Open Thread: What’s The Real Story on H-1Bs?

People want to discuss H-1Bs, and why not? Whether you believe they’re the only solution to a real lack of tech skill here in the U.S., or you’re sure businesses want more issued because they lead to lower labor costs, you’ve probably got an opinion. So, here’s a place to discuss the issue, by posting comments below.

It’s an emotional subject for many people, so here are some ground rules:

  • First, read and respect our terms of service. Read them here.
  • For more specifics on how they apply to discussions here on the blog, read my column here.
  • Follow this bottom line: Be respectful, be courteous. People have asked for a true and honest debate. Comments that are insulting, racist or anything like that have no place in a real give-and-take. I’ll delete them.
  • Finally, I will ban anyone who consistently violates these ground rules.

So now, let’s talk. With any luck we’ll all learn something, no matter which side of the issue we’re on.

Comments

  1. BY Wo'O Ideafarm says:

    I propose that we help each other understand the economics of the market for software engineers in the U.S., and in particular, the effect that H1B visas have on the operation of the market for our services. I am a 57 year old economist and an independent software developer.

    Propositions:

    (1) Contracting oneself out as an indentured servant makes lots of sense for both the software engineer and the company who hires her/him, due to the nature of the work.

    (2) Indentured servant contracts are illegal and unenforceable in the United States.

    (3) H1B visas are functionally equivalent to such contracts.

    (4) This places domestic workers at an overwhelming competitive disadvantage.

    (5) One solution is to pass laws that make it possible for domestic workers to indenture themselves in a legally enforceable way, similar to an enlistment into the military.

    • BY jcpopescu says:

      I think, quite frankly, the suggestion of indenturing one’s self to a given employer is a very moot point in today’s world of “contracting” and “consulting”. Have you ever taken the time to read some of what’s in the employment contracts from RHI and similar ilk ?

      What I’ve found:

      -Paycheck indemnification: If the company you’re working AT goes belly up and Robert Half Pay can’t collect for your last paycheck you give it back to RHI.

      -Invention Surrender: If you happen upon something you can patent and collect royalties from those royalties and the invention goes to Robert Half Brain.

      -No sue: If your supervisor hauls off and punches your lights out then you have zero recourse. Binding arbitration perhaps however expect about enough to pay for a band aid if even that.

      -You want to sue me you’ll do so in MY backyard. Therefore you eat all incumbent to dealing with the judicial system down the block from ME.

      It gets even worse if you’re working as a 1099 contractor. Heavan forbid you’re working for an out of state staffing and placement firm. You would probably burn up whatever you could recover on hotel, travel, and all expenses incumbent to filing a complaint with an out-of-state jurisdiction .

  2. BY Walter Meyer II says:

    Of course the large software companies and consulting firms are all for the H1Bs and even lobby for increasing the number every year, it drives down their costs and increases their profits.

    But look at what an undergratuate degree [B.S. Comp Sci] costs in India as opposed to an undergratuate degee cost in the United States. I was over $75,000.00 in debt when I finshed school !! From my understanding, much of education is FREE in India for members of the middle and upper castes.

    This may be incorrect, but I think the sheer cost difference to aquire the mandatory skills puts American developers at a major disadvantage !!

    I think CONGRESS needs to legislate a LEVEL playing field !!

    • BY Wo'O Ideafarm says:

      Assume that there is a foreign country in which it is very easy to become educated, either because the people there are very smart or because something about that country makes it very easy to study. Assume that those people have access to the U.S. labor market.

      It’s not clear whether the arrival of such people will lower or raise the wage that is paid to domestic workers. That depends upon whether the two groups are “substitutes” or “complements”. Assuming that they are “substitutes”, domestic workers will be paid less, which harms domestic interests. But the fall in the price of a factor of production will increase operating profit, which benefits domestic interests, and will reduce the market price of the output, which benefits both domestic and foreign interests.

      IOW, it is not at all clear that the arrival of smart, able people harms domestic interests. To the extent that foreign workers differ from domestic workers, there is much that each can learn from the other.

      • BY jcpopescu says:

        Ideafarm,

        The suggestion of a reduction in labor costs to a venture will manifest itself as a benefit to the overall domestic interests was proven wrong during the failed econmic experiements of the Regan and Bush 1 administrations.

        Remember “Reganomics” and Bush 1′s “Vodoo economics” ? Remember ” Read my lips… No New Taxes ” ? During that same time we also had folks like (Chainsaw ) Al Dunlap, T Boone Pickens, Mike Milken, and a few other infamous corporate raiders with their “leverage buyouts” throw this nation into the very economic turmoil we’re paying for today. Remember the savings and loan problems during the Bush 1 administration ?

        The whole point is “trickle down economics” does not work. OK so you get to buy a box of 10,000 DVD disks for five dollars at Costco . However those disks aren’t cheap at all. Costco employees are probably barely surviving or in debt, the local and state governments are facing budget problems from decreased personal income tax revenues and look no further than the resurgence in foreclosures and stock market volatility.

    • BY P Rao says:

      The perception that education is free in India is totally wrong.
      Let me put it into perspective.

      India has no free education at any castes/class. There are some seats held for economically backward communities, subject to verification.

      Parents have to pay from Kindergarten thru 12th Grade and then pay for furthur studies.

      Yes the cost is different and all graduates do have their own student loans to clear.

      H1B is a tool used to staff projects by companies at all levels to reduce their cost.
      All manufacturing firms have been doing that. Where did all the textile mills in Virginia and other place dissapear.

      Offshoring has been going on for over 50 years in all industries, which are labor-intensive.

      All Companies want to make profits. If they cannot increase sales, they can reduce costs.
      which is where the H1B and L1 workers come in.

      I have worked at multiple employers over 15 years and all have indulged in offshoring (manufacturing, production, IT Support) basically any standardized activity.

      We need to stay ahead of the curve and be on the bleeding edge of technologies to make more money.

      IBM sent a letter to its staffers for NA that only high-demand skilled staff will get salary hikes. Rest of the general work force salaries are being frozen.

      That is why I say we need to stay ahead of the curve.

      Thanks

      • BY Wo'O Ideafarm says:

        I am posting this blanket “THANK YOU” to you and to everyone who will follow your example by posting objective, constructive, factual, nonpartisan commentary of this high quality into this conversation.

  3. BY Fred Bosick says:

    I have a different take on Point 5, though I agree with all of them!

    If H-1B immigration is only a net benefit to the nation as a whole – and many proponents phrase it just that way – why not issue these visas *without* assigning them to a specific employer and have the visa holder be allowed to work for anyone s/he wants, once in the country? Major tech employers who avail themselves of this business subsidy can pool their resources to pay the filing fees and set up shop in a pavilion and attempt to “draft” these new workers.

    I’m gratified that a particular phrase I often use is found in the post I’m referring to. We need to leverage the history of slavery in the western world to help legislators and others understand the true import of this “minor alteration of immigration policy to enhance US technical competitiveness”.

    • BY Wo'O Ideafarm says:

      Your suggestion eliminates the unfairness by eliminating the indenture (slavery) aspect of the visa. Prohibiting indenture would prevent workers and employers from benefiting from the such contracts.

      Allowing all workers to indenture themselves would make those benefits available. If those benefits are as compelling as I think that they are, it might change the structure of our occupation; all software engineering jobs might become indenture jobs. But I think that it is more likely that jobs of both types would continue to be available, presenting workers with a choice. Workers willing to commit in a legally binding way to an employer would get paid more than those who want to retain their freedom to terminate the relationship at will.

  4. BY jcpopescu says:

    I have been in tech for over thirty years having worked in the Embedded Systems, Banking, and Construction industries in various IT and Engineering roles. At one time I was my own specialized software company.

    My education is two STEM degrees from two well known and quite respected California Schools.

    My lifelong work encompases analog, digital, and mixed signal circuitry, control software, multimedia and synthetic surround sound hardware and software.

