From IEEE Technology and
Society Magazine, V. 23, No. 2, Summer 2004, pp. 36-40
Making Computer
Professionals and Other Engineers Low-Priced Commodities
Stephen H. Unger
1. Introduction
Even during the
mid-nineties boom, many computer (and other technical) professionals,
particularly those with fifteen or more years of experience, had difficulty
finding satisfactory jobs. This
despite loud complaints by industry about a shortage of computer experts and
engineers. Now that the boom is
over, the situation is much worse.
Even new graduates are having trouble finding jobs. What is going
on? What if these trends
continue? What can we do about it?
We can summarize by
saying that many employers are adapting the "just-in-time" concept to
computer professionals. The idea
is to "rent", at a minimal price, people with the specific skills
needed for a project and then to dispense with them upon completion of their
tasks. Technical professionals are pitted against one another in a race to the
bottom as jobs are parceled out, on a global basis, to the low bidders. The process began around 1990, and the
general outline was quite clear by 1996 [1].
2. Temporary Work
One aspect is the
replacement of in-house technical staffs with temporary, or "contract" workers.
A few receive the more exalted title of "consultant". Some contract directly with the
employer. Most are engaged through
"job shops"--or, "body shops". They usually are paid at per diem rates, with no medical
insurance, vacation time, sick leave, or other benefits. Periods of employment with any one
company may range from weeks to months.
Some much sought-after specialists operate as true consultants. They usually do well financially (at
least while their specialties are needed). Most do relatively routine work, for modest pay--especially
considering the insecurity and lack of benefits.
For many, working in the
above mode for a limited time may be very desirable. They enjoy the variety of work and the opportunity to
acquire different skills and knowledge. Some enjoy seeing different parts of the
country and meeting new people frequently. They may feel that working in different types of
organizations will facilitate making an intelligent choice about a permanent
job.
But for most engineers,
the prospect of spending their careers as temporary workers is very unpleasant.
Those who enter technical professions usually do so because they are fascinated
with technology and want to spend their time learning and applying technical
knowledge. Having, every few months, to adapt to new work environments, adjust
to different computer language dialects, and learn to get along with different
sets of co-workers is something that many would find most distasteful. People who, in a stable environment,
would attain a deep mastery of the technology they are working on, hate having
to be "the new kid on the block" three or four times a year. Many
dislike the financial insecurity.
Continual concern about where their next assignment will come from is a
source of great anxiety. Sometimes
weeks or even months of inactivity may occur between jobs. Finally, particularly for those with
families, the need to relocate frequently to different parts of the country can
be very disturbing as they and their families are unable to sink roots in any community. Obviously this is very hard on children.
In the past, most
companies employing significant numbers of technical professionals chose them
carefully, regarding them as important assets. It was common to encourage and, at least partially, finance
efforts to obtain graduate degrees.
In-house training programs, seminars, lecture series, etc. were common,
and staff members were encouraged to attend professional conferences. When the need arose for different
skills, for example, when a new computer language became important, it was
assumed that engineers would acquire these skills. Usually, such learning processes were informal, involving
self-study and people helping one another. Sometimes engineers were sent to take special (often very
intensive) courses.
The result was that many
technical professionals remained with the same company for a substantial part,
sometimes all, of their careers.
They acquired a deep understanding of the employer's products and were
well situated to deal with problems and to contribute to the development of new
versions. The value of retaining
experienced engineers is illustrated in an article about the development of the
DEC Alpha processors [2]. Organizations that abandoned this approach in favor
of relying heavily on contractors often find that when troubles arise with
their products, nobody on hand can deal with them because the original
designers are gone. Taking the low
road with respect to technical staffs may lead to short-run cost savings, but
it frequently leads to disaster, as illustrated by the experience of NASA [3].
3. Hit the Ground
Running
A basic part of the
"just-in-time" approach to technical staffing is that employers
insist on hiring only people who, immediately after being put on the payroll,
can begin working directly on the company's problems. Thus, they hire only contractors with precisely the skills
needed on the current job. For
example, a company may filter out all job applicants not experienced with
Oracle 8i. Veteran programmers
familiar with related systems, who would have no trouble in mastering the
required knowledge in a few weeks, are rejected without even being interviewed,
if their resumes do not include the magic words. Instead of focusing on the most capable people, the emphasis
is placed on the precise skill set of the applicant.
