Engineering And Tech Companies Want More Kids Interested In Science — So They Can Pay Them Less

TechCompanies

Major tech companies work hard to manipulate the labor market so that they can pay their workers less.

It’s a subject of which many–MANY–people are grossly misinformed about. In fact, it’s hard to find anything like the sheer amount of propaganda that there is out there for this particular topic. It’s the idea that science is somehow and endangered species in America–that Americans simply aren’t interested enough in science. The argument often takes a somewhat specific form: we somehow have a “shortage” in the science and technology labor force. And, moreover, that it must somehow be filled by H-1B Visa holders (“high skill” temporary immigrant visas–the quotations are because the designation only implies at least a bachelor’s-level degree.) In President Obama’s 2012 State of the Union address, he endorsed the central talking point:

I also hear from many business leaders who want to hire in the United States but can’t find workers with the right skills. Growing industries in science and technology have twice as many openings as we have workers who can do the job. – President Barack Obama, 2012.

It’s considered literally non-controversial in popular discourse that this is somehow a fact. There’s almost no attempt to ponder what this would mean in terms of market fundamentals: a shortage should lead to decreased unemployment and increased wage growth; we see nothing of the sort. And according to a study by the Economic Policy Institute: “Twice as many students in STEM majors graduate from U.S. universities every year than the number that are able to find a job in a STEM occupation.” As Michael Teitelbaum–Harvard demographer, former director of the Alfred P. Sloan Foundation, and probably the leading expert on the topic–put it, there’s an “almost universal inability by objective labor market analysts to find any convincing empirical evidence to confirm the existence of such generalized shortages.”

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Why do we have this mistaken belief? There’s a litany of vested interests; it’s a Washington Consensus: tech CEOs at Apple, Google, Microsoft, Texas Instruments, and Intel–among others–have a well-documented interest in retarding wages for those in the high-tech labor market; academic institutions often rely on research grants in these fields for funding, and more STEM students is good for business; popular science intellectuals like Neil Degrasse Tyson–whom I consider to be only a very small fraction of the problem, but his name is widely known–literally make it their livelihood to motivate students to pursue science. These high-profile, vested interests are given uncritical platforms in the largest “news”-papers and “news” broadcast shows in the country. Studies that point out that all of this shortage talk is actually quite ridiculous–such as Duke University, the Rochester Institute of Technology, the Alfred P. Sloan Foundation, the Economic Policy Institute, the Urban Institute, and the RAND Corp–receive little attention.

The claims by industry are perhaps the most pernicious. In early 2011, President Obama met with several high-profile tech CEOs at a private dinner. Present at the meeting was the late Steve Jobs, co-founder, chairman, and CEO of Apple Inc. Walter Isaacson, Job’s official biographer, made an account of the interaction:

Jobs went on to urge that a way be found to train more American engineers. Apple had 700,000 factory workers employed in China, he said, and that was because it needed 30,000 engineers on-site to support those workers. ‘You can’t find that many in America to hire,’ he said. These factory engineers did not have to be PhDs or geniuses; they simply needed to have basic engineering skills for manufacturing. Tech schools, community colleges, or trade schools could train them. ‘If you could educate those engineers,’ he said, ‘we could move more manufacturing plants here.’

Eric Schmidt, the executive chairman of Google, has made similar claims. According to a summary in the Huffington Post of a speech given by Schmidt at the World Economic Forum: “In the United States, he suggested, unemployment is predominantly the result of inadequate skills among the workforce, a problem that could be addressed with better education.”

Governments have to do something that’s hard… They have to go back and invest in human capital. There are plenty of companies in the U.S. and other countries I’ve visited that are very short of highly skilled workers. – Eric Schmidt, executive chairman of Google, 2012.

Bill Gates (Microsoft) and the late Steve Jobs (Apple) have been among the most vocal proponents of the "skills shortage."

The late Steve Jobs (Apple) and Bill Gates (Microsoft) have been among the most vocal tech CEOs claiming a “skills shortage.”

These concerns have been echoed by countless tech CEOs of major U.S. corporations.

