Abolish the H-1b "indentured servant" visa; Green cards instead
Over a year ago I had blogged regarding my view that it would make since to abolish the H-1b visa and implement a green card instead. At the time I took heat from some anti-immigration groups who would rather we not allow immigrants into our country. I also have since taken heat from Greg Siskind, an immigration attorney, who somehow feels that providing permanent immigration instead of temporary employer sponsored visas is offensive. Since my first thoughts on a green card instead of the H-1b were published, my view on the subject has been refined some.
Before I get into my thoughts, I first want to address the shallow remarks of Greg Siskind in comments on his blog. Siskind's positions reflect those of a corporate lobbyists, so of course he wants to discredit anyone who stands between corporate objectives of exploitable workers with words like "anti-immigrant".
In my own defense against his untrue comments, I am married to an immigrant, support some form of amnesty, and want to increase protections for immigrants. The tough part about his attacks is that it is very difficult (perhaps impossible) to prove a negative, and it is so easy for him to lob such grenades. I find it disturbing that Siskind would sink that low.
My view is that Greg Siskind is worse than the anti-immigration proponents and that Siskind is in fact anti-immigrant. There is an important distinction between "anti-immigrant" and "anti-immigration". Anti-immigration proponents want to shut out immigrants for a variety of reasons (some not relating to race) and anti-immigrants fall into two categories. The first category is racist, and the second category are exploiters. Greg Siskind clearly represents the interests of those who want to exploit immigrants for financial gain. My point is that a person can support higher levels of immigration and at the same time be anti-immigrant.
I don't believe we need more immigration, but I also think we can support current levels if done right. I believe that we should replace the H-1b visa program with an equal number of merit based green cards (current cap of 85,000 + the 50,000 lottery). The program I have in mind would not be employer sponsored and on the other side of the coin there would be no labor test. There would also be no per-country quota. Family members wouldn't count towards the cap. The goal of a merit based program would be to allow only the best and brightest to qualify for these visas. It would be a race to the top, not the race to the bottom that we see today. Instead of junior level programmers, we would see top scientists, doctors, and inventors. Instead of "first come first serve" it would be "best come first serve".
If you are just now following the H-1b issue, you might be wondering what is wrong with it. Although not perfect, wikipedia actually covers most of the issue. But I'll summarize.
Harm to immigrants - The H-1b is not completely portable. Changing jobs will usually result in the application for a green card to start over. This is a problem because that process can take years. The end result is that immigrants intending to become permanent residents also become captive workers.
- Spouses cannot work.
- If H-1b workers are fired from a job (or quit), they must leave the country unless they are able to quickly find a new job. This gives employers great leverage over them. Simply put, immigrants from third world countries will allow themselves to be exploited so that they can remain in our country. Many sponsoring companies are quite willing to subject them to such exploitation.
Harm to American workers - Companies are using the program to lower wages in high tech occupations. There is a Labor Condition Application (LCA) that companies must submit which is suppose to enforce prevailing wage. Unfortunately, it doesn't work. The average "prevailing wage" in the LCA is $14,000 less than true market wages. Prevailing wages are also defined as much lower than what market wages are, so companies can legally use the program as a means to get a competitive advantage over companies who do not use the program.
- The top supporters of H-1b visas are also offshoring firms, mostly from India. These firms use the program as an enabler of offshoring. These also happen to be the greatest exploiters of their H-1b employees.
- Because of diminishing opportunities in software engineering, we now see a decline in Computer Science graduates in the United States. Students are voting with their major, and because of current practices they are choosing to go into other careers. In short, the H-1b is harming the labor market and discouraging entry into technology careers. This is not good for the future of our country since it is important that we lead in technology.
Although there are other problems with the H-1b, those seem to top the list. So, how would a green card instead of the H-1b help solve these problems?
First, immigrants can change jobs at will without penalty and they are no longer sponsored by a company - thus no strings attached. This benefits both immigrants and American workers. Immigrants aren't so easily exploited; as a result they can command higher salaries. Higher salaries relieve pressure on American workers.
Second, we will get a broader skill base. Instead of junior level programmers displacing the scientist who can help cure disease, the opposite will occur.
Finally, this will relieve pressure on our own college grads and entry level workers pursuing IT related occupations, which currently have the lion's share of visas. We will see a return of students to computer science occupations - a good thing for our country's ability to compete globally.
There is a reason we call the H-1b an indentured servant visa. I recently watched the movie "Amazing Grace" and I was amazed at how the same arguments used in support of slavery are now being used in support of the H-1b visa. Greg Siskind represents our modern day version of slave traders. Sure the H-1b isn't on the same moral level as slavery, but it follows the same pattern of exploitation against human beings. It makes one wonder if during the years of slavery, there was a lawyer like Greg Siskind that could be called to spin the practice in a positive way.
