A scheme to lower engineers’ wages

http://www.sandiegoreader.com/news/2015/mar/11/citylights1-scheme-lower-engineers-wages/?google_editors_picks=true

by anacleto • 11 years ago

55 71 11 years ago

hga• 11 years ago

"How about the presidential race of 2016? Hillary...."

On the Republican side, Ted Cruz wants to increase the H-1B cap to 300,000/year. All of the other Republicans who look like they might throw their hat in the ring are immigration boosters, although I'm not aware of any of them having positions on H-1B visas.

cpursley• 11 years ago

http://www.economicpolicyjournal.com/2014/07/rand-paul-mets-...

Rand has previously said all of the country's illegal immigrants should receive work permits and mentioned that he did not vote for the Senate's comprehensive amnesty bill because it did not award enough high-tech visas.

ep103• 11 years ago

Jesus, that's basically a 6x increase.

fsk• 11 years ago

The worst part of importing workers via H1-b is the indentured servant aspect. That makes the H1-b employee more attractive than a comparably-qualified American earning the same salary.

vowelless2• 11 years ago

H1-b is also a lot more expensive to hire because of the processing and many companies start the greencard process for H1-bs, which is even more expensive and highly scrutinized.

aguywithamum• 11 years ago

But if a company has a high turnover rate with domestic hires, the added cost may become marginal compared to the cost of constantly hiring.

mc32• 11 years ago

So would you support an effort to make it easier for foreign engineers, sw developers and physicians to come in to get a legal job in the us? Foreign knowledge workers seem to not enjoy the same sympathy low wage immigrants enjoy, perhaps due to the more immediate threat of job stability foreign knowledge workers pose to domestic knowledge workers, even when this fear hasn't been substantiated.

hapless2• 11 years ago

Yes, unreservedly. Immigrant workers whose residencies are not tightly coupled to their jobs would drive wages down much less than H-1Bs.

This is why you don't see employers lobbying for easier immigration policy. Instead, they lobby for expansions of the H-1B program.

therealwill5• 11 years ago

I think the easiest solution would be just to allow H1-B visa holders change jobs or quit easily. Currently if you want to quit you only have 1 month to find a job which is nearly impossible because you have to transfer the H1-B visa which is the same as applying for a NEW H1-B (only difference is that it does not count towards the yearly cap.)

beat6• 11 years ago

Once when debating the poor quality of programmers with a friend, I said "You know how dumb the average programmer is? By definition, half are even dumber!"

He responded, "Only half? Do you mean the mean, the median, or the mode?"

And there's the rub. There may not be a shortage of engineers, but there's a serious shortage of good engineers. And I'm not sure more H1B will solve that problem.

pyrophane2• 11 years ago

That is very fair. I think we are all aware by now that the bulk of H1-B visas are going to a handful of companies that are not using them to bring in the "best of the best," which makes it harder for companies who do want to hire bright foreign workers to get in under the cap. Wouldn't it be great if we could somehow reform the system to make sure it actually worked as intended?

Klockan2• 11 years ago

H1B's earn at least standard wages, so companies wouldn't bring them here if they weren't noticeably better than average.

protomyth2• 11 years ago

The majority of H1B's are here working for body shops and they aren't noticeably better than average. Average is quite good enough for the type of work they do.

beat6• 11 years ago

As someone who has worked with and hired many H1Bs, that hasn't been my experience at all. If anything, the median quality is significantly worse than American programmers. Green card workers tend to be much better than H1Bs, although "better than average" still doesn't apply.

The problem is definitely the median, not the extremes. Top-quality foreign programmers are absolutely as good as top American programmers. It's in the middle that things go sour. There are many reasons for this, both cultural and business. The big business problem is that H1Bs are hired from body shops to supply large numbers of staff quickly at a price target, so they rarely get to work on interesting, challenging projects. Whatever projects they're on are dragged down by the poor quality of their teammates, so they don't get to challenge themselves and excel. It's also aggravated by their body shop employers rewriting their resumes in an absolutely generic fashion for maximum buzzword compliance, denying the workers a chance to shine and specialize to potential employers.

So the interview process consists of starting with a generic technology set, and then spending five minutes or so on technical questions to see if they actually know their ass from a hole in the ground or not (they usually don't). If they do, the process can proceed normally. But without a resume that shows any individuality, it's a huge waste of time for the interviewers to weed through all the crap. This adds to the perception of poor quality.

