Do Immigrant Engineers Depress Engineer Wages?(slate.com)
slate.com
Do Immigrant Engineers Depress Engineer Wages?
http://www.slate.com/blogs/moneybox/2013/04/12/immigration_and_wages_the_case_of_software_engineers.html
71 comments
> If we let someone in from a poor country, we're increasing the income of someone who might be below the 50th percentile into the 99th percentile. It's awfully hard to make a case that we should be enriching the richest people in the world at the cost of the poorest.
It's not hard to make that case at all. Indians and Chinese prospective immigrants are not part of the American body politic. The American government has no duty to benefit them at the expense of Americans, and indeed I'd argue that it's morally wrong for the American government, instituted to protect American interests and American prosperity, to make that trade off regardless of the relative wealth of the people involved.
It's not hard to make that case at all. Indians and Chinese prospective immigrants are not part of the American body politic. The American government has no duty to benefit them at the expense of Americans, and indeed I'd argue that it's morally wrong for the American government, instituted to protect American interests and American prosperity, to make that trade off regardless of the relative wealth of the people involved.
Using that same logic, it's not hard to make the case for imperialism. If the sole goal is to benefit Americans at the expense of others, why not steal everyone's natural resources and use them for our own benefit?
One bit of conventional wisdom that I find interesting is the belief that what was responsible for American prosperity post-WWII was the fact that Europe was devastated and the U.S. was the undisputed industrial superpower. To the extent that theory is true (and I'm not saying it is or not, I don't have enough of a grounding in economics to say)--doesn't that suggest that the rational course of American policy should be to bomb India and China instead of trading with them? People trot out this idea all the time, but nobody really thinks through the implication...
My point isn't that the U.S. should be imperialist. I don't think it should be. There are lots of good, practical reasons to not just go around bombing everyone, namely that it's an expensive game of "king of the hill" in the long run. But in my mind the idea that we have some greater moral obligation to humanity is not one of those reasons. The American government is instituted to secure the prosperity of Americans. That is the beginning and end of the purpose of its existence. The only moral obligations binding upon it are those that reflect the will of its constituency. If the U.S. refrains from imperialism the only reason it should do so is because Americans want to be peaceful, not out of concern for the well being of non-Americans.
It should be noted that, China doesn't subscribe to any such silly notions. If they thought they could get away with bombing us to cripple our infrastructure and that doing so would increase their own prosperity, the Chinese government would do it in a heartbeat.
My point isn't that the U.S. should be imperialist. I don't think it should be. There are lots of good, practical reasons to not just go around bombing everyone, namely that it's an expensive game of "king of the hill" in the long run. But in my mind the idea that we have some greater moral obligation to humanity is not one of those reasons. The American government is instituted to secure the prosperity of Americans. That is the beginning and end of the purpose of its existence. The only moral obligations binding upon it are those that reflect the will of its constituency. If the U.S. refrains from imperialism the only reason it should do so is because Americans want to be peaceful, not out of concern for the well being of non-Americans.
It should be noted that, China doesn't subscribe to any such silly notions. If they thought they could get away with bombing us to cripple our infrastructure and that doing so would increase their own prosperity, the Chinese government would do it in a heartbeat.
So, just to be perfectly clear: you don't believe that people have any moral obligation not to murder each other. But they do have a moral obligation to follow contracts (the government's contract to do what the people want).
I don't believe in any super natural bases for morality,[1] so I believe that morality arises out of the social contract. Given that, it makes sense to talk about the moral obligations of individuals within a society to each other, but not to talk about one society's obligation to another.
[1] Not just religion, but things like "natural rights" are really supernatural conceptually.
[1] Not just religion, but things like "natural rights" are really supernatural conceptually.
This is a repeat of the other day's conversation (and about 1343243243232 other similar conversations on the internet, which is why we ought to get rid of political articles), but like hell will I "not talk about my obligations" to other human beings that happen to be born with some other passport.
https://news.ycombinator.com/item?id=5533155
Edit: looks like someone is sinking these articles off the front page. Good call!
https://news.ycombinator.com/item?id=5533155
Edit: looks like someone is sinking these articles off the front page. Good call!
What do you think is the basis for your obligations to humans that you don't share a government with?
I'm not much for philosophy, so something simple along the lines of believing that I should leave the world a better place than I found it, and there's no reason that should be limited by borders, ethnicity or much else. Also, the idea that I have no obligations to people who are just like me but don't have the same passport is chilling and disturbing in its implications.
Borders are pretty arbitrary things in a lot of cases. There are probably still a few very elderly people alive in the Sud Tirol region of Italy who, as infants, found themselves to be Italian citizens despite not having moved a mile, because Italy managed to beat Austria in WWI. Linguistically, and culturally, they are Austrians in that region (or, in some of the high valleys, Ladin speakers, if we want to start getting into details), and many of them don't really identify with Italy to this day.
Borders are pretty arbitrary things in a lot of cases. There are probably still a few very elderly people alive in the Sud Tirol region of Italy who, as infants, found themselves to be Italian citizens despite not having moved a mile, because Italy managed to beat Austria in WWI. Linguistically, and culturally, they are Austrians in that region (or, in some of the high valleys, Ladin speakers, if we want to start getting into details), and many of them don't really identify with Italy to this day.
There are no resources left that you could "steal" for less than you could buy on the open market.
Do you really fail to appreciate the difference between:
A) Not sharing your family/country resources with strangers (who might well be below your level of economic development).
B) Going over to invade another country/family and take away their resources?
A) Not sharing your family/country resources with strangers (who might well be below your level of economic development).
B) Going over to invade another country/family and take away their resources?
Starting from the premise that "it's morally wrong for the American government, instituted to protect American interests and American prosperity, to make that trade off", I don't see any reason to oppose imperialism.
I don't agree with the premise, but that's a separate point.