You don't need to wonder what thoughts Greg Siskind keeps to himself to know if he is anti-immigrant or not. You need only look at his pattern of exploitation to realize that he is in the business of exploitation, and thus anti-immigrant. I believe his actions to be worse than overt displays of racism. Racists act out of ignorance. They can "plead stupid". Greg Siskind knowingly helps in the exploitation of people for profit. He simply cannot plea ignorance.
Greg Siskind calling me anti-immigrant is like a slave trader calling the abolitionist anti-African. I'm sure in their twisted minds, they may have thought they were actually doing the slaves a favor. I wonder if Siskind thinks the same way regarding the people he helps to exploit.
According to analysis by the Bureau of Labor Statistics (BLS), in Q3 2006 American Software Engineers, Computer Scientists and Systems Analysts have lost jobs this year over last year - a net loss of 93,000. This is amazing given recent claims from the IT industry and lobbyists claim they are unable to find qualified IT professionals in the United States.
What is even more amazing is that the Commerce Department continues to release overly optimistic reports supporting the claims of the IT industry. Overly optimistic is being kind - they are in fact lying. The best employment data available proves that American software professionals are losing jobs. This is a direct result of our government not representing the interests of the middle class.
It is no wonder that American students are turning away from Computer Science majors. This is an urgent issue. In order for America to remain competitive in the global market, we must be the best when it comes to software engineering and innovation. Our government, and private enterprise in their rush to offshore - are failing us.
The New York Times is once again showing their bias, releasing an H-1b related article without as much of a mention that there is opposition from both American and Indian labor groups - and for good reason.
The tech companies want access to an exploitable class of labor; hence their desire to raise the cap on H-1b visas. These visas are a favorite for Indian tech companies like Infosys and Tata - who offshore software service projects to India. What makes them popular is that the vast majority of H-1b workers are paid well below average wages when compared to their American counterparts, they are prevented from changing jobs, and the workers are reliant upon the continued sponsorship of the company they work for (or they can be deported).
According to the GAO, the H-1b program is prone to fraud and abuse because there are very few safeguards in place.
American workers are also opposing this visa because the cap is not based on job creation in an occupation. While IT workers were losing hundreds of thousands of jobs earlier this decade, the indentured servant cap was actually raised. There are no enforced protections for the American workforce.
Tech lobbyists will tell you this visa is for the best and brightest. If tech companies were serious about attracting the best and brightest, they would seek a more competitive program. They would ask that standards be raised.
If we truly want the best and brightest the H-1b program would be limited to people who have advanced degrees and at least five years of experience. Salaries should be in line with that of American workers. Numbers should be based upon job growth - not arbitrary caps. Guest workers should not be bound to a sponsoring company - they should be workers on the free market.
Otherwise let's face it. This is an indentured servant program designed to attract cheap labor. As an American I think it wrong to exploit people. As a worker, I don't want to be competing in the same job market as an exploited class of labor. It harms our own salaries and opportunities.
To conclude, I am posting EVIDENCE of the abuse of H-1b workers by a company in Maryland called Axiom. By following the link you will discover what I am told is a typical contract between "body shops" and H-1b visa holders. The first page is a job offer (notice the below average salary for a software engineer) and the following pages are what I call an indentured servant contract. I have blacked out the name to protect the victim. This contract was released to me by an Indian activist seeking fair treatment of Indian workers. Here are some key points when reading over the contract:
Axiom will pay the costs to file a permanent resident (greencard) application - seems nice enough.
Axiom can terminate contract and withdraw greencard application at any time, for any reason. Ok, most contracts seem to be weighted in favor of corporations these days. No surprise here.
Visa applicants salary will be 65% of the hourly bill rate that the client pays. Hmm, so these guys simply sponsor a visa and take a 35% windfall on earnings? In some cases - not sure of this one. I know one worker who finds his own contracts but still pays the "sponsor" (or should we say master) a percentage just for the sponsorship.
Now here is where it gets heavy handed. Should the applicant leave Axiom or be terminated within 12 months of starting the applicant will be liable for $8000 in damages.
Should the applicant change jobs within 12 months of gaining their greencard - Axiom deems this FRAUD and will notify the USCIS. FYI, this is illegal - I consider it threatening in nature.
Applicant is an at-will employee (well, at the will of the company). I think we have established this part by now.
Terms of this agreement are confidential. Don't tell anyone!!! BTW - if you are in an unfair contract, please come forward. Especially if you already have your greencard. Despite the threats, they have no more control of you.