Extensive general
experience is considered a liability. It is clear that a major consideration is
to pay as little as possible for technical talent. Thus, since those with considerable experience would be more
costly, the tendency is not to hire them unless their experience precisely fits
the immediate needs of the company.
This is the essence of age discrimination. As indicated above, altho it may improve the next quarterly
earnings report, the long-term consequences are often harmful to employers--and
to the public when the consequences are defective products.
4. Importing People
Apart from recent
graduates of American schools, the largest pool of technical professionals that
can be hired at minimal rates is outside the borders of the USA. Several Asian countries graduate
significant numbers of computer professionals and engineers, and since pay
scales in these countries are a fraction of American rates, many of these
people are happy to come here.
Another source is the former Soviet Union and other Eastern European
countries where a similar situation prevails. Furthermore, in places like Russia, the economic situation
is such that large numbers of able, experienced technical professionals have
great difficulty finding work.
This led to pressure by
employers to amend US immigration laws to allow the importing of computer
professionals and engineers from abroad under a "temporary" program called
H-1B. Each year, 65,000 H-1B visas
were issued (the limit was later raised to 195,000), each at the request of a
specific employer. Recently, as a
result of a growing outcry resulting from significant unemployment among
technical professionals, the number was rolled back to 65,000. Some of these permits go to outstanding
individuals with excellent credentials.
But the great majority of H-1B permits go to very ordinary programmers
or engineers.
The law ostensibly
provides that H-1B visas be issued only when it is not possible to find US
residents capable of filling an employer's needs, and supposedly guards against
the incoming engineers being grossly underpaid by American standards. But those safeguards apply only in a
small subset of cases, are ineffectual, and are rarely enforced. Those with H-1B visas are essentially
tied to their employers (often job shops), are generally underpaid, and are
easily induced to work long hours without extra compensation [4]. There are
examples of companies that have discharged most of their technical staffs,
replacing them with H-1B people at a significant payroll savings. In a number of cases, as a condition
for receiving severance pay, displaced programmers have been required to train
their replacements.
The H-1B program was
justified as being necessary to meet a severe shortage of technical
professionals, particularly in the computer field. There was indeed a shortage. But it was a shortage of people with very narrowly defined
skills who were willing to work long hours for modest pay. Evidence for this is the fact that
employers interviewed only a small fraction of the people who applied for jobs,
and made offers to a small subset of this group. While high salaries and other inducements were offered in
some special cases, for the most part, average compensation (including
non-salary forms) of engineers and other computer never increased at a rate
significantly faster than compensation in most other occupations. Competent, experienced computer
professionals sent out scores of resumes without ever being called for
interviews. Many left the field,
to become salespeople in computer retail stores or to sell real estate. Twenty years after graduation, most
computer science graduates are no longer in the computer field. These factors do belie the claim that
employers were desperate to find programmers or engineers. More detailed information, with
extensive references can be found in excellent articles by Norman Matloff [5, 6],
available online.
More recently, another
mechanism, the L1 visa, has surfaced for bringing in technical
professionals. This was ostensibly
to allow companies with overseas employees, to bring them to the US. There are no limits on the number of L1
visas that can be issued annually.
5. Exporting the Jobs
Importing people from
abroad to work at lower pay scales is one way to drive down salaries in the
US. A complementary technique is
to export the work to where people are paid a fraction of what they would get
here, even as H-1B visa holders.
In India, an engineer can live very well on one fifth of an American
salary. Hence many American based
companies have outsourced work to places such as India, or the
Philippines. Engineers in
Russia have been engaged by US firms to design chips. An article in the New York Times business section about
Romania [7] states, "For less than $5000 a year, a foreign company can
hire the best and brightest [engineers] here to do work for which it would pay
at least $60,000 a year in the United States." This article mentions a satellite facility built by Raytheon
in Romania that employed 300 people, with plans to increase that number to 500.
These arrangements are,
ironically, made feasible by enhanced communications facilities developed
mainly by Americans. Altho these
facilities do make it possible to outsource certain projects, in many cases there
are serious problems associated with coordinating work done abroad with other
parts of a project being carried out in the US. However, large potential salary savings, and improving long
distance communications facilities, are accelerating the trend to contract out
work to overseas companies, as well as for US companies to open offshore
facilities. When entire projects
move overseas, the communications problems are lessened, as is also the case
when manufacturing is outsourced.
Eventually, a tipping point is reached where communications problems are
lessened by moving additional jobs to the offshore facility. Increased exporting of technical work
seems likely [8]. IBM, for
example, plans substantial expansions of its offshore facilities in places like
India [9].
