Dr. Norm Matloff On Bodyshops And Gender Discrimination
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March 22, 2013, 08:16 PM
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Dr. Norm Matloff writes to his email list:

I`ve often criticized the various entities that take a "blame the Indians" approach to "reforming" H-1B and green card policies. Their view is what I like to summarize as "Intel si! Infosys no!", meaning that the "Intels," the mainstream U.S. firms, use the H-1B and green card programs responsibly while the Indian bodyshops abuse it. This view is demonstrably false, but the IEEE-USA has taken this stance ever since 2000. (See here for some of the history).

The latest tack by this crowd is to claim that the bodyshops practice gender discrimination, while the mainstream firms do not. Excuse my blunt language, but I regard this as an outrageous obfuscation of the H-1B issue, and indeed of a very serious gender equity issue.

I reported in my posting on Monday, testimony by Dr. Karen Panetta, VP for Communications and Public Awareness at IEEE-USA (she is also an ECE professor at Tufts), which you can read here.

I must hasten to interject here that Panetta never explicitly states that gender discrimination occurs mainly in the bodyshops. But it`s quite clear that that is what she means. She cites the bodyshops repeatedly, such as:

"The greatest damage that the H-1B visa program imposes on women and families clearly results from offshore outsourcing" (i.e. from the bodyshops)...

...My own experience tells me that the vast majority of H- 1B workers are men. Everybody knows this. The IEEE-USA represents more American high tech workers than anybody else, so we have sources. One from inside the industry, looking at the offshoring companies that dominate the H-1B program, is that their global hiring is 70% men. But in the U.S., where outsourcing companies get more than half the capped H-1B visas, the ratio is more like 85% men. That`s outrageous."

Furthermore, Panetta presented the long-held position of IEEE-USA that more green cards be granted to STEM foreign students earning advanced degrees at U.S. universities. The only possible conclusion from all this, I believe, is that she thinks there is a substantially lesser gender balance among the foreign students.

As a professor herself, Panetta should know this isn`t true at all. For example, see Chips and Change, a 2009 MIT Press book by UCB economist Clair Brown and her coathor Greg Linden. In Figure 6.4, they show EE PhDs by gender and citizenship status, 1995-2004. Among the noncitizens, the male-female ratio is always at least 7::1, often 9::1. Those are considerably worse than the 70% figure she cites as known for the bodyshops, and somewhat worse than the 85% figure she speculates for them. The numbers for the citizens are similar, though I`ll have more to say about that below. Fig. 6-5, with the figures for CS, is not quite as extreme, but still comparable to her 70% figure above, and again, with about the same gender ratios for citizens and noncitizens.

So Panetta`s implication that a foreign worker policy that favors the foreign students would result in more gender balance is just plain wrong. But it`s even worse than that. As most readers of this e-newsletter know, a point I stress heavily is that H-1B is fundamentally about AGE. Younger workers are cheaper than older ones, both in salary and in benefits, so employers make out like bandits by hiring young H-1Bs instead of older (age 35+!) Americans. Age discrimination is rampant in the tech field (lots of research shows this, including work done by the IEEE-USA itself).

And this age discrimination is fueled largely by the availability of this large pool of YOUNG foreign workers. Indeed, Professor Brown makes this connection in the above research monograph and in her earlier work.

Some of you may recall that I term this Type II wage savings accrued by employers by hiring foreign workers. It is often on the order of 50%, much larger than the 20% I and others have found for Type I savings, i.e. hiring an H-1B instead of an American of the same age, education and so on.

That is the core problem with IEEE-USA`s advocacy of giving green cards to new foreign graduates—those new foreign graduates are overwhelmingly YOUNG, and thus overwhelmingly favored by employers over the 35+ Americans. So, while Panetta rightly states that at least green cards solve the H-1B problem of de facto indentured servitude, that approach does NOT solve the larger foreign worker problem, i.e. age discrimination.