I don't agree with the premise, but that's a separate point.
Right - but I am not asking whether you personally find imperialism as logical conclusion.
I am asking if you understand the difference between point A and B?
I am asking if you understand the difference between point A and B?
[insert communism comparison rebuttal here]
> instituted to protect American interests and American prosperity
That makes intuitive sense. But in practice I'd argue it's much more nuanced than that. What we all legally and sovereignly call "The United States of America" are many distinct (and I don't just mean by State borders) populations with vastly different needs and are affected differently by global undertakings.
As a thought experiments, let's say bringing immigrants from Country Z lowers the wages of workers in Trade X in Alaska-America by 50%. However, this decreases the amount of production for Product H in Country Z by 25% due to migrating workers. This increases the wages of workers in Trade B in Florida-America by 200% due to the shortage of Product H. The net-gain here is Zero for The United States of America (assuming workers in Trade B and X are same in numbers, thereby cancelling each other's net loss/gains out).
Ought not the American government allow the immigrants on the basis that, overall, it is increasing the wealth of the world economy; the world of which the United States of America is very much a part of?
I suppose the argument can be made that fundamentally the government only cares about its own Prosperity even in this case, and that a "rising tide lifts all boats" scenario outlined above merely falls into that category.
That makes intuitive sense. But in practice I'd argue it's much more nuanced than that. What we all legally and sovereignly call "The United States of America" are many distinct (and I don't just mean by State borders) populations with vastly different needs and are affected differently by global undertakings.
As a thought experiments, let's say bringing immigrants from Country Z lowers the wages of workers in Trade X in Alaska-America by 50%. However, this decreases the amount of production for Product H in Country Z by 25% due to migrating workers. This increases the wages of workers in Trade B in Florida-America by 200% due to the shortage of Product H. The net-gain here is Zero for The United States of America (assuming workers in Trade B and X are same in numbers, thereby cancelling each other's net loss/gains out).
Ought not the American government allow the immigrants on the basis that, overall, it is increasing the wealth of the world economy; the world of which the United States of America is very much a part of?
I suppose the argument can be made that fundamentally the government only cares about its own Prosperity even in this case, and that a "rising tide lifts all boats" scenario outlined above merely falls into that category.
I'm not saying immigration can't be the right policy if it benefits Americans. I'm saying the extent to which it benefits non-Americans isn't part of the calculus.
1) What is the percentage of students who get admitted into U.S. schools from foreign countries poor? Are most actually middle/upper class and just prefer to study overseas? I saw the latter as a pretty common scenario in Australia and Canada.
2) If they are poor, why are Chinese/Indians more likely to get into engineering/compsci than other demographics that are more local, such as poor African Americans / Hispanic Americans? I've worked in tech in the U.S. for the last five years and have met very few male African Americans / Hispanic Americans despite working in cities with high populations of those demographics.
2) If they are poor, why are Chinese/Indians more likely to get into engineering/compsci than other demographics that are more local, such as poor African Americans / Hispanic Americans? I've worked in tech in the U.S. for the last five years and have met very few male African Americans / Hispanic Americans despite working in cities with high populations of those demographics.
If they are poor, why are Chinese/Indians more likely to get into engineering/compsci than other demographics that are more local, such as poor African Americans / Hispanic Americans?
Both the Indians and Chinese are almost certainly poor. At least 95% of India is poorer than the bottom 5% of America, and about 80-85% of China is.
http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-t...
Granted, they might be rich by Indian/Chinese standards, but that's a far cry from actually being lower middle class in the US.
I'm not sure it is more likely for Chinese/Indians to enter STEM fields than your various aforementioned demographic groups. The ones who do enter STEM fields are more likely to immigrate to the US, however...
Both the Indians and Chinese are almost certainly poor. At least 95% of India is poorer than the bottom 5% of America, and about 80-85% of China is.
http://economix.blogs.nytimes.com/2011/01/31/the-haves-and-t...
Granted, they might be rich by Indian/Chinese standards, but that's a far cry from actually being lower middle class in the US.
I'm not sure it is more likely for Chinese/Indians to enter STEM fields than your various aforementioned demographic groups. The ones who do enter STEM fields are more likely to immigrate to the US, however...
Most Indians in US are from top 1% in India - pretty much every Indian I know had maids/gardeners/cooks at home. One guy cooked/washed clothes himself for the first time when he came to US.
> pretty much every Indian I know had maids/gardeners/cooks at home.
In poorer countries - especially those with fairly unequal societies, hiring help is cheaper - not just absolutely, but proportionally, as well, so it's much more common. I read some economics discussions of this years ago, but don't really recall the details.
In other words, an Indian is a lot more likely to have hired help than a Norwegian, even if the Norwegian is better off.
In poorer countries - especially those with fairly unequal societies, hiring help is cheaper - not just absolutely, but proportionally, as well, so it's much more common. I read some economics discussions of this years ago, but don't really recall the details.
In other words, an Indian is a lot more likely to have hired help than a Norwegian, even if the Norwegian is better off.
Inequality is irrelevant. India has a Gini index of 33, compared to the 45 for the US.
Incentives are a much more plausible explanation. The US pays people not to work. India doesn't.
Incentives are a much more plausible explanation. The US pays people not to work. India doesn't.
Most of the Indians and Chinese that I went to school with were the sons and daughters of doctors, lawyers, and professors.
What makes you believe that Indian/Chinese doctors, lawyers and professors are not poor by US standards?
You might be a "rich" corporate lawyer living in Bandra, but that doesn't mean you can afford a car, or more than 1 room/person for your family (most poor Americans have these things).
You might be a "rich" corporate lawyer living in Bandra, but that doesn't mean you can afford a car, or more than 1 room/person for your family (most poor Americans have these things).
Well, what about having several house servants? Rich Americans don't have these things.