Importing people and
exporting work reinforce one another. H-1Bıs are often returned home to
facilitate outsourced projects. On
the other hand, companies argue that if they could not use H-1Bıs they would
have to outsource the work to countries with low salary scales.
What is now in the early
stages for technical professionals has been carried virtually to completion for
US manufacturing workers. Shoe
manufacturing, the clothing industry, and electronics manufacturing, have
largely vanished from the US.
These industries have relocated to where wages are extremely low. When workers in those places succeed,
perhaps thru unions, in raising their pay scales significantly, the
manufacturers simply move elsewhere.
Perhaps the first instance of such factory flight occurred a century ago
in the US when the textile industry relocated from New England to the South
seeking cheap labor. (See [10] for a brief account of this process.) When salaries in the American south
increased, the jobs were exported to low-wage countries in Asia or Latin
America.
A good case can be made
that many social problems in the US stem largely from the outflow of good
manufacturing jobs. Note also that
many higher-level technical jobs go with exported factories.
6. What Is the Basic
Nature of the Problem and What Can We Do?
The core of the problem
is the treatment of technical professionals as commodities to be rented at the
lowest price determined by a global free market. (A similar statement might be made about people in other occupations.) The end result of this treatment would
be that, while a relatively small number of "superstars" might
survive professionally, most computer professionals and engineers in this
country would be forced to find other work.
Individuals might try to
understand the system and maneuver as best they can to stay employed. They might try to guess what skills are
likely to be important over the next few years and then acquire those
skills. The goal would be, to
become one of the relatively few hard to replace technical professionals. Those
who succeed at this might do well, but many very able, hard working people
might not be good enough (or lucky enough) at the guessing part. By definition, most people would not be
winners in this race. Many winners would find themselves leading stressful
lives quite different from what they envisioned when they chose their
professions. Individuals, with few
exceptions, can't do it alone.
Large organizations are
doing the damage, and real solutions are going to require action by other large
organizations. Rather than
pleading with corporate managers to act responsibly toward their employees and
communities, legislation must be enacted to protect more farsighted and
responsible managements from being handicapped in the short term with respect
to less scrupulous organizations. The terms of international trade and national
tax laws must be changed to discourage making technical professionals (and, for
that matter other working people) into low priced commodities.
Why can't we just let
the "free market" take care for the problem? Blind trust that somehow
the "invisible hand" will make things come out all right is not
likely to be rewarded. The corporations
that influence government policy and that implicitly cooperate on such matters
as salary standards for programmers or engineers display no such blind
trust. In order to protect their
careers, technical professionals will have to unite, perhaps thru their
professional societies (or even unions!), and ally themselves with other
groups, to redress the balance.
And we shouldn't be distracted by those who express horror at the idea
of interfering with "free trade".
In an idealized economic
model, Ricardo [7] showed how free trade benefits all participants when each
trading partner exchanges what it produces most efficiently for what other
participants produce most efficiently.
If, for example, due to differences in climate and soil conditions, the
US produces corn more efficiently than it produces bananas, and Guatemala
produces bananas more efficiently than it produces corn, then everybody
benefits when American corn is traded for Guatemalan bananas. It is this theory that underlies the valid
arguments for the benefits of free trade.
But
in no way does it
justify encouraging US companies to set up semi-conductor factories in Malaysia
to exploit the fact that workers in Malaysia are paid far less than American
workers.
There are situations
where imports of manufactured goods are fully justifiable on other grounds.
Japanese automobiles are popular in the US because they are high quality
products, not because they are cheaply produced by low paid workers or designed
by low paid engineers. Similarly,
altho Danish engineers and factory workers are at least as well paid as their
American counterparts, wind turbines produced in Denmark are highly competitive
in the US due to their excellent technological features. These are examples of fair competition
based on efforts to produce good products at reasonable prices, rather than on
taking advantage of people living in poverty.
7. Xenophobia?
It is important to
understand that these arguments against the H-1B visa program do not constitute
an attack on people based on nationality, but rather a defense of the careers
of technical professionals currently in the US, whoever they are and however
they came to be here. The people
who come here under the H-1B program are, as a whole, decent, hard working
people, often pressured into working long hours at substandard (for the US) pay
rates. They are not the cause of
the problem--often they are among the victims. Many currently out-of-work technical professionals are
themselves former H-1B people who achieved permanent resident status.
