The myth of America's missing software engineers
management.fortune.cnn.com
Interesting to see some mainstream media finally picking up on this.
management.fortune.cnn.com
This makes me want to punch the screen. It is ILLEGAL to pay an engineer on an H-1B less than the median salary for that position, precisely because people were worried that foreign labour would be used to undercut wages.
In the CNN article, it is mentioned that the most requested position is for "computer systems analyst" which "is also a lower-paying job compared to jobs like software engineer and requires only a two-year degree." It is quite possible that some of those analysts are over-qualified for their jobs and should be making software engineer or senior engineer money.
The Government Acountability Office wrote up a report about 2.5 years ago [1] that does mention limited oversight (page 3). The text:
"Elements of the H-1B program that could serve as worker protections
such as the requirement to pay prevailing wages, the visa’s
temporary status, and the cap itself are weakened by
several factors."
If a company currently pays 100K for a senior software engineer, the median for the position is 100K, and the 90%ile for the industy is 180, is the company obligated to pay 180K to an H1B for this role?
My understanding is that it is not, that 100K would meet the prevailing wage requirements.
By 'that position' do you mean the position being replaced, or the new position created in order to hire the H1B? And are you taking account of the market price of the additional skills that employee brings, or is that not relevant?
So here's just one loophole: companies find a lower-paid title, and base the 'prevailing wage' on beginning level employees. Now that the 'prevailing wage' is set, try to hire young people with advanced education, special skills, etc. Congratulations, you now have a legal way of paying about half of what a comparably experienced citizen would cost. Bonus: sponsorship does provide good leverage.
Consider H1B employees getting paid the prevailing wage. Is this how you compensate the best talent during a talent shortage? No. It implies you'd pay less if you were confident you could get away with it.
You can't honestly dispute that the program is being used to undercut wages. Legally.
I arrived in this country on an H-1B, and then I co-founded a company where I repeatedly examined the option of hiring employees on H-1Bs. It never, ever made sense to hire a foreign employee if there was a local one available, even though I have absolutely no bias towards hiring American citizens.
The only reason you'd hire an H-1B is if you were out of qualified American engineers, because it is so much harder to hire foreigners.
The chief users of H-1Bs are big, boring companies that can't attract local talent at any price. And then they can't hang on to them, thanks to the American Competitiveness in the 21st Century act, which lets H-1B holders switch companies if they get a better offer. The purpose of the law was to prevent companies using immigration status to "trap" employees at lower wage. Because the immigration system thought of that problem.
The argument that for the same price, you get a more-qualified applicant for a given lower-skilled position doesn't fly, because
a) the cost of an H-1B is far more than their salary; the legal fees run into tens of thousands of dollars before you even consider relocation. Foreign workers are much more expensive.
b) the pool of people willing to up and relocate from a foreign country to the US just isn't that big; the same market that applies to American engineers applies to foreign ones, and they are just as demanding.
c) once in America, the H-1B holders don't need to stick around if their salary is crappy, and they don't. See above.
The fundamental misunderstanding that a lot of people have about talent immigration is that they think there are hordes of unwashed foreigners beating down the doors to get in. They're not. Most people stay where they are. That's why you have to make it easier for them to get in, because we need them more than they need us.
Rank H1B Visa Sponsor Number of LCA * Average Salary
1 Infosys Limited 15,810 $75,062
2 Wipro 7,178 $76,920
3 Tata Consultancy Services 6,732 $64,350
4 IBM 6,190 $82,630
http://www.myvisajobs.com/Reports/2013-H1B-Visa-Sponsor.aspx
Those aren't average salaries for a highly skilled worker in an expensive American city.
Prior to getting an H1-B employee the employer would be required to register a minimum number of employees that will be a peer of the new employee (no bosses or anyone else that may be in cahoots). After 6 months, the government agency responsible for such visas would send a survey to those peers asking them for their title and salary and stating the title and salary of the H1-B employee. They are then asked to rank the title and salary of the employee against their own as well as the skills of the employee relative to their own.
