french startup feat

There’s a bill in Congress right now to increase the number of visas for highly skilled workers — the H-1B visa. This is an issue that techies have trumpeted loud and proud, saying that there aren’t enough domestic computer programmers to meet the Silicon Valley need.

But two studies recently published call this de facto problem into question. Separate organizations mapped out stats on the domestic IT workforce  — the Economic Policy Institute and employment recruiting startup Bright — and they came to similar conclusions. They found that there’s not a lack of qualified STEM (science, technology, engineering, mathematics) graduates in the US, and that increasing the number of H-1B visas would tackle a salary and distribution problem of IT workers in the US, not a supply problem.

Screen Shot 2013-08-02 at 2.00.27 PMThe number of US Citizens enrolling in computer and mathematical graduate fields has grown by 88 percent in the last 10 years. Students are taking notice of the market forces at work and they’re gravitating to computers and coding. In other words, being a geek is the new kind of cool.

Screen Shot 2013-08-02 at 2.07.54 PMUnfortunately and surprisingly, it might not be the most employable kind of cool. The Economic Policy Institute found that a third of students who studied computer science, but weren’t working in comp-sci after they graduated, said it’s because they couldn’t find a job in that field.  How is that possible when Silicon Valley is supposedly stumbling through a parched talent desert in search of developers? Job seeking site Bright studied supply and demand in cities across the US, and they think they found the answer.

Although there may not be enough qualified people in Silicon Valley, there’s no lack of domestic programmers across the US. The Bright research showed there’s approximately one qualified programmer to meet every job, but those programmers may be located in podunk, middletown, not San Francisco. “We looked at localized labor, and in the Valley there is a shortage of qualified computer programmers,” David Hardtke, Bright’s Chief Scientist, said. Hardtke pointed out that international applicants are more willing to move to where the jobs are, but US based programmers may not be as flexible.

So the problem is one of distribution, not necessarily supply and demand. My editor compared it to the international food issue — in America 13.2 million tons of food gets thrown out every day, and yet in other geographical regions, people go hungry.

Screen Shot 2013-08-02 at 2.16.32 PMBut there’s another side to the story: STEM jobs may not be the most attractive for the top STEM grads. The Economic Policy Institute found that half the students who studied computer science, but weren’t working in comp-sci after they graduated, said it’s because they found a better job. Grads can make more money in managerial and professional positions, where the median annual salary is $20,000 higher according to 2009 U.S. Census data. Wages have remained stagnant in the IT sector for the last decade, according to the Economic Policy Institute’s report.

Expanding the number of H-1B visas may keep wages stagnant. When Bright compiled the numbers on who was intending to apply for H-1B visas, it found that 80 percent of the twenty companies filing the most applications were outsourcing firms — like Wipro and Syntel — that bring talent into the country and then “rent” them out to other companies on a contract basis. If the number of H-1B visas is lifted across the board for the entire country without restrictions on who can file for those visas, then these firms will benefit the most.

Why does that matter? Because as NPR has reported, these outsourcing firms pay foreign IT employees less than domestic workers would receive. As a result, tech companies save money by contracting out work to one of these outsourcing firms (they call themselves “consulting firms”) instead of employing a domestic IT worker. If these consulting firms can file more visas, than they can continue to undercut domestic workers and lower the median IT salary.

So here’s the gist. More students are getting STEM degrees now than in the past, but only one student of every two with a STEM degree gets hired into a STEM field. The reasons vary: Some may not live in Silicon Valley or other tech friendly locations, others say they found a better job elsewhere. They may have found a better job elsewhere that pays more.

Increasing the number of H-1B visas is a roundabout way to solve some of these problems, albeit to the detriment of domestic workers. Foreign employees are more willing to move to the locations where STEM workers are needed, like Silicon Valley. But outsourcing firms, the largest consumer of H-1B visas, will take advantage of an increase in visas issued to hire foreign workers and potentially pay them less than domestic workers receive.