Radical Conservative Immigration Policy

“Each 100 H-1B Initial Employment Approvals are associated with 90 job losses for ‘Natives’ from 2001 to 2010.”

We have yet another “study” of immigrants in the United States workforce, this one associates different classes of immigrants with employment creation for “natives”.  The study is short on definitions, does not include a list of assumptions and does not include data, but heck let’s just take the author’s word that all is correct and good.

Today’s Featured Study:

“IMMIGRATION AND AMERICAN JOBS”

AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH AND THE PARTNERSHIP FOR A NEW AMERICAN ECONOMY

Written by:  Madeline Zavodny
http://www.renewoureconomy.org/aeireport

 

While the country teeters on the edge of a double dip recession, let’s plug-in some numbers into the formulas that the “conservative” think tanks are promoting as an employment growth solution.  Our goal here is to reduce the Current U-6 Underutilization Rate by 33%, thus creating 8 million jobs for “natives” by allowing more immigration as Ms. Zavodny suggests.

I present “What if” scenario CASE 1: and CASE 2: for creating 8 million jobs for “Natives” as per Zavodny’s policy recommendation.

CASE 1:

Zavodny: “Every additional 100 foreign-born workers with an advanced degree created an additional 44 jobs for US natives.”

In the table above we see that adding 18 million new persons with advanced degrees to the labor force “might” bring the Unemployment rate down to levels that are considered “full employment”. 

On the other hand, if Zavodny’s conclusions are wrong and the economy does not create 26 million new jobs as a result of adding these immigrants, the Headline Unemployment rate (U-3) would climb to 18.3% and the United States would be stuck with 18 million more people to house, clothe and feed.  This would be some pretty high-stakes policy poker.

 

CASE 2:

Zavodny: “Every additional 100 foreign-born workers who earned an advanced degree in the US and then worked in STEM fields created an additional 262 jobs for US natives.”

The chart above is a bit more conservative with 2.62 native jobs created for every immigrant with a US advanced STEM degree.  In this case we only need to bring in about 3 million immigrants and dedicate 100% of the science curriculum to STEM disciplines – AND -- dedicate all of the NCES advanced degree programs to immigrants for the next 10 years. 

The STEM occupations employ about 7.6 million persons, but only 1.8 million in the STEM occupations have an advanced degree.  Another 3.3 million STEM workers have bachelor’s degrees and about 2.4 million have some college, an associate degree or less. Adding 3 million immigrants to a population which is now only 1.8 million -- might tend to affect wages a little bit.

If the Zavodny Formula for STEM workers were to fail and these new immigrants were to engage in an employment bidding war to remain employed in the United States, the likely result would be another spate of housing foreclosures.   The Census homeownership rate is currently 66.3%, STEM is a well paying field, so failure of this Zavodny Formula could cause slightly more than 2.2 million additional housing foreclosures.  Fresh out of college immigrants would predominately enter the rental housing market.

CASE 3:

Zavodny: “The estimates show that a 10 percent increase in H-1B workers, relative to total employment, is associated with a 0.11 percent increase in the native employment rate. During the sample period of 2001–2010, this translates into each additional 100 approved H-1B workers being associated with an additional 183 jobs among US natives.”

 

Okay, we get down to the meat of the “citizenship provisional” visa, the H-1B.  This is the temporary worker program that encourages foreign nationals to squander their youth chasing the dream of US citizenship; it is reasonable to conclude that citizenship will not be awarded until the worker has completed 10 to 15 years of continuous employment. Why? Because corporate lobbyists have favored temporary immigration over the Employment Based Preference entrance visa with a 5 year Lawful Permanent Residence requirement prior to naturalization.

I have no idea how to decipher Zavodny’s statement, “…a 10 percent increase in H-1B workers, relative to total employment…”, is the 10 percent increase a variable in a regression formula? Or, an increase in the actual data? Is the 10 percent H-1B increase offset by a year, or instantaneous?

Displayed below is the actual H-1B Initial Employment Approvals aligned with the Total Loss/Gain in BLS employment levels for the years 2001-2010.

I can’t see how Zavodny arrives at a 100 to 183 jobs for “Natives” ratio for the same period, when considering the numbers in the above table, I guess I’ll never understand the new math(s).

Rebuttal Data:

Census Homeownership Data:

http://www.census.gov/hhes/www/housing/hvs/qtr311/graph311.html

Educational Data:

WebCASPAR Integrated Science and Engineering Resources Data System

https://webcaspar.nsf.gov/index.jsp?subHeader=WebCASPARHome

H-1B Initial Employment Approvals:

“USCIS: Characteristics of H-1B Specialty Occupation Workers”

Fiscal Years 2001 through 2009

Employment Level Loss/Gain Data:

Labor Force Statistics from the Current Population Survey

Series Id: LNU00000000

Not Seasonally Adjusted

Series title: (Unadj) Population Level

Labor force status: Civilian noninstitutional population

Type of data: Number in thousands Age: 16 years and over

Data extracted on: January 1, 2012 (3:55:39 PM)

http://www.bls.gov/data/

STEM Employment and Educational Statistics

U.S. Department of Commerce
Economics and Statistics Administration

“STEM: Good Jobs Now and for the Future”

By David Langdon, George McKittrick, David Beede, Beethika Khan, and Mark Doms,
Office of the Chief Economist

The Boeing 787 Dreamliner and the Purple Squirrel

In its effort to create the 787 commercial airplane, it appears that Boeing has also participated in the search for the elusive Purple Squirrel. The Boeing 787 has been an offshore outsourcing failure, a costly lesson learned by the largest exporter in United States. The bird (787) does fly, but with a 3-year overdue delivery date, Boeing has had to provide price discounts of 25% on some of the earliest pre-purchases.

