This post is a follow up to my previous post. This post has two sections, the first section will show how the displacement of IT workers in US by Indian IT workers is not as big as the politicans tout especially compared to the displacement happening in other sectors. The second part of the post will show how big of a problem workers displacement is and what might be the real causes of it. Politicians in this country don’t have a clue of how to handle worker displacement arising out of causes other than legal immigrants. Before I begin here I will state a sarcastic quote because this post relies heavily on numbers obtained from government sites.

There are lies, damn lies and statistics

Benjamin Disraeli – Former British Prime Minister

Bureau of Labor Statistics defines displaced workers as “Displaced workers are defined as persons 20 years of age and older who lost or left jobs because their plant or company closed or moved, there was insufficient work for them to do, or their position or shift was abolished“. This is applicable to anyone who lost their jobs due to the reasons mentioned. There is another subcategory of workers that government focuses more, they are called long-tenured displaced workers who are defined as “persons who had worked for their employer for 3 or more years at the time of displacement“. Here is the summary of worker’s displacement in the IT Sector for the last 10 years.

Duration Survey date for reemployment Actual # of Displaced Workers # of Long-Tenured Displaced Workers # of Displaced Workers in IT % Reemployed % Unemployed % Not in labor force
Jan 2011 – Dec 2013[2] Jan 2014 9.5 Million 4.3 Million 137,000 66.6 19.7 13.7
Jan 2009 – Dec 2011[3] Jan 2012 12.9 Million 6.1 Million 197,000 56.4 27.9 15.7
Jan 2007 – Dec 2009[4] Jan 2010 15.4 Million 6.9 Million 195,000 41.3 43.5 15.2
Jan 2005 – Dec 2007[5] Jan 2008 8.3 Million 3.6 Million 177,000 69.9 21.4 8.7

A few points to note in the table above and the reports in the link are

  • The years in the table overlap.
  • The values in the last three columns are for only displaced workers in the IT industry and they were obtained on the date mentioned in 2nd column.
  • The number of displaced workers in IT is a very small percentage ranging from 2.82% to 4.91% compared to the overall long-tenured displaced workers number.
  • Total number of displaced workers is almost double that of number of long-tenured workers.
  • Manufacturing and Wholesale and Retail Trade tops the list of displacement category for the last 10 years.

Politicians are baselessly bashing legal immigrants esp H1B and L1B visa holders and providing convoluted picture about immigration. Blocking or Suspending the H1B program or blocking IT outsourcing to India will not solve this economic mess. I will write a separate post about this. The bottom line is that American IT workers displacement is not that big as politicians tout. My heart goes out to these individuals and their families. For government and some investors these may look just as numbers but not as members of the society who need helping hand. Losing one’s job in today’s environment is like losing one’s dignity.

Here are the number of Non-immigrant visa numbers for the last 5 years for most important visa types. The H1Bs and L1Bs are blamed for displacement in tech sector but the real numbers tell a different story. If you compare the displacement numbers from table 1 to sum of H1B (I guess includes total of both Cap-Exempt and Cap-Subjected) and L1B numbers from the table below, I feel that these visas are adding more people to the US workforce without getting any benefit from government like social security. In the table below H4 visa numbers should not be counted against displacement because they were not allowed to work until May 26, 2015. Not all L2s are working. I intentionally left B1/B2 whose numbers are in millions and that visa is issued for business and pleasure and also there are people from Europe and other countries that can travel to US for business and pleasure without visa, hence the B1/B2 number is not going to give correct picture and they are short term visas and cannot displace US worker in US for long term.

Year[6] H1B H4 L1 L2 Yearly total
2010 117,409 66,176 74,719 69,233 327,537
2011 129,134 74,205 70,728 76,949 351,016
2012 135,530 80,015 62,430 71,782 349,757
2013 153,223 96,753 66,700 74,104 390,780
2014 161,369 109,147 71,513 78,108 420,137
Total by Visa Type 696,665 426,296 346,090 370,176 Grand Total: 1,839,227
The revenue of the entire Indian IT-BPO industry for fiscal year 2015 is $146 Billion[1]. Can you guess the revenue of Apple for fiscal year 2015? It is $234 Billion.