U.S. companies face a severe shortfall of scientists and engineers with expertise to develop the next generation of breakthroughs. – Bill Gates, Chairman of Microsoft, 2008.

There is a skills gap in this country—for every unemployed person in the United States, there are two STEM job postings. The gap will only widen if we don’t engage now to address STEM education at the elementary and high school levels. – Richard Templeton, Chairman, President, and CEO of Texas Instruments, 2013.

[I]t is up to us in the private sector to back up our rhetoric with actions and commit to the future workforce we all so desperately need… education disparity threatens to slow our economic recovery, stunts our long-term competitiveness and leaves technology firms in a skills crisis…. American universities are simply not producing enough engineers…. If we do not produce suitable candidates for these jobs, companies will go elsewhere in the world to find them. – Paul Otellini, President of Intel, 2011.

The claims are especially outrageous when considered alongside the scandal that has come out of Silicon Valley in the last few years. Silicon Valley, a major tech center that employs large amounts of today’s high-tech workforce, is well known for its liberal mystique. In his article, Google Is Not What It Seems, Wikileaks founder Julian Assange describes the mystique of one such company, Google:

[P]art of the resilient image of Google as “more than just a company” comes from the perception that it does not act like a big, bad corporation. Its penchant for luring people into its services trap with gigabytes of “free storage” produces the perception that Google is giving it away for free, acting directly contrary to the corporate profit motive. Google is perceived as an essentially philanthropic enterprise—a magical engine presided over by otherworldly visionaries—for creating a utopian future…. Google is “different”. Google is “visionary”. Google is “the future”. Google is “more than just a company”. Google “gives back to the community”. Google is “a force for good”.

"PRISM," one of the NSA programs leaked by Edward Snowden in 2013, was a collaboration between Google--among other tech companies--and the National Security Agency to illegally spy on billions of people around the world.

“PRISM,” one of the NSA programs leaked by Edward Snowden in 2013, was a collaboration between Google–among other tech companies–and the National Security Agency to illegally spy on billions of people around the world.

Even when Google airs its corporate ambivalence publicly, it does little to dislodge these items of faith. The company’s reputation is seemingly unassailable…. Caught red-handed last year making petabytes of personal data available to the US intelligence community through the PRISM program, Google nevertheless continues to coast on the goodwill generated by its “don’t be evil” doublespeak…. Nobody wants to acknowledge that Google has grown big and bad.

In regards to Google’s Executive Chairman, Eric Schmidt, Assange had this to say:

Schmidt fits exactly where he is: the point where the centrist, liberal, and imperialist tendencies meet in American political life. By all appearances, Google’s bosses genuinely believe in the civilizing power of enlightened multinational corporations, and they see this mission as continuous with the shaping of the world according to the better judgment of the “benevolent superpower.” They will tell you that open-mindedness is a virtue, but all perspectives that challenge the exceptionalist drive at the heart of American foreign policy will remain invisible to them. This is the impenetrable banality of “don’t be evil.” They believe that they are doing good. And that is a problem.

Google illegally collaborated with numerous tech companies to artificially lower the wages of the tech labor force.

Google illegally collaborated with numerous tech companies to artificially lower the wages of the tech labor force.

It’s this “don’t be evil” image of Silicon Valley that makes the recent wage-fixing scandal among the biggest tech companies especially scandalous. In 2010 the Department of Justice launched an anti-trust investigation into allegations that America’s largest tech companies had “conspired against their own employees,” as the New York Times put it. In early 2014, it came out that Apple, Google, Intel, Dell, and others, had been colluding since at least the mid-2000’s to not hire each other’s employees. Steve Jobs of Apple and Eric Schmidt of Google were key players in the agreements. The process was meticulously described by Mark Ames in two installments (available here and here.) In a series of informal agreements, emails were sent between top executives whenever a perceived breach was made, to solidify the agreements, or even to threaten other companies into joining the agreement. Early on, Eric Schmidt even noted in an email that he “didn’t want to create a paper trail over which we can be sued later.” Later, Google maintained an internal “Do Not Cold Call” list (pictured above.) From a 2008 Google memo: “As a general rule, we should not be recruiting staffing talent from any of our approved staffing partners. The lists on the following page outline these partners for both the U.S. and International staffing.”

