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The Wall Street Journal: Downsizing Crisis? Not in Silicon Valley | Cypress Semiconductor

The Wall Street Journal: Downsizing Crisis? Not in Silicon Valley

Last Updated: 
May 24, 2012

The Wall Street Journal: Downsizing Crisis? Not in Silicon Valley

T.J. Rodgers

For the past decade or more, jobs have been migrating to smaller, more nimble, entrepreneurial companies from the Fortune 500 as those companies streamline and lose employment. This trend strengthens our economy, but it has created a short-term fear for their jobs among Americans.

These job losses are highly publicized: Richard Allen, the CEO of AT&T, was labeled a "Job Killer" in a recent Newsweek article because of layoffs, many of which came from AT&T's decision to leave the personal computers business, where it was not competitive. What is not publicized is that my company has already hired some of those AT&T people. And our rival, Cirrus Logic, beat us to the punch in starting up a design center in South Carolina to take advantage of hiring those ex-AT&T engineers. The bad news from big companies gets front-page coverage, but the near-immediate absorption of their skilled workers is rarely discussed.

Cypress Semiconductor has 230 open requisitions for employment, 12% of our population of 1,940 employees. Our hiring list grows every year, and we can't find all the skilled people we need to build our company, which manufactures all of its chips in the U.S. and exports 35% of its output. The 11 semiconductor companies constituting the Sematech chip consortium have 14,000 open requisitions they are unable to fill. Competition for workers is so intense in Silicon Valley that our average San Jose employee, including line workers and receptionists, earns $93,000 a year including benefits-we also give every employee profit sharing totaling $5,000 a year and stock options.

We are so in need of skilled engineers that we have started remote design centers anywhere we can find a few engineers who want to set up shop and plug into Cypress electronically. We have already set up 10, including one in the U.K. and one in India. But if I could hire here, even at our current high wage rate, I never would consider taking any engineering jobs offshore. Unfortunately, the Simpson immigration bill would actually force American companies to export more jobs, since it would become harder to offer stateside jobs to immigrants.

One major misconception inherent in the Simpson immigration bill is that any immigrant who takes a job in the States takes that job from an American. That assertion does not stand up.

Our $600 million company is run by 10 officers. Four are immigrants. John Torode, vice president of our Computer Clock Division in Seattle, came to America as a dependent immigrant with his father, a British sailor, after World War II. Lothar Maier is the vice president of wafer manufacturing with responsibility for running our four chip plans in California, Minnesota and Texas. Lothar came to America from Germany as a child. Emmanuel Hernandez is our chief financial officer and deals with our investors and the New York Stock Exchange. Manny was relocated to the U.S. from the Philippines by his former employer, National Semiconductor. Tony Alvarez, our vice president of research and development, was a child in 1961 when he fled Cuba with his parents.

Our four vice presidents did not take jobs from native-born Americans. We are currently searching for two more semiconductor executives, who are even harder to find than semiconductor engineers. Furthermore, Cypress's four immigrant vice presidents have 1,500 people working for them-these immigrants created jobs and made our company and the U.S. industry stronger, not weaker. That's common here in Silicon Valley: Just ask Andy Grove, the Hungarian refugee, Intel founder, and CEO of the world's largest semiconductor company.

Only one of the five men I've just discussed relocated here specifically to take a job. If we believe that letting the best and brightest into America will make all of us better off, then we should not tell them, "You can come to America, but you must leave your family behind," as does the Simpson bill.

Pat Buchanan has take up "Jose" as a euphemism for immigrants. I would like him to meet Jose Arreola, a Mexican immigrant with a doctorate in transistor physics. Jose is our top scientist, responsible for managing a group of 30 people-80% with postgraduate degrees-to produce our most advanced semiconductor technology for the future. Jose's top young star is Jeff Watt, a Stanford-educated Ph.D. who immigrated from Canada. We would lose jobs without our immigrant technologists.

My economic observations about Silicon Valley are generally consistent with a recent study by Julian Simon, "Immigration-the Demographic and Economic Facts," published by the Cato Institute. In that document, such business-oriented groups as the Business Leadership Council, the Competitive Enterprise Institute, and Small Business Survival Foundation note that legal immigrants benefit all Americans, and that immigrants are not the job and welfare burden some politicians would have us believe.

A single current study is used to refute the Cato study, that of George Borjas of Harvard. Prof. Borja's study agrees with the Cato study that immigrants do not receive more cash welfare payments than native-born Americans, but claims they may use more noncash benefits: 14% of our $180 billion in noncash welfare may go to the 8.8% of our population who are immigrants. That would amount to an excess payment of $9.4 billion. Sen. Simpson, why all the commotion? The federal budget was $1.53 trillion in 1995.

The Cato study is also sponsored by the Heartland Alliance for Human Needs and Human Rights, a Lutheran Immigration Refugee Service, and the U.S. Catholic Conference/Migration Refugee Services, which support the humanitarian benefits of legal immigration.

A third faction supporting the study includes such libertarian think tanks as Cato, the Alexis de Tocqueville Institution, and the Reason Foundation. These foundations, which support social and economic freedom, are deeply concerned about the Big Brother aspects of the Simpson bill.

If the bill passes as is, companies will be required to run identity verification systems that would use personalized birth certificates with a "finger print or other biometric data," such as the retinal pattern in our eyes. Companies would then need permission from Washington to hire a new employee. Who believes that yet another monstrous government bureaucracy would be prompt, or even accurate (650,000 jobs a year would be denied, if there were only a 1% error rate in the national employment data base)?

Today, the foreign-born population of the U.S. is about 8%, about half of what it was between the 1860s and the 1920s. The proportion of immigrants in the U.S. is roughly half that of Canada, New Zealand, Switzerland, or Australia. Immigrants add only 0.4% to our population each year. Mr. Borjas himself touts the Canadian system, as does economist Milton Friedman. Is America so weak that we are hurting from this insignificant number of additions, or do demagogue politicians simply not like "Jose?"