GAO Analysis: Part 1
GAO Analysis: Part 1
Date: Saturday, October 04, 2003 1:54 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Norm Matloff's analysis of the GAO report is excellent. Here is a brief
summary for those of you that don't have the time to read the entire
text:
* The GAO claims that H-1Bs are being paid $9,000 MORE than Americans.
Norm uses census data from California that proves why the methodology
the GAO used for comparing wages was flawed. Norm shows for that for
software engineers, H-1Bs being paid $8,000 LESS than the Americans.
* The GAO contradicted their claim that H-1Bs are not paid less when
they said: "Some employers said that they hired H-1B workers in part
because these workers would often accept lower salaries than similarly
qualified U.S. workers."
* The GAO concluded that any underpayment of H-1Bs is an enforcement
issue. Their statement lets Congress off the hook because they won't
have to make needed reform of the law. Now Congress can wash their
hands of the issue by giving the Dept. of Labor more funding and
inspection powers while ignoring the real issue of loopholes in
prevailing wage.
* In most cases comments from employer are cited without citing any
countering arguments from labor whatsoever.
* The GAO had a responsibility to present both sides, and it didn't do
so. Even a quick glance at the report shows that the report is
something like 95% employer views, 5% labor views.
* Most of their recommendations consist of better tracking of the
H-1Bs, in order to gauge the impact of the H-1B program on the American
workforce. Certainly better tracking would be nice, but plugging the
gaping loopholes is what is really needed.
* The other major section of the GAO report concerns how many H-1Bs
have graduate degrees. And once again, the GAO analysis is very
misleading. Norm explains in detail why the degrees H-1Bs possess have
are not necessarily pertinent to the jobs they are doing.
* Why did the GAO take so long to release this report? There was some
obvious political manipulation of this report in the timing of the
release and possibly also in terms of its content. Matloff describes
some events that are very fishy, to say the least.
* Politicians that support H-1B were hoping that the GAO report would
come out exactly like it did. The GAO will help them to justify why
H-1B doesn't need reforming - it just needs more enforcement.
Norm's Closing Statement:
GAO is highly respected in Congress (even if their
political constraints mean that they don't always heed
GAO's advice), so this report is especially insidious.
Sadly, the report comes nowhere near living up to GAO's
slogan, "Accountability, Integrity, Reliability."
> -----Original Message-----
> From: Norm Matloff [mailto:matloff@laura.cs.ucdavis.edu]
> Sent: Friday, October 03, 2003 9:27 PM
> To: Norm Matloff
> Subject: critique of the new GAO report
The long-awaited GAO report on H-1B was finally released yesterday.
For the time being, it is at http://www.gao.gov/new.items/d03883.pdf
and also at the IEEE-USA Web page,
http://www.ieeeusa.org/forum/reports/GAOonH1b.pdf
To me, the most salient portion of the report concerns the question of
whether the H-1Bs are paid less than Americans. As we all know, the
industry lobbyists have repeatedly and vehemently denied that they pay
the H-1Bs less than Americans, while people like me claim that the main
reason the employers hire H-1Bs is cheap labor. So, this is clearly a
key issue. Unfortunately, GAO has really dropped the ball on this key
issue.
The GAO considered various job categories. As always, I am interested
in the computer-related jobs, and will focus on that category here.
The GAO's first major finding on this issue is that (a) younger H-1Bs
with no graduate degree are paid MORE than younger Americans with no
graduate degree, but (b) older H-1Bs with no graduate degree are paid
LESS than older Americans with no graduate degree.
The largest single problem with this analysis concerns job type. As I
have stated often, the computer-related H-1Bs are mostly computer
programmers. However, programmers can have different job titles at
different kinds of firms, such as Programmer, System Analyst and
Software Engineer. They are all doing the same work, but because of
historical reasons those with Programmer and System Analyst titles tend
to be doing "old-fashioned" work (i.e. IBM mainframe) while those with
Software Engineer titles are doing "modern" work. The old-fashioned
work tends to be paid considerably less than the modern work.
