Why we need H-1B professionals

Date: Tuesday, February 04, 2003 12:36 AM

H-1B and JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

John Carroll, ZDNET writer, explains why the H-1B cap in 2003 should
never be lowered. A heated discussion follows.

Carroll is a software engineer who lives in Ireland so he probably
thinks H-1Bs are a fine idea as long as they stay in the United States.

http://zdnet.com.com/2100-1107-983066.html

Why we need H-1B professionals
By John Carroll
Special to ZDNet
February 3, 2003, 5:35 AM PT

As the IT recession in America grinds on, some ask whether it's time to
scale back the number of foreign IT workers who go to work in the
United States. H-1B is a "fast-track" work authorization program "used
by an alien who will be employed temporarily in a specialty occupation"
(including, interestingly enough, fashion models). According to a study
of H-1B candidates compiled in June, 2000 by the U.S. Immigration and
Naturalization Service, "computer related occupations accounted for
nearly 54% of the total H-1B petitions." Not surprisingly, the list of
leading H-1B employers reads like a "Who's Who" of the information
technology industry.

Computer jobs pay well (the median income is $60,350, according to the
U.S. Department of Labor), and as Charles Cooper noted in a recent
article, American computer professionals are having a harder time
finding them. The cap for H-1B visas is set at 195,000 for 2003,
dropping back to 65,000 the following year. Wouldn't American IT
workers benefit from reducing the cap now?

I don't think so. I'm not ready to state that there is no need for
labor market barriers. We live in a world of extreme differences of
income, differences largely delineated by national borders. Any rich
country that unilaterally removed restrictions on all foreign labor
could be overrun by low-income job seekers. Until we resolve the issue
of income differences, right to work restrictions will be a factor in
the labor landscape.

However, there are good reasons for continuing the limited H-1B program
as is, if not extending the higher cap past 2003, particularly in the
field of information technology. In summary, such protections would do
more harm than good for American computer professionals' job prospects,
whereas the benefits stretch far beyond the needs of employers in
search of IT personnel.

Avoid exaggerating the risks
People too often exaggerate the competitive "threat" posed by imported
IT labor. Given that many such workers come from lower income nations,
the fear is that they will come to America and charge prices for their
services that their American counterparts could not match.

First, consider that H-1B is a very limited program. Assuming the 2000
statistics are correct, the maximum number of new H-1B computer
professionals who would enter the market is 105,300 (54% of 195,000).
The total number of computer professionals in the United States,
according to a 2001 Labor Department study, is approximately 2.8
million. This means that the percentage increase in the number of
workers available is 3.7%, hardly an increase that would seriously
affect salaries.

Second, most software development is of the custom sort, meaning small,
ad hoc applications tailored to specific internal business needs. This
requires close interaction with mostly American customers. Americans
have a cultural frame of reference that makes them uniquely suited to
interact with other Americans. This information simply cannot be
transferred. This is obviously not an issue in all programming tasks,
but it indicates that most American companies will prefer to hire an
American, if available, over a non-American.

Third, there are practical and legal limitations to the effect H-1B
candidates have on American salaries. The average income for IT workers
in India (who account for 37% of H-1B applicants) is $5,850, according
to Aberdeen group, but this is in a country where people who make
$10,000 qualify as rich.

This is partly a fluke of exchange rates, and says nothing about
purchasing power of such a salary within India. A programmer there can
live very well on $5,850, as he or she is paid far above the average
national income. That means that Indian programmers won't come to
America to live in poverty. You couldn't live on $5,850 a year in
Silicon Valley, much less $10,000 or $20,000. Neither would an Indian
programmer, who is highly valued in his or her home country and can
live very well close to family, friends, culture and native language.

Foreign programmers will expect to be paid a salary commensurate with
what they would receive at home, from a purchasing power standpoint.
Furthermore, this is reinforced in law, as the H-1B program requires
hiring companies to pay salaries in line with current market conditions
(the minimum salary is $40,000). Therefore, even if Motorola or Oracle
could find programmers willing to work for $30,000, if the going rate
is closer to $70,000, they wouldn't be able to get H-1B approval.

This analysis is born out in the statistical data. The median salary
among H-1B computer professionals was $53,000, while the American
median (as noted) is $60,350. Though the base salary is a bit lower,
consider that bringing foreign nationals to America entails relocation
costs, such as airfare and preliminary housing.

I'm not suggesting that foreign workers don't place some downward
pressure on salaries, nor that they aren't attracted by the prospect of
saving more money each year (given exchange rate differentials) than
they could have earned in an entire year back home. If you increase the
supply of anything, you usually have to lower the price a bit to sell
that extra supply. However, the pressure is less pronounced than simple
cross-border salary comparisons would imply.

Fewer well-paid foreign IT workers in America means more lower-paid IT
workers overseas.
We live in a global economy connected by cheap transportation and an
international telecommunications network. This makes it easy for
companies to consider outsourcing IT work to these low-cost
environments, if not set up shop in that market altogether. As Mahesh
Basappa, joint director of Software Technology parks of India, noted,
"The slowdown in the States means less on-site work and more offshore
development for companies there."

