Keep APIs Open

Last week, Engine joined software innovators, startups, and investors as a signatory on an amicus brief in Oracle v. Google -- a case centered on how far copyright should be extended with regards to Application Programming Interfaces (APIs). We are in favor of limiting copyright on APIs in order to protect innovation and investment.

In 2012, district courts ruled in favor of Google, concluding that Java APIs used by Android are not subject to copyright. The Federal Circuit is now reviewing the case on appeal.

We are proud to put our name on the brief because we recognize the need for software startups to innovate and the drive economy forward. Startup innovation requires interoperability (ie. open exchange of information) between systems and programs, and this is fostered by APIs.

Our interest is in “preserving the deliberate balance Congress and the courts have established for software copyright.” This balance is integral to maintaining a competitive marketplace and investment landscape. Should copyright restrictions on API’s be tightened, the real-world implications could be significant -- could decrease competition in software innovation and chill investment.

We’d like to recognize Engine member startups who also signed this brief, including: Bright Funds, Hattery, Hipiti, and Vessel. We are also thankful that prominent investors and technology industry veterans lent their voices, including Engine Advisory Board Member Brad Feld, and his partner at Foundry Group, Jason Mendelson. You can find a full list of signatories here.

We encourage you to check out the abstract and full brief.

Related articles:

• Computer Scientists Urge Court to Block Copyright Claims in Oracle v. Google

  API Fight

Obama Administration Joins Fight Against Patent Trolls

Today the White House Task Force on High-Tech Patent Issues issued a statement with a clear message: it’s time to tackle patent reform. While Washington as a whole has been slow to embrace new proposals after the passage of The America Invents Act in 2011, a steady drumbeat from advocates, startups, and tech companies alike has pushed policy makers to do more to end the economic drag caused by frivolous patent litigation. The Obama administration announced seven legislative recommendations and five executive actions that are a material step toward fixing the broken patent regime.

The executive actions make clarity a top priority. The requirements include ordering the patent office to work on rules that will make the real owner of a patent more apparent, requiring the office to tighten patent examiners’ scrutiny around what a given patent claims to do, and compelling the office to provide clear, plain-English answers for consumers and businesses about demand letters from patent trolls.

The administration's legislative recommendations also meet key startup needs. The White House is calling on Congress to empower and protect individuals and businesses facing legal demands from patent trolls. This includes proposals to further increase patent owner transparency, shift incentives to discourage predatory litigation, expand the patent reviews from the America Invents Act, end-user protections from patent troll suits, and increase incentives to encourage public disclosure of demand letters from trolls.

We are excited that the White House is taking action in the patent debate. While Washington has been divided along partisan lines of late, members of both parties are unifying to right some of the apparent wrongs in the system. Today’s announcement should encourage further dialogue about what the right fixes are, and how Congress can most effectively protect startups and ultimately all businesses from unwarranted lawsuits.

You can read White House fact sheet here. We will continue to post updates on patent reform proposals from Washington.

Related articles:

• Startup Perspective Critical For Patent Reform
• Entrepreneurs to Congress: Act on Patent Troll Suits

Picture courtesy of Alan Kotok.

Keep Us Here. Pass Comprehensive Immigration Reform

Engine supports comprehensive immigration reform, and specifically the bipartisan “Gang of Eight” bill that passed out of the Senate Judiciary Committee with amendments that further encourage innovation and boost economic growth.

To the aim of bringing this bill to a vote, and getting it passed into law, we’ve launched Keep Us Here
-- a campaign centered around online tools to call, write to, and tweet at, Congress.

This is a unique moment in American politics, and you can be a part of it.

For this to work, we need to mobilize startups, entrepreneurs, investors, innovators, and everyone who wants an immigration system that works for America in a global economy. We also hope to build a broader coalition, including a wider range of interest groups also pushing for comprehensive immigration reform.

Why does it matter?

1. Startups are responsible for all net job growth over the last twenty years
2. Engine Advocacy research tells us that for every new high-tech job, 4.3 other jobs are created in a local economy
3. With forty percent of Fortune 500 companies founded by immigrants, or the children of immigrants, it’s critically important that we safeguard the ability of the next generation of founders to start business here.
4. Under the current system we are losing knowledge, and losing out to other countries who are welcoming American-taught talent with open arms

Startups promise the rebirth -- and rejuvenation -- of the American economy. Startups can power the next generation of growth in the American economy if we let them.

