Comments on the Study "CLOSING ECONOMIC WINDOWS"

In June 2014, the Partnership for a New American Economy published a study titled "CLOSING ECONOMIC WINDOWS: How H-1B Visa Denials Cost U.S.-Born Tech Workers Jobs and Wages During the Great Recession". On June 4th, the Kansas City Star posted an online story titled "Loss of high-skilled immigrants hurts job growth and wages for U.S. workers" and the first portion of it appears to have been reposted on October 13th at greenbaypressgazette.com. Following are some key excerpts and comments:

The report from the Partnership for a New American Economy catches a political hot potato. Efforts to increase the number of H-1B visas have been considered in Congress but opposed by trade unions, professional organizations and members of both major political parties.

They argue that immigrant labor, especially in the high-skill science and technology jobs, works at lower pay and takes work away from American-born workers.

Not so, says the Partnership report. It says that federal law limiting H-1B visas to 65,000 a year hurts job creation for Americans whose jobs would be tied to H-1B positions. Also, employers who sponsor H-1B visas must submit documentation that they pay prevailing wages.

In fact, there appears to be very flawed scrutiny of any submitted documentation on prevailing wages. I have posted a subset of the Labor Condition Applications (LCAs) at http://econdataus.com/lcainfo.htm. I noticed that nearly every application that proposed to pay a salary significantly below the prevailing wage was denied. However, many that proposed to pay a salary many multiples the prevailing wage, suggesting bad salary data, were certified. For example, a request to pay a product consultant $11.4 million a year and a staff dentist $15.5 million a year were certified! That's despite the fact that they listed the prevailing wages as $84,344 and $136,864, respectively. It appears that someone is just applying a set of filters to the data and "rubber-stamping" everything that passes them.

Researchers analyzed extensive job and economic data from 2007-2008 to conclude: “Denying H-1B visas didn’t help the economies of America’s cities or their U.S.-born workers. … Instead, it cost their tech sectors hundreds of thousands of jobs and billions in missed wages.”

The report said H-1B visa denials in 2007 and 2008 meant that as many as 230,000 spinoff tech jobs for American-born workers weren’t created in U.S. metro areas.

This should raise some alarm bells. It appears that the findings of this report are based on a mere two-year period. In addition, this period occurred just before the biggest U.S. financial crisis since the Great Depression. We are left to trust that, not only did the authors of the report make no mistakes in their calculations or analysis but that they controlled for this crisis and all other factors correctly.

That cost U.S.-born, college-educated workers in computer-related fields as much as $3 billion in aggregate annual earnings, it said.

If the author of this article had searched for opposing views on this report, she might have come across "Annotated Research Bibliography: H-1B/Green Card/STEM Labor Shortage Issues" by Norman Matloff, a professor of computer science at UC Davis. In item 21 on page 6, Matloff discusses two papers co-written by Giovanni Peri, including this one. About Peri, he states:

Peri’s online CV says that he has received $50,000 in research support from Microsoft, and the second paper is published by an industry political group, presumably accompanied by funding for Peri’s research. These considerations may explain why there are issues here of lack of balance.

He goes on to comment on both papers and concludes as follows:

At any rate, the findings of both of the Peri papers are starkly at odds with the broad consensus among economists that the H-1B program suppresses wages, by sheer supply-and-demand considerations. That was the conclusion of the Brown, Freeman, NRC and NSF studies cited above. Former Fed chief Alan Greenspan has stated repeatedly that H-1B suppresses IT wages.

This points to a major problem with many of these papers. There appears to be no attempt by the media to check into which papers have been seriously peer-reviewed and filter out those that have not. It seems that any paper that has the name of an economist on it is good enough.

Regarding, this Dr. Gene Nelson, an expert on H-1B, wrote the following in a recent article titled "Shattering the American Dream":

Another tool utilized by the elites is public relations. The various media outlets are being flooded with messaging to pave the way for the planned enactment of further immigration liberalization.

This is exactly what I think is happening. The corporate elites are hiring economists to flood the media outlets with so many studies that they cannot all be scrutinized and that they drown out opposing views. One very easy thing that the media could do to filter this flood would be to only report on studies that have been peer-reviewed and which release their sources and their calculations. The infamous Reinhart and Rogoff spreadsheet error was a recent reminder of what can happen when economists do not release enough information that their findings can be reproduced. I'll conclude with my comments regarding that incident:

Why don't economists just post their original spreadsheets? There may be many reasons. Some may be willing to put up with peer-review when required but not want every pointy-headed number-cruncher with too much time on their hands to be going through their work. I suspect that those number-crunchers would catch a number of errors or questionable methodology that peer-review would not catch. In addition, some economists might feel that publishing their spreadsheets would reveal trade secrets and/or help other economists to compete in their area of study. Hence, I think that it's largely up to those who consume the studies to demand that the work be released. Of course, economists would still be free to release studies without peer-review and showing precisely how they arrived at their conclusions. But if those studies were simply ignored or treated as interesting ideas until they can be verified, I suspect that many of those economists would be willing to "show their work".


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