I would like to mention one more thing. Aside from contractual agreements that a company may require the H-1b worker to sign (like the one described above) the immigration process is also flawed. H-1b workers are allowed to apply for permanent residence (Axiom can help if you sign your life away). Unfortunately, if the worker changes jobs the process resets and they are sent to the back of the line, which can cost them years of waiting for their permanent residence. Many give up first and return to their home country.
In short, the H-1b workers catch hell from two sources: the employer who controls their very ability to live in this country, and the flawed immigration policy that sends them to the back of the line if they seek a better job.
The bottom line is this - if you support the exploitation of immigrant (or non-immigrant) workers, ask Congress to raise the H-1b cap. If you are opposed to what I call "slavery-light" then ask Congress to protect both American and foreign workers from this harmful program.
Forming coalitions between American workers and H-1b holders
I resigned this week from the board of directors of the Programmers Guild. Essentially, it was over the policy to not allow guest workers to join. The policy is in place to "prevent foreign workers from taking over". I personally believe the policy is a result of paranoid thinking and see little to no threat of some anti-labor or pro-globalization group from taking over. I do see the policy as counter-productive and a lost opportunity to become a real political force - as opposed to a fringe group. Obviously this isn't the only reason I resigned, and I am not going to get into details as that wouldn't be very professional.
Although an unrealistically high number of guest workers flooded the labor markets and harmed American workers (especially from 2001-2003), guest workers on these visas are also harmed. They are prevented from changing jobs at will, some are contractually bound to the companies, and the majority are paid below average wages and most work longer hours. In short, they are exploited. American workers aren't the only victims is all that I am saying.
I have concluded that a technology based professional organization that invites all who work in the United States is needed - that isn't afraid to tackle these issues. Perhaps the IEEE-USA is that organization?
The IEEE-USA recognizes the two sides to this issue. They believe that we need a sustainable number of guest workers and that the program shouldn't replace American workers. They also recognize that we should treat our immigrant or guest workers better and more fairly.
Together American technology workers and foreign guest workers can be a political force and get a sustainable and fair system in place. Apart, we all lose to the special interests and IT lobbyist groups like the ITAA.
Hopefully the Programmers Guild will one day get with the program, or another organization will step up to the plate. The Guild has done some very positive things this year and I have confidence that if they hold elections some new leaders will step up to the plate. There have not been elections in the past two years, which are required to be held each year. I am a bit puzzled as to why members haven't demanded elections.
The Commerce Department has finally released an offshoring study that it originally refused to release publicly. FOIA petitions were even denied and now career researchers are being layed off as reward for releasing non-biased research on the matter.
The Commerce Department's Office of Technology Policy (OTP), while under the last president Phil Bond, refused to release the report and instead released a 12 page executive summary that even the report's researchers dispute the accuracy of.
This summary glossed over the problems of offshoring and focused on the positive things. Phil Bond has since become the President of the ITAA - an now works for the largest IT lobbyist firm in the United States. That is his reward for betraying American technology workers and pushing his political agenda while heading the Office of Technology Policy.
According to Professor Norman Matloff in his newsletter:
Through both the Clinton and Bush administrations, the Dept. of Commercehas been remarkably even-handed in issues relating the the industry'sclaims of a tech labor shortage, and the offshoring issue. Remarkably, this is largely due to two career researchers in DOC, and their principled insistence on doing objective analyses. Even more remarkably, their political appointee bosses have usually stood by them,albeit with occasional blips. You can read the history of this at
The 360-page version of the report describes the types of IT services and software jobs that are being outsourced. It states the obvious: that Indian outsourcing companies "are expanding staff annually by the thousands." The report describes the reasons for the trend including the fact that "venture capitalists are now encouraging U.S. IT start-ups to use lower-cost offshore destinations for software development to reduce the 'cash burn rate.' "
That document is quite different from the original 12-page summary, and it is apparent why Bush's political appointees so vehemently refused its release. The administration "was scared of anything having to do with outsourcing," says one source who is familiar with the report's travails. The Bush team "could not afford even a discussion" of the outsourcing issue. "The report speaks for itself," said Ben Wu, who was in charge of the report's demise while at the Commerce Department's Technology Administration. Wu now works in the state of Maryland's economic development organization. Phil Bond, who was in charge of the Technology Administration at the time, said he had nothing to do with re-writing the report. He has since been named president and CEO of the Information Technology Association of America (ITAA), an organization that took the lead in Washington in defending the practice of offshore outsourcing of IT jobs.
