Economics, Pethokoukis

No, America does not have a ‘genius glut’

Credit: Hamilton Project

Credit: Hamilton Project

We shouldn’t try to attract and keep more high-skill immigrants just because a group of technology companies say we should — just like we shouldn’t spend trillions on new infrastructure projects just because a group of civil engineers say we should. Everyone has their biases. The opinion of tech companies should inform the current immigration debate rather than influence.

But a New York Times op-ed by the union-backed Economic Policy Institute, “America’s Genius Glut,” ventures into the hysterical when attacking the idea of a tech workers shortage and a new bill that would increase the number of high-skill temporary and permanent visas:

If there is no shortage of high-tech workers, why would companies be pushing for more? Simple: workers under the H-1B program aren’t like domestic workers — because they have to be sponsored by an employer, they are more or less indentured, tied to their job and whatever wage the employer decides to give them.

Moreover, too many are paid at wages below the average for their occupation and location: over half of all H-1B guest workers are certified for wages in the bottom quarter of the wage scale.

Bringing over more — there are already 500,000 workers on H-1B visas — would obviously darken job prospects for America’s struggling young scientists and engineers. But it would also hurt our efforts to produce more: if the message to American students is, “Don’t bother working hard for a high-tech degree, because we can import someone to do the job for less,” we could do significant long-term damage to the high-tech educational system we value so dearly.

Do we have too many high-skill workers already? One piece of evidence, says the EPI op-ed, is that “the unemployment for high-tech workers may seem low — currently 3.7 percent — that’s more than twice as high as it was before the recession.” I am not sure where that number comes from. The unemployment rate for workers with a college degree or higher is 3.7%, according to the BLS. But the rate for workers with a doctoral degree is just 2.5%. And many tech occupations have bottom-barrel unemployment rates:

– Computer and information research scientists, 0.9%

– Network and computer systems administrators, 1.7%

– Computer and information systems managers, 2.2%

– Software developers, applications and systems software, 2.3%

Some of those high-skill immigrants become entrepreneurs, and there are danger signs there. In Silicon Valley, according to one study, foreign-born founders have tumbled from 52% to 43%. Anyway, given the huge positive impact of highly-educated, high-skill immigrants–particularly in the STEM fields–I am not sure a glut is even possible in 2013 America. Economist Giovanni Peri:

1. While accounting for only 13 percent of the population, foreign-born individuals account for about one-third of U.S. patented innovations.

2. One-quarter of all U.S.-based Nobel laureates of the past fifty years were foreign born. Immigrants have been founders of 25 percent of new high-tech companies, with more than $1 million in sales in 2006, generating income and employment for the whole country.

3. Over the period 1975–2005, all of the net growth in the number of U.S.- based Ph.D.s was due to foreign-born workers.

4. Currently about half of the Ph.D.s working in science and technology are foreign born. Innovation and technological progress are the engines of economic growth.

5. A high-skill job in a city creates 2.5 additional jobs in the local nontradable sector through linkages of production and local demand effects.

6. An increase in the share of college-educated immigrants by 1% increases productivity and wages for everybody in a city by 1%.

7. Immigrants accounted for well over 50% of the growth in employment in STEM-related fields between 2003 and 2008.

Then there is the way immigration helps a nation take advantage of globalization. AEI’s Nick Schulz:

Many major American firms are multinational in their orientation, with growing presences in foreign markets around the world. Think of great companies such as Coca-Cola, Microsoft, Intel, Caterpillar, 3M, or Ingersoll-Rand. Skilled immigrants possess valuable knowledge of foreign market customs, mores, obstacles, and opportunities. Their knowledge can offer an additional edge to the companies that employ them or the new companies they start. Skilled immigrants also help established companies by their interaction with new foreign markets. The presence of these immigrants working for American companies can help boost trade, according to the OECD, “by lowering trade-transaction costs as a result of migrants’ knowledge of markets back home and their contact networks.”

Highly educated immigrants are also great for the US fiscal situation:

020813immigration2

Too many smart, highly-skilled people in America? More please!

31 thoughts on “No, America does not have a ‘genius glut’

  1. When you stop name-calling, re-think what you wrote. The NYTimes picked the headline, not me. I did not write about immigrants; I wrote about non-immigrants — the disposable, indentured, underpaid, second-class workers favored by companies seeking to cut labor costs.
    Flooding the workforce with H-1B visa-holders will have harmful effects on the supply of highly educated Americans. AEI should care about that. See: http://www.nsf.gov/statistics/sed/2011/start.cfm

    • As we already know AEI is committed to bringing in indentured servants and they could care less if the great majority of the H1Bs are used to facilitate offshoring (biggest users of H1B are Indian offshorers -Wipro, Infy etc)


    • Anyway, given the huge positive impact of highly-educated, high-skill immigrants–particularly in the STEM fields–I am not sure a glut is even possible

      not far off from:

      “Given the huge positive impact of housing construction, I am not sure a glut is even possible.”

        • Then open the borders and accept all comers for any occupation below 5% unemployment since those skills are obviously in demand.

