we cannot blame Indians that they do not care about their national interest.

[A. Pole]

Just finished up a Masters in CS, but haven't been able to find steady work now for 18 months.

Do you have a lot of student loans to pay?

[A. Pole]

Regarding education, I do not think the government should get involved. Also, what would be the point of training kids for a profession where career and job prospects are questionable?

At least there should be a protection in case they cannot find the job in their specialty or if the wages collapse. Graduates should be able to discharge their student loans instead of becoming indentured debtors to the end of their lives (you cannot discharge student loans).

Government gives special protection to the corporations investing abroad (and special bailouts on top if "needed"), why not to give protection to the American students so investing in education is less risky?

[A. Pole]

I bang keys until I get the outcome my employer desires and in my employer's timeframe. And I never turn down a combat assignment. I work for a company that must be missing the boat H-1B boat, I guess.

He, he, maybe your company did not miss H-1B boat. God forbid that employee's desire, timeframe or family could matter! I am sure that you deserve H-1H visa - I can write the best personal reference for you if you wish.

[FormerLurker]

At least we cannot blame Indians that they do not care about their national interest.

We must be the only country on this planet that doesn't care about the interests of its own citizens, and places more importance on the interests of foreign governments and those of international corporations.