Facebook, H-1B and Age

Article author: 
Norm Matloff
Article publisher: 
Upon Closer Inspection
Article date: 
September 30, 2014
Article category: 
Our American Future
Medium
Article Body: 

I’ve long emphasized that one of the major reasons the H-1B visa is so attractive to employers is that it enables them to avoid hiring older U.S. citizens and permanent residents. Other key reasons I’ve often cited are a desire for immobile labor (especially if the employer is also sponsoring the worker for a green card), and the convenience of simply recruiting at U.S. universities, where there are lots of foreign students. In this post, I’ll focus on the age issue, though note that it ties in to the convenience issue as well, since most university students are young. And I’ll use Facebook as my main example, both because Mark Zuckerberg’s FWD.us has been leading the fight in Congress for expansion of H-1B and because Senator Sessions called it out in his recent speech.

Though I generally place the age discrimination dividing line at 35, I’ve sometimes mentioned that it often occurs even earlier. Just to make matters concrete before I get to the figures, let’s look at the example of my former student, whom I’ll call Tom. He has skills of great interest to Facebook, and is one of the sharpest students I’ve had. I certainly know people at Facebook who are not quite as sharp as Tom. Yet he didn’t even get a phone interview from Facebook when he applied. This shocked his friends, who with similar backgrounds were in strong demand.

Tom’s problem, I believe, was that, in contrast to his younger friends, he was about 30 at the time he sought work at Facebook, as he had worked in the industry for a while before coming back for his Master’s degree. You might think that’s a plus, but it basically priced him out of the market.  I’m sure that Facebook would value his experience, BUT not so much as to pay him a salary appropriate to his years.

Keep that latter point in mind — experience is good in an absolute sense, but not when compared to the additional salary that goes with that experience.  To quantify that, consider this analysis of Facebook salaries.  The data there indicate that a Senior Software Engineer gets paid about $30,000 more than an ordinary Software Engineer, and more than $40,000 above what a new grad gets. You do need to take these numbers with a grain of salt, first because it’s Glassdoor data and second because it doesn’t break down according to factors such as degree level (Bachelor’s vs. Master’s) and prestige of one’s university. (Concerning the latter, two young men wearing Stanford sweatshirts are pictured as new grads, and data cited in my EPI paper indicate that a Stanford degree commands a premium of about 30%.) So, we shouldn’t focus on specific numbers, but one thing is quite clear: That Senior title means a hefty differential in pay, compared to the ordinary Software Engineers.

Now, add to that another point I’ve shown repeatedly:  Even a Senior title typically means only 3-5 years of experience! Now you can see why Tom was likely viewed as too expensive — at age 30! Imagine how Facebook views a 35-year-old, let alone those over 40. I’ve mentioned before a professor I know, who is over 70 but still active, and who after a visit to Facebook told me with his typical humor, “Most of their employees seem to be the age of my grandkids, a few the age of my kids and none close to my age.”

With that in mind, I looked at the PERM data (wage and other information for green card sponsorees) for Facebook, 2013. Before I discuss this, though, a note on prevailing wage data (the legally required floor for H-1B and green cards): I didn’t look at the measure I used in my Migration Letters paper, ratio of wage offered to prevailing wage, because of a major change in the latter. The DOL has apparently replaced its Software Engineer category with a much broader Software Developers category — the latter having a prevailing wage about $20,000 cheaper than the former. Knowing that the industry and the AILA are quite aggressive in pressuring regulators for favorable policies, I suspect that this category change came about at the behest of the industry. In any case, though, I did not use that data here. (Note by the way that these figures are for the hyperexpensive Bay Area, but it’s true that Facebook pays well.)

Instead, I tabulated the Prevailing Wage Level, I, II, III and IV in the DOL scheme. John Miano has analyzed such data before, but here I wanted to tie it directly to the age issue. The system is complex, but Level roughly corresponds to years of experience. Note carefully that even Level II still is for the very young; if Tom had been an H-1B, he likely would have been at Level III.

Here are the results, among Software Developers:

I II III IV
22% 64% 2% 12%

Well, there you have it! 86% of Facebook’s foreign software developers are younger than Tom (age 30)!  This, I submit, is why Tom didn’t even get a phone interview from Facebook — the firm wants the young H-1Bs instead of him. And, as noted, they are immobile too, unlike Tom, making them much more attractive to Facebook even if he had been younger.

Easy numbers to remember when you read FWD.us’ literature.

 


CAIRCO Research

H-1B high-tech worker job displacement