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Economic News Analysis Summary

updated: 2019-04-18

  "A man wants one measure of his own [which he has earned] rather than 9 measures of his fellow's." --- Talmud Bava Metziah 38a  


The following points are always

🚧 under construction 🚧

There was no shortage of talented US citizen STEM workers.
There is no shortage of talented US citizen STEM workers.
No credible evidence of impending shortage of talented US citizen STEM workers has been produced.

2004-07-09: articles by Konrad & Monastersky, 2004-08-06: Ed Frauenheim, 2004-08-20: Ed Frauenheim, 2004-09-23, 2004-11-29, 2004 December USA workers are fine, the job market is sick.   Studies carried out from the 1990s through 2011 by researchers from Columbia U, Computing Research Association (CRA), Duke U, Georgetown U, Harvard U, National Research Council of the NAS, RAND Corporation, Rochester Institute of Technology, Rutgers U, Alfred P. Sloan Foundation, Stanford U, SUNY Buffalo, UC Davis, UPenn Wharton School, Urban Institute, and US Dept. of Education Office of Education Research & Improvement have reported that the USA has continually been producing more US citizen STEM (science, tech, engineering, math) workers than we've been employing in these fields.   (see alsothis page with links to specific articles on some of these reports.)
Examination of employment data and projections from BLS when compared with NCES (Dept. of Education) records of degrees earned by US citizens confirms these findings.
Body shopping has been noticeably increasing since 1983 (as has use and abuse of guest-workers and off-shoring).   Careers trimmed, temp labor substituted   growth since 1990 and since 2006   25%-67% of the work-force today in some industries are contingent. (Body Shopping Ramp-Up from Federal Reserve Open Market Committee 1993-07-02)
"The rise of the contingent worker began long before the 1990-1991 recession accelerated the process.   Between 1983 & 1994, the number of temporary jobs in the US increased from 619K to 2.25M, and the BLS expects it to increase 60% by 2005.   By 1992, 13.6% of federal income tax returns reported Schedule C income -- non-farm sole proprietorships -- up from 7.8% in 1970...   Manpower Inc., whose pay-roll of 750K temporaries makes it the nation's largest employer, gets 15% of its revenues from placing high-technology workers.   The total pay-roll for professionals and managers employed by temporary services companies has jumped from $335M in 1991 to over $1.6G in 1995.   Plug & play knowledge workers, you might call them." --- Thomas A. Stewart 1997 _Intellectual Capital_ pg 211
Tax, immmigration and other laws and regulations have encouraged bodyshopping since 1980.
Importing labor, exporting jobs   ITAA freely admits that the reason for off-shoring is cheap labor (alternate link1   alternate link2)
U.S. spending for off-shore out-sourcing of computer software and services is expected to grow at a compound annual rate of almost 26% (alternate link).
In the face of criticism out-sourcing and off-shoring have grown more covert.
According to the American Electronics Association (an organization that lobbies for tech executives) 9 out of 10 new "IT" jobs went to foreigners in 2001.
Off-Shore Out-Sourcing Ax Has Fallen Hard on Tech Workers
Gary Kohut reports (MSFTW doc) that more than 43M jobs were lost in the United States between 1979 and 1995.   According to the Center for Urban Economic Development at the University of Illinois at Chicago, between 2001 March and 2004 March, the industry lost 402,800 jobs.   Between 2001 January and 2006 January, according to BLS statistics, the "IT" sector of the USA economy lost 644K jobs or 17.4% of its "work force".   Computer systems design and related lost 105K jobs or 8.5% of its work force. (alternate link 1, alternate link 2, alternate link3)
About 35% of full-time workers who lose their jobs are unable to locate new jobs with comparable salaries and benefits.
Off-Shoring Is an Obstacle to Career Planning
The increases in bodyshopping appear to be geometric (see American Staffing Association; they are very proud of this trend; see also 1999)
In 1996, 72% said their companies use bodyshopping, and 60% said their businesses currently do more than they did 5 years ago...   Companies with at least 50 workers spent an average of [only] $51 per employee on tuition reimbursement in 1994, the Labor Department says.
In 1997, there were 1.3M temporary workers: Average weekly earnings were $432 for full-time workers; 31% were eligible for benefits; 80% worked full-time & averaged $329/week; only 7% had health benefits.
Bureau of Labor Statistics reports that the bodyshopping increased 580% between 1982 and 1998, going from 417K to 2,824,000.
By 2004, 13% of the work-force was being body shopped.
Over a life-time and commonly even over a few years, those who have been body shopped receive lower total compensation than those who have real full-time permanent jobs (alternate link) confirmed also by a University of Chicago study.
Alan Greenspan warned of "irrational exuberance" on 1996-12-06
In terms of growth of output, capital stock, labor productivity and wages, as well as the level of unemployment - performance in the 5-year period between 1995 and 2000 barely matched the levels achieved in the 25-year period between 1948 and 1973. Towards the Precipice
From 1996 to 2000, off-shore out-sourcing by U.S. firms tripled from $100G to $345G a year, according to John Challenger, CEO of Challenger, Gray & Christmas.
