Silicon Valley

It’s not the first time Matloff has had to lick his wounds. Shrugging off his testimony that tech firms are picky rather than parched for programmers, Congress also expanded the H-1B program in 1998. And to add insult to injury, the president of the Information Technology Association of America calls Matloff “president of the Flat-Earth Society.”

But there’s a case to be made that Matloff’s rants are on target and perhaps ahead of the curve. A heap of evidence — including a recent report by Congress’ own watchdog — casts doubt on the tech labor shortage and suggests both domestic programmers and H-1B workers have been hurt through the program. What’s more, Matloff’s claim that companies are “shooting themselves in the foot” with their hiring practices is taken seriously by at least some Silicon Valley firms and one top business school professor.

Matloff’s quest gets to the heart of some of the biggest questions facing the technology world: Is importing programmers and engineers good for the country’s long-term competitiveness, or does the practice dissuade Americans from pursuing technology and perhaps even push high-tech brain work overseas more than ever? And who should have our greatest sympathies? Domestic techies, who’ve enjoyed a better standard of living than most Americans, or coders from poorer nations, who may never get to taste the good life or stretch their minds fully if they can’t come to Silicon Valley?

Technology firms take the H-1B issue very seriously. Since 1999, the industry has coughed up $22 million to politicians, an amount double that given during 1997 and 1998. So Matloff doesn’t expect to win over Congress or the entire computer industry overnight. But he’s hopeful his logic eventually will prevail. And even though his long-fought battle against the likes of Sun, Oracle and Intel has earned him the label “the scourge of Silicon Valley,” Matloff would like nothing more than to reach a truce with the firms on the labor front and see them prosper.

“I’m their booster,” he insists. “I’m by no means a Luddite.”

Tech industry leaders don’t call Matloff a Luddite, but neither do they consider him to be helping their cause — or correct in his reasoning.

Matloff’s proclamations about abuse in the guest worker program only “perpetuate the myths surrounding the H-1B visa program,” wrote George Scalise, president of the Semiconductor Industry Association, in a September letter to the editor of the Washington Post.

Harris Miller, president of the Information Technology Association of America, says Matloff’s 1998 predictions of gloom and doom for domestic workers haven’t panned out. Just look at unemployment, says Miller. In 1999, 2.3 percent of programmers were unemployed, well below the nationwide unemployment rate of 4.2 percent — itself an extremely small figure historically.

“He’s obviously a very good computer science professor,” Miller says. “But on this issue he’s just flat wrong.”

Matloff has evidence suggesting that unemployment figures don’t capture older techies who’ve been forced out of the field. But being asked to address Miller’s charge elicits more than just the facts. During an interview at a Chinese restaurant in Oakland, Calif., Matloff’s voice rises when he considers Miller and other industry spokesmen.

“Lobbyists are paid to be sharks,” he says.

It’s a rare angry moment during the dim sum lunch. For the most part, Matloff is soft-spoken as he speaks with me and orders dishes in fluent Chinese. His mild-mannered temperament, along with his small, wiry frame and thick glasses, fits the stereotype of a computer nerd perfectly.

Only there’s a big difference between him and most coders, he says.

“Programmers tend to be reserved people,” observes Matloff, “not types who would write to their representatives, let alone carry a picket sign.”

Matloff’s activism on the H-1B issue is part of a broader social justice streak. He’s long been interested in ethnic minority issues, and served a stint as head of UC-Davis’ affirmative action program. Matloff married a Chinese woman who eventually became a U.S. citizen, and he used his e-mail network to spread awareness of the Wen Ho Lee case.

Matloff’s concern for the underdog comes packaged with a hungry, disciplined mind. He taught himself both Cantonese and Mandarin as an adult by listening to the radio and bugging friends for help. He also taught himself how to program computers. His Ph.D. from UCLA is in theoretical math.

It’s not surprising, then, that Matloff has developed an impressive lay expertise on the subjects of age discrimination and the H-1B visa. One sign of the volume of his knowledge: The testimony he gave to Congress and that he continually updates has grown to 110 pages.

Labor unions, engineer associations and other critics have opposed the H-1B program. But Matloff has been central, says Mark Krikorian, executive director of the Center for Immigration Studies, a nonpartisan Washington think tank.

And although the H-1B expansion passed overwhelmingly, Matloff’s efforts kept the measure from being worse, Krikorian says. In particular, Matloff’s credibility and activism helped kill an exemption for foreign graduate students at U.S. universities — a feature that could have allowed an additional 100,000 or more H-1B workers annually, Krikorian says.

