Vexed in the city: Starved for tech talent and yet nobody to hire?

As the H-1B debate continues, the tech industry faces an odd contradiction: a skills shortage along with an applicant surplus.

Nick Statt Former Staff Reporter / News
Nick Statt was a staff reporter for CNET News covering Microsoft, gaming, and technology you sometimes wear. He previously wrote for ReadWrite, was a news associate at the social-news app Flipboard, and his work has appeared in Popular Science and Newsweek. When not complaining about Bay Area bagel quality, he can be found spending a questionable amount of time contemplating his relationship with video games.
Nick Statt
8 min read

Immigrants are sworn in as U.S. citizens during a naturalization ceremony May 22, 2007 in San Francisco, California. Over 1,400 immigrants from 100 countries became U.S. citizens at the ceremony. Getty Images

This story is part of a CNET special report that examines the controversy gripping San Francisco as a massive influx of techies feeds an unprecedented economic boom -- and backlash.

Darin Wedel made headlines in 2012 when his wife, Jennifer, asked President Barack Obama during a Google+ Hangout why her husband was still out of work while H-1B visa holders continued to stream into the US.

Wedel, who graduated from Texas A&M University with a degree in electrical engineering, lost his job as a semiconductor engineer for Texas Instruments three years earlier.

Obama pledged help. But Wedel ended up taking a temporary position in the medical field, becoming another American with an engineering or technology degree who couldn't find a job in engineering or technology.

Vexed in the city: CNET looks at how San Francisco is dealing with its tech boom. James Martin/CNET

The San Francisco Bay Area -- home to star tech companies including Google, Apple, Facebook, and hundreds of startups -- should be interested in experienced, mid-career engineers like Wedel. After all, tech companies often describe themselves as meritocracies, where skills are the only thing that matters.

But the reality of the landscape is more complicated. While tech companies are flooded with resumes, only a fraction of the applicants for these lucrative spots wind up with jobs in Silicon Valley. All the while, the industry complains it's struggling to find the right people with the right skills.

What's going on? Some say tech companies are being exceptionally picky. Fewer than half of the 12.1 million people in the US with degrees in science, technology, engineering and math -- so-called STEM-degree holders -- held jobs in STEM-related occupations in 2012, according to the latest data compiled by the Center for Immigration Studies.

Others blame H-1B work visas, which allow companies to hire skilled workers from other countries.

But while the political debate generates a lot of heat, it doesn't shed much light on the structural changes that make today's tech world much different than what it looked like a decade ago. A resume listing popular skills, such as the ability to write iOS apps and program in the Python and Ruby coding languages, give candidates make-or-break status in job interviews -- no matter how long they may have worked in the tech industry.

The uncomfortable truth is that many of the skills and abilities that companies seek turn engineers like Wedel into victims of circumstance.

"Today's startups are being founded by twenty-somethings," says Mike Mickiewicz, co-founder and CEO of recruiting startup Hired. "And for the most part they're trying to hire people that look and act like them."

To be sure, it's definitely an awkward situation when someone in their forties interviews for a position with a 23-year-old-first-time founder from the startup incubator Y Combinator.

Facebook's Menlo Park headquarters is awash in amenities aimed at tethering the younger crowds, like free food and a college campus feel. James Martin/CNET

"We have shortages and we have a flood at the same time," says Vivek Wadhwa, a former entrepreneur and author of "The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent."

"If you look at Silicon Valley, these companies are indeed starved for talent," Wadhwa says. "If you go to some parts of US where economies are in a slump, where you have big companies like IBM that are dominant no longer, you'll find workers there who are unemployed."

The critics

H-1B visas issued by the US government, which let foreigners work here for three years, have long been a source of controversy. The visa, which can be extended for an additional three years, is currently limited to 65,000 foreign workers per year and capped by country of origin.

Due to exemptions, however, more than double that are granted. In 2012, 136,890 were issued, along with another 125,679 renewals.

H-1B critics say the technology industry is guilty of playing a shell game, misusing the visas so they can bypass American engineers who may be more expensive to employ.

Vexed in the city: The tech invasion of San Francisco (pictures)

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"The industry lobbyists try to say, 'Well look at how many degrees we produce each year in computer science. It proves we have a shortage,'" according to Norman Matloff, a computer science professor at the University of California, Davis, who has studied the issue. But there's no shortage of Americans with tech skills, Matloff maintains, and instead a confluence of factors that mean tech companies talent sights skew younger and cheaper.

There is also controversy around so-called outsourcing firms that muddy the waters around the H-1B visa debate and, while not representative of the tech industry as a whole, tend to distort the conversation. For instance, in 2013, six of the top 10 companies receiving H-1B visas per year were headquartered in India. Nine of those 10 companies named India as their primary source of employment. These companies are predominantly information technology (IT) companies.

"There is abuse of the system," concedes Wadhwa, who has studied the industry hiring landscape. "Twenty percent of the market is that sleazy cheap labor and 'abuse the system' mentality. In Silicon Valley it definitely isn't. In some IT companies it definitely is."