    I can not even BUY a job – of any kind. Seeking menial work meets with the protest of my being “overqualified”. Seeing a kid’s Christmas list to Santa of deliberate TOOL and SKILL confusion in an online or print ad screams: ” FAKE AD !”

    What I find are certain employers, that shall remain nameless, are advertising on DICE, Monster, CareerBuilder, Craigslist, and in print for the very same jobs they submitted a labor condition application (LCA) for. Specifically jobs I have applied to being perfectly qualified for.

    This brings me to the place they’re taking advice from immigration law firms such as Cohen and Grigsby or similar: Give the impression of trying to find a “qualified” American then complain you can’t.

    In my opinion various “skilled guest worker” immigration alphabet soup serves to create two permanent dependant underclasses: The “skilled guest workers” at the mercy of their “sponsoring” companies for the right to be on US Soil and unemployed STEM professionals such as myself who are UNEMPLOYED and probably for life at this rate.

    I’ve often compared the modern day acceptance and even championing of “skilled guest worker” laws to South Africa Apartheid. Will someone explain any signficant or real difference between the two ?

    Borderline hyperbole I know however someone recently compared flooding the labor market with “skilled guest workers” to ethnic cleansing.

    While American STEM professionals might not be experiencing all the horrors of those in Bosnia, Croatia, or fragments of the former Soviet Union there still seems an objective to purging the ranks of STEM professionals of older White American Males.

    I use the term “skilled guest workers” in quotes deliberately. Thus far nobody and nothing has presented any credible , reputable, logical, factual, or even remotely believable studies showing superior education, skill competency, creativity, critical thinking, or problem solving than what exists in the domestic talent stock.

    Ironically enough Sixty Minutes did a story a few years ago on India Institute of Technology (IIT) and despite such, supposedly, done at the request of the fanboys of the school, really gave it a black eye: The final project was cutting a piece of metal to dimension with hand tools.

    I was doing the same thing in Jr. High School metals shop class and was using power tools and even engine lathes before I learned to drive. I would think if there was such technical prowess amongst IIT students they would cobble together a CNC machine from parts, interface it to a PC, and do all incumbent to making the control software and hardware play nice with each other.

    • BY Wo'O Ideafarm says:

      > Borderline hyperbole

      Your post contains much raw material that we could build upon here. But it is very raw, in the sense that it puts H1B workers on the defensive. I want H1B workers, recruiters, hiring managers, and domestic workers to be equally comfortable participating in this conversation. I don’t think that we need to discuss the relative competitiveness of domestic workers and H1B workers.

      I’d rather discuss how the market works. Several people have responded to my idea that H1B is essentially an indenture contract that is only available to foreign workers, which gives them an unfair competitive advantage. One solution path is to make it possible for domestic workers to make an enforceable indenture contract similar to enlisting in the military. Another solution path is to prohibit indenture contracts for everybody.

      Both paths would take us to a fair, equal opportunity marketplace. IMO, both of those paths would involve eliminating the H1B program, possibly replacing it with a residency visa program that gives foreign workers the same access to the U.S. labor market that domestic workers have.

      Whether foreign workers should be given access to the U.S. labor market is a political question that I think should not be discussed here. Let’s assume it, and focus on HOW to give them access in a way that is fair.

      • BY jcpopescu says:

        I make absolutely no apologies and I pull no punches when it comes to the subject of “skilled guest workers”.

        If the same kind of job discrimination against otherwise perfectly educated, willing, and qualified US Citizens, in this case I would posit a great deal of the STEM credentialls are probably white males, was happening to gays, lesbians, “people of color” or other media sacred cows this nation would burn to the ground. However it’s not the sensationalistic flavor of racism of Jim Crow days where people like Bull Connors were turning firehoses and vicious police dogs on innoccent civillians.

        About the only way I see to invoking any kind of “fairness” in immigration is reducing immigration to visitor’s visas or the naturalization process. Dispose with all the extraneous of “skilled guest workers” etc.

        The visitor’s visa should be used for just that: Tourism. Moreover it should be monitored via RFID tracking, fingerprinting, and photo identification.

        If someone wants to migrate to the USA they can work to the end of passing a citizenship exam teaching themselves English, US History, and Civics. Get in line and wait like everyone else and when your at bat comes up make the best of it.

        As it currently stands the fourteenth amendment to the US Constitution prohibits slavery. Or does it ? Has it fallen into latches through constructive legal manuevering ? .

      • BY jcpopescu says:

        Ideafarm,

        Someone’s “comfort level” is their own business. Perhaps reading my remarks will fire up a few brain cells and open a few eyes or verbally force the blinders from their face.

        How the market works, in my humble opinion, is very straightforward: H-1B and “skilled guest worker” visas are used as a form of wage arbitrage. The proliferation of telcom makes outsourcing a job to a cheaper labor market a question of finding two wires for a telco line or an even semi reliable WiFi hotspot for the data transfer incumbent to the job.

        So the question becomes does the USA accept the same sum total socioeconomic conditions in the name of being cost competitive with India or is the Indian standard of living raised making the USA a cheaper less regulated labor market ? How does one compete with Chinese prison labor in terms of cost ? Impossible.

        Quite frankly I think there are more political questions than economic ones. The economic ones can be answered from history of the industrial revolution, the great depression of the 1930′s, and even the postwar industrial hegemony of the USA after the second world war.

  5. BY Wo'O Ideafarm says:

    What do people think about my proposition that H1B visas function as indentured servant contracts and that the real problem is that only foreign workers are allowed to enter into such contracts?

    Playing along with this view, would you (domestic worker) be willing to indenture yourself contractually for, say, 5 years, if U.S. law enabled you to sign such a contract? Why, or why not?

    Are there any H1B workers present? Do you agree that your visa functions essentially as an indenture contract?

    • BY jcpopescu says:

      I’ll agree: H-1B serves as a form of indentured servitude. I would even go as far as saying an trojan horse assault on the forteenth amendment.

      Would I enter into such a contract ? No.

      Why should I subsidize through labor cost reductions, and overall operating cost reduction, an employer who thinks slave contracts are perfectly acceptable ?

      Furthermore: What would an employer expecting capitulation to such a contract really have to offer in the first place ?

      • BY Wo'O Ideafarm says:

        Would you still object to such contracts if plenty of jobs were available of both types (5 year indentures versus at-will employment) and so engineers to chose to indenture themselves are doing so because the pay rate is higher? IOW, assume that the market is working well enough that there is no coercion or desperation; workers shop confidently for the best job rather than search desperately for ANY job.

      • BY jcpopescu says:

        Ideafarm,

        I don’t think slave contracts in the form of varying indentured servitude and a truly free labor market can coexist.

        Both are mutually exclusive by the very nature of what a slave contract entails as well as what the implications of a free labor market are.

        How , possibly, could wages and job offerings increase in the presence of slave contracts ?

        I would object to such contracts as I don’t think it’s ethical for anyone to have to indenture themselves . Neither do I think anyone should expect anyone else to be their indentured servant.

        The forteenth Amendment forbids slavery and, in my opinion, it needs to be enforced in both spirit and letter of the law.

        • BY Wo'O Ideafarm says:

          >> slave contracts

          Indenture is not slavery. Both are servitude. The former is contractual and voluntary, and the servant owns himself. The latter is involuntary and coerced, and the servant’s person is owned by another. The term “slavery” is inflammatory and, in the present context, inaccurate. Please join me in using “indenture” to refer to what we are discussing.

          >> mutually exclusive

          I don’t see any conflict. Within the same shop, “at will” workers could easily work alongside 5 year indenture workers. We’re just talking about compensation packages, really. It would all be contractual and voluntary, and the indenture contracts could contain escape clauses of various kinds. Worker A’s compensation package really isn’t any of worker B’s business.

          >> How , possibly, could wages… increase in the presence of slave contracts?

