No Shortage of STEMs

February 8th, 2013 at 6:35 pm

A few posts back, on immigration economics, I wrote this:

Watch for members of Congress to try to expand guest worker programs throughout this round of reform, particularly in STEM and computer related guest visas, like H-1B’s. There is simply no credible economic argument I’ve seen based on wage or employment trends that would support the notion that there’s a near-term shortage in these fields. The wage trends in particular simply do not reflect excess demand relative to available supply.

Today, we see EPI’s Ross Eisenbrey with an op-ed in the NYT on this:

WHILE genuine immigration reform has the potential to fix a seriously broken system, four senators have introduced a bill to solve a problem we don’t have: the supply of high-tech workers.

The bill’s authors, led by Senator Orrin G. Hatch, Republican of Utah, argue that America would benefit from letting more immigrants trained in science, technology, engineering and math work in the country, with the sponsorship of high-tech companies like Microsoft and I.B.M.

But the opposite is the case: the bill would flood the job market with indentured foreign workers, people who could not switch employers to improve their wages or working conditions; damage the employment prospects of hundreds of thousands of skilled Americans; and narrow the educational pipeline that produces these skilled workers domestically.

I’m still enough of a card-carrying economist that I think price (or wage) signals matter.  So if a supply-shortage should develop in an occupation that policymakers think is important for our future growth, the last thing you’d want to do is jam the signal by artificially inflating the supply flow with a guest worker program, especially one with all the flaws Ross underscores.  No, you’d want wages to rise in the sector to signal students that it’s a good place to target.

But that would mean rising wages for someone who draws a paycheck, and that’s heady stuff these days.

So absolutely, let’s comprehensively reform immigration and create a path to citizenship.  But let’s realize that there’s no reason for that to include lifting the H-1B caps.

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13 comments in reply to "No Shortage of STEMs"

  1. Misaki says:

    I guess people expect it to work like this:

    1) Expensive colleges for the US’s elite. Result is higher spending by the rich and more job creation, even if many of them are terrible jobs like graduate students being paid to teach classes for a low price

    2) People in other countries learn actual useful things (STEM) at a much lower cost of education

    3) The US imports highly educated workers to design iPhones and so on, with higher profits for corporations due to low wage costs

    4) Rich people spend more money on luxury goods (including education). Taxes support people on welfare as long as they don’t mind not having a job

    5) Children from rich families get prestigious degrees and participate in politics and so on

    If you assume that people would prefer to be on welfare than get a job (and that males who can’t get a job don’t mind going to prison especially if they’re black/African-American), the system makes perfect sense.


  2. R Subramanian says:

    I had a long series of tweets about the Eisenbrey op-ed earlier today. Just a couple of salient points:
    1. Not all STEM graduates are employable by Silicon Valley (or employable, let’s be honest here – a point you allude to in the linked post?) So if you want to look at employment in computer or high-tech fields, focus on maybe T&E. Would be nice to see data/graphs for the wage stability in these sub-fields (your post on immigration economics didn’t have that.)

    2. But one must also consider how much of a role outsourcing plays in wage stability in these subfields. Or even hiring non-H1B workers on other visas (L1?)

    3. As an immigrant, I am rather familiar with the immigration system, and the fact that it’s broken. Eisenbrey is not correct that anyone capable of getting a job in the US can get a visa. I couldn’t get a H-1B visa despite a PhD in engineering, because of the cap. (I managed to get an O-1. It’s painful, and not everybody can get it.)

    Am planning to write a post later today. Can tweet you a link if interested.


  3. save_the_rustbelt says:

    So it ok to screw over US blue collar workers but not US white collar workers?

    FDR is rolling over in his grave.

    C’mon Jared.


  4. Nylund says:

    You don’t need the “salary as a signal” bit to make the story clear.

    Essentially, US policy makers have been saying to young people, “Go out and get STEM degrees! We need you! You’ll be paid well!”

    Now, all of a sudden, they’re saying, “We’re going to import a whole bunch of foreigners to do these STEM jobs for less money.”

    It’s like telling your girlfriend you’re really committed to her while blatantly working on your new online dating site profile right in front of her.


  5. James says:

    H-1B visas should be gotten rid of altogether. They’re horrible for both immigrants and U.S. workers. Large corporations like IBM, Microsoft and others use them to keep their costs low and profits high.

    One of my biggest grips is that it allows companies to just hire the latest grads/imports vs having to develop programs to retrain existing workers. Why retrain existing workers or hire older works that needs a skills refresh when you can get cheap labor that can’t leave?

    Nice example of what happens:
    http://www.cringely.com/2012/10/15/so-sue-us-why-big-companies-like-ibm-arent-afraid-of-h-1b-lawsuits/


  6. Rob in FL says:

    I spent from 1996-2009 working in IT for some of the largest companies in the US (Fortune 10 and Fortune 100). The situation with H1B and training new tech employees is actually worse than most people outside tech imagine. The real purpose of H1B is two-fold, 1) Getting workers below the market wage, and 2) Lowering the wages of existing workers. There is not a shortage of workers, just a shortage of those wanting to work below the market wage. H1B workers that I’ve been in contact with have been generally low tech skill and education workers. Yes there are a very few “stars”, but the vast bulk would be the equivalent of liberal arts majors with a couple of computer courses. Companies hire them even though they are low productivity workers since they are controllable and cheap, and they serve as wage control on the rest of the work force.


