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Barbarians at the Gates?

Bill Gates revealed at the end of the World Economic Forum in Davos that he thinks US visa laws are creating a "disaster" for the software industry. Truth be told, Gates leaves out the part of the story that makes him look like an unsympathetic character.

The United States government puts a quota on the number of skilled laborers that all companies can sponsor to work in the US by visa. Originally, these H-B1 visas were used for jobs where the US market place did not have a competitive demand for them. (People who work in nuclear power, for example). However, foreign workers often will take lower wages than American ones for the same job. Add to the fact that software and other "high-tech" industries are not unionized pervasively and you have the first prong of the "disaster": employers in the US too eager to hire foreign labor for even the most skilled and sensitive jobs if there is a major salary savings to the company.

But wait, there's more. The H-B1 visa does not apply to students. In the past, many firms like Microsoft had the chance to find and offer internships to bright students from all corners of the globe as they studied engineering or science in the US. Since there is no hard quota on student visas, Microsoft and others had found a nifty way to cheat: sign your new talent while they are still in the US on student visas and sponsor their citizenship before they enter the labor market and become governed by H-B1 rules. So not only are employers too reliant on foreign labor we learn, but they are too reliant on loopholes in the visa system as well.

But the reason there have been so many foreign students in the US to begin with also involves a substantial profit. Namely, universities do not have to offer federal financial assistance to international students. They have to pay their own way. And for America's universities that is an extremely profitable way to go. Add to the fact that international students often are willing to attain postgraduate degrees as well; universities then proceed to use them as "free research assistants" in exchange for paying their way through these master and doctoral programs. As these conditions can be less than desirable, many American students who studied engineering at the graduate level opt to become patent lawyers, consultants and other jobs which do not require a doctorate in their chosen profession. Safe in the comfots of American suburban life, the previous generation of foreign-born American engineering students have sired offspring which hope to do well in business, the arts, and other non-technical fields. Such choices allowed the use of international students to fill engineering programs at universities to be self-perpetuating. Until the State Department changed the rules in the wake of the World Trade Center attack, that is.

For the last point Gates brushes off is the schizophrenia the Bush Administration has toward education. Universities were usually so hard up for money in first place because federal aid to students has not increased noticeably since the 1970s. The shortage stems from the Republican desire, both at the state and federal level, to make higher education less subsidized by government money. Absent from Gates's speech was a call to make college accessible to all Americans so that we can be independent of foreign labor in high-tech sectors if need be. He wants no such thing. Gates still wants to have a cheaper labor costs via immigration, but he invariably wants the majority of software development here in the United States. For it is in the US where copyright and patent laws are the strongest.

But is there even a "disaster"? Unfortunately, it is all too imminent. For it is not just that Microsoft will not be able to find new engineers to hire. It will have to pay them almost as much as the older workers they will replace. The problem is real, however, Gates nor Larry Summers nor the federal government have ventured a solution. This is because there has never been a shortage of new immigrants to fill jobs created by economic growth. While the the change in visa rules has reduced the flow of immigration to a degree, that flow will be dwarfed by the job vacanies which loom over the next decade.

It is good to see that Gates is trying to draw attention to this. For in the economics of politics, the more prevalent talk of problems and crises are, the sooner people try to fix them. But it is also true that he is hardly an honest broker. To survive Microsoft and others will have to create a new labor model which will embrace the demographic changes of the 21st century. The only question is whether that Microsoft will still have Gates at the helm.

posted by Thomas at 6:06 PM 0 comments