Engine is working towards an immigration system that works for the United States in a global economy, and we need your help.

You can tell policymakers that you care about knowledge, talent, jobs, growth, and keeping the U.S. competitive in the global economy. Let’s raise our voices to encourage the Senate to pass comprehensive immigration reform now.

Go to Keep Us Here
. Write a letter to your Senator, tweet at Congress, and pledge to call your Senator directly on June 18th, to show your support for comprehensive immigration reform.

Use the image above as your Facebook cover picture, and the badge below for your website. If you want any further messaging, or other images, don't hesitate to reach out to us at comms@engine.is.

Unlicensed Spectrum Can Drive Innovation

Engine has filed a comment with the Federal Communications Commission (FCC) encouraging broader allocation of unlicensed spectrum in the 5 GHz band. If that sounds confusing, don’t worry; spectrum management is a highly technical area of public policy. We’re speaking up because innovators need spaces to develop their ideas for new technologies and devices.

Let’s take a step back. Spectrum is allocated to commercial users through one of three main methods. It’s auctioned, as is the case with most cellular voice and data airwaves. It’s assigned, a method that has fallen out of favor since the rise of the FCC auction system but had been widely used for television broadcasters. It is also opened up, allowing users to operate on the same wireless frequencies by setting standards to prevent interference. You’re probably familiar with some unlicensed standards; they include technologies like WiFi, Bluetooth, and RFID.

Why does unlicensed spectrum matter to startups? While spectrum is a public resource, it’s tightly regulated to keep different users from broadcasting on top of each other. As a result it’s also very hard to access. In addition to regulation, the FCC has raised billions of dollars from spectrum auctions over the last twenty years, and Congress in turn has prioritized bringing in money for the federal government, putting new auctions at the front of the policy agenda. While steps have been taken to free more spectrum for unlicensed use, very few new technologies have been deployed on opened frequencies.

It’s critical that government sees unlicensed spectrum as an investment in the future. Wireless policy is as much about opportunity as it is about utilization. Just as policy decisions laid the foundation for the deployment of LTE technologies, more needs to be done for innovators looking to roll out compelling point-to-point technology, internet-of-things technologies like smart grid, and even faster, more robust WiFi standards.

Spectrum management is not a zero-sum game. Allowing innovators access to more spectrum with fewer regulatory limitations won’t necessarily crowd out existing users. We will continue to work with regulators and legislators to find opportunities for innovators to make the most of this critical public resource.

Photo courtesy of Colin Howley.

Startups Speak: The Entrepreneur Visa is Key

Peruvian born, Fulbright scholar, engineer, entrepreneur, and Hattery Co-Founder and Managing Director, Luis Arbulu, takes us through his perspective on current immigration policy and the Senate “Gang of Eight” bill. The highlight? The visa specifically for entrepreneurs.

In his spare time, Luis works with the White House Office of Science and Technology Policy and USCIS as an Entrepreneur in Residence, advocating for growing companies and entrepreneurs right at the center of it all.

If you have a story to tell, email editorial@engine.is

Immigration Bill Moves to Senate Floor with Amendments

The amended Senate “Gang of Eight” immigration bill yesterday passed 13-5 out of the Senate Judiciary Committee -- but not before concessions were made by Chairman Patrick Leahy (D-VT), and Senators Orrin Hatch (R-UT) and Charles Schumer (D-NY) reached an agreement on certain provisions for high-skilled labor. 

Now the bill moves forward, with significant bipartisan support from the Committee, to the full Senate for their consideration, and then hopefully to a vote. Majority Leader Harry Reid (D-NV) said this bill will be first up for debate when Senators return from their Memorial Day break, and Senate Minority Leader Mitch McConnell (R-KY) vowed that Republicans would not block the immigration bill from the floor.

In a statement on Tuesday night, President Obama thanked “the leadership of Chairman Leahy and a bipartisan group of eight Senators,” and said that “the legislation...is largely consistent with the principles of commonsense reform I have proposed and meets the challenge of fixing our broken immigration system.”

Since the proposal was first released last month, over 300 amendments -- offered by Republicans and Democrats -- were submitted to the Senate Judiciary Committee for consideration. The Committee debated over 100 and has done a great job of making the bill better where necessary, but also rejecting efforts to severely restrict legal immigration, which would impede the ability to meet workforce needs. Moreover, this mark-up process is essential in giving everyone a stake in the final product as it moves through the approval process.