Whereas the reason there are open positions for programmers at high tech companies is that these companies want star programmers
Maybe they should try paying like stars. What percentage of engineers that aren't founders or within the first five employees make over $300,000 a year? The money is in Silicon Valley, Google's 2011 net income was $299,874/employee [1], but the vast majority of engineers aren't going to be the ones to get it. How about paying a market wage, instead of offering a "free lunch" to people that cannot negotiate. I am not interested in playing video games at work, I have a house for that. Last I looked at it, the difference in pay between finance and stem jobs is enough to hire a personal chef to deliver lunch to you at work every day, and cook for you at home, and buy all the games you want, with a bunch of money left over. Apple and Google are both posting ~25% net profits because engineers are willing to work for peanuts, and a free lunch. On top of that, cost of living in the bay area is outrageous, we're talking $35,000/year for housing, unless you want to live like a college student.
An average (median) engineer should be making $200,000 a year, and the "rockstar" (>80th percentile) engineers that everybody is trying to hire for $85,000 and 0.5% of equity, should be making $350,000+. These are hard jobs that few people can do at all, and fewer can do well. Great engineers can create millions of dollars of value a year.
It seems that the industry has shifted focus, now that the collusion agreements have been squashed, toward importing cheap labor. This problem has been solved in other industries through partnerships and professional societies (e.g. in the legal industry, with large partnership firms and bar associations). In the interim, it seems like the best way to capture value is to build companies to flip in talent acquisitions, while planning to leave to do it again as soon as you're vested.
[1] Goldman Sachs 2011 net income was $162,913 per employee. Average pay was $367,057. It's harder to get data on Google, but it looks like the mid-career median salary is $141,000.
Google's Gross Profit (Total Revenue less Cost of Revenue) was $24.7B in 2011, and GS's was $24.5B. At the same time, Google had 32,467 employees to GS's 35,700. Yet, the Google net income was $9.7B compared to $4.4B on the GS side. The difference seems to be made up entirely by the difference in employee compensation.
Who can't negotiate? It's your fault if you can't/won't negotiate.
I'd posit that the reason finance pays more for engineers than STEM is because most of us think that the atmosphere at a finance company will suck and as a result they have a smaller labor pool (I've literally never responded to a single financial recruiting email).
If there is a pool of labor willing to accept a free lunch and campus-like atmosphere, coupled with cheap imported labor, in lieu of perhaps $100,000 in pay, it depresses wages across the entire industry.
I'd posit that the reason finance pays more for engineers than STEM is because most of us think that the atmosphere at a finance company will suck and as a result they have a smaller labor pool (I've literally never responded to a single financial recruiting email).
And this is the funny part. Do you really believe working somewhere like EA is different than working somewhere like Goldman Sachs?
As far as people who take low salaries screwing up your salary: If they're willing to do the job for that and they're not appreciably worse than you at that particular job, maybe that's what you're worth for that role, too? Almost every industry out there has it much worse than software when it comes to the 'race to the bottom'.
Or there could be a collection of people that decide to enter different industries because of this, causing a labor shortage?
Anecdotal, but I have had a few friends working in support roles at investment banks making about double what they would make elsewhere.
The problem is exasperated by these companies treating engineers like children. "Toss them another Mt. Dew, and they'll work another all-nighter."
With all the VC and buyout money out there, a true rockstar is going to be a founder or have serious equity in their company. They'd be an idiot for anything less.
That's not a solution. That's the issue. Smart people don't work for those companies. Then, said companies turn around and complain that there is a shortage of talent*
*willing to work for $80k in the Bay area.
Raising salary always comes up as the "answer" to the talent shortage, but it's a highly localized answer. Sure a company can fill all their openings by raising their salaries--they'll do it by recruiting currently-employed engineers from another company.
