April -- H-1B -- Fools

The National Science Foundation has published a document entitled, "Science and Engineering Indicators 2008." One very interesting point for 2006 was that Computer-related and Writers occupations in H-1B workers with a Bachelor’s degree, earned on average, $400.00 more per year than those with a Master’s degree.

The document also states:

"In 2006, 44% of those receiving new H-1B visas in computer-related occupations
had master's degrees, and a little more than 1% had doctoral degrees."

"In 2006, 51% of new H-1B recipients were in computer-related occupations, including 48% in the United States Citizenship and Immigration Services occupational category of "occupations in systems analysis and programming," which includes many S&E occupations, such as computer scientist, and technician occupations, such as programmer. "

"Over two-thirds of the slightly more than 110,000 recipients of H-1B visas in 2006
are in S&T [Science & Technology] occupations."

"Total 2006 new H-1B visas approved: 113,593."

Checking the numbers, the computer-related H-1Bs would total 57,932 and 44%, those with Master’s degrees were 25,490 H-1Bs. With only a little over 1% with Doctoral degrees, the Bachelor’s and Master’s holders were significant samples and comparative in number.

2006 Computer-related occupations H-1B Average Salaries:
Bachelor’s Degree = $56,000.00
Master’s Degree = $55,600.00

2006 Writers occupation H-1B Average Salaries:

Bachelor’s Degree = $37,900.00

Master’s Degree = $37,500.00
http://www.nsf.gov/statistics/seind08/c3/tt03-29.htm

What happened in FY 2006, that drove salaries down for Master's degree holders in Computer-related & Writers occupations? This was the first year of the 20,000 visa, U.S. postgraduate degree exception to the H-1B program. The FY 2006 application date was 4/1/2005, admission commenced on 10/1/2005.

. 20,000 cap exemption for U.S. masters and higher. Up to 20,000 aliens with masters or higher-level degrees from U.S. institutions of higher education will be exempt from the H-1B cap each year. Petitions for such individuals that are filed after the 20,000 exemptions are granted will be counted against the cap. Note: this does not impact the general exemption from the cap for individuals employed by institutions of higher education; that exemption remains. Effective date: March 8, 2005. [Sec. 425]. [Note: No further details of how this will be implemented have been announced.] http://www.oiss.yale.edu/visa/h1refact.htm

Restating other information taken from the NSF document, computer-related H-1Bs were 51% (57,932 ) of 113,593 H-1B approved, but computer-related H-1Bs were 68.16% of the 85,000 non-exempt H-1B cap.

The NSF hasn’t published detailed S&E graduation statistics since 2003, but the "Science and Engineering Indicators 2008" report did leak a little information on 2005 graduation data.

I guess that Bill Gates used the CRA – Taulbee (partial) educational studies and must not have been aware of this good news from the NSF when he recently addressed Congress:

Gates: "If the problem with High Schools is one of quality, the issue at our Universities is quantity, our higher education system does not produce enough top scientists and engineers to meet the need of the U.S. economy. According to the Bureau of Labor Statistics, we are adding over 100,000 new computer related jobs each year, but only 15,000 students earned bachelor degrees in Computer Science and Engineering in 2006 and that number continues to drop." (3/12/2008 -- video 04:14)

The "100,000 computer related jobs each year" depends upon how you look at the data.

Computer related employment growth (BLS - OES)
2001 = (-92,870)
2002 = (-42,090)
2003 = 86,800
2004 = 238,880
2005 = 21,690
2006 = 114,190
Total = 326,600
Avg. per year = 54,433

From the immigrant's point of view, the tragedy of the H-1B and L-1 visa programs, are the backlogs they have created in the Employment based (EB) greencard system. If 100% of the foreign S&E graduates were accepted into the EB program, they would only consume 52% of the 120,120 visas available per year to First through Third preference categories.

(EB 1,EB-2,EB-3s are recaptured http://travel.state.gov/visa/immigrants/types/types_1323.html)

The declining permanent residence and citizenship options for S&E graduates are depicted in NSF figure 3-61. http://www.nsf.gov/statistics/seind08/c3/fig03-61.htm

click to enlarge image

Here is some recent pro-H1-B information that claims there is a labor crisis in the American S&E labor pool. The National Foundation for American Policy (NFAP) has published a study entitled, "TALENT SEARCH : JOB OPENINGS AND THE NEED FOR SKILLED LABOR IN THE U. S. ECONOMY." http://www.nfap.net/pdf/080311talentsrc.pdf

The NFAP takes a subjective look at the job openings from various advertisements for talent from large corporations for Dec. 07 and Jan.-Feb. 08. When we look at the data objectively, we find that the BLS Unemployment rate for college graduates 25 and over, is quite similar to the vacancy rate for the Top 30 corporations in the NFAP list.
http://www.nfap.net/pdf/080311talentsrc.pdf

In terms of employment, the size of each company, compared to vacancies (53,636), the vacancy rate is only 2.27%. The vacancy rate is very close to national unemployment data. Is it somehow the responsibility of our Government to ensure that corporations experience a 0% vacancy rate?