Focusing on the high-skilled sections of the bill, a host of amendments have been approved, and two were approved unanimously: an amendment by Senator Sheldon Whitehouse (D-RI) to help participants in startup accelerators obtain INVEST visas, and Senator Leahy’s amendment to permanently authorize the EB-5 visa program. The program lets a private entity or state apply to become an approved regional center, and then propose development projects for immigrant investors.

Looking at the H-1B system, the efforts of Senator Hatch were particularly noteworthy; his amendment, agreed upon late in the deliberations, increases the minimum number of high-tech H1-B visas allowed annually -- but it does so without accounting for domestic economic conditions. On the issue of fraud within the system, the broad bill requires employers filing visa petitions to first offer a job to an “equally qualified” U.S. worker, but in another amendment from Senator Hatch yet to be debated, this requirement would only be imposed on “H-1B-dependent” companies.

On student visas and funding for education, the committee adopted an amendment from Senator Grassley (R-IA) to improve the student and exchange visitor visa programs, and a further amendment from Senator Hatch to put the labor certification fee towards “improving science, technology, engineering, and mathematics education and training in the United States.”

Late in the day, still trying to get the bill to the floor, Senators Leahy and Schumer were forced to agree with dissenting members of the committee to hold off on adding an amendment that would have allowed certain provisions for same-sex couples. As a result of this, and other compromises, Committee members and other Senators know the bill is not perfect, but it is the best shot at fixing our broken immigration system. And with deals already being made between supporters and those who had previously been detractors as part of the full Senate markup process, it’s clear that Senate leadership on both sides of the aisle is looking for a process which swiftly and judiciously moves the bill to a vote. 

Last night’s developments are good news for those of us fighting for reform, but now is the time to step on the gas. The need for pressure on Senators to pass this bill and keep moving towards fixing our broken system is real, and it is immediate. 

In league with organizations from across the political spectrum, including Organizing for Action, Consumer Electronics Association, Voto Latino, Silicon Valley Leadership Group and many more, Engine and March For Innovation are launching two days of initiatives across the Internet. Stay tuned to Engine for more news about the March, and what we’ll be doing afterwards as well. Join the March, follow us on Twitter and Facebook, and keep working. Your voices can tilt this debate, help guarantee the bill’s passage, and go a long way towards protecting innovation and building an immigration system that works here in America.

Photo courtesy of  Talk Radio News Service.

Startups Speak: We Won't Be Hiring in the U.S.

Sumit Suman is the co-founder of Mentii, an online mentoring platform connecting successful mentors with aspiring young people. Sumit started the business both in New York and Bangalore in order to benefit from capital, talent and the market across two startup hubs. But, as the co-founder of Mentii, it was imperative that Sumit could work on the U.S. side. This is where the trouble began.

The whole visa process was an expensive distraction, especially during the early bootstrapped stage when the team needed to devote all their resources to finding and proving the market. After receiving a protracted Request For Evidence (RFE), where responding to it would have resulted in further legal expenses, Sumit had no choice but to withdraw his visa application. This is despite the fact that Mentii had already invested 40 percent of their total expenditure on immigration-related costs!

Now back in India, Sumit explains that his decision was the only option for his business; even if there was a legal (though uncertain) way to stay in the U.S. in order to grow the company, the cost of doing so was too prohibitive. While the Mentii team will still find a way to engage the U.S. market, and U.S. investors, the team will not be growing here -- in other words, no additional jobs will be created in America.

Startups Speak: Sumit Suman

from Engine Advocacy on Vimeo.

If you have an immigration story to tell, email editorial@engine.is

Engine to Senate Judiciary: Pass Immigration Reform Now

Engine endorses the Senate “Gang of 8” proposal on comprehensive immigration reform. So, on behalf of more than 500 startup members and other startup companies across the U.S., we sent a letter of support to Chairman Patrick Leahy (D-VT), Ranking Member Charles Grassley (R-IA) and the members of the Senate Judiciary Committee.

We thought it prudent at this juncture to thank the Senators who have been working hard on this proposal. Going forward, we hope their good work will be the subject of robust debate and then we’ll look towards the swift passage of this bill as we march towards solving our nation’s broken immigration system.