The problem is with
the system that permits organizations to operate in this
fashion. Clearly these
organizations are not motivated by a desire to improve the well being of
engineers in India or Russia. If
the American people decide that justice requires that we do something to raise
living standards of technical professionals in India or Russia, then the burden
ought to be born by our country as a whole, and not imposed arbitrarily on
those in this country (via birth or immigration) who chose to go thru the arduous
educational process necessary to become a technical professional. Supporters of the H-1B program should
be asked if they favor dismantling all restrictions on entry to the US, and
then whether they think all international borders ought to be obliterated.
While this discussion
has been focused on the situation in the US, it should be recognized that, in
varying degrees, the same problem exists in many other nations--or would exist
if their laws permitted it. What other industrialized countries today permit
foreign nationals to enter freely and take jobs as engineers?
Our tax system, which
currently acts to encourage companies to establish offshore facilities, could
be amended to penalize such behavior.
Protecting the livelihoods of US based technical professionals by
legislating taxes on the import into the US of software (or other products)
produced by people paid far less than American engineers and programmers is a
very reasonable idea that should be debated on its merits. Attacking it with slogans based on the
words "free trade" is not a constructive contribution to the
discussion. Similarly, allowing
corporations to bring in large numbers of programmers from low-wage countries
in order to depress salaries for US based programmers must be justified by real
arguments, not by references to the Statue of Liberty, or by spurious claims
that there is a severe shortage of such people in the US.
Consider, at least
briefly, what this situation looks like from outside the US. Where are the H-1B technical
professionals coming from, and why?
What is the effect on the countries exporting engineers to the US? It is not hard to see why engineers in
impoverished countries would want to come to the US. Many want to remain
permanently to enjoy a higher living standard. Others plan to return home with enough money to make them
relatively wealthy there. Is this
good for their countries as a whole?
Although the exporting country, in many cases, receives an influx of
valuable foreign exchange thru remittances by H-1B holders, it is losing a
great many bright young people who have been educated at great expense. Perhaps consideration should be given
to how the US might help these countries utilize these people at home to build
the industrial infrastructure that could lift their fellow citizens out of
poverty.
8. Conclusions
There are millions of
computer and other technical professionals in the US. These, with their families, constitute a substantial
political force if properly organized.
There are no good practical or moral reasons why they should not use
their powering an organized way to protect their careers. Once the effort is properly initiated,
it should be possible to gain support from other organized groups to enact
appropriate legislation to prevent the destruction of the technical professions
in this country, and to protect people doing other kinds of work from similar
abuse. Doubtless, thoughtful
readers will find ways to improve on the specific suggestions made here.
References
1. Unger, Stephen H.,
"Stop the Bidding War", IEEE Institute, August, 1996, p. 19.
2. "Designing the
DEC Alpha Family of Microprocessors", IEEE Computer Magazine, July, 1999,
(p. 27)
3. Oberg, James,
"NASA's Not Shining Moments", In Focus Column, Scientific American,
Feb., 2000, pp, 13-16.
4. ³Skilled Workers--or Indentured
Servants?², Business Week, Workplace, June 16, 2003, p. 54.
5. Matloff,
Norman, "Debunking the Myth of a Desperate Software Labor
Shortage",
http://heather.cs.ucdavis.edu/itaa.html
6. Matloff, Norman, " On the Need for Reform of the H-1B Non-Immigrant
Work Visa in
Computer-Related Occupations",
University of Michigan Journal of Law Reform, [Vol. 36:4], Summer 2003, pp. 1-99. http://heather.cs.ucdavis.edu/MichJLawReform.pdf
7. McNeil, Jr., Donald
G., "Opportunities in a Rusting Romania: U.S. Companies Tap Engineering
Talent to Work for Low Wages", New York Times, 12/25/99, P. B9.
8. ³Companies going offshore to
outsource IT², Mary Hayes, InformationWeek, July 28, 2003
http://informationweek.com/shared/printableArticle.jhtml?articleID=12800945
9. ³I.B.M. Explores
Shift of White-Collar Jobs Overseas², Steven Greenhouse, NY Times,
http://www.nytimes.com/2003/07/22/technology/22JOBS.html?hp
10.
http://www.myhistory.org/historytopics/articles/textile_industry.html
11. Ricardo, David,
Principles of Political Economy and Taxation, 1817.
12. Unger, Stephen H., "Is IEEE-USA Facing an Ethical Dilemma?", IEEE Institute, December 1998, p. 2.