When it comes to documenting reasons for displacement I didn’t find a satisfactory source from government. The government has classified the reasons very broadly as follows, I am not able to find numbers by other classifications from government sources.

  • Lost or left their jobs due to plant or company closings or moves
  • Due to insufficient work
  • Their position or shift was abolished

I think if government classifies the displacement by the following categories then it will be helpful to the address the problems clearly.

Demographics displacement

Baby boomers are people who are born between 1946 to 1964. 75 million people i.e roughly one quarter of the population in US belongs to this generation. In 2015 that means 25% of population is between age 50 and 70 roughly. These people are heading towards retirement which is age 65 as per social security system. The trend in displacement and hiring shows that older workers are now being replaced by younger workers. This is one of the significant factors for worker’s displacement. I am trying to collect numbers about this. This problem may be new to US but India faced this problem in 1980s. Politicians don’t have a comprehensive solution to address this problem. They will take this issue seriously only when social security fund takes a hit.

Displacement due to technology

My constant complaint about US is that it gives more focus to capital and technology than to labor. To put simply machines are replacing workers. Companies are replacing workers with machines and in some cases they can deduct those investments and its maintenance from tax. Here I am making a prediction and I am going to watch how US solves this issue. Self-driving cars are now a reality. Google is aggresively marketing its self-driving cars. The automobile industry is the heart of US economy. If self-driving cars gain considerable market share then the following jobs are under threat, cab drivers, car dealers because Google like Tesla will sell cars mostly online and finally who needs license to “use” self-driving car so DMV jobs may be at stake. One more prediction is that government is planning to allow delivery of products through drones. This will put lot of logistics jobs at stake. Is government proactive in identifying these trends and creating programmes that produce actual result?

Displacement due to new business model

This is also one of the major reasons. The business model of a sector changes dramatically every decade. Look at how the retail industry has transformed itself from the brick-and-mortor to online. This change in business model puts lot of jobs at stake. This is one of the reasons for Wholesale and Retail to be ranked 2nd in the displacement category. The retail industry affects lot of other dependant industries like Manufacturing and Logistics. The recent fuss between Mr.Elon Musk and New Jersey governor Mr.Chris Christie clearly explains the social and political tensions that new business models create. In my opinion Mr.Chris Christie’s actions were good from a social point of view.

Displacement due to capital flow

Where should I begin with for this category? If displacement numbers are tracked correctly this will come out to be the top factor for worker’s displacement. There is no doubt about the destructive power of Wall Street and Big Banks on the US economy. If somebody thinks otherwise please check your mental health. Why do you think so many merges and acquisitions are happening now? It is not because the companies are not doing well it is because of the greed of the investors. These mergers and acquisitions create layoffs in great numbers. The politicians has faciliated the movement of capital worldwide and that has made moving jobs to other countries easy. Every Free Trade Agreement that US negotiates will displace workers in US.

In addition to these categories, categories like displacement due to outsourcing, displacement by government regulations etc has to be tracked. The problem of worker displacment is getting bigger and bigger with easy flow of money to other countries as investments.

I had a plan to start a non-profit to address this huge displacement and help workers in this country get their dignity and prosperity back. After 2009 recession I abandoned my plan to become an entrepenuer and decided that addressing workers displacement is the correct choice for me. Unfortunately even I am stuck in the Green Card queue and unable to proceed with my plan. I am doing what I can, I have helped many people. Of all the people I helped I will post the stories of the 3 people who are now having a good career. I don’t want to take full credit for their hardwork and drive. I just guided them and they worked hard for their success.

Credits and References

  • 1 –
  • 2 – 2011 – 2013 workers displacement report.
  • 3 – 2009 – 2011 workers displacement report.
  • 4 – 2007 – 2009 workers displacement report.
  • 5 – 2005 – 2007 workers displacement report.
  • 6 – 2010 – 2014 visa statistics.