To: H-1B/L-1/offshoring e-newsletter 108

Enclosed is Vivek Wadhwa's latest column, on the difficulty that older
(i.e. 40+) programmers and engineers have in getting work in their
field.  (I'll refer to this as age discrimination below, but as you'll
see, it's just as much a price issue as it is fear of the graybeards.)
As he says, it is a subject on which I feel strongly, as I have always
stressed the point that H-1B is really about AGE.  The employers want to
hire the younger, i.e. cheaper, H-1Bs instead of the older, i.e. more
expensive, Americans.

For whatever reason--and I have no idea what it is--my point about age
often simply doesn't register.  Just last Friday, for instance, at the
Sloan conference on H-1B, an official with the California state
employment office said to me, "I don't know why you're saying your
students aren't getting jobs.  My daughter's fiance', a new graduate,
got a really nice job offer."  I replied, "I made no statements about
new graduates in my talk.  On the contrary, if you'll recall, what I
kept saying repeatedly was that the core of the H-1B issue is that the
visa is used as a tool for age discrimination, that young H-1Bs are
being hired in lieu of older Americans."  Well, I can hardly blame that
state bureaucrat for not getting it, when a lot of the
programmer/engineer activists against H-1B don't understand the role of
age either.

I put Microsoft in the Subject line of this message, and I'll get to
that presently.  But first, I want to address that well-worn excuse
given by the industry lobbyists, that the reason older programmers and
engineers can't get work is that their skills are out of date.  Of
course, this is in fact true in some cases, but it is patently false in
general. 

I go into the skills issue in great detail, a dozen pages or so, in my
University of Michigan article, showing that the skills issue is just a
pretext for avoiding the older workers.  But if you want a sound bite
answer, try this:  Just look at the numerous instances in which firms,
some of them well-known ones like the Bank of America, have admitted
that they laid off Americans and replaced them with H-1Bs or L-1s--and
then forced the Americans to TRAIN their foreign replacements.  It
should be clear to anyone that it was the H-1Bs/L-1s who lacked the
skill sets, not the Americans.

Here is a better answer, not a sound bit but one that sheds much more
light:  Even if the 40-year-old programmer does have the latest skills,
he is too expensive, period.  Here's an example from another article of
mine, linked to by Vivek's piece below, referring the mother of all
"shortage studies," the 1997 ITAA report:

#      In fact, the industry's claim that the older workers' problems were
#      due to skills deficits can be seen to be disingenuous in other
#      ways. Consider a report by the Information Technology Association
#      of America, one of the leading organizations lobbying for H-1B
#      increases.  The report complained that, while older programmers
#      and engineers could be retrained, this made them flight risks:
#
#      "You take a $45,000 asset, spend some time and money training him,
#      and suddenly he's turned into an $80,000 asset," says Mary Kay
#      Cosmetics CIO Trey Bradley...[the problem being that the retrained
#      workers] become highly marketable individuals . . . attractive to
#      other employers.
#
#      It is clear that Bradley was not willing to pay the salaries paid
#      by other firms.  The real issue was money, not skills.

Jim Bennett, the person in Vivek's article, got another job after
retraining, but he's the exception, and by the way, note that the job he
got in the end was basically in sales and marketing, not in engineering.
Good for Jim Bennett, but Pete Bennett in the Bay Area could not even
get that.

Jim Bennett works for Microsoft (and may well have been suggested by
them as an example for the article, as their poster boy for the industry
claim that the older people would get jobs if only they kept their
skills up to date).  That brings me to the title of my posting here,
"Microsoft lets the cat out of the bag on the age issue."

Here is the key passage:

   Microsoft  (MSFT)  is  known  for  the  high  quality  of its hires.
   Senior Vice-President and Chief Technical Officer David
   Vaskevitch...acknowledges that the vast majority of Microsoft hires are
   young, but that is because older workers tend to go into more senior
   jobs and there are fewer of those positions to begin with.

Vaskevitch didn't know it, but he has now revealed the dirty little
secret--careers in software development are short.  "THERE ARE FEWER OF
THOSE POSITIONS TO BEGIN WITH."  That's it in a nutshell, folks! The
industry just doesn't have many jobs for the 40-year-olds.  The industry
has devolved into a situation in which the industry PLANS to squeeze the
older software developers out of the business, by having a very narrow
jobs funnel at the Senior Software Engineer level.

And what ENABLES the employers to do this?  The answer:  H-1B.  This is
what underlies all the shortage shouting.  The employers want to have a
large supply of young workers, who are 40% cheaper on average.  (That
figure is for young Americans; young H-1Bs are even cheaper still.) BCIS
data show that the computer-related H-1Bs in general have a median age
of 27.4.

And for those of you who might say, "Well, isn't this true in general,
that there aren't many jobs for people after age 40 in most
professions?", just look at my civil engineering example that Vivek
cites.  The fact is that in the old days software developers had longer
careers too.  But then India decided that its niche would be software,
exporting programmers to the U.S., and the rest is history.  If India
had decided to go for the civil engineering labor market, then we'd see
the impact there too.

Norm

http://www.businessweek.com/technology/content/jan2008/tc20080115_576235.htm

Viewpoint January 15, 2008, 8:00PM EST

High-Tech Hiring: Youth Matters

In IT engineering, young hires tend to be more energetic and up to date. Older
workers need to keep skills fresh, or aim for management posts

by Vivek Wadhwa

In the engineering globalization debate, the battle lines are drawn. Companies
like Microsoft (MSFT), Intel (INTC), and Oracle (ORCL) say there are severe
shortages of skilled workers and they need more visas to bring in foreign workers
to stay competitive. Unemployed engineers say this push for more visas is a plot
to suppress wages. My own research at Duke University has shown that there is no
general shortage of engineers in the U.S.