      • Huge positive impact? HAHAHA!!! What positive impact? Destroyed economy, biggest recession in 70 years, housing collapse as Americans have their job stolen. Yeah, realy positive there, sparky. Stop the lies. These people are parasites. NRIs send $50 BILLION of our wealth back to India every single year. H-1B is nothing but a communist wealth redistribution program from America to the 3rd world. Tens of millions of American STEM workers are unemployed. These are the same people who built Silicon Valley long before India and China ever saw a keyboard. BLM stats cannot be trusted because it is the unstated policy of the US gov’t to redistribute America’s wealth to the 3rd world via mass invasion.

    • Ross honestly speaking you are misleading the conversation and the author of this article James is right. 1. H1b workers are underpaid – Where did you get that data from ? I would like to know your source? There is a particular step called “Wage approval” in H1b application process where a company hiring a H1b worker needs to prove to the USCIS that its paying the employee above market value.
      A 2 cent honest opinion here, IT resources are more often a make or break deal to most firms and most companies choose to go with the best candidate who appeared for the interviews than the cheaper one, as a matter of fact you dont even know what any candidates salary demands are until you make them an offer and I have never in my career heard of a offer being rescinded because they could not pay the candidate the salary that he had asked for. I suggest you also visit http://www.salar.ly a website that openly lists all H1b workers salaries and the current market wage in that place.

      All this brings us to the contention “Flooding the workforce with H-1B visa-holders will have harmful effects on the supply of highly educated Americans”. The point that James is trying to make in the above article is that there is no unemployment within the sector of “highly educated American IT workers”.

      Now its okay to be wrong and accept that another economist saw the data differently from what you had seen. After all all of us have different perspectives on issues and are right in our own way. If you cannot do that, you can perhaps hire a foreign born masters or a PhD graduate from one of American universities who can do that for you, because with that low of unemployment rate I am sure you are not going to find a US born PhD to do that for you :).

  2. An important factor that the employment statistics do not address is how many US advanced degree holders are employed in their field of study. I have a PhD in physics — yes, I am employed, but not in physics. It took me many years to climb back up a different career ladder to a decent salary. And yes, H1-B visas do make a difference to US STEM employment. For one thing, employers can search for someone who has *exactly* the skills they want, when they want them, instead of training a US citizen for a month or so. If they are so desperate, why do so many in my field get turned down for not having the precise skillset the HR department says they want? (I have seen, no joke, a requirement for 3 years experience in a computer language that had not even been INVENTED three years prior). The H1-B visa system is being abused.

    • There is a concerted effort in the US to keep highly educated Americans out of STEM careers because 1) companies want cheap labor, 2) foreign powers who dump their unemployed here are jealous of us, 3) American execs and managers feel threatened by American STEM workers because we are smarter than they are, 4) lots of Americans working in high-paying jobs create big booms and surpluses which threaten banks.

      Remember back in the 90s when Americans could pay CASH for cars and houses? You don’t need a bank loan if you can pay cash for a car or house, now do you?

      The American middle class has become the enemy of banks, and hence their attacks on us. Wall St. runs the gov’t.

  3. Perhaps if the companies that really need highly talented STEM employees began to compensate them more they might get more of them. But that would mean paying the attorneys, sales people, business people, or financial people relatively less. Better to get Big Daddy government to help maintain your cost structure by importing some low cost replacement nerds workers.

    • Infosys senior level meetings : “We will dump 6 million Indians in US and capture their entire IT market and no American will ever come to know about this. We will throw these Americans out of their own country. They don’t know what we are doing over here.”

    • I want $.25/gallon gas too, and Trump says there are thousands of tankers all around the world full of oil but that the US oil companies deliberately keep it out of the US to keep gas prices high. So if you’re an oil exec, there is no free market. But if you’re a Korporate Amerika exec and you need cheap labor, then the entire world is your “free market”. Free markets only apply to Korporations, not to American workers.

  4. The H-1b outsourcing visa is a scam. The vast majority of H-1bs work in the outsourcing industry and are classified in the lowest skill band available. Only 4% are classified as fully competent. Also, the unemployment rate for new computer science graduates in the US is 7.8%. That sure doesn’t seem like a worker shortage to me. Only an anti-American extremist would support H-1b.

    • Elites, pols, bankers, media types, news, lawyers, all of them are jealous of American STEM workers because we created a boom and got paid more in the 90s. We also create a new info system they cannot control. Their response is to try to put the genie back in the bottle by killing the IT industry. And they know there is no better way to do that than to flood it with 3 million workers that the UN/ILO 2008 report ranked 54th in world productivity – Indians.

  5. For every 1000 foreign workers we bring in, maybe one is a genius. The other 999 are ordinary workers, with mediocre intellects and common skill sets, AT BEST. The American workers who have to share offices with these folk know this. Just look at the jobs being advertised on Naukri and other foreign job boards that are located in America. Did they even advertise the job in America? Probably not.

  6. The whole H1B visa program smells of something foul. If I were one of the ruling elite and wanted to get rid of the working, middle and upper middle classes, leaving only the rich and the poor, first I would outsource all the manufacturing in this country. Secondly, I would target the skilled workers and professionals by flooding the labor market with Chinese engineers, Indian IT specialists, Pakistani programmers, doctors from the Caribbean, etc., all at bargain basement prices.