That doesn't "fill a hole" industry-wide. It just moves it to another company. If there are more holes than qualified engineers, there's a shortage.
To make the case that talent shortages are caused by low salaries, you'd need to show me a lot of people who are qualifed but currently willfully unemployed, waiting for the right offer. I'm not aware of many engineers who fit that description.
Sorry, far from being upset, that sounds to me like a great trade-off. Sure the companies aren't doing it out of altruism, but the net result is quite positive. All those 'underpaid' American born engineers working in silicon valley can comfort themselves knowing that they will still be among the 1% richest people in the entire world.
N.B. Look up PPP before objecting based on how much an apartment in SF costs.
It's not an invisible line. It's a line that was defended and delineated by the blood of people who wanted to establish and preserve a nation.
Isn't it enough that nationalism killed 100+m people in the 20th century, do we really need to have it hanging around our neck in the 21st?
How exactly is that justification for continuing to treat people born on one side of a line as valuable human beings and those on the other worthless? Is it a moral sunk cost theory -- as long as we've committed all these atrocities in the name of nationalism might as well keep going?
Inside versus outside isn't theoretical. People in other communities will not come to your defense when you need help, they will not perpetuate your culture and values, and they are not part of the body politic that animates your democracy.
I would have thought that reasoning went out of fashion circa September 30, 1946.
At Goldman/JPM/MS, the going rate (inclusive of bonus) right now seems to be:
100-150k for analysts (1-3 years out of undergraduate); 200-300k for associates (3-5 years out); 300-500k for VPs (6-8 years out); 500k+ for MDs (8+ years out)
And we're not talking about the guys bringing in a billion dollars as traders. This is for the rank-and-file.
Also _most_ people do not ever make MD, let alone in 9 years.
Which would presumably be a useful result for Bright's business, if it is true, as it would mean that companies simply are not looking hard enough, which is Bright's business.
"In fact, Bright's analysis reveals that for the top 10 jobs where H-1B visas are requested, only three do not currently have enough qualified American jobseekers to satisfy demand."
Ahh, so it isn't a fiction then. Hang on, just a minute ago they said it may be a fiction according to a report and now they say that nearly a third of those roles do not have enough people in the USA to fill them, according to the same report.
Hmmm. Could this possibly be an advert posing as an article? Is water wet? These and other exciting questions will be answered in a forthcoming study; "Look here's some numbers so give me all your money, you pitiful fools." Available soon for only $666.66. Reserve your copy now while stocks last.
If another company with a different business had posted - one with an incentive to say there is a shortage of high-skilled engineers, like most big companies hiring engineers - would you be implying their claims are false too? If not, you are being partial; if so, your method is just to say that whatever anyone says must be wrong because it was in their interest.
3 out of the top 10 jobs where H-1B requested does not equal a third of employees, and it isn't clear that those 3 do see a shortage.
Also, in case of a shortage in a specialized area, why do we assume that companies cannot ever do anything to train employees in that specialization themselves? If you need piles of Java programmers who know SOAP, get some Java programmers and let them train on SOAP.
If you are in the business of producing (say) cars, you have to make capital investments, including investments in human capital - why should software be a special snowflake?
I'd agree the data/method/motivation is highly suspect.
It's perfectly legal for a car company to import sub-assemblies from abroad. Why should we have free movement of capital and goods, but not labor?
This story drives me crazy because the market is essentially in the favor of the engineers, but it feels to me like the big tech influencers are trying to tilt it back in their favor by shaping policy and changing the game.
Pro tip: If you bring in foreign engineers and pay them peanuts, they're not going to be able to live in the Bay Area much less want to.
You can't win if you don't play. If you are waiting on the sidelines for some magic opportunity to fall into your lap you are going to be waiting a very long time.
Exactly why the OP won't choose to move there. Why should he have to pay someone the privilege of living, and get none of that money back when/if they decide to leave? At least when you buy you get some equity.