Tech lay-offs jumped up in 1998 (see graph of employment of software product developers, and check lay-off announcement figures from Challenger, Gray & Christmas), and again in 2000 July and August, followed by much larger lay-offs in 2000 December). 498 dot-coms cut 41,515 jobs between 1999 December and 2001 January.
Dot-coms started folding in 1999, with 225 closing in 2000, at least 537 in 2001, and the closings continued through 2002.
Scientists noticed their job market was ailing in 1999. (Karen Schmidt "Will the Job Market Ever Get Better?" Science 285 (5433) pp 1517-1519)
The Y2K bust hit in 2000 January (I designate this as "the" beginning of the current economic depression, which is shallow as they go; mid-1998, or 2000 March might do just as well. Though revised data prompted NBER to take another look at its declaration of a peak in 2001 April and trough in 2001 November, with downward revision of data from previous months and upward revision of the figures for the beginning of that period such that the common rule of thumb definition of recession as at least 2 months of decreasing GDP did not hold. No announcement of adjustment has been forthcoming from NBER.)
In 2001 January notice was taken of the economic down-turn, with special attention to "IT".
More than one million "IT" jobs were lost in 2001 and 2002.   Between 2001 January and 2006 January, according to BLS statistics, the "IT" sector of the USA economy lost 644K jobs or 17.4% of its work force.   Computer systems design and related lost 105K jobs or 8.5% of its work force (alternate link 1,   alternate link 2,   alternate link3).   Since 2001 March employers have announced more than 3M job cuts.   Nearly 20% of American workers were laid off from their jobs during the 3 years ending in 2003 July.   2.7M jobs were lost in the United States from 2001 to 2003   MarketWatch and similar sites, and it appears in anniversary reports.)
Output in the U.S. manufacturing sector experienced a pronounced slow-down starting in 2000 July
Employment reached a local peak in 2000 July and fell (BLS household survey)
Nearly 750K jobs were lost in the first 6 months of the labor market slow-down, and then another 1.3M from 2001 September through February
Some non-participation in the labor force is voluntary and some is involuntary; this is partly reflected in figures for "discouraged" and "marginal" labor force non-participants, but the issue still clouds the unemployment rate
Unemployment for science, engineering, medicine and computer wrangling have historically been low (1.8% to 3% most of the time) as compared to unskilled labor, secretaries/administrative assistants, carpenters, etc. (4% to 8% most of the time)
The periodic claims of engineer shortage are a ploy to obtain talent on the cheap...
Cincinnati Milacron, a world power-house in the design and manufacture of machine-tools, started to spin off that part of the business at the end of 1985, and, for a time, seemed to do little more than formulate coolant solutions.
In the mid-1980s, government forecasters at NSF warned that the "baby bust" portended a crippling "short-fall" of 675K scientists over the next 20 years.   By 1990 the forecast was dropped down the memory hole as joblessness increased in scientific ranks.   In 1995 an article in a publication of the American Mathematical Society noting the abundance of un-employed math PhDs.   Head-line: "Slump Continues for Chemists"   In 2004 February, Donald Kennedy, editor of Science, co-wrote an editorial that asked, "Why do we keep wishing to expand the supply of scientists, even though there is no evidence of imminent shortages?"   Average salary scales for professors show the market-place value of different disciplines: law, $109,478; business, $79,931; biological and biomedical sciences, $63,988; mathematics, $61,761...   Post-doctoral wages average around $35K a year, without benefits...   Even so, science jobs remain scarce.
Employer tuition aid has fallen.
Data graphed by Robert Rivers, together with his analysis, appears to show a long-standing pattern (back to the early 1960s) of driving engineers to other employment, especially driving out older engineers and a preference for younger, cheaper engineers (see this one also).
Tech careers tend to have higher compensation to start but quickly plateau, with little in the way of life-time career advancement paths.
Richard Freeman at NBER reported that those working with computers or the Internet tend to work 5% to 6% more hours than other workers.
A study by Foote Partners shows salaries for "IT" workers with specific skills was 23% lower in 2003 than in 2001.
Companies expected 35% to 45% of their current full-time "IT" jobs to go to workers over-seas.
About 35% of new science and tech grads are unable to land employment in their field after graduation.
6 years after finishing a computer science degree, only 57% of computer science graduates are working as programmers.
After 15 years, only 34% remain.
At 20 years, a mere 19% are still working as programmers (see also Norm Matloff's Debunking the Myth of a Desperate Software Labor Shortage).
In a 2004 survey 52% of highly-paid executives surveyed believed they could land a job after sending out fewer than 100 resumes.   Meanwhile, many science and tech workers have been sending out hundreds and even thousands of resumes before landing a single in-person interview.
NSF recently reported that about 22% of science and tech work is done by people without degrees. (Does this imply that requiring degrees is often hyper-credentialism?) In 1998 NSF reported that 19% of people who were doing engineering have no engineering degree.   In 2004 two-thirds of "IT" workers did not have an "IT" major.
