Bloomberg Writer Debunks Skills Gap Myth

Mike Bloomberg’s highly influential journal Bloomberg has come out with a surprisingly candid view of high tech’s continual demand for H-1B employees. Rachel Rosenthal, an editor with the journal’s Opinion section, published on August 4 a piece entitled “Tech Companies Want You to Believe America Has a Skills Gap.” The subtitle repeats what we at AIC Foundation have been saying for years: “But what they really want is a steady supply of cheap, dependent IT workers.”

In an analysis on Breitbart News, Neil Munro notes that with this piece Rosenthal has departed decisively from the standard Bloomberg party line, shared with Mike Bloomberg himself, which typically favors large-scale labor inflows into the U.S. Rosenthal, however, in Munro’s words, “asserts there is no shortage of skilled Americans, that the visa-worker inflow does cut American wages, push Americans out of jobs, and reduce corporate investment in U.S. training and education.”

Rosenthal’s debunking of the mythical “skills gap” between American workers and those from India and China, for example, is worth a read. She notes that while in 2019 most U.S. employers were still reporting a talent shortage among engineers and IT personnel, that shortage can be filled by American citizens and permanent residents. She points out that American universities over the past five years have awarded a record number of bachelor’s degrees in computer science and engineering. In 2018, for example, 365,000 undergraduate STEM degrees were awarded, up 60% from a decade earlier. Of that total, 92% went to American students.

Not only are more American high-tech professionals coming into the job market than ever, they are of high quality, higher than that of their foreign rivals. Last year, the National Academy of Sciences analyzed test scores among seniors majoring in computer science in the U.S. They found that American students “substantially outperform” those in China, India and Russia.

Are H-1Bs depressing the salaries of computer professionals in the U.S.? Rosenthal believes so. If qualified high-tech workers were as scarce as the cheap labor lobby insists, “employers would be scrawling out bigger paychecks with fat signing bonuses and generous benefits.” Yet that is not happening. Those salaries have flat-lined in recent years, and there is solid evidence that the hiring of foreign nonimmigrant workers is largely to blame.

While theoretically American firms hiring H-1B workers must offer the “prevailing wage” in that job category, matching what an American would receive, in practice employers can employ numerous loopholes to get around that requirement, such as hiring through outsourcing firms. Rosenthal cites a report by the Economic Policy Institute showing that companies in the D.C. metro area, by hiring H-1Bs, get whopping discounts–up to 36%–over what hiring Americans would cost.

Finally, as we noted above, the subtitle of Rosenthal’s article mentioned “cheap, dependent” foreign workers. That points up another advantage that employers see with foreign nonimmigrants. They are not only less expensive, they also have less bargaining power. The H-1B visa program has inadvertently created a kind of “bonded labor,” where one’s immigration status is tied to keeping the boss happy. That can mean being forced to work 18-hour days, often without overtime, and with the expectation that you will not complain–or else.

Rachel Rosenthal’s article points up many of the same arguments we and others in the immigration restrictionist camp have been making for years. That it comes from a journal well known for expressing the exact opposite view is encouraging. The boilerplate disclaimer tacked onto the end is perhaps especially pertinent here: “This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.” We bet that’s true.

For Rosenthal’s article, see Bloomberg. For Munro’s analysic, see Breitbart News.

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