Yeah, it's a real problem.

rguzman• 11 years ago

A 2013 study by the Economic Policy Institute showed that American universities graduate 50 percent more students in computer, information science, and engineering each year than are hired in those fields

This is a reasoning flaw: companies don't need people who graduate from certain fields. They need people with certain skills that are difficult to attain. A degree in those fields is correlated with the skills in question, but it is very far from a predictor.

TheOtherHobbes• 11 years ago

And companies can only find those skill abroad? And not by - say - offering local graduates lower starter pay but extra training?

When everyone is talking about how hard it is to predict hiring outcomes, it's a bit of a stretch to suggest that this problem magically disappears for prospects who happen to be from other countries.

Klockan2• 11 years ago

You have a finite amount of smart people in the USA, the only way to increase supply is by importing them. You can teach skills but you can't teach talent.

pyrophane2• 11 years ago

I think the problem is also that companies are no longer as willing to train new hires. It can take a lot of work to take an entry level employee and train them up to the point where they can do the job you really want to hire for. When people worked for the same company for decades it was easily worth it, but now that workers hop around every few years fewer companies are willing to make the investment, hence the fact that everyone is looking for experienced engineers, and recent grads from all but the best schools can have a bit more of a tough time.

PaulHoule5• 11 years ago

I am a member of the IEEE Computer society (and not the ACM) precisely because IEEE opposes H-1B expansion. This is not necessarily a "litmus" test for me, but it is a sign that the IEEE is sticking up for engineers and not the financiers of tech industry.

moron4hire2• 11 years ago

IEEE has also supported legislation (that they've gotten to pass in my home state) to require licensing of software developers, that the sorts of companies that use H-1Bs would not be held to.

PaulHoule5• 11 years ago

That sort of thing could help with the "market for lemons" in software developers, and also could raise our social status which would mean we have more support standing up to wrong decisions on the part of management and thus, fewer project failures.

freefrancisco• 11 years ago

If the US doesn't want all the tech talent, they will have to go somewhere else. If another city outside the US becomes a magnet that concentrates all that talent, be prepared to relinquish leadership.

PaulHoule5• 11 years ago

I have some familiarity with the "job shops" that hire a lot of H-1Bs, they do advertise for jobs in the US but I will say that the basic business model is something like "charge the customer $120 an hour and pay somebody $35 an hour to do the work" (Now there is some overhead, so this is not as bad as it sounds, but it is pretty bad.)

One thing that is fairly shocking is the low pay rates for people with skills that are unusual and high demand, I can only imagine they are throwing huge numbers of freshers at the problems.

bsbechtel• 11 years ago

My questions is why can't someone else offer these same programmers >$35/hr and steal them away? What's the friction in the market preventing this?

Yhippa• 11 years ago

In an ideal world it would be nice if you could go work from country to country without having to deal with things like this.

therealwill5• 11 years ago

Sponsoring an H1-B employee, in theory, is always more expensive than an hiring a local because not only do you have to pay an H1-B visa employee the same wage as a local you also have to pay the lawyer and visa fees. Often times employers will also have to provide an employment contract guaranteeing x number of years of employment in order to increase chances of visa approval.

In practice, this is not the case. H1-b visa workers have poor mobility and little recourse when employers cheat the system by providing lower than market pay and requiring the employee to pay their own H1B visa fees. Furthermore, there is little (if any) enforcement that the employer seriously considered domestic applicants at market rates over the H1B applicate. 99% of the time the H1-B is already hired and the employer is posting a job 100% tailored to that H1-B applicant.

hapless2• 11 years ago

Even if they hire in at a market wage (and they often don't), you don't have to give H-1B workers raises or promotions.

vowelless2• 11 years ago

Even if they hire in at a market wage (and they often don't), you don't have to give H-1B workers raises or promotions.