“He can’t be pigeonholed as a gadfly,” Krikorian says. “He knows more about this than just about anybody. He’s intimately familiar with the personal, professional and academic aspects of the issue. And you can’t write him off as a nut.”

Matloff’s ambitious quest started simply enough: as a professor concerned about his students. In 1993, Silicon Valley hadn’t yet climbed out of a recession, and computer science grads from UC-Davis experienced the tough times firsthand.

“We had graduates working in downtown San Francisco, at Macy’s as salesclerks,” Matloff recalls.

The fact that Congress was making it harder on his students by importing tech talent from abroad was especially maddening to Matloff. Washington had created the H-1B program in 1990.

The program works like this: Skilled foreign workers — typically those with a bachelor’s degree or higher — are allowed into the United States for a period of up to six years. The latest statistics from the Immigration and Naturalization Service show that 47 percent of those who enter are systems analysts or programmers and an additional 5 percent are electrical or electronics engineers.

The program started off with an annual cap of 65,000. But with the high-tech industry lobbying for more workers, the limit was raised in 1998 to 115,000 for this year. The recent legislation will raise the annual ceiling to 195,000 until 2003. Other features of the new law include giving H-1B workers greater job mobility and using a $500 application fee per guest worker to provide more than 60,000 college scholarships for U.S. students in tech-related fields. Industry leaders point out that H-1B visas have run out each year since 1997. The most recent study on the issue, released by the Information Technology Association of America, concluded that 1.6 million new information technology jobs would be created this year, and half would go unfilled.

But the tech industry hasn’t relied just on its reports to win over Congress. According to the Center for Responsive Politics, the computer equipment and services industry has contributed $12 million to Democrats and $10 million to Republicans since 1999. The total more than doubles the amount donated by the industry in 1997 and 1998.

“Congress has been bought off equally,” Matloff says. “Neither party dares to cross the industry.”

That may sound like extreme rhetoric, but the evidence on his side does make the 96-1 Senate vote rather puzzling.

One of the most impressive documents in Matloff’s arsenal is a September report by the U.S. General Accounting Office. Titled “H-1B Foreign Workers: Better Controls Needed to Help Employers and Protect Workers,” the report concluded that existing labor market studies “do not permit a conclusion as to the extent of any IT skill shortage.” The report said the labor market studies had flaws including a lack of data on whether companies considered jobs filled by contractors as vacancies.

Then there’s Matloff own research challenging the notion of a “shortage” of IT workers. By studying a database of college graduate surveys, he found that only 19 percent of computer science grads are still in that field 20 years later — compared with 52 percent of civil engineers. To him, the low unemployment rate for programmers masks what he sees as a pattern of older techies getting left out in the cold in the middle of a red-hot economy.

Research by the Institute of Electrical and Electronic Engineers supports Matloff’s claim that veteran coders are being driven out of the field. In a 1998 report, the institute discovered that unemployed members typically require three additional weeks to find a new job for each year of age over 45.

“Many employers find H-1B [pre-green card] programmers and engineers attractive because they will accept lower salaries and poor working conditions,” Matloff wrote in a paper titled “Debunking the Myth of a Desperate Software Labor Shortage.”

This document might be called the Matloff bible. Originally his testimony to Congress in 1998, he last updated it on Saturday. One section of the paper describes Matloff’s research into companies’ alleged severe need for workers. He checked with a total of 25 high-tech firms and found that they typically offer jobs to just 2 percent of applicants and a quarter of interviewees.

Matloff also notes out that tech wages haven’t skyrocketed as one might expect in a labor shortage. One of his recent e-mails cites an Oct. 2 Newsweek chart showing that the starting salaries for computer science graduates rose only 20 percent from 1995 to 1999, a smaller increase than in the fields of business administration, accounting and sales/marketing.

Despite the current tech boom, Matloff’s own students are having trouble finding good work. Fewer than half of UC-Davis computer science graduates get programming jobs.

“They put in all this work,” says Matloff, “then they’re given a job in customer service,” he says. “They’re not using what they’ve learned.”

Matloff also has become a one-man information clearinghouse for veteran programmers angry with the H-1B program. The vast majority of the people on Matloff’s e-mail list are techies, who each day feed Matloff 20 to 30 e-mails with articles on the H-1B program and tales from the trenches. Matloff can give reporters the names of dozens of programmers who’ve gone months or years without work.

One techie connected to Matloff is 45-year-old programmer Rob Sanchez. A Phoenix resident with eight and a half years in military electronics, Sanchez lost his job about a year and a half ago, on the very day his company brought on an H-1B worker to do software programming.

Sanchez then spent 18 months looking in vain for tech work. He finally landed a job as a programmer for a communications company two months ago. But he blames age discrimination, exacerbated by the H-1B program, for his difficulties.