The Judiciary Committee is the first stop on the bill’s journey to hopefully becoming law. The markup process that begins today will amend and refine the legislation into a bill that can pass in the Senate, and one that can also do real and permanent good for people and businesses across the country who are in need of a working immigration system.

As we’ve said before, you can take action as well by committing to remain a vocal participant in this process. You can sign up for the March for Innovation which is now only 11 days away. It is only with your voice that we’ll be able to make a difference on this issue, so sign up, get involved and let your voice be heard today.

Here’s the full text of the letter:

Dear Chairman Leahy and Ranking Member Grassley and members of the Committee,

I’m writing to you, on behalf of the startup community, in support of S. 744 -- the recent Comprehensive Immigration Reform proposal released by your Senate colleagues. Engine Advocacy represents more than 500 startup companies from all across the United States, and we believe the provisions in this bill would greatly benefit the startup community, and therefore the U.S economy as a whole.

New and young firms are responsible for all new net job growth since 1980, according to research from the Kauffman Foundation. In addition, our own Tech Works research projected that for every job created in the high-tech sector, 4.3 additional jobs will be created in the local goods and services economy, including barbers, lawyers, and health care professionals. Finally, with forty percent of Fortune 500 companies founded by immigrants, or the children of immigrants, it’s critically important that we safeguard the ability of the next generation of founders to start business here.

The proposed INVEST visa will directly benefit immigrant founders and entrepreneurs who want to start a business here, and already have the support of local venture capitalists. In addition, raising the H-1B visa cap, and expanding the green card system with merit-based visas for high-skilled immigrants, will also make it easier for startups to employ much needed workers. Taking into account recent developments, we also support Senator Hatch’s amendment to make the H-1B visa cap responsive to market demand.

We applaud the work already done by your Senatorial colleagues and look forward to a spirited debate, a robust amendments process, and the opportunity to be a resource for the committee and the Senate at large as the debate advances. In the end, the continued good work of this committee and of Congress can affect real and permanent good for our country -- helping to catalyze continued economic growth in our community, and opportunity for the country as a whole. Startups can power the next generation of growth in the American economy if we let them.

We hope that you will support this proposal that will lay the foundations for a prosperous future.

With thanks,

Michael McGeary
Co-Founder
Engine Advocacy

Photo courtesy of Talk Radio News Service.

Right to Know or Right to Innovate?

In recent weeks, California legislators have shown renewed interest in redrafting online privacy regulations, leading to the introduction of over a dozen bills and the creation of a Select Committee on Privacy to help “update California privacy from the brick and mortar world.” Most efforts have been focused on AB1291 -- the Right to Know Act. While supporters of this two-year  bill -- including EFF and the ACLU -- claim it offers more transparency and much needed updates to privacy laws, there are almost no additional protections to users, and the bill imposes significant hardship on startups.

As we spend more time on the internet, conducting more of the business of our lives, online privacy has rightfully come to the forefront of efforts by government regulators and advocacy organizations. Regulations are necessary to protect children, prevent abusive marketing, and allow consumers to make informed choices about the products they use. Unfortunately, Right to Know does none of that.

This bill offers few, if any, improvements to the existing “Shine the Light” law, which already requires businesses to provide information to consumers about direct disclosures of personal information to third parties. At the heart of Right to Know is a new requirement that businesses make all “reasonably available” user data available upon request -- thousands and thousands of pages of it. This ‘give us everything’ mentality might feel right from an intuitive perspective, but it does not improve transparency (what does “reasonably available” even mean?), and it makes data more costly.

For a small startup, this bill is like a regulatory DDoS attack -- there just aren’t enough resources to hunt down all the data about users, especially when you consider the ever-changing nature of databases in growing companies. The beauty of startups is that we collect every piece of information until we can determine what is useful, allowing us to innovate and improve products along the way.

As more consumer-facing services live online, there is a continued need for trust between users and service providers. Startups -- the pioneers of the next great technologies -- need to foster that trust, but giving users thousands of pages of data will not do much to help consumers make informed choices. Right to Know, though well intentioned, will not help consumers make smarter decisions about products, but it could stifle the innovation of startups.

Startups Speak: Immigration and the Innovation Economy

This post is by Fabien Beckers, Co-Founder at Morpheus Medical.

