WSJ: H-1B Visas Keep Down U.S. Tech Wages, Study Shows
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I'm pretty sure the word shortage already implies that there is a shortage at the market price, not at an arbitrary price.
"Shortage at the market price" seems to be a somewhat incoherent concept. The market price is the price point at which the supply and demand curves intersect. Other than a discontinuity in either supply or demand such that the curves pass without intersecting (which makes the market price ill-defined), demand equals supply at the market price.
We're pretty comfortable talking about shortages in consumer markets when we would buy things at the stated price, but can't because it is sold out (eg Pixel phone shortages), so I'm not sure why we can't say a similar thing about labour.
That can just be a current price below the equilibrium market price; I'd argue that a shortage is a specialized instance of that resulting from a transitory decrease from long-term supply (or increase from long-term demand) that is expected to revert to normal.
But if you need annual supplements of labor for the same field over a period of decades, that's not a labor shortage, its price being artificially suppressed (and inhibiting market signals that would develop domestic supply faster.)
Theoretically, couldn't it also be that demand is consistently growing faster than anticipated (even after whatever corrections are made upon discovery that it previously grew faster than anticipated)?
For any given skill there is a labor pool with some participation rate, of people who currently have that skill, such that it is accurate to say that the market has a shortage.
Answers to the shortage must solve for either the size of the labor pool, the rate of participation, or the amount of people who have that skill.
Those answers vacillate between importing labor to solve the problem now, or forcing the market to educate people by blocking imported labor.
The problem with importing labor is that it reduces market incentives to educate people. The problem with not importing people is that it means you'll have a labor shortage until the market adjusts and people re-educate.
Easy answers, on either side, are snake oil.
Of course not every market is a large efficient market. If you're talking about a price-regulated market, by all means, discuss shortages. Another good situation where discussing a shortage would be appropriate is markets that have very or perfectly inelastic supply over a relevant time period. Say, a vaccine that costs $1 but that takes 6 months to produce due to the biology involved, combined with a major epidemic in the relevant disease. It's fair to call that a shortage.
Constraining supply increases salaries precisely because it takes supply so long to incorporate information.
On top of that, supply and demand is a pretty leaky abstraction, I don't expect it to be very accurate in such a nonideal market.
Just because a service exists at some (arbitrarily high) price point doesn't mean society isn't suffering from a shortage of that service.
If Family Doctors could charge $10K/hour, that most certainly does point to a shortage.
His point was, offer Family Doctors $5/hour and see how many family doctors show up, which is 'equivalent' of what is happening now.
A shortage of a good means that there if there can be pending buy and sell orders in a market book, then there are a lot of pending buy orders, but just not for the price at which sellers are willing to sell.
What SV is saying that there are a lot of people who would buy a lot of goods, if they can be produced cheaply (and it isn't because they're poor, it's just because the consumers don't value that good that much). If Netflix raised their fees to $90 per month then it means that a lot of people would cancel their subscription (and not all would do because at $90 they will be unable to meet their rent).
If Netflix magically halved their wage bill they would likely keep their price the same since how much a Netflix devops engineer gets paid doesn't change how much a family in Peoria is prepared to pay for a Netflix subscription.
It is a good point that the market can't achieve the impossible. C++ bootcamps probably wouldn't spring up in your hypothetical ancient Rome and offering millions of dollars today for employees with skillsets that modern humans can't achieve wouldn't work either.
The question is whether you or not the current bar of a "qualified candidate" is impossible. I would say no. Given the right financial incentives, the candidates will exist.
Google literally does offer $1 million salaries for the right positions, the problem is that most of the people who could make that work have already been recruited.
Which is why they pay interns six figures to show up for what amounts to a long job interview, to make sure they get all the new talent the moment it's minted.
If you make it more difficult to recruit people from untapped populations abroad, they won't pay lower tier people more, they'll open offices aboard to capture their acceptable talent.
So yes, there is a shortage of talent that meets the bar. While everyone trained as a book keeper can almost certainly fill any book keeper role, not everyone trained as an engineer can actually fill any role. Not just because some people are shitty engineers, it's because engineering involves spending long periods of time learning domain knowledge that isn't transferrable, even setting aside the fact there are literally thousands of types of engineer.
FWIW, my rant was not intended as a rant against immigrants, just a rant against people that spin their personal or corporate financial interests as a national crisis.
The company is heavily automated and very profitable, which means they can attribute those profits to the humans largely responsible for them with accuracy that isn't often seen outside finance. The bonus structure is extremely kind to the highly productive.
EDIT: (from the article) "Currently, U.S. colleges graduate far more scientists and engineers than find employment in those fields every year — about 200,000 more — while the IT industry fills about two-thirds of its entry-level positions with guest workers."
One of the reasons that SV tech firms hated Trump was because he wanted to stop the abuse of H1-B Visas.
Even Republican and head of HP Meg Whitman said she was voting against Trump. His promise to fix the H1-B Visa abuse would mean that HP would have to pay market wages for programmers and engineers.
Not two weeks ago I was "hired" by a firm to do some consulting for them, during which time they extracted data on "how" to solve a problem (NLP related) and then flew in some dude form India to code the solution.
I made a decent wage. For two days.
He undoubtedly was a faste progrmmer than me, but fuck if we both didn't get used. I live in a state that thinks the word union means that General Sherman is fixing to burn down the capital, so there's little to no recourse. And I am hesitant about even writing this given how shadily I was treated.
