San Jose, California’s, Mercury News reports that:
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After a seven-year legal battle, technology industry icon HP and its spinoff Hewlett Packard Enterprises have agreed to pay $18 million to settle a class-action lawsuit accusing them of purging older workers, according to a court filing.
The lawsuit went on so long that lead plaintiff Donna Forsyth, a manager laid off at age 62 after 17 years with the companies, did not survive to see its resolution.
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Three years before the split, the company “began implementing a company-wide initiative to replace thousands of existing, older workers with new, younger employees,” the lawsuit claimed. Then-CEO Meg Whitman, the lawsuit alleged, “repeatedly admitted that her goal was to make the entire organization younger.”
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Silicon Valley continues to operate under an employment model described in the lawsuit as a “labor pyramid,” with the bulk of workforces made up of young people, UC Davis computer science professor Norman Matloff said in an interview. “No university computer science program warns its students about this scary but true fact about the industry, Matloff said.
When I read the story, I exclaimed “It’s like déjà vu all over again!” (As Yogi Berra once said.) I recalled a 60 Minutes segment by Lesley Stahl in 1993 criticizing the use of the H-1B program by job contractors that was cited in a quarter-century old House Judiciary Committee report:
When any American company needs programmers, the body shops can often deliver employees all the way from Bombay for rates that are so cheap, Americans just across town can’t compete. This is an employment agreement between one foreign programmer and an India-based body shop called Blue Star. It tells her she’ll be assigned to Hewlett-Packard in California, that her salary of $250 a month will be paid back in India, and that she’ll receive $1,300 a month for living expenses in the United States. Total that up and it comes to less than $20,000 a year — nowhere near what Hewlett-Packard would have to pay an American. But Hewlett-Packard never actually hired her; they merely made a deal with the body shop and paid the body shop a flat hourly rate. [Emphasis added.]
The companies have a built-in system of deniability. They take a “see no evil, hear no evil” approach. It’s the body shops that have all the responsibility because the foreign workers remain their employees. It’s the body shops that pick the programmers, then get them their visas and assign them to the American companies where they’ll work. It’s a way of insulating the American firms. As an executive told us, “We don’t want to know what the body shops are doing.”
The Judiciary Committee’s report also cited Matloff, who has been sounding the alarm about the H-1B program’s deleterious impact on American students and older workers for what seems like — and actually has been — decades:
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Dr. Matloff finds that mid-career programmers have great difficulty finding work because they “often lack the most up-to-date software skills” and employers “like to hire new or recent college graduates, because they work for lower salaries, and they generally are single and thus can work large amounts of overtime without being constrained by family responsibilities.” Matloff states further that:
Many employers like ... recent graduates not for their skills, but rather because they are cheaper, with foreign nationals being even cheaper still. ... If one hires a young graduate because he/she has specific skills, he/she will be cast aside in a few years when those same skills become obsolete. The comments by employers regarding new graduates are tantamount to an admission of rampant age discrimination.
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Dr. Matloff points to ... telling statistics ... [including that] only 19% of computer science graduates are still working in software development 20 years after getting their degrees — compared to 52% for civil engineers 20 years after graduating.
The report concluded that “There is much anecdotal evidence to support the contention that age discrimination against information technology workers is prevalent.” It noted that “Many American workers focused on age discrimination when they responded to the San Francisco Examiner’s solicitation of views regarding the information technology worker shortage,” and provided two examples:
At job fairs many older people, myself included, are rudely treated by young recruiters. ... In one blatant case, I saw a recruiter from a major local computer manufacturer and software firm refuse to talk to anyone who looked over 35. Resumes from older people were tossed in one pile. Resumes from younger people were put in another. ... I watched for a while and wished I’d had a hidden video camera.
I think the general problem is one of there not being enough young, and/or inexpensive workers. I have been having an increasingly difficult time of finding any employment since my late forties. I have many friends who are in their fifties who are well-educated, obviously experienced, and are quite computer literate, who are having similar difficulties. ... I believe that age discrimination is rampant in this country, especially in the computer industry. It’s the dirty little secret that industry won’t own up to.
In 2011, the U.S. Government Accountability Office (GAO) issued a report finding that “50% of U.S. citizen electrical/electronics engineers were aged 40–50 while only 9% of such H-1B workers were; for systems analysts, programmers and other computer-related workers, 40% of U.S. citizens were aged 40–50, while only 3% of such H-1B workers were”. The report stated that:
Because H-1B workers tend to be younger (with less potential work experience) than their U.S. counterparts who tend to be older (with more potential work experience), some labor advocates we spoke with argued that the H-1B program detrimentally impacts older IT professionals. Several researchers and labor advocates have stated that technology companies seek to replace older, American IT workers with cheaper, younger workers that are freshly supplied through the H-1B program in order to lower costs, and that IT companies have no incentive to retain and retrain older workers with the latest skills, since the H-1B program provides ready access to young workers with cutting-edge training. While companies could use any young, skilled workers to lower their labor costs in this manner, advocates argue that the H-1B program facilitates the practice of displacing older IT workers because it provides an inflow of new workers in IT fields that is much larger than would otherwise be available to U.S. employers.
Unfortunately, the GAO then decided not to evaluate these allegations, stating that its analysis “does not provide a test of this theory because it does not identify what the wages of older U.S. IT professionals would have been in the absence of the H-1B program, nor does it account for the myriad factors affecting wage, for which we lack data”. That’s the GAO for you.
In any event, it certainly seems like Silicon Valley has rebooted the 60’s saying “Don’t trust anybody over 30” — turning it into the mantra “Don’t employ anybody over 35.” Maybe it would even like to emulate the 70’s sci-fi classic Logan’s Run, set in a domed city where “nobody's allowed to live more than 30 years”.