Editor’s note: Vivek Wadhwa is a fellow at Stanford Law School, Director of Research at Pratt School of Engineering at Duke University, and VP of Innovation and Research at Singularity University. He is the author of The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent, which was named a 2012 Economist Book of the Year. Follow him on Twitter @wadhwa.
The passage of immigration reform by the Senate was a big step forward. The bill is far from perfect, but goes a long way toward solving Silicon Valley’s talent shortage — and America’s immigrant exodus. But big hurdles lie ahead as anti-immigrant groups regroup. Extreme elements of the right will be fighting to close the borders while their counter parts on the left — Big Labor in particular — work to undermine high-skilled immigration. Why are trade unions that have practically no presence in the technology industry trying to make things difficult for Silicon Valley? I really don’t know. What I do know is that Big Labor’s think tank Economic Policy Institute (EPI) is publishing one questionable “study” after another to sabotage immigration reform.
It continues to grab national headlines for research that claims that there is no tech-talent shortage. As stupid as this may seem to people in the tech industry, EPI keeps repeating this — despite the fact that its evidence falls apart once respected economists review its non-peer-reviewed papers. Facts don’t usually get in the way of politics, however. It started with policy papers by Ron Hira, an associate professor at the Rochester Institute of Technology.
Hira has made a career of repeating the words “H1-Bs are taking American jobs away.” He says that claims of a shortage are a ploy by Silicon Valley companies to bring wages down and to replace Americans with foreign workers (I am not kidding). Then came Norm Matloff, a computer-science professor at UC Davis, who made the assertion that foreign students have talent lesser than, or equal to, their American peers. Therefore, skilled-foreign-worker programs are causing an “internal brain drain in the United States,” he argues.
To top it all off, Rutgers professor Hal Salzman co-authored a paper for EPI claiming that the U.S. graduates far more workers in science, engineering, technology, and mathematics (STEM) than the tech industry needs and that foreign workers are discouraging Americans from pursuing technology careers.
How did they come to these conclusions? Supposedly by analyzing salary data and speaking to their own students. As Salzman et al. write, “The effect of this large supply of guestworkers can be seen in wages in I.T., which have remained flat, and are hovering around late 1990s levels in real terms.” Matloff says, “flat wages are discouraging talented U.S. workers with STEM degrees from pursuing graduate study or even careers in the field.” Hira says “H1-B’s are taking American jobs away.”
It is easy to cherry-pick misleading data. Jonathan Rothwell and Neil Ruiz of Brookings Institute did an objective analysis of salaries for the professions that get the most H1-B requests. They found that wage growth in these was actually stronger than the national average. They also found that H-1B workers are paid more than U.S. native-born workers with a bachelor’s degree ($76,356 versus $67,301 in 2010) and even within the same occupation and industry for workers with similar experience.
The chart here (courtesy of Harvard Business Review) looks at the salaries of 26- to 30-year-olds — the same age group as graduating foreign students.
In fact, foreign workers get paid higher-than-average salaries. U.S. companies would not deal with the high political and financial costs of applying for visas if they could fill vacancies with equally qualified American workers. EPI claims that since STEM salary data has been stagnant, there is no unmet demand for high-tech workers.
Unfortunately, its analysis is based on bad data. For example, in the Salzman report, Figure I supposedly reports occupational wages for programmers from 1990 to 2011. But the CPS (their source) does not report these data before 2000, because of changes in how occupations were coded. CPS data show that almost one-fifth of contemporary computer programmers would not be classified in the older system, so wage comparisons across the periods would be inaccurate. In fact, computer-programming wages have increased in the period for which they are consistently defined.
Additionally, the claim that EPI makes about guestworkers discouraging natives from studying technology was supposedly based on surveys by the National Center for Education Statistics and “from field work conducted over the past decade” by the author. There appears to be no credible survey that validates this conclusion. The “field work” is also questionable. In emails that I exchanged with Salzman, he would not provide any further information. Rob Atkinson of The Information Technology Innovation Foundation also debunked the many myths in the EPI research in paper titled The Real Story on Guestworkers in the High-skill U.S. Labor Market.
The report refutes each substantive EPI claim to show that American students are dropping out of STEM majors at high rates; those that complete their majors are finding abundant work opportunities in their fields, and wages are growing for most IT occupations. In any case, demand for current IT skills is extremely high, as engineering and computer majors have low unemployment rates and earn higher wages than any other field of study, according to research from Georgetown University.
The reality is that the country’s most innovative region, Silicon Valley, is starved for talent. Startups can’t find workers with the skills they need, and larger companies have to set up centers offshore for the same reasons. Big Labor and a handful of academics in their ivory towers can pontificate about how things should be. But all they will achieve if they have their way is to choke off the ability of Silicon Valley to create jobs — for them.