          The wage paid to an indentured worker would have to be higher than the wage paid to at will workers in order to persuade workers to voluntarily choose to indenture themselves. Employers would be willing to pay indentured workers more, and the market would force them to do so. Indentured workers would be happy because of the higher income, and the employers would be happy because of increased control and predictability and decreased risk. Everybody wins, which is guaranteed by the fact that it’s all voluntary.

          > I would object to such contracts as I don’t think it’s ethical for anyone to have to indenture themselves

          You would not sign such a contract. But do you have the right to prevent others who want to sign such contracts from doing so?

          >> The forteenth Amendment forbids slavery

          That’s what is causing the problem. Indentured contracts are illegal and unenforceable in the U.S. But there is a tremendous pressure to indenture technical workers because the benefits to both workers and employers are so compelling. H1B is what economists call the “creative response” to government interference with what people would do if they had the freedom to do it. H1B is “back door indenture”. The problem isn’t indenture. The problem is that only foreign workers are allowed to supply what employers really want (indentured servants).

      • BY jcpopescu says:

        Ideafarm,

        What’s the real sum and substance difference between indentured, slave, coerced, or forced labor or labor in general where the worker is not able to enjoy the benefits of a truly free market as so championed by the vast majority of employers ?

        Look at the roster of who is the most active and vociferous lobby in expanding “skilled guest worker” visas: It happens to be those very same companies who are the biggest proponent of a free market.

        Should that spirit of a “free market” also apply to labor ? By the very existence of skilled guest worker immigration law it does not. There’s the obvious hypocrisy.

        Realize it or do not what you suggest has inklings of what the USA was during the industrial revolution. Do we really want to go back to a world where employees were treated not much better than dispensable equipment ? Do we really want a complete gutting of workplace safety and compliance issues ?

        Do we really want to return to the kind of “industrial feudalism” that was sum and substance of the industrial revolution ?

        I am reminded of the words of Pope Pius the 23rd in his encyclical on labor. He summed it quite well: Management needs labor and labor needs management in the context of a mutually beneficial relationship. I’m paraphrasing the late Pope Pius’ words however when taken on face value without any scrutiny of the religious conduit from which it flows it makes a LOT of sense.

        Where we are today, the seeming polar opposite of such a mutually beneficial relationship, has amply demonstrated what kind of absolute disaster to expect.

        • BY Wo'O Ideafarm says:

          Great post. Sets me up perfectly to teach economics, which is what I want to do here.

          >> What’s the real… difference between indentured [versus] slave

          Indenture is mutually voluntary and contractual; with indenture, the worker owns himself and the relationship is governed by the contract. Slavery is coerced, involuntary, and statutory; with slavery, the master owns the person of the slave, and the relationship is governed only by general statute. The oppressiveness of statute is limited only by the economic and moral interests of the master majority group; the slave minority group has no say whatsoever.

          >> Should that spirit of a “free market” also apply to labor?

          I think so. If employers and workers are completely free to negotiate the terms of the relationship, in many situations they will agree to some form of indenture.

          Keep in mind that working for someone is inherently a loss of freedom, in the sense that you are selling your time. When you are “on the clock”, you are the servant of another. The key question is whether your status as a servant is voluntary.

          In a free market, the economic interests of the supplier (worker) are protected by the “invisible hand”, and the property rights interests of the supplier are protected by government enforcement of the law.

    • BY jcpopescu says:

      I think you’ve just asserted my point there’s really moot point differences between slavery and the kind of indenture contracts you speak of.

      The very nature, intent, and purpose of an indenture contract is to skew the labor market in favor of a given employer. Assuming such contracts are legally enforceable the worker can’t accept a better offer, quit their job, or move about in the labor market as they otherwise would be allowed to in the absence of such a contract. There’s a very real consequence of breeching of contract.

      Therefore indenture agreements can’t coexist with a “free” labor market.

      In a “free” labor market if I want to quit my job I can. If someone offers me a better sum total I can go work for them. No legal or contractual consequenes whatsoever.

      To get back to the original subject: During the 1970′s and for about the next fifteen years Silicon Valley was an example of what happens with a “free” labor market. The tale of Fairchild Semiconductor and the rise of Intel is but one example of if a given worker does not like it then find somewhere else to work or, better yet, cash out your savings and start your own company.

      Employers didn’t like that because it forced competition for both technical talent and product innovation. Ergo the increasing use of H-1B labor.

      Where are we today ? Look what passes for a “tech” company. Facebook, Twitter, Zynga, are more about eyballs on a page and clicks on advertisers links than about tech. What “tech” there is boils down, really, to bulletin board , USENET, or Deja on steroids. Scaling to more users has become almost a moot point.

      Compare and contrast this to the structural innovation that was going on during the 1970′s and well into the 1980′s. This nation managed to land a man on the moon and return him home, built things like the Boeing 747, and created a defense network capable of countering any threat of a nuclear holocaust. Moreover: A lot of these things were accomplished WITHOUT H-1B labor.

      • BY Wo'O Ideafarm says:

        >> I think you’ve just asserted my point there’s really moot point differences between slavery and the kind of indenture contracts you speak of

        Then you haven’t understood what I said. I am a professional, degreed economist, and I am allocating some time to being available to software engineers and others here who want to learn something about how the market works. You do not appear to me to be someone who is teachable. Rather than show me the respect that is due a teacher, and respond intellectually to what I say, you use my posts as a springboard for more ranting. This is how I perceive you.

        Please think of this as a classroom, and think of me as a visiting professor of economics who is an expert in the economics of the market for technical workers. Do not disrespect me by ranting or using this as a platform for your thoughts on unrelated topics. I have many demands on my time. Our time together is precious.

        . The very nature, intent, and purpose of an indenture contract is to skew the labor market in favor of a given employer. Assuming such contracts are legally enforceable the worker can’t accept a better offer, quit their job, or move about in the labor market as they otherwise would be allowed to in the absence of such a contract. There’s a very real consequence of breeching of contract. Therefore indenture agreements can’t coexist with a “free” labor market. In a “free” labor market if I want to quit my job I can. If someone offers me a better sum total I can go work for them. No legal or contractual consequenes whatsoever. To get back to the original subject: During the 1970′s and for about the next fifteen years Silicon Valley was an example of what happens with a “free” labor market. The tale of Fairchild Semiconductor and the rise of Intel is but one example of if a given worker does not like it then find somewhere else to work or, better yet, cash out your savings and start your own company. Employers didn’t like that because it forced competition for both technical talent and product innovation. Ergo the increasing use of H-1B labor. Where are we today ? Look what passes for a “tech” company. Facebook, Twitter, Zynga, are more about eyballs on a page and clicks on advertisers links than about tech. What “tech” there is boils down, really, to bulletin board , USENET, or Deja on steroids. Scaling to more users has become almost a moot point. Compare and contrast this to the structural innovation that was going on during the 1970′s and well into the 1980′s. This nation managed to land a man on the moon and return him home, built things like the Boeing 747, and created a defense network capable of countering any threat of a nuclear holocaust. Moreover: A lot of these things were accomplished WITHOUT H-1B labor.

      • BY Wo'O Ideafarm says:

        >> I think you’ve just asserted my point there’s really moot point differences between slavery and the kind of indenture contracts you speak of

        Then you haven’t understood what I said. I am a professional, degreed economist, and I am allocating some time to being available to software engineers and others here who want to learn something about how the market works. You do not appear to me to be someone who is teachable. Rather than show me the respect that is due a teacher, and respond intellectually to what I say, you use my posts as a springboard for more ranting. This is how I perceive you.

        Please think of this as a classroom, and think of me as a visiting professor of economics who is an expert in the economics of the market for technical workers. Do not disrespect me by ranting or using this as a platform for your thoughts on unrelated topics. I have many demands on my time. Our time together is precious.

      • BY jcpopescu says:

        Anyone else out there care to comment ? Anyone ? Anybody ?

        Hello…. “”"” echoes like an abandonded warehouse”"”"”"

        Eh… Perhaps it’s best this thing dies it’s own death. Time for the fork as it’s done….

