‘Brain Gain’ or Threat to U.S. Jobs?

Deep inside Intel’s gleaming headquarters, an azure-streaked temple to Silicon Valley’s innovative spirit and corporate profitability, Hans Mulder’s team is a mini United Nations. A German, a Swiss, a Turk, two Indians--and one native-born American--work under the Dutchman’s direction to help keep the world’s largest computer chip maker competitive.

“If you want to be in high-tech, you come here,” says Mulder, a bespectacled computer architect with a doctorate from Stanford University.

Perhaps one-third of engineers, programmers and other professionals in the Silicon Valley are foreign-born, many of them Asians sponsored for visas and green cards by area employers and U.S. universities.

In an era of near-record immigration, the pronounced presence of these highly educated workers underscores how immigrants--often perceived as mired in menial service and labor jobs--also are a force in the upper reaches of the economy.

The large number of foreign-born employees in high-tech jobs has alarmed critics in Congress and elsewhere. Some worry that high-tech firms thrive at the expense of native U.S. talent.

Silicon Valley’s chieftains vehemently deny this. Moreover, executives say, the polyglot work force is vital to maintaining a technological edge in today’s global marketplace--especially when exports are booming and American students are eschewing advanced engineering and science degrees.

“We need the best brains in this competitive battle,” Hungarian-born Andrew S. Grove, Intel’s president and chief executive officer, wrote recently in The Wall Street Journal.

The country’s burgeoning technocracy--a kind of international priesthood of knowledge, preaching a gospel of unfettered access across nation-states--has joined with agribusiness, ethnic activists and other groups in an unlikely coalition defending immigration as integral to the American dream.

Meantime, celebratory declarations of a cyber-world “brain gain” have supplanted past misgivings about a “brain drain” from the developing world.

As the emergence of hundreds of new U.S. companies has intensified the worldwide hunt for technical talent, many high-tech chiefs complain of a shortage of skilled personnel to meet the industry’s voracious needs.

George Sollman, chief executive of Centigram Communications in San Jose, says a lack of qualified software programmers forced his company to delay a critical product by six months.

“We’ll take Americans, we’ll take foreign-born, anybody,” says Sollman, whose firm makes data communications gear. “We’d like to hire 55 college grads this quarter, but that’s going to be awfully hard. I’ll just have to take as many as I can get.”

In the face of a concerted corporate lobbying campaign, the U.S. Senate this year beat a hasty retreat on plans to slash nearly in half entry slots for skilled immigrants and otherwise curtail employers’ ability to hire foreigners. Intel, Microsoft and other titans argued that such restrictions could cripple the dynamic industry--and send huge numbers of computer jobs to other countries.

Despite the white flag on Capitol Hill, the debate about allowing in so many foreign workers rages on. It is an especially volatile issue at a time when corporations are shedding tens of thousands of technically skilled U.S. citizens--whose presence among the unemployed and underemployed, many say, belies the high-tech industry’s cries of a shortfall of skilled workers.

Exploitation Charges

Hiring of foreign over domestic personnel should be the “rare exception,” says Labor Secretary Robert B. Reich, who is among those concerned that skilled foreigners may be displacing U.S. workers.

According to critics, including domestic engineering associations and groups favoring immigration restrictions, industry employment policies are far from a high-minded quest for the world’s technological brain trust. Rather, these critics see a low-ball strategy to exploit expanded quotas for skilled foreign help and hire a relatively cheap, readily available and easily discardable work force--one garlanded with advanced degrees sometimes subsidized by tax dollars. Many graduate programs in science and engineering are supported with taxes.

The end result, detractors say, is the de facto exclusion of a vast pool of Americans, from inner-city minorities to laid-off workers buffeted by downsizing in defense, aerospace and other fields.

“They’re not bringing in the best and the brightest,” says Joel B. Snyder, who chairs the Institute of Electrical and Electronics Engineers-USA, a Washington-based trade association that links the influx of foreign talent to stagnant earnings for its members. “They’re bringing in the cheapest.”