And do you "have" to give "normal" workers raises or promotions? Is any employee entitled to such a trajectory?

geebee3• 11 years ago

Also, that's assuming that the company couldn't have hired by going substantially above the market rate. If there's a talented person you could hire who insists on 150K a year, when "market rate" is 100K a year, sure, you save a bundle by sponsoring an H1B.

therealwill5• 11 years ago

They would have to post a job and allow citizens to apply to the 100k job. If the job posting is requesting requisites that would be expected for a 150k job, then this would be fraud. If the company is lying about the job requisites in order to be at the 100k market rate, this would also be fraud. Proving it, is difficult which is why everyone abuses the system.

robotkilla• 11 years ago

We need a tech union to help prevent this sort of thing. It would be nice if it could also help prevent bad practices in the industry (like building backdoors into code for the nsa).

AnthonyMouse• 11 years ago

Traditional unions only work when they're negotiating with monopolistic industries, because the company then has to hire the majority of the available labor pool itself and has no substitute workers to replace them if the union makes significant demands.

Any kind of operation that only needs a dozen developers is never going to need union workers. As soon as the union makes some nontrivial demand the employer can just let them walk out and hire other people. This is why modern unions are disappearing.

Moreover, the issue in question is about politics. The idea that unions have any real political power is a joke; the only exception is public sector unions and that isn't because they're a union, it's because government employees are a large bloc of single-issue voters and public sector unions are their de facto lobby group. Which, because the public sector unions are providing votes in favor of spending other peoples' money, has led to corruption and pandering much more than it has to the union keeping the government honest.

Exercising political power in the same way can be achieved with a lobby group that isn't a union but which lobbies Congress with the support of members willing to vote the way of the group consensus. Tech workers could certainly use that.

therealwill5• 11 years ago

Good thing the largest tech companies don't collude to lower wages... /s http://www.wsj.com/articles/judge-rejects-settlement-in-sili...

warfangle2• 11 years ago

How about we just make the immigration process sane? #vastoversimplification

protomyth2• 11 years ago

Like taxes, too many people and companies rely upon the current system to allow politicians to change what we are doing.

A good start would be to remove the H1B program in its entirety and allow specialized labor to get a work permit (with the intention to be citizens) and not be tied to a company. Graduates of our public universities should be the first to get these slots.

pnathan• 11 years ago

Leaving aside the nationalist politics, this would do approximately as described by the paper: a heap more indentured engineers coming in, able to be underpaid and exploited, driving down market rates for salaries. That's going to be real fun for people in competition with the body shops. :-/ Outsourcing has its next iteration, I guess.

This is, by the way, why hackers should pay attention to politics. The political forces know how to game systems of humans extremely well - an apex politician has the backing of a machine tuned to game politics for him & them at the level of a Gosling or a Steele with an army of supporters. Staying out of politics and wanting change is equivalent to not contributing/communicating to a project at all and moaning to your friends: ain't nothing gonna happen.

geebee3• 11 years ago

The current political reality is that about 1.2 million immigrants are accepted legally into the US every year, a number that falls far short of demand. The current system is generally based on family reunification rather than work force needs (such as skilled immigration). Silicon valley employers, ostensibly unable to hire the workers they need (under the terms they feel are acceptable) from the citizens who were born here or immigrated through non-work related programs, have lobbied for the power to bestow "front of line" privileges on people (usually STEM workers) they wish to hire. This is an unusual request (and substantial expansion of corporate power into the immigration system) that they justify by claiming that there is a shortage of these very highly skilled workers, a shortage severe enough to cause harm to the US economy in general.

This is where it starts to get complicated, because if you change the rules only for a small segment of the workforce (such as proposals to staple a green cart to STEM degrees but not dentistry, law, MBA…), you may end up creating market distortions that reduce the attractiveness of engineering or software relative to the other fields highly educated people can pursue (provided those people already have the right to live and work in the US). When you consider the skill it takes to be a good software developer and what they could earn in some other field, I don't think that the evidence supports claims of a particular shortage.

Take a look at the US News Best Jobs salary data some time, and focus on salaries in high cost regions like SF. You'll find that while programmers are reasonably well paid, in SF they earn only a bit more than dental hygienists, and quite a bit less than registered nurses. I also think that career stability and long term prospects may actually be much better in other fields. In short,I think that the aversion to software development among people who already possess the right to live and work in the US may be rational and market based, and that getting the government involved will simply forestall the market signals that would get more people interested in this field. Pay and work conditions (you make about as much as you would have with an associate's degree in a health related field, work in a giant open office with back visibility, in a company that may discard you when you get older, perhaps demanding that you train your replacement) need to improve to get more people into programming. Why should we tinker with the immigration system to allow business as usual, when clearly something needs to change?

