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December 12, 2006
H-1B Visas
There's an ongoing debate in the engineering community about the value and effects of the H-1B visa program, with opinions running the gamut from enthusiastic support to strident condemnation, writes John Donovan, editor-in-chief of Portable Design. Here Donovan picks apart the payoff.
The purpose of the H-1B visa program is to make up for the chronic and growing disparity between the supply of domestic EE graduates that U.S. universities turn out each year and the demand for them by industry. The fact that this year's allocation of 65,000 H-1B visas was reached by May highlights the disparity in supply and demand.
In May, the U.S. Senate passed a bill that would raise the annual cap to 115,000. The same legislation would exempt applicants for citizenship with advanced degrees in science, engineering, and math from H-1B requirements altogether — the idea being that it's better to have talented engineers working for us in the U.S. instead of competing with us overseas. Unfortunately, that legislation has gotten stalled in the general debate over immigration.
The argument that foreign engineers are stealing jobs from domestic ones is a red herring. The H-1B visa ceiling targets the gap between the supply and demand for engineers in the U.S. In short, we're hiring from overseas for jobs we can't fill with local talent.
The argument that H-1B workers are depressing wages for U.S. engineers also misses the mark. The globalization of the engineering labor market is the real force holding down wages. The fact is that any job that can be digitized can and will be outsourced to the lowest-cost, high-quality bidder. This often means setting up design centers in Bangalore and/or Shanghai, where U.S. companies have access to a large pool of well-educated and highly motivated engineers. Many of the engineers on H-1Bs are new hires in India and China coming here to work in the U.S. for a few years to help migrate the corporate culture and know-how back to their home countries. This is critical for U.S. companies to succeed overseas.
The alternative to bringing foreign engineers to work in the U.S. is to be forced at some point to outsource your whole design effort to Asia — with far more devastating results for U.S. engineers than bringing some help onshore to help buttress domestic design teams. Pay for a team of 100 design engineers to live and work in Silicon Valley or for a Wipro team with equal credentials in Puna? Economically it's a no-brainer, but most companies are reluctant to move in that direction, and with good reason. You don't want to have another company developing your core IP for you, since that's the one area where you can still make money. You want at least your core design team close at hand so you can subject them in person to design reviews, constant specification changes, and erratic C-level brainstorms. It's a lot easier to initiate complex designs with all the players close by.
Still, the concept of a "design-less business model" for semiconductor firms is starting to get some nervous air play. In the '90s, the fabless model took off, turning over manufacturing to foundries. Led by Altera and LSI Logic, fabless firms focused on design and marketing, and prospered. Design outsourcing is a more slippery slope, since the real value in a chip is the IP. If you can outsource parts of it — say RF to Chengdu and analog to Hyderabad-and still maintain control of the design, the net benefit goes to your bottom line. If you're a box maker, you can outsource all of your design and manufacturing, but if you're a semiconductor firm, all you have is your design expertise. Better to support bringing talented engineers to the U.S. than to basically give up the game.
I worked in Silicon Valley over a 20-year period and watched it change from a small cadre of local geeks to a multicultural environment. The Valley couldn't exist without the huge influx of Indian and Chinese engineers who have energized it over the last decade in particular — and who've given back at least as much as they've received. Those who didn't come here originally as students came on H-1Bs. Everyone now has to be more innovative and hard working than ever before, but far from being a zero sum game, it's one in which everyone wins.
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John Donovan is editor-in-chief of Portable Design, engineering resource for information and news on portable applications. Donovan has more than 24 years' of industry experience in director-level roles at Silicon Valley companies such as MIPS and Cypress Semiconductor, as well as journalism experience in North America and Asia (on EDN Asia). For more, visit Portable Design online.
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20 Comments"The purpose of the H-1B visa program is to make up for the chronic and growing disparity between the supply of domestic EE graduates that U.S. universities turn out each year and the demand for them by industry."
Name one empirical study showing such a disparity that was not produced by lobbyists seeking an H-1B increase.
"The fact that this year's allocation of 65,000 H-1B visas was reached by May highlights the disparity in supply and demand."