The globalization debate shouldn't focus on the issue of visas. Instead, it
should examine an issue that tech executives don't like to discuss: age. Tech
companies prefer to hire young engineers. Engineering has become an "up or out"
profession—you either move up the ladder or you face unemployment. In other
words,  even though globalization has compounded the difficulties for aging
engineers, it's not the culprit.

Documenting Age Discrimination

One  of the staunchest opponents of foreign worker visas is Norm Matloff, a
professor  at  the University of California, Davis, who says careers in the
programming profession are notoriously short-lived. His research (flip to page 5
of the linked PDF) into attrition rates revealed that five years after finishing
college, only 57% of computer science graduates were working as programmers; at
15 years the figure dropped to 34%, and at 20 years—when most were still only age
42—it was down to 19%. This was in sharp contrast to civil engineering, where
careers lasted much longer. Matloff says age discrimination is rampant in the
tech industry and the importation of foreign workers into the U.S. facilitates
this.

I know from my days as a tech chief executive that finding good engineering
talent in the U.S. is always difficult. And hiring policies and skill needs vary
significantly  between  companies.  Some  can  only  afford  to hire young,
inexperienced workers, while others can pick and choose. But age is still the
issue.

Startup  firms  are  often  the most cost-constrained. Consider former tech
entrepreneur Jason Williamson, who is now a product manager at Oracle (ORCL). He
says that during the six years he spent running BuildLinks, a software company
focused  on  the  construction  industry,  his  strategy was to find young,
impressionable workers who earned entry-level salaries and could learn on the
job. He had limited capital and needed employees who could afford to work through
the tough times when his company couldn't make payroll.

Even the well-funded, venture-backed companies usually echo the experiences of
JiNan Glasgow, chief executive officer of patent software firm Neopatents in
Raleigh, N.C. She says she can afford to pay what she needs, but her best hires
and most productive employees have been new college graduates. She explains they
tend to be more familiar with the latest technologies, adapt readily to change,
are more creative, and try new things. Middle-aged hires have not always worked
out as well for her. She says most had dated skills and expected to be paid for
experience that wasn't relevant to her firm.

Limited Senior Management Berths

The fact is that in tech, youth is an asset and is in great demand. Experienced
engineers are needed mostly in senior architect positions and in management,
where they are paid the highest salaries.

Microsoft  (MSFT)  is  known  for  the  high  quality  of its hires. Senior
Vice-President and Chief Technical Officer David Vaskevitch says younger workers
have more energy and are sometimes more creative. But he adds there is a lot they
don't know and can't know until they gain experience. So he says his company
recruits aggressively for fresh talent on university campuses and for highly
experienced engineers from within the industry. One is not at the expense of the
other, he insists. For him, it is all about hiring the best and brightest—age and
nationality  are  not  important. He acknowledges that the vast majority of
Microsoft hires are young, but that is because older workers tend to go into more
senior jobs and there are fewer of those positions to begin with.

There is lots of competition for these senior jobs. And globalization is making
things worse. Companies are increasingly locating their research and development
operations closer to growth markets (BusinessWeek.com, 1/18/07). Companies like
IBM  (IBM)  are  adding tens of thousands to their workforce in places like
Bangalore and Shanghai. Some of these jobs would otherwise go to older and more
expensive workers in the U.S.

How Maturing Engineers Can Cope

So the days of lifelong employment for engineers may be long gone. And they face
decreasing  salaries as they reach their fifties. Research by University of
California, Berkeley, professors Clair Brown and Greg Linden shows that even
those with masters degrees and PhDs have reason to worry. Their analysis of
Bureau  of  Labor Statistics and Census data for the semiconductor industry
revealed that salaries increased dramatically for engineers in their 30s but
these increases slowed after the age of 40. After 50, the mean salary dropped by
17% for those with bachelors degrees and 14% for those with masters degrees and
PhDs. They found that salary increases for holders of post-graduate degrees were
always lower than for those with bachelor's degrees.

The harsh reality is that as engineers progress in their careers, they need to
stay current in new technologies and become project managers, designers, or
architects. To keep their jobs, engineers need to build skills that are more
valuable to companies and take positions that can't be filled by entry-level
workers.  Experienced  engineers can also find rewards in entrepreneurship,
teaching,  and  sales,  as  well  as use their skills to excel in unrelated
professions. And as Microsoft's Vaskevitch says, there are computer programmers
"who become like rock stars and are unbelievably valuable (and well compensated)
as they get older."

Joe Bennett, 44, provides a great example of the approach engineers should take.
After  working as an engineer for 13 years at Microsoft and becoming senior
director of its developer and platform division, he realized that he was losing
touch with the technologies he was marketing. So he took a three-month sabbatical
to brush up on programming languages and frameworks like C# and ASP.NET, and
transferred into a job where he was touting the benefits of different Microsoft
technologies. He says that he isn't leading people, but is having fun again and
is more intellectually engaged in his work than he has been in 10 years. He
believes he is now more valuable to the company.

The bottom line is that we can't slow globalization or require companies to do
things  that  aren't in their economic interests. Let's focus the debate on
improving the skills of our existing workforce.

Wadhwa is Wertheim Fellow at the Harvard Law School and executive in residence at
Duke University. He is a tech entrepreneur who founded two technology companies.
His research can be found at www.globalizationresearch.com .