To: H-1B/L-1/offshoring e-newsletter 169

There was a column in the Wall Street Journal today by "Numbers Guy,"
Carl Bialik, concerning the claim by NFAP/Stuart Anderson that each H-1B
worker creates five new jobs, oft-repeated by the industry lobbyists.
It's amazing that an assertion as obviously flawed as this one, with
textbook statistical errors, has gotten so much attention.  But then
that's why the lobbyists are paid the big bucks.

Bialik has done a generally excellent job here, but I do have a few
comments.  (I have excerpted the article here, and included the full
blog posting.)

First, I wish the Numbers Guy had gotten numbers on Stuart
Anderson--where does his funding come from?  Anderson has been making a
living promoting H-1B for 15 years, and he literally wrote the H-1B
legislation that expanded the program in 1998 and 2000, when working as
a Senate staffer.  Given that he is cited by the immigration lawyers so
much, I've long believed that his NFAP organization receives funding
from the AILF, which is the research arm of the American Immigration
Lawyers Association.  The AILA sells a tape of featuring Anderson
speaking on behalf of the AILF (www.csctapes.com/tapes/aila2003cd.htm),
together with two other speakers, including Dan Siciliano, who is an
AILF official (heather.cs.ucdavis.edu/Archive/NotBestAndBrightest3.txt).

Now, concerning Bialik's own comments, let's start with this one:

#  With the filing period for employers beginning April 1, immigration
#  advocates argue that granting more H-1B visas to foreign nationals
#  creates jobs for Americans. Critics dispute that notion and say that
#  financial firms receiving bailout funds have been hiring foreign
#  workers while laying off tens of thousands of Americans. Both sides are
#  playing fast and loose with the numbers.

That last sentence is very unfortunate.  The only "critics" that Bialik
finds wanting in terms of quality of analysis are the AP and Sen. Bernie
Sanders.  Putting aside the question of whether these two sources are
accurate in their criticism, it must be pointed out--and Bialik should
have pointed out--that neither the AP nor Sen. Sanders are professional
researchers, and that Bialik's article does not take issue with the
analysis done by the three professional researchers he cites on the
H-1B-critic side, namely Ron Hira, John Miano and me.

I've found all the ruckus about the AP study to be an unfortunate
distraction to the H-1B debate.  The real issue is the banks' past (and
by the way current, as seen in the last few days with Wachovia) poor
track record regarding foreign workers.  For details, see
http://heather.cs.ucdavis.edu/Archive/BankOfAmWadhwaHira.txt

Anyway, Bialik gets right to the heart of the matter, both in his blog,

#  I sent the study -- which has been cited by Microsoft chairman Bill
#  Gates, New York mayor Michael Bloomberg and Republican Senator Judd
#  Gregg of New Hampshire -- to several statisticians, and most questioned
#  the findings.

and in the article

#  Microsoft Chairman Bill Gates, New York mayor Michael Bloomberg and
#  Republican Senator Judd Gregg of New Hampshire all have cited a study
#  they claim shows that each one of these visas awarded to technology
#  companies creates five jobs. Mr. Gates interpreted the study in
#  testimony to Congress last year as finding that "for every H-1B holder
#  that technology companies hire, five additional jobs are created around
#  that person."
# 
#  But the study shows nothing of the kind. Instead, it finds a positive
#  correlation between these visas and job growth. These visas could be an
#  indicator of broader hiring at the company, rather than the cause.
# 
#  Some think the claim that the study, conducted by the pro-immigration
#  National Foundation for American Policy, demonstrates awarding visas
#  boosts hiring is way off base. It "has all the scientific sense of cold
#  fusion," says Harvard University economist Richard B. Freeman, "though
#  of course it could be we have discovered the perpetual employment
#  expansion elixir."

The middle paragraph is the key.  It's a very famous statistical error,
often called Simpson's Paradox, in which the relation between two
variables is very misleading, due to their mutual relation to a third
variable.  (For details, consult a statistics textbook or see the
Wikipedia entry on this topic.)

Now this one really intrigued me:

#   Some researchers find the general premise of the study persuasive, even
#   if the study didn't prove it. Duke University statistician David Banks
#   said correlation can't prove causation, but he did think the study
#   "corroborates the idea that H-1B visas support job creation." It does
#   so, he says, by contradicting the theory that companies seek foreign
#   workers to replace domestic ones.

In reading this, I wondered, "Who is this guy Banks, and why was he
interviewed by Bialik, out of the literally thousands of statistics
professors in the nation?  What in the world does he have to do with
H-1B?"  Well, it turns out that he works with outspoken immigration
attorney Bruce Hake!  In fact, Banks has coauthored chapters with Hake
in AILA publications.  So Banks is certainly not the impartial observer
("finds the study persuasive"!) that Bialik apparently thought him to
be.