Imagine you loose your job in a crisis, you have to move/sell your house in a crashing market.
The article said that they pay foreign engineers more on average than local ones.
250%? What city are you comparing to? Are you perhaps comparing to a large town?
http://money.cnn.com/calculator/pf/cost-of-living/
Enter St. Louis, MO and San Francisco, CA. Housing is 276% more expensive. Columbia? 252%. Kansas City? 215%. You get the idea.
Also, just for fun, try some other "large towns":
Dallas, TX: 276% Columbus, OH: 268% Austin, TX: 245% Jacksonville, FL: 242% Phoenix, AZ: 225% Atlanta, GA: 217%
For example, we've been looking for an entry-level web developer for almost a year. They actually put "computer science degree" and "2 years experience" on the job ad. We found a pretty smart kid with an associates that blew the interview by mentioning he kept up with industry trends on Reddit - so our boss is afraid he's going to screw around online all day.
The sad part is, 3 of the other 4 developers in the department came from other areas in the same company, one in shipping and one in billing, and have almost no formal computer training and don't even know how to upgrade Firefox.
..as opposed to not keeping up with industry trends at all? Sometimes, I feel like middle management in America is the problem.
There are some decent sub-reddits.
It's a totally different thing if he's following the programming subreddit than say the gonewild subreddit.
Okay, I can understand being disappointed in hearing that because you don't like reddit and would wish for a better source (opinion), but even then I can't imagine acting on something so...trivial.
That's like me mentioning to a company I'm interviewing with that I like to browse my smartphone to keep up with feeds. Whoops, no job for me, I might dick around on my phone instead of helping clients.
I mean seriously? Is that the real reason why he screwed up the interview? Holy hell...
>To be sure, using data to argue about contentious policy issues should always prompt skepticism.
Death of journalism right there. Data be damned!
On a more serious note:
>"There is, indeed, a shortage of tech workers in the Bay Area."
That's because it's so darn expensive to live in the Bay Area, and almost impossible at the wages that tech companies generally want to pay for talent. They're knotting their own noose and standing on the chair, screaming that they'll kick it out from under them, really, for serial this time guys!, if they can't have cheap, underpaid talent to exploit.
> To be sure, using data to argue about contentious policy issues should always prompt skepticism. It's too easy to focus on particular aspects of any data analysis to prove one's point and overlook those items that may raise more questions.
... which is a very valid point.
It does literally say that using data "should always prompt skepticism" - not conditionally on whether it was done right or not.
Data is basically worthless if you can't trust the methodology behind it.
Research is gathering all of the data you can in as much of an unbiased manner as you can and then asking what conclusions you can draw from that data. Viewpoint validation is starting from your conclusion and cherry picking data to support that conclusion. There is no evidence that viewpoint validation is what went on here, and in fact the article mentions later the rest of the data that was gathered and analysis of the points in the data that may contradict this conclusion.
However, the writer also spends most of his time saying, "Welp, there's all of this data, but can a brother get a programmer? Nope? INVALID CONCLUSION DOES NOT COMPUTE," which is a pretty shitty way to do journalism.
See also "Nate Silver didn't fit in at the New York Times because he believed in the real world": http://www.fair.org/blog/2013/07/24/nate-silver-didnt-fit-in...
The way they wrote it, yeah, it almost sounds like they think it's "bad" to rely on data in a policy issue. Kind of funny, but based on the rest of the paragraph, clearly not what they mean.
Kind of an aside here, but it drives me nuts when people quote "lies, damn lies, and statistics" or talk about "lying with statistics" as a way of dismissing data out of hand. Yes, anything that can be used to communicate can be used to lie. You can lie with words, that doesn't mean you should disregard any argument made with words! It just means you have to be careful - or, as this article put it, skeptical.
It is important to take a very careful look at data in a contentious argument. So I agree with them... sheesh, though, very badly phrased.