Project managers often use the “Faster, Cheaper, Better” mantra to sell a project based upon optimistic timelines or budgets, most engineers will respond with “pick two” and more often than not the engineers are correct.

 The 787 Project: 

 Faster: Failed, 2008 projected date, time wasted creating outsourcer supply-chain difficulties. Technology issues also arose during the project – which should have been expected in cases where emerging technologies are employed.

Cheaper: I’m sure that Boeing’s version of cheaper didn’t include cost and time overruns and deep discounts granted to companies who placed pre-production purchase orders. See “Better” Better: Commercial airplanes are the ultimate durable-good, many are flown for decades and safety should be the ultimate concern; “Better” should have the highest priority. The “Cheaper” aspect of the project could still be salvaged, if purchasers find that the 787 is a durable (and safe) aircraft. Boeing may experience a lager market share, offsetting production and engineering cost overruns, dependent upon durability and fuel savings.

The Boeing 737 Wikipedia entry says that there are still thousand of 737s in the air at all times of the day. The point is, that Boeing went cheap on the “Faster” aspect of the project and paid the price. Attempting to save time and money on project engineering, Boeing assumed that outsourcing would somehow mitigate a failure to maintain “institutional knowledge” and/or a resistance to train new staff.

"You have to realize that we hadn’t done a major development program at Boeing since the triple seven, you know that was 20 years ago, we had lost a lot of the institutional knowledge, we have got a lot of institutional knowledge now, we have trained 12,000 to 13,000 Engineers on how to do it right." 

Video transcript excerpt: Jim Albaugh, CEO Boeing Commercial Airplanes 

Some people in management tend to believe that Purple Squirrels do exist. Somehow, somewhere there is a highly skilled employee candidate who is pre-configured with the exact skills and knowledge needed to staff a project that may even involve emerging technology. Once the list of United States candidates have been exhausted/discounted, management lobbies the government for more temporary employment visas because they want to look at more squirrels to see if they can find a purple one.

 The Wall Street Journal has actually printed an article that doesn’t blindly support the “shortage” of Purple Squirrels in Science, Technology, Engineering and Math candidates. During the worst employment market since the Great Depression, there are lots of squirrels – again many employers are still not interested in squirrels that are not purple.

Dr. Peter Cappelli, Director of Wharton's Center for Human Resources, in The Wall Street Journal: With an abundance of workers to choose from, employers are demanding more of job candidates than ever before. They want prospective workers to be able to fill a role right away, without any training or ramp-up time. In other words, to get a job, you have to have that job already. It's a Catch-22 situation for workers—and it's hurting companies and the economy. To get America's job engine revving again, companies need to stop pinning so much of the blame on our nation's education system. They need to drop the idea of finding perfect candidates and look for people who could do the job with a bit of training and practice.

Dr. Peter Cappelli, “Why Companies Aren’t Getting the Employees They Need” The Wall Street Journal, 10/24/2011

Dr. Cappelli did a follow up article due to the avalanche of reader response. Most of the emails I received were in support of my argument, especially from readers struggling to get a job themselves. No surprise there. But a remarkable number of those who wrote were in positions where they were hiring, including recruiters. They reported that their organizations had shortages of employees because they would not train or invest in new hires. My favorite email came from somebody in a company that had 25,000 applicants for an engineering position and the staffing people said none of them were qualified. Could that really be possible?

Once the employer and recruiter have determined that there is no such thing as a Purple Squirrel, they tend to complain that there are not enough temporary work visas squirrels. A suspicious mind may conclude that employers might want to have additional leverage over any worker that they need to train -- a work-visa might just fit the definition of leverage for squirrels who don't happen to be purple. Fortunately, the CEO of Boeing Commercial Airplanes (Jim Albaugh) has come to the realization that regular squirrels can be trained just like purple ones.

Mr. Albaugh also appears to have come to the realization that squirrels tend to work better together in-groups where the output can be controlled.

“You have to realize that we hadn’t done a major development program at Boeing since the triple seven, you know that was 20 years ago, we had lost a lot of the institutional knowledge; we have got a lot of institutional knowledge now, we have trained 12,000 to 13,000 Engineers on how to do it right.”

“I think we over-stretched this time with some of our technologies and I think that we didn’t completely think through the supply-chain that we put in place. I think we’ve been able to address the technology issues and we’ve pulled some work back from the supply chain, we’re doing it internally…” “Obviously, whenever you have an issue you want to learn from it. We are doing a variant of the 787-8 and the 787-9 we’re doing more of the work inside the company now, we want to make sure we don’t lose control like we did on the 787-8” 

CNNMoney Video transcript excerpts, Jim Albaugh, CEO Boeing Commercial Airplanes 

Video Courtesy of CNNMoney “Boeing's game changer finishes first flight” By Chris Isidore @CNNMoney October 26, 2011: 1:43 PM ET http://money.cnn.com/2011/10/25/news/companies/boeing_787_dreamliner/

 See also: W.T.O. Ruling on Airbus Subsidies Upheld on Appeal By NICOLA CLARK Published: May 18, 2011 http://www.nytimes.com/2011/05/19/business/global/19wto.html?pagewanted=all Special Thanks to Dr. Peter Cappelli for his WSJ article