Despite having 'help', it seems that the Indians tend to migrate towards the US, rather than people from the US migrating towards India. See my other comment.
This really is a no brainer, if you have the best and brightest coming here to work, then its only going to make everybody in the industry better as everybody has to raise their game to compete, as long as these workers don't flood the market (which the h1-b quota does a good job of keeping in check)
The problem is with some of the foibles of the h1-b visa. H1-b workers cannot compete in the job market the way an American worker can, because to get the h1-b the hiring company has to fork over almost $5k to the govt, to transfer to a new job, the hiring company has to pay $3k (I think), every 3 years the hiring company has to pay another $1k to renew the visa, and at the end of 6 years the hiring company has to start a green card application which costs a lot of time, money and resources IN ADDITION to the renewal fee (again).
Because of that, the hiring company wields extra-ordinary power over the h1-b worker which means that h1-b workers can be used to artificially depress wages.
The fix for this isn't all that complex. keep the h1-b as it is (complete with the yearly quota, which should be adjusted according to demand), and give a green card to the worker AUTOMATICALLY after 2 years, so that they're free do as they please in the market and see what happens.
Engineers know what they should be making and if anyone tries to underpay their workers, they'll have to contend with the fact that they'll be gone in 2 years, at which point they have to seriously ponder if it wouldn't be cheaper to actually train/hire an American to do the job. This would stem the problem of bodyshops bringing in immigrants and underpaying them for donkey years while profitting richly off their labor, and companies who'd apply for h1-b workers would actually need them and pay them fairly.
The problem is with some of the foibles of the h1-b visa. H1-b workers cannot compete in the job market the way an American worker can, because to get the h1-b the hiring company has to fork over almost $5k to the govt, to transfer to a new job, the hiring company has to pay $3k (I think), every 3 years the hiring company has to pay another $1k to renew the visa, and at the end of 6 years the hiring company has to start a green card application which costs a lot of time, money and resources IN ADDITION to the renewal fee (again).
Because of that, the hiring company wields extra-ordinary power over the h1-b worker which means that h1-b workers can be used to artificially depress wages.
The fix for this isn't all that complex. keep the h1-b as it is (complete with the yearly quota, which should be adjusted according to demand), and give a green card to the worker AUTOMATICALLY after 2 years, so that they're free do as they please in the market and see what happens.
Engineers know what they should be making and if anyone tries to underpay their workers, they'll have to contend with the fact that they'll be gone in 2 years, at which point they have to seriously ponder if it wouldn't be cheaper to actually train/hire an American to do the job. This would stem the problem of bodyshops bringing in immigrants and underpaying them for donkey years while profitting richly off their labor, and companies who'd apply for h1-b workers would actually need them and pay them fairly.
> The problem is with some of the foibles of the h1-b visa.
H1B worker here. I think what you describe is actually completely offset by the strong demand for engineers. The cost of a H1B, which is as you say $5K or so (though its the same to transfer), is tiny in comparison to salaries, and also relative to recruiter fees (which can often be $30K). The only common reason companies don't do H1Bs is the hassle, and even then it's not that big a deal for any funded or profitable company.
There is really no power over the H1B at the moment. There was during the bust following the dot com boom, and you'll always find unscrupulous employers, but I have literally zero worries about this. One employer did try to change the deal for me, but it took me literally 5 days to find a new job. In an economy like this, there is no danger.
However, that's not to say your fix wouldn't be welcome (esp if a bust comes around again). I don't see it happening though, given both the aims of the H1B and the green card programs.
A final correction: you're not allowed contract out H1B workers. That's not to say it doesn't happen, and there is one big company with a reputation for this (infosys? I dont remember), but your final line is hyperbole.
H1B worker here. I think what you describe is actually completely offset by the strong demand for engineers. The cost of a H1B, which is as you say $5K or so (though its the same to transfer), is tiny in comparison to salaries, and also relative to recruiter fees (which can often be $30K). The only common reason companies don't do H1Bs is the hassle, and even then it's not that big a deal for any funded or profitable company.
There is really no power over the H1B at the moment. There was during the bust following the dot com boom, and you'll always find unscrupulous employers, but I have literally zero worries about this. One employer did try to change the deal for me, but it took me literally 5 days to find a new job. In an economy like this, there is no danger.
However, that's not to say your fix wouldn't be welcome (esp if a bust comes around again). I don't see it happening though, given both the aims of the H1B and the green card programs.
A final correction: you're not allowed contract out H1B workers. That's not to say it doesn't happen, and there is one big company with a reputation for this (infosys? I dont remember), but your final line is hyperbole.
> The only common reason companies don't do H1Bs is the hassle, and even then it's not that big a deal for any funded or profitable company
That was not my point though ... I was trying to say that while all this is being done for the worker, that worker is beholden to the company doing all this on their behalf. Which allows the company take liberties with their wages that they could never even dream off with an American.
> There is really no power over the H1B at the moment
I agree, up to a point. At your 6 year mark, where the green card has to be filed for you to stay in the country. You are vulnerable, as it essentially makes it impossible for you to move for almost a year, getting canned at that point can also cause you untold grief. I also base this sentiment on some of the horror stories I've heard from h1-b workers at some of the body shops around the country.
> but your final line is hyperbole Again, we disagree. If I can hire a guy for $60k on the h1-b when the going rate is $90k, guess who's winning? Yes I know there is a concept of a prevailing wage, used in the filing, but those rates are ridiculously low.
That was not my point though ... I was trying to say that while all this is being done for the worker, that worker is beholden to the company doing all this on their behalf. Which allows the company take liberties with their wages that they could never even dream off with an American.
> There is really no power over the H1B at the moment
I agree, up to a point. At your 6 year mark, where the green card has to be filed for you to stay in the country. You are vulnerable, as it essentially makes it impossible for you to move for almost a year, getting canned at that point can also cause you untold grief. I also base this sentiment on some of the horror stories I've heard from h1-b workers at some of the body shops around the country.
