George Rebane
[This is the submitted form of my regular column that appeared in print and online in the 13oct12 edition of the The Union. This column continues the RR series on America’s unaddressed systemic jobs crisis.]
Recently we again learned that there are millions of jobs in America that are going unfilled – three million more or less. 600,000 of these are low-tech jobs that require people to speak correct English, answer the phone properly, and dress appropriately for the workplace. But apparently not enough in our unemployed workforce can fill the bill – but that is another story already covered elsewhere. What we’re concerned about here is the almost 2.5 million available jobs that do require higher level skills.
For those aware of the situation in our institutes of higher learning, this problem is somewhat unbelievable. Our research universities are full of foreign students who are here to learn the latest and greatest science, technology, engineering, and math skills available. Some of them we even pay to study at our schools. They graduate with all kinds of valuable advanced degrees in the STEM fields.
When these young people take off their mortar boards, we ship the overwhelming number of them back to their home countries. There they join and start companies that compete with America in developing and selling the most advanced products available in the world. American trained Masters and PhDs are successfully going after the remaining competitive bulwarks where we have always been privileged to be the leading suppliers to the world.
[This is the submitted form of my regular column that appeared in print and online in the 13oct12 edition of the The Union. This column continues the RR series on America’s unaddressed systemic jobs crisis.]
Recently we again learned that there are millions of jobs in America that are going unfilled – three million more or less. 600,000 of these are low-tech jobs that require people to speak correct English, answer the phone properly, and dress appropriately for the workplace. But apparently not enough in our unemployed workforce can fill the bill – but that is another story already covered elsewhere. What we’re concerned about here is the almost 2.5 million available jobs that do require higher level skills.
For those aware of the situation in our institutes of higher learning, this problem is somewhat unbelievable. Our research universities are full of foreign students who are here to learn the latest and greatest science, technology, engineering, and math skills available. Some of them we even pay to study at our schools. They graduate with all kinds of valuable advanced degrees in the STEM fields.
When these young people take off their mortar boards, we ship the overwhelming number of them back to their home countries. There they join and start companies that compete with America in developing and selling the most advanced products available in the world. American trained Masters and PhDs are successfully going after the remaining competitive bulwarks where we have always been privileged to be the leading suppliers to the world.
The only marginal program we have to take advantage of these highly trained workers is the H1-B visa program. But that is an old and decrepit law, helping at most 85,000 graduates and advanced degree holders annually to stay in the US. Congress has tried for years to expand our ability to hang on to such talent by introducing legislation such as the ‘Stopping Trained in America Ph.D.s from Leaving the Economy Act’ and the ‘Advanced Degree Visa Bill’. But they never become law because Democrats overwhelmingly vote them down for reasons difficult to explain in polite company.
Half the hard science advanced degrees and a majority of the doctorates are awarded to foreign students every year. Both President Obama and Mitt Romney have said we should simply staple a green card to every such degree American universities award, with the understanding that the recipients are welcome to stay, work, and eventually apply for citizenship. Instead we give a H1-B visa to a small fraction of those who apply. The visa is good for only three to six years, after that it is sayonara.
I don’t know, maybe there is some sense to making it hard for foreign STEM majors to work here and become Americans. After all, their work will probably lead to methods, software, and devices that will increase the productivity of our workers, thereby requiring fewer of them to maintain any level of GDP. And that would contribute to higher unemployment; how?
It’s not hard to understand that if you have a growing workforce, and technology-driven productivity increases, then the only way to keep unemployment down is to make the economy grow even faster so it can absorb the 3M+ net new workers who start looking for jobs every year. But we tax and regulate the bejeezus out of job creators which has never boosted any economy, and that seems to be the only thing that our progressive politicians know how to do – Exhibit A is the economic basket case formerly known as the Golden State.
Progressives call for more government spending and printing – the presses are now running at 40B new dollars a month – but that also has never worked. Government is primarily good at solindrizing companies – picking and funding losers to bankruptcy. Even “saving the auto industry” is a sham. Give me $25B, and I can ‘save’ any buggy whip or solar chip maker that you can dredge up.
The ONLY solution to our financial ills is an economy that is released from a byzantine tax code topped by unfathomable regulatory burdens, so that it can spread its wings and soar again. An economy in which free people with ideas have the opportunity to work hard, attract investment, take risks, and have the dream to become filthy rich beyond bound. Instead, we are voting into office the dolts that will do exactly the opposite to increase the ranks of the structurally (aka eternally) unemployed and unemployables who become reliable voting wards of the state.
