The Plight of the Graying Tech Worker

High-skilled immigration is dramatically transforming the tech sector in the United States.1 In 1975 immigrants accounted for one in 12 inventors in America. Today it’s one in 3.5. This surge is due to immigrant concentration in science and engineering fields, and factors that make the United States attractive, such as access to the latest technologies and high pay levels. The impact has been most evident in advanced technology sectors in areas such as Boston and Silicon Valley, but nontech companies including JPMorgan Chase, KPMG, and Walmart are also pursuing more global talent.2 Studies tout the benefits that skilled immigrants bring to the workforce, including their roles in facilitating global teams and contributions as taxpayers.3

But not everyone is happy with the current system, most notably older tech workers. In an effort to secure work in the booming Silicon Valley economy, for example, older workers have been scrambling to learn new coding skills and making other changes (including updating their wardrobes and even undergoing plastic surgery) in order to appear more youthful.4

They’re not overreacting. My analysis of employee-level U.S. Census Bureau data and qualitative interviews show that U.S. tech workers older than age 40 have good reasons to be concerned about how globalization affects their career longevity. In addition to competing with greater numbers of skilled foreign workers, older tech workers are now also more likely than younger workers to lose their jobs when technical work moves overseas.5

All that said, it would be a mistake to rein in U.S. immigration policy.6 Here’s why.

The largest and most prominent visa category for employment-based immigration to the United States is what’s known as the H-1B visa. Some 90% of H-1B visa recipients are individuals younger than age 40.7 Typically, economists analyze the effects of immigration through an apples-to-apples comparison of immigrants and nonimmigrants in the same general age and education bracket who are looking for employment. However, peer displacement doesn’t appear in that data set because the salary differences between workers with H-1B visas and domestic employees of similar ages and skills are minimal (in part due to a law requiring companies to pay an H-1B worker the “prevailing wage” for the position). As a practical matter, employers hire young foreign and homegrown tech talent at the same time and with comparable salaries.8 So putting too many constraints on international hiring would shrink the talent pool and limit access to much-needed digital skills without generating the cost savings you might expect.

How We Pit Old Against Young

But companies can save money by hiring young H-1B workers rather than older tech workers. Initial salaries for H-1B workers in 2016 ranged from less than $80,000 for routine computer work to more than $120,000 for people with scarce IT skills9; many of these individuals are willing to work long hours and weekends. By contrast, older workers who have received regular pay raises over two or three decades might earn $150,000 or higher, and they are apt to be less flexible about work schedules. Age discrimination is illegal in the United States, but companies do have the ability to terminate workers if they deem their wages too high to support or their skills outdated.

Tech CEOs claim that there are few job losses when U.S. companies hire non-U.S. workers with H-1B visas. In 2007, for example, Bill Gates testified to Congress that Microsoft hired four domestic workers for every foreign skilled worker it brought to the United States.10 But U.S. government data tells a more complicated story — that tech hiring tends to benefit younger workers over older tech workers no matter where they come from.11 As the appetite for tech workers increases among U.S. companies, the employment level of older Americans stays flat and becomes a dwindling share of the overall employee base. My research shows how older tech workers, especially computer programmers, are on a treadmill; unlike other occupations like management or law, what counts most in tech are the latest skills, not accumulated experience or personal networks.

Older Workers Are Worth Protecting

Employers should be more cautious about pursuing strategies that discount the contributions of older workers. In recent years, some companies realized too late — after older employees had departed — that longtime employees possessed critical knowledge and experience. Moreover, whatever cost reductions companies achieve can be ephemeral if young hires move on to other opportunities.

So, from a policy perspective, what can be done to address the challenges of older tech workers? In the United States, companies — not governments — are the gatekeepers for employment-based migration. The advantages of this approach are that it incentivizes businesses to hire the workers they think will provide the most value and ensures migrating workers are fully employed upon arrival.

But the existing H-1B program is hardly ideal. One thing it doesn’t do is ensure that scarce visas go toward prioritizing growth and innovation (as opposed to merely helping organizations save money on their payrolls). It has few minimum requirements for worker qualifications and gives sponsoring companies control over workers applying for green cards. Two changes would go a long way toward better meeting organizations’ needs while also providing better protection to older workers.

First, the U.S. government could rank the H-1B applications by salary level as a way to prioritize visa requests across companies and support higher-valued needs. Currently, H-1B visas are handed out by lottery, which favors companies that seek lots of visas for moderately skilled workers (who are relatively easy to find). Introducing a salary-based ranking would help companies needing people with specialized (and high-paid) skills. Second, setting a minimum salary level for an H-1B worker (say, $100,000) would limit companies’ ability to use H-1B visas just to reduce their labor costs by displacing older workers. As a kicker, the government could make the rankings and minimums regionally based as a way to better distribute some of the gains from immigration away from the tech centers and toward Middle America.

But even these policy changes wouldn’t provide enough job security for older tech workers, because experience is less valuable in tech than it is in other fields, and strong IT capabilities exist all around the world. The reality is, whether through overseas outsourcing of data centers or the hiring of young global talent, companies will continue to push down labor costs however they can.

Given how much tech companies benefit from skilled immigration, employers should be asked to do more for displaced workers. One idea is to require companies that want to employ workers on H-1B visas to contribute to a special fund earmarked for retraining displaced workers and supporting community colleges to meet an important societal need (tapping a percentage of their stock returns or profits above a certain level).12 Depending on how the program is structured, it could raise hundreds of millions of dollars to support community colleges as they retrain workers.13 Since tech companies have such a powerful and beneficial role in the selection of foreign talent, asking them to be more supportive of local talent development seems reasonable.

A key driver of U.S. competitiveness is the strength of the tech workforce. But we shouldn’t let the pursuit of one type of talent deprive us of another.

Editor’s Note: An adapted version of this article appears in the Summer 2019 print edition.