I am a foreign-born entrepreneur in America. My company, Morpheus Medical, has created the first cardiac diagnostic tool that provides 3D interactivity, flow and pressure inside the heart. And all it takes is a ten minute MRI exam. But since I am a French citizen, I faced deportation, and the possibility of losing the chance to build this life-saving company. Understanding the importance of immigration reform is understanding what innovators, of any nationality, are capable of achieving.

Heart-related diseases account for more than a third of all U.S. deaths, and in 2010, the total cost was estimated at around $444 billion; treatment of these diseases accounts for about $1 of every $6 spent on health care in this country. These numbers are second only to oncology -- the diagnosis and treatment of cancer.

Responding to the current lack of accuracy in diagnosis, our technology not only solves the problem, it also reduces the time required by doctors, and therefore lowers the cost. In addition, the non-invasive aspect makes our solution perfectly suited to diagnosing small children with heart defects and diseases.

After studying for my PhD at Cambridge in the UK, I came to the United States in 2010 to attend Stanford’s Graduate School of Business where I certainly benefited from the best education this country has to offer. But when I graduated and wanted to start a business of my own, I faced an additional challenge as a result of my nationality.

Founding a business is already a very challenging and chaotic process. When finding partners, investors and customers is just the beginning, immigration battles present another, totally unnecessary, hurdle.

At Morpheus, we were lucky enough to pique investor interest early, but unfortunately, the investment was conditional upon securing my immigration status. When my H-1B application was denied, my appeal failed, and other avenues were successively closed off, the survival of this company came down to one person in one office in California who thankfully put a stamp on my O1 application.

This is not how the system should work.

No company, community, or country can survive without talent. So we should be helping brilliant innovators who want to build companies that will change lives, here in America. Everyone I’ve spoken to -- Republicans and Democrats -- agrees that this issue needs attention. Now is the chance to act; this bill needs our support. A quarter of all tech startups have an immigrant founder. I think I speak for many of these founders when I say that I want to stay here and build a successful company that creates jobs. We need an immigration system that supports the American innovation economy.

If you have an immigration story to tell email editorial@engine.is.

It’s All Relative: STEM Workers are in High Demand

Recent claims of an excess supply of high-skilled workers in the STEM occupations of science, technology, engineering and math are at odds with anecdotal and empirical evidence. While it’s difficult to definitively conclude whether or not there is a shortage of workers in any field, publicly available government data and common sense reject the notion that there are “too many” high-tech workers in the United States. More importantly, this entire discussion misses a larger point—high-skilled employment isn’t a zero sum game where a fixed set of workers are competing for a fixed set of jobs in an economy free from global competition. Let’s separate fact from fiction as we move forward with immigration reform.

Background

As the immigration reform debate heats up, so too has the rhetoric. One issue that has generally received broad support is the idea of expanding visas for high-skilled foreign workers—in particular those in the STEM fields of science, technology, engineering and math. Such support is based on the view that there aren’t enough qualified native-born American workers to fill demand for these roles. It also comes from the acknowledgment that employment in these fields is critical to economic growth, making them a national priority.

Despite this, some critics have voiced concerns about expanding visas for STEM workers, arguing not only that there isn’t a shortage of STEM workers, but in fact there are too many of them. Expanding high-skilled work visas, they claim, would push native-born American workers out of key technological occupations and reduce the wages of those who remain in them. Such claims are certainly outside the mainstream, but they have been taken seriously enough to appear recently in the Op-Ed page of the New York Times, the Washington Post, the Wall Street Journal, and most recently, the Atlantic.

So, which is it? Are there too few or too many STEM workers in the United States? It can’t be both. Since the truth has important implications for thousands of workers, startups, and the economy, we had better get it right.

The “we have too many high-tech workers” hypothesis is flawed because it is informed by an incomplete set of information. It also lacks common sense. The aforementioned articles rely upon a November report and a report published last week by the same think-tank, both of which point to tepid inflation-adjusted wage growth in computer and math sciences (CMS) fields—a subset of STEM—as definitive evidence of an abundance of labor supply in those professions.

The fact that inflation-adjusted wages grew slowly during the last decade lacks important context. Quite obviously, there were two economic recessions during this period—one of which was the worst contraction since the Great Depression. Both were followed by “jobless recoveries,” or prolonged periods of low employment growth after the economy has begun to grow again.