It’s hard to reconcile claims of a “labor shortage” by Silicon Valley when companies are refusing to hire skilled labor already in existence on the market. There are workers who have the skills employers need; they work for their competitors. As economist Dean Baker says, if I can’t find a doctor willing to work for $30 a hour, does that mean there’s a shortage of doctors?

Teitelbaum's book goes into the details surrounding decades of deceit and false alarms behind the supposed "shortage of the nation's human capital in science and engineering."

Teitelbaum’s book goes into the details surrounding decades of deceit and false alarms behind the supposed “shortage of the nation’s human capital in science and engineering.”

In his book, Falling Behind? Boom Bust and the Global Race for Scientific Talent, Michael Teitelbaum–mentioned earlier–discusses the long history of misleading claims made by tech companies in order to flood the STEM labor market and drive down wages. Teitelbaum calls their impact on public policy a “stunning success”: “Over the past two decades,” writes Teitelbaum, “lobbying and public relations efforts to convince U.S. political elites that the country faces damaging and widespread shortages in its critical science and engineering workforce can only be described as stunning successes…. These successful efforts to mold political and public opinion have been led and largely financed by employers, employer associations, and their lobbyists.” This, in spite of the “almost universal inability by objective labor market analysts to find any convincing empirical evidence to confirm the existence of such generalized shortages.”

What is the labor market actually like? A recent article in IEEE Spectrum, the official magazine of the Institute for Electrical and Electronics Engineers (IEEE), explicitly demonstrates the problem for entry-level graduates. They start by using a study by Georgetown University to estimate that “nearly two-thirds of the STEM job openings in the United States, or about 180,000 jobs per year, will require bachelor’s degrees.” Then, using the National Science Foundation’s annual count of science and engineering bachelor’s degrees, they find that “about 252,000 STEM graduates emerged in 2009.” They conclude by pointing out that “even if all the STEM openings were entry-level positions and even if only new STEM bachelor’s holders could compete for them, that still leaves 70,000 graduates unable to get a job in their chosen field.” Of course, they’re not all entry-level positions–those are notoriously hard to find–and there’s also the many bachelor’s holders from previous years that were unable to find jobs to compete with.

But, of course, we don’t need these kinds of explicit analyses to determine whether there’s a shortage; a simple market analysis would indicate that wages should be increasing rapidly if a shortage were to exist.

So what are the claims used by proponents of a “shortage”? There are three common, incorrect ways in which an impending shortage is often argued. The first is by merely adjusting the definition of what a “STEM” employee actually is. By including healthcare workers and social scientists–as the National Science Foundation does in its definition–one can argue a case different from other definitions. The potential for cherry-picking is obvious.

The second common technique is to focus the debate on the number of “job postings” in STEM fields, along with the duration in which they remain open. The talking point usually goes as follows: “A Change the Equation study found that, even in the sluggish years between 2009 and 2012, there were nearly two STEM-focused job postings for every unemployed STEM professional.” Of course, “Change the Equation” is a group founded by Craig Barrett, former Intel CEO, along with over one-hundred other CEOs from America’s largest tech companies; in other words, it’s a group founded by people with a job description to minimize labor costs. The primary problem with this talking point is that it’s a red-herring as well as a non sequitur. This is because only wages and employment rates are considered serious metrics; it’s unclear what the job posting metric even means when evaluating an economy. For example, in recent years there has been a sharp rise in the rate of listings to unemployed in the “retail and restaurant” sector; this is hardly something we can attribute to a “skills shortage.” In addition, it’s very difficult to isolate “real” job openings from the multiple postings that often appear for the same job–not to mention the postings that never actually result in a new hire. In fact, more frequent job postings can indicate just the opposite of what’s being claimed. In particular, it might indicate higher job uncertainty, which would mean a weaker–not stronger–labor market.

