Wednesday, March 19, 2008

More H1-B Visas = More U.S. Jobs

Conclusion of the study H-1 B Visas and Job Creation: Based on a regression model that controls for both general market conditions and firm size, requests for H-1B certifications by U.S. technology companies are associated with an increase in total employment more than five times the size of the H-1B request. The data show that for every H-1B position requested, U.S. technology companies in the S&P 500 increase their employment by 5 workers. For technology firms with fewer than 5,000 employees, each H-1B position requested in labor condition applications was associated with an increase of employment of 7.5 workers.

Bill Gates, testifying before Congress: Congress's failure to pass high-skill immigration reform has exacerbated an already grave situation. The current base cap of 65,000 H-1B visas is arbitrarily set and bears no relation to the U.S. economy's demand for skilled workers. Today, knowledge and expertise are the essential raw materials that companies and countries need in order to be competitive. We live in an economy that depends on the ability of innovative companies to attract and retain the very best talent, regardless of nationality or citizenship.

WSJ: The Labor Department projects that by 2014 there will be more than two million job openings in science, technology, engineering and math fields. But the number of Americans graduating with degrees in those disciplines is falling. Meanwhile, visa quotas make it increasingly difficult for U.S. companies to hire foreign-born graduates of our own universities. Last year, as in prior years, the supply of H-1B visas was exhausted on the first day petitions could be filed.

Bottom Line: More H-1B visas, more U.S. jobs, not fewer jobs.

16 Comments:

At 3/19/2008 11:46 AM, Anonymous Anonymous said...

Arguably there may be more jobs however many highly skilled US citizens are displaced into lower paying jobs that don't use their expensive high tech education.

"...would you like fries with that?"

 
At 3/19/2008 12:15 PM, Blogger bobble said...

professor perry please answer the following questions from econ 101?

1) if there is a shortage of american IT graduates, why has the starting salary for computer science majors decreased since 2000?

answer, there isn't a shortage. industry just wants more cheap IT labor from india. if there was acutally a shortage, the salaries of computer science graduates would have been increasing steadily.

2) if there actually was a shortage of american IT graduates, what would you do to get more of them?

answer, you get more by stopping the H1B program and letting the price (salary) of IT workers rise. remember supply increases with price. if you increase the supply of IT workers by letting more H1B workers in, the price (salary) will go down and you will have FEWER american computer science graduates

 
At 3/19/2008 1:40 PM, Blogger Walt G. said...

bobble,

With the globalized economy, the supply increases with outsourcing to countries with a cheaper labor rate, so there is not a fixed supply of labor.

How do you stop capital flight? $50,000-per-year U.S. jobs might exist, but not $70,000-per-year U.S. jobs.

 
At 3/19/2008 1:52 PM, Blogger bobble said...

walt,

yep, its ALL about price isn't it?

i agree that IT workers have to accept lower wages to compete internationally. they are responding logically by not getting IT degrees.

there is no shortage of american IT workers. so lets drop that silly argument for once and for all.

i'm sick to death of hearing how the problem in america is poor math skills. you know that's just IT industry BS.

 
At 3/19/2008 3:20 PM, Anonymous Anonymous said...

Bobble,

Another factor that has depressed IT salaries since 2000 was the bursting of the tech bubble. I guess you weren't in the tech industry like me. A great many companies went out of business and thousands of workers had to migrate to other industries.

Setting aside the question of IT salaries, what about science, & engineering?

If you look at the recent survey of grads at Harvard, many were going into investment banking rather than technical fields such as engineering & science. There aren't too many fields that can offer $100k starting salary. People respond to incentives. Hence, the best & brightest have pursued career in investment banking rather than science and engineering.

In the past, the U.S. attracted the world's best & brightest who left countries like Britain. If you would prefer that the innovators go to China or Japan, don't be surprised when the U.S. is surpassed as the world's leading innovator and don't be surprised that there are economic consequences.

As Charles Murray points out, a very small portion of the population creates an outsize economic benefit to our society as a whole.

