H1B Visas Feel the Pinch

The IT squeeze reaches all the way back up the line to India. Needless to say, following Cancun, the Indian press isn't treating this as a very positive gesture.

The number of H-1B visas issued to workers in the technology industry dropped nearly 75 percent from 2001 to 2002, according to a new government report. The news comes as the annual limit on the number of visas is set to be lowered Oct. 1. Both the numbers and the rhetoric are starkly different from what they were at the height of the economic boom. And the tech industry's use of the program has seen dramatic changes.

The H-1B visa program allows foreigners to work in the United States for up to six years. It has attracted criticism from some who say it's a way for companies to hire less-expensive workers. As unemployment has risen, complaints have focused on the H-1B and other visa programs, as well as of the corporate practice of moving work to other countries. The number of H-1B visas for initial employment in technology industries fell from 105,692 in 2001 to 27,199 in 2002, according to an annual report on the program released this month by the Department of Homeland Security's Office of Immigration Statistics. The percentage of all H-1B visas issued to tech workers also declined, from 52.5 percent in 2001 to 26.3 percent in 2002.

Santa Clara-based Intel saw a 60 percent drop from 2000 to 2002 in the number of new H-1B visa workers it sponsored, said Tracy Koon, director of corporate affairs. "The reason is the economy,'' said Koon, who added that Intel uses H-1B visas to hire scientists with master's degrees and doctorates. ``Our hiring is down, period, across the board."

AeA, an association of high-tech companies with dual headquarters in Washington and Santa Clara, publicized the government report's findings, saying they show that the program is not being abused. "People who are losing their jobs, they're going to blame the H-1B visas, and this shows that this thing has been tracking the downturn on jobs just like everything else has,'" said John Palafoutas, the group's senior vice president.

Intel's Koon echoed the point: "That's the way this was intended to be working: That is, it was going to wax and wane as the economy waxed and waned.''AeA also cited statistics showing that almost half of those receiving H-1B visas have a master's degree or higher, saying this proves the program is being used for workers who are scarce in the United States.

The question of whether the program is working as intended is important because the expansion of it that Congress enacted in 2000 is about to expire. Unless Congress acts, the annual limit on H-1B visas will drop to 65,000 as of Oct. 1, the beginning of the government's fiscal year. A $1,000 fee for each visa that was used to fund training programs for U.S. workers will also expire. For the past three years, the cap has been 195,000. Not all visas issued count toward this cap -- in 2002, of the almost 200,000 total petitions that were approved, only about 79,000 counted toward the cap. People applying to extend their three-year visa for another three years, for example, or those working for universities or research institutions are not counted. Also, because some people have more than one petition filed on their behalf, the number of petitions is not necessarily the same as the number of workers who come to the country through the program.
Source: Silicon Valley.com
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Some Demographic Links

I am sure the majority of you are not half as interested in these population questions as I am, so I will spare you the reading. But for masochists among you this is a piece by Wolfgang Lutz which explains the 'tempo effect' of rising first conception age, and what an important impact on population structure this can have, this is a paper by Peter Demeny on the problem of returning to replacement fertility, and this is a concise summary of the difficulty of using population policy to try to influence 'the demand for children'.

More On Replacement Fertility

As must be obvious, I've spent a large part of today thinking through some points on the demographic side of things. One of the conclusions I've certainly come to is that there is a big problem: demographers and economists aren't really talking to each other. The economists who understand growth theory (eg Robert Lucas) don't understand that the definition of the demographic transition they're working from is, well wrong. Demographers, who don't understand too much economics think the problem can be addressed by massive capital deepening, without considering the kind of 'diminishing returns' limits to which this will be subjected. Or they think about human capital, without thinking of the narrowing gap we are now experiencing with eg China and India, or they think in terms of capital exports, without thinking about the currency re-alignments which may occur on the way. One of reasons for my time abuse today is Mats who kindly asked me the gollowing question:

Commentators over at Brad DeLong's site briefly touvhed on the question of demographics. I've read your links on it. In one of them they point at the very regular tendency for public statisticians/demographers to assume birthrates reverting to replacement levels. And this reversion often goes with little or no explanation. What's your opinion?