  7. Chris G says:

    “But the opposite is the case: the bill would flood the job market with indentured foreign workers, people who could not switch employers to improve their wages or working conditions; damage the employment prospects of hundreds of thousands of skilled Americans; and narrow the educational pipeline that produces these skilled workers domestically.”

    Yup, all seems pretty straightforward to me.


    • Chris G says:

      I forgot to note that defense contracting is one of the few remaining fields which employ people with STEM skills that isn’t subject to downward wage and benefit pressures from H1B, offshoring, etc.


  8. Ebenezer Scrooge says:

    The H1B proponents argue, in effect, that the US educational system cannot produce enough STEM types–a kind of “peak oil” theory that relies on physical, rather than market shortages. Implicit in this, I suppose, is the implicitly racist notion that STEM skills are reserved for Subcontinental types, whereas white people can only do herrenvolk stuff. (There is nothing implicit about this notion if you wade through the muck that is called the VDARE website.)

    This idea is not inherently implausible; it is merely false. The Reagan-Carter military buildup increased the demand for engineers. Economics 101 began to operate, with a bit of a lag for filling the pipeline. Salaries increased, and enrollments followed. There was one funny twist. The math SAT scores of engineering students also increased. This is completely inconsistent with the peak oil theory of engineering supply, which would argue in the opposite direction.

    Engineering shortages today–if any–are created by several factors: the relatively crappy compensation of most engineers (in relation to their market clearing wage), the difficulty of getting a college degree, the expense of engineering programs (conjoined to cheap state legislatures), and the patent lack of a clear career progression for engineers over the age of 35 or so.


    • Penny says:

      No, actually the racist assumption is that the only brown-skinned people who ARE qualified in the STEM fields are from the Indian Subcontinent. AMERICAN Indians are assumed to be “too stupid” for the STEM fields, or even “too stupid” to have gotten into any decent university or college in the first place (like Harvard, Yale, Princeton, Cornell, Dartmouth-even though Dartmouth STARTED as “the Indian school”- Johns Hopkins, MIT, Tufts, etc). I’m Native American, have a Math teaching license from the state of New York, went to Yale, and am constantly bombarded with such nonsense as “you don’t look smart enough to get into Yale.”…..on a regular daily basis. Now granted, it may be because not just Mathematics but the teaching of it, requires not just knowledge of the subject matter but the ability to get OTHER PEOPLE to listen to me regarding it. I’m brilliant at Math, but only other Native Americans are willing to listen to ME in Math. All other races treat me like I look too stupid to know what I’m doing – I even get hit with “do you even know Math” among other things. The racist assumption isn’t that ONLY India-Indians know Math, Science, Engineering and Technology; the racist assumption is that NO OTHER brown-skinned people can do it.


  9. Smith says:

    According to http://www.frbsf.org/publications/economics/papers/2012/wp12-09bk.pdf

    Of new I.T. hires, 1/3 from other occupation, 1/4 not in labor force
    (another finding, ads for tech openings overstate hiring by 2/3)

    Economists unable to account for
    “the big rise in inequality has taken place among the highly educated” ?
    http://krugman.blogs.nytimes.com/2011/03/05/falling-demand-for-brains/

    Maybe models wrong, incomplete, don’t account for missing wage increase and occupational mobility, wage stickiness a revelation in recession. Absent falling wages, STEM H-1Bs produce no observable effect.

    54,000 tech H-1B (106,445 new visas * 51% tech, 2012)
    http://www.uscis.gov/USCIS/Resources/Reports%20and%20Studies/H-1B/h1b-fy-11-characteristics.pdf

    39,589 comp sci majors
    http://nces.ed.gov/programs/digest/d11/tables/dt11_286.asp

    (144,00 unemployed, at 3.6%, near 4% college educated rate http://www.bls.gov/cps/cpsaat25.htm )

    7% high skill openings are tech
    1,366,000 (2010 – 2020)
    http://www.bls.gov/ooh/about/projections-overview.htm

    Experiment run before, in 2000, rising wages, recession, increase of H-1B to 195,000
    Comp sci majors at 40,000, rise to 60,000 by 2004, drop to 40,000 today (4 year time lags)

    See also
    http://roomfordebate.blogs.nytimes.com/2009/04/08/do-we-need-foreign-technology-workers/#norman

    Replace H-1B with high skill free labor immigration, watch Microsoft and IBM panic at the thought of more startups vs. cheap labor/indentured/involuntary servants. (600,000 for 6 years).


  10. Richard A. says:

    Republicans are not just pushing for H-1B expansion, they are also pushing for expanded guest worker programs for migrant farm labor. Agribusiness already has the H-2A visa that is under no quota, but they don’t like the prevailing wage provision. Republicans are trying to cut back on that wage provision–they think migrant farm labor is overpaid. Republicans are also pushing for expanded H-2B visas. Republicans want to maximize the negative impact immigration can have on labor.


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