Just to be clear, I do think that openness to international engineering talent is a critical factor in any countries workforce, and I do favor some kind of skilled immigration program. My big difference is that I also see a potential risk to the domestic pipeline through these market distortions.

erikb• 11 years ago

So, the problem here is that "more foreigners come here and steal our jobs"? Why is such an article even on this website?

mwsherman2• 11 years ago

There’s no doubt the promoters of the bill are self-interested, and one should read the fine print, but: the notion of excluding workers that are on a different side of a border, in order to “protect” wages, is deeply immoral.

Do the wages of the people outside of the border count? Theirs would be going up, due to a more liberal immigration policy. The idea that such a bill would “lower engineers’ wages” seems to be selective in which engineers we are talking about.

pcthrowaway• 11 years ago

I agree completely. I will also add however that it took me nearly two years from graduating with a Computer Science degree to land my first job in the field, so I do take offense to the fact that employers want employees who can do a certain thing now, rather than investing in employees who will be able to grow into their role. I would have gladly worked for minimum wage for a year to get that experience (which is what I ended up doing with an internship).

So I agree that we should let whoever wants move to the U.S. I'm in favor of open borders. But I also acknowledge that more people living here will mean more competition for jobs, and therefore more of a culture of employers treating employees as disposable.

davidw4• 11 years ago

I wrote this to have a standard thing for these threads:

http://journal.dedasys.com/2014/12/29/people-places-and-jobs...

Short version: opening things up to people willing to work, and lifting the restrictions on H1B workers are the best options, morally and economically.

Excluding people who happen to have been born in the wrong place, or the wrong color, or female or whatever, is a bad idea.

PaulHoule5• 11 years ago

I am happy to give them green cards, not happy with the H-1B program.

drcube• 11 years ago

You mean "a scheme to deflate artificially high engineers' wages"?

If you can't compete with foreigners working in your field, you can't compete.

I'm concerned with the indentured servitude we're putting H1Bs under, but not with the fact that they're working here instead of China or India. There isn't a "shortage" of STEM workers in the US, but that's no reason to support protectionist policies.

geebee3• 11 years ago

I think the argument is that we should simply treat engineers and programmers the same way we treat all other workers in the US. Nobody is lobbying for special protections for engineers, just a level playing field.

The US currently accepts 1.2 million immigrants legally into the country every year, and the engineers among them are most welcome to work here with minimal licensing and red tape (this isn't the case for foreign lawyers or doctors). The question is whether the US government should go out of its way to increase the percentage of immigrants who are STEM workers (actually, even that would be an improvement over the terms of the H1B, which empowers corporations to decide who should and shouldn't be allowed to live and work here).

As it stands, I'd say the deck is stacked against engineers relative to other professions in the US. This is probably why people who have the right to choose their profession in the US are reluctant to go into STEM - it's a rational response to market distortion caused by uneven regulation.

beat6• 11 years ago

I doubt the average high school student considering a career in engineering is worrying about market distortion from uneven regulation.

The percentage of women going into computer science in college has dropped precipitously since the 1980s. Why is that?

jws0111• 11 years ago

This article and some of the comments here make it seem like having a H1B is a terrible situation to be in.

I have a H1B. I work for major tech company in the Bay Area. I have a salary in the six figures which is about twice what I would earn back home. I was excited to come to America and work for a company I admire in their Silicon Valley headquarters and the H1B lottery was the only way for me to do so.

Without H1B I wouldn't have had this opportunity. I don't feel like its indentured servitude, I have a salary which I believe is higher than the average market wage and is more than my American peers because the company is paying all of my visa expenses and the fees related to me pursuing a green card. I've been promoted once already in the 18 months since I arrived and received a related salary bump. If I wanted to leave and goto a different company, most in the bay area would allow me to transfer my visa so I could work for them.

H1B is not a problem for America or "engineer's wages". Abuse of the system is. Lets focus on curtailing that abuse and not on victimising H1B employees who may be very happy and grateful for the opportunity to pursue their own version of the American dream.