Well my opinion is that there is a big disconnect between those deomgraphers and statisticians who work formulating policy (and economists of virtually every description), and the theoretical demographers. They seem to have much more of a consensus: replacement levels aren't coming any time soon, and certainly not in any way that will meaningfully affect the 'pensions/SS/growth panorama over the next 25 years, which seems to me what we should be focused on. If the numbers come back up over the next century, then that would be fine, although I don't see how, but this is hardly relevant to the real policy options we have today. In the extract below, demographer John Bongaarts tries to explain the observed drop in the Total Fertility Rate. One of the problems he clearly identifies is that of overshoot. That is to say, that in the early and middle phases of the transition people tended to have more children than they desired, now we have less. This situation may well adapt to a level of natality nearer to the desired level. At the same time part of the dramatic decline in TRF below 2.1 in the South European and Asian societies is undoubtedly due to a continual rise in the age of having the first child. When this stops increasing at this rapid rate, numbers in these countries may creep back up. But this process is not done, and we may be many years away from any significant change, so it would seem more sensible to decide what we are going to do on the basis of the data we already have, rather than waiting for that 'lucky eventuality' which, of course, always might turn up just around the next corner.

The future course of fertility in countries where it is already at or below replacement is one of the most controversial issues in contemporary demography. One group of analysts points to the indisputable fact that fertility has dropped below replacement in virtually all countries that have reached the end of the transition. This is the case in Europe and North America, where fertility has been below replacement since the mid-1970s, as well as in the most-developed countries in the South, such as Hong Kong, Korea, Singapore, Taiwan, and Thailand. In a few instances fertility has leveled off above replacement (e.g. Argentina and Chile), but these are exceptions. According to this school of thought, replacement fertility is a theoretical threshold that has little or no meaning for individual couples building their families, and below-replacement fertility is expected to be the norm in post-transitional societies (Demeny 1997).A contrary view is held by analysts who believe that the current low levels of post-transitional fertility are a temporary phenomenon and that concerns about imminent population declines caused by low fertility are misplaced in some countries (Le Bras 1991; Knodel et al. 1996). This perspective is supported by data onDFS (Desired Family Size), which has remained near or above two children in all societies for which measures are available. In this view, the observed below-replacement fertility is largely attributable to ongoing shifts in the timing of childbearing. Once this rise ends—as it eventually must—the corresponding fertility-depressing effect stops, thus bringing fertility back up, presumably to near replacement. These competing views are both partly valid, but incomplete. The actual situation is more complex and a full assessment requires a separate examination of trends in DFS as well as in each of the six factors linking fertility to DFS.
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How Long Do We Live?

Ooooooh John Bongaarts seems to have an interesting argument here. How long do we live, not as long as we think we do. This paper is hellishly technical, and I don't doubt controversial, but the argument seems sound. There is a bias in the way we calculate period life expectancies and age-specif death rates. These biases Bongaarts refers to as mortality tempo bias. To try and explain this simply it is really symmetrical with the easier to understand tempo distortions in fertility. The fertility rate seems lower if measured at a time when first conception age is rising. By the same measure, life expectancy seems longer, when measured during the upward curves of expectancy, because in given years less people will die. What does this mean for the accuracy of our expectancy and social security calculations. Not a lot when the median death age is only rising slowly. This potential upward bias is as nothing when compared to the potential downside biases which are normally incorporated in the forward looking life expectancy projections. It all depends on what changes take place in the rate at which life expectancy increases. It should be noted that most of the calculations assume a return to population reproducing fertility rates, and a reduction in the rate of increase in life expectancy with very little theoretical justification whatever. we just hope it's going to be like this. (I use hope advisedly here, since I am talking of the expectations of people who run pension funds, not our individual 'hope' to live longer. Perhaps this is an unfortunate use of the verb 'hope').

The principles underlying methods for the study of mortality have tended to be accepted without question. In particular, age-specific death rates and life table measures
of mortality calculated from them are widely regarded as beyond methodological reproach. We have argued that for countries with high life expectancies, in which nearly all mortality occurs beyond young adulthood, period age-specific death rates are subject to a significant bias whenever these rates are changing. When the mean age at death rises, the rates are biased downward and when the mean age at death falls, they are biased upward. Following related work on the measurement of fertility, we refer to these as mortality tempo biases.

Period life expectancies calculated from age-specific death rates by life table methods are biased as well, and we have provided a formula for determining the magnitude of the bias. The estimated average tempo effect in conventional life expectancy for females ranges from 1.6 years in the US and Sweden to 3.3 years in Japan for the period 1980–95.

Our main finding is that the conventional calculation of period life expectancy at birth gives a misleading indication of how long we live. We are not living as long as we thought we were. This result is significant in its own right, but it also has implications for the study of past and future trends in life expectancy, because tempo effects vary over time.
Source: How Long Do We Live? John Bongaarts, Griffith Feeney
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