Series Id: LNS14027662
Seasonal Adjusted
Series title: (Seas)
Unemployment Rate – Bachelor’s degree and higher, 25 yrs. & over
Labor force status: Unemployment rate
Type of data: Percent
Age: 25 years and over Educational attainment: College graduates

Unemployed College Graduates

December 2007 = 2.2% (972,000)
January 2008 = 2.1% (953,000)
February 2008 = 2.1% (944,000)

Defining the problems associated with economic immigration:
Immigration and the housing meltdown are interrelated -- the pool of qualified buyers has been depleted with excessive demand for housing and excessive supply of labor in relation to employment growth. The government's solution? Throw more immigrants at the problem.

Corporations are asking for immigration increases commensurate with the size of the population, but our natural resources and infrastructure capabilities, increase at a more static rate. Thus, the fixed immigration rate is the correct immigration policy.

The H-1B and L-1 visas have damaged the more desirable Employment based greencard system. Due to over-subscription, employers cannot offer the greencard path as part of the initial employment offer.

The H-1B and L-1 are unique from all other non-immigrant visas, these non-immigrants are not required to maintain a relationship with the home country. Per diem costs for the employer are eliminated, these types of visas are hyper-competitive because employers are not required to pay a housing allowance -- in addition to the full wage.

The H-1B and L-1 visas have caps. The Employment based EB have quotas. The quota system is to encourage diversity in AMERICA, just because a country has a larger population is of no concern to American immigration policy.

USCIS does not keep departure information on non-immigrants, this could easily be accomplished with a swipe card-issued at customs to be kept with the passport. Allowing work-related non-immigrant visas, without keeping departure statistics is not good policy and a good argument against raising any current caps or quotas.

Source:
National Science Foundation: "Science and Engineering Indicators 2008"
Chapter 2. Section: Higher Education in Science and Engineering
http://www.nsf.gov/statistics/seind08/c2/c2s4.htm
Chapter 3. Section: Global S&E Labor Force and the United States
http://www.nsf.gov/statistics/seind08/c3/c3s4.htm

National Foundation for American Policy:
"TALENT SEARCH : JOB OPENINGS AND THE NEED FOR SKILLED LABOR IN THE U. S. ECONOMY." http://www.nfap.net/pdf/080311talentsrc.pdf

Excessive immigration and the sub-prime meltdown

Note: This post addresses Immigration Policy in the U.S., this is not a piece to scapegoat the immigrant. This post attempts to go beyond the social-cost and wage depression statistics to evaluate the basic supply and demand involved with nomadic worker's effect on home-equity. Equity of the common man is eventually destroyed on both sides of the excessive immigration equation. The nomadic worker forgoes home equity to undercut the earning power of the established worker, neither worker is then capable of servicing a traditional mortgage. Excessive immigration makes it progressively harder for citizens and immigrants to maintain standards of credit-worthiness due to housing inflation.

Global competitiveness is dependent upon the wage-earner's salary requirement. The largest contributing factor to the wage-earner's salary requirement is the cost of housing.

Home equity appreciation is an often used, politically correct term, but in reality, home equity appreciation has become hyper-inflation. Housing costs have inflated 309% in 27 years, while four-fifths of America's wage-earners (80%) have averaged (after tax) income increases of only 18.25% in 24 years.

Percent Change in House Prices Period Ended June 30, 2007 (United States)
5 year = 50.76%
Since 1980 = 309.4%
http://www.ofheo.gov/media/pdf/2q07hpi.pdf

http://www.cbpp.org/1-23-07inc.htm

Excessive immigration defers cost of living raises while increasing demand for housing. Hyper-competitive labor, resulting from excessive immigration, decreases the pool of wage-earners who are able to afford the purchase of a home. The rental housing market is similarly inflated and many wage-earners make purchasing decisions based upon sheltering income through tax deductible home mortgage interest.

The sub-prime mortgage was created to offset the decline in the levels of qualified borrowers by eliminating the traditional financial qualifications. Prior to the sub-prime mortgage, the debt service coverage ratio (DSCR) determined the fair market value of the housing market. The DSCR ensures that unqualified borrowers are rejected; if the population at large cannot afford to purchase a home, the loan terms, or housing valuation must be adjusted to accomplish the sale. Current housing valuation is inflated by an oversupply of easy credit and demand caused by excessive immigration.


Sub-prime borrowers assumed that the 2001 recession would abate, but didn't realize that the Bush administration was considering doubling legal immigration, while ignoring illegal immigration -- eliminating the possibility of commensurate cost of living increases.

"Fankly, the study hypothetical dealing with the relationship of both increasing immigration from 1 million to 2 million (per year) and entitlement costs, must be revisited with offsetting economics from both homeownership from new and existing immigrant family members, and increased subprime homeownership.
Professor Richard Ivar Rydstrom, Esq.
STATEMENT FOR THE RECORD BEFORE THE
House Ways and Means Committee, Chairman Charles B. Rangel
Hearing on Economic Challenges Facing Middle Class Families

Recently, Alan Greenspsan has made some comments concerning high-skilled immigration and the housing market.