Spare a thought for those who had the job offer of their dreams, from that "brand name company" in an exciting field, and the opportunity to move to America, only for everything to fall through when they didn't get selected in the lottery. That is surely not right. Can't we come up with a system where American companies can hire who they want, where talented people can work for fair wages, and where individuals can get the opportunity to move to America, as despite all its failings, it is still an highly attractive place to live.

beat6• 11 years ago

Great story! That's what I love about immigration - bringing people like you here. America needs people with your attitude.

logfromblammo• 11 years ago

But it's not immigration. H-1B visas are nonimmigrant guest worker visas, with dual intent. That just means H-1B guest workers are allowed to apply for permanent residency with an I-140 while working in the US.

It doesn't take a rocket senator to figure out that if people are entering on an H-1B and then applying for a green card at the earliest opportunity, it is because the US isn't issuing nearly enough immigrant visas.

Am I the only one that thinks America should be encouraging smart people with valuable skills to stay as long as they like, without sponsorship? I don't think I am.

I also think that the vast numbers of foreign students attending American universities is a great opportunity. Why not slide up to graduates of certain degree programs and say, "Hey, buddy, you like America? Since you have a degree in X, I could convert that student visa to an immigrant worker visa right now, if you want. Actually, how about I do it anyway, and if you really don't want it, just tell me to stop? Hey! Wait! Where are you going? Do you want to live under your parents' thumbs? If you get on that plane now, you will regret it! Our taxes are really very reasonable! Come baaaaaack!"

humanrebar• 11 years ago

H1B is not a problem for America or "engineer's wages". Abuse of the system is.

I'm sympathetic. I really am. I have a lot of friends working on visas, both now and in the past. But I just don't see the economics of this. How can adding hundreds of thousands of people in any field not depress wages, at least in the short-to-medium term.

Why do I care? I want young Americans to go into IT and engineering in general. They are becoming more interested because wages and job security have been improving (at least relative to other careers, I'm not sure about in absolute terms). If we open the valve and flood the market, wages will be affected. Maybe they won't shrink, but maybe they'll be stagnant. And maybe the job security isn't quite as good.

When I was in school, many people didn't go into IT because investment bubbles and trends in offshoring made IT work seem like a bad bet. There was skepticism that IT would provide a good long-term career. I don't see how importing hundreds of thousands of technology workers won't do the same thing.

So, again, I really want people all over the world to have opportunities, but I feel my concerns should be for the future of the young people around me. They don't have another America to move to when their prospects get stale or bleak. They're already here.

mwsherman2• 11 years ago

These are not engineers being “added”. They are being allowed to cross borders.

What it does is equalize wages. They (outside the border) make more, and we (inside the border) make less.

davidw4• 11 years ago

But I just don't see the economics of this

It goes beyond basic economics, so it's worth reading and learning about.

adding hundreds of thousands of people

"Unfortunately", those people already exist and have skills, just in other places, where they happened to have been born. If you create bad enough policies, companies can and will go where the workers are.

Also, this is not a zero sum game. There are more people and workers than 100 years ago, and yet... wages haven't cratered.

I feel my concerns should be for the future of the young people around me

What is the radius of 'around you'? Your city? State? Country? Why are those people more important than those that happen to be born elsewhere?

When did your ancestors come to the US? Why should people now not have the same rights they did?

I'll post my link again: http://journal.dedasys.com/2014/12/29/people-places-and-jobs...

joelwilliamson• 11 years ago

It seems auctioning H1-Bs to companies would let the companies that can't find enough talent to hire at market price, and force companies that just want cheap talent to pay for Americans. Solicit bids from every company stating how many visas they want and how much they will pay for each one. If Google wants 5000 visas and is willing to give the government $200K for each visa, while Infosys is only willing to pay $40K per visa then Google should get 5000 visas and Infosys can try for whatever is left.

If there is an actual shortage of necessary talent, companies should be willing to pay whatever it takes to get visas for qualifying workers. If they just want to save money, this will show up in the low prices they are willing to pay for a visa.

davidw4• 11 years ago

Auctions are a good way of allocating scarce resources.

However, visas are arbitrarily scarce: you still have to pick a random number out of the air for "how many visas should there be".

What is the optimal number of immigrants? http://johnhcochrane.blogspot.it/2014/06/the-optimal-number-...

tdaltonc• 11 years ago

ITT there are apparently two sides: 1) the heartless capitalists who want to abuse labor and 2) the nativist nationalists who want special treatment because of where they were born.

