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Shithole Countries

I haven’t posted in a long time because my day job has had me really busy, but I had an exchange yesterday on my Facebook page that prompted me to make time for this post.

The exchange came about because a Trump supporter didn’t want to comment on the article I posted about how Trump’s condos are increasingly being purchased by shell companies (and in cash), which are tell tale signs of money laundering. This commenter instead thought that it would be more convenient for him to talk about how the (legal) immgrunts are robbing him blind with their welfare and such. That didn’t turn out very convenient for him when, after he posted some erroneous (and on it’s face, suspicious) data suggesting that them rapey Mexicans are mooching the majority of that welfare money. I then produced data from several sources demonstrating that the “data” he presented was completely wrong, and selectively manipulated to make racists and xenophobes angry. It’s hard to imagine that it’s possible to find manipulated data, designed to bolster a nefarious agenda on the internet, but it is true. This particular source has a long history of not only bias, but flat out racism.

Anyway, I’m not going to get into any of the government assistance program data. Doing so would entail writing a 16 part series that needs to encompass not only laying out all forms of government assistance (but let me assure you that 86% of us are getting something), demographic consumption of said government assistance, institutional racism that keeps certain demographics from anything resembling equality of opportunity, and results (meaning, what happens to people at incremental stages of receiving public assistance). I will write that 16 part series some day when I’m retired and living in France, where I can get some of that sweet, sweet socialist healthcare (and delightful wine) in my old age.

I want to focus this post in on what I know from living and working in the three largest cities in America. Don’t worry, there will also be some very valuable data! As some of you know, I’m an HR professional. Throughout my career, my focus has largely been on talent acquisition, although I did do a good amount of consulting on benefits packages. I currently live in New York, but I’m working with a company in San Francisco. I’ve recruited engineering professionals on and off in the bay area since the mid 90s so I’ve been intimately aware of the labor market for “highly skilled” workers through a few booms and busts.

I always joke that I’ve been recruiting in the tech space, since Java was a child. It’s true. When I first started hiring Java developers, Java was fairly new and it was just a web development language. C++ developers didn’t take it seriously, and never thought that it would be usable on enterprise applications. The point is that Java was brand new, but in extremely high demand at that time (it was 1995) because that’s the language that the internet was going to grow on.

Here are some of my experiences and observations over the past two decades:

  • In 1995, the most experience with Java that anyone could have had, was around 3 years. At that time, I was offering candidates with two years of Java development experience (in the bay area) between $130k – $150k. A senior developer (five or more years of experience – some of which would had to have been in C++) would get between $150k – $160k.
  • Today, an entry level (meaning fresh out of their masters program) developer in the bay area will start at $125k. Senior level developers (five or more years of development experience) are making between $160k – $190k. That’s not much of an increase over the past twenty years. I’m going to get back to this in a minute.
  • Back then (as is the case now), there were nowhere near the number of US citizens needed to fill these positions. That’s just a fact. And anyone who claims otherwise has never been responsible for filling an engineering position in any major city (you know, where all the jobs are) in America. Americans are simply not getting computer science degrees in the numbers that we need them to. If you don’t believe me, invest $350 on a job ad on Monster, Dice, or Indeed and see who applies. You will pay to re-up that post for months, waiting for a qualified native born American to apply.
  • An interesting observation I made when I started off, was noticing that different types of engineers seemed to be concentrated in different countries. India was largely bringing us developers. Networking engineers were largely coming from China. QA engineers were mostly coming from Eastern Europe. These patterns largely held true until about five or six years ago. Those patterns still exist, although there does seem to be more diversification. We’re getting lots of developers from Russia, Ukraine, Iran, and China. Experts in Machine Learning (that wasn’t a thing twenty years ago) are mostly Chinese and Russian. Each country had their own ideas where the big money or big growth was going to be in the technology ecosystem.
  • The entrepreneurs were largely immigrants, even in the early days of the internet (Sergey Brin and Jerry Yang come to mind off the top of my head).
  • That brings me to data.  A recent Yale study found that 44 out of 87 privately held companies valued at over $1 billion had at least one immigrant founder. It estimates that each of these immigrant-founded companies created 760 jobs.