> but your final line is hyperbole Again, we disagree. If I can hire a guy for $60k on the h1-b when the going rate is $90k, guess who's winning? Yes I know there is a concept of a prevailing wage, used in the filing, but those rates are ridiculously low.
> I was trying to say that while all this is being done for the worker, that worker is beholden to the company doing all this on their behalf.
Not at all, because there are thousands of other companies will to do this too. Its a sellers market, and engineers can literally get a job with a week's notice (plus maybe 2 weeks to get the visa sorted out).
> At your 6 year mark, where the green card has to be filed for you to stay in the country.
Green cards take time and should be planned years in advance. Don't work a H1B job without negotiating Green Cards.
I agree there is a time where you are unable to move during this time. I don't believe that good companies are going to mistreat their employees during this time. Similarly with your last point, the prevailing wage is irrelevant because there is high competition.
> horror stories I've heard from h1-b workers at some of the body shops
I think we disagree because we're coming from different perspectives. I think you're looking at the body shops (which account for half of the H1Bs) and where everyone has heard horror stories. Those H1B employees might believe they are beholden and stuck, but the truth is they are not. Move out of New Jersey, come to SF and you'll find the streets paved with great working conditions and employers who pay and treat you right.
Not at all, because there are thousands of other companies will to do this too. Its a sellers market, and engineers can literally get a job with a week's notice (plus maybe 2 weeks to get the visa sorted out).
> At your 6 year mark, where the green card has to be filed for you to stay in the country.
Green cards take time and should be planned years in advance. Don't work a H1B job without negotiating Green Cards.
I agree there is a time where you are unable to move during this time. I don't believe that good companies are going to mistreat their employees during this time. Similarly with your last point, the prevailing wage is irrelevant because there is high competition.
> horror stories I've heard from h1-b workers at some of the body shops
I think we disagree because we're coming from different perspectives. I think you're looking at the body shops (which account for half of the H1Bs) and where everyone has heard horror stories. Those H1B employees might believe they are beholden and stuck, but the truth is they are not. Move out of New Jersey, come to SF and you'll find the streets paved with great working conditions and employers who pay and treat you right.
> You are vulnerable, as it essentially makes it impossible for you to move for almost a year
180 days post application not a year.. This is well known and established, anyone applying for permanent residency should be well aware of this and should apply as soon as acceptable if they wish to stay in the US long term.
180 days post application not a year.. This is well known and established, anyone applying for permanent residency should be well aware of this and should apply as soon as acceptable if they wish to stay in the US long term.
[deleted](2)
Immigrant engineer here. Do immigrant engineers depress wages? Of course. Trivial supply and demand (and I'm surprised to see a supposed economics blog make unintuitive assertions without providing any evidence). You can already see wages rising rapidly as a result of the already low supply of engineers. Kids coming out of Stanford are getting 6-figure offers at Google. If there were less engineers, lots of companies wouldn't be able to hire at all, leading to no option but to increase their offers to attract talent.
But the thing this article got wrong (which is the same mistake made by anti-H1B articles) is asking the wrong question (though it touched on it at the end). Is it better overall with immigrant engineers? Is the economy better? Are companies able to do better (therefore providing more taxes) as a result, or able to build better things (such as the google car or glasses)?
Finally, I'll note that moving to the Bay Area does not necessarily result in 5x salary, but even when it does, it doesn't result in 5x standard of living. If I had stayed in Dublin, I'd be on a similar salary (maybe 20% lower), but I'd be earning over 3x the average salary and so be able to have a much higher relative standard of living. The downside of living in SF with a good salary is that everybody has a good salary.
But the thing this article got wrong (which is the same mistake made by anti-H1B articles) is asking the wrong question (though it touched on it at the end). Is it better overall with immigrant engineers? Is the economy better? Are companies able to do better (therefore providing more taxes) as a result, or able to build better things (such as the google car or glasses)?
Finally, I'll note that moving to the Bay Area does not necessarily result in 5x salary, but even when it does, it doesn't result in 5x standard of living. If I had stayed in Dublin, I'd be on a similar salary (maybe 20% lower), but I'd be earning over 3x the average salary and so be able to have a much higher relative standard of living. The downside of living in SF with a good salary is that everybody has a good salary.
The downside of living in SF with a good salary is that everybody has a good salary.
n.b. While this is true about many people in our social circles, this is not broadly true of San Franciscans. About 15% or so of households are below the poverty line. Another 35% or so have household incomes which are meaningfully less than what AmaGooBookSoft pay for college interns.
n.b. While this is true about many people in our social circles, this is not broadly true of San Franciscans. About 15% or so of households are below the poverty line. Another 35% or so have household incomes which are meaningfully less than what AmaGooBookSoft pay for college interns.
http://www.zdnet.com/in-the-shadow-of-silicon-valley-poverty... recent article on poverty in Silicon Valley
The downside of living in SF with a good salary is that everybody has a good salary.
It's more that having a good salary in SF doesn't necessarily level up your quality of life compared to someone with a bad salary. In some ways, it might make it worse. Three bartenders splitting an apartment in the Mission are likely having a better time than three Twitter employees splitting an apartment in the Mission.
It's more that having a good salary in SF doesn't necessarily level up your quality of life compared to someone with a bad salary. In some ways, it might make it worse. Three bartenders splitting an apartment in the Mission are likely having a better time than three Twitter employees splitting an apartment in the Mission.
If foreign-produced flaxseed oil costs 20% of US-produced flaxseed oil, and is imported in quantity, "What happens to the market clearing price of US-produced flaxseed oil?" is not a very difficult question. We do not need to adopt the counterfactual "Consider what would happen to flaxseed oil prices in an American city which banned foreign flaxseed oil. Why, they'd be a laughingstock! Flaxseed oil consumers would flee to other jurisdictions!"