BTW, did you know Microsoft is proposing that businesses should be able to bribe Washington to the tune of $10,000 to $15,000 per foreign employee that they will be permitted to import and hire?
George Rebane is an entrepreneur and a retired systems scientist in Nevada County who regularly expands these and other themes on KVMR and Rebane’s Ruminations (www.georgerebane.com).
Half the hard science advanced degrees and a majority of the doctorates are awarded to foreign students every year. Both President Obama and Mitt Romney have said we should simply staple a green card to every such degree American universities award, with the understanding that the recipients are welcome to stay, work, and eventually apply for citizenship. Instead we give a H1-B visa to a small fraction of those who apply. The visa is good for only three to six years, after that it is sayonara.
I don’t know, maybe there is some sense to making it hard for foreign STEM majors to work here and become Americans. After all, their work will probably lead to methods, software, and devices that will increase the productivity of our workers, thereby requiring fewer of them to maintain any level of GDP. And that would contribute to higher unemployment; how?
It’s not hard to understand that if you have a growing workforce, and technology-driven productivity increases, then the only way to keep unemployment down is to make the economy grow even faster so it can absorb the 3M+ net new workers who start looking for jobs every year. But we tax and regulate the bejeezus out of job creators which has never boosted any economy, and that seems to be the only thing that our progressive politicians know how to do – Exhibit A is the economic basket case formerly known as the Golden State.
Progressives call for more government spending and printing – the presses are now running at 40B new dollars a month – but that also has never worked. Government is primarily good at solindrizing companies – picking and funding losers to bankruptcy. Even “saving the auto industry” is a sham. Give me $25B, and I can ‘save’ any buggy whip or solar chip maker that you can dredge up.
The ONLY solution to our financial ills is an economy that is released from a byzantine tax code topped by unfathomable regulatory burdens, so that it can spread its wings and soar again. An economy in which free people with ideas have the opportunity to work hard, attract investment, take risks, and have the dream to become filthy rich beyond bound. Instead, we are voting into office the dolts that will do exactly the opposite to increase the ranks of the structurally (aka eternally) unemployed and unemployables who become reliable voting wards of the state.
BTW, did you know Microsoft is proposing that businesses should be able to bribe Washington to the tune of $10,000 to $15,000 per foreign employee that they will be permitted to import and hire?
George Rebane is an entrepreneur and a retired systems scientist in Nevada County who regularly expands these and other themes on KVMR and Rebane’s Ruminations (www.georgerebane.com).
"Give me $25B, and I can ‘save’ any buggy whip or solar chip maker that you can dredge up."
I agree wholeheartedly. In fact, I think many of us with a pulse and a free degree or two from the local government-run university system, could, given enough federal cash, guaranteed loans, cost-plus contracts, or negative points at the discount window, be Mitt Romney "saving" the Olympics or Lee Iacocca or Jack Welch or Jamie Dimon.
But, then again, I don't believe in the irreplaceable Galt theory of economics.
Also: Would not either Marx or Smith expect to see *some* level of serious wage inflation in particular sectors if this were really structural and not cyclical unemployment? Where is it?
Speaking of inflation... no, really. There isn't any. The Fed could print (buy toxic assets from wealthy banks) at twice or thrice the rate with interest rates at the zero lower bound and we still wouldn't see any. The money supply has tripled in recent years and we still can't hit 2%.
As to H1Bs? Higher-income protectionism has a constituency with a measure of political power. This is not limited to Dems...
Posted by: Wade I | 15 October 2012 at 01:24 PM
WadeI 124pm - Why would wages (cost of labor) increase during high unemployment (high levels of unused labor supply)?
Why are the Dems prominent in keeping legal immigration at a low roar, and also prominent in promoting fast track immigrant status to illegal entrants?
Posted by: George Rebane | 15 October 2012 at 03:27 PM
George 347
Your whole post specifically asserts high structural unemployment (high labor demand, low labor supply) with millions of unfilled jobs. How is high demand, low supply not reflected in rising prices?
Again, professional level protectionism has proponents in DC for obvious reasons. Perhaps they are more likely to be Dems because most software engineers don't live in Alabama or Oklahoma.
Posted by: Wade | 17 October 2012 at 11:44 AM
Wade 1144am - (I think you meant 'George 327'?)
