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Science Careers Blog

September 5, 2011

Ron Hira Provides Answers to Senator Grassley that Strengthen His Testimony Refuting Shortage Claims

During the Senate subcommittee hearing on high-skilled immigration reported in this month's "Taken for Granted" column, Senator Chuck Grassley (R-Iowa) asked witness Ron Hira, professor of public policy at Rochester Institute of Technology in New York, to explain in writing for the record why his testimony differed from that of the other witnesses, especially Microsoft's general council Brad Smith. Smith had argued that the United States suffers a shortage of technical talent. Hira denied that claim, stating instead that the current unemployment rate among holders of STEM (science, technology, engineering, and mathematics) degrees is unusually high.

Hira now has made available to Science Careers the 8-page written reply that he sent to Grassley, which considerably strengthens his testimony at the hearing. Smith's argument, Hira wrote, depends on his assumption that economic "full-employment occurs with an unemployment rate of 5%." Since college graduates currently have an unemployment rate of 4.4%, Smith "concludes that there's a shortage" of such workers.

In reality, however, data from the past two decades indicate that "the unemployment rate for college graduates when the enconomy is at full-employment is approximately 2.2%, or half what it is currently," Hira writes. "Typically, the national unemployment rate is slightly more than twice the unemployment rate for college graduates, whether the country is in recession or in recovery." During the 2 years before the Great Recession began in 2008, "when the economy was doing well, the national unemployment rates were 4.6%, whereas the rates for college graduates were 2.0%." This indicates an unemployment rate during full employment of "approximately 2.2%" for college graduates, and therefore that a "jobs recession" for degree holders currently exists, Hira concludes. At present, "there are too many skilled workers chasing too few jobs."  

Focusing specifically on computer and mathematical occupations, "a field where Mr. Smith argues there's a shortage of workers," Hira also finds "unemployment rates...much higher than we would expect at full-employment." These two fields, which constitute "the largest of all STEM occupations," suffered "unemployment rates of 5.2% in 2009 and 2010,...more than twice the levels at full-employment" based on historical data. In fact, in 2010, the unemployment rate for computer and mathematical workers exceeded that of all college graduates by half a percentage point. The unemployment rates for electrical and electronic engineers and for medical scientists in 2010 were 5.4% and 4.1%, respectively, Hira writes.  Again, he finds that, instead of any "broad-based shortage" in these fields, "there are too few jobs for those skilled workers."

After laying off 5,000 workers in 2009, Hira goes on, Microsoft has "an offer-acceptance rate [of] 93%, meaning that 93% of job applicants who were offered a position accepted it. A rate this high would indicate that Microsoft is experiencing little competition in attracting job candidates," he states.  

Hira next turned his attention to the claim advanced by Bob Greifeld of the NASDAQ OMX Group that each H-1B worker results in five additional new jobs. This oft-cited figure, Hira notes, comes from a 2008 study that is widely recognized among experts as having "numerous weaknesses" in methodology, most notably a skewed sample and inaccurate and misleading comparisons. Hira quoted an article by Harvard economist Richard Freeman in The Wall Street Journal stating that the study makes "all the scientific sense of cold fusion" and amounts to discovery of "the perpetual employment enhancement elixir." 

In fact, Hira reiterates, his own research shows that "on balance" the H-1B program "does more harm than good to the American labor market and for American workers....The typical H-1B worker has ordinary skills, skills that are no better than American workers who are currently unemployed or underemployed....In the worst cases American workers are being forced to train their foreign replacements as a condition of severance and eligibility for unemployment insurance."

About proposals advocating "stapling a green card" to the diplomas of foreign STEM graduates and exempting these graduates from numerical limits on entry to the U.S., Hira noted that "given the current labor markets [and] high unemployment levels for STEM graduates, such [policies] would distort the normal functioning of the U.S. labor and education markets....This is likely to lead to a crowding out of American students from these programs."  

With the powerful incentive of a green card, many more students would apply from abroad and universities would not need to offer "financially attractive package[s] to induce American students" to enroll. "The labor market is likely to have a surplus of such workers, reducing wages, increasing unemployment, and sending a signal to American workers and students to avoid STEM job markets." The overall effect would "induce the markets to supply foreign students and workers who substitute for, rather than complement, American STEM workers and students."

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