A scheme to lower engineers’ wages
sandiegoreader.com
sandiegoreader.com
I have a H1B. I work for major tech company in the Bay Area. I have a salary in the six figures which is about twice what I would earn back home. I was excited to come to America and work for a company I admire in their Silicon Valley headquarters and the H1B lottery was the only way for me to do so.
Without H1B I wouldn't have had this opportunity. I don't feel like its indentured servitude, I have a salary which I believe is higher than the average market wage and is more than my American peers because the company is paying all of my visa expenses and the fees related to me pursuing a green card. I've been promoted once already in the 18 months since I arrived and received a related salary bump. If I wanted to leave and goto a different company, most in the bay area would allow me to transfer my visa so I could work for them.
H1B is not a problem for America or "engineer's wages". Abuse of the system is. Lets focus on curtailing that abuse and not on victimising H1B employees who may be very happy and grateful for the opportunity to pursue their own version of the American dream.
Spare a thought for those who had the job offer of their dreams, from that "brand name company" in an exciting field, and the opportunity to move to America, only for everything to fall through when they didn't get selected in the lottery. That is surely not right. Can't we come up with a system where American companies can hire who they want, where talented people can work for fair wages, and where individuals can get the opportunity to move to America, as despite all its failings, it is still an highly attractive place to live.
I'm sympathetic. I really am. I have a lot of friends working on visas, both now and in the past. But I just don't see the economics of this. How can adding hundreds of thousands of people in any field not depress wages, at least in the short-to-medium term.
Why do I care? I want young Americans to go into IT and engineering in general. They are becoming more interested because wages and job security have been improving (at least relative to other careers, I'm not sure about in absolute terms). If we open the valve and flood the market, wages will be affected. Maybe they won't shrink, but maybe they'll be stagnant. And maybe the job security isn't quite as good.
When I was in school, many people didn't go into IT because investment bubbles and trends in offshoring made IT work seem like a bad bet. There was skepticism that IT would provide a good long-term career. I don't see how importing hundreds of thousands of technology workers won't do the same thing.
So, again, I really want people all over the world to have opportunities, but I feel my concerns should be for the future of the young people around me. They don't have another America to move to when their prospects get stale or bleak. They're already here.
It goes beyond basic economics, so it's worth reading and learning about.
> adding hundreds of thousands of people
"Unfortunately", those people already exist and have skills, just in other places, where they happened to have been born. If you create bad enough policies, companies can and will go where the workers are.
Also, this is not a zero sum game. There are more people and workers than 100 years ago, and yet... wages haven't cratered.
> I feel my concerns should be for the future of the young people around me
What is the radius of 'around you'? Your city? State? Country? Why are those people more important than those that happen to be born elsewhere?
When did your ancestors come to the US? Why should people now not have the same rights they did?
I'll post my link again: http://journal.dedasys.com/2014/12/29/people-places-and-jobs...
I can answer that one for you. Why should he as an American care about and for the future of youth in other countries? It is natural for us as humans to first take care of our own family/neighbours/country men. As mean as it sounds you cannot build a better future for your children if instead of taking care of things that will help them you take care of things that will help others' children.
Its not a hard concept to grasp really. And for Americans the future of American youth is ABSOLUTELY unquestionably more important the future of the youth elsewhere in the world. You know I had this exact conversation with an Easter European friend of mine who wants to have an easier time to move to the US, but at the same time he got upset when I proposed that his country should take in African immigrants in droves.
> Why should people now not have the same rights they did? Different times. Its very childish to expect the world be the way you want it to be and to throw a tantrum about it.
Americans pay taxes in America and they build the country. Their ancestors did the same. Their alligence was and is to the US - it is their home. Do tell me what the artificially driving down of wages has in store for them? How does benefit the US?
Unquestionably? That's pretty strong. I live in Italy, and frankly, I'm more inclined to care about my friends' kids here than about some kid in, say, Alabama, although of course I wish all of them the best.
50 years ago, there were people who unquestionably thought the future of kids they shared a "race" with trumped that of other children.
> Different times.
So your relatives got what they wanted, and fuck everyone after them? Can you point to a year and month when 'things changed' and after which immigrants should keep out?
> Americans pay taxes in America
Uh, the other people in the US pay taxes too, and don't even get to vote.
What it does is equalize wages. They (outside the border) make more, and we (inside the border) make less.
