[BretLudwig]

H-1Bs: Still Not the Best and the Brightest

May 2008

By Norman Matloff

Download the .pdf version
http://www.cis.org/articles/2008/back508.pdf


In pressuring Congress to expand the H-1B work visa and employment-based
green card programs, industry lobbyists have recently adopted a new tack.
Seeing that their past cries of a tech labor shortage are contradicted by
stagnant or declining wages, their new buzzword is innovation. Building on
their perennial assertion that the foreign workers are €œthe best and the
brightest,€� they now say that continued U.S. leadership in science,
technology, engineering, and mathematics (STEM) hinges on our ability to
import the worlds best engineers and scientists. Yet, this Backgrounder
will present new data analysis showing that the vast majority of the
foreign workers €” including those at most major tech firms €” are
people of just ordinary talent, doing ordinary work. They are not the
innovators the industry lobbyists portray them to be.

I presented some initial analyses along these lines in an earlier
Backgrounder,1 showing for instance that STEM foreign students at U.S.
universities tend to be at the less-selective universities. Here I present
a much more direct analysis, making use of a simple but powerful idea: If
the foreign workers are indeed outstanding talents, they would be paid
accordingly. We can thus easily determine whether a foreign worker is
among €œthe best and the brightest€� by computing the ratio of his
salary to the prevailing wage figure stated by the employer. Lets call
this the Talent Measure (TM). Keep in mind that a TM value of 1.0 means
that the worker is merely average, not of outstanding talent.

I computed median TM values for various subgroups of interest. A summary
of the results is:

* The median TM value over all foreign workers studied was just a hair
over 1.0.

* The median TM value was also essentially 1.0 in each of the tech
professions studied.

* Median TM was near 1.0 for almost all prominent tech firms that were
analyzed.

* Contrary to the constant hyperbole in the press that €œJohnnie
cant do math€� in comparison with kids in Asia, TM values for workers
from Western European countries tend to be much higher than those of their
Asian counterparts.

Again noting that a TM value of 1.0 means just average, the data show
dramatically that most foreign workers, the vast majority of whom are from
Asia, are in fact not €œthe best and the brightest.€�

This article also presents further data showing an equally important
point:

* Most foreign workers work at or near entry level, described by the
Department of Labor in terms akin to apprenticeship. This counters the
industrys claim that they hire the workers as key innovators, and again
we will see a stark difference between the Asians and Europeans.

Methodology
The analysis uses data from the Department of Labors Permanent Labor
Certification Program (PERM),2 which consists of information supplied by
employers when they sponsor foreign worker for permanent residency, i.e.
green cards. There are advantages to using this database rather than its
H-1B cousin.

First, it addresses the concern expressed by some that H-1B Labor
Condition Applications (LCAs) are merely requests for permission to hire
foreign workers, without specifying actual workers, who may be chosen
later. By contrast, each record in the PERM data is for an actual foreign
worker, containing his actual salary and other information. (The PERM form
allows an employer to specify salary as a range rather than as a single
value, but this is rarely used.)

Second, the PERM data include information concerning the nationality of
the foreign worker, enabling the between-country comparisons in the
analysis here.

Finally, the PERM data show the current visa status of the worker, which
is typically H-1B but is sometimes O-1. The law defines the O-1 visa as
applying to €œworkers of extraordinary ability.€� Since these are the
workers of interest here, it gives us a basis of comparison.

Note that while most workers in the PERM database are H-1Bs, the converse
is not true; many H-1Bs are not sponsored for green cards. Typically
employers only sponsor their better H-1Bs for permanent residency. Thus if
the PERM data show that most workers in the PERM data are not €œthe best
and the brightest,€� then even fewer of the H-1Bs overall are in that
category.

The analysis uses the 2007 PERM data. The data were first screened,
eliminating hourly workers, clear typographical errors, and so on.

