It’s never been clear to me why this program exists in the first place, other than to put downward pressure on US STEM wages. What am I missing?
The reality is that in most of those fields, few Americans get an MS/PhD. Go to a typical engineering department and you'll often see the majority of advanced degree students are foreigners.
So it's a question of: Do we want to continue to train foreigners, only to not have them contribute to the US economy?
If you move out to the pure sciences, you pretty much need a PhD to get a good career. Once again, a big chunk, if not the majority, are foreigners.
Look around at the highly skilled folks you see who are not of US origin, and you'll find most of them are in the US due to the H1-B program (only a tiny percentage come via other programs like the O visa).
Yes, H1-B is often abused, but this is the reason it exists. It's a lot harder to get an H1B visa and then permanent residency if your degree is in the humanities, for example.
Debt means most Americans go "I need to enter into the job market so I can pay off these debts".
Also, alot of foreign students are willing to work/study insane hours because visa hanging over their head. I have a friend who got MS in Engineering but didn't want to continue because he looked at what's required and started talking with his mentor about his PhD. His mentor said it's 996 schedule and if you don't want to, I can likely find a student visa student who will.
International students percentage is about 6% of total high education population [1]. We can say that their percentage in higher in some fields/degrees. But overall they are not significant reason High Education is not affordable. Actually for undergraduate (majority of international students) they will pay more tuition and many colleges wants to admit more to subsidize domestic students.
> Debt means most Americans go "I need to enter into the job market so I can pay off these debts".
Study abroad is expensive and you still need to enter the job market to earn your living and probably pay your dept (some will take loans to study in the US). This applies quite well to international students too.
[1] https://opendoorsdata.org/annual-release/international-stude...
It's much much higher in Postgraduate because it's a way to stay in the country without being employed
For undergrad, I understand the frustration, although student visas have almost nothing to do with it. As an example, when I was in my undergrad (for engineering), there was only one foreign student in my engineering classes. Almost all the foreign students were at the MS/PhD level. The number of foreign students in the undergrad population was easily under 5%, if not under 1%.
Probably true in most no-name state schools.
> Debt means most Americans go "I need to enter into the job market so I can pay off these debts".
An MS is only 2 years, and you should go only if it's fully paid for (quite often the case in engineering). And you typically don't accrue interest on undergrad debts for those 2 years - so it's only delaying paying off debts by 2 years.
No - most Americans don't do MS in engineering, simply because they don't want to and don't value it.
> Also, alot of foreign students are willing to work/study insane hours because visa hanging over their head. I have a friend who got MS in Engineering but didn't want to continue because he looked at what's required and started talking with his mentor about his PhD. His mentor said it's 996 schedule and if you don't want to, I can likely find a student visa student who will.
Entirely dependent on the advisor, although I do suspect your anecdote is becoming more common. Also, likely more common at top tier universities and less so in no name state universities.
I don't see many people getting employed straight out of undergrad from India or China and moving to the US directly. They get their advanced degree here first to get into the country then they get employed...
Yes, and ...?
I mean, if it were a requirement to start a business and employ 10 Americans gainfully, would you go and say "Yeah, but the reason so many foreign born people do that is so they can get in legally."
So?
As long as they have higher level training than most Americans, and as long as we spend money training them (via research/teaching grants), isn't it a good idea to keep them?
Outside of SW, not many engineering jobs have a mix of undergrads and MS folks doing the same work, so your sample is extremely biased.
> I have met some people from India who were surprised at how difficult college was when they came to the US compared to back in India.
And I've met the opposite. Ask folks who went to the top IITs.
As for the cost of tuition, there are many, many reasons, and I suspect if you did a PCA, you'll find "raising tuition to milk foreigners" to be of minimal impact.
In my state, for example, a local university publicized their finances going back decades, and the increase in tuition has been mirrored by a drop in state support per student. Overall the university is not making more money per student than they were 30 years ago - the only thing that changed is the entity making the payments.
If you want to make that siphon bigger — and more competitive — how would you do it? By limiting the people that can work in tech to whoever companies can hire locally, or by bringing in the smartest people from around the world?