It doesn't take a rocket senator to figure out that if people are entering on an H-1B and then applying for a green card at the earliest opportunity, it is because the US isn't issuing nearly enough immigrant visas.
Am I the only one that thinks America should be encouraging smart people with valuable skills to stay as long as they like, without sponsorship? I don't think I am.
I also think that the vast numbers of foreign students attending American universities is a great opportunity. Why not slide up to graduates of certain degree programs and say, "Hey, buddy, you like America? Since you have a degree in X, I could convert that student visa to an immigrant worker visa right now, if you want. Actually, how about I do it anyway, and if you really don't want it, just tell me to stop? Hey! Wait! Where are you going? Do you want to live under your parents' thumbs? If you get on that plane now, you will regret it! Our taxes are really very reasonable! Come baaaaaack!"
THOSE are the people I want in my country! Serious immigrants are generally more entrepreneurial and more courageous that citizens. If there's a root cause justification to American exceptionalism, its that we came from above average stock.
I think we're more likely to end up with higher quality immigrants if we provide higher quality opportunity in our countries rather than making it a ridiculous game of hoop jumping to immigrate. In fact, "lying, twisting the rules, or hiding in container ships or swimming rivers in the dark of night" sounds like it's more likely to instill contempt for the rules of the country before they're even citizen's rather than ensure their entrepreneurial spirit.
Edited to space out paragraphs.
If there is an actual shortage of necessary talent, companies should be willing to pay whatever it takes to get visas for qualifying workers. If they just want to save money, this will show up in the low prices they are willing to pay for a visa.
However, visas are arbitrarily scarce: you still have to pick a random number out of the air for "how many visas should there be".
What is the optimal number of immigrants? http://johnhcochrane.blogspot.it/2014/06/the-optimal-number-...
This is why you don't see employers lobbying for easier immigration policy. Instead, they lobby for expansions of the H-1B program.
My opinion is that they should just speed up the green card process instead of increasing H1b numbers. A lot of hard working and honest immigrants keep waiting in their current jobs for their green card to get approved. In some cases, it takes 6-10 years to get a green card.
If these folks get some job mobility without jeopardizing their green card status, there will suddenly be enough mobile engineers and wages will rise very fast.
He responded, "Only half? Do you mean the mean, the median, or the mode?"
And there's the rub. There may not be a shortage of engineers, but there's a serious shortage of good engineers. And I'm not sure more H1B will solve that problem.
The problem is definitely the median, not the extremes. Top-quality foreign programmers are absolutely as good as top American programmers. It's in the middle that things go sour. There are many reasons for this, both cultural and business. The big business problem is that H1Bs are hired from body shops to supply large numbers of staff quickly at a price target, so they rarely get to work on interesting, challenging projects. Whatever projects they're on are dragged down by the poor quality of their teammates, so they don't get to challenge themselves and excel. It's also aggravated by their body shop employers rewriting their resumes in an absolutely generic fashion for maximum buzzword compliance, denying the workers a chance to shine and specialize to potential employers.
So the interview process consists of starting with a generic technology set, and then spending five minutes or so on technical questions to see if they actually know their ass from a hole in the ground or not (they usually don't). If they do, the process can proceed normally. But without a resume that shows any individuality, it's a huge waste of time for the interviewers to weed through all the crap. This adds to the perception of poor quality.
Yeah, it's a real problem.
In practice, this is not the case. H1-b visa workers have poor mobility and little recourse when employers cheat the system by providing lower than market pay and requiring the employee to pay their own H1B visa fees. Furthermore, there is little (if any) enforcement that the employer seriously considered domestic applicants at market rates over the H1B applicate. 99% of the time the H1-B is already hired and the employer is posting a job 100% tailored to that H1-B applicant.
And do you "have" to give "normal" workers raises or promotions? Is any employee entitled to such a trajectory?
If you can't compete with foreigners working in your field, you can't compete.
I'm concerned with the indentured servitude we're putting H1Bs under, but not with the fact that they're working here instead of China or India. There isn't a "shortage" of STEM workers in the US, but that's no reason to support protectionist policies.
The US currently accepts 1.2 million immigrants legally into the country every year, and the engineers among them are most welcome to work here with minimal licensing and red tape (this isn't the case for foreign lawyers or doctors). The question is whether the US government should go out of its way to increase the percentage of immigrants who are STEM workers (actually, even that would be an improvement over the terms of the H1B, which empowers corporations to decide who should and shouldn't be allowed to live and work here).