That's an interesting speculative conclusion to a hypothetical policy that is not on the table nor will ever be considered in the United States. Back to the question: what happens when you import cheap flaxseed oil? Market prices go down, with very high confidence. Claims to the contrary would generally require fairly persuasive proof since they invert our understanding of how the world works.
(n.b. I don't particularly think my political opinions are relevant, in much the same way a physicist doesn't feel the need to mumble "Sorry to be a gravitationist" prior to suggesting that a banana pushed off a table will tend to accelerate towards the ground rather than hovering in midair, but to the extent I have them they're "Let the flaxseed oil flow" and to the extent I have economic interests in US-produced flaxseed oil I'd prefer it to be as cheap as possible since I'm a buyer more than I'm a seller.)
That's an interesting speculative conclusion to a hypothetical policy that is not on the table nor will ever be considered in the United States. Back to the question: what happens when you import cheap flaxseed oil? Market prices go down, with very high confidence. Claims to the contrary would generally require fairly persuasive proof since they invert our understanding of how the world works.
(n.b. I don't particularly think my political opinions are relevant, in much the same way a physicist doesn't feel the need to mumble "Sorry to be a gravitationist" prior to suggesting that a banana pushed off a table will tend to accelerate towards the ground rather than hovering in midair, but to the extent I have them they're "Let the flaxseed oil flow" and to the extent I have economic interests in US-produced flaxseed oil I'd prefer it to be as cheap as possible since I'm a buyer more than I'm a seller.)
Whenever I hear stupid questions like "Do immigrant engineers depress engineer wages?", I'm tempted to say that it's as simple as supply and demand. But supply and demand are not simple things.
On the one hand, an increased supply of engineers (or flaxseed) in the form of immigrants (or imports) will obviously decrease the market clearing price, and anyone who says otherwise is either ignorant of economics or engaging in sophistry.
But to the extent that engineers spur technological or industrial advances which benefit the entire ecosystem, the presence of additional engineers in the form of immigrants could actually increase the _demand_ for engineers. A concrete example is the marginal increase in engineering demand caused by an immigrant engineer founding a company.
(You could argue, given the example provided, that another company would have been founded in its absence, or that the company displaced an existing company. However, my intuition is that it's a positive-sum game, and that a successful company would created some marginal demand for engineers.)
On the one hand, an increased supply of engineers (or flaxseed) in the form of immigrants (or imports) will obviously decrease the market clearing price, and anyone who says otherwise is either ignorant of economics or engaging in sophistry.
But to the extent that engineers spur technological or industrial advances which benefit the entire ecosystem, the presence of additional engineers in the form of immigrants could actually increase the _demand_ for engineers. A concrete example is the marginal increase in engineering demand caused by an immigrant engineer founding a company.
(You could argue, given the example provided, that another company would have been founded in its absence, or that the company displaced an existing company. However, my intuition is that it's a positive-sum game, and that a successful company would created some marginal demand for engineers.)
While I was hired under H-1b visa I was definitely underpaid, but the moment I got greencard my options exploded. Now I work at startup for 1.5x of prevailing wage in here. And in a year or so I plan to get next bump in salary or finally do a successful launch of my own project.
So... Do not want to slump domestic engineer wages? Remove stupid restrictions and procedures to do transfers once employee got a job in USA so these foreign employees could pick for whom they want to work as easy as this could do domestic employees.
So... Do not want to slump domestic engineer wages? Remove stupid restrictions and procedures to do transfers once employee got a job in USA so these foreign employees could pick for whom they want to work as easy as this could do domestic employees.
The column does not directly mention H1B, but it is clear that H1B is the subtext.
Here are a couple of points not mentioned.
The top 10 H1B employers account for about half of the visas issued in recent years. All 10 are contract houses that specialize in out-sourcing. They bring people in, train them up and then send them back to work on the same programs remotely at local rates. These actions are totally against the stated principles of increasing the number of technically skilled workers in the US.
http://www.npr.org/blogs/alltechconsidered/2013/04/03/176134...
H1B people are supposed to be paid a prevailing wage. There are two big problems with that - there is absolutely no money at all allocated for enforcing that requirement, and due to technicalities (or loopholes) in the legislation, companies are legally able to pay rates for the lowest skilled categories rather than ones commensurate with their skills and jobs.
http://www.cringely.com/2012/10/23/what-americans-dont-know-...
FWIW, I am totally willing to go with the concept of a network effect, that skilled engineering job market is not a zero-sum game. But the H1B program is practically the worst possible implementation to take advantage of any network effect in the labor market. To me, it looks like it is designed to wreck it.
I'd rather H1B be treated like a fast-track immigration visa - if you qualify for an H1B visa you are guaranteed a green card in 2 years or less. I think that would remove much of the ability for H1B employers to use them in ways contrary to the rhetoric that sells H1B to the uninformed.
Here are a couple of points not mentioned.
The top 10 H1B employers account for about half of the visas issued in recent years. All 10 are contract houses that specialize in out-sourcing. They bring people in, train them up and then send them back to work on the same programs remotely at local rates. These actions are totally against the stated principles of increasing the number of technically skilled workers in the US.
http://www.npr.org/blogs/alltechconsidered/2013/04/03/176134...
H1B people are supposed to be paid a prevailing wage. There are two big problems with that - there is absolutely no money at all allocated for enforcing that requirement, and due to technicalities (or loopholes) in the legislation, companies are legally able to pay rates for the lowest skilled categories rather than ones commensurate with their skills and jobs.
http://www.cringely.com/2012/10/23/what-americans-dont-know-...
FWIW, I am totally willing to go with the concept of a network effect, that skilled engineering job market is not a zero-sum game. But the H1B program is practically the worst possible implementation to take advantage of any network effect in the labor market. To me, it looks like it is designed to wreck it.
