To: H-1B/L-1/offshoring e-newsletter 180

Though I've been a computer science professor for a long time, and
occasionally refer to my early career as a statistics professor, a
little-known fact about me is that my PhD was in pure mathematics.
Ah, those were days.  I enjoy statistics and CS very much, but I do miss
those days of pure intellectual pursuit without any application, in
what I regard as a very elegant discipline.

One of the mini-triumphs one can sometimes achive in pure math is the
"soft analysis proof."  Instead of long, intricate arguments with lots
of inequalities, epsilons and deltas, with luck one might stumble onto a
couple of insights and come up with a three-line proof that is very
clean.

In this posting, I want to apply this concept to the question of whether
H-1Bs are underpaid.  Lest you be misled by my somewhat lighthearted
language above, let me say clearly that I'm dead serious here.  Though I
believe the statistical evidence, taken in its totality, shows clearly
that H-1Bs are indeed on average paid less than comparable Americans (my
Type I salary savings, with Type II, the age-related one, also being
very important), people tend to be overwhelmed by the statistics.  Even
some professional analysts, astute people whom I highly respect such as
Lindsay Lowell, seem not quite sure what to make of the data.  In
addition, statistics can be subtle, and many good number crunchers
who've analyzed the H-1B issue who limited understanding of which
numbers ought to be crunched and what the numbers mean, resulting in
a lot of misleading analyses.

Thus, some crisp, clean soft-analysis proofs should be useful.  Here they
are:

Proof 1: 

   Step A:  H-1Bs, especially those being sponsored for green cards,
   tend to be rather immobile, not able to freely move around in the
   labor market.

   Step B:  If one can't move around in the labor market, one generally
   cannot get the best salary deal for oneself.

   Step C:  Therefore, H-1Bs will typically be making less money than
   they ought to make, given their qualifications.

   QED

Proof 2:

   Step A:  Employers claim that they hire H-1Bs because they have
   special, hard-to-find skill sets, or are more talented than the
   American applicants.

   Step B:  In the open market, employers would have to pay a premium
   for workers with hard-to-find skill sets, or of superior talent.

   Step C:  According to the DOL PERM data, most tech employers pay
   their H-1Bs (actually green card sponsorees, most of them H-1Bs) only
   the official prevailing wage or just a tad higher.

   Step D:  The official prevailing wage does not take into account
   special skill sets or high talent levels.

   Step E:  Therefore, H-1Bs are typically paid less than their
   qualifications would command in the free market.

   QED

I've mentioned Proof 1 before.  Indeed, I bring it up whenever an H-1B
tells me, as for instance a former student of mine once did, that they
are not underpaid.  When I respond by asking whether they could make
more money if they were to have full mobility in the labor market, they
say "Of course," to which I reply, "Well, then, you're underpaid after
all."  Please note, though, that this does not imply that I support
proposals for fast-track green cards, which I've explained are just as
injurious to U.S. citizens and permanent residents as H-1B.

I brought up Proof 2 when I was interviewed by a team of researchers
from the GAO a few weeks ago.  They agreed that all of Steps A-D were
valid, but it wasn't clear whether they accepted Step E, the conclusion.
We'll find out when their report comes out (which won't be soon).

Norm