Talent Measure Analysis
Again, I take as our Talent Measure (TM) the ratio of a workers salary
to the prevailing wage claimed by the employer. The employer is legally
required to pay at least the prevailing wage, and must state on the PERM
application how that wage level was determined.3 Since the application
will be rejected if the wage offered is below the prevailing wage, by
definition all values of TM will be at least 1.0. The latter value means
€œthe average worker,€� i.e. of average talent, so if most workers have
TM values close to 1.0, then most are probably not €œthe best and the
brightest.€�

With that it mind, lets look at TM values, both overall and also for
some specific occupations:

The trend, both general and for STEM occupations, is clear: Most TM values
are only a little higher than 1.0, indicating that most of the foreign
workers are not outstanding talents.

The sole exceptional occupation is mathematicians. Though rather few
workers are in this category, the TM value is worth some comment. The
anomaly is likely due to the recent interest in data mining, which has
created a de facto two-tier wage structure among mathematicians, in which
those who specialize in data mining are paid much more. Since the
prevailing wage figures do not distinguish between these tiers, the
official prevailing wage value set for mathematicians will be well below
the market wage for data miners. Thus it is probable that even these
foreign workers are not €œthe best and the brightest.€�

Lobbyists for the big firms often claim that abuse of the H-1B program
occurs mainly in Indian-owned €œbodyshops€� (firms that subcontract
H-1Bs to larger companies), while by contrast the big firms are hiring
€œthe best and the brightest.€� Yet neither this scapegoating of the
Indians nor the claim of hiring the top talents is warranted. Consider the
TM values after disaggregation by firm:

Though these figures are slightly above the overall figures we saw
earlier, they still show that the firms are not paying salaries indicating
top talents.

Even Microsoft, on the high end of the companies shown here, is not paying
top dollar, as seen by restricting attention to Microsofts workers
holding the O-1 visa. As O-1 is specifically for, in the phrasing of the
statute, €œworkers of extraordinary ability,€� this gives us a measure
of the salaries Microsoft pays to those foreign workers who in fact are
€œthe best and the brightest.€� The median TM for Microsoft O-1 workers
is 1.404. That represents a salary premium of more than double what the
firm is giving its foreign workers in general, so there does not appear to
be much support for Microsofts claim that most of their H-1Bs are of
extraordinary talent.

Thus again, it is readily apparent that even the most prominent tech
firms, which are in the vanguard of the industry movement pressuring
Congress to expand foreign worker programs, generally do not hire from
€œthe best and the brightest€� league.

East vs. West
The lobbyists love to claim that the industry resorts to hiring foreign
workers because Americans are weak in math and science. Various
international comparisons of math/science test scores at the K-12 level
are offered as €œevidence.€� The claims are specious €” after all, both
major sources of foreign tech workers, India and China, refuse to
participate in those tests, and India continues to be plagued with a high
illiteracy rate. Serious educational research, including an earlier
Arizona State university report4 and a recent major study by the Urban
Institute5 show clearly that mainstream American kids are doing fine in
STEM.

Nevertheless, the €œAsian mystique€� persists. The image is that our
tech industry owes its success to armies of mathematical geniuses arriving
to U.S. graduate schools from Asia. Once again, though, the data do not
support this perception. Here is a comparison of TM values for foreign
workers from the major Asian countries and their counterparts in Europe
and Canada:

The differences here are not large, but nevertheless, all of the Western
nations have higher median TM values than all the Asian nations €” quite
the opposite of the portrayal by the industry lobbyists.

Taking a closer look, lets tabulate median TM for the major
worker-sending nations in both hemispheres, against the major
occupations:

While still mild, the trend again indicates that the Western foreign
workers are the more talented ones.

Finally, what about individual firms? Interestingly, the gap between East
and West widens. Lets check the firms with the largest numbers of
foreign workers:

There are some interesting exceptions for China, but in general the trend
follows the previous pattern.

