The Argy-Bargy About H-1B Visas is All About Dollars … At Tech Companies AND Universities

We at Technology Bloopers are not big fans of President Trump, but his administration’s putting pressure on tech companies’ hiring software engineers from India and China to replace Americans does seem to be consonant with his pre-election promises.

But apparently it is even worse than that. We heard a couple of days ago about one local company that not only hired a bunch of Indian H1B visa-holders, fired their American staff, and replaced them with these imported folks … after they were trained by the Americans. And this noxious practice has apparently been going on for some time, according to the Stateline folks at The Pew Charitable Trusts.

Three months of coder school is not much training compared with that of the better-trained—often in American universities—and more-experienced visa-holders. But why are these American universities welcoming these foreign students? It’s because those students come bearing big funds for their education. (At state universities, it is simply that the international students must pay the same (higher) prices as out-of-state American students.) We have heard that among some of these students it is said that PhD stands for “Parents have Dough”. Interestingly, those international students are more prone to cheat on their exams. Hmmm … does that mean that their future code will be less trustworthy than that of Americans?

We wonder why the big Silicon Valley tech companies have not done a better job on their own of training software engineers. Couldn’t they be hiring “junior” software engineers from the coder schools and boosting their capabilities with on-the-job training. We suspect one reason is that it is more expensive to do that than to hire foreign help. And more time-consuming. And another reason may be that they didn’t do a good job of forecasting their growth and concomitant demand for those software engineers. Maybe the current visa flap will motivate them.

But it may not be the fault of these companies. Americans may too lazy, or too afraid to be “uncool”, to study STEM (Science/Technology/Engineering/Mathematics) courses so there is not enough local talent to fill the needs of Silicon Valley. Graduates with strong STEM knowledge are polar opposites to “art history majors” , a term used derogatorily to connote enjoyable-but-low-paying jobs.

Facebook and Google Create New Homeless People in Silicon Valley in 2016

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They may not be sleeping on park benches, but they’ll never be able to afford a house in Silicon Valley. That’s because the household-word high-tech companies (Apple, Facebook, Google, et al) in the San Francisco Bay Area are adding jobs but no one is adding commensurate numbers of housing units, and the prices of homes is skyrocketing.

The iconic independent bookstore in Menlo Park, Kepler’s Books, and Peninsula Arts & Letters, sponsored a well-attended public forum, “Housing Crisis Stories”, on August 18, 2016. The motivation for the meeting was the disconnect between the huge number of new jobs being created by the giant high-tech companies like Facebook and Google and the tiny number of new housing units being created. According to the local paper, The Almanac (which covers the tony cities of Atherton, Menlo Park, Portola Valley, and Woodside), San Mateo County added 55,000 jobs but only 2,000 housing units (homes plus apartments) between 2010 and 2014. The main source of new jobs is these high-tech companies, but other real estate development is also favoring offices at the expense of housing units.

Except for me (in my TechnologyBloopers persona), who dealt with the new jobs, everyone dealt with the housing shortage. There appeared to be NO representatives from the nearby, Menlo Park-based, Facebook. Many of the attendees were either personally the victims of the rapidly-rising home prices or apartment rents, or were recounting stories of other victims. The poster child for these victims is a Palo Alto planning commissioner—a tech lawyer with a software engineer husband—who is resigning and moving to Santa Cruz because they can’t afford to live in Palo Alto and raise a family there.

Unfortunately, individually they have no power to escape their victimhoods. They will have to band together to elect officials who DO have some power. City Councils in those cities affected will need to be very proactive in forcing the tech companies and real estate developers to deal with the housing shortage. And neighboring cities need to cooperate with each other so that jobs created in one city (which result in revenue both to that city government and to retailers in that city) do not force other cities to deal with housing those new employees.

The problem seems to be a failure to optimize the OVERALL combination of jobs and housing. The technology companies are a big part of the problem and they need to be a big part of the solution. And one way those companies, at least the ones like Facebook and Google whose principal activity is software development (which can be done most anyplace), can be a part of the solution is for them to locate large portions of their staff in regional offices in cities far away from Silicon Valley.

There were some creative solutions mentioned, which would help add housing units, IF the groups concerned would cooperate to change the rules for zoning and construction. One was to build several floors of housing above parking garages. Another was to replace single-story strip malls with multi-level buildings having the retailers at ground levels and housing at the higher levels.

There was one additional issue that seems unique to Palo Alto and Menlo Park (among the cities on the San Francisco Peninsula), namely the gentrification of (formerly) low-priced residential housing in East Palo Alto and East Menlo Park, and the related issues of racism because of the relatively high percentage of people of color living in those cities. Fortunately, those cities were well-represented in the meeting, and hopefully their inputs will continue to be carefully considered as solutions to the jobs/housing are implemented.

Is Amazon the New Apple?

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Will Apple topple from its perch as the world’s most valuable company? The stock market didn’t reflect Apple’s declining smartphone sales far enough ahead, which led to a drop in share price when year-over-year Q1 iPhone sales declined nearly 15%. And while the overall market grew about 4%, leader Samsung stayed flat, and a handful of Chinese companies rose ominously. Apple’s reliance on the iPhone for growth has become a weakness.

But there is another important consequence. If you look at total market capitalization (total shares times share price), Apple is declining rapidly and Amazon is rising rapidly. For the last 3 calendar quarters, the top 5 companies in the world have included only Apple, Alphabet, Microsoft, Amazon, Berkshire Hathaway, and Exxon Mobil, and the top 3 were only Apple, Alphabet, and Microsoft. But Apple’s market cap(italization) in 1Q2015 was more than double ANY other company, while in 1Q2016 there were 7 other companies with market caps over half of Apple’s. But In 1Q2015 Amazon was not in the top 10. It was #10 in 3Q2015, and #4 in 1Q2016 (getting profitable helped a lot). And Amazon is not dependent on one product line.