As it stands, I'd say the deck is stacked against engineers relative to other professions in the US. This is probably why people who have the right to choose their profession in the US are reluctant to go into STEM - it's a rational response to market distortion caused by uneven regulation.
The percentage of women going into computer science in college has dropped precipitously since the 1980s. Why is that?
http://journal.dedasys.com/2014/12/29/people-places-and-jobs...
Short version: opening things up to people willing to work, and lifting the restrictions on H1B workers are the best options, morally and economically.
Excluding people who happen to have been born in the wrong place, or the wrong color, or female or whatever, is a bad idea.
Do the wages of the people outside of the border count? Theirs would be going up, due to a more liberal immigration policy. The idea that such a bill would “lower engineers’ wages” seems to be selective in which engineers we are talking about.
So I agree that we should let whoever wants move to the U.S. I'm in favor of open borders. But I also acknowledge that more people living here will mean more competition for jobs, and therefore more of a culture of employers treating employees as disposable.
Any kind of operation that only needs a dozen developers is never going to need union workers. As soon as the union makes some nontrivial demand the employer can just let them walk out and hire other people. This is why modern unions are disappearing.
Moreover, the issue in question is about politics. The idea that unions have any real political power is a joke; the only exception is public sector unions and that isn't because they're a union, it's because government employees are a large bloc of single-issue voters and public sector unions are their de facto lobby group. Which, because the public sector unions are providing votes in favor of spending other peoples' money, has led to corruption and pandering much more than it has to the union keeping the government honest.
Exercising political power in the same way can be achieved with a lobby group that isn't a union but which lobbies Congress with the support of members willing to vote the way of the group consensus. Tech workers could certainly use that.
On the Republican side, Ted Cruz wants to increase the H-1B cap to 300,000/year. All of the other Republicans who look like they might throw their hat in the ring are immigration boosters, although I'm not aware of any of them having positions on H-1B visas.
> Rand has previously said all of the country's illegal immigrants should receive work permits and mentioned that he did not vote for the Senate's comprehensive amnesty bill because it did not award enough high-tech visas.
This is, by the way, why hackers should pay attention to politics. The political forces know how to game systems of humans extremely well - an apex politician has the backing of a machine tuned to game politics for him & them at the level of a Gosling or a Steele with an army of supporters. Staying out of politics and wanting change is equivalent to not contributing/communicating to a project at all and moaning to your friends: ain't nothing gonna happen.
America was built by immigrants. Lest you forget.
Borders are a remnant of the old world. Companies need to stay competitive and tapping the international workforce is part of that competitiveness.
A good start would be to remove the H1B program in its entirety and allow specialized labor to get a work permit (with the intention to be citizens) and not be tied to a company. Graduates of our public universities should be the first to get these slots.
This is a reasoning flaw: companies don't need people who graduate from certain fields. They need people with certain skills that are difficult to attain. A degree in those fields is correlated with the skills in question, but it is very far from a predictor.
When everyone is talking about how hard it is to predict hiring outcomes, it's a bit of a stretch to suggest that this problem magically disappears for prospects who happen to be from other countries.
One thing that is fairly shocking is the low pay rates for people with skills that are unusual and high demand, I can only imagine they are throwing huge numbers of freshers at the problems.
Although the Andressen Horowitzes are going to stand up for the rights of capital against workers (and against social mobility in general), if only to make it easier to do deals and to get kudos on the editoral page of the Wall Street Journal, "startup" companies don't hire H-1Bs. They are almost all hired by the likes Wipro, Infosys and IBM -- at least the first two pay the CEO at Indian rates. (Note that VC's are also deferential to the landlords and property developers that contribute to the housing crisis in the bay area since the first rule of being "respectable" is to respect other "respectable" people.)
The overhead is real and not entirely waste. The best indian dev shops have CMM 5 certification which is a matter of having a lot of process and management, so they do make up for whatever weaknesses they have by throwing more labor (both line work nad management) at the problem. They get good results, but it is not that much cheaper than the competition, particularly given that the cost of living has gone way up in Bangalore.
Also I think programmers are bad negotiators. I have definitely seen people doing the same work in the same area with pay varying by a factor of 2, very different working conditions, and sometimes with or without health insurance. (Funny the guys who didn't offer health insurance did offer a lot of free pizza)
Also, these guys in India would have a hard time working up business in another country without some help from the the business folks, so they are getting some value.