Level of Hire
As noted, recently the industry lobbyists have adopted an innovation
theme, in which they claim that the U.S. lead in tech depends on hiring
innovators from abroad. The analysis above demonstrates that the foreign
workers are in fact generally not outstanding talents, thus casting
serious doubt on the claim that innovators are being hired. Here we pursue
this point further, by examining the level at which the imported workers
are hired.

The PERM data use the following classification scheme:6

Level I is defined by the Department of Labor as for €œbeginning level
employees who have only a basic understanding of the occupation [and who]
perform routine tasks that require limited, if any, exercise of
judgment.€� Workers at Level II €œperform moderately complex tasks that
require limited judgment.€� Clearly, neither Level I nor II is for
innovators.

Level III implies more sophisticated responsibilities, but only Level IV
suggests that innovators are being hired, workers who €œplan and conduct
work requiring judgment and the independent evaluation....€�

Previous work7 analyzed H-1B data, finding that most H-1Bs are
concentrated in Levels I and II. In the tables below we extend that work
in the PERM data, adding analysis by occupation, nationality and firm.

The results first show, once again, that rather few of the foreign workers
are at Level IV, the level of real expertise whose description is
associated with innovation. Most are in fact in Levels I and II, whose DOL
definitions are for apprentice-like positions with only €œlimited exercise
of judgment,€� clearly not jobs for innovators.

Second, this pattern also holds individually for the most common job
titles.

Third, the East-vs.-West pattern observed earlier for the TM data also
holds for levels of expertise, with Asians typically being hired into
non-innovative jobs while more Europeans are in the types of positions
that could involve innovation.

The last table is striking. Most of the big firms hire almost no workers
at all at Level IV. Since it is these very firms that are arguing they
need foreign workers in order to innovate, there appears to be a striking
disconnect between what they say and do.

Conclusions
The lobbyists know that crying educational doom-and-gloom sells. Even
though it was mainly €œJohnnie,€� rather than Arvind or Qing-Ling, who
originally developed the computer industry, and even though all major East
Asian governments have lamented their educational systems stifling of
creativity, the lobbyists have convinced Congress that the industry needs
foreign workers from Asia in order to innovate.

The facts show otherwise. Most foreign tech workers, particularly those
from Asia, are in fact not €œthe best and the brightest.€� This is true
both overall and in the key tech occupations, and most importantly, in the
firms most stridently demanding that Congress admit more foreign workers.
Expansion of the guest worker programs €” both H-1B visas and green cards
€” is unwarranted.

End Notes

1 €œBest? Brightest? A Green Card Giveaway for Foreign Grads Would Be
Unwarranted,€� Center for Immigration Studies Backgrounder, May 2006,
http://www.cis.org/articles/2006/back506.html

2 See http://www.flcdatacenter.com/CasePerm.aspx

3 Typically the employer will cite government data as the source. The
legal definition of prevailing wage in both the law and regulations
contains major loopholes (see my previous Backgrounder mentioned above),
but the industry lobbyists insist that the foreign workers are not
underpaid. Since here the focus is on another industry claim, that the
foreign workers are of outstanding talent, for the purpose of the present
analysis, it will be assumed that the prevailing wage is the real market
wage.

4 David Berliner, €œOur Schools Versus Theirs,€� Washington Post,
January 28, 2001.

5 B. Lindsay Lowell, Hal Salzman, Into the Eye of the Storm: Assessing the
Evidence on Science and Engineering Education, Quality, and Workforce
Demand, The Urban Institute, October 2007,
http://www.urban.org/UploadedPDF/411...an_Science.pdf

6 DOL, http://www.foreignlaborcert.doleta.gov/wages.cfm

7 John Miano, €œLow Salaries for Low Skills: Wages and Skill Levels for
H-1B Computer Workers, 2005,€� Center for Immigration Studies
Backgrounder, April 2007, http://www.cis.org/articles/2007/back407.html



Dr. Norman Matloff is a professor of computer science at the University of
California, Davis.

http://www.cis.org/articles/2008/back508.html


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