Read more: https://mckoder.medium.com/does-america-need-immigration-781...
The major benefit of reducing or eliminating the H1B visa program is that those companies can continue to do well, and Americans can do well along with them.
The tech industry vacuums up money from foreign countries and pumps it into the economy of our country. The beneficiaries include all Americans, including those who work in restaurants, retail, healthcare, insurance, education, housing, transportation, entertainment and so on.
Limiting tech industry to whoever companies can hire locally will hurt its global competitiveness. Such a move will not just hurt the few would-be tech immigrants that are prevented from immigrating, but American prosperity in general.
Walmart is a U.S. company that historically did well, but I don't see why anyone would care unless you buy their stock or live in Bentonville.
People don't care about macro indicators that lump the 1% and the 99% together.
Phrased differently, the goal is to help industry, not hurt workers. Hurting some workers is an acceptable cost, not the goal.
One idea is that having a thriving industrial ecosystem helps those same workers more than the downward pressure.
The phrase "help industry" has many dimensions. The simplest of course is that by increasing labor supply and suppressing wages it increases profit margins, rewarding shareholders.
Another important function is that by having more workers overall in the US, it increases the productivity of the domestic industry itself, due to increased competition for jobs driving up the productivity of the average worker. This in turn makes the industry more competitive vs its equivalents in other countries.
The average worker (whether permanent resident or temporary/H1B) who doesn't have significant investments likely doesn't receive much of those productivity gains, since they mostly go to capital owners.
Long term, it boosts returns to capital while capping returns to labor, the same trend noted by Thomas Piketty some years back.
The economic impacts I described are looking backwards, not forward, and the data is pretty clear that long term returns on capital swamp the returns on labor (especially since the 1970s). STEM workers have been somewhat insulated from that due to the industries they work in growing in the past few decades faster than the labor supply. It's anyone's guess whether or not either trend will continue into the future.
> the question is less about productivity, but network effect, number of jobs, and quality of jobs.
I'd argue productivity and returns to capital are almost everything when it comes to what informs immigration policy from an economic lens. "Network effect" is a mechanism, not an outcome, and outcome metrics like "quality of job" or even "quality of life afforded by a job" are not a concern of such policies. On average, they might improve, or they might get worse, but productivity and returns on capital will always go up, whether they require workers or not.
Because what you are calling "local benefits to industrial expertise" is ultimately realized in the form of returns on capital.
Whether these benefits outweigh the costs is an open question.
When the tech industry's growth was very talent constrained as it was in the last few decades, arguably opening labor competition had the effect of increasing overall growth (mainly through new production invention). The list of immigrant technologists who have created new technologies and products - and jobs as a result - could probably fill an encyclopedia.
It's unknown whether that type of growth - the kind that creates more and better jobs - will continue, especially given recent developments in AI.
If the benefits going forward are largely going to be based on massive increases in labor efficiency, then it's not as clear that the benefits (mostly to capital) outweigh the costs (mostly to labor). Most business models in AI are predicated on replacing people, who are expensive, not making more or better goods. Sure, we'll get some neat robots along the way that actually make stuff, but that will likely be a small fraction of the money to be made.
Or perhaps we are at the dawn of a new era of technology which will make more and better jobs. We'll see.
It's relevant to the original context because what helps industry (in terms of immigration regulation) might or might not help workers in that industry.
That effect mostly comes from housing, non-housing capital has not had that big difference in returns. See https://www.brookings.edu/articles/deciphering-the-fall-and-...
Subtracting depreciation isn't a fair comparison. The example uses software as a short-lived asset. Has the monetary value of Google's search algorithms depreciated? They've been upgraded with routine investment, but the scale of the returns on their upkeep vastly outweighs the capital investment, otherwise Google wouldn't be so profitable.
Software of the internally-developed sort isn't even depreciable [1], so it's not clear how its value for these purposes would be determined (short of assuming it represents a percentage of the business's value).