I'd rather H1B be treated like a fast-track immigration visa - if you qualify for an H1B visa you are guaranteed a green card in 2 years or less. I think that would remove much of the ability for H1B employers to use them in ways contrary to the rhetoric that sells H1B to the uninformed.
> All 10 are contract houses that specialize in out-sourcing. They bring people in, train them up and then send them back to work on the same programs remotely at local rates. These actions are totally against the stated principles of increasing the number of technically skilled workers in the US.
I've seen this a number of times at the company I work at.
I've seen this a number of times at the company I work at.
Very basic economics says that a greater supply of people willing to work at a lower wage (as many H1Bs) will reduce the market wage.
"Somewhere along the line, the H-1B program got side-tracked. The program was never meant to replace qualified American workers, but it was instead intended as a means to fill gaps in highly specialized areas of employment. When times are tough, like they are now, it's especially important that Americans get every consideration before an employer looks to hire from abroad" - Sen. Chuck Grassley
"Somewhere along the line, the H-1B program got side-tracked. The program was never meant to replace qualified American workers, but it was instead intended as a means to fill gaps in highly specialized areas of employment. When times are tough, like they are now, it's especially important that Americans get every consideration before an employer looks to hire from abroad" - Sen. Chuck Grassley
> Very basic economics says that a greater supply
That explains why income and GDP keep going down the more people are born.
That explains why income and GDP keep going down the more people are born.
Labor economics are anything but simple.
It's a rather naïve conclusion. If the job is relocatable the supply of workers who remain abroad will also reduce wages too.
> If the job is relocatable
I've seen many, many, many corporations come to the conclusion that they are simply not able to manage resources abroad. They can barely handle them locally, let alone when there is many thousands of miles and a language barrier between them.
I've seen many, many, many corporations come to the conclusion that they are simply not able to manage resources abroad. They can barely handle them locally, let alone when there is many thousands of miles and a language barrier between them.
Of course. I think a lot of companies don't want to offshore some engineering jobs, however, if push comes to shove they'll do it. I'm not sure a government mandated limit helps this not occur.
I think there are two worlds here. For folks in the Valley, in NYC, or in companies working at the bleeding edge, you want to fund the best, most qualified people, period. That makes sense, and in the best interests of the country.
But, in terms of numbers, the real money is the more banal "staff augmentation" programmers that you see in "compliance advertisements" in industry trade rags. There is a shortage of qualified COBOL programmers, but you don't hear about training programs for COBOL (back in the 70's clerical staff were trained to do write that stuff, not compsci types). But you do see government contracts paying $30/hour to "body shop" vendors, who in turn are paying Indians $12-17/hr. similar story for people doing business rules in some J2EE thing.
That's a problem, because many of the few million un- or under-employed workers in the US could be trained to do this type of work quickly.
But, in terms of numbers, the real money is the more banal "staff augmentation" programmers that you see in "compliance advertisements" in industry trade rags. There is a shortage of qualified COBOL programmers, but you don't hear about training programs for COBOL (back in the 70's clerical staff were trained to do write that stuff, not compsci types). But you do see government contracts paying $30/hour to "body shop" vendors, who in turn are paying Indians $12-17/hr. similar story for people doing business rules in some J2EE thing.
That's a problem, because many of the few million un- or under-employed workers in the US could be trained to do this type of work quickly.
Well there are two answers here.
First, coming from a less developed country doesn't mean you'll be less skilled. On the contrary, it's a strong incentive. Being raised and schooled in a developed country is only a luxury, it won't make you a better engineer.
Secondly, those engineers will "depress" wages for several reasons. First, it's supply and demand. They have much stronger wishes to work in a developed country compared to native engineers. Secondly, companies might also hire native engineers because of various reasons, like language barriers, relationships between personel, the culture of the company, etc.
If it depress wages, it might be because there might be a lack skill and innovation somewhere. Lower wages isn't always a bad thing actually.
First, coming from a less developed country doesn't mean you'll be less skilled. On the contrary, it's a strong incentive. Being raised and schooled in a developed country is only a luxury, it won't make you a better engineer.
Secondly, those engineers will "depress" wages for several reasons. First, it's supply and demand. They have much stronger wishes to work in a developed country compared to native engineers. Secondly, companies might also hire native engineers because of various reasons, like language barriers, relationships between personel, the culture of the company, etc.
If it depress wages, it might be because there might be a lack skill and innovation somewhere. Lower wages isn't always a bad thing actually.
>Suppose the city of San Francisco deported 10 percent of its computer programmers tomorrow and adopted a law saying that in the future no engineers born in other counties were allowed to move here. Would that lead to skyrocketing earnings for the remaining engineers? I seriously doubt it. I think it would destroy the San Francisco tech industry with some unfortunate knock-on effects a bit south in Silicon Valley.
I wonder if there is a name for this fallacy, because I see it all the time. A common example is "Well imagine what would happen to the economy if everyone became a vegan tomorrow!"
As a malicious device for derailing a discussion, it's pretty clever. It pivots the argument from "how would the world be different if Y instead of X?" to "how would the world be different if we instantly tried to switch from X to Y?"
Suppose you propose going to the grocery store. I say, no that's a terrible idea. Imagine if, in the next second, you were suddenly whisked away to the grocery store — the acceleration forces would liquify you! Obviously that would be a dumb thing to say, but you still see these "what if X overnight‽" arguments all over the place.
I wonder if there is a name for this fallacy, because I see it all the time. A common example is "Well imagine what would happen to the economy if everyone became a vegan tomorrow!"
As a malicious device for derailing a discussion, it's pretty clever. It pivots the argument from "how would the world be different if Y instead of X?" to "how would the world be different if we instantly tried to switch from X to Y?"
Suppose you propose going to the grocery store. I say, no that's a terrible idea. Imagine if, in the next second, you were suddenly whisked away to the grocery store — the acceleration forces would liquify you! Obviously that would be a dumb thing to say, but you still see these "what if X overnight‽" arguments all over the place.