Here’s another article that says that immigrants start twenty percent of the new businesses in America. They account for thirteen percent of the population, but are creating twenty percent of the new businesses. Twenty percent of Inc’s Fortune 500 CEO list in 2014 were immigrants. From the article:

Immigrant-owned businesses pay an estimated $126 billion in wages per year, employing 1 in 10 Americans who work for private companies. In 2010, immigrant-owned businesses generated more than $775 billion in sales. If immigrant America were a stock, you’d be an idiot not to buy it.

By the way, those numbers and all of the numbers in all of the studies I’m posting don’t encompass the jobs created by first generation Americans, born to immigrants because I guess they’re old news or something?

Here’s another study that demonstrates that immigrants create jobs without lowering wages. From the study:

Each immigrant creates 1.2 local jobs for local workers, most of them going to native workers, and 62% of these jobs are in non-traded services. Immigrants appear to raise local non-tradeables sector wages and to attract native-born workers from elsewhere in the country.

And here’s yet another study from The Pew Research Center that reinforces the conclusions of the previous studies and articles, and adds that immigrants are self employed at a slightly higher percentage than native born Americans.

Okay, I can post data from a variety of credible sources all day but you get my point (also, you can find it on your own). Now back to me and my experiences.

The xenophobe from yesterday who inspired this post, made the assertion (naturally sans data) that the legal foreign workers are suppressing wages. That would appear to be bolstered by the wage numbers I shared above. But those numbers don’t tell a story. They’re just single data points. Immigrants categorically do not lower wages in “highly skilled” (meaning a degree is required) professions. Not exactly. What I left out of the wages I shared above, is what happened between 1995 and today. In both 1995 and today, we’re damned near the top of the employment market so the wages I shared are as good as it gets. Now, right after an economic bubble bursts, those wages go down for the same jobs. So an entry level developer will start at $90k – $100k instead of $125k. A senior engineer’s salary will drop to $150k – $160k for the same job because there aren’t thousands of startups or large, VC funded enterprises competing for the talent. So in 2001, Google will lower the wage for a senior engineer from $190k to 160k and they will collude with Apple and Amazon (among others) to make sure that $160k salary sticks. They will squeeze out the engineers making the 1999 salary of $190k (and that guy’s next job will pay $160 because he doesn’t have a choice). That’s why the wages for even professionals with graduate degrees aren’t going up. It’s not the immgrunts fault, it’s the never ending greed of corporate America and unless you know that Hadoop isn’t a Disney character, no one is taking your job or suppressing your wages.

Do I think that undocumented immigrants are lowering wages for unskilled workers. No, I’m not buying that, although I’m open to reviewing any credible evidence you might want to offer. Here’s that happened in Georgia when they cracked down on eye-legal immgrunts. Even with a high unemployment rate, and the possibility of earning $20 an hour, Americans don’t want to work in the fields. The same thing happened in Arizona, Arkansas, and South Carolina. Some of those farmers were offering the $20 an hour salary, and a 401k. This was still no bueno for unemployed native born Americans.

We do not have a manufacturing based economy. We have a consumption based economy, so we need as many consumers earning as much as they can to keep chugging along.

So to summarize, we have legal immigrants creating jobs and filling jobs that we don’t have the native born work force to fill. We have undocumented immigrants doing jobs that Americans simply won’t do. Are there jobs somewhere in the middle that are being adversely affected by immigrants? Perhaps, but I frankly can’t think of any, and my expertise really isn’t at the lower range of the wage spectrum.

So the xenophobe from yesterday kept asking me if I wanted to do something about immigration. I do. I want to incrementally increase it every year, with a review on ROI every ten years. The bottom line is that this is a country of immigrants, and if it hopes to survive, it needs to embrace its roots. Two hundred and fifty years of immigration has made America a place where very smart or very hard working (or very smart and very hard working) people from other countries want to come.

I say, that no immigrant comes from a shithole too big to deny entry to this country.

With that, I will leave you with Chinedu Echeruo. He came to the US from that shithole, Nigeria and rather than go back to his “hut” founded HopStop which he subsequently sold to Apple (which came to be because of a confluence of events that started with a refugee from Syria coming to America) for $1 billion dollars.

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