It's easy to fill seats.
The question is whether we have "good enough" software engineers. And, as long as we're trying to improve as a company, we'll always want better engineers.
In any case, there's reason to believe many of educated immigrants will become entrepreneurs and create jobs themselves.
Personally, I think anyone with a 4 year degree should be allowed to get a green card if they can show they have the $$ to live in the US for a year and agree to look for work. Because the way it works now, even if the article is bullshit, it is comically vulnerable to arbitrage [LOL yes, why we do indeed need a 'junior web developer' that knows C so he can understand how our api works...oh, well, we realized after he arrived we needed him to work on this C project that was critical to our infrastructure and is responsible for 100k+/day in revenue while we pay him half of that of the guy that quit] if you can pay a lawyer for an hour.
Just my two cents.
Wow, so the author thinks you only have to interview 1 person for each job. That's a Polyanna view; reject that statistic and the entire article falls apart.
Considering you pay 25-30% or more of first year salary for a hire by a recruiter and $10k is a complete bargain.
But that doesn't tell if there are enough candidates out there if the salaries and conditions of work were better. The latter is very possibly a big issue with H-1B employees, seeing as how they've a modern version of indentured servants.
I can reframe the issue by pointing out that programming is hard, and it's something we've only recently been seriously doing. I analogize it to reading and writing as "we haven't even found the phonetic alphabet" (or at least agreed that Lisp is that :-).
Going further, that means a lot of aspiring programmers have no chance whatsoever of being good programmers, and a lot just fake it. Going back to the writing analogy, perhaps they write prose good enough for an online comment, but they'll never write a competent novel or serious nonfiction book that a publisher might accept.
But still, they view themselves as programmers, and too many outfits don't check to see if they can really program before making a job offer, and often for some time afterwords. Or they otherwise manage to hold onto positions, at least for a while.
SaaS and tech consulting are really trendy right now because there are a lot of successful role models for these things. That said, a lot of magnificent failures and wannabes...but that comes with anything.
Add to this the fact that the companies who really understand how valuable good, skilled engineers are will make generous offers with benefits and vacations and conferences and food and luxury and and and...and you see why it becomes difficult to find the really sexy workers.
I looked up companies that I once worked for on h1bwage and I know for a fact that my H1B co-workers were not enjoying large bonuses.
A visa application listing a bay area senior s/w engineer prevailing wage of 78K should be outright rejected. Yet, it was accepted.
If any good software engineer were allowed carte blanche emigration to the US, the US would have more of the world's top engineering talent, which may be a good thing overall even if it depresses wages. On the other hand, high wages may encourage more young US citizens to go into computer science--assuming they can hack it.
I wonder if this is just another nature vs nurture debate. If you presume that the world's supply of "smart people" is fixed, you want to import all of them and get them to procreate in the US. If you assume intelligence is growable, you want to focus on growing it domestically.
2c.
Maybe I ask too much of my product people, but that's the reality - there are only so many steve jobses out there. People like to believe they have the traits but often lack similar "from the early years" experience of being in the whole basics of production to managing part that jobs had.
So to sum it up, too much of Wrong kind of technical debt. Sort of buying a ferrari when you need a house - because your wife will have a child soon ;)
So we really need that but another aspect of this is just massive global inequality which to me is an amazing civil/humanitarian rights issue. Its amazing that everyone just accepts it.
I think when it comes down to it we should be bringing more brilliant people out of crappy oppressed resource starved countries into our wealth hogging country. But we shouldn't have to lie about the reasons for doing it or pay them less just because we can get away with it.
Several years ago I was at a company and we were hiring for a position. One guy came in, who was maybe in his mid-50s. His technical skills were excellent, he could answer any question thrown at him in detail. Aside from that he was a normal, genial guy with a solid resume - we has passed on another guy with good tech knowledge but who did not act normal. I was desperate to have the position filled as people had quit and I was handling a large load.