Bialik then cites Vivek Wadhwa, but though Vivek has done some excellent
work on H-1B, he had to withdraw his patent study due to data problems,
and he has explicitly stated that he never found that immigrants are
more innovative than Americans.  The point is that we cannot conclude
that the demonstrated displacement of U.S. citizens and permanent
residents by foreign workers cann has led to a net increase in
patenting, a point made by Anthony Hayter in the blog.

Finally, in the blog Bialik refers to me as "Ratloff."  I hope that
wasn't a Freudian slip. :-)

Norm

http://online.wsj.com/article/SB123854027728075537.html#mod=todays_us_page_one

THE NUMBERS GUY
Wall Street Journal, MARCH 31, 2009, 11:18 P.M. ET

Work-Visa Numbers Get Squishy -- and Get Played

Both Sides in the Debate Over Employee Immigration Policies Misuse Data to
Advance Their Positions on the Issue

By CARL BIALIK

The recipients of U.S. visas for specialized job functions are a small
blip in the overall employment market. But they've taken on great
symbolic importance in the past year.

With the filing period for employers beginning April 1, immigration
advocates argue that granting more H-1B visas to foreign nationals
creates jobs for Americans. Critics dispute that notion and say that
financial firms receiving bailout funds have been hiring foreign
workers while laying off tens of thousands of Americans. Both sides are
playing fast and loose with the numbers.

"It's another form of March Madness," says Gordon Day, president of
IEEE-USA, a professional association for engineers. Every year,
"partisans on both sides of the immigration debate try to interpret
every bit of data available to support their case."

Microsoft Chairman Bill Gates, New York mayor Michael Bloomberg and
Republican Senator Judd Gregg of New Hampshire all have cited a study
they claim shows that each one of these visas awarded to technology
companies creates five jobs. Mr. Gates interpreted the study in
testimony to Congress last year as finding that "for every H-1B holder
that technology companies hire, five additional jobs are created around
that person."

But the study shows nothing of the kind. Instead, it finds a positive
correlation between these visas and job growth. These visas could be an
indicator of broader hiring at the company, rather than the cause.

Some think the claim that the study, conducted by the pro-immigration
National Foundation for American Policy, demonstrates awarding visas
boosts hiring is way off base. It "has all the scientific sense of cold
fusion," says Harvard University economist Richard B. Freeman, "though
of course it could be we have discovered the perpetual employment
expansion elixir."

There are other problems with the study: It's confined to S&P 500
technology companies. That excludes the leading users of these visas,
mainly Indian technology companies such as Infosys Technologies, Wipro
Technologies and Satyam Computer Services. The analysis is based on
changes in global employment, rather than just domestic employment. And
the study also uses an indirect measure: letters seeking approval for
visas, rather than the visas themselves.

Stuart Anderson, executive director of the Arlington, Va., foundation
that conducted the study, said these limitations arose from the data
available. He said the proxy used for visas rendered the findings
conservative, since some firms file multiple letters for the same
worker.

Representatives for Mr. Gates declined to comment. Representatives for
Mr. Bloomberg and Mr. Gregg didn't respond to inquiries.

Some researchers find the general premise of the study persuasive, even
if the study didn't prove it. Duke University statistician David Banks
said correlation can't prove causation, but he did think the study
"corroborates the idea that H-1B visas support job creation." It does
so, he says, by contradicting the theory that companies seek foreign
workers to replace domestic ones. Vivek Wadhwa, a senior research
associate at Harvard, pointed to other studies that have shown positive
relationships between immigration and innovation. But these generally
lacked a hook as catchy as five-for-one.

An Associated Press article provided a hook for opponents of the visa
program in today's lean economic climate. The AP reported in February
that the dozen U.S. banks receiving the most bailout funds had
requested visas for more than 21,800 workers over the last six years,
but maybe a fraction were hired. Days later, Bernie Sanders, an
independent senator from Vermont, was citing the report -- and
modifying its conclusions.

"What has been the response of Wall Street to the loss of 100,000 of
their own workers?" Sen. Sanders said, citing layoff figures from the
last three months of 2008. "What these banks have announced is they are
requesting 21,000 foreign workers over the next six years through the
H-1B program to fill those jobs." Yet the six-year period in AP's study
ended just as that period of layoffs began.

Confusion over the AP stats reflects the somewhat murky nature of H-1B
visas. The visas last for three years and can be extended to six years.
Employers begin by applying to the Labor Department for each potential
hire, sending multiple applications if the worker may be based in
various locations. Once those are approved, employers petition U.S
Citizenship and Immigration Services for the visa, which is generally
granted unless the cap of 65,000 is reached.

The AP wasn't counting petitions but the larger number of applications
since these data were more readily available. Mr. Anderson, however,
counted fewer than 1,000 petitions granted to 12 of the largest bailout
recipients in 2008. He also compared the number of workers receiving
visas last year to the total work force, finding it was fewer than 1%
for each bank.

Sen. Sanders's co-sponsor on an amendment restricting banks' use of the
visas, Republican Sen. Charles Grassley of Iowa, also confused the
number of applications with the number of workers. Sen. Grassley's
spokeswoman didn't respond to a request for comment.

