In a message dated 3/11/08 11:49:05 P.M. Central Daylight Time, matloff@cs.ucdavis.edu writes:
To: H-1B/L-1/offshoring e-newsletter 111

The National Foundation for American Policy, a grandiose name for the
one-person "foundation" run by industry advocate Stuart Anderson, has
released yet another "study" extolling the virtues of the H-1B work
visa. Sadly, this one is even more badly flawed than its predecessors.

The enclosed article notes that

* Stuart, a former staff director of the Senate Immigration
* subcommittee, says NFAP, is "a non-profit, non-partisan public policy
* research organization that's independently funded by foundations and
* private contributors, and does not lobby for legislation."

This is a tax law technicality, folks. Many organizations (including by
the those who promote reductions in immigration) operate under the
501(c)3 section of the tax code, which grants tax-exempt status to
organizations that do not lobby but who are freely allowed to "educate"
Congress. You get the drift here, I'm sure. And "non-partisan" simply
means that NFAP is not formally associated with one party or the other.

Anderson is hardly an unbiased researcher. He's been making a living
writing articles supporting the H-1B program since the mid-1990s, hired
for example by the Information Technology of America, one of the major
lobbyists for an expanded H-1B program. Though he is not saying who his
present employer is, the fact that the lobbyists who quote him the most
are immigration attorneys would seem to point to the American
Immigration Lawyers Association or their American Immigration Law
Foundation is his main funder.

Though Anderson cites his work in the Senate--where he authored the H-1B
expansion bills of 1998 and 2000--he doesn't mention that he subsequently
served as Executive Associate Commissioner in the INS Office of Policy and
Planning during the first term of George W. Bush. The INS (now USCIS)
stopped making data available to researchers at the time Anderson was there,
and I suspect that this is no coincidence. A Washington Monthly article at
the time (www.washingtonmonthly.com/features/2001/0205.confessore.html)
contained this passage:

^ "The best analogy I can draw about Stuart Anderson is something that
^ an INS agent said to me: If you were going to hire someone to run the
^ DEA, you wouldn't pick somebody who favors legalizing drugs," says a
^ top Republican aide on the Hill. "And by putting Stuart Anderson in a
^ ranking position in the INS, you've essentially done the same
^ thing---you've got somebody who favors open borders running the
^ agency that regulates the borders."

Now, what about Anderson's analysis in this latest report? His main
results involve statistical regression analysis, so as a former
statistics professor I will now give you a crash course in regression.
(Don't worry; this will be quick and simple.)

In its basic form, a regression model estimates a presumed linear
relationship between a response variable Y and predictor variables X1,
X2 and so on. Here the word "relationship" means that the mean of Y for
fixed values of X1, X2 and so on is a linear function:

mean Y = c0 + c1 X1 + c2 X2 + ...

for some constants c0, c1, c2 and so on to be estimated by our sample
data. For instance, we might analyze human mean weight as a linear
function of height and age. (Note the word "mean," often overlooked.)
By the way, the term "linear" refers to the c's, not the X's.)

Many thick books have been published on this methodology, showing for example
how to assess the validity of the linearity assumption etc. But really, you
now know the basic notions. By the way, to learn more about statistics, see
my online course, at http://heather.cs.ucdavis.edu/~matloff/probstatbook.html

Anderson had Y = job growth for a firm, X1 = number of H-1Bs the firm
applied to hire and X2 = current number of jobs at the firm. (Y and X1
are both given as percentages of X2.) His main finding is that c1 has an
approximate value of 5, which he correctly interprets as meaning that
the mean increase in jobs is about 5 times the increase in H-1B
applications.

But what does that say? It simply says that about 20% of the new jobs
go to H-1Bs. It doesn't say that the H-1B workers caused the creation
of new jobs.

Suppose a company tends to hire about 1% of its workers as H-1Bs. Then
by Anderson's reasoning, each H-1B is creating 100 new jobs at the firm!

In other words, there is zero content in Anderson's analysis.

As I said, that was Anderson's main point, so I could end this post
right here. He made an embarrassing statistical error, and that's that.

But it's important to bring up some other points here:

1. The R-squared value, which is the classical measure of predictive
ability in regression, is only 0.0687 in Anderson's main regression. In
other words, his X1 and X2 are only explaining less than 7% of the
variation in Y. Anderson concedes that this figure is "relatively low,"
but it's actually absurdly low. Basically, an R-squared value of 7% is
saying that X1 and X2 have almost NO relationship to Y. And by the way,
the sample R-squared is known to have a tendency to be an overestimate,
so the situation is even worse still.

2. Even if some of the jobs filled by H-1Bs have some sort of
job-creation abilities, e.g. development of new products, one could fill
the jobs with U.S. citizens and permanent residents and still get the
same job-generating effects.

