How to Create a Shortage In a Skilled-Labor Market
TO alleviate apparent shortages of computer programmers, President Clinton and Congress have agreed to raise a quota on H-1B's, the temporary visas for skilled foreigners. The annual limit will go to 200,000 next year, up from 65,000 only three years ago.

The imported workers, most of whom come from India, are said to be needed because American schools do not graduate enough young people with science and math skills. Microsoft's chairman, William H. Gates, and Intel's chairman, Andrew S. Grove, told Congress in June that more visas were only a stopgap until education improved.

But the crisis is a mirage. High-tech companies portray a shortage, yet it is our memories that are short: only yesterday there was a glut of science and math graduates.

The computer industry took advantage of that glut by reducing wages. This discouraged youths from entering the field, creating the temporary shortages of today. Now, taking advantage of a public preconception that school failures have created the problem, industry finds a ready audience for its demands to import workers.

This newspaper covered the earlier surplus extensively. In 1992, it reported that 1 in 5 college graduates had a job not requiring a college degree. A 1995 article headlined "Supply Exceeds Demand for Ph.D.'s in Many Science Fields" cited nationwide unemployment of engineers, mathematicians and scientists. "Overproduction of Ph.D. degrees," it noted, "seems to be highest in computer science."

Michael S. Teitelbaum, a demographer who served as vice chairman of the Commission on Immigration Reform, said in 1996 that there was "an employer's market" for technology workers, partly because of post-cold-war downsizing in aerospace.

In fields with real labor scarcity, wages rise. Yet despite accounts of dot-com entrepreneurs' becoming millionaires, trends in computer technology pay do not confirm a need to import legions of programmers.

Salary offers to new college graduates in computer science averaged $39,000 in 1986 and had declined by 1994 to $33,000 (in constant dollars). The trend reversed only in the late 1990's.

The West Coast median salary for experienced software engineers was $71,100 in 1999, up only 10 percent (in constant dollars) from 1990. This pay growth of about 1 percent a year suggests no labor shortage.
http://www.nytimes.com/library/tech/00/09/biztech/articles/06lessons.html?pagewanted=all