Immigration reform in America
economist.com
economist.com
Of all the top large technical companies (Microsoft, Apple, Google, Oracle, Intel, Facebook, ...) only Google has a major presence in Manhattan (in Chelsea) for software developers and engineers (it owns the second largest office building in New York City). If Zuckerberg and friends would read a some of Richard Florida, he'd find that young people don't want to live in boring Silicon Valley (many take a long daily commute from SF) but rather in places like Manhattan. Disclosure: I live in Manhattan
Lowering the wage rate is not the best way to get technical talent. The best way to do as Google has done and go to where a lot of smart, enterprising people want to live.
You might think Mark Zuckerberg is in this to bring in international developers and pay them peanuts, but the reality is that most people Google, Facebook, and the like are bringing in on H-1B visas are extremely well compensated, on a par with their US counterparts. Once you account for relocations packages and visa/legal fees (which alone can top $10k) it's often more expensive.
Yes, some companies take advantage of international workers. I don't dispute that. But many people who want to enter the US are losing out - they have great job offers, and end up being slaves to an arbitrary lottery with a fairly meaningless cap in the grand scale of total US immigration.
See Tim Harford's "Undercover Economist" for TL;DR style of understanding economics: http://www.amazon.com/gp/product/B007NIDW1Q/
If Zuckerberg's is trying to satisfy a labor shortage then he should go to where the labor wants to live, as Google has done which is to establish a major technical presence in Manhattan, where the kind of people he wishes to hire want to live.
While you're condescendingly lecturing others on basic economics, I'd suggest you brush up on what's going on in the tech scene in your own back yard.
Your understanding of economics is also overly simplistic and fails to account for the utility of the good or service being sold. Reduction in supply only raises prices if the utility of what's being traded is infinite and there are no substitutes.
While there are notable outliers in the tech industry in terms of profit per employee, most software businesses are firmly in the $200-300K range when it comes to revenue per head. This represents the upper bound of how much someone can get paid and still make sense - and both NYC and SF/Bay salaries are already a substantial portion of this figure.
A reduction in supply will only result in a rise in salaries until you hit this revenue cap. A continued reduction in supply past this point will result in companies going under as they cannot fulfill labor needs at a price they can afford. This becomes a net negative for the tech industry as the only businesses continuing to employ engineers will be the extreme outliers who can generate highly abnormal revenue numbers per employee. Startup costs will also blow through the roof as the amount of capital required to get a business off the ground explodes. The entire industry suffers as overall employment drops.
It's frustrating how many people in our field live in a fantasy land where squeezing hard on the supply side will mean they get rich.
> "where the kind of people he wishes to hire want to live."
This statement requires more elaboration. I'm in Manhattan, but I also understand that not everyone is like me. To claim that the type of software talent companies are looking for are inevitably urban is entirely misguided. There is no shortage of talented techies who would love nothing more than a house, a lawn, a car, and surfing on weekends.
NYC contains a certain demographic of talent that absolutely refuses to live anywhere else - and anyone has the capability would be well-advised to try to tap into it, but it is not the only demographic worth courting.
This may seem obvious to outsiders but bears repeating sometimes in the city: New York City, and the "type" of people who live there, is not the center of the universe.
Google has a 3 million square foot building in Manhattan which they purchased for $2 billion. I'm sorry but I don't see Microsoft, Oracle, Apple, Amazon, or any other tech firm making anywhere near that commitment.
Of course, not everyone wants to live in Manhattan and I never said that, but as Google has demonstrated, it should be the second place after SV that you want to have a major presence. There are a lot of extremely intelligent high value employees and networks there. It is also a best place for employees to be that want to improve their careers esp if it overlaps with media, finance, health care delivery, pharma, ...
BTW, I don't make my money as a software or hardware engineer but once worked in both fields. I do believe, with the exception of Google, that Goldman and other top tier finance firms have been brighter than many of the SV firms that have only made a small presence in NYC.
Source : me who lives in the valley and practically all my friends.
Employers looking to hire talented individuals from abroad would most commonly foot the bill.
There are some cool things about this solution: it raises money for the US Government, it determines who will most likely be a high-value contributor to the economy, and it raises the cost of foreign workers (to balance the interest of American workers).
Taking this further, the big corporations could potentially (and probably will) play strategically and outbid most start-ups.
Auctioning off worker visas would make it possible for startups to hire talented people and to being co-founders to work together in the USA for a cash price. Today, startups are almost completely prevented from using H1 and L1/2 visas because of the paperwork requirements and because CIS examiners choose to assign those visas only to established companies.
