Heritage Foundation In The Tank On H-1B—Because They`ve Decided To "Ignore The Realities Of The Marketplace"
May 08, 2008, 03:17 PM
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Dr. Norm Matloff emailed this—while Heritage's Robert Rector did some good work on the amnesty front, Heritage's free market organization tends to make them think that's what's good for business is good for America.

This is frequently true, but not in immigration policy, where immigration decisions by the government are good for some Americans (employers) and bad for others (employees) with a whole separate category of badness paid for by the taxpayer.

Dr. Norm Matloff writes:

The Heritage Foundation is a well-known DC think tank, with a conservative viewpoint. They might be viewed as the mirror image of the Urban Institute, the well-known liberal think tank in DC that published the recent study debunking several myths about science and math education in the U.S. (See my posting on the UI study here.)

Yesterday Heritage released an article responding to my recent study published by CIS (here, in its final version, which is slightly expanded from the original). As you may recall, my study refuted the industry lobbyists' constant claim that the H-1Bs they hire are "the best and the brightest" from around the world, and the related claim that the H-1Bs are key to the industry's ability to innovate.[May 6, 2008 H-1B Workers: Highly Skilled, Highly Needed by James Sherk, Heritage WebMemo #1916]

My analysis took a market-based approach: If the H-1Bs are of extraordinary talent, as the industry asserts, then they would be paid well above average for their levels of experience and education within their profession. Well, they're not. The data show that the vast majority of H-1Bs are workers of average talent, making average pay for their occupation and experience.

So, what's a self-respecting conservative institution such as Heritage to do in such a predicament? They want to support Big Business and thus present a favorable analysis of H-1B, but on the other hand, my critical analysis of H-1B is market-based, an approach considered holy by those on the right of the political spectrum.

Turns out that support for the captains of industry trumps ideology: The Heritage analysis of my study, enclosed below, basically ignores the market and says in essence, "OK, so the H-1Bs are just average engineers, but they're brighter than your average butcher. Most butchers don't have a master's degree, y'know."

Not only is this a patently silly argument, it is completely at odds with the claims the industry has made concerning the "best and brightest" issue. For instance, in his 2003 Senate testimony supporting the H-1B program, Intel executive Patrick Duffy said

"We are an international leader because we have been able to locate, hire and retain the world's best engineering talent."
In other words, he's saying that the H-1B engineers Intel hires are much more talented than the average engineer—NOT that his H-1B engineers are more talented than the average butcher.

In his testimony to the House Committee on Science and Technology on March 12 this year, Bill Gates wasn't comparing H-1B engineers to butchers either. He referred to the H-1Bs as "world class engineers." So of course he was making a claim about H-1B engineers relative to engineers as a whole, not comparing H-1B engineers to butchers.

And the data show, as my study found, that the vast majority of H-1Bs, including those at Intel and Microsoft, are NOT making world-class salaries. They are making about average for their experience/education groups within their occupations. If one believes in the marketplace, as Heritage does, one must conclude that these are not world-class engineers.

Yes, Intel and Microsoft do hire SOME foreign workers who are world-class (which I've always supported). For instance, Microsoft hires some under the O-1 visa, which by statute is for "workers of extraordinary ability," and the data show that Microsoft pays its O-1s 40% above average, but this is much higher than what it is paying its other foreign workers.

And note that my recent analysis is merely a confirmation through new methodology of previous work that also showed that most of the H-1Bs are not world-class. The study by David North, for example, found that foreign students in U.S. university tech programs, the source of many H-1Bs, are mainly concentrated in the less-selective, lower-ranked schools, again contrary to the industry's "best and brightest" claim.

Once he finishes pointing out that H-1B engineers make more money than American butchers, the Heritage author, Jame Sherk, then puts forth another argument that ignores the market economics. He says that U.S. productivity would fall without H-1Bs, as these jobs would go unfilled for lack of qualified workers. But if a tech labor shortage did exist as he says, market economics would mean that wages would be zooming up—which they're not. On the contrary, salaries have been flat or falling. For instance, the starting salary for new computer science grads with bachelor's degrees was $52,473 in 2001 and $53,051 in 2007. Inflation for this time period has been about 16% but yet the starting salary for computer science grads only increased by 1%. The same stagnant trend holds for fresh master's grads.

I never thought I'd see the day when the Heritage Foundation, of all organizations, would ignore the realities of the marketplace.

Norm