Also, from the paper linked in your article:
> Once all compensation of employees at the sawmill is subtracted, the remainder is its gross capital income. Some of this capital income will be paid to lenders in the form of interest, some will be paid to the government in taxes on profits, and the rest may be retained on the balance sheet of the sawmill or distributed as dividends to shareholders. Gross capital income is thus a very broad concept, encompassing funds that are ultimately paid out to many different recipients—it is unaffected, for instance, by the split in financing between debt and equity.3 GROSS VERSUS NET: CONCEPTS An alternative to gross value-added is net value-added, which subtracts depreciation. This can be divided into labor and net capital income, the latter being gross capital income minus depreciation.
Everything which I have emphasized above are examples of returns to capital. Excluding them from consideration in this presentation is ignoring how a large amount of returns are channeled to owners of capital.
Debt-holders gain from interest and shareholders are enriched via dividends and share buybacks that never appear on the article's net income derived graph.
Of course, when you willfully ignore those huge tranches of returns, then housing looks like a major factor, because it is the common asset class that has been on a largely unchecked inflationary track.
Finally, your article from 2015 argues that the overall trend will reverse and labor's share of GDP will start increasing. Here's what has actually happened since then:
https://fred.stlouisfed.org/series/PRS85006173
The brief spike in 2020 was due to pandemic era redistribution policies like the child tax credit, among others. Since those have been repealed, labor's share has continued its prior trend downwards.
1. https://www.irs.gov/publications/p946#en_US_2023_publink1000...
When productivity goes up, that doesnt mean workers are making 10X as many houses or hamburgers, which capitalist are eating.
For me, this begs the questions of what exactly is being produced when we say worker productivity has increased, and where is it going? If it is "stuff" being produced, surely it should be evident somewhere, like massive exports hoarded stockpiles. Alternatively, the productivity is an illusion because there is a corresponding inefficiency or deadweight loss, like paying some service workers to create problems and paying others to fix them.
When my companies have produced more output from the same inputs (or the same output from less inputs in the case of mass layoffs), we return the cash to shareholders by way of a stock buyback or special dividend the following quarter.
Maybe in some companies they instead give workers raises or outsize holiday bonuses, but I’ve never seen this.
Power.
Political power: policies written to benefit the highest bidder.
Financial power: more leverage in being able to dictate terms of borrowing by workers - and being able to force the government to borrow from capitalists instead of levying taxes on them.
Physical power: Being able to buy/influence law enforcement (themselves a type of worker) to protect the capitalist's interests over those of other workers.
My understanding is that GDP or Piketty's review has no column for "Power".
If someone is counting influence as GDP and worker productivity, I would say that is a faulty measure, and worker productivity has not increased.
The "product" that the increased productivity buys is control over policy at whatever level of government, not more washing machines or tires.
If you have a company and worker productivity goes up 200%, where does the product go? Wealth created selling that product may go to the owner, and carry power with it, but that doesn't answer the fundamental question. Where is the product?
In a mature industry, there is no new product, because all else equal, demand doesn't change. The company makes the same amount of product, but with fewer workers (aka layoffs).
Even in an industry serving growing demand, increase in worker productivity is not the cause of increase demand for product produced by that industry. Any growing enterprise knows it's first more important to focus on demand than increasing productivity, usually by hiring workers at the lowest cost possible. Otherwise, your competitor will serve your customers needs before you do. Premature optimization is a waste.
What increases demand for products is technological innovation plus a need/desire for more personal convenience, comfort, and time, coupled with the funds to purchase those in the hands of a growing population. Why have most companies have staked their future profits on the developing world's demand growth? Because the developing world has the desire for all of the above plus a growing population.
The question of where the new product goes has nothing to do with the question of worker productivity unless the workers have the funds to purchase those products. The product goes where the purchasing power is.
Capital's share of the return, however, goes into assets and as I described earlier, power. It doesn't go into purchasing any increase in product created.
That is my exact question, who is purchasing the goods? we have high employment and have supposedly high productivity. We dont have massive national export surplus. You say capital isn't purchasing the goods, so what gives?
Where is the black hole that is consuming all of the goods, if the workers dont get them, the rich dont get them, and they aren't exported.
