On Immigration, Engineers Simply Don’t Trust VCs

In an essay posted on his website, Paul Graham, the co-founder and former head of YCombinator, loudly called for an increase in skilled immigration. Writing with an intensity that is unusual in his writing, Graham argued that “The US has less than 5% of the world’s population. Which means if the qualities that make someone a great programmer are evenly distributed, 95% of great programmers are born outside the US.”

His concern is that “anti-immigration” forces have thwarted reforms to our immigration system, risking America’s competitiveness in attracting the most brilliant engineers to Silicon Valley. The problem is particularly acute today, he notes, since startups face a severe talent crunch that could be ameliorated with a more open immigration policy. If we refuse to adapt, “the US could be seriously fucked,” Graham writes colorfully.

But Graham largely avoids what many tech workers think when hearing about immigration reform: “we could be seriously fucked.” Indeed, Graham’s essay never once uses the words “wage” or “income.”

Such tactics have made engineers far more cynical about the motives of tech companies, which is intensified by the incessant talk of talent shortages in the industry.

Even worse, his focus on “exceptional” programmers belies the real issue at the heart of immigration reform: it isn’t about the top performing 1% of workers, which of course every country and policymaker in the world wants to attract. It is the broader effect that immigration has on wages for the other 99% that causes such controversy around these policies.

What is missing from the immigration debate in Silicon Valley is trust, and it certainly isn’t the engineers that have abused it. We know that tech companies have worked really hard to keep wages from rising the past decade. Google, Apple, and a multitude of other large tech companies systematically worked together to stop workers from negotiating higher salaries by restricting recruitment practices and preventing workers from enjoying free movement of their labor.

Such tactics have made engineers far more cynical about the motives of tech companies, which is intensified by the incessant talk of talent shortages in the industry.

Graham, like hundreds of other immigration advocates before him in the tech industry, argues that there is a broad talent crunch in Silicon Valley, and immigration policy is one of the critical friction points stopping the expansion of high-flying startups. This widely-reported hiring challenge turned immigration into the marquee political issue for Silicon Valley and led to the creation of one of the most well-funded political action committees in the region, FWD.us.

Yet, we know that many of America’s best engineers are never even given the chance to work in our industry, left behind by the meritocracy. Women are massively underrepresented in engineering jobs in the region, as are people older than 39. Graham might argue that America only represents 5% of the engineers worldwide, but it seems we have already thrown away more than 75% of them at home.

That hasn’t stopped fear of a labor squeeze from having a strong effect on Capitol Hill, where there remains broad support for easing immigration rules for knowledge workers. Changes demanded by Silicon Valley companies are generally supported on Capitol Hill, particularly in light of the other immigration challenges faced by legislators such as procedures on handling undocumented workers. As The Hill wrote in the last push for immigration reform, “…it is likely Congress will again want to use high skilled immigration as a ‘sweetener’ in comprehensive immigration reform efforts to bolster the support of business minded moderates in both parties.”

But for all of that popularity, funding, and support, high-tech immigration policy has completely stagnated, as it has for years. During a round of negotiations for immigration reform in 2007, high-tech issues got almost no final traction in Congress, despite that broad support. As reported at the time by the New York Times, “E. John Krumholtz, director of federal affairs at Microsoft, said the bill was ‘worse than the status quo, and the status quo is a disaster.’”

Trust starts with honesty, and so far in this debate, we have had very little of it.

More recently, FWD.us has also had tremendous difficulty in affecting change in Washington. Several of its strategies have backfired, including a series of television advertisements that were widely condemned in Silicon Valley. Joe Green, who founded the organization, was pushed out in September following discontent over the performance of the group’s lobbying efforts.

It’s a strange dichotomy. How is it that a policy generally received well by legislators and policymakers seems to always be thwarted in Washington horse trading?

The answer is jobs, of course, but even more than that, it is about the quality of the professions available to high-tech workers. Engineering is the most highly paid field for new graduates, and many groups want to protect that bright spot in an economy which has otherwise seen limited real wage growth over the past few decades. Labor unions like the AFL-CIO, despite being almost non-existent in Silicon Valley’s tech economy, are among the most aggressive in blocking changes to high-tech immigration.

These unions simply don’t believe arguments about “worker shortages,” since such arguments have been used for more than a century to foster an environment for employers to lower wages, weaken job security, and cut benefits. Such tactics are not just used by stereotypical factory owners, but have been adapted by managers of tech companies as well.

Writing in an older working paper at the National Bureau of Economic Research, Eric Weinstein, currently a managing director at Thiel Capital and a long-time researcher on the market for elite labor, showed that labor “shortages” in high-tech fields described during the immigration reform efforts in the early 1990s were largely a fiction, and that the reality was anything but.

Any shortage that might exist would have tremendous benefits for workers, but was “… an economic crisis as seen from the point of view of the large government, university and industry employers.” It was the active policy of the government to encourage immigration, because one of the primary benefits was lower wages for industry, and thus, greater competitiveness for the United States.

Shortages allow workers to drive their salaries higher, since they have increased leverage to negotiate with. That’s one of the reasons why we are suddenly reading in the New Yorker about elite engineering talent agencies in Silicon Valley like 10x. It’s also the reason why tech company wages have increased, to the point that even the interns are approaching six-figure salaries. It is ridiculous to think that the talent crunch affecting Silicon Valley has no effect on these rising wages.

We all know these issues. And yet, tech companies and venture capitalists continue to avoid addressing them head on, instead advocating for more immigration as the simplest solution to the problems plaguing Silicon Valley. Trust starts with honesty, and so far in this debate, we have had very little of it. Companies should admit that a shortage means they have to pay higher wages, and that they simply don’t want to do that.

I am a global knowledge worker, and like most people, I am a strong believer in the power of immigration to improve our world for the better. But we can’t start this discussion – one that goes to the core of the livelihoods of hundreds of thousands of people – without the proper respect for workers who have built up the largest tech companies. Solving our problems on the homefront may be just the way to build the coalition needed to see comprehensive high-tech immigration reform come to fruition.