4 ms·

My intuition is that H1B and similar programs hurt my personal compensation as a domestic provider of skilled labor. My reasoning is that less supply of skilled

My intuition is that H1B and similar programs hurt my personal compensation as a domestic provider of skilled labor. My reasoning is that less supply of skilled labor should result in increased cost - which gets paid to me. I understand it's better for the companies and perhaps the economy as a whole to import labor, but it seems worse for me. Is there research on this subject or something I'm missing?

sjg007 8y ago
Less H1Bs could also mean less innovation and higher costs for software products. Or in the best case, transferred overseas. It could also mean more competition for the fewer jobs in your local economy.
damnyou 8y ago
The flaw in your intuition is that it believes there's a fixed demand. It's normal for your intuition to think that way — humans are notoriously bad at analyzing higher-order effects. https://en.m.wikipedia.org/wiki/Lump_of_labour_fallacy https://en.m.wikipedia.org/wiki/Lump_of_labour_fallacy
- iguy 8y ago
  Thinking that demand is fixed would indeed be a flaw. But the right wikipedia link here is https://en.wikipedia.org/wiki/Supply_and_demand https://en.wikipedia.org/wiki/Supply_and_demand : demand curves slope downwards. More sellers (of a given kind of labour) means does mean higher volumes, but also lower prices (wages). GP's intuition is correct. I don't have links handy but it's my understanding that serious studies reliably back this up. There are other effects too of course. Letting in Sergey Brin may have competed down CEO wages (as per theory) but arguably more importantly drove up demand for engineers. Letting in lots of H1B engineers no doubt drives up demand for gardeners & house-cleaners.
landryraccoon 8y ago
This intuition only holds as long as you believe there is zero chance of new large competitors arising in other countries. If protectionism causes a rival to Google to be viable in other countries, that could hurt your salary prospects back home quite a bit.
- iguy 8y ago
  So the US should vacuum up all talent so hard it has no chance to coalesce elsewhere? I'm not sure this is a viable or even desirable strategy. The most likely competitors are in China. The actions of the Chinese government have much much more to do with this than the actions of the US. Historically, attempts to keep a lead by any other path than leading ahead haven't worked well.
- ALittleLight 8y ago
  It seems like the current model, which is import large numbers of software related folks to the US, hurts competition. What I mean by this is that Amazon, Google, etc have a few core businesses that are monopolies (search, online retail, etc) and many ancillary endeavors. Most software people don't work in the core business. If so many software people weren't imported to extend US software giants then some of those people would stay home and develop regional competitors. This would be bad for the company I work for, but for customers it would be good, for foreign software developers who could stay home AND work in a successful domestic company it would be good, and for me it would be good - I'd be paid more.
tschellenbach 8y ago
US engineering wages are 4-5x of what they are in other similarly developed countries. The reason for that is a whole ecosystem of succesful startups/tech companies. High quality talent from abroad improves the competitiveness of the US ecosystem and drains talent from other ecosystems. I'm going to go ahead and guess that US wages actually go up with less restrictive immigration policies.
scarejunba 8y ago
Aggregating talent has the effect of creating things that couldn't exist on their own. You don't know where your next co-founder is going to be from. You know you're going to be competing worldwide with other founders anyway so you want the best co-founder you can find next to you. He may be abroad. You want him here so you can meet him.

sjg007 8y ago

Less H1Bs could also mean less innovation and higher costs for software products. Or in the best case, transferred overseas. It could also mean more competition for the fewer jobs in your local economy.

damnyou 8y ago

The flaw in your intuition is that it believes there's a fixed demand. It's normal for your intuition to think that way — humans are notoriously bad at analyzing higher-order effects. https://en.m.wikipedia.org/wiki/Lump_of_labour_fallacy https://en.m.wikipedia.org/wiki/Lump_of_labour_fallacy

iguy 8y ago
Thinking that demand is fixed would indeed be a flaw. But the right wikipedia link here is https://en.wikipedia.org/wiki/Supply_and_demand https://en.wikipedia.org/wiki/Supply_and_demand : demand curves slope downwards. More sellers (of a given kind of labour) means does mean higher volumes, but also lower prices (wages). GP's intuition is correct. I don't have links handy but it's my understanding that serious studies reliably back this up. There are other effects too of course. Letting in Sergey Brin may have competed down CEO wages (as per theory) but arguably more importantly drove up demand for engineers. Letting in lots of H1B engineers no doubt drives up demand for gardeners & house-cleaners.

landryraccoon 8y ago

This intuition only holds as long as you believe there is zero chance of new large competitors arising in other countries. If protectionism causes a rival to Google to be viable in other countries, that could hurt your salary prospects back home quite a bit.

iguy 8y ago
So the US should vacuum up all talent so hard it has no chance to coalesce elsewhere? I'm not sure this is a viable or even desirable strategy. The most likely competitors are in China. The actions of the Chinese government have much much more to do with this than the actions of the US. Historically, attempts to keep a lead by any other path than leading ahead haven't worked well.
ALittleLight 8y ago
It seems like the current model, which is import large numbers of software related folks to the US, hurts competition. What I mean by this is that Amazon, Google, etc have a few core businesses that are monopolies (search, online retail, etc) and many ancillary endeavors. Most software people don't work in the core business. If so many software people weren't imported to extend US software giants then some of those people would stay home and develop regional competitors. This would be bad for the company I work for, but for customers it would be good, for foreign software developers who could stay home AND work in a successful domestic company it would be good, and for me it would be good - I'd be paid more.

tschellenbach 8y ago

US engineering wages are 4-5x of what they are in other similarly developed countries. The reason for that is a whole ecosystem of succesful startups/tech companies. High quality talent from abroad improves the competitiveness of the US ecosystem and drains talent from other ecosystems. I'm going to go ahead and guess that US wages actually go up with less restrictive immigration policies.

scarejunba 8y ago

Aggregating talent has the effect of creating things that couldn't exist on their own. You don't know where your next co-founder is going to be from. You know you're going to be competing worldwide with other founders anyway so you want the best co-founder you can find next to you. He may be abroad. You want him here so you can meet him.