Over 22% of top firms were founded by people with degrees in science and engineering and the CEOs of some 22% of top firms are people with engineering backgrounds
On average during the 1990s, wages did rise for tech workers slightly more than they did for others, both before and after adjustment for inflation (total compensation may be otherwise); some report that closer analysis shows that tech compensation lagged other professions; compensation declined between 2001 and 2006
Low quality of tech support, and low investment in tech support are a source of great customer irritation; telephone key-pad menu and voice recognition, and out-sourced and off-shore call centers have increased customer dissatisfaction due to language and cultural problems as well as resentment over loss of jobs in the more developed nations.
US employment for software product developers remains well below the peak (see graph of BLS category "Software Publishers, production workers") and well below projections (data before 1990 are not available from BLS).
Duration of unemployment for all categories remains somewhat long (see graphs of BLS data and Road Back To Employment Can Be Long).
In 1999, companies took about 2 to 3 months to hire a new professional or management executive.   Now, it's not uncommon for it to take between 6 and 9 months, or a year for senior executive positions.   "For the 500K workers laid off since January, the average job search has stretched to a 19-year high of nearly 5 months -- about twice the duration of the typical severance package."
All employment data show significant shifts from pre-1980 patterns (e.g. more labor force participation by women, lower unemployment rate peaks..., some of these are partially due to the increases in bodyshopping).
In 2000 CEO compensation rose while the S&P 500 suffered a 10% loss.   the median pay increase for the 30 CEOs with the worst total returns in 2001 was an eye-popping 70%   In 2004, Computer Sciences Corp. doubled its CEO's pay.
CEOs who off-shore and CEOs who dump employees are paid more than CEOs who do not.
Through most of the course of this economic depression (aside from some initial loss of value of stock holdings) CEOs have enjoyed annual increases in compensation of 10% to 25%, while overall compensation has increased in the range of 2% to 3.5% per year, and regardless of quality of products and services or profit margins (see also)
Increases in adult US population require a net of between 150K and 250K additional jobs to be created every month; re-absorbing those thrown out of employment over the course of this depression would require numbers that are at least at the upper end of that range to be sustained for several years.
USA student math scores are up:
NAEP math scores rose from 1973 to 1999
and from 1990 through 2003
and ACT math scores have improved since 1995
and SAT math scores have been improving since 1980 hitting a 35-year high in 2003, while a larger percentage of high scool students are taking the tests (which would normally be expected to depress results)
though academic performance of immigrants averages significantly lower than native Americans.
There is no evidence of declining skill levels in the U.S. work-force... a lack of computer and other high-level skills are not oft-cited complaints, despite the frequent focus on computers as a principal source of skills change. Furthermore, the claims of accelerating demand for college graduates also do not seem to reflect employers' behavior.
US native born scored 8 points above the average of native-born in other high income countries in the International Adult Literacy Survey (the native US average was 284, while the US top 5% scored 371 or better, including immigrants; this compares to the 17 closest high-income countries with a native average score of 276; US native HS grads averaged 295, while the other high-income countries' HS grads averaged 294).
Qualcomm reported in 2001 May that they were receiving over 1k , and in 2003 February they were receiving 200 job applications every day.   MSFT received resumes from about 100K graduating students in 2004, screened only 15K of them, interviewed only 3,500 and hired just 1K, says a spokesman, and in 2005 received about 60K resumes of every kind monthly.   In 2007 MSFT received about 60K resumes a month for its 2K open positions; Google was receiving 1,300 resumes per day in 2007 June, "A vice president at a major bank (not affected by the mortgage market) said that the bank is receiving over 2000 résumés for every open position.", reported Diane Gubin in the summer of 2008.
MSFT not so long ago, and Cypress Semiconductor several years ago reported that they generally have been recruiting at fewer than 30 campuses (the figure mentioned was 26; this is a little higher than for many large tech firms, and they allegedly recruited at only 250 in 2003) out of the over 4,000 US 4-year colleges and universities tallied by the Department of Education's National Center for Education Statistics   Subsequent to being challenged on this point, MSFT and another tech executive lobbying group, the Society of Information Management, have announced that they are going to conduct a tour of campuses in a mere dozen US cities during the rest of the current school year, touting the science and technology professions in order to drive up supply and drive down compensation.
MSFT announced in 2004 May that they were cutting total compensation for most US production workers and Ballmer announced in 2004 July that the company won't use any of its $56G in cash to pay employee benefits...