“Your professional career is being undermined by our own government and rich corporate lobbyists,” he proclaims on his Web site.

Matloff often makes reference to Sanchez’s Web site, because it includes a database of H-1B salaries Sanchez obtained through the Freedom of Information Act.

At Sanchez’s site you can learn, for example, that Microsoft planned to pay an H-1B software engineer $34,000 in 1997, when the average computer engineer salary for that year was $56,590, according to the Labor Department.

A Microsoft spokesman said the salary of a particular guest worker might reflect the average of his colleagues at Microsoft rather than the industrywide average.

Microsoft’s position is perfectly legal. But it highlights the point made by Matloff and others that guest workers frequently are mistreated by the H-1B program.

On this issue, once again, the GAO sides with Matloff. Its September report documents numerous cases of fraudulent applications and INS policy that discourage critical review of applications. What’s more, the program is ripe for abuse by employers. The GAO noted that while companies have to pay guest workers a “prevailing wage,” firms can use almost any source to determine that wage and the Labor Department is compelled to accept it.

The GAO also reported that the H-1B program creates a relationship between guest worker and employer that discourages whistle-blowing. H-1B workers are dependent on employers for their stay in this country, and many come with the expectation that their company will file a green card application on their behalf.

Matloff argues that the H-1B system has amounted to a form of “indentured servitude.” Besides the GAO report, press accounts back up this assessment. In the past few years, newspapers including the Baltimore Sun and San Francisco Chronicle have written about the poor treatment received by H-1B workers. The worst abuses seem to occur at so-called body shops — consulting outfits that outsource programmers to other firms. Body shops have been described as “benching” the guest workers, an illegal practice where they are not paid their full salary unless the firm has contract work.

The new legislation addresses some of the program’s flaws. For example, H-1B workers will be able to switch employers more quickly. And those with long delays in the processing of their green card applications will be able to transfer to a new company.

But Matloff sees the potential for continued exploitation. It will still be possible for employers sponsoring a guest worker for a green card to foot-drag in the initial stages of the process. And even without foot-dragging, foreign workers are still effectively beholden to a firm for at least three to four years, he estimates.

Matloff admits the H-1B workers may earn much more here than they ever would in their homelands. But he draws an analogy to immigrant workers toiling in U.S. garment shops. “They’re being exploited by American standards,” he says.

Many H-1B workers beg to differ, particularly those who come from from less-developed nations. Indians are by far the single largest group of guest workers — they make up nearly 43 percent of total H-1B applications — and their stories often are dramatic. A computer programmer in India, for example, might make the equivalent of $10,000 to $15,000 a year. H-1B workers in computer-related jobs, by contrast, were slated to be paid a median wage of $53,000. And the salaries for some H-1B techies can soar to $80,000 or more.

But money isn’t the only magnet for foreign engineers. The chance to do computer work on the cutting edge is also a huge draw, says Jayaram Manda, a 28-year-old H-1B programmer from India. Despite a burgeoning technology industry in Indian cities like Bangalore, the United States is the place graduates from India’s prestigious universities want to go.

“This is the technology world,” says Manda, who lives in the San Francisco Bay Area and works for a firm called the Consilium Group. “You read about something in the textbook, and you want to implement it.”

While they may enjoy their work here, H-1B workers can face resentment from domestic techies. Aditya Agrawal, an H-1B chip designer at a Silicon Valley firm, has had colleagues accuse him of cutting into domestic wages and contributing to age discrimination.

“This is a tough industry. Tough things get said all over the place,” he says.

Agrawal, 31, has an answer for his critics. He believes the H-1B program has kept U.S. tech salaries from falling, because the foreign workers have fueled Silicon Valley’s success over the past decade. Without these skilled workers moving here, the software or Internet industries in places like Taiwan or India could have blossomed, he argues.

“I doubt it could have happened [here] without the best of the best coming here and working together to get things done,” he says.

Matloff doesn’t share Agrawal’s theory. First, he disputes the idea that the “best and the brightest” arrive via the H-1B program. Citing an Immigration and Naturalization Service audit, he notes that many H-1B applications are fraudulent. Matloff also argues that the vast majority of H-1B workers have salaries well below those typically commanded by geniuses — at or above $100,000 — and points out that only nine of 115 computer-related awards given by the Institute of Electrical and Electronic Engineers were given to immigrants.

Second, U.S. companies would move more software development work offshore if they could. But Silicon Valley succeeds partly because of the face-to-face contact among colleagues, Matloff argues.

