Will Stirs the High-Skilled Hornets Nest

by on July 16, 2008 · 73 comments

My colleague Will Wilkinson has a great commentary on Marketplace where he points out that more H1-B visas means less inequality:

Increases in wage inequality over the past few decades is primarily a story of the supply and demand of skilled labor together with the effects of technological innovation. Wage increases tend to track improvements in the productivity of labor and gains in productivity tend to be driven by innovations that help workers do more in less time. But in recent decades, technical innovation has increased the productivity of more highly-educated workers faster than it has for less-educated workers. These growing inequalities in productivity have helped create growing inequalities in wages.

But that’s not the whole story. The American system of higher education produces skilled workers too slowly to keep up with the demand. This scarcity in the supply bids up the wages of the well-educated even more, further widening the wage gap. If we raised visa quotas on skilled labor, that would help bring supply in line with demand and reduce the wage gap between more and less skilled workers.

These days, almost everybody but their beneficiaries think agricultural subsidies are a lousy idea. They benefit a few already relatively wealthy American farmers and agribusiness firms to the detriment of poor farmers around the world. But H-1B visa restrictions are subsidies that benefit relatively rich domestic workers over their poorer foreign peers, and so it turns out many of us liberal-minded college grads are enjoying our own protectionist boost.

In this case, it seems the moral outrage is… well, we seem to be keeping it to ourselves.

Will is spot on. And he’s greeted with a cacophony of condemnation from commenters who either don’t seem to have grokked Will’s basic argument, or who make nakedly self-serving arguments of the form: I have an advanced degree, and I don’t make as much money as I’d like, therefore we need to keep the brown people out to push up my wages. This has the virtue of candor, if nothing else, but normally when people advocate positions that benefit themselves at the expense of people less fortunate than themselves, they at least have the decency to pretend that’s not what they’re doing.

What virtually all of the commenters seem to be missing is that the costs of protectionism for high-skilled Americans falls not only on immigrants who are unable to make better lives for themselves, but also on less-skilled Americans who are forced to pay higher prices for goods and services produced by high-skilled workers. That I take to be Will’s point, and hardly any of the commenters seem to have even taken note of it, much less offered a coherent response.

Of course, this isn’t terribly surprising. People are rarely rational when their own self-interest is involved. No matter how wealthy or successful you are—and the people who are effected by H1-B increases are overwhelmingly among the better-compensated workers in the wealthiest country on Earth—it’s always possible to feel beleaguered. By world and historical standards, a software engineer making $80,000 a year is obscenely wealthy. Yet apparently many such workers feel it a grave imposition to be asked to compete on a level playing field with foreign-born workers, few of whom grew up with the privileges and luxuries that most middle-class Americans enjoy as a birthright.

  • Jim Harper

    Here’s a tidbit from Boudreaux that’s worth emphasizing:

    “Whether immigrants increase or decrease measured GDP or per-capita income is an empirical question that can be answered only by sound empirical research. But the moral case for open immigration is paramount.”

  • Marc Grundfest

    Correction
    relatively UNconflicted
    Liberian = libertarian

    Sorry about that there may be others sorry about them as well :)

  • Marc Grundfest

    “Backing a policy because it’s fair is not social engineering. Tim Lee and I would lower the limits on free movement of people. ”

    Why do you believe that the government does not have the right and duty to control its boarders and decide who is and who is not a citizen? This is a called sovereignty,and all other governments have it. Only in the US do we apologize for being sovereign. People are not free to move anywhere they want now or at any time in the past– try to emigrate abroad if you doubt me– for that matter try Canada.

    The H1b visa is itself an exception to the default rule of entry base on what– Business likes it as it reduces wage pressure for critial skills — you seem to like it because it is fair. This is not an economic argument, it is not a legal argument, and if you serious consider the impact of brain drain on the rest of the world it is not even a true statement. Indeed many now make the claim that without h1b high skill labor will stay in there own counties thus making the US less competitive. At least here they are telling the truth– if we are importing only high skill labor it will infact increase the unfairness you claim it will mitigate and will have a beneficial impact on the US, But if is is fair then we must take all comers and the result will detrimental to the US but will by lowering US wages to match the world it will result in fairness.
    It should be noted that many H1b visa are granted on the basis of artificial over credentialing ( ie a DBA does not need an MS) or in many cases dimploma mill certification. I work with many who have purchase degrees from Overseas universities always will to help export its surplus labor overseas to gain hard currency on the return trip. Again events will speak for me in time.

    Migration to and from the US is primarily a national defense issue in any case. But those who support it do not general claim it is fair– they claim that if will benefit the US more than it costs — funny I do not hear that claim much anymore– but if true you must conceed that the brain drain will have an impact on the country of origin and thus it will never be fair.

    “#6 is the key question. It would take a long time. Most poor people don’t have the wherewithal to move to the United States, and they don’t have the skills and education to take most jobs here. We’re not talking about a jolt, but a long-term adjustment to where people’s skills and the jobs available to them line up better.”

    There are Billions of people in the world. Moving to the US is not an option no matter what. So they need to grow locally and organically, but we use H1-b and the “American dream to lure there best and brights ( as well as their duds no doubt) so how exaclty is this helping your long term goal of fairness and elevated world standard of living ?