To get a better idea of why a higher than average number of job postings can mean a weaker job market, consider that employers will look to take advantage of the labor supply. With a large supply of labor, employers become more picky, and with less pressure to fill positions, they will leave openings open longer to find the perfect hire–sometimes called a “purple squirrel” by recruiters to indicate the unrealistic expectations of a client company. They offer positions that nobody in their right mind would take, but will still eventually fill in a weak job market. As economist Dean Baker succinctly pointed out, “suppose I advertise for a doctor and offer $20 an hour. My listing might be there a long time.” These are the kinds of things employers will come to expect in a bad economy.

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The third common technique is found by taking a quick look at the website for “The National Math and Science Initiative,” a group bankrolled by Chevron and Lockheed-Martin. One of their central talking points in the section, “The Science Crisis,” provides a good illustration: “U.S. students recently finished 27th in math and 20th in science in the ranking of 34 countries by the Organization for Economic Cooperation and Development.” The test used for this study is the so-called PISA, or Programme for International Student Assessment, which is administered to 15-year-olds regardless of grade level.

A 2007 paper by B. Lindsay Lowell and Hal Salzman is particularly damning in its debunking of the many “science crisis” claims, particularly the claim that the United States underperforms in science and mathematics internationally at the K-12 level. They point out that these studies merely focus on the average score of all students, ignoring the extreme disparity in educational attainments in the United States by the bottom quartile socioeconomically (bottom 25%) when compared to the upper quartile. The economic disparities found in the United States far exceed those of comparable countries. Those in the upper quartile–those that are significantly more likely to become STEM graduates in the first place–actually perform quite well internationally, and consistently find themselves at or near the top ranks amongst international competition. Lowell and Salzman conclude the paper by pointing out that: “Analysis of the flow of students up through the S&E pipeline, when it reaches the labor market, suggests the education system produces qualified graduates far in excess of demand: S&E occupations make up only about one-twentieth of all workers, and each year there are more than three times as many S&E four-year college graduates as S&E job openings.”

Economic inequality in the United States is an international scandal.

Economic inequality in the United States is an international scandal; PISA scores are not.

I myself was once duped by this immense wall of propaganda, seemingly coming from every facet of civilized society from journalists to university presidents, to political candidates–many of which represent the interests of powerful high-tech employers and employer groups. It’s propaganda that ruined my professional life. As I pursued my B.S. in Physics, I spent little time perfecting my GPA, applying for internships, or “needlessly” bolstering my resume, as I only assumed my market value would not require such massaging. It makes me immensely angry that I was mislead about the employment situation within STEM fields; I found the market upon graduation chilly indeed. I have only rarely come across jobs that explicitly even ask for a physics bachelors in the job posting–this, the most fundamental science. And it’s not just physics, even in computer and information science and engineering, the college graduate supply is 50 percent greater than the number hired into those fields each year (this, according to the 2013 EPI study mentioned at the beginning of the article.)

It’s amazing how wrong so many of our popular ideas really are and how people’s lives are so adversely affected by our collective myths.

It’s true that there is a science crisis facing the U.S. today, but it is very different than that which has been articulated by corporate heads, industry groups, public science intellectuals, university presidents, politicians, and the many others who find the Op-Ed pages of influential papers across America accessible outlets for their ideas. The real “science crisis” facing us is the inability of “job creators” to provide quality jobs in these sectors. There is a shortage, but it’s a shortage of employers willing to hire young people and train them. What causes a shortage for employees with ten years of experience is not hiring them when they’re fresh graduates with no experience.

In addition, there’s the “science crisis” of feeling that science literacy is the major barrier standing between us and a prosperous economy. This is somewhat ironic considering those that focus on average test scores internationally. It’s the extreme economic inequality, of which the U.S. is well-known, that leads to such disparities in results; it is here that we must direct our efforts. There’s a fantastic quote that appears in the Lowell and Salzman paper: “The U.S. is not ‘first in the industrialized world’ in minimizing the percentage of its population living in poverty…. So why should anyone expect the U.S. to be first in the world in educational achievement?” At the bottom of all of this is the mistaken belief–often among scientists and engineers who are trained in narrow, technical questions–that public policy is somehow the result of rational debate instead of power politics. As the success of the “science crisis” alarm bells indicate, one should look elsewhere for the origins of public opinion.

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