The established companies in question usually pay millions and millions to hire the first tech worker because they have to set up a legal department that can deal with the obsolete, contradictory, byzantine, and nonsensical requirements of the law and CIS bureaucracy. Then each tech worker after the first costs only the application fee and salary of the worker.
The high initial cost eliminates startups while the low marginal cost for additional workers means InfoSys and WiPro can fill the quota with low wage, low profit per seat CRUD developers. It's the worst of both worlds.
Startups could easily outbid the body shops for a single talented programmer or founder if each visa were up for bid. Also, the cost would be much, much lower than today's system where you need to hire lawyers to lie for you (yes, it is required to lie; the law as written contradicts basic economic facts).
It's time to put this foolishness to rest: putting tech worker visas up to bid would be good for tech workers, good for startups, good for R&D focused companies, and good for the government budget. It would not be good for cheap body shops that depend on low-wage no-rights workers.
Bullpucky. I am a H-1B holder on my second US-based startup now. The process for getting a H-1B is the same regardless of if your sponsor is Microsoft or Startup.ly.
Hiring H-1Bs is so common for startups that there is no shortage of immigration law firms to service companies that don't have the size to do it internally. I can rattle of a list of five firms I've worked with in the past off the top of my head.
The only real problem with hiring H-1Bs for startups is the long lead time required. For massive companies with predictable aggregate growth, they can afford to hire someone early in the year and have them start October 1st - for many startups that long gap is impossible since the need for people is more immediate and acute. I'm generally of the notion that the once-a-year cycle for H-1Bs would be much better served by moving to a month-by-month model - which would help smaller companies enormously.
> "The established companies in question usually pay millions and millions to hire the first tech worker"
This is not true. I make it a point to look at at much paperwork as I can when I deal with immigration-related matters. The cost for a visa is in the mid thousands, not millions. Like I've said before, there is no shortage of immigration law firms that do this work, there is absolutely no need to set up your own internal legal department to handle immigration unless your sheer size warrants it.
> "putting tech worker visas up to bid would be good for tech workers, good for startups, good for R&D focused companies"
I disagree. In fact I believe that auctioning work visas will only serve to create the future you're most afraid of - the one where massive companies corner the bulk of the visas. It will also serve the re-create the foul situation we've only just now started to untangle re: indentured servitude and the H-1B visa.
We've seen in the past where the nature of green card applications allows employers to hold their employees over a barrel. We've seen contracts that resemble indentured servitude where the payout for the employee is a green card. We've seen tech workers terrorized by managers by having their immigration status constantly lorded over them. It's positively Dickensian and dystopian.
It is still a reality for many, though with reforms in the green card application process, it is thankfully getting better.
So now we dramatically raise the bar on work visa costs, which will only serve to create an alternate avenue for this sort of behavior. Want to come work in the US? MegaCorp will outbid everyone else, and in exchange MegaCorp corners the entire international talent market and gets everybody on a 10-year contract with insane termination clauses (not to mention being shipped back home). A lighter version of this is already reality for many people in the tech industry - this isn't just wild fantasy.
The only losers here are the startups who don't have the sheer cash power to fight the big corporations, and who do not have the means of signing employment contracts with a 10-year horizon. Oh, and the tech workers, who will work in conditions once thought to only exist in Industrial Revolution England.
I'm all for muscling Infosys and WiPro out of the talent-importation market, but there has got to be a better way.
This also solves the whole TCS, infosys, services companies hoarding on h1b. They wouldn't be able to complete since it is not their business model.
It's unfortunate that the Obama administration won't separate these two kinds of immigrants since they fear in doing so, they won't be able to get comprehensive immigration reform passed.
Other countries recognize the value of highly educated immigrants who want to create companies. Canada, for example, just announced it's startup visa specifically targeting immigrants who want to move to the country to start a company.
http://www.theverge.com/2013/4/1/4170022/canada-startup-visa...
Also in general, just doing the popular stuff leads to big problems later (that's how we ended up with low taxes and high spending, nobody wants to do either of the hard parts of balancing a budget).
Of course, the comment was jokingly flippant - it's not really a good reason to throw the borders open, though there are certainly more serious arguments on both sides of that debate.
The data includes both legal and illegal immigrants along with the minority high skilled immigrants.
http://www.cis.org/immigrant-welfare-use-2011 implies that most of that welfare use is from low skilled immigrants and not high skilled ones that are the topic of interest of most HNers.