At minimum, a more relevant question is: how did wages in the CMS fields, and by extension STEM, grow relative to other professions? Looking at just one side of the story is the intellectual equivalent of concluding that the Cincinnati Reds lost last night because they only scored 2 runs. They actually won, because the team they played, the St. Louis Cardinals, scored just 1 run. Context matters.

A more complete and responsible analysis would look at relative performance as well as a broader set of measures to determine labor market “tightness”—a term that applies to areas where potential shortages may exist. A tight labor market would have some or all of these qualities relative to others: rapid employment and wage growth, low unemployment, and a high prevalence of job vacancies.

One final note before we get started: because this debate is taking place in the context of immigration reform for high-skilled workers, whenever possible the data here will be restricted to workers with at least a bachelor’s degree.

Wage Growth

Economic theory says that if shortages existed, prices (wages) would adjust upward until supply (workers) met demand (employers). But the reality is much more complicated. For example, wages adjust slowly and workers must learn new skills—especially for technical roles like in STEM. Still, it’s an important measure for assessing labor market tightness.

The chart below shows how the inflation-adjusted median wage has changed since January 2000 through 2012, for three groups of workers—those in the STEM occupations, those in the CMS subset of STEM, and those in all occupations outside of STEM.

Real Median Wage Change, Bachelor’s Degree Holders (2000-2012)

Source: U.S. Census Bureau, Current Population Survey; Bureau of Labor Statistics, CPI; Engine calculations. Note: Data have been smoothed using a 12-month moving-average

The median wage in STEM and CMS occupations grew by an inflation-adjusted 3.5 percent and 4.0 percent respectively. That amounts to average annual growth rates of around one-third of a percent. Ouch.

But let’s take look at this in context: it’s been a very rough twelve years. As I mentioned before, there were two recessions—one of them the worst economic contraction since the Great Depression—followed by two jobless recoveries. The fact that there was wage growth at all during this period might actually be impressive.

Compared with workers in other fields, wage growth for STEM and CMS workers was actually quite robust. The inflation-adjusted median wage for all occupations outside of STEM fell by 5.5 percent during the same period, for a decline of half a percent each year on average.

Employment and Unemployment

Beyond wage growth, there are a few other measures to consider when analyzing labor market tightness—here we look at employment growth and the unemployment rate before turning to job vacancies afterward.

Employment Change, Bachelor’s Degree Holders (2000-2012)

Source: U.S. Census Bureau, CPS; Engine calculations. Note: Data have been smoothed using a 12-month moving-average

This chart shows employment growth since January 2000 for college-educated workers in the STEM, CMS and non-STEM categories. Employment in the non-STEM occupations increased 31.3 percent, for an average annual gain of 2.3 percent. STEM fields performed even better, growing 41.6 percent or 2.9 percent per year on average—that’s about one-third more growth than non-STEM. The CMS subset blew the others away—more than doubling non-STEM growth as it increased by 83.1 percent or 5.2 percent annually on average.

Unemployment Rate, Bachelor’s Degree Holders (2000-2012)

 Source: U.S. Census Bureau, CPS; Engine calculations. Note: Data have been smoothed using a 12-month moving-average

This chart shows the unemployment rate for each of our occupational groups during the same time period. The unemployment rate shows the number of people without a job, but who are willing and able to work, and are actively looking for a job (the unemployed), as a share of the total labor force (the unemployed plus the employed). In this case, the occupation assigned to an unemployed person would be the one they held in their last position.

As the chart shows, unemployment rates for college-educated workers of all varieties have been quite low over the last twelve years. The rate for STEM, and especially CMS workers, spiked during the dot-com boom—highlighting the job losses that occurred in that segment of the economy. Important to note, however, is that after peaking unemployment in STEM and CMS fell sharply. This indicates the ease with which unemployed workers in those fields were able to find new work—highlighting their relative value to employers.

The three rates peaked at about the same level during the Great Recession, though STEM and CMS unemployment has fallen sharply since mid-2010; declining by about 2.5 and 2.0 percentage points respectively during that two-year period. Unemployment for workers outside of STEM has only declined by about half a percentage point during the same period. Overall, the evidence here is more mixed: STEM workers seem to face higher volatility while unemployment for non-STEM workers rises less during recessions but also falls slower in recoveries. Even so, the STEM rate has fallen sharply in the last year.