Not sure I understand your first question. Can I rephrase it 'Why aren't offered wages increased to reflect the demand for labor that is in apparent short supply?' I'm not sure that the offered wages aren't appropriately increased to the level that alternative solutions to hiring one limited function worker aren't applied by combining positions, using more technology, or other changes to operations.
Re "professional level protectionism", you certainly have a plausible explanation. Don't know how uniformly Democratic are the locations where techies work, or how liberal the techies are. Most certainly more than software engineers are involved here. But given proposals like that of Microsoft, the problem most certainly is real. Do you know the Dems' stated reasons for opposing the import of technical talent?
Posted by: George Rebane | 17 October 2012 at 12:05 PM
My first question is this: You (and other Republicans) assert that today's high unemployment is structural rather than cyclical. Structural unemployment is, as you point out, characterized by a mismatch between desired and extant skills in the labor pool. If there are truly millions of job openings requiring certain skills going unfilled, the laws of supply / demand say you'd see upward wage pressure in particular sectors. We don't. At all. That is a strong indication that the current unemployment is, in fact, cyclical (low labor demand, high labor supply). So: in what sort of hypothetical high structural unemployment scenario do we not see upward wage pressure in the sectors with "millions" of job openings? Your answer of "alternative solutions" is fine as far as it goes, but then that belies the urgent need for a sharp increase in foreign workers, doesn't it?
That employers who employ expensive, skilled labor would love to cut their costs by flooding the market with cheaper, more pliable foreign talent is not surprising. Trying to justify this desire by pointing to "millions" of phantom jobs requires proof of their actual existence.
Where do techies work? Rte128 in MA, Silicon Valley in CA, NYC, and elsewhere but the big concentrations are certainly places represented overwhelmingly by Dems. Just like farm-state conservatives love ag-protectionism, tech-state Dems are going to like professional protectionism. Regardless of the politics of their constituents. Republican farmers don't send their welfare checks back and Republican programmers don't want to compete with a glut of onshore foreign talent who cede any ground just to keep their visas.
I don't know. Do you?
Posted by: Wade | 17 October 2012 at 01:32 PM
Wade 132pm - On your foreign worker question, I would refer you to Microsoft and its willingness to pay upwards of $10K to the feds for letting them import tech workers. And the 3M open jobs figure has been reported for some months now by the WSJ and other outlets.
As I accepted in my 1205pm, the protectionist scenario you paint seems to me plausible, although I have read of no such discussions among tech workers. Discussions of job protection that are rampant in the media between adherents (and opponents) of union shops.
In my last hurrah at bizrate.com we (I) hired H1-B techies and had close to 100 professional techies (out of 200+) employees. And we were hurting for more techies, but I heard no current ones seeking to keep anyone (citizen or alien) out of our company. But that is only an anecdotal sample, it may have been and still be a different situation elsewhere. My experience just dovetails with what I read in today's reports about the dearth of technical talent in the country. (I was surprised about the 600K non-tech jobs going wanting.)
Posted by: George Rebane | 17 October 2012 at 02:05 PM
I've worked with plenty of H1Bs myself and you are absolutely right: I have never heard even the slightest grumble. I, and everyone else I have worked with, always cared far more about having competent coworkers. I have worked with more than a handful of illegal Canadians and Israelis with no complaints. No visas to speak of save a long expired tourist stamp. Don't even get me started on the White Russians or Taiwanese.
So, no. I haven't seen it myself, but I'm aware of some level of political pressure against unlimited foreign professional hiring.
I am disinclined to take the WSJ seriously. Pre-Murdoch, I always gave the "news" part the benefit of the doubt. The editorial section has been a joke since before my, or even Bill Kristoll's time. Now? Hahaha. Reputable source, please.
Posted by: Wade | 17 October 2012 at 05:40 PM
Also, too: if there is no money (wage inflation) trying to fill these jobs then they don't exist. I call "bunch of stuff" and "malarkey."
Again, Marx or Smith, hell, even Hayek or von Mises, would expect to see inflation in a high demand scarcity market.
Posted by: Wade | 17 October 2012 at 05:52 PM
Wade 552pm - this rube has been a lifelong WSJ subscriber, among many other news/commentary pubs of all persuasions, and I have not had the experience of the newspaper ever having been reporting to anything except the highest standards. Given its preeminent subscription and distribution stats, much of the world appears to agree. Are we then all fools?
Perhaps you have a publication that would better advise and inform us.
Posted by: George Rebane | 17 October 2012 at 06:11 PM