To see this, here is my analysis of mean wages from the 2000 Census,
for the state of California. The means are calculated for U.S.
citizens (GAO's definition of "American," which excludes U.S. permanent
residents) who are under 30 years old (GAO's definition of "young") and
who have a Bachelor's degree but no graduate degree:
System Analyst $43,839 Programmer $42,495 Software Engineer
$57,309
GAO used the Current Population Survey, a monthly mini-census conducted
nationwide but with a small sample. CPS, unlike the census, does not
have a separate Software Engineer category, and GAO simply used the two
related categories CPS offers, System Analyst and Programmer.
The large difference seen above shows that GAO's failure to separate
the three categories badly skews GAO's analysis, as the H-1Bs tend to
do "modern" work while many Americans do "old-fashioned" work.
Even better, here is another comparison I did from the census data. I
did the same analysis as above for Software Engineers, but this time
for foreign-born people who had entered the country at most 8 years
ago, this condition being a proxy for H-1B-ness. (The census data does
not give visa/immigration status, but does give information on whether
the person is a native or not, and in the latter case on year of entry
to the U.S.) Again, this is for those under 30 years old, with a
Bachelor's degree but not graduate degree. Here the difference is
striking:
citizen Software Engineers $57,309 "H-1B" Software Engineers
$49,138
So, instead of the H-1Bs being paid $9,000 MORE than the Americans, as
GAO found, we have the H-1Bs being paid $8,000 LESS than the Americans.
That was for the Bachelor's level At the graduate level, the GAO said
that it had sample size problems. However, the census data are
plentiful, and I conducted the same analysis as above (under 30 years
old, etc.) but for those having a Master's degree. Here the difference
is again clear that the H-1Bs are paid less:
citizen Software Engineers $66,290 "H-1B" Software Engineers
$58,598
Note that my census figures here are for California. In other words, I
held geography fixed--something the GAO did NOT do. This is crucial,
since the H-1Bs tend to be concentrated in just a few states, i.e.
California, Maryland, New Jersey, etc. as pointed out by GAO. (If I
recall correctly, California alone has half of all the nation's H-1Bs.)
My point is that the H-1Bs tend (with the exception of Texas) to be in
high cost-of-living areas, more so than the Americans, and this alone
would push up the H-1B salaries relative to the Americans. There are
other similar problems, e.g. the fact that GAO's "no graduate degree"
category includes those not having a Bachelor's, which is the case for
a number of Americans but for very few H-1Bs (H-1Bs by law must have a
Bachelor's degree, though there are exceptions).
Even though I am deeply disappointed by the badly flawed approach GAO
took to the statistical analysis described above, I view their second
finding to be downright outrageous:
Some employers said that they hired H-1B workers in part because
these workers would often accept lower salaries than similarly
qualified U.S. workers; however, these employers said they never paid
H-1B workers less than the required wage.
Note that this employer candor about underpaying H-1Bs occurred in the
employer survey in the NRC report as well. (And needless to say, many
employers who do underpay their H-1Bs are not going to admit it.) Yet
GAO says it's fine, since it is "legal." GAO's attitude here is
unconscionable.
You don't have to be a rocket economist to notice that "something is
wrong with this picture." Anyone can plainly see that if the H-1Bs are
being paid less than the Americans but the H-1Bs are still being paid
the legal prevailing wage, then SOMETHING MUST BE WRONG WITH THE
DEFINITION OF PREVAILING WAGE. This is especially true given that the
GAO also notes that employers told them that H-1Bs are willing to take
lower salaries. The fact is that the prevailing-wage law is a total
sham, so riddled with loopholes as to be useless. The GAO researcher
had been told this quite clearly in discussions with labor groups. She
could have verified it by interviewing some immigration lawyers, and in
any case at the very least should have raised the question. But no,
instead, she says it's fine to pay the H-1Bs less than Americans,
because it's complying with the (loophole-riddled) law.
Ironically, this goes to the issue of job title I mentioned above, as
one of the favorite loopholes used by immigration lawyers is to exploit
that difference in job titles. Once again, look at the notorious Bank
of America case, analyzed at the Programmers Guild Web page, "How to
Underpay H-1B Workers,"
http://www.colosseumbuilders.com/Guild/h1b/howtounderpay.htm
The analysis there points out that one of the ways that bank H-1Bs were
underpaid was to call them System Analysts, which for reasons I
explained above carries a much lower prevailing wage even though the
work they are doing could be called something else with a higher wage.
