Monday, May 9, 2016

Trump was Right: Guestworkers are very Bad for American Workers

Bringing in talented workers makes sense as a way to bring in immigrants who can be self supporting.  So far so good.  Otherwise i am more inclined to support skilled worker mobility generally.  It also needs to be a two way street.

Guest workers are more associated with nannies and minimum wage jobs truly unable  to attract sufficient local support. There i am somewhat ambivalent.  First our minimum wage regime needs to be properly operated as a guaranteed bid market even for the barely employable.  Then we know that a real shortage exists.  

Better yet it may prove out that a simple wage increase is sufficient to fill local rosters.  What a thought!  Pay more.  That becomes much easier when a true minimum wage is competing to sponge up those truly unemployed.

STEM workers are well prepared for the market and locate an avenue of personal choice in good order.  It may well not be in their specialty but that is often their choice as well.


Trump was right: guestworkers are very bad for American workers


The Economic Policy Institute, a non-partisan think-tank, has issued a new report that reviews and analyzes the science, technology, engineering, and mathematics (STEM) and information technology (IT) labor market and workforce and the supply of highly-skilled temporary foreign workers, who serve as “guestworkers.” Authored by Hal Salzman, Daniel Kuehn, and B. Lindsay Lowell, the study seeks to examine the need in the United States for these guestworkers.

It addresses three issues and provides a basis for assessing the extent of demand for STEM workers and the impact of guestworkers on STEM and IT workforces:

a) Is there a problem producing enough STEM-educated students at sufficient performance levels to supply the labor market?

b) How large is the flow of guestworkers into the STEM workforce and into the information technology (IT) workforce in particular? And what are the characteristics of these workers?

c) What are the dynamics of the STEM labor market, and what are the employment and wage trends in the IT labor market?

According to the study of the IT labor market, guestworker flows, and the availability of STEM-educated students found that the U.S. has “more than a sufficient supply of workers available to work in STEM occupations.”

The study showed that the rate of U.S. citizens and permanent residents into these essential fields has been strong over the last ten years: “…and the number of U.S. graduates with STEM majors appears to be responsive to changes in employment levels and wages.” The most obvious data point found by the study is that for every two students graduating U.S. colleges graduate with STEM degrees, only one is hired into a STEM job.

“In computer and information science and in engineering, U.S. colleges graduate 50 percent more students than are hired into those fields each year; of the computer science graduates not entering the IT workforce, 32 percent say it is because IT jobs are unavailable, and 53 percent say they found better job opportunities outside of IT occupations. These responses suggest that the supply of graduates is substantially larger than the demand for them in industry,” declared the study.

The study found several trends:

“Over the past decade IT employment has gradually increased, but it only recovered to its 2000–2001 peak level by the end of the decade.

“Wages have remained flat, with real wages hovering around their late 1990s levels.”

Also, the study found that while there were strong increases in the number of grads in computer science and related fields during the 1990s, after the dot-com bubble burst fewer guestworkers and U.S. students entered the IT field. Since then, however, while the number of IT grads has seen a modest recovery, there has been a sharp increase in the number of guestworkers. Thereby, the study said that there has been a fundamental change in this labor market. “Our review of the data finds that guestworkers make up a large and increasing portion of the IT labor market.”

The number of immigrant guestworkers, says the report, has “increased over the past decade and continues to rise (the rate of increase dropped briefly with the economic collapse of 2008, but the flow of guestworkers has since continued its rapid upward pace).”

The study found that employment and wage levels in IT jobs have been weak. Also, only about a third of the IT workforce has an IT-related college degree, while 36 percent of IT workers do not hold a college degree at all, and only 24 percent of IT workers have a four-year computer science or math degree.

The study concludes that there is “a robust supply of domestic workers available for the IT industry because the number of U.S. and permanent resident STEM grads has grown strongly, and many of these graduates could qualify for IT jobs, and that the yearly number of computer science graduates doubled between 1998 and 2004, and is currently over 50 percent higher than its 1998 level.

Squeezing the market for U.S. and permanent residents is the current policy to invite highly-skilled immigrants, including the issuance of visas for foreign students and nonimmigrant guestworkers, most of whom are in IT occupations.

Before 2001, at the time of the dot-com bust, the supply of IT graduates and workers responded to strong wage increases and reflected in growing employment. Since then, the IT field appears to be functioning with two distinct labor market patterns. According to the study:

“The domestic supply of IT workers exhibits increasing but slow growth in line with market signals.

“The supply of IT guestworkers appears to be growing dramatically, despite stagnant or even declining wages.

“The immigration debate is complicated and polarizing, but the implications of the data for enacting high-skill guestworker policy are clear: Immigration policies that facilitate large flows of guestworkers will supply labor at wages that are too low to induce significant increases in supply from the domestic workforce.”

Corporate executives such as the late Steve Jobs of Apple Inc. have endorsed an increase in the issuance of H1-B visas to foreign guestworkers. Jobs, for example, called for more visas to be issued to Chinese applicants. More recently, “centrist Republican” Chuck Robbins – the CEO of computer giant CISCO – has endorsed Hillary Clinton’s bid for the presidency, as did his immediate predecessor John Chambers.

Clinton has been supportive of guest worker programs. While serving in the Senate, Clinton voted for legislation in 2007 that included an expansion of guest worker programs that allows them to receive a visa to be employed year-round. She criticized Sen. Bernie Sanders for failing to support it. “I voted for comprehensive immigration reform in 2007,” Clinton said at a Democratic debate in Milwaukee in February. “Senator Sanders voted against it at that time.” For his part, Sanders has been skeptical of guest worker programs, which he recognizes are favored by large corporations and result in more unemployment and lower wages for American workers.

Republican frontrunner Donald Trump said at a presidential debate in March that while he uses guestworkers in his businesses, he opined that it is "very, very bad for workers." Trump said, “I know the H1-B very well, it’s something that I frankly use.” He added, “I’m a businessman and I have to do what I have to do,” Trump said. “It’s sitting there waiting for you… It’s very bad for business.” 

"It’s unfair for our workers and we should end it,” Trump said during the GOP debate.

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