Do We Really Need Huge Numbers of Foreign Workers?

If the government's experts tell us that we are producing far more high-tech grads than the industry needs (as they do), why are the politicians thinking about importing even larger cohorts of alien tech workers? Are the pols, maybe, paying more attention to the lobbyists than to the facts?

While it is well known that the high-tech industries often prefer lower-paid, young, and docile foreign workers to hiring Americans to handle various assignments in the IT business, and while these employers keep screaming about "labor shortages", some of the real labor market numbers on the subject have not been discussed much lately.

Here's what can be gleaned from the government's (admittedly fragmented) experts on the subject; this is the big picture as drawn from data secured from the Bureau of Labor Statistics (on job openings) and from the Department of Education and the National Science Foundation (on the high-tech degrees being awarded to US citizens and green card holders):

(Architecture and Social Sciences Excluded)

Projected STEM job openings over 10 years: 2,537,000

Projected STEM earned degrees by citizens and green card holders over 10 years:

Associate's: 440,000
Bachelor's: 2,652,000
Master's: 569,000
PhDs: 258,000

Total: 3,919,000

Ratio of projected degrees to projected job openings: 1.55

Data Sources: Job openings, Bureau of Labor Statistics; earned degrees (minus those in architecture and the social sciences), based on National Science Foundation data for STEM degrees awarded (see also appendices 19, 26 and 28) in the year 2009 as a proportion of all degrees multiplied by the total projected awards of all degrees in the years 2009 to 2019 as projected by the Department of Education; see Tables 32 to 34 in the National Center for Education Statistics publication "Projection of Education to 2021".

Since the Obama administration is gung ho on giving the computer-centered industries everything they want in terms of more high-tech workers (no matter how many resident workers are hurt in the process), no one from the White House or the Department of Homeland Security has pulled together the numbers above, though all come from official data sets.

Further, one should bear in mind while looking at these numbers that the United States is routinely bringing in a million new immigrants a year, as well as more than 100,000 new H-1B highly skilled workers as nonimmigrants. (There are two ceilings: 65,000 for ordinary H-1Bs, 20,000 more for those with U.S. graduate degrees — mostly two-year's master's degrees — as well as many more who are working for universities or entities more or less connected to universities; the last group has no numerical limit.) Most of the H-1Bs are in IT.

But do we need any more high-tech migrants at all? The numbers above are for science, technology, engineering, and mathematics, and we have subtracted out of all the statistics for the categories of architects and social scientists, as there is little demand for foreign workers in those professions.

The data show, for the 10-year period, that there will be three new degree holders for every two high-tech job openings, even if employers restricted their hiring to new grads only. In addition, there are millions of unemployed college graduates out there, and even larger numbers of STEM-trained people employed in other lines of work. America is swimming in IT talent.

The focus on new university graduates that dominates the industry's immigration policy statements is a hidden indication of the not-often-discussed elephant in the room — how the ease with which employers can hire docile, young foreign workers permits wide-spread discrimination against older (35+) American workers, which is to be the subject of a subsequent article.

Do IT Jobs All Need IT degrees? A predictable response of industry to our supply and demand numbers will be: you are only showing the big picture you are not comparing the number of new jobs in the IT industry to the number of residents securing IT-specific degrees. That's both narrowly correct, and totally misleading.

Yes, if one were to look into the numbers above, one would find that BLS predicts more openings in what it calls "computer operations" than the projected number of brand-new graduates with computer training. But there is a big catch, as Dan Costa of the Economic Policy Institute pointed out in a useful paper last fall:

So why should we pay much attention to the ratio between new computer science grads and
the industry's alleged needs, when the industry pays so little attention itself? Except of course, when it wants to try to support its complaints of "labor shortages", when it means salary savings, and when it says it needs the "best and the brightest" to do technical work, much of which is pretty ordinary, as Professor Norm Matloff of UC/Davis has pointed out from time to time.

Costa's source for the statement above is another NSF study, the 2003 National Survey of College Graduates.

Most of us, in our private lives, incidentally, probably know a computer whiz or three, and the chances are that one or more of them did not major in computers in college.

