Im-Politic: Angry Voters May Not Know the Half of It on High Tech Immigration

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Center for Immigration Studies, Center for Investigative Journalism, Donald Trump, federal contracting, H-1B visa, Im-Politic, Immigration, Jobs, John Miano, KeepAmericaatWork.org, labor shortages, Mainstream Media, Norman Matloff, Obama, skills gap, technology, Virgil Bierschwale, wages

It’s now become commonplace for establishment politicians and their Mainstream Media enablers to acknowledge that so-called “insurgent” presidential candidates – especially Republican Donald Trump – have “tapped into” public anger against their performance. Far less common are signs that the establishment is prepared to take even the most obvious steps to respond constructively to this anger, and Virgil Bierschwale’s excellent “Keep America at Work” blog has just turned up a great and oh-so-revealing example.

As Virgil and many others (including me) have noted, the H-1B program under which the U.S. government hands out temporary work visas to foreigners supposedly with special skills has long been abused by employers, especially in the technology sector. Claiming that they can’t find the talented workers they need in the American workforce, tech companies have frequently hired H-1Bs – and continually lobbied for more – simply in order to drive down wages and therefore boost their profits.

And in the first sentence of this paragraph, I used the word “noted,” very deliberately. For even though expanding the H-1B program enjoys strong bipartisan support among the many American political leaders who receive handsome campaign contributions from the technology industry, the U.S. government itself over the years has charged numerous tech firms with violations of the central H-1B requirement that they pay these workers prevailing wages.

So you’d think that this same federal government would at least refrain from rewarding these crooked companies by denying them federal contracts. As Virgil has just shown, however, you’d be wrong. His August 20 post reported on a study by the Center for Investigative Journalism that found:

“The federal government has awarded contracts and other benefits worth nearly half a billion dollars since 2000 to tech labor brokers cited for violating laws related to the temporary visa program known as H-1B.

“Since 2000, nearly 20 percent of the technology labor brokers and tech firms cited for violating the H-1B visa program have received federal contracts, payments and other government support.

“The Department of Homeland Security and Department of Labor are among the agencies that have looked past H-1B violations or failed to check the record.

“Even labor brokers facing the ultimate penalty for H-1B labor violations – debarment from the temporary visa program – found ways back in.”

And what about President Obama, the self-styled champion of the American worker? This summer, he signed an executive order requiring anyone seeking significant federal contracts to notify Washington if they’ve recently broken labor laws. “Our tax dollars shouldn’t go to companies that violate workplace laws. They shouldn’t go to companies that violate worker rights,” Mr. Obama said.

But H-1B violators have nothing to fear. They’ve been expressly exempted from the new order.

So although I usually shy away from predictions, I feel pretty confident in believing that, throughout this presidential campaign and beyond, establishment politicians in both parties and their media enablers will continue to bemoan the troubles of the American workforce and hail technology industries as a big part of the solution. Federal contracting practices like those described by Virgil will continue to be a big part of the problem (along with other job- and wage-killing measures like amnesty-friendly overall immigration policies and offshoring-friendly trade agreements). And establishment politicians – along with the Mainstream Media which missed this H-1B scandal and keeps ignoring it – will keep pretending that they get it on voter anger.  

FYI, for other terrific sources of information, analysis, and coverage re H-1B and many other immigration issues, check out Norman Matloff’s “Upon Closer Inspection” and the work of the Center for Immigration Studies, notably John Miano’s blog.   

(What’s Left of) Our Economy: Tech Labor Shortage My…Foot

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compensation, ECI, Employment Cost Index, immigrants, inflation, inflation-adjusted wages, labor shortages, skills gap, tech workers, wages, {What's Left of) Our Economy

So many myths were busted in today’s Employment Cost Index (ECI) report from the Labor Department, which should put the kibosh on wage inflation claims until…the next Employment Cost report. One of the most important is the longstanding notion that America is experiencing a scary shortage of high tech workers, and will fall hopelessly behind the rest of the world in the innovation race – with dangerous implications for national security and living standards – if the “skills gap” isn’t filled pronto with zillions of brainy immigrants.

The ECI data – which doesn’t adjust for inflation when it comes to detailed occupational and industry data – lacks information on technology workers per se. But it does provide statistics on pre-inflation total compensation (including non-wage benefits) for workers in the “professional, scientific, and technical services” field, which includes engineering and computer services.

Remember that textbook economics and common sense both tell us that when businesses can’t find the workers they want, they tend to react in one of two ways. They either increase pay to become more attractive to existing workers they need, and over the longer- term to draw more people into their field. Or they figure out a way to get the necessary work done by becoming more efficient – say, by buying or developing some gizmo that can replace human beings, or make their current employees more productive. (The textbooks, incidentally, don’t teach that businesses facing labor shortages typically lobby governments to boost immigration levels in order to create labor gluts and suppress wages – which seems to be the strategy of choice in Corporate America nowadays.)

Of course, economics also teaches that employers urgently needing more workers will try various mixes of both approaches over time. But those facing genuine shortages usually can’t afford to skimp on pay. Why, then, do the data on total compensation for “professional, scientific, and technical services workers” show that that’s exactly what’s happening to compensation?

The new ECI numbers covered the quarter ending in June, and deep in the Labor Department website, you can find statistics going back to 2001. Since that June, here’s how pay has improved over each previous June quarter:

2000-01: 3.4%

2001-02: 2.4%

2002-03: 2.1%

2003-04: 4.5%

2004-05: 2.6%

2005-06: 3.1%

2006-07: 4.7%

2007-08: 4.1%

2008-09: 2.0%

2009-10: 1.4%

2010-11: 3.0%

2011-12: 1.5% 

2012-13: 2.0% 

2013-14: 1.7% 

2014-15: 1.1% 

Do these look like the kinds of pay raises given out by businesses that are desperate to hire? It’s clear that total compensation increases slowed down considerably once the Great Recession took hold in 2008-09. But why should even that deep downturn have produced the dramatic deceleration revealed here? After all, we’re talking about the industries of the future – sectors and companies that are generating outsized growth because they’ve not only found brilliant new ways to meet wants and needs the rest of the economy already has, but because they’re great at identifying completely new wants and needs.  And anyway, the recession ended more than six years ago – remember?

But here’s a finding that’s even more stunning – and destructive to claims of tech worker shortages: For the last three years, total pay for the private sector workforce overall has risen faster than total pay for the professional and scientific etc. workers. 

Lying about the hiring picture isn’t exactly admirable behavior, but we’re talking about businesses here.  They’re supposed to be obsessed with making money in any legal way possible.  But elected officials who swallow their propaganda presumably have a different set of responsibilities.  If I can find information debunking their labor shortage claims, so can the politicians.  Why haven’t they?