Source: I hold a H1-b.
The customers are mini planned economies (aka corporations) with a the standard host of principal/agent issues - CYA behavior (shifting liability for poor decisions), kickbacks, etc.
To give my personal background, I came to the US in 2004 on H1B visa through Infosys.
Working in NY/NJ area, I have seen it first hand how H1B can indeed lower wages. Here's how. The H1B visa belongs to an Employer and not the Employee. This means that losing a job on H1B could have dire consequences if you can't line up a job right away. This leads to a situation where a person on H1B visa avoids jobs where there is a risk of getting laid off. This leads to tons of 'body shops' setup by Indian/Asian folks who will sponsor your visa and then you go do 'hourly consulting' for a multinational firm. (See this page: http://techjobs.sulekha.com/h1b-jobs-usa) The body shops will charge at least 20% for this benefit, 30% in average case and even 50% if the employee is not smart enough. The goal of these body shops is to bring in more folks from India where someone will happily take up job for 60k to come and work in NY/NJ. The guy in India is thinking: 60k USD = ~3,785,000 INR. This is a huge amount which they will not be able to get in India. (In Bangalore, you can expect to get paid around 700,000 on average). However, most of the time, they don't factor in the cost of living and it means that their actual savings are much closer to what they make it in India. By the time they figure all this out and want to make a move, they understand the visa restrictions and realize that they are stuck till they get green card.
To share my personal story, when I first came in 2004, I was making 60k in NJ. Kept making around the same amount for the next 3 years. Then I became friends with a person who worked as recruiter for COMSYS (now acquired by ManpowerGroup) (For those who don't know, it's one of the bigger staffing firms in NY). She gave me the inside detail on how much companies are paying, how much these staffing companies are keeping and how to keep more share of the money. She also told me that if I want to make real money, I should consult for Investment banks. Based on this, I started improving my technical knowledge, finance knowledge and interviewing skills. I started making more and more money. I got green card last year and I am now making over 200k. I have used this knowledge to help my friends but I have seen it first hand how folks are not able to get a better paying full time job due to visa restrictions. This ultimately leads to wage suppression.
Summary: If you think that H1B abuse is not rampant, you are living under the rock.
So, on one hand, I want H1B visa program so that folks like me can come to this great country and make good money. On the other hand, I am fully aware that businesses are strictly using as a way to lower wages. There are very few H1B jobs where the worker is doing a 'highly specialized job' that a local American can not do.
I really don't know what the answer is. One idea I do like is to do the auction of the H1B visas. That way employer who have the money and who really need highly specialized work done can hire the person from any part of the world. I think it's fair that in a capitalistic system, you let the money decide who should get the opportunity to immigrate. (The current lottery system means that a company may not be able to hire a candidate if they get unlucky.) The only dilemma is that if it worked this way from beginning, I would have never made it to the US.
This is where it starts to get complicated, because if you change the rules only for a small segment of the workforce (such as proposals to staple a green cart to STEM degrees but not dentistry, law, MBA…), you may end up creating market distortions that reduce the attractiveness of engineering or software relative to the other fields highly educated people can pursue (provided those people already have the right to live and work in the US). When you consider the skill it takes to be a good software developer and what they could earn in some other field, I don't think that the evidence supports claims of a particular shortage.
Take a look at the US News Best Jobs salary data some time, and focus on salaries in high cost regions like SF. You'll find that while programmers are reasonably well paid, in SF they earn only a bit more than dental hygienists, and quite a bit less than registered nurses. I also think that career stability and long term prospects may actually be much better in other fields. In short,I think that the aversion to software development among people who already possess the right to live and work in the US may be rational and market based, and that getting the government involved will simply forestall the market signals that would get more people interested in this field. Pay and work conditions (you make about as much as you would have with an associate's degree in a health related field, work in a giant open office with back visibility, in a company that may discard you when you get older, perhaps demanding that you train your replacement) need to improve to get more people into programming. Why should we tinker with the immigration system to allow business as usual, when clearly something needs to change?
Just to be clear, I do think that openness to international engineering talent is a critical factor in any countries workforce, and I do favor some kind of skilled immigration program. My big difference is that I also see a potential risk to the domestic pipeline through these market distortions.