Job Vacancies

Perhaps the most important measure for assessing labor market tightness is the ability of employers to fill open positions. If labor shortages exist, it would be difficult to fill open positions—openings would remain vacant for extended periods or discouraged employers may not even bother posting them at all. Since the reasons for not filling a job are complex, and even if they weren’t, data are elusive, the next best option is to compare the number of open positions with the number of workers available to fill them.

Here, we look at two ways of presenting that data. One caveat first—the job vacancy data used here aren’t available by level of educational attainment. Therefore, we are unable to restrict this portion of the analysis to workers with a bachelor’s degree or more. As a result, the differences here between STEM, CMS and non-STEM may be somewhat overstated.

Number of Unemployed per Job Opening (2005-2012)

 Source: U.S. Census Bureau, CPS; Conference Board, HWOL; Bureau of Labor Statistics, JOLTS; Engine calculations

In a market with an abundance of available labor, the ratio of unemployed per job opening would be high—a large number of workers would be competing with one another for a smaller number of jobs. Where the labor market is tight, this number would be low—in other words demand is outstripping available supply. While the reality is more complicated, this is still a very good way to estimate the relationship between demand and supply.

As the data make clear, the market in STEM and CMS fields is much, much tighter than for fields outside of STEM. At the end of 2012, there were 2.4 CMS job openings for each unemployed CMS worker and 1.4 STEM openings for each unemployed STEM worker. That’s a lot of job openings for each unemployed worker to potentially be matched with. The exact opposite was true in non-STEM fields, where 4 unemployed workers battled for each job opening.

Job Vacancy Rate (2005-2012)

 Source: U.S. Census Bureau, CPS; Conference Board, HWOL; Bureau of Labor Statistics, JOLTS; Engine calculations

If you’re unconvinced that unemployed workers are an adequate measure of available labor, we can extend that definition to include workers who are currently employed in those roles. Recall that the unemployed plus the employed constitute the labor force. Here, we use the labor force as a measure of labor availability for STEM, CMS and non-STEM workers.

This time, the number of job openings is in the numerator and is expressed as a share of the labor force. This is often referred to as the job vacancy rate. Here, a bigger number would indicate a tighter labor market, showing that there are a larger number of job openings relative to the ability of the labor force to fill them. A smaller job vacancy rate would indicate the opposite.

We still see a similar story, though less pronounced: there is a larger number of job openings relative to available labor to fill those roles in STEM and CMS, compared with fields outside of STEM. The difference between this chart and the prior one likely has to do with a more rapidly declining unemployment rate and higher employment growth in STEM and CMS—both positive signs.

Conclusion

Wage growth for STEM and CMS workers with at least a bachelor’s degree has been more robust during the last twelve years than it has been for workers outside of these fields. Not only did wages grow at the median for these fields while wages in all other professions fell substantially, that growth also reached workers with a broader set of income levels.

Looking at other measures, available labor to meet job openings has been scarcer for the STEM and CMS fields, employment growth has been more robust, and unemployment has fallen to lower levels. The evidence is more mixed when it comes to unemployment, but overall the consistency across measures and the magnitude of differences point to tighter labor markets in these fields.

In fact, according to performance thresholds to assess labor market tightness outlined in a comprehensive review of the literature published by the Bureau of Labor Statistics, the CMS labor market is tight on each of three metrics (employment, wages, and unemployment). STEM is tight on two of three (wages and unemployment) and goes halfway on the third (employment). The BLS report doesn’t provide threshold criteria for job vacancies because these data weren’t available at that time.

This highlights a few important points worth making. Firstly, providing definitive evidence of the existence or nonexistence of a labor shortage in any profession is difficult, both because what constitutes a shortage can be broad based and because the appropriate data can be elusive. It’s irresponsible for researchers to claim there is an oversupply of STEM workers because of one metric taken outside of its proper context.

To be clear, the approach here does not claim that there is a shortage of workers in STEM and CMS fields. Instead, it shows that these labor markets are tighter than others based on a broad set of measures. At minimum, it is a clear rejection of the notion that we have too many high-tech workers in the United States—an argument that not only fails on evidence, but common sense as well.

Secondly, and perhaps most importantly, the argument about whether there is or is not a true shortage of STEM workers misses the entire point. Recent research has shown that foreign-born STEM workers increase employment and wage opportunities for high-skilled native-born American workers (STEM and non-STEM). In other words, these workers are complementary to, not substitutes for, one another. Foreign-born STEM workers are important contributors to productivity gains, which fuel economic growth and national prosperity. And because these workers tend to be employed in sectors of the economy that compete globally, if the United States doesn’t capture the talent and therefore growth, someone else will.