And worse still, research has shown what many of you already know, that age discrimination against women is even greater than age discrimination against men. See for instance "Between the Cracks: Discrimination Laws and Older Women," Joanne Song, UC Irvine Dept. of Economics, 2011.

The conclusion ought to be clear: Instead of advocating expansion of the green card program, IEEE-USA ought to espouse what it did before its forced U-turn in 2000—reduction of ALL tech-related foreign worker programs. Trying to use gender discrimination as one more reason to "blame the Indians" is unjustified and indeed, harmful to the very group IEEE-USA claims to want to help.

But there is still more. As we all know, foreign students earn around 50% of U.S. doctorates. Glancing at the student list for Panetta`s department at Tufts, the percentage there appears even higher there, somewhere in the 60s. WHY are the numbers so high?

This goes back to the 1989 internal NSF document I often refer to, which I will now tie to the gender issue.

The NSF document advocated bringing in a glut of foreign students to keep PhD salaries down. AND it said that the resulting stagnant wages would make PhD study unattractive to American students. It predicted that the Americans would take their talents into more lucrative fields, such as finance and law. Whether that document represented official NSF policy or not, its projection was exactly right.

In other words, when the employers say they hire H-1Bs because not enough Americans get PhDs, they have it exactly backwards—H-1B is the CAUSE of the problem, not the solution.

Now, how does that relate to women? Following the DotCom Bust of late 2000, CS enrollment plummeted. After about a year or so, a trend emerged: Women students were bailing out of CS majors even faster than men! I speculated at the time that this was due to women being more practical than men, so that they found the prospects of a field with stagnant wages (confirmed by Daniel Costa`s recent EPI study) and short career longevity to be highly unappealing—so they avoided CS. I saw some confirmation of this a few months after making this speculation, in a CACM article showing that, in deciding whether to study CS, women rate future earnings prospects much more heavily than men do.

My point, then, is that NSF`s own statement that stagnant wages would drive away Americans from PhD study probably applies even more to women. If so, the way to get more women into doctoral work is to REDUCE the number of foreign students, not create new immigration avenues for them.

I`ve argued that H-1B and green card programs are, in addition to harming individual workers, adversely impacting the U.S. economy. This is because the glut of foreign workers causes an internal brain drain in the U.S., and because the foreign workers on average are less talented than Americans of the same background—a net loss in average talent level!

Well, interestingly, Vivek Wadhwa has been saying publicly that gender discrimination in tech has an adverse impact on the tech economy. He cites research showing, for instance, that female-founded startups are more likely to succeed than male ones. If you couple that with my argument above that the foreign worker policy is one of the prime factors underlying that gender discrimination, we see it once again—H-1B and green card policy is harmful to U.S. economic health.

Even as a political tactic, IEEE-USA`s latest move is doomed to failure, I believe. Congress has reacted in the past to complaints that tech has rather few Latinos and African-Americans by allocating funds for scholarships for those groups. Their reaction to the IEEE-USA spiel will likely be the same—more scholarships.

That has never made sense anyway. Why encourage underrepresented minorities and women to enter a field that is already overcrowded? That`s utter nonsense. As Panetta herself says in her testimony,

"But clearly, disincentives to hire an American woman for that first STEM job are a huge obstacle to moving up in the field. It is hard to get promoted when you don`t get hired in the first place..."

I must close by again calling on IEEE-USA to cease using the language, "I represent the IEEE-USA, the 206,000 members of the Institute of Electrical and Electronics Engineers in the United States." As I said in my PreHearing.txt posting cited above, IEEE-USA has never polled its members on H-1B and other foreign worker issues. (This was confirmed to me after my posting by members of the organization, and by the silence of the IEEE-USA officials who are subscribers to this e-newsletter.) I believe most members of IEEE-USA have no idea that they are being "represented" as having these views. Panetta says in her testimony, "As an engineer, I don`t like making decisions without hard data"; good point!


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