This is the fallacy of division.
http://en.wikipedia.org/wiki/Fallacy_of_division
First off you have supply and demand, which is enough to say that new workers would depress wages. You can go deeper into the micro-economics view point and look at the utility curves of the American Engineer vs. an Immigrant Engineer, and see that they are very different. A immigrant engineer, is facing possible deportation to a country with lower wages, whereas an American Engineer is more willing to hold out for a higher wage, knowing the state of the labor market and that they do not have as pressing of a need for a job immediately. To an immigrant worker, turning down the job could lead to a much worse outcome, so their logical choice is to take the initial pay offered.
Furthermore, the business is aware of both their cost of the H1NB and of the immigrants situation, which gives them a negotiating advantage. They can use the H1NB cost as a negotiation tactic, and pay the worker a lower wage, without fear of being turned down.
Furthermore, the business is aware of both their cost of the H1NB and of the immigrants situation, which gives them a negotiating advantage. They can use the H1NB cost as a negotiation tactic, and pay the worker a lower wage, without fear of being turned down.
So if someone wants some actual data on this, here's one thing that we could look at:
Openness to immigration (admittedly not the easiest statistic, but we should be able to find something that works) compared to local wages, corrected for GDP.
That should give us a way to compare relatively open countries with relatively closed countries, and see which ones have higher wages.
Openness to immigration (admittedly not the easiest statistic, but we should be able to find something that works) compared to local wages, corrected for GDP.
That should give us a way to compare relatively open countries with relatively closed countries, and see which ones have higher wages.
Who should we believe, the "columnist who doesn't think it's obvious" that pulling in piles of low-paid immigrants depress local wages, or the capitalists who do think it's obvious? What possible reason would there be for hiring foreign workers if they WEREN'T depressing local wages?
And indeed, the studies confirm our intuition:
http://hothardware.com/News/Study-H1B-Visas-Lower-US-Program...
And indeed, the studies confirm our intuition:
http://hothardware.com/News/Study-H1B-Visas-Lower-US-Program...
That article is from 2009, the study they link to doesn't actually have what it says its supposed to have in the abstract and the article that claims that
"Most foreign tech workers, particularly those from Asia, are in fact of only average talent. Moreover, they are hired for low-level jobs of limited responsibility, not positions that generate innovation. This is true both overall and in the key tech occupations, and most importantly, in the firms most stridently demanding that Congress admit more foreign workers."
is 404. I'd like to see some better data if you have it though.
"Most foreign tech workers, particularly those from Asia, are in fact of only average talent. Moreover, they are hired for low-level jobs of limited responsibility, not positions that generate innovation. This is true both overall and in the key tech occupations, and most importantly, in the firms most stridently demanding that Congress admit more foreign workers."
is 404. I'd like to see some better data if you have it though.
EPI has a study - includes discussion of salary, among other things:
http://www.epi.org/publication/bp356-foreign-students-best-b...
But in all of these cases, studies are of interest only to determine the magnitude of the effect. We have observed thousands if not millions of times throughout history that in a wide variety of occupations, a labor shortage drives up wages and conversely, a labor oversupply eliminates wage increases (though it tends not to actively decrease wages by much, since wages are sticky upward). Increasing labor supply to minimize wage growth is an extraordinarily uncontroversial thing, and only nincompoop contrarian columnists or paid shills would argue differently.
http://www.epi.org/publication/bp356-foreign-students-best-b...
But in all of these cases, studies are of interest only to determine the magnitude of the effect. We have observed thousands if not millions of times throughout history that in a wide variety of occupations, a labor shortage drives up wages and conversely, a labor oversupply eliminates wage increases (though it tends not to actively decrease wages by much, since wages are sticky upward). Increasing labor supply to minimize wage growth is an extraordinarily uncontroversial thing, and only nincompoop contrarian columnists or paid shills would argue differently.
> Increasing labor supply to minimize wage growth is an extraordinarily uncontroversial thing
Probably not as uncontroversial as increasing labor supply to meet demand ;)
Probably not as uncontroversial as increasing labor supply to meet demand ;)
What I don't get is that the law allows hiring foreign workers only if a qualified American worker could not be found, but I have never seen any evidence of this. Has anyone heard of a company being forced to prove this, or experienced an interview process where they prioritize American workers?
One word economics! It can provide real answers to the questions poised by the author. The author treats this subject like a black science creating hypothetical scenarios. What a joke.
A piece on immigration as it relates to skilled labour with no mention of H-1B? If you aren't investigating the primary manner by which skilled foreign labour finds itself in the states, then you're never going to get a good answer to the question: "Do immigrant engineers depress [native] engineer wages?"
Of course, an H-1B visa is technically a non-immigrant visa, which goes a long way in investigating the question by itself. It's somewhat misleading to even call them "immigrant engineers" if most them are on a temporary visa that ties them to a sponsoring company and requires them to leave once time is up. This clouds the issue of supply and demand, as the labour pools are really quite different: foreign nationals who are tied to a specific company and are only permitted to reside for X years, versus natives who are free to work for any company and can live here indefinitely. It _is_ obvious that the native is going to be able to command a far higher salary than an H-1B that is stuck with his "sponsor."
Now, whether companies are pushing for more H1-B's because of this wage suppressing factor, or because there is an unresolvable shortage of native talent, is the million dollar question. And it's a question that, in my mind, is readily answered. Convert the H1-B into a full-on green card, wherein the skilled foreign labour is granted all of the rights and privileges of a native. If the shortage really is unresolvable --for whatever reason-- then companies still have all the skilled foreign labour they would need; the companies' staffing concerns are still addressed. And since the foreign national is permitted to live and work wherever he pleases (he is essentially identical to a native applicant at this point), the argument of wage suppression is significantly weakened, since the main argument is that there really _are_ natives willing and able to do the jobs but they're getting priced out of the market because they can't compete with locked-in H-1B holders.