Needless to say, there are many reasons why DT was elected, but one of the primary ones is because he promised a thousand times if he promised once that he would slow the tide of incoming labor to shore up the lessening of wage depreciation.
I also love how ten years ago the Department of Labor "projected" that STEM career growth would continue unabated for many years, and yet now I can't find a job writing code for literally anyone beyond the example I mentioned earlier.
If this is the future, we are completely and totally fucked. Save your pennies folks, you're going to need the copper. Oh, and don't forget to make sure to keep taxes off the rich and the jobs outsourced so the poor Americasn can take it in the ass until the next "public servant" gets elected and doesn't do what they said they would.
Meanwhile, I'll be teaching 7 year olds to code hello world (if I am ever lucky enough to actually get a GD job that isn't flipping burgers or pouring sweet fucking tea) while pining for the research position I spent more than three decades in school to be smart enough to do.
God Bless America, and all of the nations "she" serves.
I'm going to guess you have no idea what his compensation actually was, but you're assuming it's low.
On the list of reasons to hate trump the H-1B is pretty far down. Especially since the proposals so far wouldn't hurt the companies who aren't abusing the system.
The lottery system is arguably the worst part of it, it punishes companies who carefully and rigorously select candidates and rewards companies who "spam" applications. Again, while not perfect, compensation is probably an okay proxy for how selective the interview process is.
Apart from the people abusing the system, who is against a market rate/inflation adjustment? I have no stake in this, but I really don't understand.
That was a key part of Trump's proposed bill. IRRC, the proposal is to increase the minimum from $60k to $130k. Interestingly $60k in 1989 was worth what $117k is in 2017. In other words, given current inflation rates, it's very likely that the new minimum will be the 2020 or 2021 equivalent of the original minimum.
That would suck for low-end outsourcing body shops, be good for the giant SV tech companies and probably remain about equally sucky for young start-ups as it is now.
Not every company is in a place where they can find enough local customers to support a 2x increase in their salary costs. While that has been made somewhat better by the reach of the Internet it's still going to be a powerful force to move companies from lower density areas where it's almost impossible to recruit, and into high density areas that already have the bulk of the talent and customers.
You're effectively fucking middle America into relocating both their people and businesses.
Some Australian visas have a condition that you must spend 2 years in a regional area, maybe the US and its states can have the condition that you must work in some certain regions for X years.
I haven't taken anyone's job, I'm sensitive to wage disparities, I support companies letting people work remotely and I'm not doing anything at all to middle America.
There's no jobs because it's very hard to find people to fill key roles.
But there's no people to fill key roles because there's no longer any jobs, and they're in more populous centers.
If you're pushing policy that prices the few businesses there out of the remaining pools they can hire from, you might as well just close up the middle of the country and admit defeat.
Competition only increases efficiency if the price of a good is currently inflated.
Labor is likely under-priced as a good relative to other expenditures, like property and the means to production, so an increase in competition for jobs does not necessarily equate to a more highly functioning society.
In any case, for a given good if there is any profit at all being made (which...well, there should be otherwise the producers wouldn't exist) then the price of the good is (I will borrow your language) "inflated" and has room for competition to be brought down.
There's a lot of stuff wrong with your claims, I don't know where to begin...
Now, to loop back around to your point about investment; either party having additional capital will allow that party to further invest.
That is true in the case of formalized businesses, like the ones your thinking about, who can further invest in capital goods.
However, it's also true of more informal businesses that you're ignoring, specifically, the employed individuals themselves.
Employees are in the business of services -- they perform some labor, be it mental or physical, and are paid for that labor. Formalized businesses are their customer.
Profits that those employees obtain are also capital which can be invested -- whether that investment is in their health, their happiness, their residences, their educations, buying tools, the stock market, creating new businesses, affording time to raise and educate their children, and so on.
Theories of economics which ignore that the employed are also themselves informal businesses are disjointed, and fail to explain the totality of economic growth and investment.
There are several possible fixes: Auction visas with a high minimum. Disallow contracting-out workers on visas. Etc. It's a system that would be easy to fix at zero cost, and maybe even could be made into a source of revenue.
There should be some sort of approval process from an institution or firm that does not have a conflict of interest with the firms applying for H1-B Visas.
1) Solve the Green-Card backlog issue that forces people in the backlog to stick with their current jobs. This is a major thing, that is not talked about more often.
2) Simple merit/salary based priority queue to grant VISAs.
I have never quite understood why there is this urge to entirely get rid of it instead of fixing it to do what it was originally supposed to do.
Edit: On an H1B right now, and I do think there needs to be major fixes.
You can see this today. Look at the number of GC sponsorships by companies that treat H-1B employees well (Google, Microsoft, etc...) vs the consulting companies like Infosys and Tata. They have no interest in getting their employees green cards because then they have no power over them.
Adding skilled labour can allow more opportunities to add more skilled labour jobs.
Without the extra slack, there's no opportunity. Part of what makes Silicon Valley work is that there's a lot of talent that is somewhat slack to allow for new companies to get started.
Look up "Green Card backlog India" related searches. Currently it would anywhere from 15 to 35 years for a H1-B from India to get a Green Card after their Perm is filed.
Hence I'm ok with limiting the program until measures and audits are in place to good that situation.