        • BY Wo'O Ideafarm says:

          Now you are being a troll. You’ve made some interesting points. Now I’d like very much to hear what other people here think.

          H1B: Should domestic workers try to beat them, or join them? Employers want to hire indentured servants, because when you train an indentured servant, your investment doesn’t walk out the door. H1B is “creative response” indentured servitude. It gives employers what they want, and what the would be willing to pay a premium for. Should domestic workers beat them, or join them? Should domestic workers attempt to close the borders so that no indentured servants are available? Or, should domestic workers find a way to give their customers (employers) what they want?

      • BY Kevin says:

        >>>> “H1B: Should domestic workers try to beat them, or join them? Employers want to hire indentured servants, because when you train an indentured servant, your investment doesn’t walk out the door. H1B is “creative response” indentured servitude. It gives employers what they want, and what the would be willing to pay a premium for. Should domestic workers beat them, or join them? Should domestic workers attempt to close the borders so that no indentured servants are available? Or, should domestic workers find a way to give their customers (employers) what they want?”

        Neither beating nor joining H1B is a viable option. If we wanted to join the H1Bs the program would not have been needed in the first place – the employers could have found their “creative response” domestically. Clearly “joining the H1Bs” would not be the American IT worker’s first choice.

        We must be careful when we bring up the idea of “giving the employers what they want”. If the goal of corporations is to maximize shareholder value then it follows that the goal of corporations is to minimize expenses and maximize profits. Thus “what employers want”, if they were allowed to somehow “magically” create the perfect workforce, would be a group of employees that work very hard and very efficiently, and ask for a minimum level of (or even no) compensation in return. Is this what we should offer?

        This is why we have employment laws and labor unions. When such things did not exist, and it was solely up to the market to determine employment conditions, we ended up with a huge class of extremely poor workers working in extremely poor conditions. A quick glance at history of 100-150 years ago shows us what we can expect if we “give the employers what they really want”. I’m afraid we’ve already taken steps in the last 20-30 years towards the resumption of Industrial Revolution conditions, I don’t think we want to go any further in that direction.

        I think what is being lost in this current discussion is that employment is (or at least should be) a two-way street. People need jobs, employers need employees in order to make their business run and earn a profit. Both sides should be at least somewhat satisfied with the arrangement. The analogy of “employers as customers” is flawed because we are “selling” a portion of our lives not a product.

        So yes, of the options you present certainly this one is most desirable: “Should domestic workers attempt to close the borders so that no indentured servants are available?”

        Indeed, end H1B, fix this gaping wound in our economic system, and restore the American middle class. And along the way this will also have the extremely positive side-effect of increasing demand for goods and services, since people will have more discretionary income with which to purchase TVs, cars, etc, which in the end will ALSO benefit corporations as they experience an uptick in sales. Sure sounds like a “win, win” to me.

        • BY Wo'O Ideafarm says:

          Kevin, thank you for your post.

          >> employers could have found their “creative response” domestically

          The 13th amendment prohibits indenture contracts in the U.S. A H1B visa arguably has the effect of an indenture contract while conforming to U.S. law. Can anyone think of a “creative response” way to get around the 13th amendment to indenture a domestic worker?

          Even if such a mechanism could be devised, would any domestic workers indenture themselves? No one here has said, “What a cool idea! I can’t wait to indenture myself. Just show me where to sign!”

          >> careful when we bring up the idea of “giving the employers what they want”

          Yes. What I mean is structuring the work relationship in a way that maximizes the value that it creates. For technical work which involves significant investment by the firm in what is called “general human capital”, indenture makes sense because the investment doesn’t walk out the door as soon as it is made. How the value that is created is split between the buyer (employer) and the seller (worker) will be determined by competition among demanders and among suppliers, which determines the equilibrium price. As noted earlier, the equilibrium price for an indenture worker will normally be higher than the price of an “at will” worker; otherwise, all workers would elect to supply themselves “at will”.

          >> If the goal of corporations is to maximize shareholder value then it follows that the goal of corporations is to minimize expenses and maximize profits

          Here you get off track because you forget about the equilibrating forces in the market. Competition among suppliers pulls the price down, but competition among demanders pulls it up. The price will end up where supply equals demand.

          >> certainly this one is most desirable: “Should domestic workers attempt to close the borders so that no indentured servants are available?”

          Assume that indenture makes sense because it eliminates the problem of training investment walking out the door. Assume that law prevents indenture in the U.S. but not in other countries. What will prevent boards of directors from ordering management teams to send all technical work offshore, where they can structure the employment relationship optimally? If U.S. companies do not do this, what will prevent investors in foreign countries from saying to themselves, “Let’s form a software company here, where we will have a competitive advantage, and produce software here, and commence kicking ass in the marketplace!”? U.S. companies, and U.S. jobs, don’t exist in a vacuum. If the optimal work relationship is illegal here, those jobs will simply be beamed over to other countries. Software can be produced anywhere.

          >> Sure sounds like a “win, win” to me.

          I bet you don’t think so now. That’s the way economic analysis is. The power of economic analysis is that it very often reveals the unexpected and sometimes tragic consequences that are hidden to those who only have the eyes of common sense.

  6. BY Walter Meyer II says:

    One of the things that’s ALWAYS bothered me about the H1B situation is the dilution of the earning power of American software developers. Since it started the H1B program has brought in many millions of developers from overseas thus making my skills less unique and therefore less valuable. Now Gates and Ellison as well as their shareholders have a vested interest in keeping the program alive, to keep their LABOR COSTS down.

    Ideafarm, I’m curious what an economist’s opinion is on this stacking of the deck, against the American developer in WAGES and our exponentially HIGHER COST OF EDUCATION.

    • BY Wo'O Ideafarm says:

      As an software developer, I view foreign workers as invading colonists who come here to take rather than to give. They do not integrate into our society. They do not participate in our system of self government. They do not join in the never ending civic activism and community building work that is needed to maintain the very system that delivers so much bounty to them. Like all colonists, they view the natives with contempt and covert enmity. They conspire among themselves to capture organizations which then hire only their own. I view the companies who employ them as traitors, as “internal enemies” who profit by the political and economic destruction of the United States. THIS MAKES ME FURIOUS.

      OTOH, domestic workers, especially technology workers, are equally guilty of living as colonists in all of those ways. Domestic workers, and I myself was guilty of this when younger, immerse themselves in technology and leave the citizenship work to others. Domestic workers, just as much as the foreign workers, take rather than give, and stand idly by as the United States is destroyed. THIS MAKES ME EVEN MORE FURIOUS.

      That’s me with my software craftsman hat on. I’ll refrain from putting on my other hats for now, to let others speak.

    • BY Wo'O Ideafarm says:

      As an economist, and writing practical advise rather than rhetoric, I’d say that domestic software developers should seriously consider this idea: The reason that H1B has made such a significant impact is that the H1B worker supplies the “flavor” of the product that the demanders want. Domestic suppliers (software engineers) should seriously consider reformulating what they offer so that it matches more closely what demanders want.

      Demanders want to hire software engineers who will not walk out of the door the moment they finish absorbing a year of expensive training. Demanders want people who will work independently yet respond in the desired way to management control.

      Don’t get caught up in all of the rhetoric, the politics, and the racism. Take the H1B phenomenon as an opportunity to understand your customer better. Learn from the success that your competition is having grabbing market share from you. Even if you are a salaried engineer, think of your employer as your customer. Sell yourself before you sell your product. When you are at work, every meeting is a sales meeting. Present yourself confidently, take ownership over the success of your business relationship with your customer, discover what your customer wants to hear, then tell him/her exactly that, and finally, deliver what you promise and a bit more.

      The main disadvantage of the typical salaried domestic software engineer is that s/he is caught up in the anachronistic mindset of a union worker who sees every interaction with management as an “us versus them” thing. Profit is a good thing. Larceny is a bad thing. Understand the difference.