I am forced to call a spade a spade. This is none other than corruption at the highest levels of our government. The OTP has been infiltrated by corporate lobbyists and even worse will be firing the career DOC researchers responsible for reporting the facts:
"what was produced and provided by the Commerce Department in September 2005 was a 12-page document bearing a July 2004 publication date that bore little resemblance to the work done by analysts at the Technology Administration, all of whom have recently been told they will be laid off due to severe budget cuts for the agency and the issuance of a reduction in force (RIF)." (manufacturingnews.com)
We must demand an investigation into this matter. These honest career researchers should not lose their jobs because of corruption. More on this as news unfolds.
Clearly the weakening value of the Rupee is benefiting companies in India while harming American technology workers and domestic businesses. The following article from an Indian news outlet, rediff.com, details the windfall for Indian companies.
What response should the United States have to this problem?
Infotech companies are making the most of a depreciating rupee and have systems in place to hedge the risk inherent in forex earnings.
With over 90 per cent of the revenues of Indian IT companies coming from clients abroad, the rupee's downward trend over the past few quarters is boosting the power-packed results of the sector.
Since IT companies derive a bulk of their revenues in dollars, rupee depreciation adds to their bottom line.
Taking into account the expenses incurred in dollars owing to on-site operations, a one per cent fall in the rupee usually results in a 0.3-0.4 per cent gain in the operating margins of most IT companies, and vice-versa.
According to the Indian Council for Research on International Economic Relations in a 2003 working paper, the Rupee is essentially pegged to the US Dollar. They describe it as a "highly managed" currency that is subject to intervention by the Reserve Bank of India (RBI).
According to the paper "India has been in a homogeneous regime of low exchange rate flexibility from 1979 onwards."
American economists have long said that India manipulates its currency to one degree or another, however Indian economists appear to say the same thing. Given that there is no dispute regarding the artificially low value of the Indian Rupee - as the Indian economy has grown double digit percentage points while the Rupee remains flat - we should demand one of two things immediately:
The President of the United States should demand that India stop manipulating their currency. Action will be seen in a rapid rise in the regime once it is freely traded. If India does not stop their unfair currency practices, resulting in the loss of American high tech jobs, we should impose a temporary duty of 35% that increases at the rate of economic growth of the Indian economy - until such time that India stops manipulating their currency.
According to many IT trade magazines the savings gained by sending software development to India is around 20-30%. A fair trading regime would balance the playing field and the best company would get the business - not the company most able to exploit an unfair currency regime.
The United States' lack of intervention in this clearly unfair relationship is causing millions of high-value jobs to be be created offshore. President Bush should not allow India to continue this unfair manipulation of the Rupee; to do so expedites the offshoring of American jobs.
If you believe in free trade, you should also believe in fair trade. Manipulating a currency is no different than dumping and is an unfair trading relationship by definition. Is it too much to ask that our trading partners play by the rules? And if they don't play by the rules, is it too much to ask that our own government intervene on our behalf?
My sons aren't quite old enough to ponder this question, but if they were what would I tell them? As things stand right now, I would encourage them not to pursue Computer Sciences. I have several reasons:
1) Software employment has stagnated the past five years and appears to have slow growth and higher unemployment than other professions like accounting and healthcare 2) Corporations have increased offshoring of software jobs and plan to continue this pattern 3) Software jobs that remain in the United States are often given to lower paid and exploited foreign workers on H-1b or L1 visas; Americans face foreign competition here and abroad 4) Politicians seem inclined to reduce trade barriers with third world countries which will make it even easier and more cost effective to move production overseas 5) Politicians have rolled back labor protections for software developers; they are specifically exempt from overtime laws and the vast majority are not represented by organized labor
If I were entering college now I would be more inclined to pursue an occupation with a brighter future. If you are considering a Computer Science degree, you should first ask your Congress person what they will do to protect the occupation.
Fresh college graduates are finding it increasingly difficult to gain entry-level employment in software occupations. Our unsustainable trade, immigration, and labor policies are to blame.
And ITAA press release expresses their desire to raise size standards for the classification of small businesses. This federal government offers incentives for contracts to go to smaller companies as the vast majority of contracts go to larger corporations as it stands. The ITAA wishes to more than double size standards for small businesses - from the current standard of $23 million to $50 million USD.
The government currently sets aside contracts for small businesses. I don't think the government should raise the number of small business contracts awarded by relaxing the standards. The ITAA is wrong on this issue and such a measure will harm truly small businesses who need protections from the goliaths dominating this market.
Instead of relaxing standards, the government should require even more contracts be set aside for small business. The ITAA is hardly representative of such a group.