American Express sold three 2007 Porches yesterday for $5,000. They were gone in seconds. A gas station on the NJ Turnpike that sells premium at $1.50/gal would be out of gas in hours. Your example ignores the large wage disparity between H-1B workers and U.S. workers.
"In May, the U.S. Senate passed a bill that would raise the annual cap to 115,000."
That is just one of several increases in the SKIL Bill. It effectively removes the limits on the number of H-1B visas altogether.
"The same legislation would exempt applicants for citizenship with advanced degrees in science, engineering, and math from H-1B requirements altogether"
Actually, it exempts those with advanced degrees in any field. Get a Masters in Basket Weaving and you're golden under the skill bill.
"the idea being that it's better to have talented engineers working for us in the U.S. instead of competing with us overseas."
The purpose of student visas is to teach people about America, have them return to their home countries and spread American ideals. Every foreign student signs an attestation that they are coming to the U.S. only to study and will return home at the conclusion of their studies. If they do not return home to spread U.S. ideals, the money invested in them has been wasted. Besides, who wants to make universities the gatekeepers of immigration?
"The argument that foreign engineers are stealing jobs from domestic ones is a red herring."
Tell that to the U.S. workers at AIG, SeaLan, Dun & Bradstreet (others ad nauseum) that have been fired and replaced by H-1B guest workers.
"Many of the engineers on H-1Bs are new hires in India and China coming here to work in the U.S. for a few years to help migrate the corporate culture and know-how back to their home countries."
Yes, H-1B is a crucial component in migrating U.S. jobs to other countries.
"The alternative to bringing foreign engineers to work in the U.S. is to be forced at some point to outsource your whole design effort to Asia — with far more devastating results for U.S. engineers than bringing some help onshore to help buttress domestic design teams. Pay for a team of 100 design engineers to live and work in Silicon Valley or for a Wipro team with equal credentials in Puna?"
According to industry studies (McKinsey, Booz), offshoring is good for America. Sending jobs overseas creates jobs here. If a lack of H-1B visas is forcing companies to move overseas, it is creating jobs here. Plus we don't add traffic, increased housing costs and polution by having the workers here. Don't let the door hit you in the rear as you leave.
jmm
December 12, 2006 1:24 PMI am one of those individuals who is unalterably opposed to increasing the H-1B. Here's why:
1) Citing the desire to hire as many h-1b's as possible is not the same thing as proving a shortage of local talent exists.
2) Stating the purpose of the h-1b program is not the same as proving a shortage of local talent exists.
3) There is, in fact, no shortage of local talent. The company I work for layed off approximatly 60 employees and replaced them with h-1b and l-1 labor that has proven to be less qualified than those whom they replaced. Highly skilled Americans are being removed from their jobs soley based on their citizenship, not talent or lack thereof.
4) The way to address a talent shortage, if you believe there is one, is to let wages rise and allow the free market to attract more people to the profession. The h-1b visa gives corporations a license to distort the free market.
5) Enrollment in technical professions is declining for all the reasons stated above. In other words, American students are avoiding tech professions because of offshoring and the h-1b visa.
I can't say that I blame corporations and their lobbyists for wanting to reduce the cost of hiring and retaining their workforce, but to cloak that desire in claims of shortages and the like is dishonest. It is difficult to debate this issue as long as the true intentions are obfuscated.
December 12, 2006 1:40 PMHere we go again. What's good for business is good for America... paying less for hired help is always good for unemployed Americans? The Rockefellers and the robber barons of the early 1900's poured this garbage out over the heads of their slave laborers and then cracked the heads of those who didn't see working for pennies as a means of growing our country.
I spent 21 years in Silly Valley, and I left when the local apartments starting getting ridiculous in rent, because they contained a dozen immigrants without families who spent all their working hours at the engineering sweat shops, while native workers were laid off to accommodate the H1-B's who flooded in. There were no shortages of Americans who would have taken those jobs, if having a life and a chance for a family and future came with the job. It didn't, and everyone knew it.
Manufacturing and design are soon to disappear from our country, due to wanton disregard for quality and value to drive short term profits. Now, with millions of illegals flooding our cities driving down our lower-paid workers, we need to drive out our educated jobs of the future too?