Two managers said they didn't want to hire him. I really protested this - we had interviewed so many people and had finally found someone decent. I said he was perfect, what more could they want, what was wrong with him? I asked that last question repeatedly. Finally one said, "I think if we called him up in the middle of the night to fix a problem, he would be unhappy with that". Months later we hired a guy in his 20s, who had less technical talent.
That's the position companies are in. They pass over perfect candidates like this guy in his 50s, and then bemoan they can't find candidates.
These companies fund think tanks who have economists who tell us that value is determined by supply and demand, that if there is enough demand for something, the price for it will rise until a supply comes about. This is their philosophy, yet now they're saying there is a shortage of engineers. It is total BS. Engineers are being overworked and underpaid. People talk about high engineer salaries, they don't talk about how engineers have to pay for their own college degrees, do all that studying, then go to work, make a starting salary, then have death marches on projects etc.
Engineers are usually undercompensated for the work they do. The only exceptions to this are during tech bubbles (say 1999), but those only last for a short while. They're also made up for on the other side by tech slumps, where IT workers employable during normal times, but perhaps without a college degree, are out of work.
Supply/demand is all the economics most people understand. But it's not just about the labor market, but what the company is doing with the labor.
The only people I can imagine are PDP-11 assembly specialists nearing their 60s. And still I have a feeling there could just as well be even a screaming shortage for them.
Actually, my problem in this (non-Bay area) region of the country where I now live is that I don't have a ten-year Java history, and most managers here don't seem to believe that my background in C, Python, Lua, and JavaScript would allow me to pick it up in a very short period of time (and indeed, I've since picked it up for Android development, and it turned out that the Android API was harder for me to learn that Java itself).
I can't say I disagree with that statement in and of itself. Yet I believe you are getting few qualified candidates because companies are asking for highly skilled people with a great deal of experience and then only, and my opinion is intentionally, offering well below market wages. This then allows them to scream "there are not enough developers". The whole shtick is just meant to repress wages..
Having more intelligent people in the US is a good thing.
Actually my company (which hires tons of foreign developers) does have applicants rejected. They then hire some lawyers to help reword the application. I'm not sure these are all H1-B, there are other hiring visa designations, but it definitely is the case that the government can reject applications. Frankly the government should reject even more of them, and then also reject some of the resubmitted ones, however the government is easily fooled by clever wording.
You really believe that? You can't imagine that, hey maybe these companies gasp lie so they won't have to pay market wages? That some C?O somewhere cares more about the bottom line than hiring qualified local engineers that they can't threaten with deportation?
A counter-argument arose from what he may have called the "capitalist hegemons" that value arose through supply and demand and marginal utility. That if there was enough demand for something, prices would rise and a supply would come into being.
Yet nowadays these hegemons seem to be saying something different. There is a demand for IT talent. There are billions of people in the world, so it seems obvious that if you set hours at 40 a week and then raise the salary enough, eventually the demand will be filled.
The bottom line is they don't want to raise the salary.
It is possible other factors are in the way. If, to take one example, Pell Grants were higher and easier to get, maybe there would be more CS graduates. The opposite is happening with Pell Grants - they have been cut back, and are covering less college costs than they have in history.
This means less CS graduates. This means you'll have to pay more for the ones who come out, because less are coming out.
It's a strange contradictory thinking. Employers preach supply and demand, yet think it does not apply to their desire for engineers. Set hours at 40 a week and pay for them. If you want people to work more, you'll have to pay more.
There is not a shortage of engineers. There's just a flood of people who want a very accomplished, knowledgeable engineer, and want them to work on boring, brain-dead projects for 60 hours a week, and to pay them nothing and treat them like junk.
I have 10,000 jobs open right now. I need experts in Java, Python etc. I'll pay you minimum wage. You need to work 12 hours a day. See, I just added 10,000 new job openings to the shortage. How come I can't find anyone to fill these jobs?