He presumably got downvoted because it is irrelevant at best and misdirection at worst (by combining illegal and legal data and claiming immigrants claim more welfare which makes it look like highly skilled immigrants claim more welfare).
As for the notion that most HNers are interested only in high-skilled immigrants rather than low-skilled ones, that may well be the case. But low-skilled immigrants certainly are interested in HNers, or rather the money that HNers possess.
I kinda suspected you will quote that! You realize that you cannot tie that to skilled immigrants as such right? For e.g. there is family based immigration, diversity visas and what not that could and does result in households with children comprised entirely of immigrants.
If one thing is clear - highly skilled immigrants are not taking your welfare. I have lived through it and encountered a lot of high skilled immigrants and have not even an anecdote to refer you to where someone was using welfare. I would be very surprised to see data that indicates H1Bs, EB-1/2/3s, F-1s etc. take significant part of welfare benefits.
What we will get: more welfare, more crime, more unemployment, more ethnic nepotism.
I don't see how asking for/having more skilled immigrants can possibly be linked to more crime, more unemployment or whatever. Unless you are speculating on what congress might do with immigration reform that will cause it or you want immigration to be completely stopped. (Not sure how that will work out given the illegals situation.)
I actually agree that we should be more welcoming to highly skilled immigrants in general, but the "nation of immigrants" rhetoric is getting irritating.
The US currently takes 1.2 million immigrants legally into the country every year. This will be true regardless of whether we award large numbers of work visas to the sort of people Zuckerberg would like to hire.
Our immigration system is more based on family reunification than the hiring priorities of the high tech industry. I would agree that there are better ways to decide who will get to come to the US.
But this isn't really about immigration per se, the specific legislation under consideration is about awarding visas or green cards directly to people with graduate STEM degrees. A good idea sure, but why does nobody at the economist point out that US takes huge numbers of immigrants every year and will continue to do so regardless of what happens with this legislation?
[1] http://en.wikipedia.org/wiki/New_York_City#Early_history
The argument being made by tech lobbyist groups, among other immigration reform groups, is that the US needs to start wielding its immigration policy as a strategic economic tool rather than the somewhat directionless policy which exists today where small allowances are made for the importation of talent but which does not appear to be part of any cohesive overarching policy.
The leadership of the senate chose that strategy in order to require tech company management and others to lobby in favor of a bill with both benefits for them -- like driving down tech wages -- and other changes that are unpopular with the public -- like amnesty. It's a gambit they use to get both sets of changes through instead of only the popular or best funded ones.
Obviously there is a number where our infrastructure would be completely swamped, but nothing grows the economy faster than a pile of immigrants. Especially when they are permanent immigrants. The current system encourages a lot people to come for a short period and then go home, which isn't really great for the country long term.
Yep, that would really be great for the economy. Which is of course exactly the same thing as the country.
It seems the general trend would be something in the like of getting a visa, start looking for a job and be lucky your employer can get you a green card. After this 5 years of living in the states before you can become an American citizen.
Please do correct me if I'm wrong!
The most important factor here is your preference category when applying for a green card. There are 3 buckets, EB-1, EB-2, and EB-3, in decreasing order of desirability. Which bucket you fall into is a combination of your degree(s) and your relevant work experience.
Each bucket has a longer wait than the previous.
The second factor is your country of origin - the system is quota'ed based on it, so the more applicants coming from your country of origin the longer the line is. For the most part this is a minor factor except if you're from China or India, in which case you're pretty fucked.
I believe (though I'm not sure) there are also other ways to expedite processing for $$$, but this mostly surrounds various form filings that can otherwise take months to process. The actual line itself cannot be shortened.
Yet another alternative is to start your own company in US and invest about half a million $ (officially, unofficially have seen it done for 100k).
Yet another alternative would be to get a job in academia that has H1B uncapped.
And the types of talent that the likes of Google or Facebook would be interested in -- genuine genius and extra-ordinary ability-- already have visa programs: O-1 and EB-1. It's just that H-1B visas are relatively easier to get.
So what makes getting immigrants a better proposition than growing the talent yourself? Everyone wants the talent, but nobody wants to cultivate it.
When I sitting in my graduate engineer classes, 50%+ of the students were foreign. Most of them were working with professors on projects supported by the federal government via various grants programs (NIS, DOD, etc). Most of them wanted to stay in the US after graduation.
Few of them were allowed to.
Doesn't that seem like a massive waste of our educational system? Why are we spending so much time and energy educating people and then refusing to allow them to stay in the US?