Matloff and the tech industry have radically divergent views on how the H-1B program fits into global capitalism. To the industry, H-1B workers are critical to maintaining America’s technological edge, and therefore to preserving high-paying jobs here.

But Matloff suggests the country is undermining its tech industry with guest workers. He points to the work of Vernon Briggs, a Cornell labor economist who believes the expanded H-1B program will dissuade American kids from coding careers — because all the extra techies means wages won’t rise.

And in a recent e-mail to his electronic flock, Matloff suggested that H-1B workers may play a more immediate role in the country’s losing technology work. He distributed an article describing how H-1B workers tied to a worldwide consulting firm can provide a foothold into the United States for work done overseas. Another story Matloff sent around quoted an Indian software industry official as expecting the expanded H-1B program to help boost Indian software exports.

That’s “another perverse effect of the H-1B program,” Matloff wrote.

Matloff doesn’t just blast the H-1B program and companies using it. He has a solution in mind, and Silicon Valley might do well to listen. As Matloff sees it, not all companies are using guest workers out of greed. Some simply believe they can’t find qualified workers. And this is the rub: He thinks firms have developed a shortsighted attitude that programmers and other techies must come with experience in the latest, highly specific skills. That’s why firms reject the vast majority of their candidates.

Matloff suggests hiring based on overall coding prowess instead, and letting techies learn on the job.

“Any competent programmer experienced in the C language (the standard for the past 15 years) can become productive in Java in a couple of weeks,” he wrote in a recent essay for Forbes.

Tech-firm choosiness is costly — Matloff writes that the average time it takes to fill a job in Silicon Valley is 3.7 months. That’s forever in today’s fast-paced economy. Matloff adds that the obsession with skills leads to pumped-up salaries for specialists and promotes job hopping, which can cause chaos for companies.

You’d think America’s richest, most powerful firms wouldn’t need the business advice of a computer scientist. But Matloff’s analysis is shared in large part by Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School.

Cappelli published a paper on the IT labor issue this summer, and agreed that hiring on the basis of a programmer’s coding quality is key. But firms have been poor judges of programming talent, and then depend too heavily on résumés,” Cappelli observes.

“In the absence of a good understanding as to what predicts jobs performance, employers rely on credentials, especially academic credentials, which are highly visible and easily contribute to bidding wars among competitors,” Cappelli writes.

Cappelli sympathizes with companies that have trouble finding the IT talent they need, especially as technologies change rapidly. But rather than import techies, Cappelli concludes, the U.S. should concentrate on keeping so many domestic ones from leaving the field. He calls for better management for often-isolated coders, higher pay for top guns — who are more than 10 times more productive than poor programmers — and more retraining programs for veteran employees.

Matloff’s ideas also are echoing in Silicon Valley. A few companies have even approached him asking for hiring advice. Matloff helped persuade one semiconductor firm to change its policy of considering only graduates with straight-A academic records.

With all his advocacy work, Matloff has become a hero of sorts for domestic techies. One of his fans is Terry Oldberg, a 60-year-old engineer who spent eight of the past 13 years unemployed.

“He was essentially a one-man opposition to the huge juggernaut of the business lobby,” says Oldberg, also the chair of the Northern California chapter of the Programmers Guild. “He is truthful and very courageous.”

Matloff now feels a responsibility to people like Oldberg, but he doesn’t feel like a hero. He has never faced any heat from his university department for his activism. And although Matloff sends out as many as six e-mails a day commenting on news articles, he claims he gets this work done in a less than an hour a day.

He’d like to do more research on where older techies go after leaving the field and what happens to their pay. But he’s careful not to burn out or lose sight of other priorities. He’s determined to keep up his full-time professor duties, raise his 8-year-old daughter in Walnut Creek, Calif., and spend time with his wife, who just retired from a programming career.

And unlike some activists who develop a burning hate for their opponent, Matloff remains a geek at heart. He’s out to reform tech firms, not destroy them. And he believes they’ll ultimately see that the narrow way they hire and fire does not compute.

“I still believe that eventually they’re going to see it’s in their own best interests to broaden the way they hire,” he says.

What’s more, despite the lopsided H-1B vote, Matloff hasn’t given up on Washington. He believes enough programmers may get hurt by the H-1B program that members of Congress themselves will feel the pinch — perhaps the computer engineer daughter of a senator won’t be able to find a job.

So he plans to keep consulting tech firms, talking to the press, updating his online paper and sending out e-mails. Rather than a hopeless dreamer, he sees himself as Jimmy Stewart-like, repeating his point against the odds until people believe.

“It’s not ‘Don Quixote,’” he insists. “It’s ‘Mr. Smith Goes to Washington.’”