Increased pickiness has been reported in 2000, and in 2003 May.
Only 18% of companies recruited for "IT" personnel at colleges and universities at the peak in 2000, 6% in 2001, and only 2% of CIOs planned to recruit on campus in 2003
Employers are so inundated with resumes and applications that many abuse resume parsers and their attendant data-bases (alternate link 1,   alternate link 2).
NSF has promoted increasing the numbers of science and tech graduates as a means to drive down compensation.
The Independent Computer Consultants Association reports that the use of cheaper foreign labor has forced down the hourly rates of U.S. consultants by as much as 10% to 40%.
Rob Sanchez: Legislative History of H-1B & Other Immigrant Work Visas (dead link)
Only 1% of H-1B holders have Ph.D.s and only 7.5% have master's degrees.
The average holder of a graduate degree spends 13.5% of his or her income paying back loans (8% is considered manageable).
53% of those holding master's degrees, 63% of those holding doctorates, and 69% of those holding professional degrees are over $30K in debt upon graduation.
Wages of workers in Red China are between 47% and 86% lower than they would be if workers were given basic rights to organize.   Lower wages mean Red Chinese goods cost 11% to 44% less than they otherwise would.
Compensation to graduate assistants is a fraction of the going market rate.
Meanwhile, tuition has been increasing rapidly.
And financial aid grants and scholarships haven't kept up.
Publicly traded companies in Silicon Valley have been cutting back R&D investment in the USA from a peak of $35.6G in 2000, by 10% to $32.4G in 2003, meanwhile investment in foreign R&D have grown by almost 73% between 1999 and 2003, and there's been a 36% increase in the number of firms funding foreign R&D.
see: Bryan Douglas Caplan 2018 _The Case Against Education: Why the Education System Is a Waste of Time and Money_
Guest-worker visas and their limits
Two decades' growth in the supply of immigrant workers cost native-born American men an average $1,700 in annual wages by the year 2000.
After one decade, 890K high tech American citizens were forced to train foreign workers and then were fired via the H-1B visa program.
If guest-workers are not displacing USA citizens in the work-place, if they are only "the best and brightest", those of "distinguished merit", "the pre-eminent", IOW if they have measured abilities beyond the abilities of USA workers, why have several employers required USA workers to train their guest-worker and off-shore replacements as a condition for receiving severance pay.   (If the USA workers were incapable of doing the work then they wouldn't be able to train the replacements; if USA workers were not available to work they would not exist in the work-place to train the guest-workers nor would they have been there to be displaced.)   And yet, guest-workers tend to be less innovative than USA workers; the guest-workers tend t do better with rote work while USA workers do better with creative, dynamically applied skills (link 2,   link 3,   link 4,   link 5).
Guest-worker visas are also used to facilitate age discrimination.   The Indian "IT" giant Tata Consultancy Services reported that 50% of its programmers in the USA are under age 25, and 88% are under 30..."
jgo Economic Data tables and graphs
The H-1B has a 65K base limit which includes 6800 H-1B1 visas for those from Chile and Singapore.   (In FY2006 fewer than 700 of these were claimed according to USCIS.)
Plus 20K H-1B visas for those with advanced degrees from USA colleges and universities (a little fewer than half were requested in FY2005 and a little more than half have been requested for FY2006, thus undermining the whole "best and brightest", "distinguished merit", "pre-eminent" assertion). The FY2006 advanced degree H-1Bs were finally requested by 2006-01-20.
Plus there is no limit for H-1B visas for federal government, state, governments, local governments, colleges, universities and non-profits
There is no requirement for employers to prove that they have made a good-faith effort to recruit American talent before turning to H-1B visas, nor is there any requirement for them to provide any proof of a scarcity of the desired skills in America. Executives and their lobbying organizations have adamantly resisted any move to make such requirements or allow legal provisions for enforcement of what weak restrictions exist.
There are 10,500 E-3 visas for the same sorts of skills and work as for H-1B visas, for those from Australia.
There are unlimited L-1 visas for multi-national firms (commonly abused to evade H-1B limits and restrictions).
TN (NAFTA) visas for those from Mexico and Canada have been unlimited since 2004-01-01.
There is no limit for the number of O visas each year for "the best and the brightest", "the pre-eminent", those of "distinguished merit", the super-stars.   (By comparison, H-1b visas tend to go to the mediocre. O visas are initially good for the duration of an event, up to 3 years, with possibility of one-year extensions.) (see graph)
Multiple studies have shown that H-1b visa holders are often paid 7% to 55% below prevailing compensation (see Matloff and articles referenced on this site; "Neeraj Gupta...pegs the cost savings [from employing guest-workers on H-1B visas rather than USA citizens] at approximately 20%. Last week, the Wall Street Journal reported that, 'Indian "IT" professionals working in the U.S.A. are typically paid about 25% less than their American counterparts.'" Ron Hira 2013-04-22 testimony to senate Judiciary committee and Neeraj Gupta and 2013-04-18: Wall Street Journal).