Though it might seem paradoxical, refusing to allow companies to bring
IT workers to America might make moving wholesale to a foreign market
even more appealing. H-1B workers are already returning home as a
result of being laid off from American companies. This enriches foreign
IT centers, making them even more attractive as outsourcing targets. As
things stand, several billion potential customers serve as a strong
incentive to set up shop in Asia. Narrowing the H-1B window would
provide yet another reason to do so.

H-1B brings the best and brightest of the world to America.
Where are you most likely to find the largest shark in the world, in
the Irish sea, or in the Atlantic ocean? You MIGHT find the largest
shark in the Irish sea, if you're lucky, but statistically you are more
likely to find it if you spread your net as wide as possible.

The same applies to labor markets. America doesn't have a monopoly on
bright programmers. Granted, we certainly have the largest pool from
which to draw, something built on an advanced, technology-literate and
wealthy population. However, other nations have bright technologists
who can add a great deal to the American economy. It is worthwhile to
allow American companies to find these innovators, irrespective of
nationality.

In addition, H-1B computer professionals are highly-skilled and
highly-educated. 56% of H-1B candidates, of whom over half are in the
computer profession, have a bachelors degree, far above the national
average in the United States (they don't break out education by
profession in the Department of Labor study, but if they did, I bet the
percentage would be even higher for programmers).

It's worth noting that one of the unique things about America in the
1800s was its ability to attract highly-skilled and educated
immigrants. As David Landes noted in "The Wealth and Poverty of
Nations" (speaking of the character of US immigration during that
period as compared to Latin America): More of them were literate; many
were trained craftsmen (classified as "skilled")." They were attracted
by high wages, which were the result of "quasi-free land and scarce
labor."

The fact that America can still attract such high-skill migrants is a
testament to the dynamism of the American economy. These immigrants,
even if temporary (which most are) enrich the American economy, and are
the sort of people America should be working hardest to attract.

Advancing cultural understanding
Geographic distance tends to interfere with mutual understanding. The
only contact most of the world has with America is through the products
we export, and in particular, our media culture. This tends to create a
rather distorted view about what being an American is all about.

I have a number of European friends who are living and working in
America. What is most interesting is to listen to them discuss their
opinion of American society today in contrast to their opinions before
they left. They have a greater understanding and respect for the
American way of life, something no amount of federally-funded PR could
ever manage.

This does not mean that they suddenly agree with every policy put
forward by the American government. They are just less likely to see
selfish motives behind American actions, and don't subscribe to nasty
stereotypes popular among some "enlightened" Europeans.

There is no better way to change minds than to work side by side with
the object of your misperception. The exchange is bi-directional. Just
as foreigners can learn from encountering Americans on their home turf,
Americans can gain from more regular contact with foreigners.

As noted, I happen to believe that there is some justification for
labor restrictions. However, this quote from Friedrich Hayek is worth
reflecting upon. However justified we might think labor market
protections might be, there is a penalty which must be taken into
account.

"If international economic relations, instead of being relations
between individuals, become increasingly relations between whole
nations organized as trading bodies, they inevitably become the source
of friction and envy between whole nations. It is one of the most fatal
illusions that by substituting negotiations between states or organized
groups for competition for markets or for raw materials, international
friction would be reduced. (The Road to Serfdom)"

Conclusion
In an ideal world, any citizen of any nation would have the right to
work wherever they wished. This would immeasurably benefit the global
economy, as companies would have a global pool of labor from which to
draw, thus increasing their chance of finding the biggest "shark" in
the labor sea. Labor shortages in one area could more easily be
satisfied by surpluses in another, much as occurs in the global market
for material goods.

Even more important, such a world would be more fair. Humanity would
have made a great social leap forward if people could truly compete on
skill, and not on skill combined with the accident of birth location.

Unfortunately, we don't live in that ideal world, and can't so long as
income differentials between nations are as large as they are. That
doesn't mean that limited programs such as H-1B do not provide some of
the same benefits of a global free labor market. Perhaps, in some small
way, this limited program might help to hasten the arrival of a more
open system, as laborers from poorer countries use the knowledge
they've acquired back home (where most return, which shouldn't be
surprising when one considers how wrenching a move to a foreign country
truly is).

Whatever the case, there are simple benefits which the American people
receive from streamlined access to foreign workers. H-1B generosity is
beneficial even from the standpoint of naked self-interest. That merits
maintaining the H-1B cap in 2003, and extending it beyond.

John Carroll is a software engineer living in Ireland. He specializes
in the design and development of distributed systems using Java and
.Net. He is also the founder of Turtleneck Software.

Help to Keep ZaZona.com Online

Donate to the Cause at
http://www.zazona.com/Donations.htm
To Subscribe or Unsubcribe send an email to

Back to archives