Industry Overstates the Need for Advanced Degrees. Let's look a little further at the industry's rhetoric in its efforts to push through a "staple bill", one that would affix a green card to the diploma of every alien who secures an American advanced degree in STEM. This is just one of the lobbyists' efforts to increase the flow of foreign workers into the United States; they are also seeking to make the ceilings much higher in the nonimmigrant H-1B program, and to make it easier for STEM people to secure green cards after working as H-1Bs.

Note that the staple bill is directed at foreign workers who secured either a STEM master's degree or a PhD in this country; this is clearly for an elite group among the foreign workers currently employed in the H-1B program, but do labor-demand data show a particular need for such employees? Not really.

The BLS' scholarly publication, Monthly Labor Review, ran an article last April on this point showing the "typical education needed for entry" into a number of occupations and sub-occupations.

In engineering and architecture there were 35 such subcategories, and none showed a need for more than a bachelor's degree; in the computer and mathematical field, again, only three of the 16 subcategories called for more than a bachelor's degree.

Further, we know from a long series of articles by the Oak Ridge Institute for Science and Education (another government operation) that the majority of aliens with American PhDs in science and engineering manage to stay in the United States for many years after graduation under current laws.

In short, the staple bill looks like an alleged solution valiantly looking for a problem.

Academic/Labor Market Mismatches. There has long been what might be regarded as a mismatch in America between the specific fields of advanced education and the labor market, which we see currently in the STEM field. For example, prominent commentator Andrew Hacker wrote the following in "Can we Make America Smarter" in the New York Review of Books (Volume 56, Number 7, April 30, 2009):

[The] most recent Occupational Outlook Handbook [a BLS publication] uses payrolls for 2006 as a base, and then offers employment estimates for 2016. I was surprised to learn that in 2006 the nation altogether had only 17,000 paid positions for physicists, apart from teachers, and that only 1,000 more openings are envisaged for 2016. The number of employed mathematicians is expected to rise from 3,000 to 3,300. … Employment for engineers is slated to grow from 1,512,000 to 1,671,000, about the same percentage of growth as for the workforce as a whole. Indeed, at current rates, 650,000 new engineers will have received degrees by 2016, four times the predicted number of openings. Hence a high attrition rate. Most reach salary ceilings early — chemical engineers average $73,300 at midcareer — so many shift to sales or management. Perhaps our society would benefit were we to train more people in science and technology. But no matter how estimable their knowledge, when employers say they don't need more of these employees, it tells us either that there aren't tasks for them to do, or that money isn't there [to hire them].

So a rational approach by the universities might be to train more residents in IT, and perhaps fewer in math and engineering, but the momentum inside math and engineering departments would tend to blunt any such changes. And, or course, some students, particularly at the PhD level, are consumed with an interest in fields that have feeble employment prospects.

Astronomy anyone?

Yes, shifting academic priorities to make them closer to those of the labor market will be a good idea in the long run despite the inherent difficulties in such moves; and while this is happening there may be a need for some really temporary admissions — but not more than current levels — of some nonimmigrants in some very precise fields, perhaps some in IT, but there is no need for anything as massive and as long-lasting as the staple bill, or massive increases in H-1B admissions.

There may be some actual, short-term personnel gaps here and there, but we do not need a permanent Mississippi River flood of new alien workers to close those temporary shortfalls despite lobbyists urging huge, permanent additions to the flow of foreign workers?

Finally, What IT Wages Tell Us. I get a kick out of lobbyists and industrialists who urge that business be allowed to run free of needless regulation and government interference, and yet urge direct governmental intervention in the labor market by permitting the massive infusion of inexpensive and young foreign workers.

Are these guys capitalists or socialists? The answer is that they take one route or the other depending on how it will serve the specific industry in question at the specific moment in time.

Right now they are all for substantial government intervention in the labor market by permitting the admission of many more foreign workers.

And how do such admissions square with the most fundamental rule of capitalism — that the markets regulate prices and wages? Bear in mind that those seeking more alien workers to keep wages in check are the same people who would scream to high heaven if the government sought to control prices.

Are there indications in the wage patterns of a real shortage of IR workers?

As Costa indicated in the previously cited article, "average wages in the computer and mathematical occupations for workers with at least a bachelor's degree" barely moved from 2000 to 2011 when studied in 2012 dollars (i.e., in constant dollars). Using Current Population Survey data he found that average hourly wages had moved from $37.27 in 2000 to $39.24 in 2011, an average annual increase of about 18 cents an hour.

Some shortage!