  7. BY Jeff Johnson says:

    Personally, I would have no problem with H1B’s if the law was followed. The law clearly states that H1B employees are to be paid at the same rate as non-H1Bs. That is clearly not the case. There have been numerous studies on the fact that H1B employees are paid significantly less. That is why wages for everyone are driven down. The law also states that companies are to higher non-H1B before hiring H1B, that also doesn’t happen. The intention of the laws are good, they are just not followed.

  8. BY Wo'O Ideafarm says:

    Corporations routinely pay $250/hr + to consult with Ph.D. economists trained at the University of Chicago and other top tier economics departments. Very few such economists are also intimately familiar with the software craft. I am here, available to you for free. Ask me some questions about H1B and what your alternatives are if you are a domestic software engineer.

    Don’t be intimidated. Life should be approached as a banquet, not as a race. If we are not capable of discussing the “H1B problem”, how can we ever solve it?

    I’ve said plenty here to get the conversation going. If you are not willing to be active, participatory citizens, then you deserve to watch your economic prospects die the lingering death of membership in a failed society.

    • BY James says:

      52 companies have only pledged to hire 100,000 veterans by 2020, but they will hire 130,000 h1b visa holders by 2014, assuming all 65000 visa are used for both years. More pressure needs to be put on the government to eliminate h1b visa program until general unemployment numbers is below 5.0%.

      • BY Wo'O Ideafarm says:

        If H1B visas are “creative response” indenture contracts, they should be eliminated unconditionally, or the law must be changed to enable domestic workers to indenture themselves. (I favor the latter, because indenture makes so much sense for technical work.)

        The question that you pose cannot be answered until we understand the effect that H1B visas have in the market. That is why I proposed that we focus here on discussing how the market works. Without that understanding, any discussion of what should be done degenerates into “us v. them” warfare, which is not what DICE.COM is about.

        Thank you for posting. I’m still waiting for someone to engage me in such a discussion. What do you think about my suggestions already posted here for comment, but which have elicited almost no comment?

  9. BY Fred Bosick says:

    Mr. Wo’O Ideafarm,

    Your invitation to us all to discuss the H-1B matter in a scholarly manner with a Ph.D level economist is a noble gesture. but I think the pushback from some of us can be attributed to the fact that H-1B immigration is not an economic or a free enterprise issue. It’s a government declared subsidy to technically intensive businesses, regardless of their competitive ability.

    Many tech companies no longer wish to compete on a level playing field. It makes executive compensation too low and forces them to think about innovation rather than empire building. What better way than bribing Congress and securing a captive workforce? The side benefit is that IT specialties not served by H-1B have lower wage pressures.

    The discipline of Economics has the tendency of simplifying every system of irrational and contrary people into the proverbial “spherical cow”. H-1B immigration in an “extraeconomic” forcing function. You cannot use “equilibrium economics” to address a graft and corruption problem. And “Free Enterprise” is completely out the window, for these indentured servants do not have freedom of movement.

    Advising us to consider indentured servitude as a condition of tech employment sets back labor relations by hundreds of years. The American Middle Class is the most productive cohort in human history. It should be considered a privilege to employ us; for we make the US what it is.

    Rather than even discussing H-1B immigration as a solvable problem, it needs to be completely eliminated. And Corporate America needs to understand that you pay for quality and the environment that nurtures it.

    • BY Wo'O Ideafarm says:

      >> discuss the H-1B matter in a scholarly manner with a Ph.D level economist

      Thank you, Mr. Bosick, for raising the level of (mutual) respectfulness. That will enable me to serve as a professor of economics. It will also enable us to rise above the racism and anger that is associated with this issue.

      >> fact that H-1B immigration is not an economic or a free enterprise issue

      That’s an opinion, not a fact, and it is just such opinions that I would like to see expressed and discussed here.

      >> [H1B is] a government declared subsidy to technically intensive businesses

      Good. You have given us another way to look at H1B’s that competes with the idea (model) that views them as “creative response” indenture contracts. Those two model are not mutually exclusive. We can discuss what each model tells us about (1) how the market works, (2) who benefits and who loses, and (3) whether H1B is, overall, good or bad for domestic interests.

      >> What better way [to eliminate competition] than bribing Congress and securing a captive workforce?

      Yes. General principle: If you want to form a cartel to screw the general public, or any particular group, usually the easiest and best way to do it is to form a coalition that includes the government.

      >> IT specialties not served by H-1B have lower wage pressures

      Please elaborate.

      >> H-1B immigration in an “extraeconomic” forcing function.

      I am not familiar with the phrase “forcing function”. Please explain that concept and how it might apply here.

      >> You cannot use “equilibrium economics” to address a graft and corruption problem

      Economic analysis is only one approach to modeling how society works. Within that literature, the “graft and corruption problem” is referred to as malfeasance or as the “principal – agent problem”. I am not familiar with that part of the economic literature so cannot say much more.

      >> “Free Enterprise” is completely out the window, for these indentured servants do not have freedom of movement

      We are applying the word “freedom” in slightly different ways. Consider a market in which government (the courts) enforce any kind of contract whatsoever. In such a market, one might well see people voluntarily making indenture agreements. Parties to such agreements are completely free to make such contracts, but are not at all free to break them. If we were to apply the word “freedom” in the way that you suggest, no market would be free, because all markets involve exchange, and exchange implies that there is, at least for a moment, a binding obligation to deliver something to the other party to the exchange.

      >> Advising us to consider indentured servitude as a condition of tech employment sets back labor relations by hundreds of years

      Why? Please elaborate. If two people who are strangers to you decide to enter into an indenture agreement, how does that affect you, assuming that all behavior in the market is voluntary?

      >> The American Middle Class is the most productive cohort in human history

      That’s debatable, and it is also vague. In your comparison with other groups, say those workers in Taiwan with comparable educations and skills, are you adjusting for differences in the amount of capital equipment? It isn’t either fair or useful to compare how much a worker with a power tool can produce in a day with how much another worker who has only a hand tool can produce.

      > It should be considered a privilege to employ us

      This statement is probably causing HR managers to fall out of their chairs laughing. Times have changed. The market isn’t at all what it was twenty years ago. That’s why it might be very beneficial for us to discuss how the market works today, and in particular, why H1B’s exist and how domestic workers should respond to this new competitive threat.

      >> Rather than even discussing H-1B immigration as a solvable problem, it needs to be completely eliminated

      That depends upon whether you are in a group that benefits or loses. Even if you are in a group that loses, another response is for you to leave that group and join one of the groups that benefits. Still another approach is to change the game. My suggestion is an example of the latter.

      >> And Corporate America needs to understand that you pay for quality and the environment that nurtures it.

      No corporation is ever going to really care about environment. That isn’t what corporations do. Corporations focus on maximizing shareholder value. That is a good thing, in itself. If we want the game to be cleaner or the environment to be developed, we must either do it through community effort or do it using the coercive power of the state or do it by discovering some way to attach profit to achieving our goal. (Once you show a corporation that it can increase shareholder value by improving the environment, then you will have their attention and you can rely on the profit motive to keep them motivated.)

      Thank you for your post, Mr. Bosick.

      • BY Fred Bosick says:

        >> fact that H-1B immigration is not an economic or a free enterprise issue

        >That’s an opinion, not a fact, and it is just such opinions that I would like to see expressed and discussed here.

        My claim that’s it’s not Free Enterprise is that H-1B is an explicit alteration of employment and pay by government fiat, rather than by Adams Smith’s invisible hand.

        >> IT specialties not served by H-1B have lower wage pressures

        >Please elaborate.

        Simple; supply and demand. Some of those displaced can take jobs not available to H-1B candidates because of HIPAA and other regulations. The increased labor pool for these specialties will depress wages.

        I retract the use of the term, “forcing function”. It has a specific mathematical definition that I was not aware of when I inferred it’s meaning from some physics texts I read ages ago.

        >> Advising us to consider indentured servitude as a condition of tech employment sets back labor relations by hundreds of years

        >Why? Please elaborate. If two people who are strangers to you decide to enter into an indenture agreement, how does that affect you, assuming that all behavior in the market is voluntary?

