Our analysis of the data finds that high-skill guest worker programs supply the preponderance of all new hires for the IT industry. The inflow of guest workers is equal to half of all IT hires each year and fully two-thirds of annual hires of workers younger than 30.
Can it be a coincidence that wages in IT jobs have been stagnant for over a decade? The chart below shows trends for programmer and system analyst jobs; wages for other IT occupations follow similar trends.
At the same time, U.S. colleges are graduating more than twice as many science, technology, engineering and math (STEM) graduates than the number of STEM openings generated by our economy each year. In short, there is little justification to support the escalating numbers of new guest workers called for in the Senate’s S744 legislation. Why then did it pass?
Markets are supposed to reflect demand through the price mechanism. In the case of labor, the “price” is wages. How can it be, then, that if the IT industry is experiencing labor shortages, wage levels in this highly profitable industry are no higher than they were in the last millennium? How can an industry expect to attract the best workers without raising wages? Is there what economists call a “market failure” here?
Or is the hidden truth quite simply that large supplies of guest workers allow many firms to swap out higher-paid, high-skill domestic workers for lower-paid, high-skill guest workers? A recent analysis by the Brookings Institution observes that “it is likely that the extra supply of foreign-born workers does bring downward pressure on the wages of incumbent workers, as research suggests.”
Yes, employers claim they have thousands of unfilled job openings, but the evidence is hardly compelling. Only about half of engineering graduates find engineering jobs, down from previous rates of about two-thirds before the current recession began in 2007. At the largest IT jobs website DICE.com, over half of the advertisements are for contract, short-term and part-time jobs — assuming these jobs exist at all. (A recent Making Sen$e story suggested they well may not.) But even if they are available, these are not the types of jobs that U.S. graduates will find attractive, nor are they the types of jobs that will allow these graduates to pay off student loans, much less enter the middle class.
Meanwhile studies by Peter Cappelli of the Wharton School and by Burt Barnow of George Washington University find a decrease in the intensity of firms’ recruitment efforts since the recession and an increase in pickiness about whom they are willing to hire. Again, the inference seems obvious: the supply of potential workers is already plentiful relative to employer demand. So why are stories about the need for guest workers and the U.S. falling behind in the global high-tech talent search dominating the discussion?
Who knew PBS was a bastion of nationalism?! I have posted some excerpts, read the whole thing here.