Norman Matloff, a professor of computer science at UC Davis who wrote a critical study of industry hiring, says that using census data he found that average annual salaries for foreign-born computer professionals in Silicon Valley were nearly $7,000 lower than among native Americans of comparable age and education levels.

But with the demand for talent so intense, industry representatives say, it is absurd to suggest that a two-tiered salary structure exists.

“If you tried to pay foreign nationals less, your turnover rate would be horrendous,” says Tony Alvarez, vice president for research and development at Cypress Semiconductor, who came with his family from Cuba when he was a boy.

Along with driving down salaries, some contend that the steady flow of foreign engineers and scientists has reduced incentives for the industry--and the nation’s higher education establishment--to invest in improvements in elementary and high school education. Particularly infuriating to some is the fact that many of the foreign recruits are members of the economic and social upper tier back home.

“Why should we be going out of our way to help a privileged elite from Asia, when there is so much need here?” asks Frank L. Morris, former president of the Council of Historically Black Graduate Schools. “These companies call themselves ‘diverse,’ ” adds Morris, a former graduate dean at Morgan State University, “but they become diverse by not hiring Americans.”

Industry defenders scoff at such talk. Computer companies, they say, pump tens of millions annually into bolstering science learning, while sponsoring job fairs and recruiting intensely on U.S. campuses.

In fact, industry representatives say the high proportion of immigrant professionals simply reflects the large numbers of foreign-born scientists and engineers doing post-graduate work at U.S. universities--long the principal recruiting ground for Silicon Valley.

The National Science Foundation reported last year that immigrants--less than 9% of the U.S. population--account for almost 30% of scientists and engineers with doctoral degrees engaged in research and development. Most are graduates of U.S. universities.

Why is this so? Experts cite a range of reasons, including the oft-lamented state of American science education at the K-12 levels and the much higher remuneration that graduates may earn in such fields as law, business and medicine.

But, for many foreign scientists and engineers, particularly those from Third World countries, the potential payoff of an advanced U.S. degree is considerable. A master’s or doctorate can be a steppingstone to a company-sponsored green card and a coveted slot in the gilded corporate venues of the Silicon Valley.

“The cream of the crop from every country comes here,” says Siva Makineni, an Intel chip designer, whose Indian-born wife also is an industry engineer. “You’re dealing with top professionals all the time, which gives me a very good feeling.”

Makineni’s career trajectory is not an atypical one.

As a bright, upper-middle class engineering student in southern India, he kept a photograph in his room of the team that designed the Intel 286, a once state-of-the art chip. But, after earning undergraduate and master’s degrees in electrical engineering, Makineni was only earning the equivalent of $2,000 a year in India. Real opportunity was elsewhere.

Immigrants’ Views

Ultimately, he secured a student visa to come to the United States and obtained a second master’s degree here. In August 1992, he joined Intel, which arranged for his immigration papers. (Under federal law liberalized in 1990, U.S. employers may sponsor skilled foreign nationals for temporary or permanent jobs based on factors such as need and a lack of qualified domestic candidates.) Makineni, 30, now works alongside the designers whose likenesses once graced his room.

Underlying the arguments of critics, say industry boosters, is the notion that immigration is a “zero-sum game”--that each job for an immigrant such as Makineni means one less for a U.S. native. The industry calls such an idea misguided, arguing that the newcomers benefit everyone, keeping domestic firms competitive and spurring vibrant fonts of employment.

“These immigrants created jobs and made our company and the American semiconductor industry stronger, not weaker,” says T.J. Rodgers, president and chief executive officer of Cypress Semiconductor, which is based in suburban San Jose.

On a bulletin board amid the computer cubicles in Cypress’ research and development division, push pins on a world map mark staffers’ home countries. Clusters of pins crowd India, China, Southeast Asia and Western Europe. A sole pin denotes the homeland of a Mongolian engineer. No pins mark Africa or South America.

Despite its multinational character, the bulk of the overall high-tech work force is composed of U.S. natives. Americans typically dominate in top-salary executive jobs and in nontechnical fields, such as marketing and sales, and also include many clerical, security and other lower-wage positions.