"Greenspan said the economy will continue to erode until there is a stabilization of U.S. housing prices." [Link]

"…he [Greenspan] expects the mortgage problem to persist until housing prices stabilize. And that won't likely happen until the inventory of new homes dries up." [Link]

Home builders describe the inventory of unsold units as their problem.

"Falling prices tend to keep potential buyers on the sideline. That’s especially bad news for home builders who are stuck with nearly 500,000 unsold homes, or about 10 months worth of demand." [Link]

We have a housing inventory of nearly 500,000 new unsold homes, but there is a much larger hazard in the potential of inventories in the housing market. The Census Bureau provides housing vacancy data. [Link]

Housing Vacancies 2007
Northeast -- Held off market……… 921,000
Midwest -- Held off market……… 1,205,000
South -- Held off market……… 2,911,000
West -- Held off market……… 1,143,000
Total Vacancies – Held off market ……. 6,180,000 (Year-round vacant)

It's my opinion that these year-round vacant homes are the result of the "second home mortgage interest deduction act."

Another comment made by Alan Greenspan suggests that America should adjust "income inequality" by attacking upper wage earners with high-skill immigrant competition.

Greenspan: One thing the country could do to improve things speaking to recession] is to allow more immigration of skilled workers... "Significantly opening up immigration to skilled workers solves two problems," he said. The companies could hire the educated workers they need. And those workers would compete with high-income people, driving more income equality, he said. [Link]

While I agree that housing prices must be allowed to decline to reflect competitive levels, I suggest that re-introducing the 6 million second homes into the "for sale" inventory would be devastating to the U.S. economy. These "high-income people" will sell second homes to reduce the cash drain, the second home interest deduction is not required in lower income brackets.

The Greenspan and Rydstrom statements indicate that the administration has been using excessive immigration as a wage control. Now that the sub-prime bubble has burst, we find that financial instability has spread from the immigrant community to the domestic population.

Emancipation age children account for about 13,568,057 of this century’s population growth, when subtracting the population losses (CDC deaths). The Civilian noninstitutional population has grown by 23,784,000 while employment has grown by only 11,767,656.

MBIA and the New York Times have made accusations ranging from irresponsible borrowers to irresponsible hedge funds for the failure of the sup-prime mortgage. Who is more irresponsible, the citizen who is pressured into purchasing an over-inflated home, or an immigrant who abandons her home?

In truth, income inequality exists between nations not within. Luring highly skilled and low skilled persons to migrate away from their home retards the advancement of prosperity in both nations.

Skilled guestworker salay impact

If the highly skilled guestworker only stayed in the country for one year -- we would have the following yearly impact.

Year __ Guestworker Median compensation __ Guestworker Impact per yr.
2000 __ $52,000.00 __ $9,789,156,000.00
2001 __ $55,000.00 __ $12,156,485,000.00
2002 __ $53,200.00 __ $9,367,083,600.00
2003 __ $52,000.00 __ $8,550,932,000.00
2004 __ $53,000.00 __ $10,688,245,000.00
2005 __ $55,000.00 __ $10,425,635,000.00
2006 __ Not available

(* Known median compensation of H-1Bs assumed to be fair market value)

The problem is that H-1B and L-1 visas are not single year visas, they mature at five, six and seven years. Once the system is full of six year (avg. H-1B, L-1A, L-1B visas) the wage hole in the domestic economy is potentially $60,977,536,600.00 ongoing per year.

$61 Billion, per year in wages that are not available to Americans.

A Duke study indicates that 500,000 guestworkers who have applied for Employment based greencards -- in their 7th, 8th and 9th year of H-1B status more than likely offset any early guestworker repatriation. These 500,000 extensions amount to 34% of all (2000 - 2005) H-1B and L-1 visa issued, extending the wage impact beyond six years.

By the end of fiscal 2006, half a million foreign nationals living in the U.S. were waiting for employment-based green cards, according to the study, released by the nonprofit Kauffman Foundation. Titled "Intellectual Property, the Immigration Backlog, and a Reverse Brain-Drain," the study was based on research by Duke, Harvard and New York University. If spouses and children are included, the number exceeds 1 million. http://www.techcareers.com/content/article.asp?articleID=201802911&affiliate=iwk

Furthermore, the H-1B, Initial employment to Continuing employment approval rate was 99.8% (2000-2005.)

Year __ H-1B visa issued __ L-1 visas issued
2000 __ 133,290 __ 54,963
2001 __ 161,643 __ 59,384
2002 __ 118,352 __ 57,721
2003 __ 107,196 __ 57,245
2004 __ 138,965 __ 62,700
2005 __ 124,099 __ 65,458
2006 __ 135,421 __ 72,613
(travel.state.gov)

Median-wage data from DHS-USCIS: "Characteristics of SpecialtyOccupation Workers (H-1B)" publications