"Yes, there are options to combat that decline, but contrary to what many people believe, we do very poorly in opening up our borders to skilled immigrants. Our H1-B visa restrictions are a disgrace. Most high-income people in our country do not realize that their incomes are being subsidized by their protection from competition from highly skilled people who are prevented from immigrating to the United States. But we need such skills in order to staff our productive economy, so that the standard of living for Americans as a whole can grow."
The standard of living for Americans doesn't depend on the pay rate of software engineers. The profit margins of software companies are already astonishingly high. No tech firm is buckling under the weight of their payroll, they are making bank.
Google's 2nd quarter financials show a 64% operating profit. Arguably there isn't enough money from these companies going back to the people who actually did the work to generate that success. They could start paying everybody double and still be making more money than any other market sector could dream of.
Depressing the wages of software engineers doesn't mean increased standard of living for Americans, it can only mean increased profit margins for stockholders.
The point is that by allowing more highly-skilled immigrants into the country, it enables many other companies to make use of that high-skill labor and increase productivity (which would increase our standard of living, in theory). The lowering of wages is only a side effect of that.
Why do the companies have to be in the US? Why can't they be in Mexico or India or Brazil - and US investors just invest in those companies and get the resulting dividends?
Why does the company have to exist in the US for us to get any benefits of increased productivity?
Immigration restrictions are economically like any other kind of import barrier. It will boost the money to be made in the sector in question, while being bad for the US economy as a whole. In the long run we are all better off from free markets, no matter who is impacted by the short-term disruption.
If Google's profit margin could be 80% instead of 67% because it had no US engineers and only engineers in developing countries - this is only good for Google's shareholders.
Whereas Google employs >100k US citizens paying on average >$200k - plus close to as many contractors (it doesn't pay particularly well).
It's hard to argue that enriching mainly a handful of High Net-worth shareholders is better for the US economy "as a whole". High Net-worth Individuals have a low propensity to spend on the "real" US economy.
We already tax capital gains at a low rate - and because of that companies do share-buybacks to reduce the tax burden on their shareholders.
There would be far less tax dollars and far less spending in the "real" economy.
This certainly seems like only a win for the high net-worth individual.
Sure - if you want to do that and then socialize the benefits - I guess that could be better. It wouldn't happen. And also, instead of your population being productive and gaining skills and getting smarter - they're doing what? Just living off welfare? Doing the same work for less pay?
Your belief that I'm making any such assumption is a mistake on your part.
I'm saying that it is good for Americans in general to allow Google to bring good people into our labor market, so that their spending goes into our economy. Which circulates money that goes where? Mostly to Americans! Instead we force Google to create those jobs where those people happen to be.
Now the USA actually allows a lot of immigration. In fact nationwide a bit over 10% of the population is foreign born. But when you look at productivity growth, it is no accident that California is both one of the top states for long-term productivity growth, AND has over 1/4 of its population born elsewhere.
My belief, based on well-established economic theory, is that allowing more immigration of smart people would increase California's productivity even more. Which, long-term, will result in more money for all of us.
I agree, but the H1B really isn't a general immigration category, or even a general skilled immigration category.
In a free labor market, workers are free to choose a field in response to market conditions and their own personal preferences. Job Factors may include salary, flexibility, job stability, long-term career stability, up front investments, probability of success, prestige, the opportunity to do good and work with people (or not have to work with people).
If people with the freedom of choice prefer to be a lawyer in NY city over becoming a software developer in silicon valley, that's the market's answer. If tech companies want people to make decisions differently, they need to change the incentives.
...or, they could have the government ask the market on their behalf. The H1B visa is immensely restrictive, essentially allowing employers in a few narrow segments of the economy to decide who is allowed to live and work in the US and the circumstances under which they are allowed to remain. If the would-be immigrant doesn't like it and quits and can't find a new corporate "sponsor", they have to leave and may lose their spot in a long wait for a green card.
It's nearly impossible to reconcile the H1B visa with the concept of free labor markets. It didn't lead to freer and more efficient markets, it created market distortions that decreased the desirability of software engineering and a few other fields relative to other fields.
To be clear, I'm cool with skilled and general immigration. But once you start talking about corporate "sponsors" who control a would-be immigrant's right to live and work here in a few narrow fields, you're a long, long way from anything even faintly resembling a free labor market.
The H1B is a way for someone who lives elsewhere to wind up living and working in the USA. By definition that's immigration.
As you note, it is a really sucky form of immigration. And Greenspan agrees, he said we should just let high skill individuals come in and become part of our workforce without the weird restrictions.
Instead we have a complicated system that is broken at many levels.
I agree, but I still think this misses the point about the specific impact of the H1B on STEM workers - the focus of the ieee article. The H1B isn't really about generalized high skilled immigration, it's a more narrowly tailored program specially designed to increase the number of STEM workers (among a few other sectors) in the US. I think a lot of people who object to this would not object to a more general immigration system.
For an example - suppose all produce imported to the US faces 100% tarries. Then one day, congress declares a shortage of lemons and decides that there will be no import tax on lemons.
Lemon growers object, and the answer is: free trade makes everyone better off.
Well... ok. But we don't have free trade, we have a situation where almost all produce other than lemons is subject to extreme import restrictions. Under this circumstance, you'd expect overseas farmers who would like to export to the US to increase lemon production, and you'd expect US based farmers to shift production away from lemons.
I think this is very much what we created with decades of the H1B. We left most professions and trades restricted, but created special visas specifically designed to expose US citizens and permanent residents in STEM to augmented competition in the grounds that there is a "shortage". Even without the employer control over the visa, you would expect an action like this to cause more people who would like to access the US job market to study STEM, and cause people who already have that access to study something else. And I think there's strong evidence that exactly this has happened.
In the absence of these restrictions, would immigrants to the US study STEM or engineering? I'm sure many would. And while some would settle in the valley, many would work elsewhere. many would also choose to become coffee shop owners, surfboard shapers, brick layers, hod carriers, mortgage brokers, tax lawyers, itinerant musicians, nurses, dishwasher repair technicians, and so forth. In fact, the 1.2 million immigrants who enter the US legally without these restrictions every year do just that. They don't seem to think that becoming a STEM worker in a place where a small rundown ranch house by the freeway costs 1.5 million sounds any better than many people who were born with US citizenship do.
That is exactly why the tech companies don't really like freedom-based immigration. Free people can choose not to be developers in the valley. That's actually how free markets work, the whole freedom thing, and in the end, it's hard not to conclude that corporations just don't really like it very much. So the lobbied for - and got - control over who is allowed to live and work in the US and the circumstances under which they are allowed to remain.
The amazing thing is that they somehow managed to position themselves as "pro-immigrant", and label people who think that immigrants should be free to determine the circumstances of their own lives as the "anti-immigration people".
"Yes, there are options to combat that decline, but contrary to what many people believe, we do very poorly in opening up our borders to skilled immigrants. Our H1-B visa restrictions are a disgrace. Most high-income people in our country do not realize that their incomes are being subsidized by their protection from competition from highly skilled people who are prevented from immigrating to the United States. But we need such skills in order to staff our productive economy, so that the standard of living for Americans as a whole can grow."
https://www.theglobalist.com/globalist-interview-with-alan-g...