Electronic Arts (EA) settled for $14.9 million USD with programmers of various experience levels. This would suggest that yes, programmers are entitled to overtime and most especially in California where their rights to overtime are explicitly protected in state law.
Many programmers in the United States are not paid overtime - lawyers for United Employees Law Group are now asking American programmers to submit claims if they are not being paid overtime. Even though federal law may not protect overtime rights, many state laws do. According to this lawfirm, most states require overtime to be paid and do not classify programmers as management staff (thus exempting them from overtime).
What do you think - are programmers entitled to overtime?
OK, so this has nothing to do with technology. I know.
Ken Lay, the former Enron CEO and convicted felon who was pivotal in robbing Enron employees of billions died while vacationing in Aspen Colorado. There is no justice in this world. Before spending a single day in prison, Ken Lay checked out permanently escaping justice.
Anything left in the Lay estate should be siezed and awarded to Enron retirees. Entirely illegal, but that would be justice. Please feel free to vent here. In this case it looks like Lay got off scott free and there is nothing we can do about it.
Blogspot has some limitations when it comes to formatting HTML. Because of this, you are encouraged to reference the webpage of this blog here: http://www.freedomcast.com/h1b/H1bSham.html.
77% of H-1b Applications are Certified by the DOL below the average prevailing wages
Normally I detail what an H-1b visa is in my writings, however the reader of this is presumed to know that already. Please seek information on Wikipedia or other sources if you are unfamiliar with the subject and then refer back to these statistics so that you understand who is impacted by it.
In 2005 there were 279,719 LCAs certified by the Department of Labor for Programmer and Programmer/Analyst occupations. The average salary for these jobs going to foreign guest workers stands at $53,024. Median annual earnings of America computer programmers was $62,890 in May 2004; although the average rose slightly in 2005 we will use the more conservative 2004 averages for these purposes.
What this means is that the H-1b program has enabled companies to underpay programmers by 15.6 percent or $9,866 each year. I am a software developer and have the LCA database stored on my personal server, it was made available by the US Department of Labor. Running a simple query returned these startling results.
According to the DOL starting salary ranges are as follows for American programmers in 2004:
What this proves is that the H-1b program is being used for labor arbitrage - simply put companies are flooding the labor markets in an effort to lower labor costs. 46% percent of all H-1b programmers are certified by the Department of Labor for pay BELOW $50,000 each year. Additionally, 77% of programmers are certified for wages below the average prevailing wage in this occupation.
This has been driven by deception from industry lobbyists like the ITAA. They say there have been shortages of programmers. In fact, programmers have less jobs as they did in the year 2000. Many people still may believe that there is a shortage of programmers because of misinformation. I produced a paper that should dispell this myth: http://www.freedomcast.com/h1b/NIVSolution2006.pdf.
Another myth is that H-1b visas fill hard to find jobs. That may be true in select occupations, however the vast majority of H-1b visas fill jobs where there are not shortages of skilled labor, just shortages of cheap labor. These numbers suggest otherwise:
Total LCA Applications in 2005
Occupation...............................Applications.......Percent of Total (Rounded) Programmer.........................................279,719.....................46% Non-Programmer IT Jobs.................132,627.....................22% Non-IT Jobs.........................................199,466.....................33%
The reason I focus on Programmer jobs is because the vast majority of applications is for these jobs - as seen above. Many people ask why the Programmers Guild seems to just focus on this issue, well now you know. 68% of all H-1b visa applications are for IT-related positions so it is only natural that we take a lead on this issue.
One solution to this problem, since so many companies are looking for cheap labor as opposed to highly skilled labor, is to set the a minimum wage at the average. If the H-1b becomes a visa designed to deliver quality workers as opposed to a large number of low paid workers it will meet less opposition. In addition to fair pay for the workers on H-1b visas, we must prevent American workers from being displaced. Although my other paper details such a method, there are many factors to consider.
If the goal of the H-1b program is to replace American workers and provide corporations with exploitable and cheap labor, then it is working just fine. If the goal is to provide corporations with truly high skilled labor, then it is falling short. Our proposals work towards that goal and should be supported by any legitimate company with a legitimate need. Those opposing us are most likely abusers of the system.
Here was the query run so everyone knows this is legit and open. FYI Software Engineer positions were not a part of this result set. Companies claim they need "software engineers" - so why are over 2/3 of the IT jobs just for "PROGRAMMERS" ???
selectsum(nbr_immigrants) total, truncate(avg(wage_rate_1),2) AveragePay from lca where rate_per_1 = 'Year' and Approval_Status = 'Certified' and job_code like ('03%') anducase(job_title) like ('%PROGRAMMER%') Order by total;
Replacing Harris Miller as "Enemy #1" of IT workers at the ITAA, an IT industry association intent on harming IT workers through labor arbitrage, is Phillip Bond. He is a Bush insider and and just quit his job as head of the Office of Technology Policy (OTP) at the Commerce Department.