    “Why should you act against your interest and accept higher immigration rates, even if they could put you in competion with new workers? Because you believe in justice and fairness. If you think that it’s the government’s job to take from others and give to you, then you’re the socialist.”

    You have made my point for me. But infact you can be socialist without state coercion. As I said H1b should not exist at all. No special treatment of immigrants based on skill sets that would not be fair to the others left behind and would hurt not help the cause of improving world living standards. It does exist because it proponents ( ie those who unlike the libertarians actually make policy) think it is our national interest to pooch talent from abroad in an effort to increase our technical lead, while keeping wage and price inflation under control.

    If H1B work as designed they will increase not decrease world ‘unfairness’ and you are force to appose them if you think fairness is a goal ,where as they are used at present they are just controlling wage inflation in such high tech areas as customer support rep (which as we all know requires at least a PHD.– and customer support is so much better now that we can all see the benifits :) )

    I look forward to your solution as to turn the entire world into america. Meanwhile event continue to turn America into the rest of the world. But if you are serious about raising world standard of living you need to
    1. stop pooching talent
    2.demand free and fair elections for all trading partners
    3. up root corruption in the counties of origin and the world bank
    4. share tecnology
    5. Kill off rouge states

    None of this will happen of course but number 1. may be a good start and may even lead, as I alluded to in my first post, to reform in the country of origin, but then the US and the people who run it will not infact be able to maintain there hegemony.

    And that is how the world really works,and that is why we will have H1-b in the first place to increase not decrease our hegemony

  • Jim Harper

    Backing a policy because it’s fair is not social engineering. Tim Lee and I would lower the limits on free movement of people. Those limits have “engineered” artificially high rates of pay for a small group of wealthy Americans at the expense of poor Americans and poor people worldwide. Your perception that it is “social engineering” to remove this subsidy to people like you proves my point about people’s skewed perception when self-interests are at stake.

    Were there to be freer migration, that would improve world GDP because people would be able to move to where their labor is most useful. They would make more, and the people they work for would make more. Everyone would be better off, except perhaps the small number of people whose incomes are artificially inflated by the labor restrictions inherent in our tightly restrictive immigration laws.

    #6 is the key question. It would take a long time. Most poor people don’t have the wherewithal to move to the United States, and they don’t have the skills and education to take most jobs here. We’re not talking about a jolt, but a long-term adjustment to where people’s skills and the jobs available to them line up better.

    Why should you act against your interest and accept higher immigration rates, even if they could put you in competion with new workers? Because you believe in justice and fairness. If you think that it’s the government’s job to take from others and give to you, then you’re the socialist.

  • Marc Grundfest

    “Why should they be? Does our government exist to serve our interest, or the world’s interest?

    Furthermore, the excessive concern about income inequality smacks of socialist sentiments, not capitalist ones. Any good libertarian knows that equality beyond legal equality and liberty are mutually exclusive.”

    Quite so.

  • Jim Harper

    OK, you’re a nationalist too. A nationalist and a socialist. Where are we going with this? Godwin’s law! [Over and out.]

  • Jim Harper

    I would have government serve no interest but neutral justice. You would use government to enrich yourself as against others. Confess your socialism!

  • Allen

    The problem with opening the borders is that we’re not talking just about jobs. We’re talking about opening up our hospitals, our schools, our chartiy, et al. Unless the government does a whole sale turn about and goes 95% Libertarian, we will end up bearing the costs of educating the world, healing the world, etc, etc. Sure, not all the poor will pull it off. But as we’ve seen there are plenty of poor people who do find $5k to be crammed into a container at risk of dieing at sea just to get to America. Now you make it legal and remove that risk of death?

    Sorry, there is an important difference between unrestricted movement of people within a country and within countries. I’d be more than happy to let anyone immigrate who could pay, or have an employer pay, their $3k / year “green card fee” or whatever the new system would have.

  • Tim Lee

    I’d be more than happy to let anyone immigrate who could pay, or have an employer pay, their $3k / year “green card fee” or whatever the new system would have.

    Which is precisely what we’re discussing in this post, no? H1-B applicants are the immigrants most likely to find good jobs and least likely to impose a major burden on public services. I think there are arguments for broader liberalization, but I think the argument is particularly clear-cut when it comes to admitting highly-skilled immigrants, as Will advocates.

  • Allen

    Good point.

    Question – Why limit it to just H-1B?

  • Jim Harper

    Good points, Allen. Bill Niskanen wrote a piece on point a while back called “Build a Wall Around the Welfare State, Not Around the Country.” Page 2 of this PDF. And Don Boudreaux something similar.

  • Jim Harper

    Here’s a tidbit from Boudreaux that’s worth emphasizing:

    “Whether immigrants increase or decrease measured GDP or per-capita income is an empirical question that can be answered only by sound empirical research. But the moral case for open immigration is paramount.”