Let’s get our facts straight, and in context, as we move forward with immigration reform. Sure, foreign worker programs like the H-1B visa have a number of problems and need rethinking. So does our education system. But let’s fix those, not shut our doors to high-skilled foreign workers based on poor economics. That would be throwing the baby out with the bathwater, and in the process, shooting ourselves in the foot.

Ian Hathaway is the research director at Engine.

Startups Speak: Let Me Grow My Business

Sacha Tueni, co-founder of Changemakrs, grew up in Austria. When he moved to the United States to work with Facebook’s mobile partnership team in 2009, he was granted a visa within 3 short months. As a result, when Sacha decided to start his own business, he had no sense of how complicated the immigration process could actually be for a small company with limited resources. Now Sacha spends a third of his time talking to his lawyer, instead of growing his business.

Startups Speak: Sacha Tueni from Engine Advocacy on Vimeo.

If you have an immigration story to tell, email editorial@engine.is.

Bill to Amend 1986 Communications Privacy Law Goes to Senate

Senator Patrick Leahy (D-VT.), author of the original Electronic Communications Privacy Act (or ECPA), is once again pushing for amendments that take into account rapid advances in technology since, er, 1986. Passing the Senate Judiciary Committee today, the bill will soon be debated by the Senate.

In Leahy’s own words, the “bill takes several important steps to improve Americans’ digital privacy rights, while also promoting new technologies -- like cloud computing -- and accommodating the legitimate needs of law enforcement.”

Engine, together with a coalition of tech companies, is pleased with the clarity this new act brings to how content can be accessed by government; excluding emergencies, law enforcement must obtain a warrant in order to compel a service provider to disclose the private content of users.

Since data plays an increasingly important role for many startups, uncertainty about compliance increases the burden of time and resources, and puts a strain on user trust. Currently, a complex legal request from law enforcement would force startups to chose between legal action and alienating users.

The bipartisan Amendment Act is co-sponsored by Senator Mike Lee (R-UT). “When ECPA was enacted”, Senator Lee explained, “email was primarily a means of communicating information, not storing it. Today, we use our email accounts as digital filing cabinets, where we store many of the personal documents and sensitive information that the Fourth Amendment was meant to protect. This bill takes an essential step toward ensuring that the private life of Americans remains private.”

Here’s a rundown of this new bill:

• Search warrant required for email and other electronic communications, when those communications are stored with a third-party service provider.
• Requirement does not apply to other Federal crimina or national security laws including Wiretap Act and Foreign Intelligence Surveillance Act of 1978
• Government can use administrative, civil discovery and grand jury subpoena to obtain corporate email and other electronic communications directly from a corporate entity, when the content is on an internal email systemGovernment can use civil discovery subpoenas to obtain non-content information
• Bill eliminates the outdated “180-day” rule that calls for different legal standards for the government to obtain email content depending upon the age of an email
• Government must notify an individual whose electronic communications have been disclosed within 10 days of obtaining a search warrant, but they can also seek a court order to delay this notice in order to protect integrity of ongoing investigations

Tweet at any or all of the members of the Senate Judiciary Committee listed below to tell them that protecting data matters to startups.

Chairman Patrick Leahy @SenatorLeahy

Sen. Michael Lee @SenMikeLee

Ranking Member Charles Grassley @ChuckGrassley

Sen. Dianne Feinstein @SenFeinstein

Sen. Orrin Hatch @Orrin Hatch

Sen. Chuck Schumer @ChuckSchumer

Sen. Dick Durbin @SenatorDurbin

Sen. Jeff Sessions @SenatorSessions

Sen. Sheldon Whitehouse @SenWhitehouse

Sen. Lindsey Graham @GrahamBlog

Sen. Amy Klobuchar @amyklobuchar

Sen. John Cornyn @JohnCornyn

Sen. Al Franken @alfranken

Sen. Christopher Coons @ChrisCoons

Sen. Richard Blumenthal @SenBlumenthal

Sen. Ted Cruz @TedCruz

Sen. Jeff Flake @JeffFlake

Sen. Mazie Hirono @maziehirono

Photo courtesy of Talk Radio News Service.