Some immigrants, particularly Asians, complain of an informal glass ceiling that limits promotions. “Why do you think there are so many Indian entrepreneurs? Because they know that sooner or later they will be held back,” says Prabhat Andleigh, who spent more than 20 years in high-tech firms before launching his own company.

Many immigrants have made the jump from technician to entrepreneur.

Zvi Or-Bach, an Israeli who founded Chip Express, a small manufacturer of custom-made microchips for everything from pagers to missiles, came to the United States in the early 1980s after completing his studies in Israel. He went to work for Honeywell on Massachusetts Route 128, the high-tech corridor outside Boston.

Or-Bach returned to Israel, but he had an itch to set up in the bustling U.S. market and finally opened shop here in 1990. Chip Express’ recently expanded facility employs 80 people, almost evenly split between immigrants and native-born Americans, the company says, though the engineering staff is virtually all foreign.

“We are a perfect example of a company of immigrants that has brought jobs to the United States,” says Or-Bach, who contends that U.S. authorities should make it easier, not harder, to import foreign talent.

Matloff, the UC Davis computer science professor who is critical of industry hiring, says that many smaller, immigrant-run companies tend to hire their compatriots almost exclusively. Such “network” hiring--well-documented in low-skill labor markets--places U.S.-born job-seekers at a disadvantage, says Matloff, a former Silicon Valley software developer.

On occasion, industry officials note, foreign workers have expertise that U.S. natives lack. In 1993, Sun Microsystems hired a group of scientists in Russia who had expertise in Fortran, a software programming language considered “boring” in the United States, said Ken Alvares, Sun’s vice president of human resources. Although conceding that the Russians worked for significantly less than their American counterparts, Sun insists that was not the company’s reason for hiring them.

Contracting with programmers in Russia, India and a few other countries is an increasingly popular way for some computer companies to reduce their costs and find skilled workers. Although some consider that a good alternative to immigration, others worry that it will merely drive wages down and jobs overseas.

From the perspective of some industry outsiders, computer companies easily could recruit from the legions of technologically literate U.S. workers, including computer programmers, who have been downsized, out-sourced or otherwise buffeted by the nation’s shifting, post-Cold War economy. Although often lacking advanced degrees, such jettisoned workers could be retrained, many say.

“There is really something bizarre about large-scale shedding of highly skilled professionals on the one hand, and employers in cognate sectors saying they can’t hire these skilled professionals,” says Michael S. Teitelbaum, a member of the bipartisan U.S. Commission on Immigration Reform and a program officer for the Alfred P. Sloan Foundation, which supports science research.

In part, Matloff blames what he calls the industry’s blatant age discrimination: the near-obsessive desire to hire eager young people right out of school, rather than accommodating an older, less malleable work force.

But the industry maintains that the skills of the downsized masses often do not match the needs of the quickly evolving high-tech sector.

“It’s not cost-effective for us to retrain these people, and I don’t think it’s our job,” says Marydee Beall, government affairs manager for Hewlett-Packard. “For a person to come out of the aerospace or defense industries and come to work for us in many cases would require that they go back and start their undergraduate studies again.”

Hewlett Packard, one of the industry’s most hallowed names, got burned publicly a few years ago during a spate of news accounts exposing “body shops”--contract outfits that take on computer programming assignments and hire foreigners, often brought in on temporary visas, to do the job. (“Techno-braceros” is what some have dubbed such workers, who, critics say, have cost thousands of Americans their jobs.)

Californians for Population Stabilization, a Sacramento-based group that seeks limits on immigration, sued Hewlett Packard and called its contract with an Indian firm “nothing more than high-tech servitude.” Company officials strongly denied any wrongdoing. A Superior Court judge found in favor of the company and dismissed the suit.

Notwithstanding such high-profile examples, the majority of foreign staffers in Silicon Valley work directly for their employers, not through third parties. And most are hired when they are in the United States, often on student visas.

Jeff Feng, who came from China as a student more than a decade ago and now works at Cypress, admires how national origin seems to be a nonissue in Silicon Valley’s relentless pursuit of new and better product. Says Feng, who has a doctorate in physics from Virginia Tech, “You don’t feel like a foreigner here.”