And, again, the refrain is to "put more money in education" .... what would you have our kids educated in? How to be laid off and replaced by an H1-B?
If our politicians weren't so ignorant and in corporate pockets, our immigration laws would be enforced and our country stronger. How about educating our kids to be crooked politicians?
December 12, 2006 3:24 PMThe so-called shortage is not credible, since the wages paid by those needing the talent do not reflect any shortage. It really seems stange that this one example does not qualify for the laws of economics (supply and demand).
We have the same problem with some farmers and other industries that claim US citizens will not do certain jobs. The validity to that claim is that those industries will not (do not) pay what the job is worth to the consumer. The ripple-down cost to the consumer, who is thinking he is getting a good deal for low-cost products or produce, is the higher tax bill he now gets to pay for the added infrastructure, criminal activity and degradation in our culture.
Give me a break!
Tom
December 12, 2006 3:35 PMThe reason why the H-1b visa quota vanishes so rapidly has nothing to do with America's need for additional skilled employees and has everything to do with how bodyshops (both international and domestic) staff up for anticipated projects.
If you look on an actual database of visa applications, you will see multiple batch applications for 10, 50, even 100 of these workers at a time. The job titles will indicate rank and file work, not 'best and brightest' assignments. Every one of these represents a job in the US, that was probably never advertised where any American could see and apply for it. So, how can they say they couldn't fill the jobs with American talent when they never even tried?
Stop the bodyshops from hogging the quota and there would be far more than enough visas for any legitimate need for an exotic skillset.
And the choice between bringing in H-1bs and offshoring work is a false dichotomy. In both cases, work pertaining to America's society and economy is handed off to a foreign worker. In many cases, bringing in H-1Bs to learn a business is Step #1 in eventually offshoring it. Better to stop them at the gate.
December 12, 2006 3:54 PMI'd have to agree with the responses I've seen so far. Isn't it amazing how smart people can see right through big ol steamin piles of BS. Keith
December 12, 2006 5:49 PMMaybe we should export the jobs of a few CEOs. With the savings, we could afford to hire a few hundred engineers, maybe a thousand. I think that more than a few jobs have been exported simply to concentrate the wealth at the top.
December 12, 2006 10:08 PMI lost my job a few years ago, after first training 3 of 200 imported foreign software engineers. About 100 American engineers were laid off. The H1-Bs worked for half the price that I did. I was not impressed by their quality. As time went on, I watched contractor salaries fall $15/hr on the average, down to regular employee wages due to the large influx of H1-Bs. I seem to that recall that a represenative of IEEE showed congress an unemployemt rate of 23% for American EEs during a specific time period.
We don't need H1-B Engineers. Fewer students are majoring in Engineering because of the lack of employment in certain areas. I think the only people that support H1-Bs are companies that want cheap labor. Why isn't Congress listening to its Citizens on this subject? It's probably because we don't have high paying lobbyist.
December 12, 2006 10:59 PMI don't quite believe that companies bring in lots of H1bs just out of altruism. When it benefits companies to outsource overseas, that's going to happen no matter how many more H1bs come here. I think it's a set-up too, eventually the H1bs will do exactly that.
December 29, 2006 11:48 AMThis topic seems to touch a sensitive nerve amongst Americans every time somebody writes in favor of more H-1B visas. Here is a perspective from the other side, as an H-1B worker myself.
In this country, there is indeed a serious shortage of highly educated and skilled engineering professionals who can actually work for 40 hours every week, do not need 30 minutes coffee break, do not sit in the office bathroom for hours, do not conduct meetings on how not to waste time, do not ask for training on how to use a mouse, and do not fall 'sick' just before or after a long weekend! The H-1B and L-1 programs are designed to effectively eliminate this shortage.
The double benefit from these exceptionally qualified specialty occupations is net contribution in excess of $12 billion every year to the U.S. Social Security and Medicare fund with zero withdrawal from the system. There is no payback on retirement for a temporary resident since he/she cannot accumulate enough points with IRS, although they are taxed like any U.S. citizen.