While the impact of H-1B visas on US engineers looking for employment remains a question of debate, this much is known: Sixty-one percent of such visa holders work in computer-related jobs, earning a median salary of $70,000, according to a joint study conducted by UC Davis and Colgate University. The mean annual salary for a computer engineer is around $108,000, a 2014 survey by Michigan Technological University found.

Employers keen to keep a lid on expenses may choose talent they can hire for less, as well as on terms that restrict the ability for that worker to jump ship and join a rival.

"The young Python person is much preferable to the old Python person. The young and immobile Python person is even more preferable," Matloff says. "Any big company in Silicon Valley, they want this person to be trapped. Hiring a foreign worker does that for them."

H-1B holders must get new employers to sponsor a new visa if they wish to change jobs. According to Mickiewicz, even though H-1B transfers are relatively easy and quick, those workers see 33 percent fewer job offers than green card holders or US citizens.

"Everybody says they want top talent, but the unsaid part of that sentence is, 'within our budget,' or 'under $140,000 a year,'" Mickiewicz adds. "Engineering salaries start off strong, grow really fast, and seem to max out very early in most people's careers."

Those salaries, Mickiewicz adds, usually max out at $160,000 after starting out slightly above six figures.

Even outside the Bay Area, in tech hot spots like Austin, Texas, and Boston, programming salaries have remained generally constant and in step with Silicon Valley, peaking nationally only during the dot-com boom.

You've got skills. But not skills we need

A recent Kauffman Foundation study found that about one-fourth of the engineering and technology companies founded in the US between 2006 and 2012 had at least one key founder who was born outside the country. Laszlo Bock, who's in charge of hiring at Google, used that fact to bemoan on his blog that "at a time when the U.S. economy needs it most, our immigration policies are stifling innovation."

The New York Times' Thomas L Friedman (left) and Google Senior VP of People Operations Laszlo Bock speak onstage at The New York Times Next New World Conference on June 12, 2014, in San Francisco. Getty Images

But finding candidates with the necessary backgrounds is harder than ever. The fast-changing requirements of today's tech jobs also affect the prospects for newly minted graduates with computer science and engineering degrees. Without the right cognitive skills and traits that enable you to learn and solve problems, someone with a college degree will have a hard time getting past their first interview, Bock told New York Times' columnist Thomas Friedman earlier this year.

Indeed, that's why Google -- which develops computerized eyewear, Wi-Fi air balloons, and self-driving cars -- now looks for candidates with backgrounds that typically haven't had a place at software companies in the past, like policy, law, behavioral economics, and psychology, yet also liberal arts. "You need some people who are holistic thinkers and have liberal arts backgrounds and some who are deep functional experts," Bock said. "Building that balance is hard, but that's where you end up building great societies, great organizations."

According to Bock, Google hires around 100 people globally a week. The company receives around 2 million resumes a year. Yet, one look at its careers page shows pages upon pages of openings. There are 984 current openings under Google's "Build cool stuff" umbrella, which includes engineering and design, operations and support, product management, and developer relations and technical solutions.

An inside look at a typical day in tech wonderland (pictures)

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Google's competitors have equally robust job openings relative to company size. Apple, with a work force of 98,000 employees, is nearly twice the size of Google. The iPhone maker has a combined 1,434 listings in the US across software and hardware engineering, with the earliest job listing dating back to March 27, 2013 for a role as a Sensor System Architect.

Facebook, which has 7,185 employees, has more than 360 openings across its technical roles. Facebook, Google, and Apple declined to comment for this piece.

And though USA-firsters may want tech companies to focus on native shores, the talent hunt no longer knows boundaries.

"Why limit yourself to one market? It's like the NFL recruiting only from Rhode Island," said Wadhwa, a proponent of immigration reform. He acknowledges that the global search creates casualties and prompt angry messages and threats from people who are unemployed. "But the more we innovate, the better the world will be. People who don't have up to date skills are going to be the losers in this economy. People who can keep up with tech win."

Joe Green is the president of FWD.us, an immigration lobbying group founded in April 2013 and funded by several tech industry leaders including Facebook founder Mark Zuckerberg. He rejects the idea that there ought to be a certain number of American jobs that need to get allocated to US workers.

"It's not how many jobs does Microsoft have, or is Microsoft going to keep expanding in the US, or is the next Microsoft going to even be in the US," Green said. "The single biggest factor that you're thinking about is where can I collect talent."

In the meantime, engineers like Wedel make the best of the situation. Wedel's temporary medical position became permanent after five months. It was ultimately immobility that kept him from taking an out-of-state offer that would have allowed him to stay in his desired field. Because of a custody agreement for one his two daughters, he had to keep a job in North Texas.

"I wish the president could have gotten us a job," his wife, Jennifer, told the Fort Worth Star-Telegram in April 2014. "He's the president and you'd think if anybody could get you a job, he could. But if he was able to, and the word had gotten out, the White House would be flooded with requests."

Update at 5:00 p.m. PT: A previous version of this article mistakenly attributed conversational anecdotes about the top H-1B rankings in the US to Norman Matloff. The conversation was had with Vivek Wadhwa, and data was not directly discussed, but was pulled from publicly available records.