Vraxx4• 11 years ago

That's a false dichotomy at its finest. I've read a wide range of agreeing and dissenting opinions with a range of reasons to back them up. Though I will say that there is a decent amount of nationalism present in this comment section, you are right about that.

solutionyogi• 11 years ago

I am torn on this issue.

To give my personal background, I came to the US in 2004 on H1B visa through Infosys.

Working in NY/NJ area, I have seen it first hand how H1B can indeed lower wages. Here's how. The H1B visa belongs to an Employer and not the Employee. This means that losing a job on H1B could have dire consequences if you can't line up a job right away. This leads to a situation where a person on H1B visa avoids jobs where there is a risk of getting laid off. This leads to tons of 'body shops' setup by Indian/Asian folks who will sponsor your visa and then you go do 'hourly consulting' for a multinational firm. (See this page: http://techjobs.sulekha.com/h1b-jobs-usa) The body shops will charge at least 20% for this benefit, 30% in average case and even 50% if the employee is not smart enough. The goal of these body shops is to bring in more folks from India where someone will happily take up job for 60k to come and work in NY/NJ. The guy in India is thinking: 60k USD = ~3,785,000 INR. This is a huge amount which they will not be able to get in India. (In Bangalore, you can expect to get paid around 700,000 on average). However, most of the time, they don't factor in the cost of living and it means that their actual savings are much closer to what they make it in India. By the time they figure all this out and want to make a move, they understand the visa restrictions and realize that they are stuck till they get green card.

To share my personal story, when I first came in 2004, I was making 60k in NJ. Kept making around the same amount for the next 3 years. Then I became friends with a person who worked as recruiter for COMSYS (now acquired by ManpowerGroup) (For those who don't know, it's one of the bigger staffing firms in NY). She gave me the inside detail on how much companies are paying, how much these staffing companies are keeping and how to keep more share of the money. She also told me that if I want to make real money, I should consult for Investment banks. Based on this, I started improving my technical knowledge, finance knowledge and interviewing skills. I started making more and more money. I got green card last year and I am now making over 200k. I have used this knowledge to help my friends but I have seen it first hand how folks are not able to get a better paying full time job due to visa restrictions. This ultimately leads to wage suppression.

Summary: If you think that H1B abuse is not rampant, you are living under the rock.

So, on one hand, I want H1B visa program so that folks like me can come to this great country and make good money. On the other hand, I am fully aware that businesses are strictly using as a way to lower wages. There are very few H1B jobs where the worker is doing a 'highly specialized job' that a local American can not do.

I really don't know what the answer is. One idea I do like is to do the auction of the H1B visas. That way employer who have the money and who really need highly specialized work done can hire the person from any part of the world. I think it's fair that in a capitalistic system, you let the money decide who should get the opportunity to immigrate. (The current lottery system means that a company may not be able to hire a candidate if they get unlucky.) The only dilemma is that if it worked this way from beginning, I would have never made it to the US.

wooyi• 11 years ago

I bet if someone did an economic impact study of H1B visas and looked beyond pure salary numbers, you would find a very positive economic impact.

America was built by immigrants. Lest you forget.

Borders are a remnant of the old world. Companies need to stay competitive and tapping the international workforce is part of that competitiveness.

Vraxx4• 11 years ago

I find it interesting that typically we commend ourselves for being a nation of immigrants (all in the past of course) and consistently resist current immigration. I feel like we might be more tolerant as a species if we did away with all of these nationalistic tendencies.

NTDF9• 11 years ago

As professionals, software engineers should be more supportive of each other regardless of their backgrounds. America has profited from some of the best international talent. That talent deserves to receive their fair share of rewards. That is the American spirit. Not unfettered self-centered greed. On the other hand, increasing the number of H1bs from the current number is pure corporate greed.

My opinion is that they should just speed up the green card process instead of increasing H1b numbers. A lot of hard working and honest immigrants keep waiting in their current jobs for their green card to get approved. In some cases, it takes 6-10 years to get a green card.

If these folks get some job mobility without jeopardizing their green card status, there will suddenly be enough mobile engineers and wages will rise very fast.

A scheme to lower engineers’ wages

Related Stories