What the H-1Bs did falls within the very broad generic definition of
System Analyst, so it is FULLY LEGAL to underpay them by choosing that
title, one of the many loopholes which the employers exploit.
Moreover, GAO was fully aware of these issues. It had had a lengthy
conference call with the Programmers Guild and had had their
literature, and there were prominent references to that Guild Web
analysis in both the phone call and the literature.
The GAO then dismisses any underpayment of H-1Bs as an enforcement
issue, another favorite industry line. Using this spin, the industry
gets Congress off the hook, insuring that Congress won't make needed
reform of the law. All Congress has to do is give the Dept. of Labor
more funding and inspection powers, thus sidestepping the real issue of
loopholes in prevailing wage. And sure enough, that (expanding the
enforcement role of DOL) is what GAO recommends at the end of this
report. There is no recommendation regarding (or even the slightest
mention of) the prevailing wage law itself, the real problem.
Again, this is something the GAO was told in its Programmers Guild
conference call, but the GAO completely ignores it in this report.
Bottom line: The GAO tells only the industry's side of the story here,
not labor's.
And that is a consistent theme. The employers' comments are stated
repeatedly throughout the report, with only a few cases in which
labor's points are mentioned. In most cases, the employer' comments
are cited without citing any countering arguments from labor
whatsoever. For example, the report says that the employers stated
that they hire H-1Bs because American programmers and engineers are
lacking in certain specific skill sets, but the report does not mention
that the evidence labor cites to show that the skills issue is just a
phony pretext (e.g. the major firms which lay off Americans and force
them to train their H-1B/L-1 replacements, showing that it is the
foreign workers, not the Americans, who lack the skills). Another
example is that the report cites the employers as claiming that the
2000 legislation removed the H-1Bs' de facto indentured servant status,
but the report does not say that labor showed that the H-1Bs still have
that problem due to green card sponsorship.
GAO had a responsibility to present both sides, and it didn't do so.
Even a quick glance at the report shows that the report is something
like 95% employer views, 5% labor views.
Again, GAO's recommendations for reform include NOTHING about
prevailing wage. Instead, their recommendations consist of better
tracking of the H-1Bs, in order to gauge the impact of the H-1B program
on the American workforce, and they make such a big thing out of this
that they make it the title of the report. Certainly better tracking
would be nice, but plugging the gaping loopholes, which quite plainly
are at work (again, as any immigration lawyer would have confirmed), is
what is really needed. They also recommend expanded enforcement, which
as I said is not the solution.
The other major section of the GAO report concerns how many H-1Bs have
graduate degrees. This too is a favorite theme of the industry
lobbyists, with the point being that employers supposedly hire H-1Bs
because they have graduate degrees, i.e. advanced training in their
field of work. And once again, the GAO analysis is very misleading.
The report says that 38% of the computer-related H-1Bs have a graduate
degree. (It is not shown in the report, but that breaks down to about
2% PhD, 36% Master's.) As I've explained in the past, this is correct
but misleading, because at the Master's level, just like the case at
the Bachelor's level, many computer-related H-1Bs come from fields
other than computer science. It is very common for a foreign national
to get a Master's degree in, say, economics or biology at a U.S.
university, taking a few undergraduate computer courses, and then be
hired by an American employer. The point is that such a person does
not have Master's-level training in computer science, as implied by the
industry lobbyists. Based on educational statistics data (see my
updated congressional testimony), among computer-related H-1Bs, only
0.6% have a PhD in the field and only 7.6% have a Master's in the
field, totaling about 8% overall. (As some of you know, I don't
consider a graduate degree important to begin with; again, see my
updated congressional testimony.)
Finally, there is the question as to why the GAO took so long to
release this report, which was released only yesterday, even though it
is dated September 10 and all but one other of the reports issued in
the last two days were dated September 30 and October 1. One person
who had checked with GAO a few weeks ago had been told that the report
was actually ready in August, but was being "reviewed." So why the
delay?