 
At 3/19/2008 3:53 PM, Blogger bobble said...

by the way, you study on h1b visas and job creation is authored by an outfit run by Stuart Anderson. hardly and impartial obverver. for years, he has been working behind the scenes for expanding the H1B program.

here's a blurb on him:

"The National Foundation for American Policy is apparently one of those Beltway
organizations that have grandiose names but in actuality are one-man shows.
The one man here is Stuart Anderson, a long-time lobbyist and activist in
favor of a liberal H-1B program. Anderson began these activities by writing
pro-H-1B articles for Jack Kemp's Empower America, then for the Cato
Institute, a libertarian think tank. He also was the author of the 1997 study
by the ITAA, the industry lobbying group, that convinced Congress to enact the
first expansion of the H-1B program in 1998. He then went to work for
then-Senator Spencer Abraham, in which job Anderson authored the 2000
legislation which expanded the H-1B program. He's also a favorite author in
the house magazine of the National Association of Foreign Student Advisers,
one of the most ardent lobbying groups on Capitol Hill for a liberal H-1B
policy. (Anderson was also in tune with them when he lobbied against
instituting a system, brought in after 9/11, to track whether foreign students
are still attending college.)"

 
At 3/19/2008 4:23 PM, Anonymous Anonymous said...

So Anderson lobbied against
instituting a system, brought in after 9/11, to track whether foreign students
are still attending college and Dr. Perry is using him as a source?

 
At 3/19/2008 5:44 PM, Anonymous Anonymous said...

Bobble,

I have no problem with your questioning the findings for bias but discrediting someone through their associations with the Cato Institute or Jack Kemp seems to have no more merit than the present Obama-Reverend Wright controversy. I agree that one does need to examine studies for bias and errors in methodology that could skew the results.

You have not examined the methodology of the study, the size of the sample group, the selection criteria or any other element that might be problematic. If you wish to suggest that the report is biased, then support your conclusions with data.

With regard to Mr. Stuart, you have not provided the context of his objections to student tracking nor the means to independently verify any of your assertions ie. through quotations from Mr. Stuart. The result is that your argument has the appearance of an ad hominem attack (attack the man rather than addressing the issues he raises). Would be more than pleased to consider an argument that is backed up by documentation such as reports or direct quotes from Mr. Stuart. I understand that many people are used to hearing these kinds of assertions in the media while classical argumentation, supporting your assertions with data is not very common outside institutions of higher learning.

Some of us find ad hominem a particularly tedious and exasperating form of argument. You are capable of much better argument than this.

Originally, you started with 2 questions and presented material to support your conclusions which was a more reasoned form of classical debate.

With regard to your first question, I suggested that your assumption regarding the salaries for IT professionals since 2000 did not account for the bursting of the tech bubble which led to many businesses going broke. It has taken a number of years for this industry to recover. A negative shift in the demand curve would also result in lower salaries.

I also suggested that your critique did not look at any fields under discussion aside from IT. Specifically, you did not look at whether or not there was a shortage of skilled labour in science (other than computer science), engineering and technology. Salary ranges and growth projections on thousands of occupations are available on the website of the Dept. of Labour.

Your original questions were well presented although you answered them yourself rather than allowing Prof. Perry to answer them as you had requested. Funnily, people seldom ask a question that they have not already decided for themselves. The answer they desire is merely a confirmation of their present assumptions.

You might enjoy Predictably Irrational by Dan Ariely. An interesting read that takes one outside the box. One of the most difficult things in life is challenging our own assumptions.

 
At 3/19/2008 6:53 PM, Blogger bobble said...

This comment has been removed by the author.