        Had it been simply two strangers – to me – making a private agreement, much like that made in a BDSM lifestyle, it’s A-OK. But the government is involved. It affects me, and you. I haven’t lost a job to an H-1B applicant, but coworkers have. Their severance was conditional upon training their replacements. That’s not a voluntary agreement. It’s not as if they lost their jobs for cause, other than expecting a middle class salary.

        >> The American Middle Class is the most productive cohort in human history

        >That’s debatable, and it is also vague. In your comparison with other groups, >say those workers in Taiwan with comparable educations and skills, are you >adjusting for differences in the amount of capital equipment? It isn’t either fair >or useful to compare how much a worker with a power tool can produce in a >day with how much another worker who has only a hand tool can produce.

        The *only* reason India and China have relatively modern economies is because of the purchasing power of the U.S. Middle Class. Is this debatable? Taiwan has not been a subject of outsourcing or offshoring discussions is because it has a similar level of productivity and wages as does the U.S. They’re a lot like us, except our population is 13 times greater.

        > It should be considered a privilege to employ us

        >This statement is probably causing HR managers to fall out of their chairs >laughing. Times have changed. The market isn’t at all what it was twenty >years ago. That’s why it might be very beneficial for us to discuss how the >market works today, and in particular, why H1B’s exist and how domestic >workers should respond to this new competitive threat.

        I’m eager to compete, and I’ll win! Except when when a government franchise allows tech companies to rip me and my colleagues off. HR managers have never had it so easy. They only have to outsource their resume’ scanning tasks to a brute force text search.

        >> And Corporate America needs to understand that you pay for quality and the environment that nurtures it.

        >No corporation is ever going to really care about environment.

        I’m sorry, I should have been more specific. What I mean by the “environment” is the infrastructure and values that enabled me to choose IT employment based on my interests instead of the desperation to leave the poverty of a 3rd world village. The H-1B and outsourced employee candidates have an immense
        drive to succeed, and they’ll do their very best. But as many of us displaced people have noticed is that these people accept their training as received wisdom and the manuals as a holy text – to be memorized backwards and forwards. They have no context for this info that the rest of us absorbed in years of experience.

        Just the past weekend I earned 5 hours of overtime, because it was my turn with the pager. I didn’t particularly want it as my whole Saturday evening was spent in a VPN connection to my work PC. The company, for which I am a contractor, is implementing a follow-the-sun strategy. So some Indian employees of the company are being trained in some of the tasks the department in which I work does. Note that they *are* employees and I’m just a contractor. One guy made two relatively simple mistakes, one of which is rather puzzling as well as showing up the bugs in an IBM product. I spent 5 hours, and the team lead put in about 8. He’s been doing the training and has some egg on his face. And some application owners put in multiple hours too. Just because of one guy. This is a rather extreme example but not the only one.

        • BY Wo'O Ideafarm says:

          Mr. Bosick, again, a meaty post. Good statement of how important culture is in the production of a technology worker, and what domestic workers have to offer.

          > What I mean by the “environment” is the infrastructure and values

          I’ll continue to push back on this idea of yours. IMO, it is unrealistic to expect, and counterproductive to require, a U.S. corporation to care about anything that does not materially affect its market value (the total market value of its common stock). If all U.S. corporations would just focus on doing that very important thing, and the entire society came around to appreciate how important it is to have that done well, our business sector would become totally kick ass.

          The solution to the problem that you speak of is, IMO, for us to become active, involved citizens, participants in self government. We need to objectively consider the arguments of the “small government people”, such as me, as well as the opposing arguments of people who advocate various forms of active intervention by government in the operation of the market.

  10. BY Glen Smith says:

    Economically, there is NO shortage or tech skills in the US. In economic terms, demand is both the desire and the ABILITY to pay the price. If supply is low relative to demand, demanders either pay a higher price or adjust expectations (for example, take on more staffing risk). If either of those reactions make the given project untenable, then you are NOT part of the demand. Whining about a shortage of tech workers is just an example of teaching the horse to sing.

    • BY Wo'O Ideafarm says:

      Thank you for the post, Mr. Smith.

      >> shortage o[f] tech skills in the US

      “Shortage” is a useful concept “in the small”. For example, a particular store might be out of stock on some item. Last week, I saw a sign in an office supply store that notified customers that the chain was experiencing a shortage of hard drives due to flooding in Thailand. These examples illustrate how “shortages” can be experienced in every day life.

      But “shortage” is an utterly useless concept “in the large”. When you hear someone asserting that there is a chronic shortage of X in country Y, you should always be highly skeptical and ask the person to elaborate what they mean. If you don’t get an immediate and completely satisfactory answer, dismiss the assertion as empty hyperbole.

      Some markets operate in a way that is similar to mating. Supply and demand analysis is still useful, and is usually done using “hedonic pricing” analysis introduced by Sherwin Rosen, one of my professors, in the 1980′s. In such markets, market equilibrium determines prices, but the exchange process involves lots of searching. In that sense, under those conditions, the term “shortage” has some usefulness.

      Earlier in the development of the software craft occupation, every job and every candidate could reasonably be viewed as unique, and filling positions was very much like searching for Mr. Right. But as the occupation has developed, this perception has become an anachronism. Today, hiring a software engineer is no more like mating than hiring any of many other occupations is. Hiring someone into the management team of a company is far more of a mating process, and no one ever speaks about the chronic shortage of professional managers.

      I agree with you that all of the whining that H1B is needed because of the chronic shortage of qualified domestic tech workers is empty hyperbole and is an insult to the intelligence of anyone who is smart enough to perform this kind of work. It would be more honest and constructive for business leaders to just admit that they, like us and everyone, want to get the best deal available, i.e. pay the lowest price possible for what they buy, and that foreign workers are currently the “low price leaders” in the market.

      . In economic terms, demand is both the desire and the ABILITY to pay the price. If supply is low relative to demand, demanders either pay a higher price or adjust expectations (for example, take on more staffing risk). If either of those reactions make the given project untenable, then you are NOT part of the demand. Whining about a shortage of tech workers is just an example of teaching the horse to sing.

    • BY jcpopescu says:

      Glen…. Exactly.

      What has happened , however, is the labor market is flooded with H-1B and other immigration visas thus driving labor costs right into the ground.

      Fact of population is China and India are the most densely populated nations ranking first and second in world’s population. What this means is there’s more of them then anyone else on the planet and the consequences of tapping such a population for cheap and indentured labor are the kiss of death for the domestic STEM professional. Along with a whole other host of problems.

      Fact of life in a 2012 labor market is industry balks at even the suggestion of having to train new hires. The expectation is plug them into the job, if they succeed then retain if not then find another poor sap and repeat until desired results. Of course doing this with the domestic STEM professional exposes the company to the possibility of a wrongfull termination or hostile workplace lawsuit.

      What better to the plug, play, dump game than someone with no worker protection and a visa held by the “sponsoring” company ?

  11. BY Nemo says:

    Let me get this straight:

    “One solution is to pass laws that make it possible for domestic workers to indenture themselves in a legally enforceable way, similar to an enlistment into the military.”

    The solution proposed to the H1B problem by a Ph. D. economist is to bring back indentured servitude for US citizens with STEM degrees?

    Unglaublich.

    The next time someone asks me why kids are avoiding the STEM subjects, I’m going to tell him a true story. The employment practices of US corporations are *so* dreadful that a Ph. D. economist seriously proposed bringing back indentured servitude to allow US citizens to compete on a level playing field with H1B visa recipients.

    The fact that you can seriously propose this is proof that the ruling classes in this country actually think that anyone who actually gets their hands dirty by manufacturing physical products should be reduced to serfdom.

    I am actually insulted that you are seriously proposing that I should be treated as a subhuman.

    You also completely miss the point: treating H1B visa holders as subhumans with a very restricted set of legal rights is WRONG and it lowers the terms of employment for everyone.