This is truly troublesome. It puts into question the independence of the OTP. This is clearly an unholy marriage between industry and government. The OTP should distance itself from the ITAA and this sad and irresponsible move.
All I can say is that Bush Administration officials have been a sad a cruel joke once again. But is anyone really surprised when a Bush insider becomes an industry lobbyist? The OTP by the way is the same organization claiming millions of IT jobs would be created, but then had to eat their words when we actually lost jobs. They have always had close ties to industry and no ties to IT professionals. Amazing - they claim to want to create jobs but not once have they spoken to labor groups about labor specific issues. Of course they always find time to meet with industry lobby groups.
Shame on them all! This government is suppose to be of and for the people. Instead, the OTP represents a sellout of our national interests. As Homer Simpson would say: BOOOOOOOH!!!
The only question now is who's image to place on my dart board now. Does Harris Miller come down? Not just yet. I'm still waiting to see his next move.
In one of our most agressive moves to combat discrimination, the Programmers Guild has today filed over 300 complaints with the US Department of Justice for discriminatory ads. FYI I am on the board of directors of the non-profit Programmers Guild. Here is what ComputerWorld has to say about the complaints:
http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9001285 June 19, 2006 (Computerworld) -- The Programmers Guild is filing a stack of complaints with the U.S. Department of Justice against some 300 IT employers it says are discriminating against U.S. citizens and permanent residents by placing advertisements that specifically seek "H-1B only" visa holders or workers who have student or L-1 visas.
John Miano, founder of the Summit, N.J.-based Programmers Guild, said today that he has collected some 1,500 IT job advertisements in the past six weeks from a variety of online jobs boards that express preference for hiring visa holders. Miano said the practice is widespread because "for the most part, there isn't much enforcement going on. So we are trying to do what we can do to bring private enforcement against these employers."
Miano said H-1B workers are in demand because "they are cheap and they make good slave labor." The guild has filed about 100 complaints with the DOJ's Office of Special Counsel for Immigration-Related Discrimination, and it plans to file another 200.
It's not to difficult to find IT job advertisements that seek specific skills, and H-1B opponents have long circulated examples of these advertisements on mailing lists.
For instance, in a search on the job board run by Dice Inc., iGate Mastech, a Pittsburgh-based IT staffing agency with about 1,000 employees, has an advertisement for eight Java developers with three to five years of Java development experience. The ad says: "Only looking for H-1B visas and should be willing to transfer."
Paper in progress - Economists on outsourcing software jobs - part-1/draft-1
I am working on a paper regarding the fathers of economics and what their views would be on offshore outsourcing and related issues impacting software professionals. Because I am a software professional and amateur economist a good way to prepare this paper is to get feedback during the construction of it.
The paper's goal is to tie the modern day with the works of Adam Smith, John Stuart Mill, and David Ricardo. The target audience are other software professionals with no background in economics. Concepts should be at a level that people without an economics or finance degree can still understand.
Fortunately, each of these authors are dead - and has been dead more than 70 years. Well, fortunately for us and probably not them. Because of this, their books are open source and can be read freely online as can books from other economists past: http://www.econlib.org/index.html.
In addition to reading literature, I will be watching the Adam Smith DVD which should arrive shortly. That should put me on par with all the economics students who were drinking and partying when they should have been studying.
I need your help, if you are so inclined. Simply post comments as this topic builds.
So in short, be nice. Call me out on something if I am wrong or if you believe me to be wrong. And make suggestions on how to advance the topic. When complete, I think software professionals should have a better understanding of offshore outsourcing and a respect for thinkers of the past.
Adam Smith, John Stuart Mill, and David Ricardo on the Software Profession (A work in progress) Part 1, Draft 1 By Roy Lawson
If some of the most revered economists could speak, we can only wonder what they would say about issues facing software professionals today. This article examines the writings of Adam Smith, John Stuart Mill, and David Ricardo. Although electronic based machines, software, and modern day communication technologies were not invented during the lives of these men, their theories are still applicable today. Most software professionals don't have a background in economics; this article is intended to give them a background on the subject and an understanding of how it applies to themselves.
Traditionally a commodity describes unprocessed goods that can be traded or sold such as grain, metals, and livestock. In corporations today you will often hear managers refer to software developers as a "commodity". This term is not meant to have an endearing connotation and is in fact used to describe a service based occupation that corporations wish to trade freely on the global market. These individuals don't make a distinction between the trade of cattle and the trade of human services, nor do they take interest in the social implications of such a concept. There is an indifference to nationalistic interests and a priority given to short term drivers of the market economy.