 
At 3/19/2008 6:59 PM, Blogger bobble said...

reposting. too many typos in my last comment :o]

anon said: "You [bobble] have not examined the methodology of the study, the size of the sample group, the selection criteria or any other element that might be problematic. If you wish to suggest that the report is biased, then support your conclusions with data."

well, you're right. here's one item that popped up during a quick read.

study says "Over
this sample, H-1B certifications are most strongly associated with employment increases for smaller companies
(see figure on next page). For firms with fewer than 5,000 employees, each H-1B position requested in labor
condition applications was associated with an increase of employment of 7.5 workers compared to 4.7 additional
workers at firms employing between 5,000 and 10,000 workers.5"

looking at footnote 5 we see: "5 When estimated using all years of data, there was no statistically significant relationship found between H1-B
certifications and employment for firms that were already employing more than 10,000 workers. It may be harder
to find a relationship statistically for very large firms with multiple lines of business, however a positive effect was
found even for very large firms in the most recent year of data."

oops. "there was no statistically significant relationship found between H1-B
certifications and employment for firms that were already employing more than 10,000 workers."

so the study is only valid for small companies. large companies are a huge portion of H1B hiring.

why is this just in the footnotes?
is this an example of the author's bias?

 
At 3/21/2008 1:14 PM, Anonymous Anonymous said...

Bobble,

You are right. Have to agree that this doesn't look like a very good study.

I originally read Prof. Perry's post rather than linking to the report and reading it. I feel somewhat embarrassed that I reacted to what you were posting about Stuart Anderson rather than doing my homework.

My apologies for jumping on you. I guess we all make mistakes. Sorry to be a pain.

Have a nice weekend
:)

 
At 8/03/2008 5:03 AM, Blogger sac devotees said...

I found http://www.h1jobs.ORG
useful in recruiting all the bench folks. Be sure to click jobs_mentioning_h1b to find h1b jobs.

 
At 1/16/2009 3:32 PM, Anonymous Anonymous said...

Being an IT/Geoscientist. Bill gates and his IT, computer cronies just want cheap labors.I see foreign workers stealing IT jobs from US citizen and resident.If those do get H1B,hope that they develops, new jobs for legal resident.I doubt it! I wonder if H1B holder visa overstay,do the adjustment for green card, or just get married. If they do stay,no jobs for us ciz. Then local have more competition.Being a US Ciz,Maybe i should go back and revoke my naturalization and applying for a H1B myself.:D Bill gates & cronies = dumbass = he just wants the $$$.

 
At 1/22/2009 11:51 PM, Blogger Kannan said...

While thousands of Americans (white collar jobs) are being laid off, I see non-US citizens (H1B visas) are doing just fine. In fact, the 65,000 H1B quota filled out immediately this past April and all these workers are working here in the USA. Come April, 2009, another 65,000 H1B quota will be filled out and 65,000 workers will arrive here. I found out that for every H1B visa filing, the employer is supposed to pay about $600 (I am not sure about the amount) to the Dept. of Labor. This fee was supposed to help retrain American workers. Yet, I am yet to find out if anybody has made use of this. I resent it that when Americans do not have a job, how could these corporations hire foreign workers to come over here? Their usual excuse is that there aren’t enough IT trained Americans to hire. This is not true; I personally know many IT professionals (Americans) without a job. Shouldn’t the government spend the money and train our own citizens?
And then there is this big loophole of bringing in L1 foreigners. We should blame our system; it is so lax that foreigners take advantage of it. H1 once gets here, never leaves!!

 
At 2/12/2009 3:50 PM, Anonymous Anonymous said...

That study is ridiculous...

I lost my job last June to a H1-B worker that was my assistant. The H1-B worker was paid nearly $10,000/ year less than a second assistant I has that was an American worker. Eventhough the H1-B worker was less qualified to perform my job duties - with less experience and education than myself, the company realized that they could give her the easier aspects of my job duties and divide up the rest among the team and pay her far below my salary range. The fact is, H1-B visas DO cost Americans their jobs.

 
At 10/27/2009 6:44 PM, Anonymous Anonymous said...

Wow, what garbage. It's funny because now unemployment is so outrageously high and companies are STILL hiring H1B workers.

Can you really tell me it's not about having these Indians on a tether for cheap??

I have a masters in Computer Engineering. I can't get a call back. In fact, the only time I get a call back is when some company needs an "unqualified American" to prove they need an H1B.

These "studies" are BS. Someone please explain how giving money to an Indian who sends the money back to India while keeping the American worker unemployed creates more jobs???? IT IS STUPID. IT IS IMPOSSIBLE.

It's just a lobbying effort by companies that want cheap workers. End of story!

 

Post a Comment

<< Home