Take new cars as an example. We are producing fewer of them [1], they are larger and more expensive, and they are mostly being sold to wealthier people. So yes in this case, capital owners (people more likely to have more wealth) are the ones purchasing the product.
Also, for a while we have been shifting towards a services based economy, so for a lot of this production growth, you won't see physical products. For example, you can't see the software IDE subscription I signed up for yesterday.
We also don't have a national export surplus because we import so many goods that are not worthwhile to manufacture here, while we export a ton of services, petroleum, and other raw extracted materials, all industries that scale with technology/capital/machinery and not labor.
I didn't say 100%, I said most (re-read my comments upthread). Please don't misrepresent my words. I choose them carefully.
Greater productivity does not automatically equal a commensurate increase in products/services delivered, which seems to be the flawed assumption you are unable to get past.
Here is a concrete scenario to illustrate this.
A company makes 1M units of a product at a cost of $1/unit, and sells them for $1.50/unit. Profit/unit is $.50.
Productivity doubles, so the same million units can now be produced for $.50/unit. When sold for $1.50, profit is now $1/unit.
The $.50/unit increase in profit goes mostly to shareholders.
There are no new products, no new services.
In reality, demand varies over time, so product output varies with that, but the gains in profit mostly have gone to shareholders.
The only time they ever go to labor is when labor is in short supply or when labor organizes to demand a larger share.
If harm was the goal, something like a STEM worker tax or cutting R&D tax incentives would be easier.
These would affect all STEM workers equivalently. The H1-B program, whatever one thinks of its merits, hurts domestic STEM workers and helps immigrant STEM workers.
Perhaps the result is that the overall opportunities are greater because the larger talent pool results in more companies being formed. That depends a lot on how mature the industry is, and whether technological trends like generative AI will replace large swaths or STEM workers altogether.
You can’t really separate the two sides of the same coin.
Im not extracting all your blood for the fun of it, or to kill you. profit is the motivation.
Saying the motivation is to kill you is simply not correct. It is a byproduct.
Can we honestly say these hires are paid exactly the same their American counterparts would be willing to accept?
Im not sure why this is confusing. One part is the motivation, the other isnt.
If I rock it explodes killing all of the astronauts, was that the purpose of the rocket and the mission?
If I crash my car on my way to the store, is that the purpose of leaving my house?
But it's also possible to say that one hasn't been able to find a skilled-enough Java developer.
And in general skilled immigration has many times over been proven to only benefit the country and that java developer you mention.
"The intent of the H-1B provisions is to help employers who cannot otherwise obtain needed business skills and abilities from the U.S. workforce [...]"
o-1 is to bring Albert Einstein and h1b is to bring some physicist that matches criteria.
As in, O-1 is person-focused, while H1B is role-focused.
those are exceptional cases. The majority of the 65K year h1b visas granted every year are for filling IT related positions. Mostly dev related positions.
Because that's not profitable.
An odd claim, wish there was more evidence for it being true. As in, what is the "artificial constraint" for front end web developers?
What is the downward price shock you're talking about? What do you think the salary would or should be, assuming all H1B worker are magically gone the next day?
You learn about the world by living in it, not by reading about it.
The program might have been designed for this, sold as this, but it's definitely not used for that anymore.
H1B was created in 1990, that's when Russia (and ex-USSR in general) had a lot of idle brains that wouldn't mind moving to the US. Today isn't 1990 tho.
You don't see the need but perhaps the users do.
As Asimov pointed out, "[t]here is a cult of ignorance in the United States, and there has always been." American culture is profoundly anti-intellectual. Every Dunning-Kruger rando thinks they have something valuable to contribute to every discussion.
Then why are US tech companies the most successful?
I think you're omitting the giant impact of the FED, wall street, power of the USD world reserve currency and the VC investor incentives of risking billions on ideas that may or may not be profitable, with the low risk for investors if their investments don't pan out.
All stuff that doesn't exist outside the US.
The latest Gallup polling suggests anti-vax sentiment is at an all-time high. In no other comparable country on earth do 45% of people say vaccines shouldn't be mandatory. And it's not the foreigners on visas who are contributing to anti-vax sentiment.