Software is a significant aspect of our modern day economy and is intended to make corporations more productive. Productivity enables workers to focus on more valuable endeavors, which is directly responsible for increased profits. Productivity can also be gained through lower labor costs. Modern day communications such as the Internet enable companies to move software production to regions where labor costs are lower. This shift can increase productivity because the same output can be gained at a much lower cost. Moving software development and related service jobs to lower cost regions is known as arbitrage, or the practice of taking advantage of the state of imbalance between two markets.[3]
As a modern day example of arbitrage it is often more affordable for companies to outsource jobs to Indian companies where there is a large supply of educated workers who are able to live and produce the same services at a fraction of the cost. This is achieved through a variety of market imbalances. First, India is a less developed economy with a large population of low-skilled producers. The vast supply of workers at the bottom of the class hierarchy enable those at the top, such as software developers, to have a much lower cost of living than their counterparts in the United States. Thus their cost to produce the same amount of output is much lower. In this case, success in global trade is achieved artificially by means of mass poverty.
Other market disparities also exist in India such as a currency regime that is pegged to a basket of other currencies, meaning it is not traded on the open market as is the custom of more developed nations. Because of this the growth in the Indian currency regime will not be the same as the growth in the Indian economy. This creates an imbalance between other markets and an opportunity for arbitrage to exist.
Another form of arbitrage in American labor markets include the importation of workers from other countries on certain guest worker visa programs. These workers are often exploited because of their immigration status; company sponsorship is required for immigration purposes so their ability to work freely in the open market is restricted. Because of such restrictions, these workers produce the same product for lower salaries and will work longer hours in what amounts to a modern day form of indentured servitude. Should the workers request higher salaries or more advantageous working conditions the company may terminate not only their employment but their right to live and work in the United States. This unfair advantage makes many foreign guest workers more productive (by means of disparity) and thus a natural choice for employment over indigenous workers.
All of the conditions described are hardly new concepts but there are most certainly some modern day twists when compared with the times of our economic forefathers. In 1776 Adam Smith published An Inquiry into the Nature and Causes of the Wealth of Nations.[1] One obvious answer to global trade disparities is of course trade restrictions. According to Smith creating a "monopoly of the home market" through high duties or absolute prohibitions secures the domestic industry employed in the protected market which "gives greater encouragement to that particular species of industry which enjoys it, and frequently turns towards that employment a greater share of both the labour and stock of the society than would otherwise have gone to it."
Despite the obvious benefits of such home market protections to a specific industry, Smith cannot be certain that it is beneficial to the whole of society. He goes on to say that "to give the monopoly of the home-market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or hurtful regulation." What we learn from Smith is that in general trade restrictions are not always a good thing, but when Smith refers to such protections he refers to trade of true commodities such as cattle and corn. During his time it was not conceivable that large portions of the skilled labor performed in one nation could be performed in the other by means of technology. Another difference between the economy as Smith knew it and today is that the economies Smith studied throughout Europe were either engaged largely in agricultural or industrial endeavors; high-tech services of today are a relatively new phenomenon.
One could argue that the world as Adam Smith knew it (Europe) was actually flatter than the world as we know it today, to borrow from Thomas Friedman. The economies throughout Europe were much more similar to each other than the economies of India and China when compared to more mature economies like the United States and Japan. These differences have an enormous impact on domestic labor markets.
Smith did address the inequalities of labor and pointed out three major sources. These inequalities include restraining competition, increasing competition beyond what it naturally would be, and finally obstructing the free movement of labor from employer to employer and place to place.
The software occupations are not restrictive at all; there are few unions, no apprenticeships, and no professional licensing requirements as seen in professions such as law, finance, and health care occupations. Generally, employers prefer a four year degree and some form of certification from software professionals. Given the advanced knowledge required to practice in the profession this seems reasonable.
A clear inequality found in the United States is increasing competition beyond what it naturally would be. This can be seen in the importation of foreign labor intended to artificially increase the supply of workers in software occupations. An example of this is the authorization of foreign guest workers via the H-1b visa. According to the U.S. Department of Labor in 2002 American companies reduced employment in the software occupations by 139,000 while increasing foreign guest workers by 110,713 workers in the same occupations.[2]
As previously stated, these foreign guest workers also face obstructed movement from employer to employer; immigration policy requires that employers sponsor them and they are restricted from changing employers. Doing so can reset any pending immigration requests such as permanent residence. A pause in employment may also require the worker to leave the country, creating an unnatural tie between employee and employer. This satisfies the third inequality identified by Smith.