3. Anderson is egregiously misusing the term "statistically
significant," which merely means "not due to random chance." It does
not imply practical importance.

4. After spending a good part of the last two years blasting H-1B
critic John Miano for using LCAs to study the H-1B issue--Anderson's
point being that LCAs are only *applications* to hire H-1Bs and thus do
not necessarily represent the number of H-1Bs actually hired--Anderson
has the chutzpah here to base his analysis on LCAs! He does make a
disclaimer along these lines in the appendix of his report, but no one
will see that.

5. Anderson also claims,

% If the proposition was true that companies hire H-1B professionals
% because they're cheaper, then when businesses hit hard times they should
% hire more H-1Bs to save money. However, the analysis shows that,
% overall, H-1B filings at U.S. technologies declined when companies hit
% hard times, undermining the perennial assertion that H-1Bs are hired as
% "cheap labor."

This is ridiculous. If companies don't have job openings, they can't
hire anyone, including H-1Bs.

Anderson has outdone himself with this report.

Norm

http://www.informationweek.com/story/showArticle.jhtml?articleID=206902716

U.S. Tech Companies Add Five Workers For Each H-1B Visa They Seek

A report says large tech companies with more than 5,000 employers added an
average of five workers for every H-1B position requested; smaller
companies added 7.5 workers.

By Marianne Kolbasuk McGee, InformationWeek
March 10, 2008

For each H-1b visa position requested, U.S. technology companies increase
their employment by an average of five workers, says a new report released
today by the National Foundation of American Policy, a research
organization.

The NFAP examined all H-1B Labor Condition Applications, or LCA filings, to
the U.S. Dept. of Labor from 2001 to 2005 by Standards & Poor's 500
technology companies. The NFAP report says researchers used "a regression
model that controls for both general market conditions and firm size" in
analyzing the association between number of positions required in H-1B LCA
documents and the percentage of total employment.

Through this analysis, NFAP determined that S&P 500 technology companies
with more than 5,000 employers added an average of five workers for every
H-1B position requested. For companies with fewer than 5,000 employees, the
average increase in employment was 7.5 workers for each H-1B position
requested.

The S&P 500, which consists of mostly American companies, currently
features about 76 technology companies.

The NFAP's report findings dispute a common argument by critics of the H-1B
visa program who assert that the hiring of foreign technology professionals
reduce employment opportunities for American workers.

"At the minimum, this shows that H-1Bs are complementary to other U.S.
workers being hired, not displacing them," said Stuart Anderson, executive
director of NFAP in an interview with InformationWeek.

Stuart, a former staff director of the Senate Immigration subcommittee,
says NFAP, is "a non-profit, non-partisan public policy research
organization that's independently funded by foundations and private
contributors, and does not lobby for legislation."

The LCAs filings examined by NFAP are documents that companies file to the
Dept. of Labor to specify details such as job location and pay that an
employer plans to provide for a position they'd like to fill by an H-1B
worker. The LCAs are "supporting evidence" employers provide to the U.S.
Dept. of Labor before the company can apply for H-1B visa workers. LCAs
need to be certified by the DoL before the employer can petition the U.S.
Citizenship and Immigration Services for an H-1B visa.

However, the NFAP research did not examine the types of job positions that
S&P companies added to their employment, or the pay for those positions.
Anderson said the research did not conclude that companies added to their
employment because they were saving money by hiring H-1B workers. In fact,
he said an opposite argument may be true.

"We did not see increases in H-1B hiring by companies when they faced
harder times and needed to reduce their payrolls," he says.

On April 1, the U.S. government begins accepting H-1B visa petitions from
employers looking to hire foreign workers for fiscal 2009, which starts
Oct. 1.

In another report NFAP released on Monday, the organization said its
analysis of S&P 500 employers found that there are more than 140,000 job
openings for skilled positions at those companies today.

Major U.S. technology companies today average more than 470 U.S.-based job
openings for skilled positions, while defense companies have more than
1,265 each.

The skilled positions include all jobs that require at least an
undergraduate degree. NFAP examined posting for U.S.-based jobs at all
companies in the S&P 500 companies. The vast majority of the data was
gathered in January 2008, with the rest compiled in December 2007 or
February 2008, says NFAP's report.

So, who's trying to fill the most jobs? According the NFAP report, S&P 500
employers with the most job openings as of January 2008 are Microsoft
(4,005), Northrop Grumman (3,925), Lockheed Martin (3,901), General
Electric (3,078), Countrywide Financial (2,415), JPMorgan Chase (2,164),
Tenet Healthcare (2,050), United Health Group (1,927), Raytheon (1,694),
IBM (1,670), Computer Sciences Corp. (1,666), Cintas (1,664), L-3
Communications (1,618), Bank of America (1,600), U.S. Bancorp (1,562) and
Cisco Systems (1,504).