  • Marc Grundfest

    “Backing a policy because it’s fair is not social engineering. Tim Lee and I would lower the limits on free movement of people. “

    Why do you believe that the government does not have the right and duty to control its boarders and decide who is and who is not a citizen? This is a called sovereignty,and all other governments have it. Only in the US do we apologize for being sovereign. People are not free to move anywhere they want now or at any time in the past– try to emigrate abroad if you doubt me– for that matter try Canada.

    The H1b visa is itself an exception to the default rule of entry base on what– Business likes it as it reduces wage pressure for critial skills — you seem to like it because it is fair. This is not an economic argument, it is not a legal argument, and if you serious consider the impact of brain drain on the rest of the world it is not even a true statement. Indeed many now make the claim that without h1b high skill labor will stay in there own counties thus making the US less competitive. At least here they are telling the truth– if we are importing only high skill labor it will infact increase the unfairness you claim it will mitigate and will have a beneficial impact on the US, But if is is fair then we must take all comers and the result will detrimental to the US but will by lowering US wages to match the world it will result in fairness.
    It should be noted that many H1b visa are granted on the basis of artificial over credentialing ( ie a DBA does not need an MS) or in many cases dimploma mill certification. I work with many who have purchase degrees from Overseas universities always will to help export its surplus labor overseas to gain hard currency on the return trip. Again events will speak for me in time.

    Migration to and from the US is primarily a national defense issue in any case. But those who support it do not general claim it is fair– they claim that if will benefit the US more than it costs — funny I do not hear that claim much anymore– but if true you must conceed that the brain drain will have an impact on the country of origin and thus it will never be fair.

    “#6 is the key question. It would take a long time. Most poor people don’t have the wherewithal to move to the United States, and they don’t have the skills and education to take most jobs here. We’re not talking about a jolt, but a long-term adjustment to where people’s skills and the jobs available to them line up better.”

    There are Billions of people in the world. Moving to the US is not an option no matter what. So they need to grow locally and organically, but we use H1-b and the “American dream to lure there best and brights ( as well as their duds no doubt) so how exaclty is this helping your long term goal of fairness and elevated world standard of living ?

    “Why should you act against your interest and accept higher immigration rates, even if they could put you in competion with new workers? Because you believe in justice and fairness. If you think that it’s the government’s job to take from others and give to you, then you’re the socialist.”

    You have made my point for me. But infact you can be socialist without state coercion. As I said H1b should not exist at all. No special treatment of immigrants based on skill sets that would not be fair to the others left behind and would hurt not help the cause of improving world living standards. It does exist because it proponents ( ie those who unlike the libertarians actually make policy) think it is our national interest to pooch talent from abroad in an effort to increase our technical lead, while keeping wage and price inflation under control.

    If H1B work as designed they will increase not decrease world ‘unfairness’ and you are force to appose them if you think fairness is a goal ,where as they are used at present they are just controlling wage inflation in such high tech areas as customer support rep (which as we all know requires at least a PHD.– and customer support is so much better now that we can all see the benifits :) )

    I look forward to your solution as to turn the entire world into america. Meanwhile event continue to turn America into the rest of the world. But if you are serious about raising world standard of living you need to
    1. stop pooching talent
    2.demand free and fair elections for all trading partners
    3. up root corruption in the counties of origin and the world bank
    4. share tecnology
    5. Kill off rouge states

    None of this will happen of course but number 1. may be a good start and may even lead, as I alluded to in my first post, to reform in the country of origin, but then the US and the people who run it will not infact be able to maintain there hegemony.

    And that is how the world really works,and that is why we will have H1-b in the first place to increase not decrease our hegemony

  • Jim Harper

    OK, you’re a nationalist too. A nationalist and a socialist. Where are we going with this? Godwin’s law! [Over and out.]

  • Marc Grundfest

    I am not going anywhere.

    But you still have not answered any of my questions.

    Nor have you explained why there should be any immigration at all. Nor have you refuted my claims that h1-b hurts the country of origin and may increase social unrest.

    I have been called far worse, but they usually try to answer my points first.
    Well good luck to you.

  • Marc Grundfest

    Any good libertarian knows that equality beyond legal equality and liberty are mutually exclusive.

    Which is exactly what I’m advocating: greater legal equality for whose who weren’t fortunate enough to be born in the United States.”

    I cant resist this one. You are now claiming that Foreign national have rights under US law. Tell me can a Foreign National sue in US courts to become a citizen. If not why not? Are there any limits to the claim the world may make on the US.

    Let me guess I am also a fascist now.

  • Marc Grundfest

    I am not going anywhere.

    But you still have not answered any of my questions.

    Nor have you explained why there should be any immigration at all. Nor have you refuted my claims that h1-b hurts the country of origin and may increase social unrest.

    I have been called far worse, but they usually try to answer my points first.
    Well good luck to you.

  • Marc Grundfest

    Any good libertarian knows that equality beyond legal equality and liberty are mutually exclusive.

    Which is exactly what I’m advocating: greater legal equality for whose who weren’t fortunate enough to be born in the United States.”

    I cant resist this one. You are now claiming that Foreign national have rights under US law. Tell me can a Foreign National sue in US courts to become a citizen. If not why not? Are there any limits to the claim the world may make on the US.

    Let me guess I am also a fascist now.

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