Smith plainly separated the trade of goods and labor; he recognized that "the only property which every man has is his own labour, is it is the original foundation of all other property, so it is the most sacred and inviolable." Smith goes on to say that hindering man from practicing their trade is "a plain violation of this most sacred property." Smith would no doubt take offense to the results of outsourcing service related jobs to foreign nations for the sole purpose of labor arbitrage. This is not a desirable result of trade relationships as described by Smith.
So are software developers commodities? No, and absolutely no. A more probable technology based commodity may be the trade of bandwidth; our current networks have a limited capacity, there is no concentration of supply or demand, and pricing is both volatile and indexed. This is simply not the case with software services, although most companies would love for it to be so. Could software products and not the producers themselves be commodities? Under some circumstances and debatable use of the word, it is possible. An example of this may be open source software or commercial off the shelf software (COTS), however even this is quite a loose interpretation of the word.
The term "commodity" as applied towards software professionals is used incorrectly by technology companies to define jobs which are targets of outsourcing to a foreign market. Semantics aside, the reasons for outsourcing these jobs (lower wages) are, as established by Adam Smith, based upon unfair trade conditions that allow companies to take advantage of the disparities between U.S. and foreign markets. Trade protections should exist to remedy disparities but not to the point of creating a "monopoly of the home market." Ideally, Adam Smith would prefer that countries correct disparities but in the interim he would not fault a nation for protecting their national interests through duties designed to correct such disparities.
David Ricardo was drawn into economics after reading The Wealth of Nations. He greatly expanded upon Smith's works and developed the theory of Comparative Advantage in Principles of Political Economy which was published in 1817. His theory is often used to justify trends such as outsourcing. To be sure, outsourcing is not inherently a bad thing unless the motivations are based upon unfair trade practices; this can currently be demonstrated with the nations of India and China.
Part two... Comparative Advantage... Shortages of labor... John Stuart Mill...
The flyer I posted in a prior blog created what I call a fake controversy in Virginia politics. Mind you, I did not create the flyer. Miller campaign staff claim that the flyer is anti-Semitic because of the "hooked nose", references to him as the anti-Christ of outsourcing, and because he has money hanging out of his pockets.
I believe that each point made by the campaign is utter nonsense.
First, the cartoonist who drew the original graphics TRACED a picture of Harris Miller - so if he has a hooked nose of course the final result will have a hooked nose. I did research, and this is in fact a stereotype (I was not aware of this stereotypes so research was required). However given that the image was traced I don't think that was the cartoonists intent.
Second, an Information Week article referenced many of OUR ACTIVISTS in regards to the characterization of Miller being the "anti-Christ of outsourcing". I have never studied pictures of Harris Miller and given his surname of "Miller" which is of English origins (according to geneology.com) we would have no reason to think Harris Miller was Jewish. Even if he were, it has no impact regarding our views of him. We refer to him as the "Anti-Christ of Outsourcing" because he is a terrible human being with a stated goal of moving American jobs overseas. We don't hate him because of his ethnicity or religion, but because he is an ass.
Third, Harris Miller is rich. He has corporate money coming in from the largest tech companies across America. As president of the ITAA he made tons of money lobbying for the outsourcing of American jobs. He is also self-funding his campaign by nearly $1,000,000. Simply put, he has sold out American workers to make a quick buck.
The bottom line is that Harris Miller is at the bottom of the barrell when it comes to judging a person's character. His actions against American IT workers are simply not forgiveable. And the fact that he is running as a Democrat of all things is laughable.
The flier, drawn in comic-book cartoon style, depicts Miller with a grotesquely hooked nose and cash overflowing from his suit pockets as he orders an underling to find ways to export U.S. jobs overseas. The flier refers to Miller as the "anti-Christ of outsourcing.''
Miller called it "despicable.'' "One of the things I hoped we would keep out of this campaign, because it has nothing to do with the campaign, is my religion and my background,'' Miller said.
Webb said the flier was not intended to disparage Miller's religion or heritage and apologized if it was perceived that way.
"I would not in any way look at that and say that it was anti-Semitic. Harris is the one who's played the race card in this campaign by distorting my views on affirmative action,'' said Webb, a Republican-turned-Democrat and best-selling author.
Because Miller is so offended by the comic, I have decided to edit it - removing things he may find offensive to his religion.
I will not take out the money coming from his pockets because that is factually true. I am using his actual image in each slide from actual Harris Miller footage - notice the final image. Harris likes to point out that he is a Democrat every chance he gets - maybe he is on to something. Or is he just an ass?