Well, a partial answer may be in this passage of the report, in which
GAO addresses Rep. Mark Udall, who had requested GAO to undertake this
study:
As arranged with your office, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 30 days from its issue date. At that time, we will send copies
of this report to the Secretary of Homeland Security, the Secretary
of Labor, appropriate congressional committees, and other interested
parties. In addition, the report will be available at no charge on
GAO's Web site at http://www.gao.gov.
That certainly shows that there was some political manipulation of this
report, at least in the timing of the release but very possibly also in
terms of its content. I make the latter statement both because of the
clear imbalance in the report--there is no denying that employers are
quoted FAR more than labor throughout the report, something like
95%/5%--but also because of very disturbing comments I heard from one
H-1B critic who talked to the supervisor of the researcher responsible
for the report. I regard the researcher herself to be competent and
fair, but what I heard second-hand about the supervisor would, if true,
suggest that political pressure was placed on, or somewhere in, GAO.
The pressure need not be explicit. It could be simply something like,
"Make sure your analysis is on data, not just anecdotes." It is yet
another favorite industry lobbyist line to dismiss anything said by
critics of H-1Bs as "anecdotal," in spite of the critics supplying lots
of data addressing various aspects of the H-1B debate. In the GAO
report, GAO does indeed characterize one of the points made by labor as
"anecdotal," though none of the statements made by industry is
characterized that way. Since some of the issues are indeed hard to
quantify, notably impact of H-1Bs on American workers, the best way to
avoid the report having an outcome unfavorable to industry is to insist
that everything be quantified.
Certainly it is clear that many in Congress, especially the
Democrats--who are supposed to at least look pro-labor, even if they
are just as tied to industry as the Republicans--were hoping that the
GAO report would come out exactly like it did, saying "We need more
data," letting the politicians off the hook. I've heard that a number
of politicians have said, "We need to wait for the GAO report" before
doing anything on H-1B/L-1. An inconclusive report--one whose main
recommendation is to collect more data--is exactly the vehicle they
want for stalling. Another of the report's recommendations, giving DOL
more power or funds for enforcement action, is even more pernicious,
since as I stated above, the problem lies in the law itself, not
enforcement; by saying it's enforcement issue, the GAO is enabling
Congress to sidestep the central issue, which is the gaping loopholes
in the law.
No wonder Silicon Valley congressperson Anna Eshoo, in meeting with the
Programmers Guild a few weeks ago, was so dismissive of the NRC report
of 2000, commissioned by Congress. She insisted it was "too old"
(what, the employers starting paying the H-1Bs better since then????),
and that she couldn't do a thing until the GAO report came out. Now,
of course, it appears that the report will enable her to not do a
thing, if that was her goal.
I should mention my own involvement here. The GAO researcher contacted
me before the study began, in August 2002, referring to my "expertise
in this area" (her phrasing), and asking me what kind of data might be
analyzed. I gave her an answer, and she said she would call me back
the next week for more advice. She never did call back. I did get to
talk to her many months later, but only because I was invited by labor
representatives to participate in the conference call mentioned above.
I felt at the time, and still feel now, that she was sincerely
interested in what everyone had to say in the conference call. After
that, I offered to give her a draft of a long academic article I had
written (due to come out soon now), and she replied that she would like
to see it. But she ignored everything that was in it, as can be seen
from what I said above.
I suppose that sometime after she called me an "expert," some industry
lobbyist (or third party who had talked to industry lobbyists)
convinced her that I am instead some sort of wide-eyed radical. If
that is what did happen, it's a shame, because I could have pointed out
analysis which would have made for a much more meaningful report, e.g.
the data I've shown above.
In any case, again the point is not that she didn't *support*
my/labor's side in the debate with employers. The point is that she
didn't even *present* labor's side in most aspects. By word count or
any other measure, the employers' voices were given 95% coverage and
labor was given only 5%. That undeniable fact comes from a simple
reading of the report.
GAO is highly respected in Congress (even if their political
constraints mean that they don't always heed GAO's advice), so this
report is especially insidious. Sadly, the report comes nowhere near
living up to GAO's slogan, "Accountability, Integrity, Reliability."
Norm
Support this Newsletter and ZaZona.com by donating:
www.zazona.com/Donations.htm
To Subscribe or Unsubscribe send an email to
Back to archives