    • Third, I would produce a high school program that emphasizes art or whatever, while reemphasizing the things that used to get young americans into engineering – shop (auto, machine, wood).

      There is a shortage of good americans. But its not because they aren’t smart. Its because the public schools do a crappy job at prepping our kids for the future.

      Forget the H1-B visa program. Give big business a huge write off for starting alternative pre-stem high schools where interested kids can go and escape the union dominated BS that is the education establishment. They don’t have to teach everything – just enough to get these kids on the right track – before its too late.

      • The whole public education system is a joke and I believe it is structured that way to prevent people from learning. Many schools only have students take a few classes every term instead of a full curriculum the way they did when I was in school. Many students no longer are given homework. Answers are given out before tests and if you fail one, your given multiple opportunities to retake it till you get a passing grade. Community Colleges and even Universities are teaching programs that used to be done via on the job training and supplemented with worthless classes in ethnic and feminist studies.

      • MUMBAI: Across the world, India is seen as an education powerhouse — based largely on the reputation of a few islands of academic excellence such as the IITs. But scratch the glossy surface of our education system and the picture turns seriously bleak.

        Fifteen-year-old Indians who were put, for the first time, on a global stage stood second to last, only beating Kyrgyzstan when tested on their reading, math and science abilities.

        India ranked second last among the 73 countries that participated in the Programme for International Student Assessment (PISA), conducted annually to evaluate education systems worldwide by the OECD (Organisation for Economic Co-operation and Development) Secretariat. The survey is based on two-hour tests that half a million students are put through.

  7. No one is complaining that we shouldn’t have more people in here that are truly skilled – that is not what is happening with the H1b program in reality. Ask almost any STEM worker, and you’ll get the same answer: the H1b program is full of fraud and abuse, period. Does anyone really think that there would be all of these complaints if H1b’s were coming in here creating jobs like crazy, improving our professions, raising salaries, what F-ing idiot would be against that. Do you also believe that unregulated companies always look out for what is best for society, and that government is always honest, or Santa Claus ? And, we already have a visa for job-creators, and worse came to worse expand on that. H1b is used to day to bring in indentured servants and replacement workers; plain and simple. Big body-shops like CrapGemin and Tata love to dump these high-margin/low-skilled beholden workers here, to replace tax-payers, that is not what I’m paying ever-increasing taxes for. END H1B NOW – OR REBUILD IT FROM SCRATCH – H1B IS POISON!!!

    • They’re NOT skilled. If they were skilled we would not have lost 28 million jobs in the US since 1998. The # of jobs would have gone UP if they were so skilled. Americans invented IT, not India and China. The whole thing is just a fake wealth redistribution scam for lazy people in Asia who have never invented anything. If they are so brilliant then why are they unable to even build enough toilets for their own people in their own countries?

      • @wakjob: Note that Americans did not invent IT, the first computer humans ever built “Colossus” was put together in UK. The second computer “ENIAC” was put together in US by John W. Mauchly, J. Presper Eckert and John von Neumann and John von Neumann was a immigrant. Alan M. Turing who also contributed in a large part to algorithm design was a immigrant from UK. So immigrants were involved in IT right from its hay days. Here is a link http://www.computer50.org/mark1/contemporary.html

        Now coming to the second part, the lazy asians part, take a peek at the list and tell me how many names are asian names in that http://en.wikipedia.org/wiki/List_of_chief_executive_officers.
        The point that I am trying to make is, world has equal distribution of intellect, just like say tall people across the world or bald people across the world, the % distribution is largely the same in any given geographic region

        And as far as the toilets are concerned, asians dont have toilets because concrete and building material is wasted on building underground bunkers for an oncoming apocalypse that would never happen in the US. If you did not catch the sarcasm, the point that I am trying to make is there is also a equal distribution of idiots in any given geographic region.

        Now the question for you is, who do you want to hire, a in-house idiot or a foreign genius, because as the above article suggests in-house geniuses are all already taken ?

        • To set the record straight, the complete design but never produced first electronic computer was designed by an American, Atanasoff, from Iowa

          John Vincent Atanasoff was an American physicist and inventor, best known for inventing the first electronic digital computer. Atanasoff invented the first electronic digital computer in the 1930s at Iowa State College.

    • I’d say that the union teacher hacks are more a threat than creationism. After all, it doesn’t matter if you think the world is 6000 years old if you understand math. But Kalifornya just dumped algebra requirements for 8th grade. How are the creationists to blame for that?

  8. Comparing your average H1B drone coder to someone who actually contributes creatively to the growth of the tech sector is a massive sleight-of-hand, perpetuated by unscrupulous businesses who have built an impossibly profitable model on the collective back of the willing foreign wage-slave at the expense of the US worker…and it’s also perpetuated by the immigration law community remoras who feed off the process.

    They are “skilled” only in the sense that they’re not manual laborers. But to read what proponents of wage-slavery say, you’d think they were each making significant leaps in biotechnology, solving climate change, and building the next generation of eco-friendly composite constuction materials.

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