The Myth of America's Tech-Talent Shortage

And what it should mean for immigration reform.

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So it turns out the United States is not, in fact, the educational wasteland tech industry lobbyists would have you think. 

Companies like Microsoft often claim that America is suffering from an economically hobbling shortage of science, math, and computer talent. The solution, they argue, is to let employers fill their hiring gaps by importing tens of thousands of educated guest workers beyond what the law currently allows. Much as farmers want to bring in field workers from Mexico on short-term visas, software developers desperately want to bring in more coders from India. 

The Senate's current immigration bill would grant their wish. As written, it vastly increases the annual limit on H1-B visas, which allow corporations to bring employees with a bachelor's degree to the U.S. from overseas for up to six years. Roughly half the guest workers who currently arrive through the program come for computer-related jobs. When Facebook CEO Mark Zuckerberg announced earlier this month that he was forming a political action group to back the reform effort, it was in part seen as a move to ensure that the H1-B provision would make it to President Obama's desk intact. 

There's just one problem. That whole skills shortage? It's a myth, as was amply illustrated (yet again) in a report written by researchers from Rutgers, Georgetown, and American University, and issued by the Economic Policy Institute. It still might be the case that tech companies are having trouble finding specific skill sets in certain niches (think cloud software development, or Android programming), but there simply aren't any signs pointing to a broad dearth of talent. 

Our Programmer Surplus 

Colleges, for instance, are already minting far more programmers and engineers than the job market is absorbing. Roughly twice as many American undergraduates earn degrees in science, technology, engineering, and math disciplines than go on to work in those fields. As shown in the EPI graph below, in 2009 less than two thirds of employed computer science grads were working in the IT sector a year after graduation.

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Meanwhile, the unemployment rate for programmers is still stuck well above its pre-recession average.

Could it be that schools aren't teaching their students the right stuff, that despite their fancy credentials, today's grads lack the programming chops or logical prowess needed to succeed at a Google or Microsoft? Not so much. 

In industries where talent is scarce, economists generally expect wages to rise, as desperate companies go chasing after what few qualified souls they think can do the job. That's exactly what's happened to oil and gas engineers over the last decade during the energy boom, for instance. But while there have certainly been anecdotal accounts of Silicon Valley firms tossing outrageous sums at elite college students, in the big picture, programmer salaries have been stagnant ever since the dotcom bubble went bust more than a decade ago. The pattern holds whether you look at the national data, or just at traditional tech centers such as Silicon Valley, the Route 128 corridor outside Boston, Dallas, or Austin, where you'd expect competition for talent to be hottest. 

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The "Indentured" Workers Problem

The H1-B program's fiercest critics, such as University of California, Davis computer science professor Norman Matloff, have long derided it as little more than a pipeline for cheap "indentured" labor. Companies are technically supposed to hire H1-B immigrants only if there are no Americans available to do the job, and then are required to pay them on par with U.S.-born professionals. Thanks to an array of legal loopholes in the way appropriate wages are calculated, though, it doesn't necessarily work out that way. 

Often, it comes down to a matter of age: Companies frequently save money by hiring a young, less experienced immigrant instead of an older American who would command a higher salary. And because the bureaucratic hurdles make it difficult for H1-B holders to switch jobs -- particularly if they're stuck in line waiting for a green card -- guest workers have notorious difficulty bargaining for promotions or raises. They also can't go off and start their own businesses, as they'd lose their visa. Unlike green card holders, they're professionally chained in place. 

The program has also fed the pernicious growth of IT outsourcing firms. These companies use H1-B visas to import low cost tech workers by the thousands, who they hire out to American corporations as substitutes for better-paid, in-house staff. The Boston Globe reports that just 4 of these companies -- New Jersey-based Cognizant Technology Solutions along with India-based Tata Consultancy Services, Wipro, and Infosys -- claimed 20 percent of the 134,780 H1-B visas that were approved in 2012. 

Presented by

Jordan Weissmann is a senior associate editor at The Atlantic.

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