2017-08-02 (5777 Ab 10)
John Binder _Breitbart_
firms that contract with bodyshops or directly sponsor employees for H-1B guest-work visas pay below-average compensation, latest DHS data confirm

H-2 visas have allowed employers to artificially suppress compensation and drive Americans, balancing against costs of living, from the fields of construction and agriculture (both fields in which my father and uncles and cousins once made better livings than most USA tech workers do today).

Additional Situation Reports

  "A friend of mine told me that he was happy initially when, through the blessing of technology, he was told by his boss he could work from home.   With the use of a home computer he would save himself many hours in commuting time each week.   In the comfort of his living room, in pajamas, he would now be able to earn a living wage.   That's how he felt at first.   Later, what happened was, he started getting calls further and further into the night.   Soon he was 'on call' 24/7.   How was he going to handle Shabbos?   Even 24/6 would prove too much for him.   When would he find sacred time for his kids, wife and himself?   This new work set-up became a major intrusion.   At first it entered benignly with a smile and only later choked his entire life.   Once the walls of his home became included in the definition of work so all of his time became fair game.   Somehow, by being aware, he was able to disengage himself from the new arrangement." --- 2003-01-01/5763 Tebet 27: R. Label Lam: Torah.org/Project Genesis: parshas Shemos/Shemuth 1:13, 5:9: "Out of Time"  

Media Backgrounder

1. Highly-skilled USA citizen STEM workers are plentiful.

2. USA workers are acknowledged to be the best, most creative, knowledgeable, and industrious in the world.

3. Student and work visas should be reserved for the very best from abroad (and a few deserving refugees/asylees).

4. Visa "limits" are vastly excessive & overly elastic.

5. Visas to visit/ study/ work in the USA are under-priced.

6. Lax recruiting in the USA shows glut of able & willing workers.

7. NSF knew in the mid-1980s that F, H-1B & additional green cards would harm USA STEM job markets.

8. DoL, immigration lawyers acknowledged that employers can (and do) bypass all able and willing USA citizen STEM workers.

9. Guest-work visas facilitate off-shoring.

10. Personal Toll: Bright, capable, well-educated USA citizens, young & old.

11. Prescriptions for improving the USA's dysfunctional job markets and visa progams.

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Neither this page, nor the opinions expressed or implied in it are endorsed by Michael Badnarik, Ron Paul, Binyamin L. Jolkovsky, Bob Barr, Walter E. Williams, Wayne Allyn Root, Thomas Sowell, Warner Brothers, Gary Johnson, Peter Brimelow, president Donald Trump, nor by my hosts, Kermit and Rateliff.

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