    • BY Wo'O Ideafarm says:

      Nemo, thank you for your post.

      >> Ph. D. economist

      “Ph.D. Lite” best describes my formal education. I did not complete my Ph.D.

      >> bringing back indentured servitude

      It has been many years now since Texas Instruments brought back indentured servitude. The success of the H1B visa, which “end runs” around the 13th amendment, suggests that indenture makes sense for software engineering work. I just suggested that domestic workers be given the same opportunity to participate in this market development that foreign workers enjoy.

      >> reduced to serfdom

      Most people are, in fact, serfs in the United States. But that is another story.

      > I am actually insulted that you are seriously proposing that I should be treated as a subhuman

      I think that you have gotten onto the wrong track by focusing on the competition between suppliers (workers) which pulls the market clearing wage down. Of equal importance is the competition between demanders (employers), which pulls the market clearing wage up. In a supply and demand model, the wage observed in the market is the wage for which supply equals demand.

      My intuition tells me that allowing domestic workers to indenture themselves would unambiguously RAISE their wage. In formal analytic terms, this would shift the marginal revenue product curve up. But this is “shooting from the hip”. I have not yet taken out my pen and done a formal analysis.

      >> treating H1B visa holders as subhumans with a very restricted set of legal rights is WRONG

      I agree, but that is a moral opinion and is, IMO, off topic!

      >> and [H1B] lowers the terms of employment for everyone

      No, it unambiguously and demonstratively raises the wage for the foreign workers who voluntarily supply their labor as an H1B worker. It also unambiguously raises the wage paid to domestic workers who perform jobs that are complements. (Formally, the marginal revenue product curve of complement domestic workers shifts up.) It also unambiguously raises the marginal revenue product curve of ALL workers by shifting the production function out. The only effect that I can think of right now that is not an unambiguous improvement is that the “substitution effect” operates to reduce the wage paid to domestic workers who are “close substitutes” for foreign workers. In theory, the net effect on domestic workers who compete directly with H1B workers is ambiguous, although there is a presumption that, generally speaking, the substitution effect dominates.

      Economic analysis is not easy to learn, but the effort is well worth it. Without a mastery of it, you simply cannot understand your world! (This is my plug to encourage people to major in economics or at least take a few introductory courses at your local junior college.)

    • BY jcpopescu says:

      Nemo… LOL and good point.

      As I see it from an economic standpoint there’s two choices in terms of strictly cost competitivenes:

      Make the cost of H-1B labor equal or above the wages otherwise paid to the domestic talent stock by imposing taxes, tarriffs, fees, and levies much in the same fashion as the US Customs service does regarding and surrounding imported goods. Any US Citizen who has traveled internationally is very familiar with what a customs declaration form is and probably has heard a flight attendant’s quip of “declare it or dump it”. .

      The alternative is reduce the cost of the domestic labor to less or than the sum total overall of H-1B labor.

      However there is the very real framework of the law. Do we want to usurp employment law or even constitutional law for the sake of allowing business cheap and unregulated labor ?

      Do we want to return to the days of the industrial revolution or the USA postwar industrial hegemony after the second world war ?

      All we have is history to guide. One can postulate in theroy and conjecture what might or might not happen if a certain economic direction is taken.

      As I see it H-1B has resulted in two very costly dependant underclasses: One is workers indentured to the company for the right to be on US soil in which case wages remain very stagnant or even depreciate.

      Another is an increase of domestic tech talent driven to the ranks of the unemployed or being somehow reliant on the public sector for healthcare or a partial cash distribution to be able to meet their food and rent.

      Furthermore as I see it indenture contracts serve only to create more H-1B style employment situations and consequences. The result: A depreciation of wages to the point of having to live hand in mouth. Anyone want to live like that ? Take a look at Mexico and India today. What I see is the USA in the next decade if not sooner.

      • BY Wo'O Ideafarm says:

        jcpopescu: Thanks for the post. Your post illustrates the importance of the choice of analytic approach. You use the historical approach rather than the approach used by (neoclassical or Chicago School) economists, so the forces that are revealed by economic analysis are invisible to you.

        Everything that I would say in response has already been said. With friendly intent, I invite everyone here who is comfortable with supply / demand analysis to use jcpopescu’s post for target practice. This will give you practice applying the ideas that you have learned here.

  12. BY H1B Worker says:

    It is very interesting to see all of the negative comments against H1B workers.

    I am currently on H1B, and have been perusing the job boards out of curiosity. Specifically, I have been looking at Dynamics CRM positions over the last 4-6 months. Many of those positions are calling for anywhere between $65K and $110K+. Yet, I have yet to come across a company willing to transfer my visa.

    All I have to say is this: One way or the other, producers will find a way to produce…whether it is hiring lower-wage H1Bs, outsourcing to another country, and if pushed, leaving the US altogether. Go ahead and increase the cost of doing business in the US and see the economy tumble even more.

    What goes around, comes around…

    • BY Wo'O Ideafarm says:

      H1B worker, THANK YOU for joining this conversation.

      >> Yet, I have yet to come across a company willing to transfer my visa.

      I interpret this as supporting my idea that H1B visas function as “creative response” indenture contracts. If you were able to easily transfer your visa, you would be as much “at will” as domestic workers are. WDYT?

      >> Go ahead and increase the cost of doing business in the US and see the economy tumble even more.

      Yes, and the prohibition on indenture (excepting the H1B loophole for foreign workers) does not just frustrate demanders (employers) who would like to hire indentured servants. It also frustrates suppliers (workers) who would like to have access to the compensation benefits of indenture: more generally marketable training, a much less exacting and picayune hiring process, and a pay differential.

      I want H1B workers to participate in this conversation. Let us focus on our common interest. We all have a stake in developing our occupation, the industries that employ us, and the market in which we sell our labor.

    • BY jcpopescu says:

      H-1B worker,

      I’m going to venture a guess one rationale for coming to America and accepting all incumbent to H-1B employ was a higher standard of living than what your home country offered.

      Given the current trends to labor cost reductions the end result will be a lowering of wages, workplace conditions, and the lot of working people to a standard not far removed from what motivated you to leave your homeland.

      So the question, as I posted earlier, becomes do we raise or lower everyone’s standard of living ? Each has it’s own economic consequences as a higher standard of living puts real inflationary pressures on energy, food, and housing prices. A lower standard of living creates increased crime and a domino effect of business’ dependant on disposable incomes having to close or severely cut back.

      My own position is employment based immigration serves only one purpose: Cheap and indentured labor.

      If I had my way immigration law would be simplified to visitor’s visas and the naturalization process. I think letting people into the USA with a vested interest in the USA, enjoying the full benefits of US Citizenship provides a much more socially and economically stable situation than the current.

      Let the current outsourcing, offshoring, and insourcing trends continue. History has shown a very clear path to spreading nothing but economic polarization not conducive to a stable society Hungry bellies become angry bellies and angry bellies overthrow governments. This is historical fact.

      • BY Wo'O Ideafarm says:

        JCPOPESCU: Although I share some of your opinions, I object to your post on the grounds that it is off topic here and also that it puts all H1B workers present on the defensive.

        Your post insinuates that H1B workers are to blame for falling wages in the U.S. and (rightly) claims that the presence of foreigners who are here only to work and are not full participants in our system of self government harm us. Such a post does not contribute to an understanding of how the market for software engineers works or of the role that H1B visas play in the operation of that market. The negative conclusions that you voice are not made explicit, are not supported by argument, and, IMO, are not consistent with a competent analysis using either the tools of the economist or of the historian.

      • BY jcpopescu says:

        Mr. Ideafarm…

        The economic consequences of flooding the labor market with “skilled guest workers” shackled by a ball and chain of an immigration visa to a given company is very well understood from an economics standpoint of supply and demand.

        I’m sure this was made very clear to you in pursuit of your “PhD”, “PhD Lite”, or any economics training you care to own inclusive and beyond an economics 101 course.