While the AP may have double- or triple-counted some prospective
workers, Mr. Anderson, in turn, may have overplayed his hand. As an AP
spokesman noted, Mr. Anderson initially counted zero visas for Capital
One rather than 104, because he misspelled the bank's name as "Capitol
One." Also, it would have been fairer to compare the visa numbers to
new hires, instead of comparing them to the total work force, as he
did.

Several banks corroborated the notion that this isn't a major source of
employees, though no bank would fully provide all relevant numbers. A
Citigroup spokeswoman said holders of H-1B visas account for fewer than
1% of all employees; the equivalent figure was fewer than 0.04% at
Wells Fargo. A Bank of America spokeswoman said such workers accounted
for fewer than 1% of new hires last year. No bank would say how many
such workers its contractors use.

"The major abuse occurs not with the banks' direct hires of H-1Bs but
instead their shadow work forces," says Ron Hira, an assistant
professor of public policy at Rochester Institute of Technology.

Ted Bridis, head of the AP's Washington Investigative Team, notes that
the AP sought information from banks, including on third-party workers,
but was rebuffed. AP spokesman Paul Colford says, "The AP stands by its
scrupulous, rigorous reporting."

Others have backed off -- a bit. Warren Gunnels, senior policy advisor
to Sen. Sanders, acknowledged that the AP numbers covered the last six
years, and may overstate actual hiring of foreign workers. Then he
suggested that the numbers, though they were used to back the amendment
requiring banks to prove they can't find qualified Americans, aren't
critical. Even if alternative, lower numbers such as Mr. Anderson's are
more accurate, "why would the supporters of increasing H-1B visas be so
concerned about our amendment?" Mr. Gunnels asks. "At a time when the
unemployment rate is soaring, do you really think there aren't enough
intelligent Americans to fill these jobs?"

Write to Carl Bialik at numbersguy@wsj.com


About Carl Bialik

Carl is a former technology reporter for the Online Journal who lives
in Brooklyn, N.Y. In addition to the Numbers Guy, he co-writes The
Daily Fix, a sports column that appears each weekday morning on
WSJ.com. Carl has a degree in mathematics and physics from Yale
University.

Email:numbersguy@wsj.com

http://blogs.wsj.com/numbersguy/the-debate-over-h-1b-visa-numbers-652/

The Debate Over H-1B Visa Numbers

By Carl Bialik

My print column this week examines statistics used on both sides of a
debate about a program providing U.S. visas for workers from overseas.
Proponents of the H-1B visa program point to a study they claim
demonstrates that hiring such workers boosts domestic employment.
Critics of banks' use of the program at a time they are receiving
bailout funds and laying off U.S. workers point to a report about the
number of such hires. Both sides appear to be taking some liberties
with the numbers.

globe

I sent the study -- which has been cited by Microsoft chairman Bill
Gates, New York mayor Michael Bloomberg and Republican Senator Judd
Gregg of New Hampshire -- to several statisticians, and most questioned
the findings. "Can we be sure that the extra U.S. nationals wouldn't
have been hired anyway, regardless of the H-1B visa hires?" asked
Anthony Hayter, a statistician at the University of Denver's Daniels
College of Business.

The study itself said, "most changes in a company's employment are not
driven solely by their temporary-visa high-skilled hires. It is likely
that increased hiring of both H-1Bs and other workers are both
influenced primarily by business opportunities specific to the firm."

"It is hard to prove that one thing led to another," said Vivek Wadhwa,
a senior research associate at Harvard, who added, "There are other
studies which make lesser claims but are much more defensible." He
cited these studies as examples. (Wadhwa co-wrote a recent paper on a
similar theme.)

Meanwhile, Sens. Bernie Sanders, an Independent from Vermont, and
Charles Grassley, an Iowa Republican, cited an AP report in claiming
that major banks receiving bailout funds sought to hire 21,800 workers
over the last six years. But the AP was counting applications to the
Department of Labor, which can be filed multiple times for a single
worker who may be stationed in more than one location.

The applications "are more a wished-for number that the HR types file
to cover any eventuality, while the petitions reflect ultimate hiring,"
said Lindsay Lowell, director of policy studies at Georgetown
University's Institute for the Study of International Migration. The
actual numbers for individual banks were lower in 2007 than the AP
report suggested. "Our members really account for a very, very small
percentage of the H-1B visas," said Diane Casey-Landry, chief operating
officer of the American Bankers Association.

What do you think? How significant are these visas to overall
employment? Should the program be limited or expanded in tough economic
times? Please let me know in the comments.

Further reading: John Miano and Norm Ratloff offer detailed criticisms
of the job-creation study. Grassley and Sanders cited 100,000 layoffs
by banks in the fourth quarter of last year. The Wall Street Journal's
Real Time Economics blog tracked those grim numbers and has a tally for
the first quarter of this year. The Journal also reported on other visa
restrictions last week. Ron Hira argued in 2007 that guest workers
promote outsourcing, an argument bolstered by this report from
Charlotte this week.