Dean Baker: H1-B Workers and Gains From Trade

[marmar]

from The American Prospect:



H1-B Workers and Gains From Trade

The NYT reports on the battle of the status of the H1-B program that allows highly skilled foreign workers in the United States for a period of time. The article describes the debate as being between opponents of the visas, who argue that it lowers the wages in the most affected occupations and the supporters who claim that they cannot find enough skilled workers in the United States.

It would have been helpful to include some economic analysis. By increasing the supply of highly skilled workers, the H1-B program undoubtedly reduces the wages for the most affected occupations. According to standard trade theory, this is precisely the point of the program. Allowing firms to get lower paid workers will reduce their cost and increase the economy's potential output. It is the same argument that is used for the gains from getting cheap textiles or steel from foreign producers.

The argument from high-tech employers, that they simply can't get enough high tech workers in the United States is ridiculous on its face. If these jobs paid millions of dollars per year (like jobs at Wall Street investment banks), then highly skilled workers would leave other occupations and develop the skills necessary to work in high tech occupations. Obviously, Bill Gates and the other high tech employers cited in this article want to be able to employ high tech workers at lower wages. The issue is wages, not a shortage.

--Dean Baker

Posted by Dean Baker on April 1, 2008 5:33 AM


http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=04&year=2008&base_name=h1b_workers_and_gains_from_tra

[Jim__]

1. "The issue is wages, not a shortage." - Amen - n/t

[hedgehog]

2. The issue is also who pays for educating those workers. In the US.

education is an out of pocket expense for the student or the family, generally with a surcharge of interest to a bank or agency for a student loan. Other countries pay for their student's education. Ultimately, Indian peasants are paying to subsidize Gate's low wages!

[mrreowwr_kittty]

4. Yep.

And many of them get their health care covered by their native countries while they are here. I met an Indian couple recently who told me that they got an allowance from their government to get health insurance here. They said this was a common practice.

[mrreowwr_kittty]

3. Sadly, many Democrats in Congress have swallowed the cheap labor koolaid

My own Rep (Harry Mitchell) brings up the need for more H1Bs every time I go to see him speak. I mean every time, and I have listened to him at least a dozen times since he got elected. Obviously, this has become a mission for him and I have tried to point out the flaws in the argument to no avail. Recently, Gabrielle Giffords (D Tucson) spoke at a fundraiser. She was starstruck at having recently met Bill Gates at economic summit. Guess what she was talking about? It's unfortunate that elected leaders on our side are actively working against their own constituents. You can't say that you want to keep good jobs in this country on one hand and then help the outsourcers and cheap labor lobby on the other.

[Romulox]

5. Outsourcing all the blue collar jobs leaves customers who can't afford expensive American IT workers

The gains from outsourcing are illusory in that your impoverished blue-collar neighbor can't afford to pay your bloated white-collar salary. American software engineers are simply not cost effective.

Time to do what you've been telling laid-off manufacturing workers for 30 years: go back to school!

edit: My use of "you" is strictly rhetorical!

[Skink]

6. I don't think there is a shortage of H1B's

I worked for a big cruise company for awhile and every week the crew purser would anound "if you are signing off on an H1B report now". Every week, on every ship, and there are lots of ships, a handful of people use this visa.