The skilled immigrants win. The companies still get their skilled labour and win. If there really are natives ready and willing to do the jobs, then they too will win.
Of course, an H-1B visa is technically a non-immigrant visa, which goes a long way in investigating the question by itself. It's somewhat misleading to even call them "immigrant engineers" if most them are on a temporary visa that ties them to a sponsoring company and requires them to leave once time is up. This clouds the issue of supply and demand, as the labour pools are really quite different: foreign nationals who are tied to a specific company and are only permitted to reside for X years, versus natives who are free to work for any company and can live here indefinitely. It _is_ obvious that the native is going to be able to command a far higher salary than an H-1B that is stuck with his "sponsor."
Now, whether companies are pushing for more H1-B's because of this wage suppressing factor, or because there is an unresolvable shortage of native talent, is the million dollar question. And it's a question that, in my mind, is readily answered. Convert the H1-B into a full-on green card, wherein the skilled foreign labour is granted all of the rights and privileges of a native. If the shortage really is unresolvable --for whatever reason-- then companies still have all the skilled foreign labour they would need; the companies' staffing concerns are still addressed. And since the foreign national is permitted to live and work wherever he pleases (he is essentially identical to a native applicant at this point), the argument of wage suppression is significantly weakened, since the main argument is that there really _are_ natives willing and able to do the jobs but they're getting priced out of the market because they can't compete with locked-in H-1B holders.
The skilled immigrants win. The companies still get their skilled labour and win. If there really are natives ready and willing to do the jobs, then they too will win.
I won't even say that they do, as it is obvious on the face of it.
There's really no debate about this issue, like scientists debating some aspect of quantum mechanics seeking to get to the truth. This is a fight over how the pie gets divided up, and the billionaires and their commissars like Yglesias are trying to grab more of the pie. We're still at a historic unemployment high from the 2008 crash, current unemployment was not at its high current level from 1984 to 2008 other than a two month period in 1992.
As I said, this is not a debate like physicists arguing to get to the truth. This is a struggle of people trying to get their pockets filled, and lies and nonsense are par for the course. Every statement in a thread like this boils down to either "I am on the side of the IT workers who create the wealth in the US" or "I am on the side of the heirs and billionaires who extract profit from the labor of those who work".
So glad Yglesias is looking out for us common programmers...Yglesias's bio says he went to Dalton. Do you know how much first grade costs at Dalton? Over $40,000. The heirs, the billionaires and their agents got together to push for more H1-B slaves in the midst of this historic unemployment, and now the propaganda push happens. Arguing with their agents does nothing - get together with other engineers organizing against this type of nonsense and get going. There is no type of honest debate possible as they are just greedy people who will tell any lie to pile some more money on their billions. Your alternatives are join with those organizing against these types of things or do nothing. Yglesias and those who agree with them are liars who will say anything to rip you off, so talking to them is pointless.
There's really no debate about this issue, like scientists debating some aspect of quantum mechanics seeking to get to the truth. This is a fight over how the pie gets divided up, and the billionaires and their commissars like Yglesias are trying to grab more of the pie. We're still at a historic unemployment high from the 2008 crash, current unemployment was not at its high current level from 1984 to 2008 other than a two month period in 1992.
As I said, this is not a debate like physicists arguing to get to the truth. This is a struggle of people trying to get their pockets filled, and lies and nonsense are par for the course. Every statement in a thread like this boils down to either "I am on the side of the IT workers who create the wealth in the US" or "I am on the side of the heirs and billionaires who extract profit from the labor of those who work".
So glad Yglesias is looking out for us common programmers...Yglesias's bio says he went to Dalton. Do you know how much first grade costs at Dalton? Over $40,000. The heirs, the billionaires and their agents got together to push for more H1-B slaves in the midst of this historic unemployment, and now the propaganda push happens. Arguing with their agents does nothing - get together with other engineers organizing against this type of nonsense and get going. There is no type of honest debate possible as they are just greedy people who will tell any lie to pile some more money on their billions. Your alternatives are join with those organizing against these types of things or do nothing. Yglesias and those who agree with them are liars who will say anything to rip you off, so talking to them is pointless.
First, the practical case: when I was in college (2000-2003), none of the Indian or Chinese people wanted to get a job back home. And, they were some of the best people in school: the more advanced the class, the smaller the proportion of native born Americans; graduate level classes were mostly full of foreign-born students, and most of the top of the class consisted of foreign-born students. The U.S. didn't let most of them stay in the country, forcing them to go back home. If you take a bunch of smart people, and force them to live in their home country, they aren't going to go dig ditches; they're going to start industries. Those industries have done so well that many of my classmates (and others) who have spent time working in the U.S., and have a legal right to work here, want to go back home. They, naturally, want to be near their families. A decade ago, there wasn't enough industry to find a job that was both interesting and well paid. By forcing the people who wanted to stay here to go back home, we've forced them to create good companies, and hence, good jobs.
And then there's the moral case. This is less relevant for high-skilled workers now, due to what's happened above, but it still applies for many countries and most industries [1]. If we reduce the wages of engineers in the U.S., we're reducing the wages of a relatively well off group in one of the richest countries in the world. We're talking about reducing the wages of someone who is, on a worldwide scale, in the 99th percentile. If we let someone in from a poor country, we're increasing the income of someone who might be below the 50th percentile into the 99th percentile. It's awfully hard to make a case that we should be enriching the richest people in the world at the cost of the poorest.
[1] Total factor productivity [2] in the U.S. is so high that unskilled Mexican laborers become three times more productive when they cross the border, and, globally, Mexico is one of the richer countries in the world.
[2] http://en.wikipedia.org/wiki/Total_factor_productivity