        Moreover: The history of what happens when people are enslaved either by force , economic duress, or some means of coercion are VERY clear.

        OK since you claim my analysis incompetent: Let’s see YOURS.

        • BY Wo'O Ideafarm says:

          >> you claim my analysis incompetent

          I haven’t seen your economic analysis yet. Your posts so far suggest, explicitly, that you are approaching the question using the tools of the historian rather than the tools of the economist. I was just pointing that out, in the hope that you would either shift over to economic analysis or someone else would contribute some.

          You’ve already seen mine. I claim that H1B visas are “creative response” indenture contracts. If we look at the market that we, domestic workers have two choices: beat ‘em or join ‘em. This is because, according to that model, the fact that indenture contracts are observed implies that economic agents (suppliers and demanders) will use them if allowed to do so, i.e. they WANT to use them. Let’s assume that this is entirely due to demand side efficiencies, so that in equilibrium workers are paid a premium to indenture themselves. If domestic workers “beat ‘em” by using the coercive power of government to prevent employers from hiring indentured workers, that makes domestic firms less efficient and, hence, less competitive, and will encourage production to shift offshore, as one H1B worker correctly pointed out. If, OTOH, domestic workers “join ‘em” by getting the Congress to exempt them from 13th Amendment restrictions so that they can, like the foreign workers with whom they compete, give employers what they want, then domestic workers will receive the indenture premium and domestic firms will operate more efficiently and become more competitive, which will tend to bring production back home.

          Economic analysis is tricky. I don’t mind at all if someone catches an error in my reasoning. Someone can also suggest another model; it’s good to use multiple models to look at an issue from various angles.

          Thank you, Mr. Pope, for your post.

      • BY jcpopescu says:

        Again I don’t see an economic analysis.

        What I see is a very simplistic discussion of supply and demand from a supply side and the suggestion indenture contracts being used by the domestic talent stock to be cost competitive with H-1B visas.

        Immigration law can’t affect the supply in being formed to increase the cost of immigrant labor to the point where it equals that of the domestic talent stock ?

        The use of public opinion can’t invoke a change in demand (and supply also) as was the case of the outcry over South Africa Apartheid and the outcry for divestment from firms doing business with or in South Africa ?

        And, finally, as in the case of Asbestos, Breast Implants, and even the Tobbacco lawsuits the courts can’t influence the labor supply ?

        Quite frankly, Ideafarm, I think you’re championing the cause of the very companies benefitting financially from the status quo of “skilled guest workers” all the while trying to cast such an opinion in very incomplete and skewed “economic” speak that really amounts to no more than classic supply side economics.

        And the era of Reganomics showed just how great THAT worked.

      • BY Wo'O Ideafarm says:

        >What I see is a very simplistic discussion of supply and demand from a supply side

        Qualified agreement. One cannot present an economic analysis in a blog. The qualification is that “supply and demand analysis” is, by definition, not “supply side analysis”. The latter term comes from Reagan era political discourse and has no meaning within economic theory. Partial equilibrium analysis, which is the correct term for the approach that I am implicitly using here, considers both suppliers and demanders. Due to space and time limits, I have only stated the salient features of one possible model and stated what the policy implications of that model would be. If you don’t like that model, or even if you do, I invite you and others to propose a different model, so that we can look at the problem from all possible angles WITHIN THE ECONOMIC ANALYSIS APPROACH. I exclude other approaches here so that we can focus and fully benefit from the power of economic analysis.

        >> Immigration law can’t affect the supply in being formed to increase the cost of immigrant labor to the point where it equals that of the domestic talent stock ?

        Yes. As already discussed. Doing that will drive jobs offshore by forcing domestic firms to operate inefficiently.

        >> The use of public opinion can’t invoke a change in demand (and supply also) as was the case of the outcry over South Africa Apartheid and the outcry for divestment from firms doing business with or in South Africa ?

        Possible, but I am skeptical. Racism is an issue that many people are passionate about, and South Africa represented an easily identified opponent that was easy to demonize. General Motors and Ford tried to do it to get people in the United States to buy domestically produced vehicles. Didn’t work. It’s not easy to get millions of people to all make stupid purchase decisions. You have run afoul, again, of the “law of gravity of economics”: A $20 bill sitting on a well travelled sidewalk won’t be there for long.

        >> Quite frankly, Ideafarm,…

        Please show me due respect, Mr. Pope. It is Mr. Ideafarm.

        >> I think you’re championing the cause of the very companies benefitting financially from the status quo of “skilled guest workers”

        I am not championing anything, here. I have stated the policy conclusions that emerge inescapably from a particular partial equilibrium model. If those conclusions aren’t to your liking, then you can propose another model.

        Note also that this model does not favor the status quo. It suggests that the 13th Amendment be revised to permit indenture, which would allow domestic workers to compete and would RAISE the wages paid to domestic workers.

  13. BY ITGUY22 says:

    Re: (2) Indentured servant contracts are illegal and unenforceable in the United States.

    Can you explain more about what exactly defines and indentured service contract and what laws make this illegal?

    • BY Wo'O Ideafarm says:

      13th Amendment to the Constitution of the United States of America:

      “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction. Congress shall have power to enforce this article by appropriate legislation.”

      Perhaps someone will post the relevant provisions of the U.S. Code. Google Scholar could also be used to find relevant U.S. Supreme Court and other federal cases.

      I will leave this as an exercise. Suggestion: search Google for “slavery”, “indenture”, “13th Amendment”, etc. Wikipedia also has some good information on this. Those of you who oppose H1B program could probably mount a 13th Amendment constitutional attack on it in Federal Court.

  14. BY Wo'O Ideafarm says:

    “No 3rd party. Unable to transfer visa or sponsor one.”

    This job posting for a “system validation engineer” just arrived in my email. Can anyone explain exactly why Kelly IT Services states that they cannot transfer or sponsor a visa? Are they really unable, or just unwilling? What must an employer do administratively in order to hire an H1B worker away from another employer?

    Here is the job posting:

    http://seeker.dice.com/jobsearch/servlet/JobSearch?rel_code=1102&op=302&type=14&dockey=xml/7/7/77c1f0b4a90da9b9d30854d00d49a805@endecaindex&bb=0&source=49&cmpid=304

    • BY Peji Sana says:

      My experience is that many corporations carefully express their hiring needs so as to insure that only newly minted IT folk can meet those needs. “Must know language X,K,J and be able to do z, b, t.” can be decoded as “sure we could spend a couple of months bringing you experienced engineers up to speed but you cost more than a new grad, especially a cheap H1-B grad, so we are putting forth a laundry-list of requirements hoping only the cheap guys will have them on their resume.” They meet the letter, but not the intent, of the law this way.

      Corporations exist to make $$$ – government exists to keep them from crushing the workers. Mr. Economist, you should know this.

      • BY Wo'O Ideafarm says:

        Your post is right on topic; thank you.

        >> government exists to keep them from crushing the workers

        The world is not so simple. A market cannot exist without property rights. Under anarchy, property rights are asserted by individual males with deadly force. Inevitably, coalitions form; this is the origin, and the essence, of government. Given that a male has effective possession of something, and can thus offer it in exchange for something else, government has no further role to play in protecting his interests. The interests of suppliers are protected by competition among demanders.

        Your post is correct if construed as a reference to the many institutional details of the maintenance of property rights in contemporary society. For example, environmental regulation pursuant to pollution and preservation of endangered species falls into this bucket. But if construed literally, your post is fatally in error in that it fails to comprehend the counterbalancing forces of competition that determine the market clearing price.

        In contemporary society, the role that government plays in organizing and enforcing coalitions to screw the public is empirically just as important, if not more important, as the role that government plays in promoting liberty and justice, i.e. enforcing property rights.

        >> Mr. Economist, you should know this.

        My formation as an economist means only that I have mastered a particular approach to thinking about how society works. Many people here know things about how the market for software craftwork works that I do not know. It is my intent to elicit that information so that we can all learn something. Thank you for your post, Peji Sana.

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